What changed in this filing

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Item 1. Financial Statements

2022-08-12 compared with 2022-05-13 · 170 added, 126 removed, 522 unchanged (36% of the section changed)

7 unchanged sentences

Accounts and other receivables, net of allowance for doubtful accounts of:

$ 192,000 at March 31, 2022;

$ 114,000 at June 30, 2022;

$ 391,000 at September 30, 2021

33 unchanged sentences

authorized, 40,000,000 shares:

10,124,587 issued at March 31, 2022;

10,124,587 issued at June 30, 2022;

9,613,525 issued at September 30, 2021

2 unchanged sentences

Retained earnings 8,012,000 2,356,000

Accumulated other comprehensive loss, net 19,000 32,000

Accumulated other comprehensive (loss) income, net ( 89,000 ) 32,000

Treasury stock, at cost:

167,900 shares at March 31, 2022 and September 30, 2021

167,900 shares at June 30, 2022 and September 30, 2021

( 2,286,000 ) ( 2,286,000 )

9 unchanged sentences

Three months ended

March 31, Six months ended

June 30, Nine months ended

2022 2021 2022 2021

11 unchanged sentences

Interest expense 1,000 2,000 1,000 6,000

Gain on debt extinguishment — ( 149,000 ) — ( 149,000 )

Gain on termination of post-retirement medical plan — ( 2,341,000 ) — ( 2,341,000 )

5,797,000 2,717,000 16,909,000 12,734,000

Earnings (loss) before equity in income of affiliates and income taxes 776,000 ( 1,384,000 ) 1,021,000 ( 1,632,000 )

Earnings before equity in income of affiliates and income taxes 2,231,000 2,397,000 3,252,000 765,000

Equity in income of affiliates 433,000 3,348,000 3,400,000 5,026,000

Earnings (loss) before income taxes 2,536,000 ( 760,000 ) 3,988,000 46,000

Earnings before income taxes 2,664,000 5,745,000 6,652,000 5,791,000

Income tax provision 75,000 191,000 325,000 288,000

Net earnings (loss) 2,398,000 ( 794,000 ) 3,738,000 ( 51,000 )

Net earnings 2,589,000 5,554,000 6,327,000 5,503,000

Net earnings attributable to non-controlling interests 58,000 576,000 671,000 797,000

Net earnings (loss) attributable to Barnwell Industries, Inc.

Net earnings attributable to Barnwell Industries, Inc.

$ 2,531,000 $ 4,978,000 $ 5,656,000 $ 4,706,000

Basic and diluted net earnings (loss) per common share attributable to Barnwell Industries, Inc.

Basic and diluted net earnings per common share attributable to Barnwell Industries, Inc.

stockholders $ 0.25 $ 0.59 $ 0.59 $ 0.57

4 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three months ended

March 31, Six months ended

June 30, Nine months ended

2022 2021 2022 2021

Net earnings (loss) $ 2,398,000 $ ( 794,000 ) $ 3,738,000 $ ( 51,000 )

Other comprehensive income (loss):

Net earnings $ 2,589,000 $ 5,554,000 $ 6,327,000 $ 5,503,000

Other comprehensive (loss) income:

Foreign currency translation adjustments, net of taxes of $ 0

3 unchanged sentences

— 26,000 — 92,000

Total other comprehensive income (loss) 12,000 ( 52,000 ) ( 13,000 ) ( 253,000 )

Total comprehensive income (loss) 2,410,000 ( 846,000 ) 3,725,000 ( 304,000 )

Gain on termination of post-retirement medical plan, net of taxes of $ 0

— 541,000 — 541,000

Total other comprehensive (loss) income ( 108,000 ) 493,000 ( 121,000 ) 240,000

Total comprehensive income 2,481,000 6,047,000 6,206,000 5,743,000

Comprehensive income attributable to non-controlling interests ( 58,000 ) ( 576,000 ) ( 671,000 ) ( 797,000 )

Comprehensive income (loss) attributable to Barnwell Industries, Inc.

Comprehensive income attributable to Barnwell Industries, Inc.

$ 2,423,000 $ 5,471,000 $ 5,535,000 $ 4,946,000

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT)

Three months ended March 31, 2022 and 2021

Three months ended June 30, 2022 and 2021

Outstanding Common

2 unchanged sentences

(Accumulated Deficit) Accumulated

Comprehensive Income (Loss) Treasury

Comprehensive (Loss) Income Treasury

Stock Non-controlling

1 unchanged sentence

Equity (Deficit)

Balance at December 31, 2020 8,277,160 $ 4,223,000 $ 1,350,000 $ ( 3,313,000 ) $ ( 1,636,000 ) $ ( 2,286,000 ) $ 3,000 $ ( 1,659,000 )

Net (loss) earnings — — — ( 856,000 ) — — 62,000 ( 794,000 )

Balance at March 31, 2021 8,277,160 $ 4,223,000 $ 1,501,000 $ ( 4,169,000 ) $ ( 1,688,000 ) $ ( 2,286,000 ) $ 4,000 $ ( 2,415,000 )

Net earnings — — — 4,978,000 — — 576,000 5,554,000

Foreign currency translation adjustments, net of taxes of $ 0

2 unchanged sentences

Share-based compensation — — 238,000 — — — — 238,000

Issuance of common stock, net of costs 586,546 293,000 1,284,000 — — — — 1,577,000

Retirement plans:

1 unchanged sentence

— — — — 26,000 — — 26,000

Gain on termination of post-retirement medical plan, net of taxes of $ 0

— — — — 541,000 — — 541,000

Balance at June 30, 2021 8,863,706 $ 4,516,000 $ 3,023,000 $ 809,000 $ ( 1,195,000 ) $ ( 2,286,000 ) $ ( 62,000 ) $ 4,805,000

Balance at March 31, 2022 9,956,687 $ 5,062,000 $ 7,121,000 $ 5,481,000 $ 19,000 $ ( 2,286,000 ) $ 64,000 $ 15,461,000

Balance at December 31, 2021 9,446,783 $ 4,807,000 $ 4,846,000 $ 3,429,000 $ 7,000 $ ( 2,286,000 ) $ 24,000 $ 10,827,000

Net earnings — — — 2,531,000 — — 58,000 2,589,000

3 unchanged sentences

Share-based compensation — — 114,000 — — — — 114,000

Issuance of common stock for services 437 — 1,000 — — — — 1,000

Issuance of common stock, net of costs 509,467 255,000 2,101,000 — — — — 2,356,000

Balance at March 31, 2022 9,956,687 $ 5,062,000 $ 7,121,000 $ 5,481,000 $ 19,000 $ ( 2,286,000 ) $ 64,000 $ 15,461,000

Balance at June 30, 2022 9,956,687 $ 5,062,000 $ 7,235,000 $ 8,012,000 $ ( 89,000 ) $ ( 2,286,000 ) $ 50,000 $ 17,984,000

See Notes to Condensed Consolidated Financial Statements

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT)

Six months ended March 31, 2022 and 2021

Nine months ended June 30, 2022 and 2021

Outstanding Common

2 unchanged sentences

(Accumulated Deficit) Accumulated

Comprehensive Income (Loss) Treasury

Comprehensive (Loss) Income Treasury

Stock Non-controlling

2 unchanged sentences

Balance at September 30, 2020 8,277,160 $ 4,223,000 $ 1,350,000 $ ( 3,897,000 ) $ ( 1,435,000 ) $ ( 2,286,000 ) $ 92,000 $ ( 1,953,000 )

Net (loss) earnings — — — ( 272,000 ) — — 221,000 ( 51,000 )

Net earnings — — — 4,706,000 — — 797,000 5,503,000

Foreign currency translation adjustments, net of taxes of $ 0

2 unchanged sentences

Share-based compensation — — 389,000 — — — — 389,000

Issuance of common stock, net of costs 586,546 293,000 1,284,000 — — — — 1,577,000

Retirement plans:

1 unchanged sentence

— — — — 92,000 — — 92,000

Balance at March 31, 2021 8,277,160 $ 4,223,000 $ 1,501,000 $ ( 4,169,000 ) $ ( 1,688,000 ) $ ( 2,286,000 ) $ 4,000 $ ( 2,415,000 )

Gain on termination of post-retirement medical plan, net of taxes of $ 0

— — — — 541,000 — — 541,000

Balance at June 30, 2021 8,863,706 $ 4,516,000 $ 3,023,000 $ 809,000 $ ( 1,195,000 ) $ ( 2,286,000 ) $ ( 62,000 ) $ 4,805,000

Balance at September 30, 2021 9,445,625 $ 4,807,000 $ 4,590,000 $ 2,356,000 $ 32,000 $ ( 2,286,000 ) $ 8,000 $ 9,507,000

6 unchanged sentences

Issuance of common stock, net of costs 509,467 255,000 2,101,000 — — — — 2,356,000

Balance at March 31, 2022 9,956,687 $ 5,062,000 $ 7,121,000 $ 5,481,000 $ 19,000 $ ( 2,286,000 ) $ 64,000 $ 15,461,000

Balance at June 30, 2022 9,956,687 $ 5,062,000 $ 7,235,000 $ 8,012,000 $ ( 89,000 ) $ ( 2,286,000 ) $ 50,000 $ 17,984,000

See Notes to Condensed Consolidated Financial Statements

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six months ended

Nine months ended

Cash flows from operating activities:

Net earnings (loss) $ 3,738,000 $ ( 51,000 )

Adjustments to reconcile net earnings (loss) to net cash

provided by (used in) operating activities:

Net earnings $ 6,327,000 $ 5,503,000

Adjustments to reconcile net earnings to net cash

provided by operating activities:

Equity in income of affiliates ( 3,400,000 ) ( 5,026,000 )

11 unchanged sentences

Retirement plan contributions and payments ( 2,000 ) ( 5,000 )

Bad debt expense 44,000 7,000

Bad debt (recovery) expense ( 27,000 ) 33,000

Gain on debt extinguishment — ( 149,000 )

Gain on termination of post-retirement medical plan — ( 2,341,000 )

Decrease from changes in current assets and liabilities ( 1,245,000 ) ( 659,000 )

Net cash provided by (used in) operating activities 1,699,000 ( 338,000 )

Net cash provided by operating activities 5,669,000 2,105,000

Cash flows from investing activities:

2 unchanged sentences

Proceeds from the sale of contract drilling assets 687,000 —

Proceeds from the sale of oil and natural gas assets — 60,000

Payments to acquire oil and natural gas properties ( 1,563,000 ) ( 348,000 )

1 unchanged sentence

Capital expenditures - all other ( 13,000 ) ( 28,000 )

Payment for other non-current asset — ( 250,000 )

Issuance of note receivable ( 400,000 ) —

Net cash (used in) provided by investing activities ( 6,063,000 ) 1,955,000

3 unchanged sentences

Proceeds from issuance of stock, net of costs 2,356,000 1,736,000

Payment of deferred offering costs — ( 23,000 )

Net cash provided by (used in) financing activities 1,799,000 ( 285,000 )

Net cash provided by financing activities 1,727,000 832,000

Effect of exchange rate changes on cash and cash equivalents ( 38,000 ) 24,000

Net decrease in cash and cash equivalents ( 1,653,000 ) ( 197,000 )

Net increase in cash and cash equivalents 1,295,000 4,916,000

Cash and cash equivalents at beginning of period 11,279,000 4,584,000

17 unchanged sentences

These condensed consolidated financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto included in Barnwell’s September 30, 2021 Annual Report on Form 10-K, as amended by our Form 10-K/A Amendment No.

