CoJax Oil & Gas Corp 10-K/A

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA CONTENTS PAGE Reports of Independent Registered Public Accounting Firms F 42 Financial Statements: Consolidated Balance Sheets as of December 31, 2024, and December 31, 2023 F 43 Consolidated Statements of Operations for the years ended December 31, 2024, and December 31, 2023 F 44 Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2024, and 2023 F 45 Consolidated Statements of Cash Flows for the years ended December 31, 2024, and December 31, 2023 F 46 Notes to Consolidated Financial Statements F 47 – F 62 F 41 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders CoJax Oil and Gas Corporation Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of CoJax Oil and Gas Corporation (the Company) as of December 31, 2024 and 2023, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2024, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each the years in the two-year period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. Going Concern The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has yet to achieve profitable operations, has negative cash flows from operating activities, and is dependent upon future issuances of equity or other financings to fund ongoing operations all of which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and the significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe our audit provides a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates. Oil and gas properties As described in Notes 3, 5 and 12 to the consolidated financial statements, the Company accounts for its oil and gas properties using the successful efforts method of accounting which requires management to estimate reserve volumes and future net revenues to assess if there are indications the carrying value of certain properties exceed the fair value and if so, determine the fair value of its oil and gas properties. To estimate the volume of reserves and future net revenues, management makes significant estimates and assumptions, and rely on third party experts. In addition, the estimation of reserves is also impacted by management’s judgments and estimates regarding the financial performance of wells associated with reserves to determine if wells are expected, with reasonable certainty, to be economical under the pricing assumptions required in the impairment evaluation and measurements. We identified the evaluation of oil and gas properties as a critical audit matter. Our audit procedures related to the estimation of proved reserves included the following, among others. • We evaluated the level of knowledge, skill and ability of the Company’s reservoir engineering specialists and their relationship to the Company, made inquiries of those reservoir engineers regarding the process followed and judgments made to estimate the Company’s proved reserves, and read the reserve report prepared by the Company’s reservoir engineering specialists. • We tested the accuracy of the Company’s impairment evaluation and measurement that included these proved reserve reports. • We evaluated sensitive inputs and assumptions used to determine reserve volumes and other cash flow inputs and assumptions derived from the Company’s accounting records. These assumptions included historical pricing differentials, current and future operating costs, estimated future capital costs, and ownership interests. /s/ M&K CPAS, PLLC M&K CPAS, PLLC PCAOB ID: 2738 We have served as the Company’s auditor since 2024 The Woodlands, TX March 31, 2025 F 42 CoJax Oil and Gas Corporation Consolidated Balance Sheets As of As of December 31, 2024 December 31, 2023 ASSETS Current assets: Cash $ 46,738 $ 75,908 Accounts receivable 147,082 205,306 Prepaid expenses 21,210 — Total current assets 215,030 281,214 Property and Equipment: Oil and gas properties at cost 11,065,307 4,509,679 Less: Accumulated depletion ( 766,901 ) ( 420,176 ) Total property and equipment - net 10,298,406 4,089,503 Total assets $ 10,513,436 $ 4,370,717 LIABILITIES and STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 113,473 $ 121,764 Workover expense payable 40,334 106,861 Accrued salaries and payroll taxes 1,059,281 834,809 Current portion of notes payable 10,088 9,984 Notes payable – related party 103,001 103,001 Total current liabilities 1,326,177 1,176,419 Long-term liabilities: Asset retirement obligations 553,538 105,118 Notes payable, net of current portion 11,007 21,094 Total long-term liabilities 564,545 126,212 Total liabilities 1,890,722 1,302,631 Stockholders’ equity: Preferred stock, $ 0.10 par value, 50,000,000 current shares authorized, 0 and 105,000 Series A shares, $ 0.01 par value issued and outstanding at December 31, 2024 and 2023, respectively. — 1,050 Common stock, $ 0.01 par value, 300,000,000 current shares authorized, 13,998,639 and 9,315,902 shares issued and outstanding at December 31, 2024 and 2023, respectively. 139,986 93,159 Subscription payable 10,000 10,000 Additional paid-in capital 20,846,615 13,727,918 Accumulated deficit ( 12,373,887 ) ( 10,764,041 ) Total stockholders’ equity 8,622,714 3,068,086 Total liabilities and stockholders’ equity $ 10,513,436 $ 4,370,717 See accompanying notes to consolidated financial statements. F 43 CoJax Oil and Gas Corporation Consolidated Statements of Operations For the Year Ended For the Year Ended December 31, 2024 December 31, 2023 Revenues $ 971,686 $ 927,983 Operating costs and expenses: Lease operating expenses 355,644 248,642 General and administrative expenses 919,994 1,038,473 Depletion and accretion on discounted liabilities 382,061 393,430 Impairment expense 922,932 875,400 Total operating costs and expenses 2,580,631 2,555,945 Loss from operations ( 1,608,945 ) ( 1,627,962 ) Other income (expense): Other income and expense 2,690 202 Interest expense ( 3,591 ) ( 2,142 ) Total other income (expense) ( 901 ) ( 1,940 Net loss $ ( 1,609,846 ) $ ( 1,629,902 ) Net loss per common share - basic and diluted $ ( 0.13 ) $ ( 0.18 ) Weighted average number of common shares outstanding during the