What changed in this filing

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Item 1. Financial Statements

2021-11-05 compared with 2021-08-11 · 198 added, 138 removed, 277 unchanged (55% of the section changed)

2 unchanged sentences

BALANCE SHEETS

September 30,

Current assets

6 unchanged sentences

Oil and gas properties, using the full cost method

Accumulated depreciation, depletion

and amortization

Accumulated depreciation, depletion and amortization

( 29,559,992 )

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2,171,566 and 2,143,666 shares issued;

and, 2,081,666 and 2,076,666 shares outstanding as of June 30, 2021 and March 31, 2021, respectively

2,104,566 and 2,076,666 shares outstanding as of September 30, 2021 and March 31, 2021, respectively

Additional paid-in capital

Retained earnings

Treasury stock, at cost ( 67,000

Treasury stock, at cost ( 67,000 shares)

Total stockholders’ equity

Total liabilities and stockholders’

Total liabilities and stockholders’ equity

accompanying notes are an integral part of the consolidated financial statements.

1 unchanged sentence

STATEMENTS OF OPERATIONS

the Three Months Ended June 30,

Three Months Ended

Six Months Ended

September 30,

Operating revenues:

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Operating income (loss)

Other income (expense):

Other income (expenses):

Interest income

Net realized and unrealized loss on derivative contracts

Interest expense

Loss on derivative instruments

Net other expense

Income (loss) before provision for income taxes

Income (loss) before income taxes

Net income (loss)

2 unchanged sentences

Weighted average common shares outstanding:

accompanying notes are an integral part of the consolidated financial statements.

accompanying notes are an integral part of

consolidated financial statements.

Energy Corporation and Subsidiaries

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Stock Par Value

Paid-In Capital

Common Stock Par Value

Additional Paid-In Capital

Retained Earnings (Losses)

Treasury Stock

Stockholders’ Equity

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Stock based compensation

Balance at September 30, 2021

$ ( 346,001 )

Common Stock Par Value

Additional Paid-In Capital

Retained Earnings (Losses)

Treasury Stock

Stockholders’ Equity

Balance at June 30, 2021

$ ( 346,001 )

Stock Par Value

Paid-In Capital

Issuance of stock through options exercised

Stock based compensation

Balance at September 30, 2021

$ ( 346,001 )

Common Stock Par Value

Additional Paid-In Capital

Retained Earnings

Treasury Stock

Stockholders’ Equity

1 unchanged sentence

$ ( 346,001 )

Net income (loss)

Issuance of stock through options exercised

Stock based compensation

Balance at September 30, 2020

$ ( 346,001 )

Common Stock Par Value

Additional Paid-In Capital

Retained Earnings

Treasury Stock

Stockholders’ Equity

Balance at June 30, 2020

$ ( 346,001 )

Issuance of stock through options exercised

Stock based compensation

Balance at September 30, 2020

$ ( 346,001 )

SHARE ACTIVITY

1 unchanged sentence

Balance at April 1, 2021

Balance at June 30, 2021

Balance at September 30, 2021

Common stock shares, held in treasury:

Balance at April 1, 2021

Balance at June 30, 2021

Common stock shares, outstanding at June 30, 2021

Balance at September 30, 2021

Common stock shares, outstanding at September 30, 2021

accompanying notes are an integral part of the consolidated financial statements.

1 unchanged sentence

STATEMENTS OF CASH FLOWS

the Three Months Ended June 30,

the Six Months Ended September 30,

Cash flows from operating activities:

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Amortization of debt issuance costs

Change in fair value of derivative instruments

Changes in operating assets and liabilities:

(Increase) decrease in accounts receivable

Decrease in prepaid expenses

Increase in prepaid asset – option contract

Increase in accounts receivable

(Increase) decrease in right-of-use asset

Decrease in prepaid expenses

Increase in accounts payable and accrued expenses

Settlement of asset retirement obligations

Increase (decrease) in operating

lease liability

Increase (decrease) in operating lease liability

Net cash provided by operating activities

1 unchanged sentence

Additions to oil and gas properties

Drilling refunds

Investment – cost basis

Proceeds from sale of oil and gas properties and equipment

Additions to other property and equipment

Proceeds from sale of oil and

gas properties and equipment

Net cash used in investing activities

1 unchanged sentence

Proceeds from exercise of stock options

Reduction of long-term debt

Proceeds from long-term debt

Reduction of long-term debt

( 1,455,000 )

Net cash (used in) provided by financing activities

6 unchanged sentences

Asset retirement obligations

Operating lease – right of use asset and associated

accompanying notes are an integral part of the consolidated financial statements.

Operating lease – right of use asset and associated liabilities

accompanying notes are an integral part of

consolidated financial statements.

Energy Corporation and Subsidiaries

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Texas Disposal Corporation (a Texas corporation) and TBO Oil & Gas, LLC (a Texas limited liability company) (collectively, the “Company”)

are engaged in the exploration, development and production of crude oil, natural gas, condensate and natural gas liquids (“NGLs”).

Most of the Company’s oil and gas interests are centered in West Texas and Southeastern New Mexico;

however, the Company owns producing

properties and undeveloped acreage in fourteen states.

All of Company’s oil and gas interests are operated by others.

are engaged in the exploration, development and production of natural gas, crude oil, condensate and natural gas liquids (“NGLs”).

Most of the Company’s oil and gas interests are centered in the West Texas and Southeastern New Mexico;

however, the Company owns

producing properties and undeveloped acreage in fourteen states.

All of the Company’s oil and gas interests are operated by others.

Basis of Presentation and Significant Accounting Policies

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and Assumptions .

In preparing financial statements in conformity with accounting principles generally accepted in the United States

of America (“GAAP”), management is required to make informed judgments, estimates and assumptions that affect the reported

amounts of assets and liabilities as of the date of the financial statements and affect the reported amounts of revenues and expenses

during the reporting period.

In addition, significant estimates are used in determining proved oil and gas reserves.

Although management

believes its estimates and assumptions are reasonable, actual results may differ materially from those estimates.

The estimate of the

Company’s oil and natural gas reserves, which is used to compute depreciation, depletion, amortization and impairment of oil and

gas properties, is the most significant of the estimates and assumptions that affect these reported results.

In preparing consolidated

financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”),

management is required to make informed judgments, estimates and assumptions that affect the reported amounts of assets and liabilities

as of the date of the financial statements and affect the reported amounts of revenues and expenses during the reporting period.

significant estimates are used in determining proved oil and gas reserves.

Although management believes its estimates and assumptions

are reasonable, actual results may differ materially from those estimates.

The estimate of the Company’s oil and natural gas reserves,

which is used to compute depreciation, depletion, amortization and impairment of oil and gas properties, is the most significant of the

estimates and assumptions that affect these reported results.

Financial Statements .

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments

(consisting only of normal recurring accruals) necessary to present fairly the financial position of the Company as of June 30, 2021,

and the results of its operations and cash flows for the interim periods ended June 30, 2021 and 2020.

The consolidated financial statements

as of June 30, 2021 and for the three-month periods ended June 30, 2021 and 2020 are unaudited.

the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal

recurring accruals) necessary to present fairly the financial position of the Company as of September 30, 2021, and the results of its

operations and cash flows for the interim periods ended September 30, 2021 and 2020.

The consolidated financial statements as of September

30, 2021 and for the three and six month periods ended September 30, 2021 and 2020 are unaudited.

The consolidated balance sheet as of

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adequate to make the information presented not misleading.

It is suggested that these consolidated financial statements be read in conjunction

with the consolidated financial statements and notes thereto included in the Form 10-K.

It is suggested that these consolidated financial statements be read

in conjunction with the consolidated financial statements and notes thereto included in the Form 10-K.

Investments .

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The Company only offsets derivative assets and liabilities

for arrangements with the same counterparty when right of setoff exists.

for arrangements with the same counterparty when right of offset exists.

Derivative assets and liabilities with different counterparties

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consolidated statements of cash flows.

of June 30, 2021, the Company had no derivative contracts.

During the quarter ended June 30, 2020, the Company entered into a series

of crude oil put option contracts.

of September 30, 2021, the Company had no derivative contracts.

During the six months ended September 30, 2020, the Company entered into

a series of crude oil put option contracts.

All of these such contracts expired in July and August 2020.

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in the accounts payable and other accrued expenses.

following table provides a rollforward of the AROs for the first three months of fiscal 2022:

of Rollforward of Asset Retirement Obligations

following table provides a rollforward of the AROs for the first six months of fiscal 2022:

Schedule of Rollforward of Asset Retirement Obligations

Carrying amount of asset retirement obligations as of April 1, 2021

2 unchanged sentences

Accretion expense

Carrying amount of asset retirement obligations as of June 30, 2021

Carrying amount of asset retirement obligations as of September 30, 2021

Current portion

2 unchanged sentences

debt on the Consolidated Balance Sheets consisted of the following as of the dates indicated:

of Long-Term Debt

June 30, 2021

March 31, 2021

Schedule of Long-Term Debt

September 30, 2021

Credit facility

Unamortized debt issuance costs (1)

Total long-term debt

Total long-term debt, net

the current period, since the Company has no long term debt outstanding, unamortized debt issuance costs in the amount of $ 18,789

are included in Other noncurrent assets.

the current period, since the Company has no long term debt outstanding, unamortized debt issuance costs are included in Other

noncurrent assets.

December 28, 2018, the Company entered into a loan agreement (the “Agreement”) with West Texas National Bank (“WTNB”),

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The unused commitment fee is payable quarterly in arrears on the last day of each calendar quarter.

As of June 30,

2021, there was $ 700,000 available on the facility.

As of September

30, 2021, there was $ 1,500,000 available for borrowing by the Company on the facility.

principal payments are anticipated to be required through the maturity date of the credit facility, March 28, 2023 .

15 unchanged sentences

Agreement does not permit the Company to enter into hedge agreements covering crude oil and natural gas prices without prior WTNB approval.

balance outstanding on the credit facility as of June 30, 2021 was $ 800,000 .

The following table is a summary of activity on the WTNB

credit facility for the three months ended June 30, 2021:

of Line of Credit Activity

was no balance outstanding on the line of credit as of September 30, 2021.

The following table is a summary of activity on the WTNB line

of credit for the six months ended September 30, 2021:

Summary of Line of Credit Activity

Balance at April 1, 2021:

Balance at June 30, 2021:

Subsequently,

the Company has made payments totaling $ 250,000 , leaving a balance of $ 550,000 as of the date of this report.

Stock-based Compensation

Company recognized compensation expense of $ 13,865 and $ 14,005 related to vesting stock options in general and administrative expense

in the Consolidated Statements of Operations for the first quarter of fiscal 2022 and 2021, respectively.

The total cost related to non-vested

awards not yet recognized at June 30, 2021 totals $ 100,266 , which is expected to be recognized over a weighted average of 2.10 years.

following table is a summary of stock options activity for the three months ended June 30, 2021 and 2020:

of Activity of Stock Options

Number of Shares

Weighted Average Exercise Price Per Share

Weighted Aggregate Average Remaining Contract Life in Years

Intrinsic Value

Outstanding at April 1, 2021

Forfeited or Expired

Outstanding at June 30, 2021

Vested at June 30, 2021

Exercisable at June 30, 2021

the three months ended June 30, 2021 and 2020, no

stock options were granted.

Subsequently,

pursuant to approval from the Compensation Committee of the Board of Directors, the Company granted options covering 31,000

shares of stock at a strike

price of $ 8.51 effective July 26, 2021.

the three months ended June 30, 2021, stock options covering 5,000 shares were exercised with a total intrinsic value of $ 15,036 .

Company received proceeds of $ 34,000 from these exercises.

During the three months ended June 30, 2020, no stock options were exercised.

Subsequently, in July 2021, stock options covering 10,500 were exercised with a total intrinsic value of $ 36,433 .

The Company received

proceeds of $ 73,500 from these exercises.

forfeiture rate is assumed for stock options granted to directors or employees due to the forfeiture rate history for these types of

During the three months ended June 30, 2021 and 2020, there were no stock options forfeited or expired.

options at June 30, 2021 expire between April 2023 and March 2030 and have exercise prices ranging from $ 3.34 to $ 7.00 .

( 1,455,000 )

Balance at September 30, 2021:

Company leases approximately 4,160 rentable square feet of office space from an unaffiliated third party for our corporate office located

5 unchanged sentences

rate extending its current lease expiration date to July 2021 .

In June 2021, the Company agreed to extend its current lease for 36 months .

In June 2021, the Company agreed to extend its current lease at a flat

(unescalated) rate for 36 months .

The amended lease now expires on July 31, 2024 .

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balance sheets classification of lease assets and liabilities was as follows:

of Operating Lease Assets and Liabilities

June 30, 2021

Schedule of Operating Lease Assets and Liabilities

September 30, 2021

Operating lease right-of-use asset, beginning balance

5 unchanged sentences

Total lease liabilities

minimum lease payments as of June 30, 2021 under non-cancellable operating leases are as follows:

of Future Minimum Lease Payments

minimum lease payments as of September 30, 2021 under non-cancellable operating leases are as follows:

Schedule of Future Minimum Lease Payments

Lease Obligation

8 unchanged sentences

Operating lease liability, long term

cash paid for our operating lease for the three months ended June 30, 2021 and 2020 was $ 10,929 and $ 10,600 , respectively.

cash paid for our operating lease for the six months ended September 30, 2021 and 2020 was $ 20,903 and $ 21,693 , respectively.

Rent expense,

less sublease income of $ 10,768 and $ 9,459 , respectively, is included in general and administrative expenses.

Stock-based Compensation

Company recognized stock-based compensation expense of $ 22,568 and $ 13,943 in general and administrative expense in the Consolidated

Statements of Operations for the three months ended September 30, 2021 and 2020, respectively.

Stock-based compensation expense recognized

for the six months ended September 30, 2021 and 2020 was $ 36,433 and $ 27,948 , respectively.

The total cost related to non-vested awards

not yet recognized at September 30, 2021 totals $ 265,248 which is expected to be recognized over a weighted average of 2.82 years.

the six months ended September 30, 2021, the Compensation Committee of the Board of Directors approved and the Company granted 31,000

stock options exercisable at $ 8.51

per share with an estimated fair value of

During the six months ended September 30, 2020, no

stock options were granted.

These options are

exercisable at a price not less than the fair market value of the stock at the date of grant, have an exercise period of ten

years and generally vest over four

in the following table is a summary of the grant-date fair value of stock options granted and the related assumptions used in the Binomial

models for stock options granted during the six months ended September 30, 2021 and 2020.

All such amounts represent the weighted average

Summary of Grant-date Fair Value of Stock Options Granted and Assumptions Used Binomial Models

Six Months Ended

Grant-date fair value

Volatility factor

Dividend yield

Risk-free interest rate

Expected term (in years)

following table is a summary of activity of stock options for the six months ended September 30, 2021:

Summary of Activity of Stock Options

Number of Shares

Weighted Average Exercise Price

Weighted Average Remaining Contract Life in Years

Intrinsic Value

Outstanding at April 1, 2021

Forfeited or Expired

Outstanding at September 30, 2021

Vested at September 30, 2021

Exercisable at September 30, 2021

the six months ended September 30, 2021, stock options covering 27,900 shares were exercised with a total intrinsic value of $ 104,473 .

The Company received proceeds of $ 185,732 from these exercises.

During the six months ended September 30, 2020, stock options covering

1,500 shares were exercised with a total intrinsic value of $ 135 .

The Company received proceeds of $ 9,435 from these exercises.

were no stock options forfeited or expired during the six months ended September 30, 2021 and 2020.

No forfeiture rate is assumed for

stock options granted to directors or employees due to the forfeiture rate history of these types of awards.

options at September 30, 2021 expire between April 2023 and July 2031 and have exercise prices ranging from $ 3.34 to $ 8.51 .

valuation allowance for deferred tax assets, including net operating losses, is recognized when it is more likely than not that some

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on the material write-downs of the carrying value of our oil and natural gas properties during fiscal 2016, we are in a net deferred

tax asset position as of June 30, 2021.

Our deferred tax asset is $ 1,180,248

as of June 30, 2021 with a

valuation amount of $ 1,180,248 .

tax asset position as of September 30, 2021.

Our deferred tax asset is $ 1,045,531 as of September 30, 2021 with a valuation amount of

$ 1,045,531 .

We believe it is more likely than not that these deferred tax assets will not be realized.

assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit

the use of deferred tax assets.

The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of

future taxable income are increased or if objective negative evidence in the form of cumulative losses is no longer present and additional

weight is given to subjective evidence such as expected future growth.

Management assesses the available

positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit the use of deferred tax

The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income

are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight

is given to subjective evidence such as expected future growth.

Related Party Transactions

party transactions for the Company primarily relate to shared office expenditures in addition to administrative and operating expenses

paid on behalf of the principal stockholder.

The total billed to and reimbursed by the stockholder for the quarters ended June 30, 2021

party transactions for the Company relate to shared office expenditures in addition to administrative and operating expenses paid on

behalf of the principal stockholder.

The total billed to and reimbursed by the stockholder for the quarters ended September 30, 2021

and 2020 was $ 10,288 and $ 8,219 , respectively.

The principal stockholder pays for his share of the lease amount for the shared office

space directly to the lessor.

Amounts paid by the principal stockholder directly to the lessor less sublease income for the three months

ending June 30, 2021 and 2020 were $ 3,700 and $ 3,803 , respectively.

The total billed to and reimbursed by the stockholder for the six months ended September

30, 2021 and 2020 was $ 23,056 and $ 18,321 , respectively.

The principal stockholder pays for his share of the lease amount for the shared

office space directly to the lessor.

Amounts paid by the principal stockholder directly to the lessor for the three months ending September

30, 2021 and 2020 were $ 3,944 and $ 3,846 , respectively.

Amounts paid by the principal stockholder directly to the lessor for the six

months ending September 30, 2021 and 2020 were $ 7,988 and $ 7,649 , respectively.

Income (loss) Per Common Share

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their inclusion would be anti-dilutive.

following is a reconciliation of the number of shares used in the calculation of basic and diluted net income (loss) per share for the

three-month periods ended June 30, 2021 and 2020.

of Reconciliation of Basic and Diluted Net Income (loss) Per Share

following is a reconciliation of the number of shares used in the calculation of basic and diluted net loss per share for the three and

six month periods ended September 30, 2021 and 2020.

Schedule of Reconciliation of Basic and Diluted Net Income (loss) Per Share

Three Months Ended

Six Months Ended

September 30,

Net income (loss)

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Shares outstanding:

Weighted average common shares outstanding – basic

Effect of the assumed exercise of dilutive stock options

Weighted average common shares outstanding – dilutive

Weighted avg.

shares outstanding – basic

Effect of assumed exercise of dilutive stock options

Weighted avg.

shares outstanding – dilutive

Income (loss) per common share:

the three months ended June 30, 2021, no anti-dilutive shares relating to stock options were excluded from the computation of diluted

Due to a net loss for the three months ended June 30, 2020, the weighted average number of common shares outstanding excludes

common stock equivalents because their inclusion would be anti-dilutive.

the three and six months ended September 30, 2021, 31,000 shares relating to stock options were excluded from the computation of diluted

net income because their inclusion would be anti-dilutive.

Due to a net loss for the for the three and six months ended September 30,

2020, the weighted average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive.

Subsequent Events

July 2021, the Company made payments totaling $ 250,000 on the credit facility leaving a balance of $ 550,000 .

July 2021, stock options covering 10,500 shares were exercised with a total intrinsic value of $ 36,433 .

October 4, 2021, stock options covering 16,100 shares were exercised with a total intrinsic value of $ 128,615 .

The Company received proceeds

of $ 103,928 from these exercises.

to approval from the Compensation Committee of the Board of Directors, the Company granted options covering 31,000 shares of stock at

a strike price of $ 8.51 effective July 26, 2021.

October 5, 2021, stock options covering 1,000 shares were exercised with a total intrinsic value of $ 8,138 .

The Company received proceeds

of $ 5,980 from these exercises.

October 22, 2021, the Company expended $ 84,600 for the completion of four wells in Lea County, NM.

October 27, 2021, the Company expended $ 126,000 for the drilling of four wells in Lea County, NM.

November 1, 2021, the Company had cash on hand of approximately $ 335,000 .

Company completed a review and analysis of all events that occurred after the consolidated balance sheet date to determine if any such

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-Q

Item 1. Financial Statements