1 (our “2021 Annual Report”).

The Condensed Consolidated Balance Sheet as of September 30, 2021 has been derived from audited consolidated financial statements.

In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position at March 31, 2022, results of operations, comprehensive income (loss), and equity (deficit) for the three and six months ended March 31, 2022 and 2021, and cash flows for the six months ended March 31, 2022 and 2021, have been made.

The results of operations for the period ended March 31, 2022 are not necessarily indicative of the operating results for the full year.

In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position at June 30, 2022, results of operations, comprehensive income, and equity (deficit) for the three and nine months ended June 30, 2022 and 2021, and cash flows for the nine months ended June 30, 2022 and 2021, have been made.

The results of operations for the period ended June 30, 2022 are not necessarily indicative of the operating results for the full year.

Use of Estimates in the Preparation of Condensed Consolidated Financial Statements

5 unchanged sentences

Significant Accounting Policies

There have been no changes to Barnwell's significant accounting policies as described in the Notes to Consolidated Financial Statements included in Item 8 of the Company's most recently filed Annual Report on Form 10-K, as amended by our Form 10-K/A Amendment No.

There have been no changes to Barnwell's significant accounting policies as described in the Notes to Consolidated Financial Statements included in Item 8 of the Company's 2021 Annual Report.

Recently Adopted Accounting Pronouncements

4 unchanged sentences

The adoption of this update did not have an impact on Barnwell's consolidated financial statements.

EARNINGS (LOSS) PER COMMON SHARE

Basic earnings (loss) per share is computed using the weighted-average number of common shares outstanding for the period.

Diluted earnings (loss) per share is calculated using the treasury stock method to reflect the assumed issuance of common shares for all potentially dilutive securities, which consist of outstanding stock options.

Potentially dilutive shares are excluded from the computation of diluted earnings (loss) per share if their effect is anti-dilutive.

Options to purchase 615,000 and 665,000 shares of common stock were excluded from the computation of diluted shares for the three and six months ended March 31, 2022 and 2021, respectively, as their inclusion would have been anti-dilutive.

Reconciliations between net earnings (loss) attributable to Barnwell stockholders and common shares outstanding of the basic and diluted net earnings (loss) per share computations are detailed in the following tables:

Three months ended March 31, 2022

EARNINGS PER COMMON SHARE

Basic earnings per share is computed using the weighted-average number of common shares outstanding for the period.

Diluted earnings per share is calculated using the treasury stock method to reflect the assumed issuance of common shares for all potentially dilutive securities, which consist of outstanding stock options.

Potentially dilutive shares are excluded from the computation of diluted earnings per share if their effect is anti-dilutive.

Options to purchase 615,000 shares of common stock were excluded from the computation of diluted shares for the three and nine months ended June 30, 2022 and 2021, as their inclusion would have been anti-dilutive.

Reconciliations between net earnings attributable to Barnwell stockholders and common shares outstanding of the basic and diluted net earnings per share computations are detailed in the following tables:

Three months ended June 30, 2022

(Numerator) Shares

4 unchanged sentences

Diluted net earnings per share $ 2,531,000 9,956,687 $ 0.25

Six months ended March 31, 2022

Nine months ended June 30, 2022

(Numerator) Shares

4 unchanged sentences

Diluted net earnings per share $ 5,656,000 9,657,532 $ 0.59

Three months ended March 31, 2021

Three months ended June 30, 2021

(Numerator) Shares

(Denominator) Per-Share

Basic net loss per share $ ( 856,000 ) 8,277,160 $ ( 0.10 )

Basic net earnings per share $ 4,978,000 8,398,001 $ 0.59

Effect of dilutive securities -

common stock options — —

Diluted net loss per share $ ( 856,000 ) 8,277,160 $ ( 0.10 )

Six months ended March 31, 2021

Diluted net earnings per share $ 4,978,000 8,398,001 $ 0.59

Nine months ended June 30, 2021

(Numerator) Shares

(Denominator) Per-Share

Basic net loss per share $ ( 272,000 ) 8,277,160 $ ( 0.03 )

Basic net earnings per share $ 4,706,000 8,317,440 $ 0.57

Effect of dilutive securities -

common stock options — —

Diluted net loss per share $ ( 272,000 ) 8,277,160 $ ( 0.03 )

Diluted net earnings per share $ 4,706,000 8,317,440 $ 0.57

NOTE RECEIVABLE

In February 2022, the Company loaned $ 400,000 to an unrelated third party and recorded a $ 400,000 note receivable.

The note receivable is included in “Other current assets” in the Company’s Condensed Consolidated Balance Sheet as of March 31, 2022.

In February 2022, the Company loaned $ 400,000 to an unrelated third party and recorded a $ 400,000 note receivable in the quarter ended March 31, 2022.

In April 2022, the loan was repaid in full and no interest was accrued during the outstanding period.

4 unchanged sentences

KD I is the developer of Kaupulehu Lot 4A Increment I (“Increment I”), and KD II is the developer of Kaupulehu Lot 4A Increment II (“Increment II”).

Barnwell’s ownership interests in the Kukio Resort Land Development Partnerships is accounted for using

the equity method of accounting.

The partnerships derive income from the sale of residential parcels, of which three lots remain to be sold at Increment I as of March 31, 2022, as well as from commissions on real estate sales by the real estate sales office and revenues resulting from the sale of private club memberships.

Barnwell’s ownership interests in the Kukio Resort Land Development Partnerships is accounted for using the equity method of accounting.