period - basic and diluted 12,380,074 9,279,410 See accompanying notes to consolidated financial statements. F 44 CoJax Oil and Gas Corporation Consolidated Statements of Stockholders’ Equity For the years ending December 31, 2024, and December 31, 2023 Additional Total Preferred stock Common stock Subscriptions paid-in Accumulated Stockholder’s Shares Amount Shares Amount payable capital deficit equity Balance, December 31, 2022 55,000 $ 550 9,114,446 $ 91,144 $ — $ 12,249,429 $ ( 9,134,139 ) $ 3,206,984 Common stock issued for services — — 201,456 2,015 — 413,989 — 416,004 Preferred shares issued for accrued officer compensation 50,000 500 — — — 1,064,500 — 1,065,000 Cash received for stock subscriptions payable — — 10,000 — — 10,000 Net loss for the year ending December 31, 2023 — — — — — — $ ( 1,629,902 ) $ ( 1,629,902 ) Balance, December 31, 2023 105,000 $ 1,050 9,315,902 $ 93,159 $ 10,000 $ 13,727,918 $ ( 10,764,041 ) $ 3,068,086 Common stock issued for services — — 100,000 1,000 — 98,000 — 99,000 Conversion of preferred stock to common stock ( 105,000 ) ( 1,050 ) 1,050,000 10,500 — ( 9,450 ) — — Common stock issued for acquisition — — 3,532,737 35,327 — 7,030,147 — 7,065,474 Net loss for the year ending December 31, 2024 — — — — — — ( 1,609,846 ) ( 1,609,846 ) Balance, December 31, 2024 — $ — 13,998,639 $ 139,986 $ 10,000 $ 20,846,615 $ ( 12,373,887 ) $ 8,622,714 See accompanying notes to consolidated financial statements. F 45 CoJax Oil and Gas Corporation Consolidated Statements of Cash Flows For the Year Ended For the Year Ended December 31, 2024 December 31, 2023 Operating Activities: Net loss $ ( 1,609,846 ) $ ( 1,629,902 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Impairment loss on oil and gas properties 922,932 875,400 Depletion expense 346,726 380,553 Accretion of asset retirement obligations 35,335 12,877 Common stock issued for services and salaries 99,000 416,004 Changes in operating assets and liabilities: Accounts receivable 58,224 ( 153,256 ) Prepaid expense ( 21,210 ) — Accounts payable and accrued liabilities 149,652 146,370 Net cash provided by (used in) operating activities ( 19,187 ) 48,046 Investing Activities: Net cash provided by investment activities — — Financing Activities: Payments of loans payable - related party — ( 10,000 Payments of loans payable – SBA PPP Loan ( 9,983 ) ( 9,888 ) Proceeds for stock subscriptions payable — 10,000 Net cash used in financing activities ( 9,983 ) ( 9,888 ) Net change in cash ( 29,170 ) 38,158 Cash - beginning of period 75,908 37,750 Cash - end of period $ 46,738 $ 75,908 Supplemental disclosure of non-cash operating activities: Cash paid for interest $ 1,538 $ 645 Cash paid for taxes $ 16,994 $ — Supplemental disclosure of non-cash investing and financing activities: Common stock issued for acquisitions $ 7,065,474 $ — Preferred stock issued for accrued compensation $ — $ 1,065,000 Common shares issued upon conversion of Series A Preferred shares $ 2,100,000 $ — ARO assumed from acquisitions $ 398,358 $ — Change in estimate of ARO Asset and related liability $ 14,727 $ — See accompanying notes to consolidated financial statements. F 46 CoJax Oil and Gas Corporation Notes to Consolidated Financial Statements NOTE 1 – ORGANIZATION, NATURE OF OPERATIONS AND BASIS OF PRESENTATION Organization CoJax Oil & Gas Corporation, a Virginia corporation (“Company”), was incorporated on November 13, 2017. The Company is based in Arlington, Virginia, with a wholly owned subsidiary, Barrister Energy LLC (‘Barrister Energy’), registered in Mississippi and based in Laurel, Mississippi. Nature of Operations The Company is a growing U.S. energy company engaged in the acquisition and development of lower-risk onshore oil and gas-producing properties within the Southeastern U.S. The Company’s focused growth strategy relies primarily on leveraging management’s expertise to acquire both operated and non-operated interests in producing properties with the goal of assembling a large oil and gas portfolio. Through this strategy of acquisition of operated and non-operated properties, the Company has the unique ability to benefit from the technical and scientific expertise of world-class exploration and production (“E&P”) companies operating in the area. Since the company’s inception, it has been engaged in organizational activities and had limited revenue-generating operations prior to the periods covered by this current report. The company has begun to acquire assignments of hydrocarbon revenues and underlying oil and gas exploration and production rights as covered by this current report. The company runs all operations of its current acquisitions through Barrister Energy LLC, the operational subsidiary. The Company focuses on the acquisition of and exploitation of upstream energy assets, specifically targeting select oil and gas mineral interests. These acquisitions are structured primarily as acquisitions of leases, working interests, real property interests and mineral rights and royalties and are generally not regarded as the acquisition of securities, but rather real property interests. As an owner, the Company has the right to receive a portion of the production from the leased acreage (or of the proceeds of the sale thereof). As an owner, the Company also has an obligation for its share of lease operating costs. On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic. This contagious disease outbreak and any related adverse public health developments, have adversely affected workforces, economies, and financial markets globally, leading to an economic downturn. The impact on the Company has not been significant, but management continues to monitor the situation. Basis of Presentation The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which contemplate the continuation of the Company as a going concern. NOTE 2 – GOING CONCERN DISCLOSURE The Company’s consolidated financial statements are prepared in accordance with U.S. GAAP applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business. There can be no assurance that the Company will be able to achieve its business plan, raise any additional capital, or secure the additional financing necessary to implement its current operating plan. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. F 47 The Company has yet to achieve profitable operations, expects to incur further losses in the development of its business, has negative cash flows from operating activities, and is dependent upon future issuances of equity or other financings to fund ongoing operations, all of which raises substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the issuance of these financial statements. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing from stockholders or other sources to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances, however, there is no assurance of additional funding being available or on acceptable terms, if at all. NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of consolidation The accompanying consolidated financial statements include the accounts of the Company and of its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant areas of estimate include the impairment of assets and rates for amortization, accrued liabilities, future income tax obligations, and the inputs used in calculating stock-based compensation. Actual results could differ from those estimates and would affect future results of operations and cash flows. Reclassifications Certain prior period amounts have been reclassified to conform with the current year presentation. Reclassifications include combining or further disaggregation of certain line items in the consolidated balance sheets, consolidated statements of operations, and consolidated statements of cash flows. Such reclassifications had no significant impact on our reported net loss, current assets, total assets, current liabilities, total liabilities, shareholders’ equity or cash flows. Cash and Cash Equivalents The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At December 31, 2024, and December 31, 2023, the Company had no cash equivalents. F 48 Oil and Gas Producing Activities The Company uses the successful efforts method of accounting for oil and gas activities. Under this method, the costs of productive exploratory wells, all development wells, related asset retirement obligation assets, and productive leases are capitalized and amortized, principally by field, on a units-of-production basis over the life of the remaining proved reserves. Exploration costs, including personnel costs, geological and geophysical expenses, and delay rentals for oil and gas leases are charged to expense as incurred. Exploratory drilling costs are initially capitalized but charged to expense if and when the well is determined not to have found reserves in commercial quantities. Estimates of oil and gas reserves, as determined by independent petroleum engineers, are continually subject to revision based on price, production history and other factors. Depletion expense, which is computed based on the units of production method, could be significantly impacted by changes in such estimates. Additionally, US GAAP requires that if the expected future undiscounted cash flows from an asset are less than its carrying cost, that asset must be written down to its fair market value. As the fair market value of an oil and gas property will usually be significantly less than the total undiscounted future net revenues expected from that asset, slight changes in the estimates used to determine future net revenues from an asset could lead to the necessity of recording a significant impairment of that asset. Unproved oil and gas properties will be assessed annually to determine whether they have been impaired by the drilling of dry holes on or near the related acreage or other circumstances, which may indicate a decline in value. When impairment occurs, a loss will be recognized. When leases for unproved properties expire, the costs thereof, net of any related allowance for impairment, will be removed from the accounts and charged to expense. The Company will review its proved oil and natural gas properties for impairment whenever events and circumstances indicate that a decline in the recoverability of its carrying value may have occurred. It estimates the undiscounted future net cash flows of its oil and natural gas properties and compares such undiscounted future cash flows to the carrying amount of the oil and natural gas properties to determine if the carrying amount is recoverable. If the carrying amount exceeds the estimated undiscounted future cash flows, the Company will adjust the carrying amount of the oil and natural gas properties to fair value. During the years ended December 31, 2024, and 2023, the Company recorded impairments of $ 922,932 and $ 875,400 , respectively, on oil and gas properties. Long-Lived Assets The Company accounts for the impairment or disposal of long-lived assets according to the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 360 “Property, Plant and Equipment”. ASC 360 clarifies the accounting for the impairment of long-lived assets and for long-lived assets to be disposed of, including the disposal of business segments and major lines of business. Long-lived assets are reviewed when facts and circumstances indicate that the carrying value of the asset may not be recoverable. When necessary, impaired assets are written down to estimated fair value based on the best information available. Estimated fair value is generally based on either appraised value or measured by discounting estimated future cash flows. Considerable management judgment is necessary to estimate discounted future cash flows. Accordingly, actual results could vary significantly from such estimates. The Company did not recognize any impairment losses on long-lived assets during the years ending December 31, 2024, and 2023. F 49 Fair Value of Financial Instruments The Company had no financial instruments for the year ending December 31, 2024, or for the year ending December 31, 2023. ASC 820 “Fair Value Measurements and