What changed in this filing

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Item 1A. Risk Factors

2026-03-23 compared with 2025-03-31 · 113 added, 53 removed, 386 unchanged (30% of the section changed)

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● Our exploration and development drilling efforts and the operation of our wells may not be profitable or achieve our targeted rates of return.

● Our financial results following the sale of our West Quito Assets may not be comparable to our historical financial results and historical trends may not be indicative of our future results.

● Our ability to complete dispositions of assets, or interests in assets, may be subject to factors beyond our control, and in certain cases, we may be required to retain liabilities for certain matters.

● Increasing attention to environmental, social and corporate governance (“ESG”) matters may impact our business.

● We could experience periods of higher costs for various reasons, including due to higher commodity prices, increased drilling activity in the Delaware Basin and trade disputes or inflation that affect the costs of steel and other raw materials that we and our vendors rely upon, which could adversely affect our ability to execute our exploration and development plans on a timely basis and within budget.

● We could experience periods of higher costs for various reasons, including due to higher commodity prices, increased drilling activity in the Delaware Basin and trade disputes, tariffs or inflation that affect the costs of steel and other raw materials that we and our vendors rely upon, which could adversely affect our ability to execute our exploration and development plans on a timely basis and within budget.

● We may not be able to drill wells on a substantial portion of our acreage.

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● Future sales of our common stock in the public market or the issuance of securities senior to our common stock, or the perception that these sales may occur, could adversely affect the trading price of our common stock and our ability to raise funds in stock offerings.

● We may choose to delist our securities from NYSE American and deregister our common stock under the Exchange Act, which could negatively affect the liquidity and trading prices of our common stock and would result in less disclosure about the Company.

● Our stock price has been volatile, and you may not be able to resell our common stock at or above the price you paid.

● Our failure to meet the continued listing standards of NYSE American could result in a delisting of our common stock.

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Restrictions on our ability to obtain, dispose of or recycle water may impact our ability to execute our drilling and development plans in a timely or cost-effective manner.

● Events beyond our control, including a global or domestic health crisis, may result in unexpected adverse operating and financial results.

● Our business could be adversely impacted by events beyond our control, including economic downturns, inflation, tariffs, increases in interest rates, natural disasters, public health crises such as pandemics, political crises, geopolitical events such as the conflict in Venezuela, Russia and Ukraine and the Middle East, or other

macroeconomic conditions, which have in the past and may in the future result in adverse operating and financial results.

● A financial downturn could negatively affect our business, results of operations, financial condition and liquidity.

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● the ability of members of the Organization of Petroleum Exporting Countries and other oil exporting countries, including Russia, to agree upon and maintain production quotas;

● social unrest and political instability, particularly in major oil and natural gas producing regions outside the U.S., such as the Middle East, and armed conflict or terrorist attacks;

● social unrest and political instability, particularly in major oil and natural gas producing regions outside the U.S., such as Venezuela, Russia and Ukraine and the Middle East, and armed conflict or terrorist attacks;

● the level of consumer demand for oil and natural gas, including demand growth in developing countries, such as China and India;

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It is possible that we will acquire acreage in other areas that we believe are prospective for oil and natural gas production and expend capital to develop such acreage.

We expect to use proceeds from the sales of redeemable convertible preferred stock, if necessary, and which may be difficult or limited to access, to fund capital expenditures that are in excess of our operating cash flow and cash on hand.

We expect to use a portion of the proceeds from the sale of our West Quito Assets and from the sales of redeemable convertible preferred stock, if necessary, and which may be difficult or limited to access, to fund capital expenditures that are in excess of our operating cash flow and cash on hand.

Additionally, certain segments of the investor community have negative sentiment towards investing in our industry, with some investors and investment advisors adopting policies negatively impacting investment in the oil and gas sector based on social and environmental considerations.

Commercial and investment banks have also come under pressure to stop financing oil and gas production and related infrastructure projects.

