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Organization and Summary of Significant Accounting Policies (Policies)
 12 Months Ended
Jun. 30, 2018
Organization And Summary Of Significant Accounting Policies  
Organization

The American Energy Group, Ltd. (the Company) was incorporated in the State of Nevada on July 21, 1987 as Dimension Industries, Inc. Since incorporation, the Company has had several name changes including DIM, Inc. and Belize-American Corp. Internationale with the name change to The American Energy Group, Ltd. effective November 18, 1994. The Company’s authorized common stock, par value $0.001 is 80,000,000 shares. The Company’s authorized preferred stock, par value $0.001, is 20,000,000 shares. There is no preferred stock issued and outstanding.

 

These financial statements do not include the consolidation of its recently re-acquired wholly owned subsidiary, Hycarbex American Energy, Inc as the Company had not yet received full access to the historical financial records, nor full control of its operations, as of June 30, 2018.
Accounting Methods

The Company’s financial statements are prepared using the accrual method of accounting. The Company has elected a June 30 year-end.
Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents
Property and Equipment and Depreciation

Property and equipment are stated at cost. Depreciation on drilling and related equipment, vehicles and office equipment is provided using the straight-line method over expected useful lives of five to ten years. For the years ended June 30, 2018 and 2017, the Company incurred total depreciation of $450 and $509, respectively.
Basic Loss Per Share of Common Stock
    For the Year     For the Year  
    Ended June 30,      Ended June 30,  
    2018     2017  
             
Loss (numerator)   $ (1,266,552 )   $ (1,237,661 )
                 
Shares (denominator)     71,188,830       67,331,791  
                 
Per Share Amount   $ (0.02 )   $ (0.02 )

 

The basic loss per share of common stock is based on the weighted average number of shares issued and outstanding during the period of the financial statements. Stock warrants convertible into 12,193,334 and 12,193,334 shares of common stock for the years ended June 30, 2018 and 2017, respectively, are not included in the basic calculation because their inclusion would be antidilutive, thereby reducing the net loss per common share.
Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Long Lived Assets

All long lived assets are evaluated for impairment per FASB ASC 360 whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The Company recognized no impairment loss during the year ended June 30, 2018.
Stock Based Compensation

Equity securities issued for services rendered have been accounted for at the fair market value of the securities on the date of issuance.
Income Taxes

The Company accounts for corporate income taxes in accordance with FASB ASC 740-10 “Income Taxes”. FASB ASC 740-10 requires an asset and liability approach for financial accounting and reporting for income tax purposes.

 

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Tax Cuts and Jobs Act was enacted on December 22, 2017 which reduced the U.S. corporate statutory tax rate from 35% to 21% beginning on January 1, 2018. We used a blended rate as an effective rate.

 

The Company’s total deferred tax liabilities, deferred tax assets, and deferred tax asset valuation allowances at June 30, 2018 and June 30, 2017 are as follows:

 

    2018     2017  
Net Operating Losses:            
Federal   $ (58,145,400 )   $ (57,201,767 )
State     -       -  
Total net operating losses   $ (58,145,400 )   $ (57,201,767 )
                 
Deferred Tax Asset:                
NOL Carryover     10,451,834       19,406,225  
Less valuation allowance     (10,451,834 )     (19,406,225 )
                 
Net Deferred Tax Asset   $ -     $ -  

  

The Financial Accounting Standards Board (FASB) has issued FASB ASC 740-10. This standard requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. As a result of the implementation of this standard, the Company performed a review of its material tax positions in accordance with recognition and measurement standards established by FASB ASC 740-10.

 

Net operating loss carryovers of the Company may be used to offset against future taxable income from the year 2018 through 2038 and will begin expiring in the year ended June 30, 2019. No tax benefit has been reported since the potential tax benefit is offset by a valuation allowance of the same amount.

 

The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income from continuing operations for the years ended June 30, 2018 and 2017 due to the following:

 

    2018     2017  
Book Loss   $ (241,468 )   $ (38,429 )
Warrant Expense     19,644       -  
Extended Warrants     8,368       -  
Loss on Derivatives     15,247       -  
Meals & Entertainment     833       -  
Change in Depreciation     53       -  
Valuation allowance     197,323       38,429  
Income tax provision   $ -     $ -  

 

 

The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operations in the provision for income taxes.

 

The tax years that remain subject to examination by major taxing jurisdictions are those for the years ended June 30, 2018, 2017, 2016 and 2015.
Fair Value of Financial Instruments

On January 1, 2008, the Company adopted FASB ASC 820-10-50, “Fair Value Measurements. This guidance defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:

 

  · Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
  · Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
  · Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement.

 

The carrying amounts reported in the balance sheets for the cash and cash equivalents, receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The carrying value of the promissory notes approximates fair value because negotiated terms and conditions are consistent with current market rates as of June 30, 2018 and 2017.
Concentration of Credit Risk

Financial instruments which subject the Company to concentrations of credit risk include cash and cash equivalents. The Company maintains its cash and cash equivalents with major financial institutions selected based on management’s assessment of the banks’ financial stability. Balances occasionally exceed the $250,000 federal deposit insurance limit. The Company has not experienced any losses on deposits.
Restoration, Removal and Environmental Liabilities

The Company is subject to extensive federal, state and local environmental laws and regulations. These laws regulate the discharge of materials into the environment and may require the Company to remove or mitigate the environmental effects of the disposal or release of petroleum substances at various sites. Environmental expenditures are expensed or capitalized depending on their future economic benefit. Expenditures that relate to an existing condition caused by past operations and that have no future economic benefit are expensed.

 

Liabilities for expenditures of a noncapital nature are recorded when environmental assessments and/or remediation is probable, and the costs can be reasonably estimated. Such liabilities are generally undiscounted unless the timing of cash payments for the liability or component are fixed or reliably determinable. As of June 30, 2018, the Company believes it has no such liabilities.
New Accounting Pronouncements

Except for rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of grandfathered standards, the FASB Accounting Standards Codification™ ("ASC") is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company. 

 

In February 2016, the FASB issued ASU No. 2016-02: Leases (Topic 842) (ASU 2016-02). The main objective of ASU 2016-02 is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The main difference between previous GAAP and Topic 842 is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases. ASU 2016-02 requires lessees to recognize assets and liabilities arising from leases on the balance sheet. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. For public entities, ASU 2016-02 is effective for financial statements issued for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years; early application is permitted. This standard is not expected to have a significant impact on the Company as it does not currently engage in significant leasing activity. The Company will continue to assess the impact this may have on its financial position, results of operations, and cash flows.

 
Basis of Presentation

Our financial statements for the year ended June 30, 2017, include an immaterial revision to liabilities, additional paid in capital as well as retained earnings related to the over commitment of shares and the extension of stock warrants to the shares issuable on the exercise of outstanding debentures, stock options and warrants. In accordance with Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin Nos. 99 and 108 (“SAB 99” and “SAB 108”), the Company has evaluated this error and, based on an analysis of quantitative and qualitative factors, has determined that it was not material to any of the reporting periods affected and no amendments to previously filed 10-Q or 10-K reports with the SEC are required.