Disclosures” defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) a reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which give the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below: Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means; and Level 3 – Fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2024, and 2023. The respective carrying values of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. F 50 Revenue Recognition The Company accounts for revenue under ASC 606 “Revenue from Contracts with Customers.” Under ASC 606, oil and natural gas sales revenues are recognized when control of the product is transferred to the customer, the performance obligations under the terms of the contracts with customers are satisfied and collectability is reasonably assured. All the Company’s oil and natural gas sales are made under contracts with customers. The performance obligations for the Company’s contracts with customers are satisfied at a point in time through the delivery of oil and natural gas to its customers. Accordingly, the Company’s contracts do not give rise to contract assets or liabilities. The Company typically receives payment within 90 days of the month of delivery. The Company’s contracts for oil and natural gas sales are standard industry contracts that include variable consideration based on the monthly index price and adjustments that may include counterparty-specific provisions related to volumes, price differentials, discounts, and other adjustments and deductions. Revenues consist of the following: Year ended December 31, 2024 Year ended December 31, 2023 Crude oil revenues $ 970,859 $ 918,210 Gas revenues 827 9,773 Total revenues $ 971,686 $ 927,983 Accounts Receivable Accounts receivable consists of oil and natural gas receivables. Ongoing evaluations of collectability are performed and an allowance for potential credit losses is provided against the portion of accounts receivable that is estimated to be uncollectible. The Company did not recognize any write-offs during the years ended December 31, 2024, and 2023. The allowance for doubtful accounts is $ 0 as of December 31, 2024, and 2023. Stock-Based Compensation The Company accounts for Stock-Based Compensation under ASC 718 “Compensation – Stock Compensation”, which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. Generally accepted accounting principles require measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized. The Company issues stock to consultants for various services. The costs for these transactions are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The value of the common stock is measured at the earlier of (i) the date at which a firm commitment for performance by the counterparty to earn the equity instruments is reached or (ii) the date at which the counterparty's performance is complete. The Company recognized consulting expense and a corresponding increase to additional paid-in-capital related to stock issued for services. Income Taxes Income taxes are accounted for under ASC 740, using the liability method of accounting for income taxes. Under the liability method, future tax liabilities and assets are recognized for the estimated future tax consequences attributable to differences between the amounts reported in the financial statement carrying amounts of assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using enacted or substantially enacted income tax rates expected to apply when the asset is realized, or the liability settled. The effect of a change in income tax rates on future income tax liabilities and assets is recognized in income in the period that the change occurs. Future income tax assets are recognized to the extent that they are considered more likely than not to be realized. F 51 ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. This standard requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based on the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. Because of the implementation of this standard, the Company performed a review of its material tax positions in accordance with recognition and measurement standards established by ASC 740 and concluded that it had no uncertain tax positions as of December 31, 2024, or as of December 31, 2023. Basic and Diluted Income per Share The Company computes income per share in accordance with ASC 260, "Earnings per Share", which requires the presentation of both basic and diluted earnings per share (“EPS”) on the face of the consolidated statement of operations. Basic EPS is computed by dividing income available to common stockholders by the weighted average number of shares outstanding during the period. Diluted EPS gives effect to all dilutive potential shares of common stock outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of December 31, 2024, and 2023, the Company had 0 and 1,050,000 potentially dilutive common shares outstanding, respectively. Asset Retirement Obligations The Company records the estimated fair value of obligations associated with the retirement of tangible, long-lived assets in the period in which they are incurred. When a liability is initially recorded, the Company capitalizes the cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value, and the capitalized cost is depleted over the useful life of the related asset. Revisions to estimated asset retirement obligations will result in an adjustment to the related capitalized asset and corresponding liability. Upon settlement of the liability, the Company either settles the obligation for its recorded amount or incurs a gain or loss. The Company’s asset retirement obligation relates to the plugging, dismantling, removal, site reclamation, and similar activities of its oil and gas properties. Asset retirement obligations are estimated at the present value of expected future net cash flows and are discounted using the Company’s credit adjusted risk-free rate. The Company uses unobservable inputs in the estimation of asset retirement obligations that include, but are not limited to: costs of labor, costs of materials, profits