What changed in this filing

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Item 7. Management’s Discussion and Analysis

2022-06-14 compared with 2021-05-14 · 76 added, 79 removed, 125 unchanged (55% of the section changed)

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etc.), or similar expressions, identify certain of these forward-looking statements.

These forward-looking statements are subject to risks and uncertainties, including those under "Risk Factors,"

which appear in elsewhere in this Annual Report, that could cause

actual results or events to differ materially from those expressed or implied by the forward-looking statements.

Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors.

We do not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Annual Report.

We were incorporated on November 13, 2017, under the laws of the Commonwealth of Virginia in order to acquire, fund, and operate oil exploration and production from assets in the Gulf States Drill Region.

We have no revenue-generating operations as of the date of this prospectus.

These statements are only predictions and involve known and unknown risks, uncertainties, and other factors which may cause our or our industry’s actual results, levels of activity, or

performance to be materially different from any future results, levels of activity, or performance expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, or performance.

You should not place undue reliance on these statements, which speak only as of the date of this Annual Report.

These cautionary statements should be considered with any written or oral forward-looking statements that we may issue in the future.

You should read this Annual Report on Form 10-K with the understanding that our actual future results may be materially different from what we expect.

All forward-looking statements speak only as of the date on which they are made.

We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made, except as required by applicable law.

Management’s discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

The following discussion and analysis of financial condition and results of operations of the Company is based upon and should be read in conjunction with, the audited consolidated financial statements and related notes elsewhere in this Annual Report on Form 10-K.

We were incorporated on November 13, 2017, under the laws of the Commonwealth of Virginia to acquire, fund, and operate oil exploration and production from assets in the Gulf States Drill Region.

We are an early-stage corporation seeking to become an independent energy company focused on the acquisition and subsequent exploitation and development of crude oil in the Gulf States Drill Region.

We caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond our control, incident to the exploration for and development, production, gathering, and sale of oil.

While any oil and gas exploration and production leases and rights that we may acquire may produce gas, we do not currently regard gas as a significant revenue source from possible future oil production operations.

The exploitation of gas may change if our oil drilling produces sufficient quantities of gas to warrant its exploitation and sale as a primary business line.

These risks include but are not limited to, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, availability of affordable funding, availability of qualified personnel, environmental risks, problems or delays in drilling, other operating risks and regulatory changes, the uncertainty inherent in estimating oil reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under “Risk Factors” in this prospectus.

COVID-19 pandemic also imposes a significant risk factor affecting demand for oil, economic conditions, availability of personnel, the ability of workers to work under possible social distancing and mask requirements and demand from consumers and industries that use oil and oil-based products.

Until there is an effective vaccine, there is no certainty as to the duration, scope, and extent of COVID-19 pandemic’s impact on the oil industry and our company.

Since our inception, we have incurred operating losses.

We have not generated positive cash flows from operations, and there are no assurances that we will be successful in obtaining an adequate level of financing for the development and commercialization of our proposed oil exploration and production business.

Prior to the Acquisition, we have not generated positive cash flows from operations, and while after the Acquisition, we started to generate revenue, there are no assurances that we will be successful in obtaining an adequate level of financing for the development and commercialization of our proposed oil exploration and production business.

These factors raise substantial doubt about our ability to continue as a going concern.

We expect to incur expenses and operating losses for the foreseeable future as we seek to implement our business plan.

Due to its limited revenues, the acquisition of Barrister does not remedy substantial doubts about our ability as a going concern.

Acquisition of the Barrister Oil Rights does not enhance our asset base for debt financing because the Barrister Oil Rights are secured by a first senior lien held by COP under the COP Agreements.

If we do not raise additional working capital, we will not be unable to continue operations, which could result in the rescission of the acquisition of Barrister if that failure occurs prior to the Rescission Deadline and constitutes a trigger event for a rescission of the Exchange.

Loss of Barrister would leave CoJax without any operating assets or revenues.

In any liquidation of CoJax, there would not

be sufficient assets for distribution of assets or money to CoJax shareholders.

CoJax has been unable to raise additional capital as of the date of this prospectus, other than personal loans by Jeffrey J.

Due to its limited revenues, the Acquisition does not remedy substantial doubts about our ability as a going concern.