The partnerships derive income from the sale of residential parcels, of which two lots, one being a large lot that is now a consolidation of two previous separate lots and one being an original size lot, remain to be sold at Increment I as of June 30, 2022, as well as from commissions on real estate sales by the real estate sales office and revenues resulting from the sale of private club memberships.

Two ocean front parcels approximately two to three acres in size fronting the ocean were developed within Increment II by KD II, of which one was sold in fiscal 2017 and one was sold in fiscal 2016.

7 unchanged sentences

Cumulative distributions from the Kukio Resort Land Development Partnerships have reached the $ 45,000,000 threshold and in the quarter ended December 31, 2020, the Kukio Resort Land Development Partnerships made distributions in excess of the threshold out of the proceeds from the sale of two lots in Increment I.

Accordingly, Barnwell received a total of $ 459,000 in preferred return payments, which was reflected as an additional equity pickup in the "Equity in income of affiliates" line item in the accompanying Condensed Consolidated Statement of Operations for the six months ended March 31, 2021.

The preferred return payments received in the quarter ended December 31, 2020 brought the cumulative preferred return total to $ 656,000 , which was the total amount to which Barnwell was entitled.

During the six months ended March 31, 2022, Barnwell received cash distributions of $ 2,967,000 from the Kukio Resort Land Development Partnership resulting in a net amount of $ 2,643,000 , after distributing $ 324,000 to non-controlling interests.

During the six months ended March 31, 2021, Barnwell received net cash distributions in the amount of $ 2,205,000 after distributing $ 215,000 to non-controlling interests.

Of the $ 2,205,000 net cash distributions received, $ 459,000 represented a payment of the preferred return from KKM, as discussed above.

Barnwell’s share of the operating results of its equity affiliates was income of $ 1,760,000 and $ 2,967,000 for the three and six months ended March 31, 2022, respectively, compared to income of $ 624,000 and $ 1,678,000 , which includes the $ 459,000 payment of the preferred return from KKM discussed above, for the three and six months ended March 31, 2021, respectively.

During the nine months ended June 30, 2022, Barnwell received cash distributions of $ 3,400,000 from the Kukio Resort Land Development Partnership resulting in a net amount of $ 3,028,000 , after distributing $ 372,000 to non-controlling interests.

During the nine months ended June 30, 2021, Barnwell received net cash distributions in the amount of $ 5,328,000 after distributing $ 599,000 to non-controlling interests.

Of the $ 5,328,000 net cash distributions received during the nine months ended June 30, 2021, $ 459,000 represented a payment of the preferred return from KKM, as discussed above.

Equity in income of affiliates was $ 433,000 and $ 3,400,000 for the three and nine months ended June 30, 2022, respectively, as compared to equity in income of affiliates of $ 3,348,000 and $ 5,026,000 , which includes the $ 459,000 payment of the preferred return from KKM discussed above, for the three and nine months ended June 30, 2021, respectively.

Summarized financial information for the Kukio Resort Land Development Partnerships is as follows:

Three months ended March 31,

Three months ended June 30,

Revenue $ 4,574,000 $ 21,521,000

1 unchanged sentence

Net earnings $ 2,209,000 $ 11,618,000

Six months ended March 31,

Nine months ended June 30,

Revenue $ 23,492,000 $ 37,220,000

3 unchanged sentences

The Company will record future equity method earnings only after our share of the Kukio Resort Land Development Partnership’s cumulative earnings in excess of distributions during the suspended period exceeds our share of the Kukio Resort Land Development Partnership’s income recognized for the excess distributions, and during this suspended period any distributions received will be recorded as equity in income of affiliates.

Accordingly, the amount of equity in income of affiliates recognized in the six months ended March 31, 2022 was equivalent to the $ 2,967,000 of distributions received in that period.

Accordingly, the amount of equity in income of affiliates recognized in the nine months ended June 30, 2022 was equivalent to the $ 3,400,000 of distributions received in that period.

Sale of Interest in Leasehold Land

1 unchanged sentence

With respect to Increment I, Kaupulehu Developments is entitled to receive payments from KD I based on 10 % of the gross receipts from KD I’s sales of single-family residential lots in Increment I.

Six single-family lots were sold during the six months ended March 31, 2022 and three single-family lots, of the 80 lots developed within Increment I, remained to be sold as of March 31, 2022.

Six single-family lots were sold during the nine months ended June 30, 2022 and two single-family lots, of the 80 lots developed within Increment I, remained to be sold as of June 30, 2022.

Under the terms of the Increment II agreement with KD II, Kaupulehu Developments is entitled to 15 % of the distributions of KD II, the cost of which is to be solely borne by KDK out of its 55 % ownership interest in KD II, plus a priority payout of 10 % of KDK’s cumulative net profits derived from Increment II sales subsequent to Phase 2A, up to a maximum of $ 3,000,000 as to the priority payout.

7 unchanged sentences

Three months ended

March 31, Six months ended

June 30, Nine months ended

2022 2021 2022 2021

11 unchanged sentences

established a new wholly-owned subsidiary named BOK Drilling, LLC (“BOK”) for the purpose of indirectly investing in oil and natural gas exploration and development in Oklahoma.

BOK and Gros Ventre Partners, LLC (“Gros Ventre”), an entity affiliated with the Company, entered into the Limited Liability Agreement (the “Teton Operating Agreement”) of Teton Barnwell Fund I, LLC (“Teton Barnwell”), an entity formed for the purpose of directly entering into such oil and natural gas investments.

BOK and Gros Ventre Partners, LLC (“Gros Ventre”), an entity previously affiliated with the Company (see Note 18 for additional details), entered into the Limited Liability Agreement (the “Teton Operating Agreement”) of Teton Barnwell Fund I, LLC (“Teton Barnwell”), an entity formed for the purpose of directly entering into such oil and natural gas investments.

