Filing summary
Issuer discrepancy: The request identifies Abundia Global Impact Group, Inc., but the supplied 10-Q is for Houston American Energy Corp. This summary reflects the filing text provided, not Abundia’s results.
Business context and reporting period
Unaudited Form 10-Q for the quarter and nine months ended September 30, 2016. Houston American Energy is an oil and gas company with U.S. producing properties and undeveloped interests in Colombia. It reported no drilling during the first nine months of 2016.
Financial results and position
| Metric | Three months ended Sept. 30, 2016 | Nine months ended Sept. 30, 2016 | Comparable 2015 period |
|---|---|---|---|
| Oil and gas revenue | $39,738 | $121,885 | $124,448 quarter; $340,541 nine months |
| Operating loss | $371,192 | $1,207,087 | $468,332 quarter; $1,999,589 nine months |
| Net loss | $370,343 | $1,200,200 | $463,566 quarter; $2,002,438 nine months |
| Loss per share, basic and diluted | $0.01 | $0.02 | $0.01 quarter; $0.04 nine months |
At September 30, cash was $872,130, down from $2,123,520 at December 31, 2015. Working capital was $1,129,646 versus $2,384,283. Total assets were $4.30 million and total liabilities were $45,176, including $25,676 for plugging and abandonment. The company reported no debt. Nine-month operating cash use was $1,023,200; investing cash use was $92,217, and financing cash use was $135,973, including treasury-share purchases. Cash ended the period at $872,130.
Gross margin was not stated as a single measure. For the nine-month period, revenue was $121,885 and lease operating expense was $60,416; general and administrative expense was $1,194,223. No income tax expense was recorded in 2016.
Changes versus prior period
- Nine-month revenue fell 64%; management attributed the decline to lower realized oil and gas prices and lower production. Average realized oil and gas prices declined 30% and 34%, respectively, while oil and gas production fell 53% and 30%.
- Nine-month net loss narrowed from $2.00 million to $1.20 million, primarily alongside lower depreciation and depletion and no 2016 impairment charge; 2015 included a $677,051 impairment.
- Nine-month operating cash use improved from $1.49 million to $1.02 million, while cash declined by $1.25 million during the 2016 period.
- General and administrative expense rose 6% for the first nine months to $1.19 million, although it declined 7% in the third quarter.
Outlook, risks, and notable items
- Going concern: Management disclosed substantial doubt about the company’s ability to continue as a going concern, citing continuing losses, negative operating cash flow, declining cash, low commodity prices, and financial commitments related to Colombia. Additional financing or asset sales may be needed; success is not assured.
- Colombia permitting: Local opposition and repeated permit delays have prevented drilling at Serrania. The company shelved plans to drill there in 2016 and for the foreseeable future; work on Los Picachos and Macaya is also expected to wait. The company stated there was no assurance permits would be issued or the prospects developed.
- Funding and strategy: The company had no budgeted capital expenditures for the balance of 2016 or 2017 as of the filing, but said available cash may not support operations for the next twelve months or future commitments. It was pursuing strategic alternatives and had submitted letters of intent for potential acquisitions, but had no definitive agreements. Transactions or financing could be dilutive, and no outcome was assured.
- The planned $1 million investment in Tamboran Resources was terminated effective June 30, 2016 after a closing condition was not met.
- The company repurchased 221,948 shares in September at an average $0.21 per share under its repurchase plan; the filing reports $135,973 of treasury-share payments for the nine-month period.
- Disclosure controls were deemed ineffective as of September 30, 2016 because of a lack of segregation of duties following the CFO’s 2013 departure. Management said it relied on third-party consultants and its accounting firm for financial reporting assistance.
- Commodity prices are a key market risk; the company said it had not historically used hedges to manage price volatility. It also reported $494,077 of cash deposits above the FDIC insured limit.
Important facts to verify
- Confirm the intended issuer: the supplied filing names Houston American Energy Corp., not Abundia Global Impact Group, Inc.
- Review the going-concern disclosure and the company’s available financing and liquidity plans.
- Check the status of Colombian permits, concession commitments, and the carrying value of undeveloped properties.
- Verify whether any strategic transaction or additional financing was later completed, and assess potential dilution.
- Review remediation of the disclosed material weakness in disclosure controls and the reliance on outside reporting support.