What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-11-20 compared with 2022-06-14 · 84 added, 83 removed, 118 unchanged (59% of the section changed)

11 unchanged sentences

"expect,"

and the like, and/or future tense or conditional constructions ("will,"

and the like, and/or future tense or conditional

constructions ("will,"

"may,"

2 unchanged sentences

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

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.

These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that 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.

9 unchanged sentences

Since our inception, we have incurred operating losses.

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.

Prior to the Acquisitions, we had not generated positive cash flows from operations, and while after the Acquisitions, 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 does not remedy substantial doubts about our ability as a going concern.

Due to its limited revenues, the Acquisitions do 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.

5 unchanged sentences

Accordingly, reserve estimates may differ significantly from the quantities of oil that are ultimately recovered.

When we acquire oil exploration and production leases and rights, we will use oil reserve reports as one factor in deciding whether to drill in the property of a specific oil lease or right.

When we acquire oil exploration and production leases and rights, we will use

oil reserve reports as one factor in deciding whether to drill in the property of a specific oil lease or right.

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

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

In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic.

Governments have tried to slow the spread of the virus by imposing social distancing guidelines, travel restrictions, and stay-at-home orders, which have caused a significant contraction in global economic activity, including a decline in the demand for oil and to a lesser extent natural gas.

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 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 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 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 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.

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 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 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.

We have continued to operate as permitted under these regulations while taking steps to protect the health and safety of our workers.

We have implemented protocols to reduce the risk of an outbreak within our field operations, and these protocols have not reduced production or efficiency in a significant manner.

A substantial portion of our non-field level employees have transitioned temporarily to remote work-from-home arrangements.

With these arrangements in place, we have been able to maintain a consistent level of effectiveness, including maintaining our day-to-day operations, our financial reporting systems, and our internal control over financial reporting.

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 products or oil could result in us having to shut in production.

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

Risks and Uncertainties

Since March 2020, and throughout the last two years, global markets and commodity prices have been extremely volatile due to the impacts from the COVID-19 pandemic, with further impacts on volatility caused by the war in Ukraine that began in February 2022.

Commodity prices remained steady during the fourth quarter of 2022 as demand has continued to outpace relative supply.

While recessionary concerns have placed some downward pressure on commodity prices, causing oil and gas prices to decline in the first quarter of 2023 from their earlier highs in 2022, worldwide commodity demand continues to exceed pre COVID-19 pandemic levels.

Although supply has increased and we have seen continued recovery in commodity prices since the beginning of the pandemic, there is still an element of volatility and uncertainty that we expect to continue at least for the near-term and possibly longer, in part by the impact of the Russian-Ukrainian military conflict on global commodity and financial markets, and the associated effect of trade sanctions on imports of oil and natural gas from Russia.

This volatility could negatively impact future prices for oil, natural gas, petroleum products and industrial products.

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.

On November 8, 2022, the Company, through Barrister, acquired from Taxodium 100% ownership, right, title and interest in certain properties located in Mississippi and Alabama, including all oil and gas leases, interests, royalties, overriding royalties, subleases, fee estates, net profits interest, and carried interests (collectively, known as “NONOP Assets”) pursuant to the NONOP Assignment.

In consideration of the acquisition of NONOP Assets, the Company issued 1,600,000 shares of the Company’s Common Stock to all members of Taxodium in proportion to their interest in Taxodium.

This transaction became effective on October 1, 2022, for accounting purposes.

On December 2, 2022, the Company, through Barrister, acquired from Taxodium 100% ownership, right, title and interests in additional properties located in Mississippi, including certain wells, facilities, the oil gas and mineral leases, together with all surface and subsurface and all operating rights, working interest, and net revenue interest arising out of such leases and rights (collectively known as “Buckley Assets”) pursuant to the to the Buckley Assignment.

In consideration of the acquisition of Buckley Assets, the Company issued to members of Taxodium an aggregate of 1,500,000 shares of its Common Stock, valued at $2.00 per share, in proportion of their ownership interest in Taxodium.

The Buckley Assignment became effective on October 15, 2022 for accounting purposes.