on costs of labor and materials, the effect of inflation on estimated costs, and discount rate. Due to the subjectivity of assumptions and the relative long lives of the Company’s leases, the costs to ultimately retire the Company’s obligations may vary significantly from prior estimates. Assumptions used in determining estimates are reviewed annually. F 52 Concentration of Credit Risk Our revenue can be materially affected by current economic conditions and the price of oil and natural gas. However, based on the current demand for crude oil and natural gas and the fact that alternative purchasers are readily available, we believe that the loss of our marketing agents and/or any of the purchasers identified by our marketing agents would not have a long-term material adverse effect on our financial position or results of international operations. The continued economic disruption resulting from Russia’s invasion of Ukraine, a potential global recession, and other varying macroeconomic conditions could materially impact the Company's business in future periods. Any potential disruption will depend on the duration and intensity of these events, which are highly uncertain and cannot be predicted at this time. Segment Information The Company operates in one reportable segment engaged in the acquisition, exploration, and production of oil and natural gas properties in the Gulf States Drilling Region. The Company’s chief operating decision maker (“CODM”) is the President and Chief Executive Officer as he maintains responsibility for assessment of the Company’s performance and decision making regarding resource allocation. Consolidated net income (loss) is the performance measure used by the CODM to evaluate the segment’s performance and allocate capital and to monitor budget versus actual results. The information regularly provided to the CODM on the segment’s revenues and significant expenses aligns with the categories presented in the Consolidated Statements of Income. Furthermore, the segment’s assets are reported on the Consolidated Balance Sheets as total assets. NOTE 4 – RECENT ACCOUNTING PRONOUNCEMENTS In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU requires enhanced disclosures about significant segment expenses that are regularly provided to the Chief Operating Decision Maker and included in each reported measure of segment profit or loss. Additionally, the ASU expanded interim disclosure segments. The ASU was adopted by the Company during the year ended December 31, 2024 and did not have a material impact on the consolidated financial statements. See Segment Information as disclosed with Note 3 for additional information regarding the updates made. Management does not believe any other recently issued accounting pronouncements, if adopted, would have a material effect on the Company’s present or future financial statements. NOTE 5 – ROYALTY INTERESTS IN OIL AND GAS PROPERTIES On August 29, 2024, the Company issued 2,211,982 shares of common stock, $ 0.01 par value per share, valued at $2.00 per share (the “Pine Grove Shares” to Liberty Operating, LLC, a Mississippi limited liability company (“Liberty”), in consideration for the sale and assignment of various mineral and oil and gas interests in and to certain properties located in Mississippi to Barrister Energy, LLC, a wholly-owned subsidiary of the Company organized under the laws of Mississippi. At the request and the instructions of Liberty, the Company issued the Pine Grove Shares to all members of Liberty on the pro rata basis of their ownership in Liberty. This acquisition was effective as of July 1, 2024. On May 31, 2024, the Company issued 1,320,755 shares of common stock, $ 0.01 par value per share, valued at $2.00 per share (the “Liberty Shares”), to Liberty in consideration for the sale and assignment of various mineral oil and gas interests in and to certain properties located in Mississippi to Barrister Energy, LLC, a wholly-owned subsidiary of the Company organized under the laws of Mississippi. At the request and the instructions of Liberty, the Company issued the Liberty Shares to all members of Liberty on the pro rata basis of their ownership in Liberty. This acquisition was effective as of May 1, 2024. The Company did not execute any acquisitions during the year ended December 31, 2023. In connection with fair value assessments for oil and gas proved properties, during the year ended December 31, 2024, the Company recorded impairment of $ 992,932 on its NONOP property, which was acquired in 2022. During the year ended December 31, 2023, the Company recorded impairment of $ 875,400 on its Barrister Energy property, which was acquired in 2020. F 53 At December 31, 2024, and December 31, 2023, the Company had leased oil and gas properties assets valued at $ 10,298,406 and $ 4,089,503 , respectively. Scheduled leased oil and gas properties assets As of December 31, 2024 As of December 31, 2023 Beginning balance $ 4,089,503 $ 5,345,457 Additions to proved reserves 5,294,020 — Additions to unproved reserves 2,169,814 Revisions of prior year ARO estimates 14,727 — Depletion expense ( 346,726 ) ( 380,554 ) Impairment expense ( 922,932 ) ( 875,400 ) Ending Balance $ 10,298,406 $ 4,089,503 We recorded depletion expense of ($ 0.35 ) million and ($ 0.38 ) million for the years ended December 31, 2024, and 2023, respectively. NOTE 6 – NOTES PAYABLE Schedule of notes payable December 31, 2024 December 31, 2023 On May 7, 2020, the Company applied for a Small Business Association (SBA) loan under the Paycheck Protection Program (PPP). The Company met all the necessary qualifications to apply for a $ 49,992 loan. On June 10, 2020, the SBA PPP loan was approved and transferred to the Company to be used for payment of accrued payroll and related payroll taxes. On November 29, 2021, the Company was notified that the request for forgiveness was denied. The note has been converted to a five-year loan at 1 % interest beginning on January 1, 2022 . $ 21,095 $ 31,078 Notes payable $ 21,095 $ 31,078 Less: current portion ( 10,088 ) ( 9,984 ) Notes payable net of current portion $ 11,007 $ 21,094 F 54 Related Party The Company was a party to several loans with related parties. The note holder is the CEO and Executive Chairman of the Company. At December 31, 2024, and 2023, notes payable consisted of the following: December 31, 2024 December 31, 2023 On January 24, 2022 , the Company's Executive Chairman loaned $ 20,000 to the Company, and the Company issued a promissory note for such amount. The promissory note is unsecured and bears interest at 2 % per annum principal and accrued interest matures on January 24, 2023 . $ 10,000 $ 10,000 On April 21, 2022 , the Company's Executive Chairman loaned $ 18,000 to the Company, and the Company issued a promissory note for such amount. The promissory note is unsecured and bears interest at 2 % per annum principal and accrued interest matures on April 21, 2023 . $ 18,000 $ 18,000 On August 23, 2022 , the Company's Executive Chairman loaned $ 20,000 to the Company, and the Company issued a promissory note for such amount. The promissory note is unsecured and bears interest at 2 % per annum principal and accrued interest matures on August 23, 2023 . $ 20,000 $ 20,000 On September 15, 2022 , the Company's Executive Chairman loaned $ 15,000 to the Company, and the Company issued a promissory note for such amount. The promissory note is unsecured and bears interest at 2 % per annum principal and accrued interest matures on September 16, 2023 . $ 15,000 $ 15,000 On October 25, 2022 , the Company's Executive Chairman loaned $ 20,000 to the Company, and the Company issued a promissory note for such amount. The promissory note is unsecured and bears interest at 2 % per annum principal and accrued interest matures on October 25, 2023 . $ 20,000 $ 20,000 On December 8, 2022 , the Company's Executive Chairman loaned $ 20,000 to the Company, and the Company issued a promissory note for such amount. The promissory note is unsecured and bears interest at 2 % per annum principal and accrued interest matures on December 8, 2023 . $ 20,001 $ 20,001 Notes payable – related party $ 103,001 $ 103,001 On December 19, 2024 all outstanding notes with the Company’s CEO and Executive Chairman were extended to have a maturity date of December 31, 2025. During the years ended December 31, 2024, and 2023 the Company recorded interest expense of $ 3,591 and $ 2,142 , respectively. NOTE 7 – RELATED PARTY TRANSACTIONS For the years ending December 31, 2024, and 2023, in addition to the related party loans payable (NOTE 6), the following related party transactions occurred between the Company’s directors or executive officers or any person nominated or chosen by the Company to become a director or executive officer: F 55 On January 25, 2023, the Company issued 25,000 shares of its Series A convertible preferred stock to Jeffrey J. Guzy, the Company’s CFO, and 25,000 shares of Series A convertible stock to Wm. Barrett Wellman, the Company’s former CFO. Each share is convertible at the option of the holder to ten (10) shares of common stock. The total fair value of $ 1,065,000 ($ 21.30 per share) was recorded as part of accrued salaries and payroll taxes for the year ended December 31, 2023 as service was provided in that year. The accrual was reversed upon issuance of the shares in January 2023. The fair value was based on the value assigned to common stock ($2.13 per share) multiplied by 10. On February 14, 2023, the Company entered into a new employment agreement with Mr. Guzy (the “Guzy 2023 Employment Agreement”), pursuant to which Mr. Guzy continued serving the Company as Chief Executive Officer, President and Chairman of the Company. That employment agreement was terminated on January 10, 2024, upon resignation of Mr. Guzy from these positions. On the same date, the Company entered into a new employment agreement with Mr. Guzy in connection with his appointment as Chief Financial officer. On March 13, 2023, Mr. Wellman’s Employment Agreement was extended to a termination date of August 16, 2024. The Employment Agreement was terminated on January 10, 2024, upon resignation of Mr. Wellman as Chief Financial Officer. Effective as of January 10, 2024, the board of directors of the Company (the “Board”) increased the size of the Board from two to three directors and appointed William R. Downs to the Board. On January 10, 2024, Jeffrey J. Guzy resigned from serving as Chief Executive Officer, President and Chairman of the Board. Immediately upon Mr. Guzy’s resignation from these offices, Mr. Downs was appointed as Chief Executive Officer, President and Chairman of the Board. Also on January 10, 2024, Wm. Barrett Wellman resigned as Chief Financial Officer and Secretary of the Company. Effective immediately upon Mr. Wellman’s resignation, the Board appointed Mr. Guzy as the Company’s Chief Financial officer and Secretary. On January 10, 2024, the Company issued 100,000 common shares at $ 0.99 per share to William R. Downs in connection with his appointment as the Company’s new Chief Executive Officer. The issuance of 100,000 shares was recognized at the share price on the date of the employment agreement. On January 26, 2024, Mr. Guzy and Mr. Wellman, being the holders of all of the Company’s Series A Stock converted all 105,000 shares issued and outstanding into common shares at a conversion rate of one to ten. The conversion occurred at the rate specified in the initial issuance agreement and therefore no gain or loss was recognized on the conversion. In connection with the exercise of the conversion option, the Company issued 575,000 and 475,000 common shares to Jeffrey J. Guzy and Wm. Barrett Wellman, respectively. NOTE 8 – STOCKHOLDER’S EQUITY Authorized Capital The Company has 300,000,000 authorized shares of Common Stock at $ 0.01 par value and 50,000,000 authorized shares of Preferred Stock at a par value of $ 0.10 , and Series A convertible shares at a par value of $ 0.01 . The Company had 13,998,639 and 9,315,902 shares of Common Stock issued and outstanding as of December 31, 2024, and 2023, respectively. The Company had 0 and 105,000 shares of Preferred Stock issued and outstanding as of December 31, 2024, and 2023, respectively. F 56 Preferred Stock The holders of Preferred Stock are entitled to receive dividends equal to the amount of the dividend or distribution per share of common stock payable multiplied by the number of shares of common stock the shares of Series A preferred shares held by such holder are convertible into. Each Series A preferred shares is convertible into ten common shares. The Company classified the Series A Preferred Stock as permanent equity in the consolidated financial statements as the terms do not provide for an obligation to buy back the shares in exchange for cash or other assets of the Company. The shares are not considered debt under ASC 480 “Distinguishing Liabilities from Equity” as the shares do not represent an obligation that must or may be settled with a variable number of shares. No other redemption features exist within the terms of the instrument. Refer to Note 7 for details on convertible preferred stock activity during the years ending December 31, 2024, and 2023. Common Stock During the year ended December 31, 2023, the Company issued 140,642 shares, 14,217 shares, 35,000 shares, 7,107 shares, and 4,490 shares for vendor payments at share prices of $ 2.13 per share, $ 2.20 per share, $ 1.90 per share, $ 2.00 per share, and $ 0.99 per share, respectively. Additionally, during the year ended December 31, 2023, the Company received $ 10,000 for stock subscriptions payable of 5,000 shares of common stock. Refer to Note 7 for details on common share issuances to the Company’s officers. Refer to Note 5 for details on common share issuances for acquired interests in oil and gas properties. During the year ended December 31, 2024, there has been no additional common share activity outside of the items disclosed in Notes 5 and 7. F 57 The above shares of capital stock are restricted securities under Rule 144 and were issued in reliance on an exemption from the registration requirements of the Securities Act. NOTE 9 - INCOME TAXES The Company provides for income taxes using the liability method in accordance with ASC 740 “Income Taxes”. Deferred income taxes arise from the differences in the recognition of income and expenses for tax purposes. There were no deferred tax assets or liabilities at December 31, 2024, and 2023. Management has reviewed the provisions regarding the assessment of their valuation allowance on deferred tax assets and based on those criteria determined that it would not have sufficient taxable income to realize those assets. Therefore, management has assessed the realization of the deferred tax assets and has determined that it is more likely than not that they will not be realized and has provided a full valuation allowance against the deferred tax asset. The Company recognizes the financial statement effect of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company is subject to income taxes in the U.S. federal jurisdiction and the state of Virginia. The tax regulations within each jurisdiction are subject to the interpretation of related tax laws and regulations and require significant judgment to apply. The Company is not presently undergoing any tax audits. The Company will apply the federal and state net operating loss (“NOL”) carry-forward in FY 2024 and later years. On December 22, 2017, the United States Government passed new tax legislation that, among other provisions, will lower the corporate tax rate from 35 % to 21 %. In addition to applying the new lower corporate tax rate in 2018 and thereafter to any taxable income we may have, the legislation affects the way we can use and carry forward net operating losses previously accumulated and results in a revaluation of deferred tax assets recorded on our balance sheet. Given that the deferred tax assets are offset by a full valuation allowance, these changes have no net effect on the Company’s financial position and net loss. However, when we become profitable, we will receive a reduced benefit from such deferred tax assets. A reconciliation of the income tax provision computed at statutory rates to the reported tax provision is as follows: Year ended December 31, 2024 Year ended December 31, 2023 Federal income tax rate 21.0 % 21.0 % Loss before income taxes $ ( 1,609,846 ) $ ( 1,629,902 ) Non-deductible expenses — — Taxable loss $ ( 1,609,846 ) $ ( 1,629,902 ) Expected approximate tax recovery on net loss $ ( 338,068 ) $ ( 342,280 ) Changes in valuation allowance 338,068 342,280 Income tax $ — $ — F 58 The component of the Company’s deferred tax asset is as follows: As of December 31, 2024 As of December 31, 2023 Deferred income tax assets: Net operating losses carried forward $ 1,013,260 $ 897,353 Impairments 1,198,687 1,004,871 Other 118,052 5,946 Total gross deferred income tax assets $ 2,329,999 $ 1,908,170 Less: valuation allowance ( 2,329,999 ) ( 1,908,170 ) Net deferred tax asset $ — $ — The Company has a valuation allowance against the full amount of its net deferred tax assets due to the uncertainty of the realization of the deferred tax assets. At December 31, 2024, and December 31, 2023, the Company has incurred accumulated net operating losses in the United States of America totaling $ 4,825,047 and $ 4,273,108 respectively which are available to reduce taxable income in future taxation years. NOTE 10 - COMMITMENTS AND CONTINGENCIES Operating Lease Commitments The Company has no lease obligations at December 31, 2024, and 2023. Additionally, the Company has no known contingencies as of December 31, 2024, and December 31, 2023. Purchase Commitments The Company has no purchase obligations at December 31, 2024, and 2023. Significant Risks and Uncertainties Concentration of Credit Risk – Cash – The Company maintains cash and cash equivalent balances at a single financial institution that are insured by the Federal Deposit Insurance Corporation (FDIC) up to $ 250,000 . At December 31, 2024, and December 31, 2023, the Company had no exposure in excess of insurance. F 