Such developments, including environmental activism and initiatives aimed at limiting climate change and reducing air pollution, could potentially result in a reduction of available capital funding for development projects, thus impacting future financial results.

Such developments, including environmental

activism and initiatives aimed at limiting climate change and reducing air pollution, could potentially result in a reduction of available capital funding for development projects, thus impacting future financial results.

If we are unable to raise sufficient capital to fund our capital expenditures, we may be required to curtail our drilling, development, land acquisitions and other activities, which could result in a decrease in our production of oil and natural gas, forfeiture of leasehold interests if we are unable or unwilling to renew them, and the sale of some of our assets on an unfavorable basis, each of which could have a material adverse effect on our results and future operations.

Failure to comply with the covenants in our 2024 Amended Term Loan Agreement may limit our ability to borrow, result in an event of default and cause amounts outstanding under our 2024 Amended Term Loan Agreement to become immediately due and payable.

On December 26, 2024, the Company and its wholly owned subsidiary, Halcón Holdings, LLC (the “Borrower”) entered into a Second Amended and Restated Senior Secured Credit Agreement (the “2024 Term Loan Agreement”) with Fortress Credit Corp., as administrative agent, and certain other financial institutions party thereto, as lenders.

Pursuant to the 2024 Term Loan Agreement, the lenders party thereto agreed to provide the Borrower with (i) an initial term loan facility in the aggregate principal amount of $162.0 million, funded on December 26, 2024 and (ii) an incremental term loan facility in the aggregate principal amount of up to $63.0 million to be made available to the Borrower from January 3, 2025 until the date that is the earliest to occur of (x) the date on which such incremental term facility is fully drawn, (y) the date on which such incremental term facility is terminated and (z) January 11, 2025, subject to the satisfaction of certain conditions.

On January 9, 2025, the Borrower entered into a first amendment (the “First Amendment”) to its 2024 Term Loan Agreement (as amended, the “2024 Amended Term Loan Agreement”).

Pursuant to the First Amendment, the Borrower incurred incremental term loans in the aggregate principal amount of $63.0 million (the “Incremental Term Loans”).

As of December 31, 2024, we had approximately $162.0 million of indebtedness outstanding under the 2024 Amended Term Loan Agreement.

As of December 31, 2024, we have no additional borrowing capacity under the 2024 Amended Term Loan Agreement.

Additionally, our 2024 Amended Term Loan Agreement contains certain covenants

as well as a mandatory repayment schedule requiring us to make scheduled amortization payments in the aggregate amount of $16.9 million in 2025 and $22.5 million in 2026.

On December 26, 2024, we entered into the 2024 Term Loan Agreement with Fortress Credit Corp.

Pursuant to the 2024 Term Loan Agreement, we were provided (i) an initial term loan facility in the aggregate principal amount of $162.0 million, funded on December 26, 2024 and (ii) an incremental term loan facility in the aggregate principal amount of up to $63.0 million.

On January 9, 2025, we entered into the First Amendment to our 2024 Term Loan Agreement and incurred incremental term loans in the aggregate principal amount of $63.0 million.

On November 12, 2025, we entered into the Second Amendment to the 2024 Amended Term Loan Agreement to amend certain financial covenants, as described in more detail in Item 1.

Business – Recent Developments .

As of December 31, 2025, we had approximately $208.1 million of indebtedness outstanding under the 2024 Amended Term Loan Agreement and no additional borrowing capacity under the 2024 Amended Term Loan Agreement.

Additionally, our 2024 Amended Term Loan Agreement contains certain covenants as well as a mandatory repayment schedule requiring us to make scheduled amortization payments in the aggregate amount of $22.5 million in both 2026 and 2027.

The 2024 Amended Term Loan Agreement matures on December 26, 2028.

