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Item 1. Financial Statements

2024-02-12 compared with 2023-08-14 · 135 added, 317 removed, 392 unchanged (54% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

2023 September 30,

December 31, 2023 September 30, 2023

Current assets:

Cash and cash equivalents $ 3,223,000 $ 2,830,000

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

$ 250,000 at June 30, 2023;

Accounts and other receivables, net of allowance for credit losses of:

$ 334,000 at December 31, 2023;

$ 284,000 at September 30, 2023

3,278,000 3,246,000

Income taxes receivable 51,000 —

Other current assets 2,622,000 3,009,000

3 unchanged sentences

Property and equipment:

Oil and natural gas properties, full cost method of accounting:

Proved properties 81,102,000 67,883,000

Proved oil and natural gas properties (full cost method) 83,348,000 80,851,000

Drilling rigs and other property and equipment 7,231,000 7,223,000

12 unchanged sentences

Total current liabilities 6,645,000 6,598,000

Long-term debt — 44,000

Operating lease liabilities 36,000 47,000

6 unchanged sentences

authorized, 40,000,000 shares:

10,158,678 issued at June 30, 2023;

10,168,006 issued at December 31, 2023;

10,158,678 issued at September 30, 2023

4 unchanged sentences

Treasury stock, at cost:

167,900 shares at June 30, 2023 and September 30, 2022

167,900 shares at December 31, 2023 and September 30, 2023

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

Total stockholders' equity 18,154,000 18,744,000

18,052,000 19,141,000

Non-controlling interests 11,000 13,000

6 unchanged sentences

Three months ended

June 30, Nine months ended

2023 2022 2023 2022

Oil and natural gas $ 5,130,000 $ 5,226,000

8 unchanged sentences

Depletion, depreciation, and amortization 1,511,000 840,000

Interest expense 1,000 1,000 1,000 1,000

Foreign currency gain ( 126,000 ) ( 78,000 )

Interest expense 2,000 —

Gain on sale of assets — ( 551,000 )

3 unchanged sentences

(Loss) earnings before income taxes ( 596,000 ) 1,288,000

Income tax (benefit) provision ( 163,000 ) 75,000 ( 87,000 ) 325,000

Income tax provision 66,000 79,000

Net (loss) earnings ( 662,000 ) 1,209,000

11 unchanged sentences

Three months ended

June 30, Nine months ended

2023 2022 2023 2022

Net (loss) earnings $ ( 662,000 ) $ 1,209,000

Other comprehensive (loss) income:

Other comprehensive income (loss):

Foreign currency translation adjustments, net of taxes of $ 0

15,000 ( 108,000 ) 17,000 ( 121,000 )

Retirement plans:

1 unchanged sentence

( 21,000 ) ( 20,000 )

Total other comprehensive loss ( 5,000 ) ( 108,000 ) ( 43,000 ) ( 121,000 )

Total other comprehensive income (loss) 9,000 ( 18,000 )

Total comprehensive (loss) income ( 653,000 ) 1,191,000

6 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Three months ended June 30, 2023 and 2022

Three months ended December 31, 2023 and 2022

Outstanding Common

Stock Additional

Capital Retained Earnings Accumulated

Comprehensive (Loss) Income Treasury

Capital Retained

Earnings Accumulated

Comprehensive

Income Treasury

Stock Non-controlling

Interests Total

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 September 30, 2022 9,956,687 $ 5,062,000 $ 7,351,000 $ 7,720,000 $ 1,294,000 $ ( 2,286,000 ) $ 20,000 $ 19,161,000

Net earnings — — — 1,089,000 — — 120,000 1,209,000

3 unchanged sentences

Share-based compensation — — 115,000 — — — — 115,000

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

Balance at March 31, 2023 9,956,687 $ 5,062,000 $ 7,541,000 $ 7,273,000 $ 1,256,000 $ ( 2,286,000 ) $ 18,000 $ 18,864,000

Net (loss) earnings — — — ( 717,000 ) — — 2,000 ( 715,000 )

Foreign currency translation adjustments, net of taxes of $ 0

— — — — 15,000 — — 15,000

Distributions to non-controlling interests — — — — — — ( 4,000 ) ( 4,000 )

Share-based compensation — — ( 12,000 ) — — — — ( 12,000 )

Issuance of common stock for services 34,091 17,000 73,000 — — — — 90,000

Dividends declared, $ 0.015 per share

3 unchanged sentences

— — — — ( 20,000 ) — — ( 20,000 )

Balance at June 30, 2023 9,990,778 $ 5,079,000 $ 7,602,000 $ 6,406,000 $ 1,251,000 $ ( 2,286,000 ) $ 16,000 $ 18,068,000

See Notes to Condensed Consolidated Financial Statements

BARNWELL INDUSTRIES, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Nine months ended June 30, 2023 and 2022

Outstanding Common

Stock Additional

Capital Retained Earnings Accumulated

Comprehensive (Loss) Income Treasury

Stock Non-controlling

Interests Total

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

Net earnings — — — 5,656,000 — — 671,000 6,327,000

Foreign currency translation adjustments, net of taxes of $ 0

— — — — ( 121,000 ) — — ( 121,000 )

Distributions to non-controlling interests — — — — — — ( 629,000 ) ( 629,000 )

Share-based compensation — — 541,000 — — — — 541,000

Issuance of common stock for services 1,595 — 3,000 — — — — 3,000

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

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

Balance at December 31, 2022 9,956,687 $ 5,062,000 $ 7,466,000 $ 8,660,000 $ 1,276,000 $ ( 2,286,000 ) $ 32,000 $ 20,210,000

Balance at September 30, 2023 9,990,778 $ 5,079,000 $ 7,687,000 $ 6,160,000 $ 2,104,000 $ ( 2,286,000 ) $ 13,000 $ 18,757,000

4 unchanged sentences

Share-based compensation — — 65,000 — — — — 65,000

Issuance of common stock for services 34,091 17,000 73,000 — — — — 90,000

Dividends declared, $ 0.045 per share

— — — ( 449,000 ) — — — ( 449,000 )

Issuance of common stock for restricted stock units vested 9,328 5,000 ( 5,000 ) — — — — —

Retirement plans:

1 unchanged sentence

— — — — ( 21,000 ) — — ( 21,000 )

