What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-05-14 compared with 2024-11-13 · 180 added, 228 removed, 90 unchanged (82% of the section changed)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

FORWARD-LOOKING INFORMATION

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by a number of distinct factors, including Empire’s failure to secure short and long-term financing necessary to sustain and grow

its operations, increased competition, changes in the markets in which Empire participates and the technology utilized by Empire and

new legislation regarding environmental matters.

These risks and other risks that could affect Empire's business are more fully described

in reports Empire files with the SEC, including its Annual Report on Form 10-K for the year ended December 31, 2023.

Actual results may

vary materially from the forward-looking statements.

Empire undertakes no duty to update any of the forward-looking statements in this

Our primary business is the optimization and

development of oil and gas interests.

In 2022 we had net income from operations but have incurred losses from operations in 2023 and

2024 and in years prior to 2022.

There is no assurance that we will be profitable or obtain funds necessary to finance our future operations.

its operations, increased competition, changes in the markets in which Empire participates, the technology utilized by Empire, new legislation

regarding environmental matters and general economic conditions including inflation, tariffs and interest rates.

These risks and other

risks that could affect Empire's business are more fully described in reports Empire files with the SEC, including its Annual Report

on Form 10-K for the year ended December 31, 2024.

Actual results may vary materially from the forward-looking statements.

Empire undertakes

no duty to update any of the forward-looking statements in this Form 10-Q.

Our primary business is the optimization and development

of oil and gas interests.

We have incurred losses from operations in 2025 and 2024.

There is no assurance that we will be profitable

or obtain the funds necessary to finance our future operations.

We seek to increase shareholder value by growing

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and expertly spend capital to realize reserves on producing properties as well as further develop fields.

Management places emphasis on operating cash

flow in managing our business, as operating cash flow considers the cash expenses incurred during the period and excludes non-cash expenditures

Management places emphasis on operating cash flow

in managing our business, as operating cash flow considers the cash expenses incurred during the period and excludes non-cash expenditures

not related directly to our operations.

Concentration

The Company’s producing

properties and oil and natural gas reserves are all located in Louisiana, New Mexico, North Dakota, Montana, and Texas.

Because of the

concentration, the Company is exposed to the impact of regional supply and demand factors, processing or transportation capacity constraints,

severe weather events, water shortages, and government regulations specific to the geographic area.

The Company also sells a large portion

of its oil and natural gas production to a few customers, which increases the risk of temporary sales interruption or a lower price for

production if one of these purchasers were lost.

The effect of inflation on the Company has generally

been to increase its cost of operations, general and administrative costs and direct costs associated with oil and natural gas production.

We are an independent operator in four geographic

areas in the United States.

For our operated properties, we manage and influence production using a combination of experienced field

personnel and third-party service providers to execute our mission.

Our producing properties have reasonably predictable production profiles

and cash flows, subject to commodity price and cost fluctuations.

As is common in the industry in which we operate, we selectively participate

in drilling and developmental activities in non-operated properties.

Decisions to participate in non-operated properties are made after

technical and economic analysis of the projects which also considers the operating expertise and historical track record of the operators.

Seasonality of Business

Weather conditions often affect the demand for,

and prices of, natural gas and can also delay oil and natural gas production.

Demand for natural gas is traditionally higher in the winter,

resulting in higher natural gas prices during the first and fourth quarters.

Due to these seasonal fluctuations, results of operations

for individual quarterly periods may not be indicative of the results realized on an annual basis.

Business Strategy

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The preparation of financial statements in conformity

with GAAP requires management to use judgment to make estimates and assumptions that affect certain amounts reported in the consolidated

financial statements.

As additional information becomes available, these estimates and assumptions are subject to change and thus impact

amounts reported in the future.

Critical accounting policies are those accounting policies that involve judgment and uncertainties affecting

the application of those policies and the likelihood that materially different amounts would be reported under different conditions or

using differing assumptions.

Management periodically updates the estimates used in the preparation of the financial statements based

on management’s latest assessment of the current and projected business and general economic environment.

There have been no significant

changes to Empire’s critical accounting policies during the nine months ended September 30, 2024.

with US GAAP requires management to use judgment to make estimates and assumptions that affect certain amounts reported in the unaudited

interim consolidated financial statements.