Under the terms of the Teton Operating Agreement, the profits of Teton Barnwell are split between BOK and Gros Ventre at 98 % and 2 %, respectively, and as the manager of Teton Barnwell, Gros Venture is paid an annual asset management fee equal to 1 % of the cumulative capital contributions made to Teton Barnwell as compensation for its management services.

BOK is responsible for 100 % of the capital contributions made to Teton Barnwell and as of March 31, 2022, the Company has made a total of $ 1,250,000 in cumulative capital contributions to Teton Barnwell to fund its initial oil and natural gas investment in Oklahoma.

BOK is responsible for 100 % of the capital contributions made to Teton Barnwell and as of June 30, 2022, the Company has made a total of $ 1,250,000 in

cumulative capital contributions to Teton Barnwell to fund its initial oil and natural gas investment in Oklahoma and has received a total of $ 1,176,000 in distributions, net of non-controlling interests, from Teton Barnwell out of Teton Barnwell's operating cash flows.

In July 2022, an additional $ 882,000 distribution, net of non-controlling interests, was received from Teton Barnwell.

These contributions and distributions between Teton Barnwell and the Company do not affect our reported consolidated cash flows as Teton Barnwell is a consolidated entity, as discussed further below.

The Company has determined that Teton Barnwell is a variable interest entity (“VIE”) as the entity is structured with non-substantive voting rights and that the Company is the primary beneficiary.

24 unchanged sentences

Barnwell also assumed $ 1,500,000 in asset retirement obligations associated with the acquisition.

There were no oil and natural gas working interest acquisitions during the six months ended March 31, 2021.

In April 2021, Barnwell acquired additional working interests in oil and natural gas properties located in the Twining area of Alberta, Canada for cash consideration of $ 348,000 .

The purchase price per the agreement was adjusted for customary purchase price adjustments to reflect the economic activity from the effective date to the closing date.

There were no significant oil and natural gas property dispositions during the nine months ended June 30, 2022.

In April 2021, Barnwell entered into a purchase and sale agreement with an independent third party and sold its interests in properties located in the Hillsdown area of Alberta, Canada.

The sales price per the agreement was adjusted for customary purchase price adjustments to $ 132,000 in order to, among other things, reflect an economic effective date of October 1, 2020.

$ 72,000 of the sales proceeds was withheld by the buyers for potential amounts due for Barnwell’s Canadian income taxes related to the sale.

The proceeds were credited to the full cost pool, with no gain or loss recognized, as the sale did not result in a significant alteration of the relationship between capitalized costs and proved reserves.

Impairment of Oil and Natural Gas Properties

Under the full cost method of accounting, the Company performs quarterly oil and natural gas ceiling test calculations.

There was no ceiling test impairment during the three months ended March 31, 2022 and 2021.

There was no ceiling test impairment during the six months ended March 31, 2022 and a $ 630,000 ceiling test impairment during the six months ended March 31, 2021.

There was no ceiling test impairment during the three months ended June 30, 2022 and 2021.

There was no ceiling test impairment during the nine months ended June 30, 2022 and a $ 630,000 ceiling test impairment during the nine months ended June 30, 2021.

Changes in the mandated 12-month historical rolling average first-day-of-the-month prices for oil, natural gas and natural gas liquids prices, the value of reserve additions as compared to the amount of capital expenditures to obtain them, and changes in production rates and estimated levels of reserves, future development costs and the estimated market value of unproved properties, impact the determination of the maximum carrying value of oil and natural gas properties.

1 unchanged sentence

Barnwell sponsors a noncontributory defined benefit pension plan (“Pension Plan”) covering substantially all of its U.S.

Additionally, Barnwell sponsors a Supplemental Executive Retirement Plan (“SERP”), a noncontributory supplemental retirement benefit plan which covers certain current and former employees of Barnwell for amounts exceeding the limits allowed under the Pension Plan, and previously sponsored a post-retirement medical insurance benefits plan (“Post-retirement Medical”) covering eligible U.S.

Additionally, Barnwell sponsors a Supplemental Executive

Retirement Plan (“SERP”), a noncontributory supplemental retirement benefit plan which covers certain current and former employees of Barnwell for amounts exceeding the limits allowed under the Pension Plan, and previously sponsored a post-retirement medical insurance benefits plan (“Post-retirement Medical”) covering eligible U.S.

In June 2021, the Company terminated its Post-retirement Medical plan effective June 4, 2021.

2 unchanged sentences

The Post-retirement Medical plan was an unfunded plan and the Company funded benefits when payments were made.

As a result of the plan termination, the Company recognized a non-cash gain of $ 2,341,000 during the three and nine months ended June 30, 2021.

The following tables detail the components of net periodic benefit (income) cost for Barnwell’s retirement plans:

Pension Plan SERP Post-retirement Medical

Three months ended March 31,

Three months ended June 30,

2022 2021 2022 2021 2022 2021

4 unchanged sentences

Pension Plan SERP Post-retirement Medical

Six months ended March 31,

Nine months ended June 30,

2022 2021 2022 2021 2022 2021

8 unchanged sentences

Fluctuations in actual equity market returns as well as changes in general interest rates will result in changes in the market value of plan assets and may result in increased or decreased retirement benefits costs and contributions in future periods.

The components of earnings (loss) before income taxes, after adjusting the earnings for non-controlling interests, are as follows:

The components of earnings before income taxes, after adjusting the earnings for non-controlling interests, are as follows:

Three months ended

March 31, Six months ended

June 30, Nine months ended

2022 2021 2022 2021

2 unchanged sentences

$ 2,606,000 $ 5,169,000 $ 5,981,000 $ 4,994,000

The components of the income tax provision (benefit) are as follows:

The components of the income tax provision are as follows:

Three months ended

March 31, Six months ended

June 30, Nine months ended

2022 2021 2022 2021

6 unchanged sentences

Income from our investment in the Oklahoma oil venture is 100% allocable to Oklahoma and Barnwell receives no benefit from consolidated or unitary losses and, therefore, is subject to Oklahoma state taxes.

In addition, net operating loss carryforwards, the benefit of which had not previously been recognized due to the Company's continuing full valuation allowance, are estimated to be partially utilized in the current year periods as the recognized benefit is now more likely than not.

In addition, net operating loss carryforwards, all of which had a full valuation allowance at the end of the previous fiscal year, are being partially utilized in the current year periods to offset taxable income in the U.S.

federal and Canadian jurisdictions.

The net operating loss carryforwards beyond the current year’s utilization continue to have a full valuation allowance as realization of their benefit is not more likely than not.

Included in the current income tax provision for the three and nine months ended June 30, 2022 is a $ 61,000 expense for income tax penalties and interest thereon for the non-filing of IRS Form 8858 in each of our U.S.

federal income tax returns for fiscal years 2019, 2020 and 2021.

The Company is in the process of amending its U.S.

federal tax returns to include Form 8858 and plans to request abatement of the potential penalties and interest.

There was no such expense included in the current income tax provision for the three and nine months ended June 30, 2021.

REVENUE FROM CONTRACTS WITH CUSTOMERS

Disaggregation of Revenue

The following tables provide information about disaggregated revenue by revenue streams, reportable segments, geographical region, and timing of revenue recognition for the three and six months ended March 31, 2022 and 2021.

Three months ended March 31, 2022

Three months ended June 30, 2022

Oil and natural gas Contract drilling Land investment Other Total

4 unchanged sentences

Drilling and pump — 736,000 — — 736,000

Contingent residual payments — — 695,000 — 695,000

Other — — — 32,000 32,000

Total revenues before interest income $ 7,292,000 $ 736,000 $ — $ — $ 8,028,000

7 unchanged sentences

Total revenues before interest income $ 7,292,000 $ 736,000 $ — $ — $ 8,028,000

Three months ended March 31, 2021

Three months ended June 30, 2021

Oil and natural gas Contract drilling Land investment Other Total

4 unchanged sentences

Drilling and pump — 889,000 — — 889,000

Contingent residual payments — — 1,253,000 — 1,253,000

Other — — — 79,000 79,000

8 unchanged sentences

Total revenues before interest income $ 2,887,000 $ 889,000 $ 1,253,000 $ 79,000 $ 5,108,000

Six months ended March 31, 2022

Nine months ended June 30, 2022

Oil and natural gas Contract drilling Land investment Other Total

15 unchanged sentences

Total revenues before interest income $ 16,345,000 $ 2,430,000 $ 1,295,000 $ 89,000 $ 20,159,000

Six months ended March 31, 2021

Nine months ended June 30, 2021

Oil and natural gas Contract drilling Land investment Other Total

17 unchanged sentences

The following table provides information about accounts receivables, contract assets and contract liabilities from contracts with customers:

March 31, 2022 September 30, 2021

June 30, 2022 September 30, 2021

Accounts receivables from contracts with customers $ 3,975,000 $ 2,797,000

9 unchanged sentences

Such deferred revenue typically results from billings in excess of costs and estimated earnings on uncompleted contracts.

As of March 31, 2022 and September 30, 2021, the Company had $ 662,000 and $ 455,000 , respectively, included in “Other current liabilities” on the balance sheets for those performance obligations expected to be completed in the next twelve months.

During the six months ended March 31, 2022 and 2021, the amount of revenue recognized that was previously included in contract liabilities as of the beginning of the respective period was $ 308,000 and $ 789,000 , respectively.

As of June 30, 2022 and September 30, 2021, the Company had $ 1,145,000 and $ 455,000 , respectively, included in “Other current liabilities” on the balance sheets for those performance obligations expected to be completed in the next twelve months.

During the nine months ended June 30, 2022 and 2021, the amount of revenue recognized that was previously included in contract liabilities as of the beginning of the respective period was $ 342,000 and $ 978,000 , respectively.

Contracts are sometimes modified for a change in scope or other requirements.

7 unchanged sentences

Nearly all of the Company's contract drilling segment contracts have original expected durations of one year or less.

At March 31, 2022, the Company had four contract drilling jobs with original expected durations of greater than one year.

At June 30, 2022, the Company had five contract drilling jobs with original expected durations of greater than one year.

For these contracts, 35 % of the remaining performance obligation of $ 7,490,000 is expected to be recognized in the next twelve months and the remaining, thereafter.

1 unchanged sentence

Preconstruction costs, which include costs such as set-up and mobilization, are capitalized and allocated across all performance obligations and deferred and amortized over the contract term on a progress towards completion basis.

As of March 31, 2022 and September 30, 2021, the Company had $ 257,000 and $ 326,000 , respectively, in unamortized preconstruction costs related to contracts that were not completed.

During the three and six months ended March 31, 2022 and 2021, the amortization of preconstruction costs related to contracts were not material and were included in the accompanying Condensed Consolidated Statements of Operations.

Additionally, no impairment charges in connection with the Company’s preconstruction costs were recorded during the three and six months ended March 31, 2022 and 2021.

As of June 30, 2022 and September 30, 2021, the Company had $ 228,000 and $ 326,000 , respectively, in unamortized preconstruction costs related to contracts that were not completed.

During the three and nine months ended June 30, 2022 and 2021, the amortization of preconstruction costs related to contracts were not material and were included in the accompanying Condensed Consolidated Statements of Operations.