Our 2024 Amended Term Loan Agreement contains the following financial covenants (as defined), including the maintenance of the following ratios:

● Asset Coverage Ratio not to fall below 1.70x as of March 31, 2025 through and including June 30, 2025, 1.85x as of September 30, 2025 through and including December 31, 2025 and 2.00x for each fiscal quarter thereafter, determined as of the last day of each fiscal quarter;

● Total Net Leverage Ratio not to exceed 2.75x as of March 31, 2025 through and including June 30, 2025 and 2.50x for each fiscal quarter thereafter, determined as of the last day of each fiscal quarter;

● Asset Coverage Ratio not to fall below 1.85x as of December 31, 2025 through and including December 31, 2026 and 2.00x for each fiscal quarter thereafter, determined as of the last day of each fiscal quarter;

● Total Net Leverage Ratio not to exceed 3.20x as of December 31, 2025, 3.25x as of March 31, 2026 and not to exceed the levels set forth in Item 1.

Business – Recent Developments for each fiscal quarter thereafter, determined as of the last day of each fiscal quarter;

● Current Ratio not to fall below 1.00x, determined on the last day of each calendar month commencing with the calendar month ending March 31, 2025 ;

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In the past, we have periodically sought amendments to the covenants under our revolving credit agreements, including the financial covenants, where we have anticipated difficulty in maintaining compliance.

While historically we have largely been successful in obtaining modifications of our covenants as needed, there can be no assurance that we will be successful in the future.

While historically we have largely been successful in obtaining modifications of our covenants as needed, as evidenced most recently by the Second Amendment to our 2024 Amended Term Loan Agreement, there can be no assurance that we will be successful in the future.

In the event we are not successful in obtaining covenant modifications, if needed, there is no assurance that we will be successful in implementing alternatives that allow us to maintain compliance with our covenants or that we will be successful in obtaining alternative financing that provides us with the liquidity that we need to operate our business.

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Higher levels of indebtedness make us more vulnerable to economic downturns and adverse developments in our business.

We had $162.0 million principal amount of debt, including current portions, as of December 31, 2024 and incurred incremental borrowings of $63.0 million in January 2025, resulting in total principal debt outstanding of $225.0 million as of the date of this Annual Report on Form 10-K.

We had $208.1 million principal amount of debt, including current portions, as of December 31, 2025 and as of the date of this Annual Report on Form 10-K.

As a result of our indebtedness, we will need to use a portion of our cash flow to pay interest, and outstanding principal during 2026, which will reduce the amount of cash flow we will have available to finance our operations and other business activities and could limit our flexibility in planning for or reacting to changes or adverse developments in our business or economic downturns impacting the industry in which we operate.

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A rise in interest rates could impact on our borrowing costs and could have an adverse effect on our cash flows.

Borrowings under the 2024 Amended Term Loan Agreement bear interest at a rate per annum equal to the Secured Overnight Financing Rate (“SOFR”) (with a credit spread of adjustment of 0.15% per annum) plus an applicable margin of 7.75%.

Borrowings under the 2024 Amended Term Loan Agreement initially bore interest at a rate per annum equal to the Secured Overnight Financing Rate (“SOFR”) (with a credit spread of adjustment of 0.15% per annum) plus an applicable margin of 7.75%.

Under the Second Amendment, the Applicable Margin (as defined in the 2024 Amended Term Loan Agreement) is to be the rate per annum set forth below under the caption “SOFR Loans Spread” or “ABR Loans Spread”, as the case may be, based on the Total Net Leverage Ratio set forth in the table above in Item 1.

Business – Recent Developments ;

provided that (a) until the Adjustment Date (the date of delivery of financial statements pursuant to the 2024 Amended Term Loan Agreement) following the Second Amendment effective date, the Applicable Margin shall be the applicable rate per annum set forth below in Category 1 and (b) the Applicable Margin shall be the applicable rate per annum set forth in Category 4 below at any time that an Event of Default (as defined in the 2024 Amended Term Loan Agreement) exists:

Total Net Leverage Ratio

SOFR Loans Spread

ABR Loans Spread

≤ 2.50 to 1.00

> 2.50 to 1.00 ≤ 3.00 to 1.00

> 3.00 to 1.00 ≤ 3.25 to 1.00

> 3.25 to 1.00

The Applicable Margin shall be adjusted quarterly on a prospective basis on each Adjustment Date based upon the Total Net Leverage Ratio in accordance with the table above.