As additional information becomes available, these estimates and assumptions are subject to

change and thus impact amounts reported in the future.

Because estimates and assumptions require significant judgment, future actual

results could differ from those estimates and could have a significant impact on our results of operations, financial position and cash

We re-evaluate our estimates and assumptions at least on a quarterly basis and periodically update the estimates used in the preparation

of the financial statements based on management’s latest assessment of the current and projected business and general economic

There have been no significant changes to Empire’s critical accounting estimates during the three months ended March

LIQUIDITY AND CAPITAL

Empire’s primary sources of short-term

liquidity are cash and cash equivalents, net cash provided by operating activities, and issuance of debt or equity securities.

short- and long-term liquidity requirements consist primarily of capital expenditures, acquisitions of oil and natural gas properties,

payments of contractual obligations, and working capital obligations.

Funding for these requirements may be provided by any combination

of Empire’s sources of liquidity.

Although Empire expects that its sources of funding will be adequate to fund its liquidity requirements,

no assurance can be given that such funding sources will be adequate to meet Empire’s future needs.

liquidity are cash and cash equivalents, net cash provided by operating activities, our Credit Facility and issuance of debt or equity

Empire’s short- and long-term liquidity requirements consist primarily of capital expenditures, acquisitions of oil

and natural gas properties, payments of contractual obligations, and working capital obligations.

Funding for these requirements may

be provided by any combination of Empire’s sources of liquidity.

Although Empire expects that its sources of funding will be adequate

to fund its liquidity requirements, no assurance can be given that such funding sources will be adequate to meet Empire’s future

As noted below, our working capital is negative

as of September 30, 2024, which is primarily the result of a higher level of payables related to capital spending as part of our Starbuck

Drilling Program in North Dakota.

In addition, Empire was not in compliance with the current ratio covenant under the Revolver as of

September 30, 2024;

however, Empire obtained a compliance waiver from the lender for September 30, 2024.

As of September 30, 2024,

we had approximately $3.1 million in cash on hand and approximately $0.2 million available on the Revolver.

Empire will require additional

funds to be in compliance with debt covenants and satisfy the payables discussed above which are greater than estimated cash flows from

operations over the next 12 months.

Phil Mulacek and Energy Evolution Master Fund, Ltd, both related parties of Empire and our largest

two shareholders, owning 20.3% and 31.4%, respectively, of the common shares outstanding as of September 30, 2024, have indicated that

they will, and have the ability to, provide sufficient support to sustain the operating, investing, and financing activities of Empire,

as necessary.

In addition to the November Rights Offering, discussed elsewhere in this document, management continues to seek additional

sources of capital via the debt or equity markets to improve liquidity going forward.

See the liquidity and going concern discussion

included in notes to unaudited interim condensed consolidated financial statements, presented elsewhere in this document, for further

discussion of management’s plans.

as of March 31, 2025, which is primarily the result of a lower cash balance due to capital spending as part of our Starbuck Drilling

Program, return-to-production efforts in Texas and a reduction-to-production due to five wells being down in North Dakota during the

first quarter of 2025.

As of March 31, 2025, we had approximately $1.1 million in cash on hand and approximately $7.8 million available

under our Credit Facility;

however, the Company’s available borrowing capacity under the Credit Facility continues to decrease

due to a subsequent borrowing of $3.0 million in April 2024 and monthly reductions to the borrowing capacity under the Credit Facility

(See Note 8).

Empire will require additional funds to satisfy the payables discussed above which are greater than estimated cash flow

from operations over the next 12 months.

Phil Mulacek and Energy Evolution, both related parties of Empire and our largest two stockholders,

owning 21.1% and 31.8%, respectively, of the common shares outstanding as of March 31, 2025, have indicated that they will, and have

the ability to, provide sufficient support to sustain the operating, investing, and financing activities of Empire, as necessary.

continues to seek additional sources of capital via the debt or equity markets to improve liquidity going forward.

See Liquidity and

Going Concern in Note 1 of Notes to Unaudited Interim Condensed Consolidated Financial Statements for further discussion of management’s

Empire expects to continue to incur costs related

to drilling activities in core areas as well as future oil and natural gas acquisitions in core areas.