The Company has been unable to raise additional capital as of the date of this Annual Report, other than personal loans by Jeffrey J.

Guzy, CoJax’s Chief Executive Officer and Chairman of the Board of Directors, and $53,000 raised in the public offering.

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Reserve estimates depend on many assumptions that may turn out to be inaccurate.

Any material inaccuracies in reserve estimates or underlying assumptions will materially affect the quantities and present value of oil from a drilling site.

inaccuracies in reserve estimates or underlying assumptions will materially affect the quantities and present value of oil from a drilling site.

Effects of COVID-19

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Our business and operations have been adversely affected by and may continue to be adversely affected by the COVID-19 pandemic and the public health response thereto.

As a result of the COVID-19 outbreak and the adverse public health developments, including voluntary and mandatory quarantines, travel restrictions and other restrictions, our operations, and those of our subcontractors, customers and suppliers, have experienced, and may to continue to experience, delays or disruptions.

As a result of the COVID-19 outbreak and the adverse public health developments, including voluntary and mandatory quarantines, travel restrictions, and other restrictions, our operations, and those of our subcontractors, customers, and suppliers, have experienced, and may continue to experience delays or disruptions.

In addition, our financial condition and results of operations have been and may continue to be, adversely affected by the ongoing coronavirus outbreak.

The timeline and potential magnitude of the COVID-19 outbreak, and its consequences are currently unknown.

The prolongation or exacerbation of this pandemic could more extensively affect the United States and global economy, including the demand for oil and natural gas.

The Company has experienced the effects of a negatively impacted domestic and international demand for crude oil and natural gas, which has contributed to price volatility and impacted the price we received for our production, and moreover materially and adversely affected the demand for and marketability of our production.

The prolongation or exacerbation of this pandemic could more extensively affect the United States and the global economy, including the demand for oil and natural gas.

The Company has experienced the effects of a negatively affected domestic and international demand for crude oil and natural gas, which has contributed to price volatility and affected the price we received for our production, and moreover materially and adversely affected the demand for and marketability of our production.

For the Company, this means that production was shut in for some of our wells and that we held some of our production as inventory to be sold at a later date because we refused to accept the unprecedented and exceptionally low price for our production.

Our 2020 results were negatively impacted by the pandemic response.

At this time, we expect that our financial results for the first quarter of 2021 may be adversely impacted by our response to, the existence of and the global response to the COVID-19 pandemic.

Also, in March 2020, Saudi Arabia and Russia, along with OPEC producers, failed to agree to cut oil production, and Saudi Arabia significantly cut the sell price of its oil and announced plans to increase

production, which events together contributed to a sharp drop in global oil prices.

Our 2020 results were negatively affected by the pandemic response.

At this time, we expect that our financial results for the first quarter of 2022 may be adversely affected by our response to, the existence of and the global response to the COVID-19 pandemic.

Also, in March 2020, Saudi Arabia and Russia, along with OPEC producers, failed to agree to cut oil production, and Saudi Arabia significantly cut the selling price of its oil and announced plans to increase production, which events together contributed to a sharp drop in global oil prices.

While OPEC, Russia, and other allied producers reached an agreement in April 2020, and most recently in March 2021, to reduce production, oil prices remained low until the first quarter of 2021.

While OPEC+ producers ultimately agreed to cut global petroleum output, such cut was not enough to offset the impact of COVID-19 on 2020 demand.

While OPEC+ producers ultimately agreed to cut global petroleum output, such a cut was not enough to offset the effect of COVID-19 on 2020 demand.

As a result of this decrease in demand and increase in supply, oil and natural gas prices decreased, which affected our liquidity.

Additionally, with depressed oil and natural gas prices, we incurred a write-down to our oil and gas properties and additional write-downs may be required in future periods if prices decrease from current levels.

The imbalance between the supply of and demand for oil, as well as the uncertainty around the extent and timing of an economic recovery, caused significant market volatility and a substantial adverse effect on commodity prices during the last two quarters of 2021.

The Company expects ongoing oil and gas price volatility over the short term.

The full impact of the coronavirus on oil and natural gas prices continues to evolve as of the date of this report.

The full effect of the coronavirus on oil and natural gas prices continues to evolve as of the date of this report.

As such, the full magnitude of such events on the Company remains uncertain.

Management is actively monitoring the global situation and its impact on the Company’s future operations, financial position and liquidity in fiscal year 2020.