We may incur substantially more debt in the future.

Our ability to meet our debt obligations and other expenses will depend on our future performance, which will be affected by financial, business, economic, regulatory and other factors, many of which we are unable to control.

Our ability to meet our debt obligations and other expenses will depend on our future performance, which will be affected by financial, business, economic, regulatory and other factors,

many of which we are unable to control.

If our cash flow is not sufficient to service our debt, we may be required to refinance debt, sell assets or sell additional shares of common or preferred stock on terms that we may not find attractive if it may be done at all.

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Federal legislation and rulemaking could have an adverse impact on our ability to use derivative instruments to reduce the effects of commodity prices, interest rates and other risks associated with our business.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) establishes, among other provisions, federal oversight and regulation of the over-the-counter (“OTC”) derivatives market and entities that participate in that market.

The Dodd-Frank Act also establishes margin requirements and certain transaction clearing and trade execution requirements.

The Dodd-Frank Act may require us to comply with margin requirements in our derivative activities, although the application of those provisions to us is uncertain at this time.

The counterparties to our derivative instruments may also spin off some of their derivatives activities to separate entities, which may not be as creditworthy as the current counterparties.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) established, among other provisions, federal oversight and regulation of the over-the-counter (“OTC”) derivatives market and entities that participate in that market.

Among other things, the Dodd-Frank Act established margin requirements and requires clearing and trade execution practices for certain categories of swaps and may result in certain market participants needing to curtail or alter their derivative activities..

The Dodd-Frank Act also created new categories of regulated market participants, such as "swap dealers" and "security-based swap dealers" that are subject to significant new capital, registration, recordkeeping, reporting, disclosure, business conduct and other regulatory requirements, a large number of which have been implemented.

This regulatory framework has significantly increased the costs of entering into derivatives transactions for end-users of derivatives, such as us.

In particular, new margin requirements and capital charges, even when not directly applicable to us, have increased the pricing of derivatives that we transact in.

New exchange trading margin regulations, trade reporting requirements and position limits may lead to changes in the liquidity of our derivative transactions or higher pricing.

That said, our hedging activities are not subject to mandatory clearing or the margin requirements imposed in connection with mandatory clearing, although we are subject to certain recordkeeping and reporting obligations associated with the Dodd-Frank Act.

Additionally, our uncleared swaps are not subject to regulatory margin requirements.

Finally, we believe that the majority, if not all, of our hedging activities constitute bona fide hedging under applicable federal and exchange-mandated position limits rules and are not materially impacted by the limitations under such rules.

The Dodd-Frank Act and any new regulations could significantly increase the cost of some commodity derivative contracts (including through requirements to post collateral, which could adversely affect our available liquidity), materially alter the terms of some commodity derivative contracts, limit our ability to trade some derivatives to hedge risks, reduce the availability of some derivatives to protect against risks we encounter, and reduce our ability to monetize or restructure our existing commodity derivative contracts.

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During any period in which these factors indicate impairment, the cumulative drilling costs incurred to date for such property and all or a portion of the associated leasehold costs are transferred to the full cost pool and are then subject to depletion and the ceiling test limitation.

Accordingly, a significant change in these factors, many of which are

beyond our control, may shift a significant amount of cost from unevaluated properties into the full cost pool that is subject to depletion and the ceiling test limitation.

Accordingly, a significant change in these factors, many of which are beyond our control, may shift a significant amount of cost from unevaluated properties into the full cost pool that is subject to depletion and the ceiling test limitation.

Hedging transactions may limit our potential gains and increase our potential losses.

In order to manage our exposure to price risks in the marketing of our oil, natural gas, and natural gas liquids production and comply with the requirements of our 2024 Amended Term Loan Agreement, we have entered into oil and natural gas hedging arrangements with respect to a portion of our anticipated production and we may enter into additional hedging transactions in the future.

additional hedging transactions in the future.