Additionally, no impairment charges in connection with the Company’s preconstruction costs were recorded during the three and nine months ended June 30, 2022 and 2021.

SEGMENT INFORMATION

6 unchanged sentences

Three months ended

March 31, Six months ended

June 30, Nine months ended

2022 2021 2022 2021

24 unchanged sentences

Interest income — 6,000 2,000 6,000

Earnings (loss) before income taxes $ 2,536,000 $ ( 760,000 ) $ 3,988,000 $ 46,000

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The changes in each component of accumulated other comprehensive income (loss) were as follows:

Gain on debt extinguishment — 149,000 — 149,000

Gain on termination of post-retirement medical plan — 2,341,000 — 2,341,000

Earnings before income taxes $ 2,664,000 $ 5,745,000 $ 6,652,000 $ 5,791,000

ACCUMULATED OTHER COMPREHENSIVE LOSS

The changes in each component of accumulated other comprehensive loss were as follows:

Three months ended

March 31, Six months ended

June 30, Nine months ended

2022 2021 2022 2021

3 unchanged sentences

Income taxes — — — —

Net current period other comprehensive income (loss) 12,000 ( 85,000 ) ( 13,000 ) ( 319,000 )

Net current period other comprehensive loss ( 108,000 ) ( 74,000 ) ( 121,000 ) ( 393,000 )

Ending accumulated foreign currency translation 141,000 152,000 141,000 152,000

2 unchanged sentences

Amortization of net actuarial loss — 26,000 — 92,000

Gain on termination of post-retirement medical plan — 541,000 — 541,000

Income taxes — — — —

1 unchanged sentence

Ending accumulated retirement plans benefit cost ( 230,000 ) ( 1,347,000 ) ( 230,000 ) ( 1,347,000 )

Accumulated other comprehensive income (loss), net of taxes $ 19,000 $ ( 1,688,000 ) $ 19,000 $ ( 1,688,000 )

Accumulated other comprehensive loss, net of taxes $ ( 89,000 ) $ ( 1,195,000 ) $ ( 89,000 ) $ ( 1,195,000 )

The amortization of net actuarial loss for the retirement plans are included in the computation of net periodic benefit (income) cost which is a component of “General and administrative” expenses on the accompanying Condensed Consolidated Statements of Operations (see Note 8 for additional details).

15 unchanged sentences

If the Company repays 66.6 % of the principal amount prior to December 31, 2023, there will be loan forgiveness of 33.3 % up to a maximum of CAD$ 20,000 .

STOCKHOLDERS' EQUITY (DEFICIT)

Paycheck Protection Program Loan

In April 2020, the Company, as obligor, entered into a promissory note evidencing an unsecured loan in the approximate amount of $ 147,000 under the Paycheck Protection Program (“PPP”) pursuant to the Coronavirus Aid, Relief, and Economic Security Act.

The note was to mature two years after the date of the loan disbursement with interest at a fixed annual rate of 1.00 % and with the principal and interest payments deferred until ten months after the last day of the covered period.

In April 2021, the Company was notified by the lender of our PPP loan that the entire PPP loan amount and related accrued interest was forgiven by the Small Business Administration.

As a result of the loan forgiveness, the Company recognized a gain on debt extinguishment of $ 149,000 during the three and nine months ended June 30, 2021.

STOCKHOLDERS' EQUITY

In May 2022, Barnwell’s stockholders approved the amendment to increase the Company’s number of authorized shares of common stock from 20,000,000 to 40,000,000 shares and approved amendments to the Company’s 2018 Equity Incentive Plan (the “2018 Plan”) which included the amendment to increase the total number of shares of stock authorized for awards granted under the 2018 Plan from 800,000 to 1,600,000 shares among other amendments.

At The Market Offering

On March 16, 2021, the Company entered into a Sales Agreement (the “Sales Agreement”) with A.G.P./Alliance Global Partners (“A.G.P,”), with respect to an at-the-market offering program (“ATM”) pursuant to which the Company may offer and sell, from time to time, shares of its common stock, par value $ 0.50 per share, having an aggregate sales price of up to $ 25 million (subject to certain limitations set forth in the Sales Agreement and applicable securities laws, rules and regulations), through or to A.G.P as the Company’s sales agent or as principal.

as the Company’s sales agent or as principal.

Sales of our common stock under the ATM, if any, will be made by any methods deemed to be “at the market offerings” as defined in Rule 415(a)(4) under the Securities Act, including sales made directly on the NYSE American, on any other existing trading market for our Common Stock, or to or through a market maker.

1 unchanged sentence

333-254365), filed with the Securities and Exchange Commission on March 16, 2021, and declared effective on March 26, 2021 (the "Registration Statement”), and the prospectus dated March 26, 2021, included in the Registration Statement.

During the six months ended March 31, 2022, the Company sold 509,467 shares of common stock resulting in net proceeds of $ 2,356,000 after commissions and fees of $ 75,000 and ATM-related professional services of $ 22,000 .

CONTINGENCIES

During the nine months ended June 30, 2022, the Company sold 509,467 shares of common stock resulting in net proceeds of $ 2,356,000 after commissions and fees of $ 75,000 and ATM-related professional services of $ 22,000 .

During the nine months ended June 30, 2021, the Company sold 586,546 shares of common stock resulting in net proceeds of $ 1,736,000 after commissions and fees of $ 59,000 and ATM-related professional services of $ 124,000 .

In August 2022, the Company’s Board of Directors suspended the sales of our common stock under the ATM until further notice.

COMMITMENTS AND CONTINGENCIES

Legal and Regulatory Matters

4 unchanged sentences

While the well did pass the cage plumbness test, the contract uses the gyroscopic test as the measure of plumbness.

Barnwell and the customer currently have a verbal arrangement where Barnwell will provide for centralizers and armored cabling and a warranty agreement, however Barnwell’s management believes the plumbness deviation is not impactful to the performance of the submersible pumps that will be installed in the well.

Accordingly, while costs for the centralizers and armored cabling have been accrued, no accrual has been recorded as of March 31, 2022 for the warranty as there is no probable or estimable contingent liability.

Barnwell and the customer currently have an arrangement where Barnwell will provide for centralizers, armored cabling and a pump installation and removal test to confirm that plumbness is satisfactory.

Barnwell’s management believes the plumbness deviation is not impactful to the performance of the submersible pumps that will be installed in the well.

Accordingly, while costs for the centralizers, armored cabling and the pump installation and removal test have been accrued, no accrual has been recorded as of June 30, 2022 for any further costs as there is no related probable or estimable contingent liability.

Subscription Receipts Agreement

In May 2022, Barnwell Investments LLC, a new wholly-owned subsidiary of Barnwell Industries Inc., entered into an agreement to participate in a private placement offering (the “Offering”) of subscriptions receipts (the “Subscription Agreement”) with 1287398 B.C.

(the “Issuer”) and agreed to purchase 1,724,138 subscription receipts at a price of $ 1.16 per subscription receipt for a total of $ 2,000,000 from the Issuer.

is a Canadian reporting issuer.

The Offering is subject to regulatory approvals, including the conditional listing approval by the TSX Venture Exchange.

The Subscription Agreement is currently held in escrow by the Issuer until certain escrow release conditions are met which includes the Issuer raising an additional $ 3,000,000 in gross proceeds from other parties under the private placement offering for total minimum gross proceeds of $ 5,000,000 .

As of the date of this report, the escrow release condition has not been satisfied and no cash has been paid by the Company to the Issuer.

INFORMATION RELATING TO THE CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six months ended

Nine months ended

Supplemental disclosure of cash flow information:

Cash paid during the year for:

Income taxes paid, net $ 302,000 $ 85,000

Capital expenditure accruals related to oil and natural gas exploration and development increased $ 443,000 during the six months ended March 31, 2022 and decreased $ 381,000 during the six months ended March 31, 2021.

Additionally, capital expenditure accruals related to oil and natural gas asset retirement obligations increased $ 2,341,000 during the six months ended March 31, 2022 and decreased $ 12,000 during the six months ended March 31, 2021.

Cash paid (received) during the year for:

Income taxes paid (refunded), net $ 352,000 $ ( 290,000 )

Supplemental disclosure of non-cash investing and financing activities:

Canadian income tax withholdings on proceeds from the sale of oil and natural gas properties $ — $ 72,000

Accrued offering costs included in deferred offering costs, additional paid-in capital, and accounts payable $ — $ 453,000

Capital expenditure accruals related to oil and natural gas exploration and development increased $ 812,000 during the nine months ended June 30, 2022 and decreased $ 7,000 during the nine months ended June 30, 2021.

Additionally, capital expenditure accruals related to oil and natural gas asset retirement obligations increased $ 2,476,000 and $ 463,000 during the nine months ended June 30, 2022 and 2021, respectively.

RELATED PARTY TRANSACTIONS

3 unchanged sentences

Changes to the arrangement above, effective March 7, 2019, are discussed in Note 4.

During the six months ended March 31, 2022, Barnwell received $ 1,295,000 in percentage of sales payments from KD 1 from the sale of six single-family lots within Phase II of Increment I.

During the six months ended March 31, 2021, Barnwell received $ 485,000 in percentage of sales payments from KD 1 from the sale of two single-family lots within Phase II of Increment I.

O'Farrell, a member of the Board of Directors of the Company through March 7, 2022, is the sole member of Four Pines Operating LLC which owns a 25 % interest in Gros Ventre.

In February 2021, Gros Ventre and BOK, a wholly-owned subsidiary of Barnwell, entered into the Teton Operating Agreement of Teton Barnwell, an entity formed for the purpose of directly investing in oil and natural gas exploration and development in Oklahoma.

During the nine months ended June 30, 2022, Barnwell received $ 1,295,000 in percentage of sales payments from KD 1 from the sale of six single-family lots within Increment I.

During the nine months ended June 30, 2021, Barnwell received $ 1,738,000 in percentage of sales payments from KD 1 from the sale of eight single-family lots within of Increment I.

O'Farrell, formerly a member of the Board of Directors of the Company through March 7, 2022, is the sole member of Four Pines Operating LLC which owns a 25 % interest in Gros Ventre.

In February 2021, Gros Ventre and BOK, a wholly-owned subsidiary of Barnwell, entered into the Teton Operating Agreement of Teton Barnwell, an entity formed for the purpose of directly investing in

oil and natural gas exploration and development in Oklahoma.

Under the terms of the Teton Operating Agreement, Gros Ventre makes no capital contributions and receives 2 % of the profits of Teton Barnwell.

Additionally, as the manager of Teton Barnwell, Gros Venture is paid an annual asset management fee equal to 1 % of the cumulative capital contributions made to Teton Barnwell as compensation for its management services.

SUBSEQUENT EVENTS

Subsequent to March 31, 2022, Barnwell received net cash distributions in the amount of $ 385,000 from the Kukio Resort Land Development Partnerships.

Financial results of this distribution will be reflected in Barnwell's quarter ending June 30, 2022.

In May 2022, Barnwell’s stockholders approved the amendment to increase the Company’s number of authorized shares of common stock from 20,000,000 to 40,000,000 shares and approved the amendments to the Company’s 2018 Equity Incentive Plan (the “2018 Plan”) which included the amendment to increase the total number of shares of stock authorized for awards granted under the 2018 Plan from 800,000 to 1,600,000 shares amongst other amendments.

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-Q

Item 1. Financial Statements