Balance at June 30, 2023 9,990,778 $ 5,079,000 $ 7,602,000 $ 6,406,000 $ 1,251,000 $ ( 2,286,000 ) $ 16,000 $ 18,068,000

Balance at December 31, 2023 10,000,106 $ 5,084,000 $ 7,747,000 $ 5,496,000 $ 2,113,000 $ ( 2,286,000 ) $ 11,000 $ 18,165,000

See Notes to Condensed Consolidated Financial Statements

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine months ended

Three months ended

Cash flows from operating activities:

2 unchanged sentences

provided by operating activities:

Equity in income of affiliates ( 538,000 ) ( 3,400,000 )

Depletion, depreciation, and amortization 1,511,000 840,000

Equity in income of affiliates — ( 538,000 )

Gain on sale of assets — ( 551,000 )

2 unchanged sentences

Retirement benefits income ( 86,000 ) ( 63,000 )

Non-cash rent income ( 19,000 ) ( 1,000 )

Accretion of asset retirement obligation 200,000 194,000

Non-cash rent income ( 7,000 ) ( 5,000 )

Deferred income tax benefit ( 2,000 ) ( 12,000 )

1 unchanged sentence

Share-based compensation expense 65,000 115,000

Common stock issued for services 90,000 3,000

Retirement plan contributions and payments ( 1,000 ) ( 1,000 )

Bad debt expense (recovery) 18,000 ( 27,000 )

Credit loss expense 37,000 18,000

Foreign currency gain ( 126,000 ) ( 78,000 )

Decrease from changes in current assets and liabilities ( 433,000 ) ( 1,245,000 )

Increase (decrease) from changes in current assets and liabilities 606,000 ( 241,000 )

Net cash provided by operating activities 1,375,000 897,000

2 unchanged sentences

Proceeds from sale of interest in leasehold land, net of fees paid — 233,000

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

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

Capital expenditures - oil and natural gas ( 1,018,000 ) ( 3,870,000 )

Capital expenditures - all other ( 1,000 ) ( 9,000 )

Advances to operators for capital expenditures — ( 3,464,000 )

Net cash used in investing activities ( 1,019,000 ) ( 6,891,000 )

1 unchanged sentence

Distributions to non-controlling interests ( 4,000 ) ( 108,000 )

Payment of dividends ( 449,000 ) —

Proceeds from issuance of stock, net of costs — 2,356,000

Net cash (used in) provided by financing activities ( 577,000 ) 1,727,000

Net cash used in financing activities ( 4,000 ) ( 108,000 )

Effect of exchange rate changes on cash and cash equivalents 41,000 34,000

Net (decrease) increase in cash and cash equivalents ( 10,232,000 ) 1,295,000

Net increase (decrease) in cash and cash equivalents 393,000 ( 6,068,000 )

Cash and cash equivalents at beginning of period 2,830,000 12,804,000

19 unchanged sentences

The Condensed Consolidated Balance Sheet as of September 30, 2023 has been derived from audited consolidated financial statements.

In the opinion of management, all adjustments (which include only normal recurring adjustments, with the exception of an out-of-period adjustment for the nine months ended June 30, 2023 as described below) necessary to present fairly the financial position at June 30, 2023, results of operations, comprehensive (loss) income, and equity for the three and nine months ended June 30, 2023 and 2022, and cash flows for the nine months ended June 30, 2023 and 2022, have been made.

The results of operations for the period ended June 30, 2023 are not necessarily indicative of the operating results for the full year.

Out-of-Period Adjustment

During the three months ended December 31, 2022, errors were identified related to estimates of accrued oil and natural gas sales and accrued professional fees for the year ended September 30, 2022.

Accordingly, the Company recorded out-of-period adjustments in the three months ended December 31,

2022 for the rollover effect of those differences which were immaterial to the results of that quarter.

For the nine months ended June 30, 2023, the rollover effect of those out-of-period adjustments both decreased oil and natural gas revenues and increased general and administrative expenses by a total of $ 147,000 , which accordingly increased our net loss before income taxes and net loss for the nine months ended June 30, 2023 by the same amount.

In addition, during the three months ended June 30, 2023, an error was identified that resulted from actual state income taxes in our fiscal 2022 state tax returns being $ 106,000 lower than the amounts recorded as fiscal 2022 state income taxes in our income tax provision at September 30, 2022.

The net effect of all of the out-of-period adjustments above amounted to a $ 41,000 increase in our net loss for the nine months ended June 30, 2023.

The net earnings per basic and diluted share attributable to Barnwell stockholders would have been $ 0.01 lower for the year ended September 30, 2022 and the net loss per basic and diluted share attributable to Barnwell stockholders would have been $ 0.01 lower for the nine months ended June 30, 2023 had the amounts been reflected in the periods to which they relate.

Based upon an evaluation of all relevant quantitative and qualitative factors, and after considering the provisions of Staff Accounting Bulletin (SAB) No.

99, “Materiality,” and SAB 108, management believes these out-of-period correcting adjustments were not material to the Company’s results for the nine months ended June 30, 2023 or the Company’s trend of operating results.

We evaluated the impact of these out-of-period adjustments on the results of our previously issued financial statements for the year ended September 30, 2022, first quarter ended December 31, 2022, and third quarter ended June 30, 2023 and concluded that the impact was not material as well.

In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position at December 31, 2023, results of operations, comprehensive (loss) income, equity and cash flows for the three months ended December 31, 2023 and 2022, have been made.

The results of operations for the period ended December 31, 2023 are not necessarily indicative of the operating results for the full year.

Use of Estimates in the Preparation of Condensed Consolidated Financial Statements

2 unchanged sentences

Actual results could differ significantly from those estimates.

Significant assumptions are required in the valuation of deferred tax assets, asset retirement obligations, share-based payment arrangements, obligations for retirement plans, contract drilling estimated costs to complete, proved oil and natural gas reserves, and the carrying value of other assets, and such assumptions may impact the amount at which such items are recorded.

Significant assumptions are required in the

valuation of deferred tax assets, asset retirement obligations, contract drilling estimated costs to complete, proved oil and natural gas reserves, and the carrying value of other assets, and such assumptions may impact the amount at which such items are recorded.