While intended to reduce the effects of volatile commodity prices, such transactions may limit our potential gains and increase our potential losses if commodity prices were to rise substantially over the price established by the hedge.

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If we are unable to accurately predict and control the costs of drilling and completing a well, we may be forced to limit, delay or cancel drilling operations.

Our financial results following the sale of our West Quito Assets may not be comparable to our historical financial results and historical trends may not be indicative of our future results.

We entered into a sale and purchase agreement to sell substantially all of our oil and natural gas properties and related assets in the West Quito Draw area located in the Southern Delaware Basin in Ward County, Texas on December 18, 2025, with an accounting effective date of December 1, 2025.

The West Quito Assets included approximately 6,100 net acres in Ward County, Texas and proved reserves for these properties accounted for approximately 6.0 MMBoe, or approximately 10%, of our proved reserves at December 31, 2025 and approximately 15% of our annual production for the year ended December 31, 2025.

As a result, our historical financial results will not be comparable to our future results and historical trends may not be indicative of results expected in future periods.

Our ability to complete dispositions of assets, or interests in assets, may be subject to factors beyond our control, and in certain cases, we may be required to retain liabilities for certain matters.

From time to time, we may sell assets or interests in an asset for the purpose of assisting or accelerating the asset’s development, most recently our West Quito Divestiture, and we regularly review our property base for the purpose of identifying nonstrategic assets, the disposition of which would increase capital resources available for other activities and create organizational and operational efficiencies.

Various factors could materially affect our ability to dispose of such interests or nonstrategic assets or complete announced dispositions, including the identification of purchasers willing to acquire the interests or purchase the nonstrategic assets on terms and prices acceptable to us.

Sellers typically retain certain liabilities or indemnify buyers for certain pre-closing matters, such as matters of litigation, environmental contingencies, royalty obligations and income taxes.

The magnitude of any such retained liability or indemnification obligation may be difficult to quantify at the time of the transaction and ultimately may be material.

Also, as is typical in divestiture transactions, third parties may be unwilling to release us from guarantees or other credit support provided prior to the sale of the divested assets.

As a result, after a divestiture, we may remain secondarily liable for the obligations guaranteed or supported to the extent that the buyer of the assets fails to perform these obligations.

Increasing attention to ESG matters may impact our business.

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Unfavorable ratings or assessment of our ESG practices may lead to negative investor sentiment toward us, which could have a negative impact on our stock price and our access to capital.

We could experience periods of higher costs for various reasons, including due to higher commodity prices, increased drilling activity in the Delaware Basin and trade disputes or inflation that affect the costs of steel and other raw materials that we and our vendors rely upon, which could adversely affect our ability to execute our exploration and development plans on a timely basis and within budget.

We could experience periods of higher costs for various reasons, including due to higher commodity prices, increased drilling activity in the Delaware Basin and trade disputes, tariffs or inflation that affect the costs of steel and other raw materials that we and our vendors rely upon, which could adversely affect our ability to execute our exploration and development plans on a timely basis and within budget.

Our industry is cyclical.

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In addition, the demand for, and wage rates of, qualified drilling rig crews rise as the number of active rigs in service increases.

Increasing levels of exploration and production, particularly in the Delaware Basin, likewise may increase demand for oilfield services and equipment, and the costs of these services and equipment may increase, while the quality of these services and equipment may suffer.

Increasing levels of exploration and production, particularly in the Delaware Basin, likewise may increase demand for oilfield services and equipment, and the costs of these services and

equipment may increase, while the quality of these services and equipment may suffer.

Cost increases may also result from a variety of factors beyond our control, such as increases in the cost of electricity, steel and other materials that we and our vendors rely upon and increases in the cost of services to process, treat and transport our production.

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Certain of our undeveloped leasehold acreage could expire if we are unable to meet continuous development clauses or similar provisions in our leases requiring development of our undeveloped acreage and/or maintaining production on units containing the acreage.