Management is actively monitoring the global situation and its effect on the Company’s future operations, financial position, and liquidity in fiscal year 2021.

As a producer of oil and natural gas, we are recognized as an essential business under various federal, state and local regulations related to the COVID-19 pandemic.

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Although such restraints have relaxed significantly, we may become subject to such constraints if we are not able to sell our production or certain components of our production.

The lack of a market or available storage for natural gas product or oil could result in us having to shut in production.

The lack of a market or available storage for natural gas products or oil could result in us having to shut in production.

Recent Developments

On November 16, 2021, the Company entered into and executed the Debt Exchange Agreement with C.O.P, the holder of the Note, which was secured by the Barrister Oil Rights.

Pursuant to the Debt Exchange Agreement, COP discharged the Company from all its obligations with respect to the Assumed Debt in connection with the Acquisition in exchange for the issuance of 1,350,000 shares of Common Stock to COP

On November 22, 2021, the Company entered into a 12-month consulting agreement with Catherine Moden to provide website services, search engine optimization, and general marketing.

The payment was effected by the issuance of 50,000 shares of common stock at a price of $2.00 per share.

The Company recorded the total amount of the contract as a prepaid expense asset to be amortized over the twelve months of the contract.

Results of Operations

Twelve-month period ended December 31, 2020 compared to twelve-month period ended December 31, 2019

Twelve-month period ended December 31, 2021, compared to the twelve-month period ended December 31, 2020

Revenues were $8,160 for the year ended December 31, 2021, and $0 in the same period of last year.

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General and Administrative Expenses

General and administrative (G&A) expenses were $1,349,653 for the year ended December 31, 2020 compared to $35,169 in the same period in 2019, representing an increase of 3738%, or $1,314,484.

The increase was primarily due to the increase of salary expense and accruals of $611,714 and the Barrister acquisition costs of $620,500.

General and administrative (G&A) expenses were $1,461,534 for the year ended December 31, 2021, compared to $1,349,653 in the same period in 2020, representing a increase of 28.8%, or $111,881.

The increase was primarily due to the increase in salary expenses and accruals.

Research and Development Expenses

The Company had no Research and Development (R&D) expenses for the years ended December 31, 2021, and December 31, 2020.

Operating Income

Total operating income was $0 for the year ended December 31, 2020, and $0 for the year ended December 31, 2019.

Operating Loss

Total operating loss was $1,487,708 for the year ended December 31, 2021, and $1,362,215 for the year ended December 31, 2020.

As a result of the above factors, we had a net loss of $1,490,196 for the year ended December 31, 2021, compared to a net loss of $1,363,296 in the same period of last year.

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We are in the early stages of acquisition and development of oil and gas leaseholds and properties, and we have been funded primarily by a combination of loans or contributions of Jeffrey J.

Guzy, an officer, and director of the Company.

Guzy, an officer and director of the Company, and $53,000 raised in the public offering.

This limited funding has been inadequate as of the date of this Annual Report to fund our business strategy.

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We require additional capital within the next 12 months.

Our ability to obtain additional financing may be impaired by many factors outside of our control, including the capital markets (both generally and in the crude oil industry in particular), our lack of operating history, the location of our proposed or future crude oil properties and prices of crude oil on the commodities markets (which will impact the amount of asset-based financing available to us) and other factors.

Our ability to obtain additional financing may be impaired by many factors outside of our control, including the capital markets (both generally and in the crude oil industry in particular), our lack of operating history, the location of our proposed or future crude oil properties and prices of crude oil on the commodities markets (which will influence the amount of asset-based financing available to us) and other factors.

Further, if oil prices on the commodities markets decline, our revenues from any exploitation of Barrister Oil Rights will likely decrease, and such decreased revenues may increase our requirements for capital.

Debt or equity financing arrangements may not be available to us or may be available only on unfavorable terms.

Based on prior experience on seeking funding for drilling on properties without any significant oil production, funding for drilling is challenging to obtain at all or on affordable terms.

Based on prior experience in seeking funding for drilling on properties without any significant oil production, funding for drilling is challenging to obtain at all or on affordable terms.

Additionally, available forms of funding could be highly dilutive to our existing stockholders and may not provide us with sufficient funds to meet our long-term capital requirements.