As of September 30, 2024, Empire

has incurred approximately $38.3 million of additions to oil and natural gas properties, primarily related to the drilling program in

the Starbuck field of North Dakota.

During the first quarter of 2025,

Empire incurred approximately $2.7 million of additions to oil and natural gas properties, primarily related to the drilling program

in the Starbuck field of North Dakota.

It is expected that Empire will use a combination of debt or equity issuances, cash on hand, and

1 unchanged sentence

Working Capital

Working capital, presented below, decreased

by approximately $9.0 million between December 31, 2023, and September 30, 2024.

This change was primarily driven by payables related

to the Starbuck Drilling Program in North Dakota and a lower cash balance at September 30, 2024.

September 30, 2024

December 31, 2023

Working capital is presented in the table below.

This change of approximately $3.5 million was primarily driven by payables related to the Starbuck Drilling Program in North Dakota and

a lower cash balance at March 31, 2025.

(in thousands)

Current Assets

Current Liabilities

(26,993,885 )

(25,049,572 )

Working Capital

$ (15,262,882 )

$ (6,304,668 )

Nine Months Ended September 30,

For the Three Months Ended March 31,

Cash flows provided by (used in):

(in thousands)

Operating activities

$ (5,957,231 )

Investing activities

(49,274,023 )

(43,754,844 )

Financing activities

Cash Flows from Operating Activities

The impact of higher oil production and lower

workover expenses in 2024 compared to 2023 contributed to the increase in cash flows from operating activities.

Cash flows from operating activities decreased

period over period primarily due to lower production volumes primarily in North Dakota and lower oil prices consistent with general market

pricing trends.

Cash Flows from Investing Activities

Cash flows from investing activities in the

first nine months of 2024 include approximately $48.8 million of additions to oil and natural gas properties primarily due to the development

of our operations as part of our Starbuck Drilling Program in North Dakota.

Cash flows from investing activities are primarily

from approximately $2.6 million of cash additions to oil and natural gas properties during the first quarter of 2025 compared to approximately

$17.0 million of cash additions to oil and natural gas properties during first quarter 2024 associated with the Starbuck Drilling Program

in North Dakota with the decline period over period due to the Company nearing completion of this project.

Cash Flows from Financing Activities

Cash flow from financing activities in 2024

includes net proceeds from the April Rights Offering of approximately $20.5 million (see Note 10).

In addition, cash flows from financing

activities in 2024 includes $5.0 million from a promissory note issued to Empire by a related party and approximately $4.0 million borrowed

on Empire’s Revolver (see Note 8).

Cash flows from financing activities in 2024

includes $5.0 million from a promissory note issued to Empire by a related party (see Note 8) and approximately $4.0 million borrowed

on Empire’s Credit Facility.

Capital Resources

Capital Expenditures

For the nine months ended September 30, 2024,

Empire incurred approximately $38.3 million of additions to oil and natural gas properties which primarily reflects continued drilling

and completions activity related to our Starbuck Drilling Program in North Dakota.

For the three months ended March 31, 2025, Empire

incurred approximately $2.7 million of total additions to oil and natural gas properties which is primarily from continued drilling and

completions activity related to our Starbuck Drilling Program in North Dakota.

Production and Operating Data

The following table sets forth a summary of

Empire’s production and operating data for the three and nine months ended September 30, 2024 and 2023.

Because of normal production

declines, increased or decreased production due to future acquisitions, divestitures, and development, and fluctuations in commodity

prices, the historical information presented below should not be interpreted as being indicative of future results.

Three Months Ended September 30,

Nine Months Ended September 30,

Empire’s production and operating data for the three months ended March 31, 2025 and 2024.

Because of normal production declines,

increased or decreased production due to future acquisitions, divestitures, development, and fluctuations in commodity prices, the historical

information presented below should not be interpreted as being indicative of future results.

For the Three Months Ended March 31,

Production and Operating Data:

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Average Price per Unit:

Natural Gas (Mcf)

Natural Gas Liquids (Bbl)

Natural gas liquids

Operating Costs and Expenses per Boe:

Lease Operating Expense

Lease operating expense (excluding workovers)

Total Lease operating expense

Production and ad valorem taxes

Depreciation, depletion, amortization and accretion

General and Administrative Expense:

General and Administrative Expense

General & administrative (excluding stock-based compensation)

Stock-based compensation

Total General and Administrative Expense

Total General & administrative

(1) Excludes the effect of net cash receipts from (payments on) derivatives.