As of December 31, 2024, we owned leasehold interests in approximately 40,500 net acres in the Delaware Basin in West Texas of which approximately 4,700 net acres are undeveloped.

As of December 31, 2025, we owned leasehold interests in approximately 37,600 net acres in the Delaware Basin in West Texas of which approximately 2,400 net acres are undeveloped and approximately 6,100 net acres are to be divested in the West Quito Divestiture.

Generally, our oil and natural gas leases remain in force as long as production in paying quantities is maintained.

Currently, our leases on undeveloped oil and natural gas properties are either categorized as “held by production” or perpetuated by continuous development clauses contained in our leases or tolling agreements.

We continually review our leases on acreage subject to these clauses or agreements

when planning for our future drilling programs.

We continually review our leases on acreage subject to these clauses or agreements when planning for our future drilling programs.

If our leases on acreage subject to these provisions are not maintained by production in paying quantities or continuous development, our leases could expire and we would lose our right to develop the related properties.

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Our success depends upon the continued contributions of our executive officers and key employees, particularly with respect to providing the critical management decisions and contacts necessary to manage and maintain growth within a highly competitive industry.

Competition for qualified personnel can be intense, particularly in the oil and

natural gas industry, and there are a limited number of people with the requisite knowledge and experience.

Competition for qualified personnel can be intense, particularly in the oil and natural gas industry, and there are a limited number of people with the requisite knowledge and experience.

Under these conditions, we could be unable to attract and retain these personnel.

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We cannot predict the effect, if any, that future sales or issuances of shares of our common stock or other equity securities, or the availability of shares of common stock or such other equity securities for future sale or issuance, will have on the trading price of our common stock.

We may choose to delist our securities from NYSE American and deregister our common stock under the Exchange Act, which could negatively affect the liquidity and trading prices of our common stock and would result in less disclosure about the Company.

As further discussed in Item 7.

Management’s Discussion and Analysis, “Capital Resources and Liquidity,” we are exploring strategic transactions and looking at opportunities to significantly reduce expenses in the near term to bolster liquidity.

Given the cost and resource demands of being a public company, we may decide to “go dark,” or discontinue our obligation to make periodic filings with the SEC, by delisting our securities with NYSE American and deregistering our securities with the SEC.

While no decision has been made, should we ultimately make the decision to go dark, there would be a substantial decrease in disclosure by us of our operations and prospects, and a potential decrease in the liquidity in our common stock even though stockholders may still continue to trade our common stock on an over-the-counter (“OTC”) market.

As a result of going dark, investors may find it more difficult to dispose of or obtain accurate

quotations as to the market value of our common stock, and the ability of our stockholders to sell our common stock in the secondary market may be materially limited.

Our stock price has been volatile, and you may not be able to resell our common stock at or above the price you paid.

Our stock price has been highly volatile in recent years.

Such volatility may continue in response to various factors, some of which are beyond our control, including:

● market conditions in the broader stock market;

● fluctuations in the values of companies perceived by investors to be comparable to us;

● sales, or the anticipation of sales, of our common stock by us, our insiders or our other stockholders, including the impacts if we are no longer a controlled company;

● public response to press releases or other public announcements by us or third parties, including our filings with the SEC;

● the realization of any risks described under this “Risk Factors” section, or other risks that may materialize in the future.

These and other factors, many of which are beyond our control, may cause our operating results and the market price and demand for our common stock to fluctuate substantially.

While we are of the view that operating results for any particular quarter are not necessarily a meaningful indication of future results, fluctuations in our quarterly operating results may negatively affect the market price and liquidity of our stock.

In addition, in the past, when the market price of a stock has been volatile, holders of that stock have sometimes instituted securities class action litigation against the company that issued the stock.

If any of our stockholders brought a lawsuit against us, we could incur substantial costs defending and/or settling the lawsuit, a portion or all of which may not be covered by insurance.

Settlement and verdict damages from securities class action lawsuits are often material.

Such a lawsuit could also divert the time and attention of our management from our business, which could significantly harm our profitability and reputation.

In addition, the stock markets, and the market for growth stocks in particular, have from time to time experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies.

Broad market and industry factors may significantly affect the market price of our common stock, regardless of our actual operating performance.

You may not realize any return on your investment in us and may lose some or all of your investment.

Our failure to meet the continued listing requirements of NYSE American could result in a delisting of our common stock.

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In the event of a delisting, we would expect to take actions to restore our compliance with NYSE American’s listing requirements, but we can provide no assurance that any such action taken by us would allow our common stock to become listed again, stabilize the market price or improve the liquidity of our common stock, prevent our common stock from dropping below the NYSE minimum bid price requirement or prevent future non-compliance with NYSE’s listing requirements.

On May 30, 2025, we received written notice (the “Notice”) on behalf of the NYSE American indicating that we are no longer in compliance with NYSE American’s continued listing standards.

Specifically, the letter stated that we are not in compliance with the continued listing standards set forth in Sections 1003(a)(i) and 1003(a)(ii) of the NYSE American Company Guide (the “Company Guide”).

Section 1003(a)(i) requires a listed company to have stockholders’ equity of $2.0 million or more if the listed company has reported losses from continuing operations and/or net losses in two of its three most recent fiscal years.

Section 1003(a)(ii) requires a listed company to have stockholders’ equity of $4.0 million or more if the listed company has reported losses from continuing operations and/or net losses in three of its four most recent fiscal years.

Our noncompliance resulted from our reporting stockholders’ equity of $(1.8) million as of March 31, 2025, and losses from continuing operations and/or net losses in three of our four most recent fiscal years ended December 31, 2024.

We continue to report negative stockholders’ equity at December 31, 2025 of $(32.8) million and additional losses from continuing operations.

The Notice further provided that we must submit a plan of compliance (the “Plan”) by June 30, 2025 addressing how we intend to regain compliance with the continued listing standards by November 30, 2026.

Such Plan was submitted by the required deadline and our Plan was accepted by the NYSE.

The Notice has no immediate impact on the listing of our shares of common stock, which will continue to be listed and traded under the symbol “BATL” on the NYSE American during this period, subject to our compliance with the other listing requirements of the NYSE American.

The notice does not affect our ongoing business operations or our reporting requirements with the Securities and Exchange Commission.

We may be unable to either redeem or pay cash dividends on the outstanding shares of our Redeemable Preferred Stock, resulting in increases in the liquidation preference of the Redeemable Preferred Stock and the right of the holders of the Redeemable Preferred Stock to receive a greater number of shares of our common stock in the event such holders elect to exercise their conversion rights.

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and prohibits flaring from new oil wells.

In addition, BLM promulgated new rules in 2024 to reduce venting, flaring and leaks from oil and gas production on public lands.

Aside from new controls, the 2022 Inflation Reduction Act creates incentives designed to increase use of electric cars and fuels other than oil and natural gas.

That statute imposes a fee on certain excess methane emissions from oil and gas facilities of $900 per metric ton of methane for 2024, $1,200 per metric ton for 2025, and $1,500 per metric ton each year thereafter.

While the EPA has proposed or made certain changes in those regulations that are intended to reduce compliance difficulties, the standards still have imposed and will impose additional requirements and costs on our operations.

In addition, BLM promulgated new rules in 2024 to reduce venting, flaring and leaks from oil and gas production on public lands, but they were challenged in court, and BLM currently is evaluating a replacement proposed rule.

Aside from new controls, the 2022

Inflation Reduction Act created incentives designed to increase use of electric cars and fuels other than oil and natural gas.

That statute required the EPA to impose a fee on certain excess methane emissions from oil and gas facilities of $900 per metric ton of methane for 2024, $1,200 per metric ton for 2025, and $1,500 per metric ton each year thereafter.