Results of Operations

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.

We are an early-stage Company having just acquired our first lease assets.

We expect to begin producing revenue in 2023.

Year Ended December 31, 2022 Compared to Year Ended December 31, 2021

For the Year Ended December 31,

Lease operating expenses

General & administrative expenses

Depletion and accretion on discounted liabilities

Impairment expense

Loss from operations

Other income (expense)

$ (6,237,615)

$ (1,490,196)

$ (4,747,419)

* In excess of 1,000%

Revenues were $106,554 for the year ended December 31, 2022, and $8,160 for the year ended December 31, 2021.

The Company is an early-stage company, having just begun to acquire assignments of hydrocarbon revenues and underlying oil and gas exploration and production rights, and therefore has just begun producing significant revenue in 2023.

General and Administrative Expenses

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 Loss

General and administrative expenses consisted primarily of accounting and audit fees, legal and professional services fees, and payroll-related expenses.

General and administrative expenses were $2,111,761 for the year ended December 31, 2022, compared to $1,461,534 in the same period in 2021, representing an increase of 5.9% or $85,227.

The increase was primarily driven by an increase in share-based compensation expense.

Lease Operating Expenses

Lease operating expenses were $321,103 for the year ended December 31, 2022, compared to $31,918 in the same period in 2021.

The increase was due to additional operating expenses resulting from acquisitions of oil and gas properties during 2022.

Loss from Operations

Total operating loss was $6,278,331 for the year ended December 31, 2022, and $1,487,708 for the year ended December 31, 2021.

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.

The loss was primarily driven by the $3,909,700 impairment loss on oil and gas properties in addition to the increase in general and administrative expenses.

Other Income (Expense)

Other income was $40,716 for the year ended December 31, 2022, compared to other expense of $2,488 in the same period in 2021.

The increase was primarily due to an increase in interest income of $41,660.

As a result of the above factors, there was a net loss of $6,237,615 for the year ended December 31, 2022, compared to a net loss of $1,490,196 in the same period of last year.

Liquidity and Capital Resources

We have incurred net operating losses and operating cash flow deficits since inception, continuing through the years ended December 31, 2021, and December 31, 2020.

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.

Sources of Liquidity

The Company had cash and cash equivalents of $37,750 at December 31, 2022.

The Company has incurred net operating losses and operating cash flow deficits since inception, continuing through the years ended December 31, 2022, and December 31, 2021.

Since inception, the primary sources of financing have been a combination of loans or contributions of Jeffrey J.

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.

It has covered just general administration and legal compliance for the Company.

We had cash and cash equivalents at December 31, 2021, of $12,098.

We believe that our working capital on hand, as of the date of this report, will not be sufficient to fund our plan of operations over the next 12 months.

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 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.

The Company has not attained profitable operations and its ability to pursue any future plan of operation is dependent upon our ability to obtain additional financing.

Funding Requirements

The Company believes that its working capital on hand, as of the date of this report, will not be sufficient to fund its plan of operations over the next 12 months.

Until such time, if ever, as the Company can generate substantial revenues, it expects to continue relying on a combination of equity offerings and debt financings to fund ongoing operations.

To the extent that the Company raises additional capital through the sale of equity or debt securities, the ownership interest of the Company may be materially diluted, and the terms of such securities could include liquidation or other preferences that adversely affect the rights of the Company’s existing stockholders.

There is no assurance that the Company will be able to complete any additional sales of equity securities or that it will be able to arrange for other financing to fund its planned business activities.

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

We may continue to incur substantial costs in the future in connection with raising capital to fund our business, including investment banking fees, legal fees, accounting fees, securities law compliance fees, printing and distribution expenses, and other costs.

We may also be required to recognize non-cash expenses in connection with certain securities we may issue, which may adversely affect our financial condition.

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

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.

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

The Company may continue to incur substantial costs in the future in connection with raising capital to fund our business, including investment banking fees, legal fees, accounting fees, securities law compliance fees, printing and distribution expenses, and other costs.

The Company may also be required to recognize non-cash expenses in connection with certain securities we may issue, which may adversely affect our financial condition.

If the Company is unable to raise additional funds through equity or debt financings or other arrangements sufficient to satisfy its long-term capital requirements, together with its revenues from any acquired operations, it may be required to reduce operating costs, which are already minimal and delay, reduce or eliminate its acquisition and development activities.

That reduction could jeopardize the Company’s future strategic initiatives and business plans.

The Company may be required to sell some or all of its 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.

Bankruptcy Code).

Any of these actions could result in investors in the common stock losing their investment or failing to realize any appreciation in the common stock from the purchase price.

Working Capital (Deficit)

The following table summarizes our total current assets, total current liabilities, and working capital (deficit) as of December 31, 2022, and December 31, 2021:

December 31, 2022

December 31, 2021

Current assets

Current liabilities

Working capital surplus (deficit)

Working capital deficit

$ (2,0 15 ,508)

Changes in the net cash provided by and (used in) our operating, investing, and financing activities for the years ended December 31, 2021, and December 31, 2020, are set forth in the following table:

Changes in the net cash provided by and (used in) operating, investing, and financing activities for the years ended December 31, 2022, and December 31, 2021, are set forth in the following table:

December 31, 2022

December 31, 2021

Net cash provided by (used in) operating activities

Net cash provided by (used in) financing activities

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by financing activities

Cash at beginning of period

Net increase (decrease) in cash

Cash Flows from Operating Activities:

Net cash from operating activities is derived from net loss from operations adjusted for non-cash items, changes in the balances of accounts receivables, deposits, and prepaid expenses, accounts payables, accrued expenses, and other payables.

For the periods ended December 31, 2021, and December 31, 2020, net cash used by operating activities was $90,648 and $117,745, respectively.

Cash Flows from Financing Activities:

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

Net cash from operating activities is derived from net loss from operations adjusted for non-cash items, changes in the balances of accounts receivables, prepaid expenses, accounts payables, and accrued expenses.

For the period ended December 31, 2022, net cash used in operating activities was $78,323 compared to net cash used in operating activities of $108,618 for the period ended December 31, 2021.

Net cash used in investing activities was $0 for the periods ended December 31, 2022, and December 31, 2021.

Total net cash provided by financing activities was $103,975 and $76,665 for the periods ended December 31, 2022, and December 31, 2021, respectively.

The net decrease was primarily due to the decrease in SBA PPP loans.

Going Concern

3 unchanged sentences

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.

15 unchanged sentences

Revenue Recognition.

In January 2018, the Company adopted Accounting Standards Update (“ASU”) 2014-09 Revenues from Contracts with Customers (Topic 606) (“ASU 2014-09”).

The timing of recognizing revenue from the sale of produced crude oil and natural gas was not changed as a result of adopting ASU 2014-09.

In January 2018, the Company adopted Financial Accounting Standards Board (“FASB”) Codification Revenues from Contracts with Customers (Topic 606) .

The timing of recognizing revenue from the sale of produced crude oil and natural gas was not changed as a result of adopting ASC 606.

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

3 unchanged sentences

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 contract.

The new guidance regarding ASC 606 does not require that the transaction price be fixed or stated in the contract.

Estimating the variable consideration does not require significant judgment.

12 unchanged sentences

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 .

Impairment of Oil and Natural Gas Properties .

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.

7 unchanged sentences

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.

An impairment may not be reversed in future periods even though higher oil and natural gas prices may subsequently increase the ceiling.

Our estimates of reserves and future cash flow as of December 31, 2022, and 2021 were prepared using an average price equal to the unweighted arithmetic average of the first day of the month price for each month within the 12-month periods ended December 31, 2022, and 2021, respectively, in accordance with SEC guidelines.

7 unchanged sentences

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 the current period and future excess tax benefit.

In January 2018, the Company adopted ASC 718, Compensation – Stock Compensation .

Recent Accounting Pronouncements

Management does not believe any recently issued but not yet effective accounting pronouncements, if adopted, would have a material effect on the Company’s present or future financial statements.

See Note 4 in the notes to our consolidated financial statements for further discussion regarding recently issued accounting standards.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

1 unchanged sentence

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