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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q

(Mark One)

 

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

 

For the quarterly period ended September 30, 2024

 

OR

 

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

 

For the transition period from ___________ to ______________.

 

Commission File Number 1-32955

 

HOUSTON AMERICAN ENERGY CORP.

(Exact name of registrant as specified in its charter)

 

Delaware   76-0675953

(State or other jurisdiction of

incorporation or organization)

  

(IRS Employer

Identification No.)

 

801 Travis Street, Suite 1425, Houston, Texas 77002

 

(Address of principal executive offices)(Zip Code)

 

(713) 222-6966

 

(Registrant’s telephone number, including area code)

 

 

 

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

 

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

 

Title of each class

  

Trading Symbol(s)

  

Name of each exchange on which registered

Common Stock, $0.001 par value per share   HUSA   NYSE American

 

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

 

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

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer ☐ Accelerated filer ☐ Non-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 standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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

 

As of November 14, 2024, we had 13,086,533 shares of $0.001 par value common stock outstanding.

 

 

 

 
 

 

HOUSTON AMERICAN ENERGY CORP.

 

FORM 10-Q

 

INDEX

 

    Page No.
PART I. FINANCIAL INFORMATION 3
     
Item 1. Financial Statements 3
     
  Consolidated Balance Sheets as of September 30, 2024 (Unaudited) and December 31, 2023 3
     
  Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2024 and 2023 (Unaudited) 4
     
  Consolidated Statements of Changes in Shareholders’ Equity for the Three and Nine Months Ended September 30, 2024 and 2023 (Unaudited) 5
     
  Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023 (Unaudited) 6
     
  Notes to Consolidated Financial Statements (Unaudited) 7
 
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 12
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk 15
     
Item 4. Controls and Procedures 15
     
PART II OTHER INFORMATION 16
     
Item 6. Exhibits 16

 

2
 

 

ITEM 1 Financial Statements

 

PART I - FINANCIAL INFORMATION

HOUSTON AMERICAN ENERGY CORP.

CONSOLIDATED BALANCE SHEETS

 

  

September 30, 2024

  

December 31, 2023

 
   (Unaudited)     
ASSETS        
CURRENT ASSETS          
Cash  $2,847,296   $4,059,182 
Accounts receivable – oil and gas sales   139,886    71,736 
Prepaid expenses and other current assets   78,414    35,244 
TOTAL CURRENT ASSETS   3,065,596    4,166,162 
           
PROPERTY AND EQUIPMENT          
Oil and gas properties, full cost method          
Costs subject to amortization   62,777,666    62,776,561 
Office equipment   90,004    90,004 
Total   62,867,670    62,866,565 
Accumulated depletion, depreciation, amortization, and impairment    (61,410,343)   (61,307,264)
PROPERTY AND EQUIPMENT, NET   1,457,327    1,559,301 
Equity investment – Hupecol Meta LLC   5,577,722    4,505,358 
Right of use asset   89,531    145,021 
Other assets   3,167    3,167 
           
TOTAL ASSETS  $10,193,343   $10,379,009 
           
LIABILITIES AND SHAREHOLDERS’ EQUITY          
CURRENT LIABILITIES          
Accounts payable  $192,329   $156,572 
Accrued expenses   17,065    17,083 
Current portion of lease liability   83,510    75,276 
TOTAL CURRENT LIABILITIES   292,904    248,931 
           
LONG-TERM LIABILITIES          
Lease liability, net of current portion   7,431    71,083 
Reserve for plugging and abandonment costs   64,189    63,084 
TOTAL LONG-TERM LIABILITIES   71,620    134,167 
TOTAL LIABILITIES   364,524    383,098 
           
COMMITMENTS AND CONTINGENCIES   -     -  
           
SHAREHOLDERS’ EQUITY         
Common stock, par value $0.001; 20,000,000 shares authorized 10,906,353 shares issued and outstanding     10,907       10,907  
Additional paid-in capital   87,066,462    86,984,001 
Accumulated deficit   (77,248,550)   (76,998,997)
TOTAL SHAREHOLDERS’ EQUITY   9,828,819    9,995,911 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY  $10,193,343   $10,379,009 

 

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

 

3
 

 

HOUSTON AMERICAN ENERGY CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

(Unaudited)

 

   2024   2023   2024   2023 
   Nine Months   Three Months 
   Ended September 30,   Ended September 30, 
   2024   2023   2024   2023 
                 
OIL AND GAS REVENUE  $393,729    547,408   $130,239    112,994 
                     
EXPENSES OF OPERATIONS                    
Lease operating expense and severance tax   534,443    344,318    229,210    128,918 
General and administrative expense   1,012,862    1,409,445    299,308    363,011 
Depreciation and depletion   103,079    115,645    39,994    23,749 
Total operating expenses   

1,650,384

    1,869,408    568,512    515,678 
                     
Loss from operations   (1,256,655)   (1,322,000)   (438,273)   (402,684)
                     
OTHER INCOME, NET                    
Interest income   84,143    114,061    24,688    39,426 
Other income   922,959    1,235,101    268,817    586,626 
Total other income   1,007,102    1,349,162    293,505    626,052 
                     
Net (loss) income before taxes   (249,553)   27,162    (144,768)   223,368 
                     
Income tax expense   —    —    —    — 
                     
Net (loss) income  $(249,553)   27,162   $(144,768)   223,368 
                     
Basic and diluted (loss) income per common share  $(0.02)   0.00   $(0.01)   0.02 
                     
Based and diluted weighted average number of common shares outstanding   10,906,353    10,742,407    10,906,353    10,906,353 

 

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

 

4
 

 

HOUSTON AMERICAN ENERGY CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

(Unaudited)

 

   Shares   Amount   Capital   Deficit   Total 
           Additional         
   Common Stock   Paid-in   Accumulated     
   Shares   Amount   Capital   Deficit   Total 
                     
Balance at December 31, 2023   10,906,353   $10,907   $86,984,001   $(76,998,997)  $9,995,911 
                          
Stock-based compensation   —    —    50,667    —    50,667 
Net loss   —    —    —    (15,699)   (15,699)
Balance at March 31, 2024   10,906,353    10,907    87,034,668    (77,014,696)   10,030,879 
                          
Stock-based compensation   —    —    12,746    —    12,746 
Net loss   —    —    —    (89,086)   (89,086)
Balance at June 30, 2024   10,906,353    10,907    87,047,414    (77,103,782)   9,954,539 
                          
Stock-based compensation   —    —    19,048    —    19,048 
Net loss   —    —    —    (144,768)   (144,768)
Balance at September 30, 2024   10,906,353   $10,907   $87,066,462   $(77,248,550)   9,828,819 

 

           Additional         
   Common Stock   Paid-in   Accumulated     
   Shares   Amount   Capital   Deficit   Total 
                     
Balance at December 31, 2022    10,327,646   $10,328   $85,094,266   $(73,787,720)  $11,316,874 
Stock-based compensation    —    —    84,445    —    84,445 
Issuance of common stock    294,872    295    901,205    —    901,500 
Net loss    —    —    —    104,175    104,175 
Balance at March 31, 2023    10,662,518    10,623    86,079,916    (73,683,545)   12,406,994 
                          
Stock-based compensation    —    —    77,870    —    77,870 
Issuance of common stock    283,835    284    750,216    —    750,500 
Net loss    —    —    —    (89,085)   (89,085)
Balance at June 30, 2023    10,906,353    10,907    86,908,002    (73,983,926)   12,934,983 
                          
Stock-based compensation    —    —    50,667    —    50,667 
Net income    —    —    —    223,368    223,368 
Balance at September 30, 2023    10,906,353   $10,907   $86,958,669   $(73,760,558)  $13,209,018 

 

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

 

5
 

 

HOUSTON AMERICAN ENERGY CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

(Unaudited)

 

   2024   2023 
  

For the Nine Months Ended

September 30,

 
   2024   2023 
         
CASH FLOWS FROM OPERATING ACTIVITIES          
Net (loss) income  $(249,553)  $27,162 
Adjustments to reconcile net income (loss) to net cash used in operations:          
Depreciation and depletion   103,079    115,645 
Accretion of asset retirement obligation   1,105    2,336 
Stock-based compensation   82,461    212,982 
Amortization of right of use asset   55,490    49,758 
Changes in operating assets and liabilities:          
Decrease (increase) in accounts receivable   (68,151)   125,355 
Decrease (increase) in accrued earnings distributions from Hupecol Meta, LLC   —    (311,544)
Increase in prepaid expenses and other current assets   (43,170)   (34,659)
Increase in accounts payable and accrued expenses   34,634    72,541 
Decrease in operating lease liability   (55,418)   (48,113)
           
Net cash provided by (used in) operating activities   (139,522)   (211,463)
           
CASH FLOWS FROM INVESTING ACTIVITIES          
Payments for capital contribution for equity investment   (1,072,364)   (1,954,515)
           
Net cash used in investing activities   (1,072,364)   (1,954,515)
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Proceeds from issuance of common stock for cash, net of offering costs   —    1,652,000 
           
Net cash provided by financing activities   —    1,652,000 
           
Increase (decrease) in cash   (1,211,886)   (91,052)
Cash, beginning of period   4,059,182    4,547,210 
Cash, end of period  $2,847,296   $4,456,158 
           
SUPPLEMENTAL CASH FLOW INFORMATION          
Interest paid  $—   $— 
Taxes paid  $—   $— 
           
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES          
Changes in estimate of asset retirement obligations, net  $ —   $ 10,826 

Change in accrued oil and gas development costs

  $1,105   $333,813 
Changes in accrued equity investment contributions and distributions  $—   $333,813 

 

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

 

6
 

 

HOUSTON AMERICAN ENERGY CORP.

