Annual report pursuant to Section 13 and 15(d)

Notes Payable - Related Party

Notes Payable - Related Party
12 Months Ended
Dec. 31, 2017
Debt Disclosure [Abstract]  
Notes Payable - Related Party

Note 7 – Notes Payable - Related Party


    December 31,  
    2017     2016  
13.25% unsecured note payable due May 5, 2017 (1)   $ 1,250,000     $   -  
Total debt     1,250,000       -  
Less: current maturities     1,250,000       -  
Long-term debt, net of current maturities   $ -     $ -  



Effective January 5, 2017, Foothills borrowed $1,250,000 from Berwin Trading Limited that, due to its 20% beneficial ownership in the Company, is a related party. This note called for interest at 9% per annum; but because it was not paid when due interest was to have accrued at a default rate of 11% from the due date of the note. The Company used net proceeds of this loan to satisfy certain obligations under a Purchase and Sale Agreement with Total Belief Limited, dated December 30, 2016, for general working capital and to support certain target drilling activities. See Note 3 – Acquisitions.


On May 4, 2017, the Company and Berwin agreed to extend the maturity date of the debenture to June 20, 2017, in return for an annual interest rate increase from 9% to 13.5% per annum for the life of the debenture. On November 3, 2017, Berwin agreed to defer repayment of this note to a later date and acknowledged that the Company is not in default regarding this Debenture. As partial consideration for the deferment, the Company issued Berwin 100,000 shares of its restricted common stock, valued at $48,000. The issuance of the shares in exchange for the maturity extension was treated as a modification of existing debt pursuant to the guidance of ASC 470-50 “Debt – Modifications and Extinguishments” (“ASC 470-50”).


During the years ended December 31, 2017 and 2016, the Company recorded interest expense of $166,438 and $0, respectively on the related party note.