Significant Accounting Policies

Other than as set forth below, 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 2023 Annual Report.

Share-based Compensation

Share-based compensation cost for Barnwell’s equity-classified stock options and restricted stock units is measured at fair value and is recognized as an expense over the requisite service period.

For stock options, Barnwell utilizes a closed-form valuation model to determine the fair value of each option award.

Expected volatilities are based on the historical volatility of Barnwell’s stock over a period consistent with that of the expected terms of the options.

The expected terms of the options represent expectations of future employee exercise and are estimated based on factors such as vesting periods, contractual expiration dates, historical trends in Barnwell’s stock price, and historical exercise behavior.

If the Company does not have sufficient historical data regarding employee exercise behavior, the “simplified method” as permitted by the SEC’s Staff Accounting Bulletin No.

110, Share-Based Payment is utilized to estimate the expected terms of the options.

The risk-free rates for periods within the contractual life of the

options are based on the yields of U.S.

Treasury instruments with terms comparable to the estimated option terms.

Expected dividends are based on historical dividend payments.

For restricted stock units, Barnwell utilizes the closing market price of the Company’s common stock on the day prior to the date of grant reduced by the present value of the dividends expected to be paid on the underlying shares of common stock during the requisite service period (as these awards are not entitled to receive dividends until vested) to determine the fair value of each restricted stock unit award.

The Company's policy is to recognize forfeitures as they occur.

Accounts and Other Receivables

Accounts receivable are recorded at the invoiced amount and do not bear interest.

The allowance for credit losses is Barnwell’s best estimate of the amount of current expected credit losses in Barnwell’s existing accounts receivable and is based on the aging of the receivable balances, analysis of historical credit loss rates, and current and future economic conditions affecting collectability.

Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

Barnwell does not have any off-balance sheet credit exposure related to its customers .

Derivative Instruments

Barnwell utilizes physical forward commodity contracts to mitigate market price risk on its oil and natural gas output when deemed appropriate.

Purchase and sale contracts with a fixed price determined at inception are recorded on the consolidated balance sheet as derivative financial instruments if such contracts are readily convertible to cash - unless the contracts are eligible for and elected as the normal purchases and normal sales exception (“NPNS”);

in which case, the contracts are recorded on an accrual basis and the Company recognizes the amounts relating to such transactions during the period when the commodities are physically delivered.

The Company generally applies the NPNS exception to eligible oil and natural gas contracts to purchase or sell quantities it expects to use or sell in the normal course of business.

The Company has not traded in any derivative contracts other than where the NPNS exception is applied, and it does not apply hedge accounting.

Recently Adopted Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2016-13, “Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments,” which replaces the incurred loss model with an expected loss model referred to as the current expected credit loss (“CECL”) model.

The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost, including but not limited to trade receivables.

The FASB has subsequently issued other related ASUs which amend ASU 2016-13 to provide clarification and additional guidance.

The Company adopted the provisions of this ASU effective October 1, 2023.

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

(LOSS) EARNINGS PER COMMON SHARE

2 unchanged sentences

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

For the three months ended June 30, 2023, options to purchase 493,022 shares of common stock and 37,312 restricted stock units were excluded from the computation of diluted shares as their inclusion would have been anti-dilutive.

For the nine months ended June 30, 2023, options to purchase 574,341 shares of common stock and 12,301 restricted stock units were excluded from the computation of diluted shares as their inclusion would have been anti-dilutive.

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

Options to purchase 465,000 shares of common stock and 76,336 restricted stock units were excluded from the computation of diluted shares for the three months ended December 31, 2023, as their inclusion would have been anti-dilutive.

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

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

Three months ended June 30, 2023

(Numerator) Shares

(Denominator) Per-Share

Basic net loss per share $ ( 717,000 ) 9,975,044 $ ( 0.07 )

Effect of dilutive securities -

common stock options and restricted stock units — —

Diluted net loss per share $ ( 717,000 ) 9,975,044 $ ( 0.07 )

Nine months ended June 30, 2023

Three months ended December 31, 2023

(Numerator) Shares

(Denominator) Per-Share

Basic net loss per share $ ( 865,000 ) 9,962,806 $ ( 0.09 )

Basic net loss $ ( 664,000 ) 9,996,760 $ ( 0.07 )

Effect of dilutive securities -

common stock options and restricted stock units — —

Diluted net loss per share $ ( 865,000 ) 9,962,806 $ ( 0.09 )

Three months ended June 30, 2022

(Numerator) Shares

(Denominator) Per-Share

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

Effect of dilutive securities -

common stock options — —

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

Nine months ended June 30, 2022

(Numerator) Shares

Diluted net loss $ ( 664,000 ) 9,996,760 $ ( 0.07 )

Three months ended December 31, 2022

Net Earnings (Numerator) Shares

(Denominator) Per-Share

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

Basic net earnings $ 1,089,000 9,956,687 $ 0.11

Effect of dilutive securities -

common stock options — —

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

Diluted net earnings $ 1,089,000 9,956,687 $ 0.11

Investment in Kukio Resort Land Development Partnerships

1 unchanged sentence

These entities, collectively referred to hereinafter as the “Kukio Resort Land Development Partnerships,” own certain real estate and development rights interests in the Kukio, Maniniowali and Kaupulehu portions of Kukio Resort, a private residential community on the Kona coast of the island of Hawaii, as well as Kukio Resort’s real estate sales office operations.

KDK holds interests in KD Acquisition, LLLP (“KD I”) and KD Acquisition II, LP, formerly KD Acquisition II, LLLP (“KD II”).

KDK holds interests in KD Acquisition, LLLP (“KD I”) and KD Acquisition II,

LP, formerly KD Acquisition II, LLLP (“KD II”).

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”).

3 unchanged sentences

Barnwell continues to have an indirect 19.6 % non-controlling ownership interest in KD Kukio Resorts, LLLP, KD Maniniowali, LLLP, and KD I.

The partnerships derive income from the sale of residential parcels in Increment I, of which only one lot remains to be sold as of June 30, 2023, 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.

The partnerships derive income from the sale of residential parcels in Increment I, of which only two lots remain to be sold as of December 31, 2023, 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.

Increment II is not yet under development, and there is no assurance that development of such acreage will occur.