Bbl – One stock tank barrel, of

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of oil or condensate.

Three Months Ended September 30, 2024

Three Months Ended March 31, 2025 and

Results of Operations

3 unchanged sentences

the historical information presented below should not be interpreted as indicative of future results.

Three Months Ended September 30,

For the Three Months Ended March 31,

(in thousands)

Natural gas revenues

Total product revenues

Lease Operating Expense (Including Workovers)

Lease operating expense

Production and ad valorem taxes

Depreciation, depletion, amortization and accretion

General and Administrative Expense:

General and Administrative Expense

General and administrative expense (excluding

stock-based compensation)

Total General and Administrative Expense

Interest Expense

Stock-based compensation

Cash-based interest expense

Non-cash interest expense

Operating Loss

Revenues for the three months ended September

30, 2024, increased slightly compared to the prior year primarily due to higher oil, natural gas and NGL sales volumes, substantially

offset by lower realized oil and natural gas prices.

Revenues for the three months ended March 31,

2025, decreased compared to the prior year primarily due to lower oil and NGLs sales volumes and lower realized oil prices.

Net oil sales volumes were approximately 120,000

Bbls for the three months ended September 30, 2024, an increase of approximately 20% over the same period in the prior year.

in third-quarter 2024 increased primarily due to new wells completed in North Dakota during the period as well as the acquisition of

additional working interest in New Mexico.

Bbls for the three months ended March 31, 2025, a decrease of approximately 9% over the same period in the prior year primarily due to

five wells being down to redrill in North Dakota during first quarter 2025.

Realized oil prices for the three months ended

September 30, 2024, were $71.48 per barrel, while realized prices for the same period in the prior year were $78.98 per barrel, a decrease

in price of approximately 9%.

March 31, 2025, were $67.28 per barrel, while realized prices for the same period in the prior year were $72.21 per barrel, a decrease

in price of approximately 7% due to a general decline in overall market price.

Realized natural gas prices for the three months

ended September 30, 2024, were $0.03 per mcf, while realized prices for the same period in the prior year were $2.10 per mcf.

primarily due to the depressed natural gas prices in the third quarter of 2024 in New Mexico.

Realized NGL prices for the three months ended

September 30, 2024, were $13.84 per barrel, while realized prices for the same period in the prior year were $11.57 per barrel, an increase

ended March 31, 2025, were $2.74 per Mcf, while realized prices for the same period in the prior year were $1.78 per Mcf.

is due to an increase in market price during the same period.

Realized NGLs prices for the three months ended

March 31, 2025, were $12.56 per barrel, while realized prices for the same period in the prior year were $11.97 per barrel, an increase

in price of approximately 5%.

1 unchanged sentence

Lease operating expense was lower for the three

months ended September 30, 2024, compared to the same period in 2023 primarily due to lower workover costs.

months ended March 31, 2025, compared to the same period in 2024 primarily due to lower workover costs.

Lease operating expense includes

approximately $1.4 million of workover expense for the three months ended September 30, 2024, as compared to $3.2 million for the same

period in 2023.

The higher workover expense in 2023 was primarily in New Mexico as Empire continued to work over wells in the region

to enhance and maintain production.

Production taxes were higher for the three months

ended September 30, 2024, compared to the same period in 2023 as a result of the higher product revenues discussed above.

approximately $0.4 million of workover expense for the three months ended March 31, 2025, compared to $2.0 million for the same period

The higher workover expense in 2024 was primarily in New Mexico as Empire continued work in the region to enhance and maintain

Production taxes were lower for the three months

ended March 31, 2025, compared to the same period in 2024 as a result of the lower product revenues discussed above.

Depreciation, Depletion, Amortization and

The higher DD&A for the three months ended

September 30, 2024, compared to the same period in 2023 is due in part to the increase in production, the acquisition of additional working

interest as well as the impact of the capitalized costs associated with the new drilling activity as part of our Starbuck Drilling Program

in North Dakota.

General and Administrative Expense

March 31, 2025, compared to the same period in 2024 is primarily due to the acquisition of additional working interest and the impact

of the capitalized costs associated with the new drilling activity as part of our Starbuck Drilling Program in North Dakota.

also increased slightly from prior period due to the new drilling activity.

General and Administrative Expense (excluding

stock-based compensation, increased for the three months ended September 30, 2024, compared to the same period in 2023 primarily due to

an increase in salaries and benefits period over period associated with an increase in employee headcount.

stock-based compensation)

Empire utilizes stock-based compensation to

compensate the Board, members of management, and retain talented personnel.

Empire anticipates stock-based compensation to continue to

be utilized in 2024 and beyond to attract and retain talented personnel and compensate Board members and consultants.

Interest Expense

Interest expense decreased for the three months

ended September 30, 2024, compared to the same period in 2023 primarily due to lower cash interest expense from lower average debt balances

in the third quarter of 2024 compared to third-quarter 2023.

Nine Months Ended September 30, 2024 and

Results of Operations

The following table reflects Empire’s

summary operating information.

Because of normal production declines, increased or decreased drilling activity and the effects of acquisitions,

the historical information presented below should not be interpreted as indicative of future results.

Nine Months Ended September 30,

Natural Gas Revenues

Total Product Revenues

Lease Operating Expense (Including Workovers)

Production and Ad Valorem Taxes

Depreciation, Depletion, Amortization and Accretion

General and Administrative Expense:

General and Administrative Expense

Stock-based Compensation

Total General and Administrative Expense

Interest Expense

Operating Loss

(12,004,581 )

Revenues for the nine months ended September

30, 2024, increased compared to the prior year primarily due to higher oil, natural gas, and NGL sales volumes, partially offset by lower

realized oil and natural gas prices.

Net oil sales volumes were approximately 436,000

Bbls for the nine months ended September 30, 2024, an increase of approximately 18% over the same period in the prior year.

in 2024 increased primarily due to new wells completed in North Dakota during the period as well as the acquisition of additional working

interest in New Mexico.

Realized oil prices for the nine months ended

September 30, 2024, were $73.60 per barrel, while realized prices for the same period in the prior year were $74.77, a decrease in price

of approximately 2%.

Realized natural gas prices for the nine months

ended September 30, 2024, were $0.38 per mcf, while realized prices for the same period in the prior year were $2.06, a decrease in price

of approximately 72%.

The lower prices in 2024 are primarily due to depressed natural gas prices in New Mexico during the period.

Realized NGL prices for the nine months ended

September 30, 2024, were approximately $13.87 per barrel, while realized prices for the same period in the prior year were approximately

$12.06 per barrel, an increase in price of approximately 15%.

Lease Operating Expense and Production Taxes

The increase in lease operating expense for

the nine months ended September 30, 2024, was primarily associated with an increase in production, partially offset by lower workover

expenses year over year.

Lease operating expense includes approximately $5.3 million of workover expense for the nine months ended September

30, 2024, as compared to $8.9 million for the same period in 2023.

The higher workover expense in 2023 was primarily in New Mexico as

Empire continued to work over wells in the region to enhance and maintain production.

Production taxes were higher for the nine months

ended September 30, 2024, compared to the same period in 2023 as a result of the higher product revenues discussed above.

Depreciation, Depletion, Amortization and

The higher DD&A in 2024 is due in part to

the increase in production, the acquisition of additional working interest in New Mexico as well as the impact of the capitalized costs

associated with drilling activity associated with our Starbuck Drilling Program in North Dakota.

General and Administrative Expense

General and administrative expense, excluding

stock-based compensation, increased for the nine months ended September 30, 2024, compared to the same period in 2023 primarily due to

an increase in salaries and benefits period over period associated with an increase in employee headcount.

stock-based compensation, increased for the three months ended March 31, 2025, compared to the same period in 2024 primarily due to an

increase in salaries and benefits period over period associated with an increase in employee headcount.

Stock-based Compensation

Empire utilizes stock-based compensation to

compensate members of the Board, management, and retain talented personnel.

Empire anticipates stock-based compensation to continue to

be utilized in 2024 and beyond to attract and retain talented personnel and compensate Board members and consultants.

The decrease year

over year is primarily due to Board of Directors awards in 2023.

Stock-based compensation decreased period over

period due to a lower number of awards in first quarter 2025.

Empire utilizes stock-based compensation to compensate the Board, members

of management, and retain talented personnel.

Empire anticipates stock-based compensation to continue to be utilized in 2025 and beyond

to attract and retain talented personnel and compensate Board members and consultants.

Interest Expense

Interest expense increased in 2024 compared

to the same period in 2023 primarily due to higher cash interest expense and the amortization of the debt discount both associated with

the Promissory Note that was issued in 2024 (see Note 8).

Interest expense decreased for the three months

ended March 31, 2025 compared to the same period in 2024 primarily due to certain non-cash interest expense in first quarter 2024

from the convertible promissory note further described in Note 8 partially offset by a higher average outstanding balance on the Company’s

Credit Facility.

AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

We are a smaller reporting company as defined by

Rule 12b-2 of the Securities Exchange Act of 1934 (the “Exchange Act”) and are not required to provide this information.

AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this

report, Empire carried out an evaluation under the supervision and participation of Empire’s Principal Executive Officer and Principal

Financial Officer, along with our management, of the effectiveness of the design and operation of Empire’s disclosure controls

and procedures as defined in Securities Exchange Act Rule 13a-15(e).

Based on this evaluation, Empire’s Principal Executive

Officer and Principal Financial Officer concluded that the disclosure controls and procedures were effective, as of the end of the period

covered by this report, in ensuring the information required to be disclosed by Empire in the reports it files or submits under the Securities

Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and

that such information is accumulated and communicated to management, including Empire’s Chief Executive Officer (principal executive

officer and principal financial officer) to allow timely decisions regarding required disclosure.

As of the end of the period

covered by this report, the Company carried out an evaluation under the supervision and participation of the Company’s Principal

Executive Officer/Principal Financial Officer, along with our management, of the effectiveness of the design and operation of the Company’s

disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e).

Based on this evaluation, the Company’s Principal

Executive Officer/Principal Financial Officer concluded that the disclosure controls and procedures were effective, as of the end of

the period covered by this report, in ensuring the information required to be disclosed by the Company in the reports it files or submits

under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and

forms, and that such information is accumulated and communicated to management, including the Company’s Chief Executive Officer

(Principal Executive Officer/Principal Financial Officer), to allow timely decisions regarding required disclosure.

Changes in Internal

1 unchanged sentence

While we continue to

implement design enhancements to our internal control procedures, there were no changes to our internal control over financial reporting

during the three months ended September 30, 2024, which were identified in connection with the evaluation that have materially affected,

or are reasonably likely to materially affect, our internal control over financial reporting.

It is management’s expectation

that Empire will implement enhanced controls throughout 2024 with additional controls implemented as they are identified by management.

Management will continue to diligently and rigorously review the financial reporting controls and procedures on an ongoing basis.

Inherent Limitations on Effectiveness of

Empire’s disclosure

controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their

desired objectives.

Management recognizes that a control system, no matter how well designed and operated, can provide only reasonable,

not absolute, assurance that the objectives of the control system are met.

Further, the design of a control system must reflect the fact

that there are resource constraints, and the benefits of controls must be considered relative to their costs.

Because of their inherent

limitations, disclosure controls and procedures and internal control over financial reporting may not prevent or detect all errors or

misstatements.

Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial

statement preparation and presentation.

implement design enhancements to our internal control procedures, we believe there were no changes to our internal control over financial

reporting during the three months ended March 31, 2025, which were identified in connection with the evaluation that have materially

affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Company’s disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance

of achieving their desired objectives.

Management recognizes that a control system, no matter how well designed and operated, can provide

only reasonable, not absolute, assurance that the objectives of the control system are met.

Further, the design of a control system must

reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.

of their inherent limitations, disclosure controls and procedures and internal control over financial reporting may not prevent or detect

all errors or misstatements.

Therefore, even those systems determined to be effective can provide only reasonable assurance with respect

to financial statement preparation and presentation.

OTHER INFORMATION

Legal Proceedings

For information regarding legal

proceedings, see Note 15 of the Unaudited Interim Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

For information regarding legal proceedings,

see Note 14 of the unaudited interim condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

Not applicable.

Unregistered Sales of Equity Securities and Use

Defaults Upon Senior Securities

Mine Safety Disclosures

Not applicable.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis