What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-02-08 compared with 2021-11-05 · 186 added, 205 removed, 270 unchanged (59% of the section changed)

2 unchanged sentences

BALANCE SHEETS

September 30,

Current assets

19 unchanged sentences

Long-term liabilities

Long-term debt, net

Long-term debt

Operating lease liability, long-term

6 unchanged sentences

10,000,000 shares authorized;

none outstanding

Common stock - $ 0.50 par value;

1 unchanged sentence

2,188,666 and 2,143,666 shares issued;

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

2,121,666 and 2,076,666 shares outstanding as of December 31, 2021 and March 31, 2021, respectively

Additional paid-in capital

7 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Operating revenues:

Nine Months Ended

Operating revenue:

Natural gas sales

1 unchanged sentence

Operating expenses:

Accretion of asset retirement obligations

Accretion of asset retirement obligation

Depreciation, depletion, and amortization

5 unchanged sentences

Interest expense

PPP loan forgiveness

Loss on derivative instruments

Net other expense

Net other (expense) income

Income (loss) before income taxes

7 unchanged sentences

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Common Stock Par Value

Additional Paid-In Capital

Retained Earnings (Losses)

Treasury Stock

Stockholders’ Equity

Stockholders’

Balance at April 1, 2021

2 unchanged sentences

Stock based compensation

Balance at September 30, 2021

Balance at December 31, 2021

$ ( 346,001 )

Common Stock Par Value

Additional Paid-In Capital

Retained Earnings (Losses)

Treasury Stock

Stockholders’ Equity

Balance at June 30, 2021

Stockholders’

Balance at September 30, 2021

$ ( 346,001 )

1 unchanged sentence

Stock based compensation

Balance at September 30, 2021

Balance at December 31, 2021

$ ( 346,001 )

Common Stock Par Value

Additional Paid-In Capital

Retained Earnings

Treasury Stock

Stockholders’ Equity

Stockholders’

Balance at April 1, 2020

2 unchanged sentences

Stock based compensation

Balance at September 30, 2020

Balance at December 31, 2020

$ ( 346,001 )

Common Stock Par Value

Additional Paid-In Capital

Retained Earnings

Treasury Stock

Stockholders’ Equity

Balance at June 30, 2020

Stockholders’

Balance at September 30, 2020

$ ( 346,001 )

Net income (loss)

Issuance of stock through options exercised

Stock based compensation

Balance at September 30, 2020

Balance at December 31, 2020

$ ( 346,001 )

2 unchanged sentences

Balance at April 1, 2021

Balance at September 30, 2021

Balance at Dec.

Common stock shares, held in treasury:

Balance at April 1, 2021

Balance at September 30, 2021

Common stock shares, outstanding at September 30, 2021

Balance at Dec.

Common stock shares, outstanding at December 31, 2021

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

1 unchanged sentence

STATEMENTS OF CASH FLOWS

the Six Months Ended September 30,

the Nine Months Ended December 31,

Cash flows from operating activities:

1 unchanged sentence

$ ( 261,143 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Adjustments to reconcile net income (loss) to net cash provided by operating

Stock-based compensation

1 unchanged sentence

Accretion of asset retirement obligations

Non-cash lease expense

PPP loan forgiveness

Amortization of debt issuance costs

1 unchanged sentence

Increase in accounts receivable

(Increase) decrease in right-of-use asset

Decrease in prepaid expenses

Increase in accounts payable and accrued expenses

Increase (decrease) in accounts payable and accrued expenses

Settlement of asset retirement obligations

Increase (decrease) in operating lease liability

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

( 1,213,618 )

( 1,024,104 )

Additions to other property and equipment

Drilling refund

Investment in limited liability company at cost

Proceeds from sale of oil and gas properties and equipment

Net cash used in investing activities

( 1,021,849 )

Cash flows from financing activities:

1 unchanged sentence

Proceeds from long-term debt

Proceeds from PPP loan

Reduction of long-term debt

9 unchanged sentences

Operating lease – right of use asset and associated liabilities

accompanying notes are an integral part of

consolidated financial statements.

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

Energy Corporation and Subsidiaries

4 unchanged sentences

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.

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

4 unchanged sentences

and Assumptions .

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.

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.

Financial Statements .

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

March 31, 2021 was derived from the audited balance sheet filed in the Company’s 2021 annual report on Form 10-K filed with the

Securities and Exchange Commission (“SEC”).

The results of operations for the periods presented are not necessarily indicative

of the results to be expected for a full year.

The accounting policies followed by the Company are set forth in more detail in Note 2

of the “Notes to Consolidated Financial Statements” in the Form 10-K.

Certain information and footnote disclosures normally

included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America

have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the SEC.

However, the disclosures herein are

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.

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 December 31, 2021,

and the results of its operations and cash flows for the interim periods ended December 31, 2021 and 2020.

The consolidated financial

statements as of December 31, 2021 and for the three and nine month periods ended December 31, 2021 and 2020 are unaudited.

The consolidated

balance sheet as of March 31, 2021 was derived from the audited balance sheet filed in the Company’s 2021 annual report on Form

10-K filed with the Securities and Exchange Commission (“SEC”).

The results of operations for the periods presented are not

necessarily indicative of the results to be expected for a full year.

The accounting policies followed by the Company are set forth in

more detail in Note 2 of the “Notes to Consolidated Financial Statements” in the Form 10-K.

Certain information and footnote

disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United

States of America have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the SEC.

However, the disclosures

herein are adequate to make the information presented not misleading.

It is suggested that these financial statements be read in conjunction

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

Investments .

The Company accounts for investments of less than 1% in limited liability companies at cost.

The Company has no control of the limited

liability companies.

The cost of the investment is recorded as an asset on the consolidated balance sheets and when income from the investment

is received, it is immediately recognized on the consolidated statements of operations.

The Company accounts for investments of less than 1% of any limited liability companies at cost.

The Company has no control of the

limited liability companies.

The cost of the investment is recorded as an asset on the consolidated balance sheets and when income from

the investment is received, it is immediately recognized on the consolidated statements of operations.

Financial Instruments .

13 unchanged sentences

consolidated statements of cash flows.

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

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

of December 31, 2021, the Company had no derivative contracts.

During the nine months ended December 31, 2020, the Company entered into

a series of crude oil put option contracts.

3 unchanged sentences

and site restoration on oil and gas properties.

The fair value of a liability for an ARO is recorded in the period in which it is initially

incurred, discounted to its present value using the credit adjusted risk-free interest rate, and a corresponding amount capitalized by

increasing the carrying amount of the related long-lived asset.

The liability is accreted each period until the liability is settled

or the well is sold, at which time the liability is removed.

The related asset retirement cost is capitalized as part of the carrying

amount of our oil and natural gas properties.

The ARO is included on the consolidated balance sheets with the current portion being included

in the accounts payable and other accrued expenses.

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

The fair value of a liability for an ARO is recorded in the period in which it is incurred,

discounted to its present value using the credit adjusted risk-free interest rate, and a corresponding amount capitalized by increasing

the carrying amount of the related long-lived asset.

The liability is accreted each period until the liability is settled or the well

is sold, at which time the liability is removed.

The related asset retirement cost is capitalized as part of the carrying amount of our

oil and natural gas properties.

The ARO is included in the consolidated balance sheets with the current portion being included in the

accounts payable and other accrued expenses.

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

Schedule of Rollforward of Asset Retirement Obligations

3 unchanged sentences

Accretion expense

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

Carrying amount of asset retirement obligations as of December 31, 2021

Current portion

Non-Current asset retirement obligation

Stock-based Compensation

Company recognized stock-based compensation expense of $ 25,570 and $ 13,865 in general and administrative expense in the Consolidated

Statements of Operations for the three months ended December 31, 2021 and 2020, respectively.

Stock-based compensation expense recognized

for the nine months ended December 31, 2021 and 2020 was $ 62,003 and $ 41,813 , respectively.

The total cost related to non-vested awards

not yet recognized at December 31, 2021 totals approximately $ 239,677 which is expected to be recognized over a weighted average of 2.57

the nine months ended December 31, 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 $ 187,550 .

During the nine months ended December 31, 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 years .

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 nine months ended December 31, 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

NIne 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 nine months ended December 31, 2021:

Summary of Activity of Stock Options

Weighted Average

Contract Life in Years

Outstanding at April 1, 2021

Forfeited or Expired

Outstanding at December 31, 2021

Vested at December 31, 2021

Exercisable at December 31, 2021

the nine months ended December 31, 2021, stock options covering 45,000 shares were exercised with a total intrinsic value of $ 241,226 .

The Company received proceeds of $ 295,640 from these exercises.

During the nine months ended December 31, 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 nine months ended December 31, 2021.

During the nine months ended December 31,

2020, 1,000 unvested stock options were forfeited due to the resignation of an employee and 34,200 vested stock options expired unexercised.

No forfeiture rate is assumed for stock options granted to directors or employees due to the forfeiture rate history of these types of

options at December 31, 2021 expire between April 2023 and July 2031 and have exercise prices ranging from $ 3.34 to $ 8.51 .

Long Term Debt

1 unchanged sentence

Schedule of Long-Term Debt

September 30, 2021

Credit facility

Unamortized debt issuance costs (1)

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

Total long-term debt

For the current period, since the Company has no long-term debt outstanding, unamortized debt issuance costs in the amount of $ 15,657

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”),

which provided for a credit facility of $ 1,000,000 with a maturity date of December 28, 2021 .

The Agreement has no monthly commitment

reduction and a borrowing base to be evaluated annually.

which originally provided for a credit facility of $ 1,000,000 with a maturity date of December 28, 2021 .

The Agreement has no monthly

commitment reduction and a borrowing base to be evaluated annually.

February 28, 2020, the Agreement was amended to increase the credit facility to $ 2,500,000 , extend the maturity date to March 28, 2023

and increase the borrowing base to $ 1,500,000 .

the Agreement, interest on the facility accrues at a rate equal to the prime rate as quoted in the Wall Street Journal plus one-half

the Agreement, interest on the credit facility accrues at a rate equal to the prime rate as quoted in the Wall Street Journal plus one-half

of one percent ( 0.5 %) floating daily.

4 unchanged sentences

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

As of September

As of December

31, 2021, there was $ 1,500,000 available for borrowing by the Company on the facility.

2 unchanged sentences

WTNB on the original Agreement, the Company paid a .5% loan origination fee in the amount of $ 5,000 plus legal and recording expenses

totaling $ 34,532 , which were deferred over the life of the credit facility.

Upon closing the amendment to the Agreement, the Company

paid a .1% loan origination fee of $ 2,500 and an extension fee of $ 3,125 plus legal and recording expenses totaling $ 12,266 , which were

also deferred over the life of the credit facility.

totaling $ 34,532 , which were deferred over the original life of the credit facility.

Upon closing the amendment to the Agreement, the

Company paid a .1% loan origination fee of $ 2,500 and an extension fee of $ 3,125 plus legal and recording expenses totaling $ 12,266 ,

which were also deferred over the life of the credit facility.

borrowed under the Agreement are collateralized by the common stock of the Company’s wholly owned subsidiaries and substantially

8 unchanged sentences

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

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

was no balance outstanding on the line of credit as of December 31, 2021.

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

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

of credit for the nine months ended December 31, 2021:

Summary of Line of Credit Activity

1 unchanged sentence

( 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

Balance at December 31, 2021:

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

in Midland, Texas.

This includes 1,112 square feet of office space shared with and reimbursed by our majority shareholder.

does not include an option to renew and is a 36 month lease that expired in May 2021.

In June 2020, in exchange for a reduction in rent

for the months of June and July 2020, the Company agreed to a 2-month extension to its current lease agreement at the regular monthly

rate extending its current lease expiration date to July 2021 .

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

(unescalated) rate for 36 months .

This includes 1,112 square feet of office space shared with and reimbursed by the majority shareholder.

does not include an option to renew and is a 36 -month lease that was to expire in May 2021.

In June 2020, in exchange for a reduction

in rent for the months of June and July 2020, the Company agreed to a 2-month extension to its current lease agreement at the regular

monthly rate extending its current lease expiration date to July 2021.

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 .

15 unchanged sentences

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 September 30, 2021 under non-cancellable operating leases are as follows:

minimum lease payments as of December 31, 2021 under non-cancellable operating leases are as follows:

Schedule of Future Minimum Lease Payments

9 unchanged sentences

Operating lease liability, long term

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

cash paid for our operating lease for the nine months ended December 31, 2021 and 2020 was $ 31,570 and $ 34,121 , respectively.

Rent expense,

less sublease income of $ 14,662 and $ 14,315 , 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

7 unchanged sentences

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 September 30, 2021.

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

$ 1,045,531 .

tax asset position as of December 31, 2021.

Our deferred tax asset is $ 887,701 as of December 31, 2021 with a valuation amount of $ 887,701 .

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

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

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 assets.

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 future expected growth.

Related Party

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

The total billed to and reimbursed by the stockholder for the three months ended December 31, 2021

and 2020 was $ 12,276 and $ 9,122 , respectively.

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

The total billed to and reimbursed by the stockholder for the nine months ended December

31, 2021 and 2020 was $ 35,332 and $ 27,443 , respectively.

1 unchanged sentence

office space directly to the lessor.

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

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

31, 2021 and 2020 were $ 3,893 and $ 4,045 , 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

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

months ending December 31, 2021 and 2020 were $ 11,882 and $ 11,694 , respectively.

Income (loss)

Per Common Share

Company’s basic net income (loss) per share has been computed based on the weighted average number of common shares outstanding

5 unchanged sentences

their inclusion would be anti-dilutive.

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.

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 and nine month periods ended December 31, 2021 and 2020:

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

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

Net income (loss)

7 unchanged sentences

Income (loss) per common share:

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

the three and nine months ended December 31, 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

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.

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 .

Anti-dilutive stock options have a weighted average exercise price of $ 8.51

at December 31, 2021.

the three ended December 31, 2020, 139,800 shares relating to stock options were excluded from the computation of diluted net income

because their inclusion would be anti-dilutive.

Anti-dilutive stock options have a weighted average exercise price of $ 6.12 at December

to a net loss for the nine months ended December 31, 2020, the weighted average number of common shares outstanding excludes common stock

equivalents because their inclusion would be anti-dilutive.

January 2022, the Company expended $ 25,000 to exercise its option to participate in the first of two optional cash calls increasing the

capitalized investment of 10 % of the interest in a limited liability company in which the Company has previously invested $ 250,000 .

Company’s interest in this partnership is less than 1 % of the partnership at cost basis.

The purpose of the partnership is to purchase

mineral interests located in the state of Ohio.

February 1, 2022 the Company entered into a Purchase and Sale Agreement to acquire various overriding royalty interests in approximately

75 wells primarily operated by XTO Energy, Inc.

and located in the Eagleford area of Atascosa and Karnes Counties, Texas for a purchase

price of $ 567,000 with an effective date of January 1, 2022.

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