What changed in this filing

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Item 1. Financial Statements

2023-02-10 compared with 2022-11-09 · 177 added, 149 removed, 256 unchanged (56% of the section changed)

Financial Statements

Mexco Energy Corporation and Subsidiaries

CONSOLIDATED BALANCE SHEETS

September 30,

Energy Corporation and Subsidiaries

BALANCE SHEETS

Current assets

11 unchanged sentences

Property and equipment, net

Investment in limited liability company at cost

Investment – cost basis

Operating lease, right-of-use asset

14 unchanged sentences

10,000,000 shares authorized;

none outstanding

Common stock - $ 0.50 par value;

40,000,000 shares authorized;

2,216,416 shares issued and, 2,149,416 shares outstanding as of

September 30, 2022 and March 31, 2022, respectively

2,221,416 and 2,216,416 shares issued;

2,142,000 and

2,149,416 shares outstanding as of December 31, 2022 and March 31, 2022, respectively

Additional paid-in capital

Retained earnings

Treasury stock, at cost ( 67,000 shares)

Treasury stock, at cost ( 79,416 and 67,000 shares, respectively)

Total stockholders’ equity

2 unchanged sentences

Energy Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

STATEMENTS OF OPERATIONS

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

6 unchanged sentences

Net other expense

Income before income taxes

Net income before income taxes

State income tax expense

Income per common share:

1 unchanged sentence

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

Mexco Energy Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Energy Corporation and Subsidiaries

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

the three and nine months ended December 31, 2022 and 2021:

Stockholders’

1 unchanged sentence

$ ( 346,001 )

Profit from purchase of stock by insider

Stock based compensation

Balance at September 30, 2022

$ ( 346,001 )

Stockholders’

Balance at June 30, 2022

4 unchanged sentences

$ ( 346,001 )

Issuance of stock through options exercised

Stock based compensation

Purchase of stock

Balance at December 31, 2022

$ ( 514,261 )

Stockholders’

3 unchanged sentences

Stock based compensation

Balance at September 30, 2021

$ ( 346,001 )

Stockholders’

Balance at June 30, 2021

4 unchanged sentences

$ ( 346,001 )

Issuance of stock through options exercised

Stock based compensation

Balance at December 31, 2021

$ ( 346,001 )

SHARE ACTIVITY

1 unchanged sentence

Balance at April 1, 2022

Balance at September 30, 2022

Balance at Dec.

Common stock shares, held in treasury:

Balance at April 1, 2022

Balance at September 30, 2022

Common stock shares, outstanding at September 30, 2022

Balance at Dec.

Common stock shares, outstanding at December 31, 2022

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

Mexco Energy Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended September 30,

Energy Corporation and Subsidiaries

STATEMENTS OF CASH FLOWS

the Nine Months Ended December 31,

Cash flows from operating activities:

5 unchanged sentences

Changes in operating assets and liabilities:

Decrease (increase) in accounts receivable

Decrease (increase) in right-of-use asset

Increase in accounts receivable

Decrease in right-of-use asset

Decrease in prepaid expenses

1 unchanged sentence

Settlement of asset retirement obligations

(Decrease) increase in operating lease liability

Decrease in operating lease liability

Net cash provided by operating activities

2 unchanged sentences

( 4,760,880 )

( 1,213,618 )

Additions to other property and equipment

Drilling refunds

1 unchanged sentence

Proceeds from sale of oil and gas properties and equipment

Additions to other property and equipment

Net cash used in investing activities

( 4,969,269 )

( 1,021,849 )

Cash flows from financing activities:

4 unchanged sentences

( 1,455,000 )

Net cash provided by (used in) financing activities

Acquisition of treasury stock

Net cash used in financing activities

Net (decrease) increase in cash and cash equivalents

12 unchanged sentences

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

are engaged in the acquisition, exploration, development and production of natural gas, crude oil, condensate and natural gas liquids

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

the Company owns producing properties and undeveloped acreage in fourteen states.

All of the 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 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 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.

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.

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

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.

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 September 30,

2022, and the results of its operations and cash flows for the interim periods ended September 30, 2022 and 2021.

(consisting only of normal recurring accruals) necessary to present fairly the financial position of the Company as of December 31, 2022,

and the results of its operations and cash flows for the interim periods ended December 31, 2022 and 2021.

The consolidated financial

statements as of September 30, 2022 and for the three and six month periods ended September 30, 2022 and 2021 are unaudited.

statements as of December 31, 2022 and for the three and nine month periods ended December 31, 2022 and 2021 are unaudited.

The consolidated

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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.

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.

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 3% of any limited liability companies at cost .

The Company has no control or significant

influence 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.

Reclassifications .

Certain amounts in prior periods’ consolidated financial statements have been reclassified to conform with the current period’s

presentation.

These reclassifications had no effect on previously reported results of operations, retained earnings or net cash flows.

Asset Retirement Obligations

8 unchanged sentences

oil and natural gas properties.

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

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 six months of fiscal 2023:

Schedule of Rollforward of Asset Retirement Obligations

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

of Rollforward of Asset Retirement Obligations

Carrying amount of asset retirement obligations as of April 1, 2022

2 unchanged sentences

Accretion expense

Carrying amount of asset retirement obligations as of September 30, 2022

Carrying amount of asset retirement obligations as of December 31, 2022

Current portion

Non-Current asset retirement obligation

Stock-based Compensation

Company recognized stock-based compensation expense of $ 41,460 and $ 25,570 in general and administrative expense in the Consolidated

Statements of Operations for the three months ended December 31, 2022 and 2021, respectively.

Stock-based compensation expense recognized

for the nine months ended December 31, 2022 and 2021 was $ 101,462 and $ 62,003 , respectively.

The total cost related to non-vested awards

not yet recognized at December 31, 2022 totals approximately $ 498,285 which is expected to be recognized over a weighted average of 2.63

the nine months ended December 31, 2022, the Compensation Committee of the Board of Directors approved and the Company granted 31,000

stock options exercisable at $ 18.05 per share with an estimated fair value of $ 385,640 .

During 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 .

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, 2022 and 2021.

All such amounts represent the weighted average

of Grant-date Fair Value of Stock Options Granted and Assumptions Used Binominal 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:

of Activity of Stock Options

Exercise Price

Weighted Average

Contract Life in

Outstanding at April 1, 2022

Forfeited or Expired

Outstanding at December 31, 2022

Vested at December 31, 2022

Exercisable at December 31, 2022

the nine months ended December 31, 2022, stock options covering 5,000 shares were exercised with a total intrinsic value of $ 47,575 .

The Company received proceeds of $ 16,700 from these exercises.

During 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.

were no stock options forfeited or expired during the nine months ended December 31, 2022 and 2021.

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 December 31, 2022 expire between August 2024 and August 2032 and have exercise prices ranging from $ 3.34 to $ 18.05 .

Long Term Debt

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, 2022, 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, 2022.

was no balance outstanding on the line of credit as of December 31, 2022.

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

of credit for the six months ended September 30, 2022:

Summary of Line of Credit Activity

of credit for the nine months ended December 31, 2022:

of Line of Credit Activity

Balance at April 1, 2022:

Balance at September 30, 2022:

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, 2022:

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.

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.

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

Schedule of Operating Lease Assets and Liabilities

September 30,

of Operating Lease Assets and Liabilities

December 31, 2022

Operating lease right-of-use asset, beginning balance

4 unchanged sentences

Total lease liabilities

minimum lease payments as of September 30, 2022 under non-cancellable operating leases are as follows:

Schedule of Future Minimum Lease Payments

minimum lease payments as of December 31, 2022 under non-cancellable operating leases are as follows:

of Future Minimum Lease Payments

Lease Obligation

7 unchanged sentences

Operating lease liability, long term

cash paid for our operating lease for the six months ended September 30, 2022 and 2021 was $ 21,334 and $ 20,903 , respectively.

cash paid for our operating lease for the nine months ended December 31, 2022 and 2021 was $ 32,001 and $ 31,570 , respectively.

Rent expense,

less sublease income of $ 11,679 and $ 14,662 , respectively, is included in general and administrative expenses.

Stock-based Compensation

Company recognized stock-based compensation expense of $ 34,431 and $ 22,568 in general and administrative expense in the Consolidated

Statements of Operations for the three months ended September 30, 2022 and 2021, respectively.

Stock-based compensation expense recognized

for the six months ended September 30, 2022 and 2021 was $ 60,002 and $ 36,433 , respectively.

The total cost related to non-vested awards

not yet recognized at September 30, 2022 totals $ 539,745 which is expected to be recognized over a weighted average of 2.88 years.

the six months ended September 30, 2022, the Compensation Committee of the Board of Directors approved and the Company granted 31,000

stock options exercisable at $ 18.05 per share with an estimated fair value of $ 385,640 .

During 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 $ 187,550 .

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 six months ended September 30, 2022 and 2021.

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, 2022:

Summary of Activity of Stock Options

Weighted Average

Contract Life in

Outstanding at April 1, 2022

Forfeited or Expired

Outstanding at September 30, 2022

Vested at September 30, 2022

Exercisable at September 30, 2022

the six months ended September 30, 2022, no stock options were exercised.

During 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

were no stock options forfeited or expired during the six months ended September 30, 2022 and 2021.

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, 2022 expire between August 2024 and August 2032 and have exercise prices ranging from $ 3.34 to $ 18.05 .

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, 2022.

Our deferred tax asset is $ 313,582 as of September 30, 2022 with a valuation amount of $ 313,582 .

tax asset position as of December 31, 2022.

Our deferred tax asset for federal income tax purposes is $ 202,543 as of December 31, 2022

with a valuation amount of $ 202,543 .

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

Management considers the likelihood that the

Company’s net operating losses and other deferred tax attributes will be utilized prior to their expiration, if applicable.

determination to record a valuation allowance was based on management’s assessment of all available evidence, both positive and

negative, supporting realizability of the Company deferred tax asset as required by applicable accounting standards.

In light of those

criteria for recognizing the tax benefit of deferred tax assets, the Company’s assessment resulted in application of a valuation

allowance against the deferred tax asset as of September 30, 2022.

considers the likelihood that the Company’s net operating losses and other deferred tax attributes will be utilized prior to their

expiration, if applicable.

The determination to record a valuation allowance was based on management’s assessment of all available

evidence, both positive and negative, supporting realizability of the Company deferred tax asset as required by applicable accounting

In light of those criteria for recognizing the tax benefit of deferred tax assets, the Company’s assessment resulted

in application of a valuation allowance against the deferred tax asset as of December 31, 2022.

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 September 30,

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 three months ended December 31, 2022

and 2021 was $ 11,598 and $ 12,276 , 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, 2022 and 2021 was $ 35,333 and $ 35,332 , 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, 2022 and 2021 were $ 3,893 .

Amounts paid by the principal stockholder directly to the lessor for the nine months ending December 31,

2022 and 2021 were $ 11,679 and $ 11,882 , respectively.

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

months ending September 30, 2022 and 2021 were $ 7,786 and $ 7,988 , respectively.

Income Per Common Share

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

and six month periods ended September 30, 2022 and 2021.

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

and nine month periods ended December 31, 2022 and 2021:

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

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

Shares outstanding:

5 unchanged sentences

Income per common share:

the three and six months ended September 30, 2022 and 2021, 31,000 shares relating to stock options were excluded from the computation

of diluted net income because their inclusion would be anti-dilutive.

the three months ended December 31, 2022, 31,000 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 $ 18.05 at December

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.

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

at December 31, 2021.

Stockholders’ Equity

June 2022, the Board of Directors authorized the use of up to $ 250,000 to repurchase shares of the Company’s common stock for the

treasury account.

This program does not have an expiration date and may be modified, suspended or terminated at any time by the board

of directors.

Under the repurchase program, shares of common stock may be purchased from time to time through open market purchases or

other transactions.

The amount and timing of repurchases will be subject to the availability of stock, prevailing market conditions,

the trading price of the stock, our financial performance and other conditions.

Repurchases may also be made from time-to-time in connection

with the settlement our share-based compensation awards.

Repurchases will be funded from cash flow from operations.

the three months ended December 31, 2022, the Company repurchased 12,416 shares for the treasury at an aggregate cost of $ 168,260 .

were no shares of common stock repurchased for the treasury account during the three months ended December 31, 2021.

Subsequently, in

January 2023, the Company repurchased 1,300 shares for the treasury at an aggregate cost of $ 16,359 .

September 6, 2022, one of the Company’s directors paid the Company $ 30,179 , representing profit on Company stock purchased within

2 unchanged sentences

Subsequent Events

October 3, 2022, the Company expended approximately $ 698,000 for the drilling and completion of seven wells in Eddy and Lea Counties,

October 21, 2022, the Company expended $ 147,600 for the completion of four wells in Lea County, New Mexico.

October 27, 2022, the Company made an approximately 2 % equity investment commitment in a limited liability company amounting to $ 2,000,000 .

The limited liability is capitalized at approximately $ 100 million to purchase mineral interests in the Utica and Marcellus areas in

the state of Ohio.

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