59 Concentration of Credit Risk – Accounts Receivable and Revenues – For the periods presented, all of the Company’s outstanding accounts receivable and revenues were transacted with one party, Taxodium Energy, LLC. Legal Matters During the course of business, litigation commonly occurs. From time to time, the Company may be a party to litigation matters involving claims against the Company. The Company operates in a highly regulated industry and employs personnel, which may inherently lend itself to legal matters. Management is aware that litigation has associated costs and that results of adverse litigation verdicts could have a material effect on the Company's financial position or results of operations. There are no known legal proceedings against the Company or its officers and directors in their capacity as officers and directors of the Company. NOTE 11 – ASSET RETIREMENT OBLIGATION Changes in the asset retirement obligation were as follows: As of December 31, 2024 As of December 31, 2023 Beginning balance $ 105,118 $ 92,241 Liabilities acquired 398,358 — Accretion expense 35,335 12,877 Revisions 14,727 — Ending Balance $ 553,538 $ 105,118 NOTE 12 – RESERVE AND RELATED FINANCIAL DATA - UNAUDITED Disclosure of Reserves The table below summarizes our estimated net proved reserves, as of December 31, 2024, and 2023, based on reserve reports prepared by Netherland, Sewell & Associates, Inc. (NSAI), our third-party independent reserve engineers. In preparing its reports, NSAI evaluated properties representing all of our proved reserves at December 31, 2024, and 2023 in accordance with the rules and regulations of the SEC applicable to companies involved in oil and natural gas producing activities. Our estimated net proved reserves in the table below do not include probable or possible reserves and do not in any way include or reflect our commodity derivatives. F 60 Schedule of proved developed and undeveloped oil and gas reserve quantities Natural Gas (Mmcf) Oil (Mbbl) BOE Proved Developed and Undeveloped Reserves at December 31, 2022 36 189 195 Revisions of Previous Estimates ( 31 ) ( 12 ) ( 17 ) Purchases of Minerals in Place — — — Production ( 5 ) ( 12 ) ( 13 ) Proved Developed and Undeveloped Reserves at December 31, 2023 — 165 165 Revisions of Previous Estimates ( 385 ) ( 231 ) ( 296 ) Purchases of Minerals in Place 2,489 1,198 1,613 Production — ( 14 ) ( 14 ) Proved Developed and Undeveloped Reserves at December 31, 2024 2,104 1,118 1,468 The table above values oil and natural gas reserve quantities as of December 31, 2024, and 2023, assuming constant realized prices of $ 73.68 and $ 75.81 per barrel of oil and $ 2.013 and $ 0 per Mcf of natural gas, respectively. Under SEC guidelines, these prices represent the average prices per barrel of oil and per Mcf of natural gas at the beginning of each month in the 12-month period prior to the end of the reporting period, after adjustment to reflect applicable transportation and quality differentials. Standardized Measure The standardized measure of discounted future net cash flows and changes in such cash flows are prepared using assumptions required by the Financial Accounting Standards Board. Such assumptions include using 12-month average prices for oil and gas, based on the first-day-of-the-month price for each month in the period, and year-end costs for estimated future development and production expenditures to produce year-end estimated proved reserves. Discounted future net cash flows are calculated using a 10% rate. Estimated future income taxes are calculated by applying year-end statutory rates to future pre-tax net cash flows, less the tax basis of related assets and applicable tax credits. The estimated well abandonment costs are deducted from the standardized measure using year-end costs and discounted at 10%. Such abandonment costs are recorded as a liability on the consolidated balance sheet, using estimated values as the projected abandonment date and discounted using a risk-adjusted rate when the well is drilled or acquired. The standardized measure does not represent management’s estimate of the Company’s future cash flows or the value of proved oil and gas reserves. Probable and possible reserves, which may become proved in the future, are excluded from the calculations. Furthermore, prices used to determine the standardized measure are influenced by supply and demand as affected by recent economic conditions and other factors and may not be the most representative in estimating future revenues or reserve data. The table below reflects the standardized measure of discounted future net cash flows related to the Company’s interest in proved reserves. F 61 Year Ended December 31, 2024 2023 (in thousands) Future cash inflows $ 86,581 $ 12,496 Future production costs 5,736 2,716 Future development and abandonment costs 12,479 407 Future tax expense 12,209 1,968 Future net cash flows 56,157 7,405 10% annual discount for estimated timing of cash flows 32,965 2,353 Standardized measure of discounted future net cash flows $ 23,192 $ 5,052 The principal changes in the standardized measure of discounted future net cash flows attributable to the Company's proved reserves are as follows: Year Ended December 31, 2024 2023 (in thousands) Beginning of period $ 5,052 $ 6,757 Sales of oil and natural gas produced, net of production costs ( 616 ) ( 679 ) Net change due to extensions, discoveries, and improved recovery — — Net change of prices and production costs ( 2,975 ) ( 1,850 ) Change in future development costs ( 24 ) 59 Revisions of quantity and timing estimates ( 6,831 ) ( 621 ) Accretion of discount 6,837 937 Change in income taxes ( 4,801 ) 453 Purchases of minerals in place 23,096 — Other 3,454 ( 4 ) End of period $ 23,192 $ 5,052 NOTE 13 - SUBSEQUENT EVENTS The Company has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued to determine if they must be reported. Management determined that there were no reportable subsequent events to be disclosed beyond the following: F 62 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.