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If the amount of capital we are able to raise from financing activities, together with our revenues from any acquired operations, is not sufficient to satisfy our capital needs, we will be required to reduce operating costs, which are already minimal.

That reduction could jeopardize our future strategic initiatives and business plans.

That reduction could jeopardize our future strategic initiatives and business

We may be required to sell some or all of our acquired properties (which could be on unfavorable terms), seek joint ventures with one or more strategic partners, strategic acquisitions, and other strategic alternatives, cease our operations, sell or merge our business, or file a petition for bankruptcy (either liquidation or reorganization under the U.S.

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Total net cash provided by financing activities was $58,665 and $133,607 for the periods ended December 31, 2021, and December 31, 2020.

The net increase was derived from the SBA PPP loan program and the sale of shares.

The net decrease was primarily derived from the decrease in the loans payable–related party.

Going Concern

The accompanying consolidated financial statements have been prepared assuming we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the date of these financial statements.

The accompanying consolidated financial statements have been prepared assuming we will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the date of these financial statements.

On a consolidated basis, we have incurred significant operating losses since inception.

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Therefore, we will need to raise additional funds and are currently exploring sources of financing.

Historically, we have raised capital through private offerings of debt and equity and officer loans to finance working capital needs.

Historically, we have raised capital

through private offerings of debt and equity and officer loans to finance working capital needs.

There can be no assurances that we will be able to continue to raise additional capital through the sale of common stock or other securities or obtain short-term loans.

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We have outlined below certain of these policies as being of particular importance to the portrayal of our financial position and results of operations and which require the application of significant judgment by our management.

On May 9, 2022, the Board of directors of the Company, after discussion with management, determined that the Company’s previously issued financial statements included in the Original Form 10-K need to be restated, to among other things, amend the statements used in the Original Form 10-K regarding the method of accounting it uses.

On May 31, 2022, the Company filed an amendment to the Original Form 10-K in which it modified and restated certain statements, including that 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.

All of our properties are located within the continental United States .

Revenue Recognition.

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The Company predominantly derives its revenue from the sale of produced crude oil and natural gas.

The contractual performance obligation is satisfied when the product is delivered to the customer.

The contractual performance obligation is satisfied when the product is delivered to the purchaser.

Revenue is recorded in the month the product is delivered to the purchaser.

The Company receives payment from one to three months after delivery.

The Company receives payment within one month after pickup.

The transaction price includes variable consideration as product pricing is based on published market prices and reduced for contract-specified differentials.

The new guidance regarding ASU 2014-09 does not require that the transaction price be fixed or stated in the

Estimating the variable consideration does not require significant judgment and Ring engages third party sources to validate the estimates.

The new guidance regarding ASU 2014-09 does not require that the transaction price be fixed or stated in the contract.

Estimating the variable consideration does not require significant judgment.

Revenue is recognized net of royalties due to third parties in an amount that reflects the consideration the Company expects to receive in exchange for those products.

See Note 2 of our financial statements for additional information.

Full Cost Method of Accounting.

We account for our oil and natural gas operations using the full cost method of accounting.

Under this method, all costs (internal or external) associated with property acquisition, exploration and development of oil and gas reserves are capitalized.

Costs capitalized include acquisition costs, geological and geophysical expenditures, lease rentals on undeveloped properties and cost of drilling and equipping productive and non-productive wells.

Drilling costs include directly related overhead costs.

All of our properties are located within the continental United States.

Successful Efforts Method of Accounting.

We account for oil and natural gas properties in accordance with the successful efforts method.

Under this method, all acquisition costs of proved properties are capitalized and amortized on a unit-of-production basis over the remaining life of the proved reserves.

All development costs of proved properties are capitalized and amortized on a unit-of-production basis over the remaining life of the proved developed reserves.

Costs of retired, sold, or abandoned properties that constitute a part of an amortization base are charged or credited, net of proceeds, to accumulated depreciation, depletion and amortization unless doing so significantly affects the unit-of-production amortization rate, in which case a gain or loss is recognized in the current period.

Gains or losses from the disposal of other properties are recognized in the current period.

For assets acquired, we base the capitalized cost on the fair value at the acquisition date.

We expense expenditures for maintenance and repairs necessary to maintain properties in operating condition, as well as annual lease rentals, as they are incurred.

