Business Context and Reporting Period
Company: Houston American Energy Corp. (Note: Metadata lists "Abundia Global Impact Group, Inc." but the filing text identifies Houston American Energy Corp.)
Filing Type: Form 8-K (Current Report)
Date of Report: February 3, 2006 (Signed November 9, 2006)
Subject: Non-reliance on previously issued financial statements for the quarters ended June 30, 2005, and September 30, 2005.
Key Financial Metrics
The filing does not provide specific revenue, profit, cash flow, or debt figures. It addresses a qualitative accounting error regarding financial derivatives embedded in convertible notes and warrants issued in 2005.
- Accounting Error: Failure to identify and account for embedded derivatives in accordance with SFAS No. 133 and EITF 00-19.
- Impact: Failure to record a derivative liability, deemed interest expense, and charges associated with changes in the value of embedded derivatives.
Material Changes Versus Prior Period
The filing announces a material restatement of financial statements for the periods ended June 30, 2005, and September 30, 2005. The previously filed Form 10-QSB reports for these periods are no longer reliable. The restatement will result in:
- Booking of a liability associated with embedded derivatives.
- A corresponding discount in related convertible notes payable.
- A charge to earnings for deemed interest arising from the derivatives.
- An additional expense item representing the change in the value of the derivative.
Guidance, Outlook, and Management Commentary
Management Action: The Company intends to amend its Form 10-QSB for the periods ended June 30, 2005, and September 30, 2005, to include restated financial statements as soon as possible.
Context: The error was identified by the independent registered public accounting firm during the preparation of the Form 10-KSB for the year ended December 31, 2005. The Company notes that the embedded derivatives were properly accounted for as of December 31, 2005, and in the June 30, 2006 Form 10-QSB. The decision to file this 8-K and amend prior 10-QSBs followed the hiring of a full-time Chief Financial Officer and the preparation of the September 30, 2006 Form 10-QSB.
Important Facts for Investor Verification
- Verify the filing of amended Form 10-QSB reports for the quarters ended June 30, 2005, and September 30, 2005.
- Review the magnitude of the restated derivative liability and the associated charge to earnings once the amended reports are filed.
- Confirm the impact of the restatement on the Company's convertible notes payable and overall liquidity position.
- Note that the filing text does not provide a clear value for the specific financial adjustments; these will be detailed in the upcoming amended filings.