No definitive development plans have been made by KD II, the developer of Increment II, as of the date of this report.

Barnwell has the right to receive distributions from the Kukio Resort Land Development Partnerships via its non-controlling interest in KD Kona and KKM, based on its respective partnership sharing ratios of 75 % and 34.45 %, respectively.

No cash distributions were received during the three months ended June 30, 2023.

During the three months ended June 30, 2022, Barnwell received cash distributions of $ 433,000 from the Kukio Resort Land Development Partnerships resulting in a net amount of $ 385,000 after distributing $ 48,000 to non-controlling interests.

During the nine months ended June 30, 2023, Barnwell received cash distributions of $ 538,000 from the Kukio Resort Land Development Partnerships resulting in a net amount of $ 478,000 , after distributing $ 60,000 to non-controlling interests.

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

Equity in income of affiliates was nil and $ 538,000 for the three and nine months ended June 30, 2023, respectively, as compared to equity in income of affiliates of $ 433,000 and $ 3,400,000 for the three and nine months ended June 30, 2022, respectively.

Barnwell has the right to receive distributions from the Kukio Resort Land Development Partnerships via its non-controlling interests in KD Kona and KKM, based on its respective partnership sharing ratios of 75 % and 34.45 %, respectively.

No cash distributions were received during the three months ended December 31, 2023.

During the three months ended December 31, 2022, Barnwell received cash distributions $ 538,000 from the Kukio Resort Land Development Partnerships resulting in a net amount of $ 478,000 , after distributing $ 60,000 to non-controlling interests.

Equity in income of affiliates was nil for the three months ended December 31, 2023, as compared to equity in income of affiliates of $ 538,000 for the three months ended December 31, 2022.

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

Three months ended June 30,

Revenue $ 2,703,000 $ 4,574,000

Gross profit $ 1,694,000 $ 3,004,000

Net earnings $ 951,000 $ 2,209,000

Nine months ended June 30,

Three months ended

Revenue $ 1,886,000 $ 3,712,000

1 unchanged sentence

Net earnings $ 354,000 $ 1,307,000

In the quarter ended June 30, 2021, the Company received cumulative distributions from the Kukio Resort Land Development Partnerships in excess of our investment balance and in accordance with applicable accounting guidance, the Company suspended its equity method earnings recognition and the Kukio Resort Land Development Partnerships investment balance was reduced to zero with the distributions received in excess of our investment balance recorded as equity in income of affiliates because the distributions are not refundable by agreement or by law and the Company is not liable for the obligations of or otherwise committed to provide financial support to the Kukio Resort Land Development Partnerships.

The Company will record future equity method earnings only after our share of the Kukio Resort Land Development Partnerships’ cumulative earnings in excess of distributions during the suspended period exceeds our share of the Kukio Resort Land Development Partnerships’ 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 nine months ended June 30, 2023 was equivalent to the $ 538,000 of distributions received in that period.

Cumulative distributions received from the Kukio Resort Land Development Partnerships in excess of our investment balance was $ 993,000 at June 30, 2023 and $ 958,000 at September 30, 2022.

In the quarter ended June 30, 2021, the Company received cumulative distributions from the Kukio Resort Land Development Partnerships in excess of our investment balance and in accordance with applicable accounting guidance, the Company suspended its equity method earnings recognition and the Kukio Resort Land Development Partnership investment balance was reduced to zero with the distributions received in excess of our investment balance recorded as equity in income of affiliates because the distributions are not refundable by agreement or by law and the Company is not liable for the obligations of or otherwise committed to provide financial support to the Kukio Resort Land Development

Partnerships.

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, no equity in income of affiliates was recognized during the three months ended December 31, 2023.

Cumulative distributions received from the Kukio Resort Land Development Partnerships in excess of our investment balance was $ 630,000 at December 31, 2023 and $ 708,000 at September 30, 2023.

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.

One single-family lot was sold during the nine months ended June 30, 2023 and one single-family lot, of the 79 lots developed within Increment I, remained to be sold as of June 30, 2023.

No lots were sold during the three months ended December 31, 2023 and two single-family lots, of the 80 lots developed within Increment I, remained to be sold as of December 31, 2023.

The following table summarizes the Increment I revenues from KD I and the amount of fees directly related to such revenues:

Three months ended

June 30, Nine months ended

2023 2022 2023 2022

Sale of interest in leasehold land:

9 unchanged sentences

In February 2021, Barnwell Industries, Inc.

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.

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”) 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.

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 Ventre 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.

7 unchanged sentences

Accounts and other receivables 147,000 175,000

Oil and natural gas properties, full cost method of accounting:

Proved properties, net 566,000 655,000

Property and equipment:

Proved oil and natural gas properties, net (full cost method) 522,000 544,000

Total assets $ 753,000 $ 802,000

2 unchanged sentences

Total liabilities $ 25,000 $ 25,000

ASSET HELD FOR SALE

In September 2022, the Company entered into a purchase and sale agreement with an independent third party for the sale of a contract drilling segment drilling rig and received a payment of $ 551,000 , net of related costs.

At September 30, 2022, the legal title for the drilling rig had not yet transferred to the buyer and therefore, the Company did not record a sale during the year ended September 30, 2022.

The proceeds received from the buyer was recognized as a deposit and recorded in “Other Current Liabilities” on the Company's Consolidated Balance Sheet at September 30, 2022.

No amount was recorded as assets held for sale at September 30, 2022 as the drilling rig was fully depreciated and therefore had a net book value of zero.

In October 2022, the legal title for the drilling rig was transferred to the buyer and as a result, the Company recognized a $ 551,000 gain on the sale of the drilling rig during the nine months ended June 30, 2023.

OIL AND NATURAL GAS PROPERTIES

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In December 2022, Barnwell Texas, LLC (“Barnwell Texas”), a new wholly-owned subsidiary of the Company, entered into a purchase and sale agreement with an independent third party whereby Barnwell Texas acquired a 22.3 % non-operated working interest in oil and natural gas leasehold acreage in the Permian Basin in Texas for cash consideration of $ 806,000 .

In connection with the purchase of such leasehold interests, Barnwell Texas acquired a 15.4 % non-operated working interest in two oil wells in the Wolfcamp Formation in Loving and Ward Counties, Texas and has paid $ 4,293,000 for its share of the costs to drill, complete and equip the wells through the nine months ended June 30, 2023.

The two Texas wells began producing in late April 2023.

Additionally, in connection with the entry into this agreement, the Company is obligated to pay a broker’s fee of 5.0 % of the capital invested under this arrangement to Four Pines Exploration LLC - Exploration - Series 1 (“Four Pines”).

Four Pines is controlled by Mr.

Colin O’Farrell who is an affiliate of Teton Barnwell (see Note 17 for additional details).

As of June 30, 2023, the Company has paid $ 255,000 in broker fees to Four Pines related to this arrangement.

Fiscal 2022 Acquisitions

In the quarter ended December 31, 2021, Barnwell acquired working interests in oil and natural gas properties located in the Twining area of Alberta, Canada, for cash consideration of $ 317,000 .

In the quarter ended March 31, 2022, Barnwell acquired additional working interests in oil and natural gas properties located in the Twining area of Alberta, Canada for consideration of $ 1,246,000 .

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.

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

Additionally, in connection with the purchase of such leasehold interests, Barnwell Texas acquired a 15.4 % non-operated working interest in two oil wells in the Wolfcamp Formation in Loving and Ward Counties, Texas and had paid $ 4,293,000 for its share of the costs to drill, complete, and equip the wells in the three months ended December 31, 2022.

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 were no reductions to the carrying value of our oil and natural gas properties during the three months ended December 31, 2023 and 2022.

Changes in the 12-month 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 market value of unproved properties, impact the determination of the maximum carrying value of oil and natural gas properties.

Based on the 12-month rolling average first-day-of-the-month prices for January and February 2024, it is reasonably possible that we will incur a ceiling test impairment in the Company's second quarter ending March 31, 2024.

The Company is currently unable to estimate a range of the amount of any potential future reduction in carrying value as variables that impact the ceiling limitation are dependent upon actual results through the end of March 2024.

RETIREMENT PLANS

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employees and a noncontributory Supplemental Executive Retirement Plan (“SERP”), which covers certain current and former employees of Barnwell for amounts exceeding the limits allowed under the Pension Plan.

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

Pension Plan SERP

Three months ended June 30,

2023 2022 2023 2022

Interest cost $ 102,000 $ 73,000 $ 22,000 $ 15,000

Expected return on plan assets ( 167,000 ) ( 156,000 ) — —

Amortization of net actuarial gain — — ( 20,000 ) —

Net periodic benefit (income) cost $ ( 65,000 ) $ ( 83,000 ) $ 2,000 $ 15,000

Effective December 31, 2019, the accrual of benefits for all participants in the Pension Plan and SERP was frozen and the plans were closed to new participants from that point forward.

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

Pension Plan SERP

Nine months ended June 30,

Three months ended December 31,

2023 2022 2023 2022

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The net periodic benefit (income) cost is included in “General and administrative” expenses in the Company's Condensed Consolidated Statements of Operations.

Currently, no contributions are expected to be made to the Pension Plan during fiscal 2023.

Currently, no contributions are planned to be made to the Pension Plan during fiscal 2024.

The SERP plan is unfunded and Barnwell funds benefits when payments are made.

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Three months ended

June 30, Nine months ended

2023 2022 2023 2022

United States $ ( 689,000 ) $ 18,000

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$ ( 598,000 ) $ 1,168,000

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

The components of the income tax provision are as follows:

Three months ended

June 30, Nine months ended

2023 2022 2023 2022

Current $ 68,000 $ 91,000

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based on consolidated operations, and essentially all deferred tax assets, net of relevant offsetting deferred tax liabilities, are not estimated to have a future benefit as tax credits or deductions.

The Company operates two subsidiaries in Canada, one of which is a U.S.

corporation operating as a branch in Canada that is treated as a non-resident for Canadian tax purposes and thus has operating results that cannot be offset against or combined with the other Canadian subsidiary that files as a resident for Canadian tax purposes.

Income from our non-controlling interest in the Kukio Resort Land Development Partnerships is treated as non-unitary for state of Hawaii unitary filing purposes, thus unitary Hawaii losses provide limited sheltering of such non-unitary income.

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As such, Barnwell receives no benefit from consolidated or unitary losses and, therefore, is subject to Oklahoma state taxes.

Consolidated taxes also include the impacts of favorable state jurisdiction provision to tax return true-ups.

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 Canadian tax jurisdiction in the current year periods as the recognized benefit is now considered more likely to occur than not.

Our operations in Texas are subject to a franchise tax assessed by the state of Texas, however no significant amounts have been incurred to date.

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 nine months ended June 30, 2023 and 2022.

Three months ended June 30, 2023

Oil and natural gas Contract drilling Land investment Other Total

Revenue streams:

Oil $ 3,423,000 $ — $ — $ — $ 3,423,000

Natural gas 622,000 — — — 622,000

Natural gas liquids 458,000 — — — 458,000

Drilling and pump — 1,134,000 — — 1,134,000

Other — — — 13,000 13,000

Total revenues before interest income $ 4,503,000 $ 1,134,000 $ — $ 13,000 $ 5,650,000

Geographical regions:

United States $ 869,000 $ 1,134,000 $ — $ 1,000 $ 2,004,000

Canada 3,634,000 — — 12,000 3,646,000

Total revenues before interest income $ 4,503,000 $ 1,134,000 $ — $ 13,000 $ 5,650,000

Timing of revenue recognition:

Goods transferred at a point in time $ 4,503,000 $ — $ — $ 13,000 $ 4,516,000

Services transferred over time — 1,134,000 — — 1,134,000

Total revenues before interest income $ 4,503,000 $ 1,134,000 $ — $ 13,000 $ 5,650,000

Three months ended June 30, 2022

Oil and natural gas Contract drilling Land investment Other Total

Revenue streams:

Oil $ 4,951,000 $ — $ — $ — $ 4,951,000

Natural gas 1,652,000 — — — 1,652,000

Natural gas liquids 689,000 — — — 689,000

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

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

Geographical regions:

United States $ 840,000 $ 736,000 $ — $ — $ 1,576,000

Canada 6,452,000 — — — 6,452,000

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

Timing of revenue recognition:

Goods transferred at a point in time $ 7,292,000 $ — $ — $ — $ 7,292,000

Services transferred over time — 736,000 — — 736,000

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

Nine months ended June 30, 2023

The following tables provides information about disaggregated revenue by revenue streams, reportable segments, geographical region, and timing of revenue recognition for the three months ended December 31, 2023 and 2022.

Three months ended December 31, 2023

Oil and natural gas Contract drilling Land investment Other Total

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Drilling and pump — 993,000 — — 993,000

Contingent residual payments — — 265,000 — 265,000

Other — — — 17,000 17,000

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Total revenues before interest income $ 5,130,000 $ 993,000 $ — $ 17,000 $ 6,140,000

Nine months ended June 30, 2022

Three months ended December 31, 2022

Oil and natural gas Contract drilling Land investment Other Total

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

June 30, 2023 September 30, 2022

December 31, 2023 September 30, 2023 September 30, 2022

Accounts receivables from contracts with customers $ 2,902,000 $ 2,931,000 $ 4,038,000

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Contract liabilities 232,000 377,000 1,087,000

Accounts receivables from contracts with customers are included in “Accounts and other receivables, net of allowance for doubtful accounts,” and contract assets, which includes costs and estimated earnings in excess of billings and retainage, are included in “Other current assets.” Contract liabilities, which includes billings in excess of costs and estimated earnings are included in “Other current liabilities” in the accompanying Condensed Consolidated Balance Sheets.

Accounts receivables from contracts with customers are included in "Accounts and other receivables, net of allowance for credit losses," in the accompanying Condensed Consolidated Balance Sheets and contract assets, which includes costs and estimated earnings in excess of billings and retainage, are included in “Other current assets” in the accompanying Condensed Consolidated Balance Sheets.

Contract liabilities, which includes billings in excess of costs and estimated earnings are included in “Other current liabilities” in the accompanying Condensed Consolidated Balance Sheets.

Retainage, included in contract assets, represents amounts due from customers, but where payments are withheld contractually until certain construction milestones are met.

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

As of June 30, 2023 and September 30, 2022, the Company had $ 305,000 and $ 1,087,000 , 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, 2023 and 2022, the amount of revenue recognized that was previously included in contract liabilities as of the beginning of the respective period was $ 1,012,000 and $ 342,000 , respectively.

As of December 31, 2023 and September 30, 2023, the Company had $ 232,000 and $ 377,000 , respectively, included in “Other current liabilities” in the accompanying Condensed Consolidated Balance Sheets for those performance obligations expected to be completed in the next twelve months.

During the three months ended December 31, 2023 and 2022, the amount of revenue recognized that was previously included in contract liabilities as of the beginning of the respective period was $ 229,000 and $ 523,000 , respectively.

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

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

At June 30, 2023, the Company had five contract drilling jobs with original expected durations of greater than one year.

For these contracts, 100 % of the remaining performance obligation of $ 4,052,000 is expected to be recognized in the next twelve months.

At December 31, 2023, the Company had three contract drilling jobs with original expected durations of greater than one year.

For these contracts, approximately 100 % of the remaining performance obligation of $ 371,000 is expected to be recognized as revenue in the next twelve months.

Contract Fulfillment Costs

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 June 30, 2023 and September 30, 2022, the Company had $ 581,000 and $ 689,000 , respectively, in unamortized preconstruction costs related to contracts that were not completed.

During the three and nine months ended June 30, 2023 and 2022, 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, 2023 and 2022.

As of December 31, 2023 and September 30, 2023, the Company had $ 423,000 and $ 504,000 , respectively, in unamortized preconstruction costs related to contracts that were not completed.

During the three months ended December 31, 2023 and 2022, 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 months ended December 31, 2023 and 2022.

SEGMENT INFORMATION

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Three months ended

June 30, Nine months ended

2023 2022 2023 2022

Oil and natural gas $ 5,130,000 $ 5,226,000

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(Loss) earnings before income taxes $ ( 596,000 ) $ 1,288,000

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

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

ACCUMULATED OTHER COMPREHENSIVE INCOME

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

Three months ended

June 30, Nine months ended

2023 2022 2023 2022

Foreign currency translation:

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Income taxes — —

Net current period other comprehensive income (loss) 15,000 ( 108,000 ) 17,000 ( 121,000 )

Net current period other comprehensive income 30,000 2,000

Ending accumulated foreign currency translation 250,000 224,000

Retirement plans:

Beginning accumulated retirement plans benefit income (cost) 1,032,000 ( 230,000 ) 1,072,000 ( 230,000 )

Beginning accumulated retirement plans benefit income 1,884,000 1,072,000

Amortization of net actuarial gain ( 21,000 ) ( 20,000 )

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Net current period other comprehensive loss ( 21,000 ) ( 20,000 )

Ending accumulated retirement plans benefit income (cost) 1,012,000 ( 230,000 ) 1,012,000 ( 230,000 )

Accumulated other comprehensive income (loss), net of taxes $ 1,251,000 $ ( 89,000 ) $ 1,251,000 $ ( 89,000 )

Ending accumulated retirement plans benefit income 1,863,000 1,052,000

Accumulated other comprehensive income, net of taxes $ 2,113,000 $ 1,276,000

The amortization of net actuarial gain 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 6 for additional details).

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The estimated fair values of oil and natural gas properties and the asset retirement obligation incurred in the drilling of oil and natural gas wells or assumed in the acquisitions of additional oil and natural gas working interests are based on an estimated discounted cash flow model and market assumptions.

The significant Level 3 assumptions used in the calculation of estimated discounted cash flows included future commodity prices, projections of estimated quantities of oil and natural gas reserves, expectations for timing and amount of future development, operating and asset retirement costs, projections of future rates of production, expected recovery rates and risk adjusted discount rates.

The assumptions used in the calculation of estimated discounted cash flows were primarily Level 3 assumptions;

assumptions included future commodity prices, projections of estimated quantities of oil and natural gas reserves, expectations for timing and amount of future development, operating and asset retirement costs, projections of future rates of production, expected recovery rates and risk adjusted discount rates.

Barnwell estimates the fair value of asset retirement obligations based on the projected discounted future cash outflows required to settle abandonment and restoration liabilities.

Such an estimate requires assumptions and judgments regarding the existence of liabilities, the amount and timing of cash outflows

required to settle the liability, what constitutes adequate restoration, inflation factors, credit adjusted discount rates, and consideration of changes in legal, regulatory, environmental and political environments.

Abandonment and restoration cost estimates are determined in conjunction with Barnwell’s reserve engineers based on historical information regarding costs incurred to abandon and restore similar well sites, information regarding current market conditions and costs, and knowledge of subject well sites and properties.

Such an estimate requires assumptions and judgments regarding the existence of liabilities, the amount and timing of cash outflows required to settle the liability, what constitutes adequate restoration, inflation factors, credit adjusted discount rates, and consideration of changes in legal, regulatory, environmental and political environments.

Abandonment and restoration cost estimates are determined in conjunction with Barnwell’s reserve engineers based on historical information regarding costs incurred to abandon and restore similar

well sites, information regarding current market conditions and costs, and knowledge of subject well sites and properties.

Asset retirement obligation fair value measurements in the current period were Level 3 fair value measurements.

Canada Emergency Business Account Loan

In the quarter ended December 31, 2020, the Company’s Canadian subsidiary, Barnwell of Canada, received a loan of CAD$ 40,000 (in Canadian dollars) under the Canada Emergency Business Account (“CEBA”) loan program for small businesses.

In the quarter ended March 31, 2021, the Company applied for an increase to our CEBA loan and received an additional CAD$ 20,000 for a total loan amount received of CAD$ 60,000 ($ 45,000 ) under the program.

In January 2022, the Canadian government announced the extension of the CEBA loan repayment deadline and interest-free period from December 31, 2022 to December 31, 2023.

Accordingly, the CEBA loan is interest-free with no principal payments required until December 31, 2023, after which the remaining loan balance is converted to a two year term loan at 5 % annual interest paid monthly.

If the Company repays 66.7 % 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 .

The current loan balance of $ 45,000 is included in “Other current liabilities” in the Company's Condensed Consolidated Balance sheet at June 30, 2023.

STOCKHOLDERS' EQUITY

Restricted Stock Units

On June 9, 2023, the Board of Directors of the Company granted a total of 37,312 restricted stock units to the independent directors of the Board as partial payment of fiscal 2023 director fees for their service as members of the Board from the period of April 1, 2023 to September 30, 2023.

The restricted stock units vest and become nonforfeitable on September 30, 2023.

The following table summarizes Barnwell’s restricted stock unit activity from October 1, 2022 through June 30, 2023:

On November 2, 2023, the Board of Directors of the Company granted a total of 76,336 restricted stock units to the independent directors of the Board as partial payment of director fees for their service as members of the Board.

The restricted stock units vest ratably over a three-year period, subject to the director’s continued service through the applicable vesting dates.

The following table summarizes Barnwell’s restricted stock unit activity from October 1, 2023 through December 31, 2023:

Restricted Stock Units Shares Weighted-Average

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Forfeited — —

Nonvested at June 30, 2023 37,312 $ 2.65

Nonvested at December 31, 2023 76,336 $ 2.62

Compensation cost for restricted stock unit awards is measured at fair value and is recognized as an expense over the requisite service period.

During the three and nine months ended June 30, 2023, the Company recognized share-based compensation expense related to restricted stock units of $ 49,000 .

was no share-based compensation expense related to restricted stock units recognized during the three and nine months ended June 30, 2022.

As of June 30, 2023, the total remaining unrecognized compensation cost related to nonvested restricted stock units was $ 50,000 , which is expected to be recognized over the weighted-average remaining requisite service period of 0.3 years.

Stock Options

In the the quarter ended June 30, 2023, 100,000 shares of vested stock options expired and 50,000 shares of outstanding stock options were forfeited prior to the option’s vesting date.

The Company's policy is to recognize forfeitures as they occur.

Thus, when an award is forfeited prior to the vesting date, the Company will recognize an adjustment for the previously recognized expense in the period of the forfeiture.

Accordingly, as a result of the forfeited stock options, the Company recorded a share-based compensation benefit of $ 96,000 during the three and nine months ended June 30, 2023.

Common Stock Issued for Services

In May 2023, the Company issued a total of 34,091 shares of Barnwell common stock to certain independent directors for their services on behalf of the Company and the Board of Directors pertaining to the negotiations of the Cooperation Agreement and the settlement of the potential proxy contest (see Note 17 for additional details).

The total value of the shares issued was $ 90,000 which was valued using the closing price of Barnwell's common stock on May 11, 2023, the date of grant.

Cash Dividends

In December 2022, the Company's Board of Directors declared a cash dividend of $ 0.015 per share that was paid on January 11, 2023 to stockholders of record on December 27, 2022.

In February 2023, the Company's Board of Directors declared a cash dividend of $ 0.015 per share that was paid on March 13, 2023 to stockholders of record on February 23, 2023.

In May 2023, the Company's Board of Directors declared a cash dividend of $ 0.015 per share that was paid on June 12, 2023 to stockholders of record on May 25, 2023.

No dividends were declared or paid during the nine months ended June 30, 2022.

The Tax Benefits Preservation Plan

On October 17, 2022, the Board of Directors of the Company adopted a Tax Benefits Preservation Plan (the “Tax Plan”) designed to protect the availability of the Company’s existing net operating loss carryforwards and certain other tax attributes.

To implement the Tax Plan, the Board of Directors declared a dividend of one right (a “Right”) for each outstanding share of the Company's common stock.

The Rights were issued to stockholders of record at the close of business on October 27, 2022 pursuant to the Tax Plan.

The Rights are exercisable if a person or group of persons acquires 4.95% or more of the Company’s common stock.

The Rights are also exercisable if a person or group of persons that already owns 4.95% or more of the Company’s common stock acquires an additional share other than as a result of a dividend or a stock split.

Existing stockholders that beneficially own in excess of 4.95% of the Company’s common stock are “grandfathered in” at their current ownership level.

If the Rights become exercisable, all holders of Rights, other than the person or group of persons triggering the Rights, will be entitled to purchase shares of the Company’s common stock at a 50% discount.

Rights held by the person or group of persons triggering the Rights will become void and will not be exercisable.