Notes to Consolidated Financial Statements

(Unaudited)

 

NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

 

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

 

These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and footnotes, which are included as part of the Company’s Form 10-K for the year ended December 31, 2023.

 

Consolidation

 

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

 

Liquidity and Capital Requirements

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the issuance date of these consolidated financial statements. The Company has incurred continuing losses since 2011, with an accumulated deficit of $77.2 million as of September 30, 2024.

 

The Company believes that it has the ability to fund, from cash on hand, its operating costs and anticipated drilling operations for at least the next twelve months following the issuance of these financial statements.

 

The actual timing and number of wells drilled during 2024 and beyond will be principally controlled by the operators of the Company’s acreage, based on a number of factors, including but not limited to availability of financing, performance of existing wells on the subject acreage, energy prices and industry condition and outlook, costs of drilling and completion services and equipment and other factors beyond the Company’s control or that of its operators.

 

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

 

Accounting Principles and Use of Estimates

 

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

 

7
 

 

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to a concentration of credit risk include cash, cash equivalents (if any) and any marketable securities (if any). The Company had cash deposits of $2,347,296 in excess of the FDIC’s current insured limit on interest bearing accounts of $250,000 as of September 30, 2024. The Company has not experienced any losses on its deposits of cash and cash equivalents.

 

Earnings (Loss) per Share

 

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

 

Recently Issued Accounting Pronouncements

 

In December 2023, the Financial Accounting Standards Board “FASB”, issued Accounting Standards Update “ASU”, No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). The guidance in ASU 2023-09 improves the transparency of income tax disclosures by greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. The standard is effective for public companies for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact that the adoption of ASU 2023-09 may have on its consolidated financial statements and related disclosures. 

 

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280). The amendments in this update expand segment disclosure requirements, including new segment disclosure requirements for entities with a single reportable segment among other disclosure requirements. This update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

 

Subsequent Events

 

The Company has evaluated all transactions from September 30, 2024 through the financial statement issuance date for subsequent event disclosure consideration. On November 11, 2024, subsequent to the period covered by this report, the Company sold 2,180,180 shares of our common stock to one investor for aggregate proceeds of approximately $2.5 million. In addition, James A. Schoonover resigned as a director on November 11, 2024, and Robert J. Bailey was appointed as a director.

 

NOTE 2 – REVENUE FROM CONTRACTS WITH CUSTOMERS

 

Disaggregation of Revenue from Contracts with Customers

 

The following table disaggregates revenue by significant product type for the three and Nine-month periods ended September 30, 2024 and 2023:

 

   2024   2023   2024   2023 
   Three Months Ended September 30,   Nine Months Ended September 30, 
   2024   2023   2024   2023 
Oil sales  $108,553    95,506   $314,524    408,555 
Natural gas sales   (4,237)   11,544    3,831    53,418 
Natural gas liquids sales   25,923    5,944    75,374    85,435 
Total revenue from customers  $ 130,239    112,994   $393,729    547,408 

 

There were no significant contract liabilities or transaction price allocations to any remaining performance obligations as of September 30, 2024 or 2023.

 

NOTE 3 – OIL AND GAS PROPERTIES

 

During the three and nine months ended September 30, 2024, the Company recorded depletion expense of $39,994 and $103,079, respectively. During the three and nine months ended September 30, 2023, the Company recorded depletion expense of $23,749 and $115,645, respectively.

 

Geographical Information

 

The Company currently has properties in the United States. Revenues for the nine months ended September 30, 2024 and long-lived assets (net of depletion, amortization, and impairments) as of September 30, 2024 are presented below:

 

   Nine Months Ended September 30, 2024   As of September 30, 2024 
    Revenues    Long Lived Assets, Net 
United States  $393,729   $1,457,327 
Total  $393,729   $1,457,327 

 

Revenues and long-lived assets attributable to the Company’s investments in Hupecol Meta LLC (“Hupecol Meta”), and its underlying assets and operations in Colombia, are excluded from the above table.

 

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NOTE 4 – EQUITY INVESTMENT

 

The Company’s carrying value of its holdings in Hupecol Meta is reflected in the line item “equity investment – Hupecol Meta LLC” on the Company’s Consolidated Balance Sheet.

 

During the three months ended September 30, 2024, the Company made capital contributions totaling $1,072,364, to Hupecol Meta to cover its share of required capital contributions. During the three and nine months ended September 30, 2024, the Company received distributions, totaling $268,817 and $992,959, respectively, from Hupecol Meta representing the Company’s share of distributable net profits of Hupecol Meta. During the three and nine months ended September 30, 2023, the Company received distributions, totaling $586,626 and $1,235,101, respectively.

 

NOTE 5 – STOCK-BASED COMPENSATION EXPENSE

 

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

 

In 2017, the Company adopted the Houston American Energy Corp. 2017 Equity Incentive Plan (the “2017 Plan”). The terms of the 2017 Plan, allow for the issuance of up to 400,000 shares of the Company’s common stock pursuant to the grant of stock options and restricted stock.

 

In 2021, the Company adopted the Houston American Energy 2021 Equity Incentive Plan (the “2021 Plan” and, together with the 2008 Plan and the 2017 Plan, the “Plans”). The terms of the 2021 Plan allow for the issuance of up to 500,000 shares of the Company’s common stock pursuant to the grant of stock options and restricted stock.

 

Persons eligible to participate in the Plans are key employees, consultants and directors of the Company.

 

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

 

Stock Option Activity

 

A summary of stock option activity and related information for the nine months ended September 30, 2024 is presented below:

 

   Options   Weighted-Average Exercise Price  

 

Aggregate Intrinsic Value

 
             
Outstanding at January 1, 2024   1,000,807   $2.46      
Granted   60,000    1.21      
Exercised   —    —      
Expired   (152,668)   3.98      
Outstanding at September 30, 2024   908,139   $2.12   $— 
Exercisable at September 30, 2024   862,813   $2.12   $— 

 

During the nine months ended September 30, 2024, options to purchase an aggregate of 60,000 shares of the Company’s common stock were granted to the Company’s directors. The options have a ten-year life, are exercisable at $1.21 per share, vest 20% on the date of grant and 80% nine months from the date of grant. The grant date fair value of these stock options was $63,730 based on the Black-Scholes Option Pricing model based on the following assumptions: market value of common stock on grant date – $1.21; risk free interest rate based on the applicable US Treasury bill rate – 0%; dividend yield – 0%; volatility factor based on the trading history of the Company – 97.8%; weighted average expected life in years – 10; and expected forfeiture rate – 0%.

 

During the three and nine-months ended September 30, 2024, the Company recognized $19,048 and $82,461, respectively, of stock-based compensation expense attributable to the vesting amortization of stock options. As of September 30, 2024, total unrecognized stock-based compensation expense related to non-vested stock options was approximately $31,940. The unrecognized expense is expected to be recognized over a weighted average period of 0.72 years and the weighted average remaining contractual term of the outstanding options and exercisable options at September 30, 2024 is 5.19 years and 5.46 years, respectively.

 

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As of September 30, 2024, there were 61,333 shares of common stock available for issuance pursuant to future stock or option grants under the Plans.

 

Stock-Based Compensation Expense

 

The following table reflects total stock-based compensation recorded by the Company for the three and nine months ended September 30, 2024 and 2023:

 

                 2024   2023 
   

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 
    2024   2023    2024   2023 
                       
Stock-based compensation expense included in general and administrative expense   $ 19,048     50,667    $82,461   $212,982 
Earnings per share effect of share-based compensation expense – basic and diluted   $ (0.00 )   (0.00 )  $(0.00)  (0.00)

 

NOTE 6 – CAPITAL STOCK

 

Warrants

 

A summary of warrant activity and related information for 2024 is presented below:

 

   Warrants   Weighted-Average
Exercise Price		   Aggregate
Intrinsic Value		 
             
Outstanding at January 1, 2024   94,400   $2.46      
Issued   —    —      
Exercised   —    —      
Expired   —    —      
Outstanding at September 30, 2024   94,400   $2.46   $— 
Exercisable at September 30, 2024   94,400   $2.46   $— 

 

NOTE 7 – EARNINGS PER COMMON SHARE

 

Earnings (loss) per common share-basic is calculated by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Net income (loss) per common share-diluted assumes the conversion of all potentially dilutive securities and is calculated by dividing net (loss) income by the sum of the weighted average number of shares of common stock, as defined above, outstanding plus potentially dilutive securities. Net income (loss) per common share-diluted considers the impact of potentially dilutive securities except in periods in which there is a loss because the inclusion of the potential common shares, as defined above, would have an anti-dilutive effect.

 

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The calculation of earnings (loss) per common share for the periods indicated below were as follows:

 

   2024   2023   2024   2023 
  

Three Months Ended

September 30,

  

Nine Months Ended

September 30,

 
   2024   2023   2024   2023 
Numerator:                    
Net (loss) income  $(144,768)   223,368   $(249,553)   27,162 
                     
Effect of common stock equivalents   —    —    —    — 
Net (loss) income adjusted for common stock equivalents  $(144,768)   223,368   $(249,553)   27,162 
                     
Denominator:                    
Weighted average common shares – basic   10,906,353    10,906,353    10,906,353    10,742,407 
                     
Dilutive effect of common stock equivalents:                    
Options and warrants   —    43,603    —    204,584 
                     
Denominator:                    
Weighted average common shares – diluted   10,906,353    10,949,956    10,906,353    10,946,991 
                     
(Loss) earnings per common share – basic  $(0.01)   0.02   $(0.02)   0.00 
                     
(Loss) earnings per common share – diluted  $(0.01)   0.02   $(0.02)   0.00 

 

For the nine months ended September 30, 2024 and 2023, the following warrants and options to purchase shares of common stock were excluded from the computation of diluted net income (loss) per common share, as the inclusion of such shares would be anti-dilutive:

 

   2024   2023   2024   2023 
  

Nine Months Ended

September 30,

  

Three Months Ended

September 30,

 
   2024   2023   2024   2023 
Stock warrants   94,400    94,400    94,400    94,400 
Stock options   908,139    485,481    908,139    473,481 
Total   1,002,539    579,881    1,002,539    473,481 

 

NOTE 8 – COMMITMENTS AND CONTINGENCIES

 

Lease Commitment

 

The Company leases office facilities under an operating lease agreement that expires October 31, 2025. During the three and nine months ended September 30, 2024, the operating cash outflows related to operating lease liabilities of $22,137 and $66,411, respectively, and the expense for the right of use asset for operating leases totaled $19,051 and $55,491, respectively. As of September 30, 2024, the Company’s operating lease had a weighted-average remaining term of 1.33 years and a weighted average discount rate of 12%. As of September 30, 2024, the lease agreement requires future payments as follows:

 

Year  Amount 
2024   22,389 
2025   75,051 
Total future lease payments   97,440 
Less: imputed interest   (6,499)
Present value of future operating lease payments   90,941 
Less: current portion of operating lease liabilities   (83,510)
Operating lease liabilities, net of current portion  $7,431 
Right of use assets  $89,531 

 

Total base rental expense was $22,646 and $22,161 for the three months ended September 30, 2024 and 2023, respectively, and $66,411 and $66,483 for the nine months ended September 30, 2024 and 2023, respectively. The Company does not have any capital leases or other operating lease commitments.

 

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

 

Forward-Looking Information

 

This Form 10-Q quarterly report of Houston American Energy Corp. (the “Company”) for the three months ended September 30, 2024, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. To the extent that there are statements that are not recitations of historical fact, such statements constitute forward-looking statements that, by definition, involve risks and uncertainties. In any forward-looking statement, where we express an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation or belief will be achieved or accomplished.

 

The actual results or events may differ materially from those anticipated and as reflected in forward-looking statements included herein. Factors that may cause actual results or events to differ from those anticipated in the forward-looking statements included herein include the Risk Factors described in Item 1A herein and in our Form 10-K for the year ended December 31, 2023.

 

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

 

Additionally, the following discussion regarding our financial condition and results of operations should be read in conjunction with the financial statements and related notes contained in Item 1 of Part 1 of this Form 10-Q, as well as the Risk Factors in Item 1A and the financial statements in Item 7 of Part II of our Form 10-K for the fiscal year ended December 31, 2023.

 

Critical Accounting Policies

 

The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. We believe certain critical accounting policies affect the more significant judgments and estimates used in the preparation of our financial statements. A description of our critical accounting policies is set forth in our Form 10-K for the year ended December 31, 2023. As of, and for the three months ended, September 30, 2024, there have been no material changes or updates to our critical accounting policies.

 

Recent Developments

 

Drilling and Operating Activity

 

During the three months ended September 30, 2024, no drilling activities were conducted on properties of Hupecol Meta. At September 30, 2024, we had 4 wells on production in the U.S. Permian Basin.

 

Our Frost 2-H well was reworked during the quarter to repair its electric submersible pump.

 

In June 2024, the Company entered into a joint venture agreement with EOG Resources, Inc. (“EOG”) with respect to the drilling of six wells on the State Finkle Unit in the Wolfcamp formation in Reeves County, Texas. During June 2024, the Company elected to participate in all six wells.

 

Pursuant to the joint venture agreement, EOG will act as operator of the unit and is the principal working interest owner in the unit. The unit includes acreage subject to our existing O’Brien lease. We will hold an approximately 0.00370542% working interest in the unit, which is less than previously disclosed due to title issues. The first well was scheduled to spud June 23, 2024 with all six wells anticipated to be in production by the second quarter of 2025. Houston American’s cost of participating in the drilling program is estimated at $550,000. Drilling activity continued during the quarter.

 

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Operations, Planned Drilling and Divestiture in Colombia

 

At September 30, 2024, Hupecol Meta operated four wells in the Venus Exploration Area of the CPO-11 block in Colombia. Each of the four wells operated by Hupecol Meta were shut-in from February 20 to March 18, 2024 as a result of a dispute with local residents regarding maintenance of the road serving the wells.

 

During the quarter, Hupecol Meta drilled the Jupiter 1 well, which resulted in a dry hole.

 

We own an approximately 18% interest in Hupecol Meta, representing an approximately 16% interest in the wells operated in the Venus Exploration Area. We do not report results of Hupecol Meta in our consolidated operating results but include our investment in Hupecol Meta on our balance sheet as “Equity Investment – Hupecol Meta” with distributions from Hupecol Meta reported as “Other Income” on our Statement of Operations.

 

Hupecol Meta has advised that it intends to evaluate potential monetization or some form of divestiture of its assets in Colombia, including the interest in the CPO-11 block held by Hupecol Meta. Pending the outcome of Hupecol Meta’s evaluation of, and potential efforts regarding, divestiture or monetization of the CPO-11 block in the fourth quarter of 2024, we have no planned drilling operations, or other planned operations, in Colombia. As a result, we expect to continue to operate our existing wells in the CPO-11 block. There is no assurance as to the timing or outcome of Hupecol Meta’s potential monetization or divestiture of assets.

 

Capital Investments

 

During the quarter ended September 30, 2024, our capital investment expenditures totaled $1,072,364, attributable to investments in our equity investment in Hupecol Meta LLC (“Hupecol Meta”).

 

Distributions from Equity Investment

 

During the three and nine months ended September 30, 2024, we received distributions, totaling $268,817 and $922,959, respectively, from Hupecol Meta, representing our share of distributable net income and reflected as “Other Income” on our Statement of Operations.

 

Management and Board Changes

 

On November 11, 2024, subsequent to the period covered by this report, we sold 2,180,180 shares of our common stock to one investor for aggregate proceeds of approximately $2.5 million. In connection with this transaction, John F. Terwilliger resigned as Chief Executive Officer (“CEO”), and Peter Longo was appointed as CEO. Mr. Terwilliger remains an advisor to the Company until the end of this year. Also, as part of the foregoing transaction, Mr. Terwilliger received $800,000 in exchange for the waiver of certain claims pursuant to his change in control agreement with the Company. In addition, James A. Schoonover resigned as a director on November 11, 2024, and Robert J. Bailey was appointed as a director.

 

Results of Operations

 

Oil and Gas Revenues. Total oil and gas revenues increased 15% to $130,239 in the three months ended September 30, 2024, compared to $112,994 in the three months ended September 30, 2023. Oil and gas revenues declined 28% to $393,729 in the nine months ended September 30, 2024, compared to $547,408 for the nine months ended September 30, 2023. The change in revenue was due to decreases in average sales price of natural gas (down 92%), oil production (down 28%), and natural gas production (down 13%), and partially offset by an increase in average sales price of oil (up 6%).

 

The following table sets forth the gross and net producing wells, net oil and gas production volumes and average hydrocarbon sales prices for the quarters ended September 30, 2024 and 2023:

 

  

Nine Months Ended

September 30,(1)  

  

Three Months Ended

September 30,(1)

 
   2024   2023   2024     2023 
Gross producing wells   4    4    4    4 
Net producing wells   0.68    0.68    0.68    0.68 
Net oil production (Bbl)   4,101    5,667    1,411    1,308 
Net gas production (Mcf)   34,883    40,188    13,719    6,732 
Average sales price – oil (per barrel)  $76.70   $72.09   $77.29   $73.01 
Average sales price – natural gas (per Mcf)  $0.11   $1.33   $-   $1.72 

 

(1)All well, production and price information excludes wells operated by Hupecol Meta.

 

The change in production volumes was primarily attributable to the natural decline in production.

 

The change in average oil and natural gas sales price realized reflects global energy trends.

 

Oil and gas sales revenues are entirely attributable to our U.S. properties.

 

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Lease Operating Expenses. Lease operating expenses increased 78% to $229,210 during the three months ended September 30, 2024, from $128,918 during the three months ended September 30, 2023. Lease operating expenses increased 55% to $534,443 during the nine months ended September 30, 2024, from $344,318 during the nine months ended September 30, 2023. The increase in lease operating expenses was attributable to additional severance tax expense from prior periods and an increase in production expenses during the nine months ended September 30, 2024.

 

Lease operating expenses are entirely attributable to our U.S. properties and exclude lease operating expenses of Hupecol Meta.

 

Depreciation and Depletion Expense. Depreciation and depletion expense was $39,994 and $23,749 for the three months ended September 30, 2024 and 2023, respectively, and $103,079 and $115,645 for the nine months ended September 30, 2024 and 2023, respectively. The change in depreciation and depletion was principally due to the decline in oil production during the nine months ended September 30, 2024.

 

General and Administrative Expenses (excluding stock-based compensation). General and administrative expense decreased by 10% to $280,260 during the three months ended September 30, 2024 from $312,344 during the three months ended September 30, 2023, and decreased 22% to $930,401 during the nine months ended September 30, 2024, from $1,196,463 during the nine months ended September 30, 2023. The decrease in general and administrative expense was primarily attributable to a bonus of $200,000 paid to our CEO in the second quarter of 2023, which was not repeated this year.

 

Stock-Based Compensation. Stock-based compensation decreased to $19,048 during the three months ended September 30, 2024 and $82,461 during nine months ended September 30, 2024 from $95,205 during the three months ended September 30, 2023 and $212,982 during the nine months ended September 30, 2023.

 

Other Income (Expense). Other income/expense, net, totaled $293,505 of income during the three months ended September 30, 2024, compared to $626,052 of income during the three months ended September 30, 2023, and totaled $1,007,102 during the nine months ended September 30, 2024, compared to $1,349,162 during the nine months ended September 30, 2023. Other income consisted of equity investment distributions totaling $922,959 and $1,235,101, respectively, from Hupecol Meta, representing our share of distributable net income for the nine months ended September 30, 2024 and 2023, respectively, and interest income on cash balances during the nine months ended September 30, 2024 and 2023. In mid-October 2024 the Company received a notification for a cash call from Hupecol Meta, LLC for the amount of $859,246 for anticipated costs related to the Jupiter #1 well.

 

Financial Condition

 

Liquidity and Capital Resources. At September 30, 2024, we had a cash balance of $2,847,296 and working capital of $2,772,692, compared to a cash balance of $4,059,182 and working capital of $3,917,231 at December 31, 2023.

 

Cash Flows. Operating activities used $139,522 of cash during the nine months ended September 30, 2024, compared to cash outflows of $211,463 during the nine months ended September 30, 2023. The change in operating cash flow was primarily attributable to a bonus of $200,000 paid to our CEO in the second quarter of 2023, which was not repeated this year.

 

Investing activities used cash of $1,072,364 during the nine months ended September 30, 2024, compared to $1,954,515 used during the nine months ended September 30, 2023. Cash used in investing activities for both periods was attributable to investments in Hupecol Meta to support our share of costs in Colombia.

 

Financing activities provided $0 during the nine months ended September 30, 2024, compared to $1,652,000 provided during the nine months ended September 30, 2023. Cash provided by financing activities during the nine months ended September 30, 2023 was attributable to funds received from the sale of common stock in the company’s 2022 ATM offering.

 

Long-Term Liabilities. At September 30, 2024, we had long-term liabilities of $71,620, compared to $152,904 at December 31, 2023. Long-term liabilities at September 30, 2024 and December 31, 2023, consisted of a reserve for plugging costs and the long-term lease liability.

 

Capital and Exploration Expenditures and Commitments. Our principal capital and exploration expenditures relate to ongoing efforts to acquire, drill and complete prospects. During 2023, capital expenditures relating to Hupecol Meta increased with our investments in Hupecol Meta to fund our share of costs associated with the initial wells drilled on the CPO-11 block. Based on discussions with Hupecol Meta, we anticipate that one additional vertical well will be drilled on the CPO-11 block by the end of 2024 pending efforts by Hupecol Meta to monetize its interest in the CPO-11 block. Our costs relating to the drilling of such well is estimated at approximately $550,000. There are no present plans to conduct additional drilling operations on our U.S. properties. The actual timing and number of well operations undertaken, if any, will be principally controlled by the operators of our acreage based on a number of factors, including but not limited to availability of financing, performance of existing wells on the subject acreage, energy prices and industry condition and outlook, costs of drilling and completion services and equipment and other factors beyond our control or that of our operators.

 

14
 

 

In addition to possible operations on our existing acreage holdings, we continue to evaluate drilling prospects in which may acquire an interest and participate.

 

During the three months ended September 30, 2024, we invested $1,072,364 for the acquisition and development of oil and gas properties, consisting of capital contributions to Hupecol Meta. The $1,072,364 invested in Hupecol Meta was capitalized to our equity investment in Hupecol Meta.

 

As our allocable share of well costs will vary depending on the timing and number of wells drilled as well as our working interest in each such well and the level of participation of other interest owners, we have not established a drilling budget but will budget on a well-by-well basis as our operators propose wells. We believe that we have the ability, through our cash on-hand, to fund operations and our cost for all planned wells expected to be drilled during 2024.

 

In the event that we pursue additional acreage acquisitions or expand our drilling plans, we may be required to secure additional funding beyond our resources on hand. While we may, among other efforts, seek additional funding from “at-the-market” sales of common stock, and private sales of equity and debt securities, we presently have limited authorized shares of common stock available for issuance to support equity capital raises and we have no commitments to provide additional funding, and there can be no assurance that we can secure the necessary capital to fund our share of drilling, acquisition or other costs on acceptable terms or at all. If, for any reason, we are unable to fund our share of drilling and completion costs and fail to satisfy commitments relative to our interest in our acreage, we may be subject to penalties or to the possible loss of some of our rights and interests in prospects with respect to which we fail to satisfy funding commitments and we may be required to curtail operations and forego opportunities.

 

Off-Balance Sheet Arrangements

 

We had no off-balance sheet arrangements or guarantees of third party obligations at September 30, 2024.

 

ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Commodity Price Risk

 

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

 

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

 

ITEM 4 CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

Under the supervision and the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation as of September 30, 2024 of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were not effective as of September 30, 2024. Such conclusion reflects the 2013 departure of our chief financial officer and assumption of duties of principal financial officer by our chief executive officer and the resulting lack of an appropriate level of accounting knowledge and experience commensurate with the financial reporting requirements for a public company, in particular with respect to technical accounting knowledge regarding accounting for certain transactions, and a related lack of segregation of duties. Until we are able to remedy these material weaknesses, we are relying on third party consultants to assist with financial reporting.

 

15
 

 

Changes in Internal Control over Financial Reporting

 

No change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) occurred during the quarter ended September 30, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

PART II

 

ITEM 6 EXHIBITS

  

Exhibit Number   Description
       
  31.1   Certification of CEO and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
       
  32.1   Certification of CEO and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
       
  101.INS   Inline XBRL Instance Document
       
  101.SCH   Inline XBRL Taxonomy Extension Schema Document
       
  101.CAL   Inline XBRL Taxonomy Extension Calculation Linkbase Document
       
  101.DEF   Inline XBRL Taxonomy Extension Definition Linkbase Document
       
  101.LAB   Inline XBRL Taxonomy Extension Label Linkbase Document
       
  101.PRE   Inline XBRL Taxonomy Extension Presentation Linkbase Document
       
  104   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

16
 

 

SIGNATURES

 

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

 

  HOUSTON AMERICAN ENERGY CORP.
Date: November 14, 2024    
  By: /s/ Steve Hartzell
    Steve Hartzell
    Chairman of the Board and Principle Financial Officer

 

17

 

 

Exhibit 31.1

 

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

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

 

I, Peter Longo, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Houston American Energy Corp.;
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respect the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
     
  b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

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

 

  a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
  b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

 

Date: November 14, 2024

 

  /s/ Peter Longo
  Peter Longo
  Chief Executive Officer

 

 

 

 

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

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

 

I, Steve Hartzell, certify that:

 

1.I have reviewed this quarterly report on Form 10-Q of Houston American Energy Corp.;
  
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
  
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respect the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
  
4.I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
   
b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
   
c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
   
d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

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

 

a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
   
b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

 

Date: November 14, 2024

 

  /s/ Steve Hartzell
 

Steve Hartzell
 

Chairman of the Board and Principle Financial Officer

 

 

 

Exhibit 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Peter Longo, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Houston American Energy Corp. on Form 10-Q for the quarterly period ended September 30, 2024 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents in all material respects the financial condition and results of operations of Houston American Energy Corp.

 

  By: /s/ Peter Longo
  Name:

Peter Longo

  Title:

Chief Executive Officer

  Dated: November 14, 2024

 

 

 

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Steve Hartzell, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Houston American Energy Corp. on Form 10-Q for the quarterly period ended September 30, 2024 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents in all material respects the financial condition and results of operations of Houston American Energy Corp.

 

  By: /s/ Steve Hartzell
  Name: Steve Hartzell
  Title: Chairman of the Board and Principle Financial Officer
  Dated: November 14, 2024

 

 

 

v3.24.3
Cover - $ / shares
 9 Months Ended
Sep. 30, 2024
Nov. 14, 2024
Cover [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Quarterly Report true  
Document Transition Report false  
Document Period End Date Sep. 30, 2024  
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2024  
Current Fiscal Year End Date --12-31  
Entity File Number 1-32955  
Entity Registrant Name HOUSTON AMERICAN ENERGY CORP.  
Entity Central Index Key 0001156041  
Entity Tax Identification Number 76-0675953  
Entity Incorporation, State or Country Code DE  
Entity Address, Address Line One 801 Travis Street  
Entity Address, Address Line Two Suite 1425  
Entity Address, City or Town Houston  
Entity Address, State or Province TX  
Entity Address, Postal Zip Code 77002  
City Area Code (713)  
Local Phone Number 222-6966  
Title of 12(b) Security Common Stock, $0.001 par value per share  
Trading Symbol HUSA  
Security Exchange Name NYSEAMER  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   13,086,533
Entity Listing, Par Value Per Share $ 0.001  
v3.24.3
Consolidated Balance Sheets - USD ($)
Sep. 30, 2024
Dec. 31, 2023
CURRENT ASSETS    
Cash $ 2,847,296 $ 4,059,182
Accounts receivable – oil and gas sales 139,886 71,736
Prepaid expenses and other current assets 78,414 35,244
TOTAL CURRENT ASSETS 3,065,596 4,166,162
PROPERTY AND EQUIPMENT    
Costs subject to amortization 62,777,666 62,776,561
Office equipment 90,004 90,004
Total 62,867,670 62,866,565
Accumulated depletion, depreciation, amortization, and impairment (61,410,343) (61,307,264)
PROPERTY AND EQUIPMENT, NET 1,457,327 1,559,301
Equity investment – Hupecol Meta LLC 5,577,722 4,505,358
Right of use asset 89,531 145,021
Other assets 3,167 3,167
TOTAL ASSETS 10,193,343 10,379,009
CURRENT LIABILITIES    
Accounts payable 192,329 156,572
Accrued expenses 17,065 17,083
Current portion of lease liability 83,510 75,276
TOTAL CURRENT LIABILITIES 292,904 248,931
LONG-TERM LIABILITIES    
Lease liability, net of current portion 7,431 71,083
Reserve for plugging and abandonment costs 64,189 63,084
TOTAL LONG-TERM LIABILITIES 71,620 134,167
TOTAL LIABILITIES 364,524 383,098
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY    
Common stock, par value $0.001; 20,000,000 shares authorized 10,906,353 shares issued and outstanding 10,907 10,907
Additional paid-in capital 87,066,462 86,984,001
Accumulated deficit (77,248,550) (76,998,997)
TOTAL SHAREHOLDERS’ EQUITY 9,828,819 9,995,911
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 10,193,343 $ 10,379,009
v3.24.3
Consolidated Balance Sheets (Parenthetical) - $ / shares
Sep. 30, 2024
Dec. 31, 2023
Statement of Financial Position [Abstract]    
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 20,000,000 20,000,000
Common stock, shares issued 10,906,353 10,906,353
Common stock, shares outstanding 10,906,353 10,906,353
v3.24.3
Consolidated Statements of Operations (Unaudited) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Income Statement [Abstract]        
OIL AND GAS REVENUE $ 130,239 $ 112,994 $ 393,729 $ 547,408
EXPENSES OF OPERATIONS        
Lease operating expense and severance tax 229,210 128,918 534,443 344,318
General and administrative expense 299,308 363,011 1,012,862 1,409,445
Depreciation and depletion 39,994 23,749 103,079 115,645
Total operating expenses 568,512 515,678 1,650,384 1,869,408
Loss from operations (438,273) (402,684) (1,256,655) (1,322,000)
OTHER INCOME, NET        
Interest income 24,688 39,426 84,143 114,061
Other income 268,817 586,626 922,959 1,235,101
Total other income 293,505 626,052 1,007,102 1,349,162
Net (loss) income before taxes (144,768) 223,368 (249,553) 27,162
Income tax expense
Net (loss) income $ (144,768) $ 223,368 $ (249,553) $ 27,162
Basic net income (loss) per common share $ (0.01) $ 0.02 $ (0.02) $ 0.00
Diluted net income (loss) per common share $ (0.01) $ 0.02 $ (0.02) $ 0.00
Basic weighted average number of common shares outstanding 10,906,353 10,906,353 10,906,353 10,742,407
Diluted weighted average number of common shares outstanding 10,906,353 10,906,353 10,906,353 10,742,407
v3.24.3
Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($)
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Total
Balance at Dec. 31, 2022 $ 10,328 $ 85,094,266 $ (73,787,720) $ 11,316,874
Balance, shares at Dec. 31, 2022 10,327,646      
Stock-based compensation 84,445 84,445
Net income (loss) 104,175 104,175
Issuance of common stock $ 295 901,205 901,500
Issuance of common stock, shares 294,872      
Balance at Mar. 31, 2023 $ 10,623 86,079,916 (73,683,545) 12,406,994
Balance, shares at Mar. 31, 2023 10,662,518      
Balance at Dec. 31, 2022 $ 10,328 85,094,266 (73,787,720) 11,316,874
Balance, shares at Dec. 31, 2022 10,327,646      
Net income (loss)       27,162
Balance at Sep. 30, 2023 $ 10,907 86,958,669 (73,760,558) 13,209,018
Balance, shares at Sep. 30, 2023 10,906,353      
Balance at Mar. 31, 2023 $ 10,623 86,079,916 (73,683,545) 12,406,994
Balance, shares at Mar. 31, 2023 10,662,518      
Stock-based compensation 77,870 77,870
Net income (loss) (89,085) (89,085)
Issuance of common stock $ 284 750,216 750,500
Issuance of common stock, shares 283,835      
Balance at Jun. 30, 2023 $ 10,907 86,908,002 (73,983,926) 12,934,983
Balance, shares at Jun. 30, 2023 10,906,353      
Stock-based compensation 50,667 50,667
Net income (loss) 223,368 223,368
Balance at Sep. 30, 2023 $ 10,907 86,958,669 (73,760,558) 13,209,018
Balance, shares at Sep. 30, 2023 10,906,353      
Balance at Dec. 31, 2023 $ 10,907 86,984,001 (76,998,997) 9,995,911
Balance, shares at Dec. 31, 2023 10,906,353      
Stock-based compensation 50,667 50,667
Net income (loss) (15,699) (15,699)
Balance at Mar. 31, 2024 $ 10,907 87,034,668 (77,014,696) 10,030,879
Balance, shares at Mar. 31, 2024 10,906,353      
Balance at Dec. 31, 2023 $ 10,907 86,984,001 (76,998,997) 9,995,911
Balance, shares at Dec. 31, 2023 10,906,353      
Net income (loss)       (249,553)
Balance at Sep. 30, 2024 $ 10,907 87,066,462 (77,248,550) 9,828,819
Balance, shares at Sep. 30, 2024 10,906,353      
Balance at Mar. 31, 2024 $ 10,907 87,034,668 (77,014,696) 10,030,879
Balance, shares at Mar. 31, 2024 10,906,353      
Stock-based compensation 12,746 12,746
Net income (loss) (89,086) (89,086)
Balance at Jun. 30, 2024 $ 10,907 87,047,414 (77,103,782) 9,954,539
Balance, shares at Jun. 30, 2024 10,906,353      
Stock-based compensation 19,048 19,048
Net income (loss) (144,768) (144,768)
Balance at Sep. 30, 2024 $ 10,907 $ 87,066,462 $ (77,248,550) $ 9,828,819
Balance, shares at Sep. 30, 2024 10,906,353      
v3.24.3
Consolidated Statements of Cash Flows (Unaudited) - USD ($)
 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
CASH FLOWS FROM OPERATING ACTIVITIES    
Net (loss) income $ (249,553) $ 27,162
Adjustments to reconcile net income (loss) to net cash used in operations:    
Depreciation and depletion 103,079 115,645
Accretion of asset retirement obligation 1,105 2,336
Stock-based compensation 82,461 212,982
Amortization of right of use asset 55,490 49,758
Changes in operating assets and liabilities:    
Decrease (increase) in accounts receivable (68,151) 125,355
Decrease (increase) in accrued earnings distributions from Hupecol Meta, LLC (311,544)
Increase in prepaid expenses and other current assets (43,170) (34,659)
Increase in accounts payable and accrued expenses 34,634 72,541
Decrease in operating lease liability (55,418) (48,113)
Net cash provided by (used in) operating activities (139,522) (211,463)
CASH FLOWS FROM INVESTING ACTIVITIES    
Payments for capital contribution for equity investment (1,072,364) (1,954,515)
Net cash used in investing activities (1,072,364) (1,954,515)
CASH FLOWS FROM FINANCING ACTIVITIES    
Proceeds from issuance of common stock for cash, net of offering costs 1,652,000
Net cash provided by financing activities 1,652,000
Increase (decrease) in cash (1,211,886) (91,052)
Cash, beginning of period 4,059,182 4,547,210
Cash, end of period 2,847,296 4,456,158
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES    
Interest paid
Taxes paid
Changes in estimate of asset retirement obligations, net 10,826
Change in accrued oil and gas development costs 1,105 333,813
Changes in accrued equity investment contributions and distributions $ 333,813
v3.24.3
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
 9 Months Ended
Sep. 30, 2024
Accounting Policies [Abstract]  
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

 

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

 

These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and footnotes, which are included as part of the Company’s Form 10-K for the year ended December 31, 2023.

 

Consolidation

 

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

 

Liquidity and Capital Requirements

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the issuance date of these consolidated financial statements. The Company has incurred continuing losses since 2011, with an accumulated deficit of $77.2 million as of September 30, 2024.

 

The Company believes that it has the ability to fund, from cash on hand, its operating costs and anticipated drilling operations for at least the next twelve months following the issuance of these financial statements.

 

The actual timing and number of wells drilled during 2024 and beyond will be principally controlled by the operators of the Company’s acreage, based on a number of factors, including but not limited to availability of financing, performance of existing wells on the subject acreage, energy prices and industry condition and outlook, costs of drilling and completion services and equipment and other factors beyond the Company’s control or that of its operators.

 

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

 

Accounting Principles and Use of Estimates

 

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

 

 

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to a concentration of credit risk include cash, cash equivalents (if any) and any marketable securities (if any). The Company had cash deposits of $2,347,296 in excess of the FDIC’s current insured limit on interest bearing accounts of $250,000 as of September 30, 2024. The Company has not experienced any losses on its deposits of cash and cash equivalents.

 

Earnings (Loss) per Share

 

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

 

Recently Issued Accounting Pronouncements

 

In December 2023, the Financial Accounting Standards Board “FASB”, issued Accounting Standards Update “ASU”, No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). The guidance in ASU 2023-09 improves the transparency of income tax disclosures by greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. The standard is effective for public companies for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact that the adoption of ASU 2023-09 may have on its consolidated financial statements and related disclosures. 

 

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280). The amendments in this update expand segment disclosure requirements, including new segment disclosure requirements for entities with a single reportable segment among other disclosure requirements. This update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

 

Subsequent Events

 

The Company has evaluated all transactions from September 30, 2024 through the financial statement issuance date for subsequent event disclosure consideration. On November 11, 2024, subsequent to the period covered by this report, the Company sold 2,180,180 shares of our common stock to one investor for aggregate proceeds of approximately $2.5 million. In addition, James A. Schoonover resigned as a director on November 11, 2024, and Robert J. Bailey was appointed as a director.

 
v3.24.3
REVENUE FROM CONTRACTS WITH CUSTOMERS
 9 Months Ended
Sep. 30, 2024
Revenue from Contract with Customer [Abstract]  
REVENUE FROM CONTRACTS WITH CUSTOMERS

NOTE 2 – REVENUE FROM CONTRACTS WITH CUSTOMERS

 

Disaggregation of Revenue from Contracts with Customers

 

The following table disaggregates revenue by significant product type for the three and Nine-month periods ended September 30, 2024 and 2023:

 

   2024   2023   2024   2023 
   Three Months Ended September 30,   Nine Months Ended September 30, 
   2024   2023   2024   2023 
Oil sales  $108,553    95,506   $314,524    408,555 
Natural gas sales   (4,237)   11,544    3,831    53,418 
Natural gas liquids sales   25,923    5,944    75,374    85,435 
Total revenue from customers  $ 130,239    112,994   $393,729    547,408 

 

There were no significant contract liabilities or transaction price allocations to any remaining performance obligations as of September 30, 2024 or 2023.

 
v3.24.3
OIL AND GAS PROPERTIES
 9 Months Ended
Sep. 30, 2024
Extractive Industries [Abstract]  
OIL AND GAS PROPERTIES

NOTE 3 – OIL AND GAS PROPERTIES

 

During the three and nine months ended September 30, 2024, the Company recorded depletion expense of $39,994 and $103,079, respectively. During the three and nine months ended September 30, 2023, the Company recorded depletion expense of $23,749 and $115,645, respectively.

 

Geographical Information

 

The Company currently has properties in the United States. Revenues for the nine months ended September 30, 2024 and long-lived assets (net of depletion, amortization, and impairments) as of September 30, 2024 are presented below:

 

   Nine Months Ended September 30, 2024   As of September 30, 2024 
    Revenues    Long Lived Assets, Net 
United States  $393,729   $1,457,327 
Total  $393,729   $1,457,327 

 

Revenues and long-lived assets attributable to the Company’s investments in Hupecol Meta LLC (“Hupecol Meta”), and its underlying assets and operations in Colombia, are excluded from the above table.

 

 
v3.24.3
EQUITY INVESTMENT
 9 Months Ended
Sep. 30, 2024
Equity Investment  
EQUITY INVESTMENT

NOTE 4 – EQUITY INVESTMENT

 

The Company’s carrying value of its holdings in Hupecol Meta is reflected in the line item “equity investment – Hupecol Meta LLC” on the Company’s Consolidated Balance Sheet.

 

During the three months ended September 30, 2024, the Company made capital contributions totaling $1,072,364, to Hupecol Meta to cover its share of required capital contributions. During the three and nine months ended September 30, 2024, the Company received distributions, totaling $268,817 and $992,959, respectively, from Hupecol Meta representing the Company’s share of distributable net profits of Hupecol Meta. During the three and nine months ended September 30, 2023, the Company received distributions, totaling $586,626 and $1,235,101, respectively.

 
v3.24.3
STOCK-BASED COMPENSATION EXPENSE
 9 Months Ended
Sep. 30, 2024
Share-Based Payment Arrangement [Abstract]  
STOCK-BASED COMPENSATION EXPENSE

NOTE 5 – STOCK-BASED COMPENSATION EXPENSE

 

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

 

In 2017, the Company adopted the Houston American Energy Corp. 2017 Equity Incentive Plan (the “2017 Plan”). The terms of the 2017 Plan, allow for the issuance of up to 400,000 shares of the Company’s common stock pursuant to the grant of stock options and restricted stock.

 

In 2021, the Company adopted the Houston American Energy 2021 Equity Incentive Plan (the “2021 Plan” and, together with the 2008 Plan and the 2017 Plan, the “Plans”). The terms of the 2021 Plan allow for the issuance of up to 500,000 shares of the Company’s common stock pursuant to the grant of stock options and restricted stock.

 

Persons eligible to participate in the Plans are key employees, consultants and directors of the Company.

 

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

 

Stock Option Activity

 

A summary of stock option activity and related information for the nine months ended September 30, 2024 is presented below:

 

   Options   Weighted-Average Exercise Price  

 

Aggregate Intrinsic Value

 
             
Outstanding at January 1, 2024   1,000,807   $2.46      
Granted   60,000    1.21      
Exercised   —    —      
Expired   (152,668)   3.98      
Outstanding at September 30, 2024   908,139   $2.12   $— 
Exercisable at September 30, 2024   862,813   $2.12   $— 

 

During the nine months ended September 30, 2024, options to purchase an aggregate of 60,000 shares of the Company’s common stock were granted to the Company’s directors. The options have a ten-year life, are exercisable at $1.21 per share, vest 20% on the date of grant and 80% nine months from the date of grant. The grant date fair value of these stock options was $63,730 based on the Black-Scholes Option Pricing model based on the following assumptions: market value of common stock on grant date – $1.21; risk free interest rate based on the applicable US Treasury bill rate – 0%; dividend yield – 0%; volatility factor based on the trading history of the Company – 97.8%; weighted average expected life in years – 10; and expected forfeiture rate – 0%.

 

During the three and nine-months ended September 30, 2024, the Company recognized $19,048 and $82,461, respectively, of stock-based compensation expense attributable to the vesting amortization of stock options. As of September 30, 2024, total unrecognized stock-based compensation expense related to non-vested stock options was approximately $31,940. The unrecognized expense is expected to be recognized over a weighted average period of 0.72 years and the weighted average remaining contractual term of the outstanding options and exercisable options at September 30, 2024 is 5.19 years and 5.46 years, respectively.

 

 

As of September 30, 2024, there were 61,333 shares of common stock available for issuance pursuant to future stock or option grants under the Plans.

 

Stock-Based Compensation Expense

 

The following table reflects total stock-based compensation recorded by the Company for the three and nine months ended September 30, 2024 and 2023:

 

                 2024   2023 
   

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 
    2024   2023    2024   2023 
                       
Stock-based compensation expense included in general and administrative expense   $ 19,048     50,667    $82,461   $212,982 
Earnings per share effect of share-based compensation expense – basic and diluted   $ (0.00 )   (0.00 )  $(0.00)  (0.00)

 
v3.24.3
CAPITAL STOCK
 9 Months Ended
Sep. 30, 2024
Equity [Abstract]  
CAPITAL STOCK

NOTE 6 – CAPITAL STOCK

 

Warrants

 

A summary of warrant activity and related information for 2024 is presented below:

 

   Warrants   Weighted-Average
Exercise Price		   Aggregate
Intrinsic Value		 
             
Outstanding at January 1, 2024   94,400   $2.46      
Issued   —    —      
Exercised   —    —      
Expired   —    —      
Outstanding at September 30, 2024   94,400   $2.46   $— 
Exercisable at September 30, 2024   94,400   $2.46   $— 

 
v3.24.3
EARNINGS PER COMMON SHARE
 9 Months Ended
Sep. 30, 2024
Earnings Per Share [Abstract]  
EARNINGS PER COMMON SHARE

NOTE 7 – EARNINGS PER COMMON SHARE

 

Earnings (loss) per common share-basic is calculated by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Net income (loss) per common share-diluted assumes the conversion of all potentially dilutive securities and is calculated by dividing net (loss) income by the sum of the weighted average number of shares of common stock, as defined above, outstanding plus potentially dilutive securities. Net income (loss) per common share-diluted considers the impact of potentially dilutive securities except in periods in which there is a loss because the inclusion of the potential common shares, as defined above, would have an anti-dilutive effect.

 

 

The calculation of earnings (loss) per common share for the periods indicated below were as follows:

 

   2024   2023   2024   2023 
  

Three Months Ended

September 30,

  

Nine Months Ended

September 30,

 
   2024   2023   2024   2023 
Numerator:                    
Net (loss) income  $(144,768)   223,368   $(249,553)   27,162 
                     
Effect of common stock equivalents   —    —    —    — 
Net (loss) income adjusted for common stock equivalents  $(144,768)   223,368   $(249,553)   27,162 
                     
Denominator:                    
Weighted average common shares – basic   10,906,353    10,906,353    10,906,353    10,742,407 
                     
Dilutive effect of common stock equivalents:                    
Options and warrants   —    43,603    —    204,584 
                     
Denominator:                    
Weighted average common shares – diluted   10,906,353    10,949,956    10,906,353    10,946,991 
                     
(Loss) earnings per common share – basic  $(0.01)   0.02   $(0.02)   0.00 
                     
(Loss) earnings per common share – diluted  $(0.01)   0.02   $(0.02)   0.00 

 

For the nine months ended September 30, 2024 and 2023, the following warrants and options to purchase shares of common stock were excluded from the computation of diluted net income (loss) per common share, as the inclusion of such shares would be anti-dilutive:

 

   2024   2023   2024   2023 
  

Nine Months Ended

September 30,

  

Three Months Ended

September 30,

 
   2024   2023   2024   2023 
Stock warrants   94,400    94,400    94,400    94,400 
Stock options   908,139    485,481    908,139    473,481 
Total   1,002,539    579,881    1,002,539    473,481 

 
v3.24.3
COMMITMENTS AND CONTINGENCIES
 9 Months Ended
Sep. 30, 2024
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

NOTE 8 – COMMITMENTS AND CONTINGENCIES

 

Lease Commitment

 

The Company leases office facilities under an operating lease agreement that expires October 31, 2025. During the three and nine months ended September 30, 2024, the operating cash outflows related to operating lease liabilities of $22,137 and $66,411, respectively, and the expense for the right of use asset for operating leases totaled $19,051 and $55,491, respectively. As of September 30, 2024, the Company’s operating lease had a weighted-average remaining term of 1.33 years and a weighted average discount rate of 12%. As of September 30, 2024, the lease agreement requires future payments as follows:

 

Year  Amount 
2024   22,389 
2025   75,051 
Total future lease payments   97,440 
Less: imputed interest   (6,499)
Present value of future operating lease payments   90,941 
Less: current portion of operating lease liabilities   (83,510)
Operating lease liabilities, net of current portion  $7,431 
Right of use assets  $89,531 

 

Total base rental expense was $22,646 and $22,161 for the three months ended September 30, 2024 and 2023, respectively, and $66,411 and $66,483 for the nine months ended September 30, 2024 and 2023, respectively. The Company does not have any capital leases or other operating lease commitments.
v3.24.3
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies)
 9 Months Ended
Sep. 30, 2024
Accounting Policies [Abstract]  
Consolidation

Consolidation

 

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

 
Liquidity and Capital Requirements

Liquidity and Capital Requirements

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the issuance date of these consolidated financial statements. The Company has incurred continuing losses since 2011, with an accumulated deficit of $77.2 million as of September 30, 2024.

 

The Company believes that it has the ability to fund, from cash on hand, its operating costs and anticipated drilling operations for at least the next twelve months following the issuance of these financial statements.

 

The actual timing and number of wells drilled during 2024 and beyond will be principally controlled by the operators of the Company’s acreage, based on a number of factors, including but not limited to availability of financing, performance of existing wells on the subject acreage, energy prices and industry condition and outlook, costs of drilling and completion services and equipment and other factors beyond the Company’s control or that of its operators.

 

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

 
Accounting Principles and Use of Estimates

Accounting Principles and Use of Estimates

 

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

 

 
Concentration of Credit Risk

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to a concentration of credit risk include cash, cash equivalents (if any) and any marketable securities (if any). The Company had cash deposits of $2,347,296 in excess of the FDIC’s current insured limit on interest bearing accounts of $250,000 as of September 30, 2024. The Company has not experienced any losses on its deposits of cash and cash equivalents.

 
Earnings (Loss) per Share

Earnings (Loss) per Share

 

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

 
Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

 

In December 2023, the Financial Accounting Standards Board “FASB”, issued Accounting Standards Update “ASU”, No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). The guidance in ASU 2023-09 improves the transparency of income tax disclosures by greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. The standard is effective for public companies for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact that the adoption of ASU 2023-09 may have on its consolidated financial statements and related disclosures. 

 

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280). The amendments in this update expand segment disclosure requirements, including new segment disclosure requirements for entities with a single reportable segment among other disclosure requirements. This update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

 
Subsequent Events

Subsequent Events

 

The Company has evaluated all transactions from September 30, 2024 through the financial statement issuance date for subsequent event disclosure consideration. On November 11, 2024, subsequent to the period covered by this report, the Company sold 2,180,180 shares of our common stock to one investor for aggregate proceeds of approximately $2.5 million. In addition, James A. Schoonover resigned as a director on November 11, 2024, and Robert J. Bailey was appointed as a director.
v3.24.3
REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables)
 9 Months Ended
Sep. 30, 2024
Revenue from Contract with Customer [Abstract]  
SCHEDULE OF DISAGGREGATES REVENUE BY SIGNIFICANT PRODUCT

The following table disaggregates revenue by significant product type for the three and Nine-month periods ended September 30, 2024 and 2023:

 

   2024   2023   2024   2023 
   Three Months Ended September 30,   Nine Months Ended September 30, 
   2024   2023   2024   2023 
Oil sales  $108,553    95,506   $314,524    408,555 
Natural gas sales   (4,237)   11,544    3,831    53,418 
Natural gas liquids sales   25,923    5,944    75,374    85,435 
Total revenue from customers  $ 130,239    112,994   $393,729    547,408 
v3.24.3
OIL AND GAS PROPERTIES (Tables)
 9 Months Ended
Sep. 30, 2024
Extractive Industries [Abstract]  
SCHEDULE OF REVENUES AND LONG LIVED ASSETS ATTRIBUTABLE TO GEOGRAPHICAL AREA

The Company currently has properties in the United States. Revenues for the nine months ended September 30, 2024 and long-lived assets (net of depletion, amortization, and impairments) as of September 30, 2024 are presented below:

 

   Nine Months Ended September 30, 2024   As of September 30, 2024 
    Revenues    Long Lived Assets, Net 
United States  $393,729   $1,457,327 
Total  $393,729   $1,457,327 
v3.24.3
STOCK-BASED COMPENSATION EXPENSE (Tables)
 9 Months Ended
Sep. 30, 2024
Share-Based Payment Arrangement [Abstract]  
SCHEDULE OF STOCK OPTION ACTIVITY

A summary of stock option activity and related information for the nine months ended September 30, 2024 is presented below:

 

   Options   Weighted-Average Exercise Price  

 

Aggregate Intrinsic Value

 
             
Outstanding at January 1, 2024   1,000,807   $2.46      
Granted   60,000    1.21      
Exercised   —    —      
Expired   (152,668)   3.98      
Outstanding at September 30, 2024   908,139   $2.12   $— 
Exercisable at September 30, 2024   862,813   $2.12   $— 
SCHEDULE OF STOCK-BASED COMPENSATION

The following table reflects total stock-based compensation recorded by the Company for the three and nine months ended September 30, 2024 and 2023:

 

                 2024   2023 
   

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 
    2024   2023    2024   2023 
                       
Stock-based compensation expense included in general and administrative expense   $ 19,048     50,667    $82,461   $212,982 
Earnings per share effect of share-based compensation expense – basic and diluted   $ (0.00 )   (0.00 )  $(0.00)  (0.00)
v3.24.3
CAPITAL STOCK (Tables)
 9 Months Ended
Sep. 30, 2024
Equity [Abstract]  
SCHEDULE OF WARRANT ACTIVITY

A summary of warrant activity and related information for 2024 is presented below:

 

   Warrants   Weighted-Average
Exercise Price		   Aggregate
Intrinsic Value		 
             
Outstanding at January 1, 2024   94,400   $2.46      
Issued   —    —      
Exercised   —    —      
Expired   —    —      
Outstanding at September 30, 2024   94,400   $2.46   $— 
Exercisable at September 30, 2024   94,400   $2.46   $— 
v3.24.3
EARNINGS PER COMMON SHARE (Tables)
 9 Months Ended
Sep. 30, 2024
Earnings Per Share [Abstract]  
SCHEDULE OF EARNINGS (LOSS) PER COMMON SHARE

The calculation of earnings (loss) per common share for the periods indicated below were as follows:

 

   2024   2023   2024   2023 
  

Three Months Ended

September 30,

  

Nine Months Ended

September 30,

 
   2024   2023   2024   2023 
Numerator:                    
Net (loss) income  $(144,768)   223,368   $(249,553)   27,162 
                     
Effect of common stock equivalents   —    —    —    — 
Net (loss) income adjusted for common stock equivalents  $(144,768)   223,368   $(249,553)   27,162 
                     
Denominator:                    
Weighted average common shares – basic   10,906,353    10,906,353    10,906,353    10,742,407 
                     
Dilutive effect of common stock equivalents:                    
Options and warrants   —    43,603    —    204,584 
                     
Denominator:                    
Weighted average common shares – diluted   10,906,353    10,949,956    10,906,353    10,946,991 
                     
(Loss) earnings per common share – basic  $(0.01)   0.02   $(0.02)   0.00 
                     
(Loss) earnings per common share – diluted  $(0.01)   0.02   $(0.02)   0.00 
SCHEDULE OF ANTI-DILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF DILUTED NET INCOME LOSS

For the nine months ended September 30, 2024 and 2023, the following warrants and options to purchase shares of common stock were excluded from the computation of diluted net income (loss) per common share, as the inclusion of such shares would be anti-dilutive:

 

   2024   2023   2024   2023 
  

Nine Months Ended

September 30,

  

Three Months Ended

September 30,

 
   2024   2023   2024   2023 
Stock warrants   94,400    94,400    94,400    94,400 
Stock options   908,139    485,481    908,139    473,481 
Total   1,002,539    579,881    1,002,539    473,481 
v3.24.3
COMMITMENTS AND CONTINGENCIES (Tables)
 9 Months Ended
Sep. 30, 2024
Commitments and Contingencies Disclosure [Abstract]  
SCHEDULE OF FUTURE PAYMENTS UNDER LEASE AGREEMENT

 

Year  Amount 
2024   22,389 
2025   75,051 
Total future lease payments   97,440 
Less: imputed interest   (6,499)
Present value of future operating lease payments   90,941 
Less: current portion of operating lease liabilities   (83,510)
Operating lease liabilities, net of current portion  $7,431 
Right of use assets  $89,531 
v3.24.3
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)
Nov. 11, 2024
Sep. 30, 2024
Dec. 31, 2023
Accumulated deficit   $ 77,248,550 $ 76,998,997
Cash deposits   2,347,296  
Current insured limit on interest bearing accounts   $ 250,000  
Common Stock [Member] | Subsequent Event [Member]      
Stock shares 2,180,180    
Stock value $ 2,500,000    
v3.24.3
SCHEDULE OF DISAGGREGATES REVENUE BY SIGNIFICANT PRODUCT (Details) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Disaggregation of Revenue [Line Items]        
Total revenue from customers $ 130,239 $ 112,994 $ 393,729 $ 547,408
Oil Sales [Member]        
Disaggregation of Revenue [Line Items]        
Total revenue from customers 108,553 95,506 314,524 408,555
Natural Gas Sales [Member]        
Disaggregation of Revenue [Line Items]        
Total revenue from customers (4,237) 11,544 3,831 53,418
Natural Gas Liquids Sales [Member]        
Disaggregation of Revenue [Line Items]        
Total revenue from customers $ 25,923 $ 5,944 $ 75,374 $ 85,435
v3.24.3
REVENUE FROM CONTRACTS WITH CUSTOMERS (Details Narrative) - USD ($)
Sep. 30, 2024
Sep. 30, 2023
Revenue from Contract with Customer [Abstract]    
Remaining performance obligations $ 0 $ 0
v3.24.3
SCHEDULE OF REVENUES AND LONG LIVED ASSETS ATTRIBUTABLE TO GEOGRAPHICAL AREA (Details) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Oil and Gas, Full Cost Method, Amortization Expense [Line Items]        
Revenues $ 130,239 $ 112,994 $ 393,729 $ 547,408
Long Lived Assets, Net 1,457,327   1,457,327  
UNITED STATES        
Oil and Gas, Full Cost Method, Amortization Expense [Line Items]        
Revenues     393,729  
Long Lived Assets, Net $ 1,457,327   $ 1,457,327  
v3.24.3
OIL AND GAS PROPERTIES (Details Narrative) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Extractive Industries [Abstract]        
Depletion expense $ 39,994 $ 23,749 $ 103,079 $ 115,645
v3.24.3
EQUITY INVESTMENT (Details Narrative) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Equity Investment        
Direct investment operations $ 1,072,364      
Total distributions received during period $ 268,817 $ 586,626 $ 992,959 $ 1,235,101
v3.24.3
SCHEDULE OF STOCK OPTION ACTIVITY (Details)
 9 Months Ended
Sep. 30, 2024
USD ($)
$ / shares
shares
Share-Based Payment Arrangement [Abstract]  
Options, Outstanding, Beginning Balance | shares 1,000,807
Weighted-Average Exercise Price, Outstanding, Beginning Balance | $ / shares $ 2.46
Options, Granted | shares 60,000
Weighted-Average Exercise Price, Granted | $ / shares $ 1.21
Options, Exercised | shares
Weighted-Average Exercise Price, Exercised | $ / shares
Options, Expired | shares (152,668)
Weighted-Average Exercise Price, Expired | $ / shares $ 3.98
Options, Outstanding, Ending Balance | shares 908,139
Weighted-Average Exercise Price, Outstanding, Ending Balance | $ / shares $ 2.12
Aggregate Intrinsic Value, Outstanding, Ending Balance | $
Options, Exercisable, Ending Balance | shares 862,813
Weighted-Average Exercise Price, Exercisable, Ending Balance | $ / shares $ 2.12
Aggregate Intrinsic Value, Exercisable, Ending Balance | $
v3.24.3
SCHEDULE OF STOCK-BASED COMPENSATION (Details) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Share-Based Payment Arrangement [Abstract]        
Stock-based compensation expense included in general and administrative expense $ 19,048 $ 50,667 $ 82,461 $ 212,982
Earnings per share effect of share-based compensation expense - basic $ (0.00) $ (0.00) $ (0.00) $ (0.00)
Earnings per share effect of share-based compensation expense - diluted $ (0.00) $ (0.00) $ (0.00) $ (0.00)
v3.24.3
STOCK-BASED COMPENSATION EXPENSE (Details Narrative) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2024
Dec. 31, 2021
Dec. 31, 2017
Dec. 31, 2008
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]          
Number of options granted during period   60,000      
Stock option exercisable price per share $ 2.12 $ 2.12      
Directors [Member]          
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]          
Number of options granted during period   60,000      
Option term   10 years      
Stock option exercisable price per share 1.21 $ 1.21      
Description on vesting of stock options   vest 20% on the date of grant and 80% nine months from the date of grant.      
Fair value of options granted   $ 63,730      
Market value of common stock $ 1.21 $ 1.21      
Risk free interest rate   0.00%      
Expected dividend yield   0.00%      
Expected stock volatility   97.80%      
Stock option life, term   10 years      
Expected forfeiture rate   0.00%      
2008 Equity Incentive Plan [Member] | Maximum [Member]          
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]          
Number of options authorized to purchase shares of common stock         480,000
2017 Equity Incentive Plan [Member] | Maximum [Member]          
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]          
Number of options authorized to purchase shares of common stock       400,000  
2021 Equity Incentive Plan [Member] | Maximum [Member]          
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]          
Number of options authorized to purchase shares of common stock     500,000    
2021 Equity Incentive Plan [Member]          
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]          
Share based compensation $ 19,048 $ 82,461      
Unrecognized share-based compensation expense related to non-vested stock options $ 31,940 $ 31,940      
Weighted average period for unrecognition of compensation expense   8 months 19 days      
Weighted average remaining contractual term of the outstanding options   5 years 2 months 8 days      
Weighted average remaining contractual term of the exercisable options   5 years 5 months 15 days      
Common stock available for issuance to future 61,333 61,333      
v3.24.3
SCHEDULE OF WARRANT ACTIVITY (Details) - Warrant [Member]
 9 Months Ended
Sep. 30, 2024
USD ($)
$ / shares
shares
Accumulated Other Comprehensive Income (Loss) [Line Items]  
Warrants Outstanding, Beginning | shares 94,400
Weighted-Average Exercise Price Outstanding, Beginning | $ / shares $ 2.46
Warrants Outstanding, Issued | shares
Weighted-Average Exercise Price, Issued | $ / shares
Warrants Outstanding, Exercised | shares
Weighted-Average Exercise Price, Exercised | $ / shares
Warrants Outstanding, Expired | shares
Weighted-Average Exercise Price, Expired | $ / shares
Warrants Outstanding, Ending | shares 94,400
Weighted-Average Exercise Price Outstanding, Ending | $ / shares $ 2.46
Aggregate Intrinsic Value Outstanding at end of the period | $
Warrants Outstanding, Exercisable | shares 94,400
Weighted-Average Exercise Price Outstanding, Exercisable | $ / shares $ 2.46
Aggregate Intrinsic Value Outstanding Exercisable at end of the period | $
v3.24.3
SCHEDULE OF EARNINGS (LOSS) PER COMMON SHARE (Details) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Jun. 30, 2024
Mar. 31, 2024
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Sep. 30, 2024
Sep. 30, 2023
Earnings Per Share [Abstract]                
Net (loss) income $ (144,768) $ (89,086) $ (15,699) $ 223,368 $ (89,085) $ 104,175 $ (249,553) $ 27,162
Effect of common stock equivalents        
Net (loss) income adjusted for common stock equivalents $ (144,768)     $ 223,368     $ (249,553) $ 27,162
Weighted average common shares – basic 10,906,353     10,906,353     10,906,353 10,742,407
Options and warrants     43,603     204,584
Weighted average common shares – diluted 10,906,353     10,949,956     10,906,353 10,946,991
(Loss) earnings per common share - basic $ (0.01)     $ 0.02     $ (0.02) $ 0.00
(Loss) earnings per common share - diluted $ (0.01)     $ 0.02     $ (0.02) $ 0.00
v3.24.3
SCHEDULE OF ANTI-DILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF DILUTED NET INCOME LOSS (Details) - shares
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Total 1,002,539 473,481 1,002,539 579,881
Warrant [Member]        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Total 94,400 94,400 94,400 94,400
Share-Based Payment Arrangement, Option [Member]        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Total 908,139 473,481 908,139 485,481
v3.24.3
SCHEDULE OF FUTURE PAYMENTS UNDER LEASE AGREEMENT (Details) - USD ($)
Sep. 30, 2024
Dec. 31, 2023
Commitments and Contingencies Disclosure [Abstract]    
2024 $ 22,389  
2025 75,051  
Total future lease payments 97,440  
Less: imputed interest (6,499)  
Present value of future operating lease payments 90,941  
Less: current portion of operating lease liabilities (83,510) $ (75,276)
Operating lease liabilities, net of current portion 7,431 71,083
Right of use assets $ 89,531 $ 145,021
v3.24.3
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]        
Expense of right of use asset     $ 55,490 $ 49,758
Rental expense $ 22,646 $ 22,161 $ 66,411 $ 66,483
Operating Lease Agreement [Member]        
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]        
Operating lease agreement expire date     Oct. 31, 2025  
Operating cash outflows related to operating lease liabilities 22,137   $ 66,411  
Expense of right of use asset $ 19,051   $ 55,491  
Weighted-average remaining term 1 year 3 months 29 days   1 year 3 months 29 days  
Weighted average discount rate 12.00%   12.00%  
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