Estimated dismantlement and abandonment costs are capitalized at their estimated net present value and amortized over the remaining lives of the related assets.

Interest is capitalized only during the periods in which these assets are brought to their intended use.

We only capitalize the interest on borrowed funds related to our share of costs associated with qualifying capital expenditures.

Write-down of Oil and Natural Gas Properties .

Companies that use the full cost method of accounting for oil and natural gas exploration and development activities are required to perform a ceiling test calculation each quarter.

The full cost ceiling test is an impairment test prescribed by SEC Regulation S-X Rule 4-10.

The ceiling test is performed quarterly utilizing the average of prices in effect on the first day of the month for the preceding twelve-month period in accordance with SEC Release No.

The ceiling limits such pooled costs to the aggregate of the present value of future net revenues attributable to proved crude oil and natural gas reserves discounted at 10%, plus the lower of cost or market value of unproved properties, less any associated tax effects.

If such capitalized costs exceed the ceiling, the Company will record a write-down to the extent of such excess as a non-cash charge to earnings.

Any such write-down will reduce earnings in the period of occurrence and results in a lower depletion, depreciation and amortization (“DD&A”) rate in future periods.

We evaluate the impairment of our proved oil and natural gas properties generally on a field-by-field basis or at the lowest level for which cash flows are identifiable, whenever events or changes in circumstance indicate that the carrying value may not be recoverable.

We reduce the carrying values of proved properties to fair value when the expected undiscounted future cash flows are less than the net book value.

We measure the fair values of proved properties using valuation techniques consistent with the income approach, converting future cash flows to a single discounted amount.

Significant inputs used to determine the fair values of proved properties include estimates of (i) reserves;

(ii) future operating and development costs;

(iii) future commodity prices;

and (iv) a risk-adjusted discount rate.

These inputs require significant judgments and estimates by our management at the time of the valuation.

The most significant financial statement effect from a change in our oil and gas reserves or impairment of its proved properties would be the DD&A rate.

A write-down may not be reversed in future periods even though higher oil and natural gas prices may subsequently increase the ceiling.

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As of December 31, 2020, our reserves are based on an SEC average price of $62.63 per Bbl of WTI oil posted and $2.88 per MCF natural gas.

Prices are adjusted by local field and lease level differentials and are held constant for life of reserves in accordance with SEC guidelines.

Oil and Natural Gas Reserve Quantities.

Reserve quantities and the related estimates of future net cash flows affect our periodic calculations of depletion and impairment of our oil and natural gas properties.

Proved oil and natural gas reserves are the estimated quantities of crude oil, natural gas and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be recoverable in future periods from known reservoirs under existing economic and operating conditions.

Reserve quantities and future cash flows included in this Annual Report are prepared in accordance with guidelines established by the SEC and FASB.

The accuracy of our reserve estimates is a function of:

· The quality and quantity of available data;

· The interpretation of that data;

· The accuracy of various mandated economic assumptions;

· The judgements of the persons preparing the estimates

Our proved reserve information included in this Annual Report was prepared and determined by NOVA Resource Incorporated, independent petroleum engineers.

Because these estimates depend on many assumptions, all of which may differ substantially from actual results, reserve estimates may be different from the quantities of oil and natural gas that are ultimately recovered.

We continually make revisions to reserve estimates throughout the year as additional properties are acquired.

We make changes to depletion rates and impairment calculations in the same period that changes to the reserve estimates are made.

All capitalized costs of oil and natural gas properties, including estimated future costs to develop proved reserves and estimated future costs of site restoration, are amortized on the unit-of-production method using estimates of proved reserves as determined by independent engineers.

Investments in unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined.

Prices are adjusted by local field and lease level differentials and are held constant for the life of reserves in accordance with SEC guidelines.

Income Taxes.

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We record adjustments to the actual values in the period we file our tax returns.

In January 2018, the Company adopted ASU 2016-09, Compensation – Stock Compensation (Topic 718.) The Company will use the prospective method to account for current period and future excess tax benefit.

In January 2018, the Company adopted ASU 2016-09, Compensation – Stock Compensation (Topic 718.) The Company will use the prospective method to account for the current period and future excess tax benefit.

Recent Accounting Pronouncements

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

What changed 10-K

Item 7. Management’s Discussion and Analysis