On January 25, 2023, the Tax Plan was terminated by the Board of Directors and as a result, all Rights distributed to holders of the Company's common stock expired at the time of termination.

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.

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.

Shares of common stock sold under the ATM are offered pursuant to the Company’s Registration Statement on Form S-3 (File No.

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 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 .

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

During the three months ended December 31, 2023, the Company recognized share-based compensation expense related to restricted stock units of $ 30,000 .

There was no share-based compensation expense related to restricted stock units recognized during the three months ended December 31, 2022.

As of December 31, 2023, the total remaining unrecognized compensation cost related to nonvested restricted stock units was $ 170,000 , which is expected to be recognized over the weighted-average remaining requisite service period of 1.8 years.

Cash Dividend

No dividends were declared or paid during the three months ended December 31, 2023.

During the three months ended December 31, 2022, the Company's Board of Directors declared a cash dividend of $ 0.015 per share that was paid on January 11, 2023 to stockholders of record on December 27, 2022.

CONTINGENCIES

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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.

The pump installation and removal test was successfully completed.

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, 2023 for any further costs related to this contract as there is no related probable or estimable contingent liability.

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 December 31, 2023 for any further costs related to this contract as there is no related probable or estimable contingent liability.

INFORMATION RELATING TO THE CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine months ended

Three months ended

Supplemental disclosure of cash flow information:

Cash paid during the year for:

Income taxes paid, net $ 100,000 $ 352,000

Capital expenditure accruals related to oil and natural gas exploration and development decreased $ 6,000 during the nine months ended June 30, 2023 and increased $ 812,000 during the nine months ended June 30, 2022.

Additionally, capital expenditure accruals related to oil and natural gas asset retirement obligations increased $ 789,000 and $ 2,476,000 during the nine months ended June 30, 2023 and 2022, respectively.

Income taxes paid

Capital expenditure accruals related to oil and natural gas exploration and development decreased $ 523,000 and $ 1,405,000 during the three months ended December 31, 2023 and 2022, respectively.

Additionally, capital expenditure accruals related to oil and natural gas asset retirement obligations increased $ 115,000 and $ 150,000 during the three months ended December 31, 2023 and 2022, respectively.

RELATED PARTY TRANSACTIONS

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Changes to the arrangement above, effective March 7, 2019, are discussed in Note 3.

During the nine months ended June 30, 2023, Barnwell received $ 265,000 in percentage of sales payments from KD 1 from the sale of one single-family lot within Increment I.

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.

O'Farrell, formerly a member of the Board of Directors of the Company from July 7, 2021 to 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.

Furthermore, as discussed above, Mr.

O'Farrell controls Four Pines, which, as of June 30, 2023, was paid $ 255,000 in broker fees in connection with the oil and natural gas investment discussed in Note 6.

Cooperation and Support Agreement

In January 2023, the Company entered into a cooperation and support agreement (the “Cooperation Agreement”) with Alexander C.

Kinzler , the Company’s CEO and President in his capacity as a stockholder , MRMP-Managers LLC, the Ned L.

Sherwood Revocable Trust, NLS Advisory Group, Inc.

Sherwood (collectively, the “MRMP Stockholders”), with respect to a potential proxy contest pertaining to the election of directors to our Board of Directors (the “Board”).

The Cooperation Agreement extended for two years the standstill terms of the previous agreement entered into with the MRMP Stockholders in 2021, which ended the potential of a proxy contest at the 2023 annual meeting of stockholders (the “2023 Annual Meeting”), which was held on April 17, 2023.

Pursuant to the terms of the Cooperation Agreement, among other things, the Company agreed to promptly appoint Joshua S.

Horowitz and Laurance Narbut, effective February 9, 2023, to serve on the Board.

In addition, the Company agreed to nominate a five-person board comprised of Mr.

Kinzler, Kenneth Grossman, Douglas Woodrum, and Messrs.

Horowitz and Narbut as candidates for election to the Board at the 2023 Annual Meeting and the 2024 annual meeting of stockholders (the “2024 Annual Meeting”) and Mr.

Kinzler and the MRMP Stockholders agreed to vote their respective shares of common stock of the Company in favor of the election of the Company’s slate at the 2023 Annual Meeting and the 2024 Annual Meeting.

Additionally, pursuant to the terms of the Cooperation Agreement, the Company terminated the previously adopted Tax Benefits Preservation Plan, although the MRMP Stockholders have agreed to limit their beneficial and economic ownership of the Company to 28 % of the outstanding common stock of the Company for the next 12 months and 30 % for the subsequent 12-month period.

In exchange for this arrangement, the Company agreed to reimburse the MRMP Stockholders and Mr.

Kinzler for their reasonable, documented out-of-pocket fees and expenses (including legal expenses) in connection with the negotiation and execution of the Cooperation Agreement and the transactions contemplated hereby and the proposed nomination of directors at the 2023 Annual Meeting.

In the nine months ended June 30, 2023 , $ 190,000 and $ 149,000 in expenses were recorded for reimbursements to MRMP Stockholders and Mr.

Kinzler, respectively, under the Cooperation Agreement.

In May 2023, the Company’s Board of Directors approved and ratified the payment of one-time special director fees to directors Messrs.

Grossman and Woodrum for their services on behalf of the Company and the Board pertaining to the negotiations of the Cooperation Agreement and the settlement of the potential proxy contest.

Grossman received a one-time special director fee of $ 100,000 , which was paid in $ 40,000 cash and a stock grant of 22,728 shares of Barnwell common stock (valued at $ 60,000 using the closing price of Barnwell's common stock on May 11, 2023, the date of grant).

Woodrum received a one-time special director fee of $ 50,000 , which was paid in $ 20,000 cash and a stock grant of 11,363 shares of Barnwell common stock (valued at $ 30,000 using the closing price of Barnwell's common stock on May 11, 2023, the date of grant).

SUBSEQUENT EVENTS

In August 2023, the Company's Board of Directors declared a cash dividend of $ 0.015 per share payable on September 11, 2023 to stockholders of record on August 24, 2023.

No lots were sold during the three months ended December 31, 2023.

During the three months ended December 31, 2022, Kaupulehu Developments received $ 265,000 in percentage of sales payments from KD I from the sale of one single-family lot within Phase II of Increment I.

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