The EPA had promulgated a final rule to implement the methane charges, but Congress disapproved it pursuant to the Congressional Review Act.

The EPA reportedly is evaluating its options for complying with the statutory obligation to assess methane fees.

As a general matter, recent Democratic Presidential Administrations have been spearheading the development of federal climate policies and controls.

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Macroeconomic Risk Factors

Our business could be adversely impacted by events beyond our control, including economic downturns, inflation, increases in interest rates, natural disasters, public health crises such as pandemics, political crises, geopolitical events such as the conflict in Ukraine and the Middle East, or other macroeconomic conditions, which have in the past and may in the future result in adverse operating and financial results.

Our business could be adversely impacted by events beyond our control, including economic downturns, inflation, tariffs, increases in interest rates, natural disasters, public health crises such as pandemics, political crises, geopolitical events such as the conflict in Venezuela, Russia and Ukraine and the Middle East, or other macroeconomic conditions, which have in the past and may in the future result in adverse operating and financial results.

The global economy, including credit and financial markets, has experienced extreme volatility and disruptions,

including, among other things, severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, supply chain shortages, increases in inflation rates, higher interest rates and uncertainty about economic stability.

including, among other things, severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, supply chain shortages, increases in inflation rates and tariffs, higher interest rates and uncertainty about economic stability.

In order to manage the inflation risk present in the U.S.’ economy, the Federal Reserve utilized monetary policy in the form of interest rate increases beginning in 2022 in an effort to bring the inflation rate in line with its stated goal of 2% on a long-term basis.

Between 2022 and 2023, the Federal Reserve increased the federal funds interest rate by 5.25%.

During the second half of 2024, inflation rates began to approach the Federal Reserve’s stated goal of 2%, and the Federal Reserve decreased the federal funds rate by 1.75% in 2024 and 2025.

While inflationary pressures in the U.S.’ economy have begun to subside, it is uncertain what impact recent tariff activity by the U.S.

and foreign governments will have on inflation.

Higher interest rates, coupled with reduced government spending and volatility in financial markets may increase economic uncertainty and affect consumer spending.

If the equity and credit markets deteriorate, including as a result of political unrest or war, it may make any necessary debt or equity financing more difficult to obtain in a timely manner or on favorable terms, more costly or more dilutive.

Increased inflation rates can adversely affect us by increasing our costs, including labor and employee benefit costs.

A widespread public health crisis such as a pandemic could result in significant disruption of global financial markets, reducing our ability to access capital, which could negatively affect our liquidity.

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The ultimate impact of a public health crisis is highly uncertain.

The Federal Reserve recently raised interest rates multiple times in response to concerns about inflation and it may raise them again.

Higher interest rates, coupled with reduced government spending and volatility in financial markets may increase economic uncertainty and affect consumer spending.

Increased inflation rates can adversely affect us by increasing our costs, including labor and employee benefit costs.

A financial downturn could negatively affect our business, results of operations, financial condition and liquidity.

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or global financial system and markets and a severe economic contraction either regionally or worldwide could materially affect our business and financial condition and impact our ability to finance operations by worsening the actual or anticipated future drop in worldwide oil demand, negatively impacting the price we receive for our oil and natural gas production.

Negative economic conditions could also

adversely affect the collectability of our trade receivables or performance by our vendors and suppliers or cause our commodity hedging arrangements to be ineffective if our counterparties are unable to perform their obligations.

Negative economic conditions could also adversely affect the collectability of our trade receivables or performance by our vendors and suppliers or cause our commodity hedging arrangements to be ineffective if our counterparties are unable to perform their obligations.

All of the foregoing may adversely affect our business, financial condition, results of operations and cash flows.

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Further, the loss or corruption of sensitive information could have a material adverse effect on our reputation, financial position, results of operations or cash flows.

In addition, as cyber-attacks continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any vulnerability to cyber-attacks.

In addition, as cyber-attacks continue to evolve, we may be required to

expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any vulnerability to cyber-attacks.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors