What changed in this filing

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Item 1. Financial Statements

2023-11-08 compared with 2023-08-10 · 227 added, 233 removed, 197 unchanged (70% of the section changed)

2 unchanged sentences

BALANCE SHEETS

Current assets

Cash and cash

Accounts receivable:

Oil and natural gas sales

Prepaid drilling

and cash equivalents

and natural gas sales

costs and expenses

Total current assets

Property and equipment, at cost

Oil and gas properties,

using the full cost method

current assets

and equipment, at cost

and gas properties, using the full cost method

depreciation, depletion and amortization

1 unchanged sentence

( 32,215,095 )

Property and equipment,

Investments – cost

Operating lease, right-of-use

and equipment, net

lease, right-of-use asset

noncurrent assets

LIABILITIES AND STOCKHOLDERS’

Current liabilities

Accounts payable and accrued

AND STOCKHOLDERS’ EQUITY

payable and accrued expenses

lease liability, current

Total current liabilities

Long-term liabilities

Operating lease liability,

Asset retirement obligations

current liabilities

lease liability, long-term

retirement obligations

income tax liabilities

long-term liabilities

Total liabilities

Commitments and contingencies

Stockholders’ equity

Preferred stock - $ 1.00

and contingencies

Stockholders’

stock - $ 1.00 par value;

10,000,000 shares authorized;

none outstanding

Common stock - $ 0.50 par value;

stock - $ 0.50 par value;

40,000,000 shares authorized;

2,221,916 and 2,221,416 shares issued;

and, 2,136,500 and 2,136,000 shares outstanding as of June 30,

2023 and March 31, 2023, respectively

Additional paid-in capital

Retained earnings

stock, at cost ( 85,416 shares)

Total stockholders’

and, 2,110,500 and 2,136,000 shares

outstanding as of September 30, 2023 and March 31, 2023, respectively

paid-in capital

stock, at cost ( 111,416 and 85,416 shares, respectively)

stockholders’ equity

liabilities and stockholders’ equity

2 unchanged sentences

STATEMENTS OF OPERATIONS

the Three Months Ended June 30,

operating revenues

Natural gas sales

Total operating revenues

Operating expenses:

Accretion of asset retirement

Depreciation, depletion

and amortization

of asset retirement obligations

Depreciation,

depletion, and amortization

and administrative

operating expenses

Operating income

Other income (expense):

Interest income

income (expenses):

other income (expense)

Income before provision for income taxes

before provision for income taxes

income tax expense

Total income tax expense

Income per common share:

Weighted average common shares outstanding:

Income per common

Weighted average

common shares outstanding:

accompanying notes are an integral part of

4 unchanged sentences

Paid-In Capital

Earnings (Losses)

Stockholders’

Balance at April 1, 2023

at April 1, 2023

$ ( 590,495 )

Dividends paid

Issuance of stock through

options exercised

of stock through options exercised

based compensation

1 unchanged sentence

$ ( 590,495 )

based compensation

at September 30, 2023

$ ( 915,751 )

Stock Par Value

1 unchanged sentence

Stockholders’

Balance at April 1, 2022

at April 1, 2022

$ ( 346,001 )

2 unchanged sentences

$ ( 346,001 )

SHARE ACTIVITY

Common stock shares, issued:

Balance at April 1, 2023

Balance at June 30, 2023

Common stock shares, held in treasury:

Balance at April 1, 2023

Balance at June 30,

Common stock shares, outstanding at June

accompanying notes are an integral part of

consolidated financial statements.

$ ( 346,001 )

from purchase of stock by insider

based compensation

at September 30, 2022

$ ( 346,001 )

stock shares, issued:

at April 1, 2023

at September 30, 2023

stock shares, held in treasury:

at April 1, 2023

at September 30, 2023

Common stock shares, outstanding at September 30, 2023

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

Energy Corporation and Subsidiaries

STATEMENTS OF CASH FLOWS

the Three Months Ended June 30,

Cash flows from operating

Adjustments to reconcile

net income to net cash provided by operating activities:

Deferred income tax

Stock-based compensation

Depreciation, depletion

and amortization

Accretion of asset retirement

Amortization of debt

issuance costs

Changes in operating

assets and liabilities

Decrease (increase)

the Six Months Ended September 30,

flows from operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

income tax expense

Depreciation,

depletion and amortization

of asset retirement obligations

of debt issuance costs

in operating assets and liabilities:

in accounts receivable

Decrease in prepaid

Decrease in right-of-use

Increase (decrease)

in right-of-use asset

in prepaid expenses

in accounts payable and accrued expenses

Settlement of asset

retirement obligations

of asset retirement obligations

in operating lease liability

Net cash provided by

operating activities

Cash flows from investing

Additions to oil and

gas properties

cash provided by operating activities

flows from investing activities:

to oil and gas properties

( 1,650,812 )

Additions to other property

and equipment

Investments in limited

liability companies at cost

Drilling refund

( 4,245,064 )

in limited liability companies at cost

from sale of oil and gas properties and equipment

Net cash used in investing

to other property and equipment

cash used in investing activities

( 1,544,299 )

Cash flows from financing

Proceeds from exercise

of stock options

Dividends paid

( 4,253,453 )

flows from financing activities:

from exercise of stock options

from purchase of stock by insider

of treasury stock

issuance costs

cash used in financing activities

Net increase (decrease) in cash and cash

Cash and cash equivalents

at beginning of period

Cash and cash equivalents

at end of period

Non-cash investing and financing activities:

Asset retirement obligations

accompanying notes are an integral part of

consolidated financial statements.

from long-term debt

of long-term debt

cash (used in) provided by financing activities

increase (decrease) in cash and cash equivalents

and cash equivalents at beginning of period

and cash equivalents at end of period

investing and financing activities:

retirement obligations

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

Energy Corporation and Subsidiaries

4 unchanged sentences

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

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

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 Company’s oil and gas interests are operated

All of the Company’s oil and gas interests are

operated by others.

Basis of Presentation and Significant Accounting Policies

3 unchanged sentences

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 consolidated financial statements and affect the reported amounts of revenues

and expenses during the reporting period.

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 consolidated 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 June 30, 2023,

and the results of its operations and cash flows for the interim periods ended June 30, 2023 and 2022.

The consolidated financial statements

as of June 30, 2023 and for the three-month periods ended June 30, 2023 and 2022 are unaudited.

The consolidated balance sheet as of

March 31, 2023 was derived from the audited balance sheet filed in the Company’s 2023 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.

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

2023, and the results of its operations and cash flows for the interim periods ended September 30, 2023 and 2022.

The consolidated financial

statements as of September 30, 2023 and for the three and six month periods ended September 30, 2023 and 2022 are unaudited.

The consolidated

balance sheet as of March 31, 2023 was derived from the audited balance sheet filed in the Company’s 2023 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.

Investments .

The Company accounts for investments of less than 3% of any limited liability companies at cost .

The Company accounts for investments of less than 3% in any limited liability companies at cost .

The Company has no control of the

18 unchanged sentences

accounts payable and other accrued expenses.

following table provides a rollforward of the AROs for the first three months of fiscal 2024:

following table provides a rollforward of the AROs for the first six months of fiscal 2024:

of Rollforward of Asset Retirement Obligations

Carrying amount of asset retirement obligations as

of April 1, 2023

Liabilities incurred

Liabilities settled

Accretion expense

Carrying amount of asset retirement obligations as of June 30, 2023

amount of asset retirement obligations as of April 1, 2023

Carrying amount of

asset retirement obligations as of September 30, 2023

Current portion

Non-Current asset retirement

asset retirement obligation

Long Term Debt

13 unchanged sentences

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

As of June 30,

As of September

30, 2023, there was $ 1,500,000 available for borrowing by the Company on the facility.

1 unchanged sentence

Upon closing the

second amendment to the Agreement, the Company paid a loan origination fee of $ 9,000 plus legal and recording expenses totaling $ 12,950 ,

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

second amendment to Agreement, the Company paid a loan origination fee of $ 9,000 plus legal and recording expenses totaling $ 12,950 ,

which were 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

6 unchanged sentences

Expense) of 2.00 to 1.00 for each quarter.

addition, this Agreement prohibits the Company from paying cash dividends on its common stock without prior written permission of WTNB.

The Company obtained written permission from WTNB prior to declaring the special dividend on April 10, 2023 as discussed in Note 10.

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

was no balance outstanding on the credit facility as of June 30, 2023.

addition, this Agreement prohibits the Company from paying cash dividends on its common stock without written permission of WTNB.

Company obtained written permission from WTNB prior to declaring the special dividend on April 10, 2023 as discussed in Note 10.

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, 2023.

Stock-based Compensation

Company recognized compensation expense of $ 54,975 and $ 25,571 related to vesting stock options in general and administrative expense

in the Consolidated Statements of Operations for the first quarter of fiscal 2024 and 2023, respectively.

The total cost related to non-vested

awards not yet recognized at June 30, 2023 totals $ 677,185 , which is expected to be recognized over a weighted average of 2.85 years.

the three months ended June 30, 2023, the Compensation Committee of the Board of Directors approved and the Company granted 32,000 stock

options exercisable at $ 12.68 per share with an estimated fair value of $ 279,360 .

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.

the three months ended June 30, 2022, no stock options were granted.

Company recognized stock-based compensation expense of $ 58,848 and $ 34,431 in general and administrative expense in the Consolidated

Statements of Operations for the three months ended September 30, 2023 and 2022, respectively.

Stock-based compensation expense recognized

for the six months ended September 30, 2023 and 2022 was $ 113,823 and $ 60,002 , respectively.

The total cost related to non-vested awards

not yet recognized at September 30, 2023 totals $ 618,338 which is expected to be recognized over a weighted average of 2.64 years.

the six months ended September 30, 2023, the Compensation Committee of the Board of Directors approved and the Company granted 32,000

stock options exercisable at $ 12.68 per share with an estimated fair value of $ 279,360 .

During 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 .

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 three months ended June 30, 2023 and 2022.

models for stock options granted during the six months ended September 30, 2023 and 2022.

All such amounts represent the weighted average

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

Three Months Ended

Grant-date fair value

Volatility factor

Dividend yield

Risk-free interest rate

Expected term (in years)

following table is a summary of stock options activity for the three months ended June 30, 2023:

Months Ended September 30

interest rate

term (in years)

following table is a summary of activity of stock options for the six months ended September 30, 2023:

of Activity of Stock Options

Average Exercise Price Per Share

Aggregate Average Remaining Contract Life

Outstanding at April 1, 2023

Outstanding at June

Vested at June 30, 2023

Exercisable at June 30, 2023

the three months ended June 30, 2023, stock options covering 500 shares were exercised with a total intrinsic value of $ 2,416 .

received proceeds of $ 2,962 from these exercises.

During the three months ended June 30, 2022, no stock options were exercised.

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, 2023 and 2022, there were no stock options forfeited or expired.

options at June 30, 2023 expire between August 2024 and April 2033 and have exercise prices ranging from $ 3.34 to $ 18.05 .

Average Exercise Price

Average Remaining Contract Life in Years

at April 1, 2023

Outstanding at September

Vested at September

Exercisable at September

the six months ended September 30, 2023, stock options covering 500 shares were exercised with a total intrinsic value of $ 2,416 .

Company received proceeds of $ 2,962 from these exercises.

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

were no stock options forfeited or expired during the six months ended September 30, 2023 and 2022.

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, 2023 expire between August 2024 and April 2033 and have exercise prices ranging from $ 3.34 to $ 18.05 .

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

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

The lease 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

of Operating Lease Assets and Liabilities

Operating lease

right-of-use asset, beginning balance

Current period amortization

lease right-of-use asset, beginning balance

period amortization

operating lease right-of-use asset

Operating lease liability,

lease liability, current

lease liability, long term

lease liabilities

minimum lease payments as of June 30, 2023 under non-cancellable operating leases are as follows:

minimum lease payments as of September 30, 2023 under non-cancellable operating leases are as follows:

of Future Minimum Lease Payments

Fiscal Year Ended March 31, 2024

Fiscal Year Ended March 31, 2025

Total lease payments

Year Ended March 31, 2024

Year Ended March 31, 2025

lease payments

imputed interest

Operating lease liability

operating lease

liability, current

Operating lease liability,

cash paid for our operating lease for the three months ended June 30, 2023 and 2022 was $ 10,667 .

Rent expense, less sublease income of

$ 3,893 is included in general and administrative expenses.

lease liability

operating lease liability, current

lease liability, long term

cash paid for our operating lease for the six months ended September 30, 2023 and 2022 was $ 21,334 .

Rent expense, less sublease income

of $ 7,786 is included in general and administrative expenses.

August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022 (“IRA 2022”).

6 unchanged sentences

The IRA 2022 did not impact the Company’s current year tax provision or the Company’s financial statements.

income tax provision consists of the following for the three months ended June 30, 2023 and 2022:

income tax provision consists of the following for the six months ended September 30, 2023 and 2022:

of Income Tax Provision

Three Months Ended

Months Ended September 30

income tax expense:

current income tax expense

Total current income tax

Deferred income tax expense:

income tax expense:

deferred income tax expense

Total income tax expense:

Federal income tax for the three months ended June 30, 2023 was $ 88,683 .

There was no federal income tax expense for the three

months ended June 30, 2022 because the Company was in a net deferred tax asset position.

reconciliation of the provision for income taxes to income taxes computed using the federal statutory rate for the three months ended

June 30 follows:

income tax expense:

income tax for the six months ended September 30, 2023 was $ 149,862 .

There was no federal income tax expense for the six months ended

September 30, 2022 because the Company was in a net deferred tax asset position.

reconciliation of the provision for income taxes to income taxes computed using the federal statutory rate for the six months ended September

of Reconciliation of Provision for Income Taxes

Tax expense at federal statutory

Statutory depletion carryforward

Change in valuation allowance

expense at federal statutory rate (1)

depletion carryforward

in valuation allowance

tax reform, corporate rate reduction

Permanent differences

State income expense

Effective income tax rate

The federal statutory rate was 21 % for three

months ended June 30, 2023 and 2022.

income expense

income tax rate

The federal statutory rate was 21 % for six months ended September

30, 2023 and 2022.

Related Party Transactions

1 unchanged sentence

paid on behalf of the principal stockholder.

The total billed to and reimbursed by the stockholder for the quarters ended June 30, 2023

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

2023 and 2022 was $ 8,612 and $ 13,649 , 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 June 30, 2023

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

30, 2023 and 2022 was $ 17,994 and $ 23,735 , 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, 2023 and 2022 were $ 3,893 .

Amounts paid by the principal stockholder directly to the lessor for the six months ending September 30,

2023 and 2022 were $ 7,786 .

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-month

periods ended June 30, 2023 and 2022.

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, 2023 and 2022.

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

Shares outstanding:

Weighted average common shares outstanding

of the assumed exercise of dilutive stock options

Weighted average common

Weighted avg.

outstanding – basic

of assumed exercise of dilutive stock options

shares outstanding – dilutive

Income per common share:

the three months ended June 30, 2023, 63,000 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 $ 15.32 at June

For the three months ended June 30, 2022, no anti-dilutive shares relating to stock options were excluded from the computation

of diluted net income.

Income per common

the three and six months ended September 30, 2023, 63,000 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 $ 15.32

at September 30, 2023.

For the three and six months ended September 30, 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 September 30, 2022.

Stockholders’ Equity

15 unchanged sentences

in excess of an annual limit of $ 1,000,000 after December 31, 2022.

the three months ended June 30, 2023 and 2022 there were no shares of common stock repurchased for the treasury account.

Subsequently,

in July 2023, the Company repurchased 9,500 shares for the treasury at an aggregate cost of $ 116,707 .

the six months ended September 30, 2023 there were 26,000 shares of common stock repurchased for the treasury account at an aggregate

cost of $ 325,256 .

During the six months ended September 30, 2022 there were no shares of common stock repurchased for the treasury account.

Subsequently, in October 2023, the Company repurchased 6,000 shares for the treasury at an aggregate cost of $ 75,477 .

April 10, 2023, the Board of Directors declared a special dividend of $ 0.10 per common share.

10 unchanged sentences

Subsequent Events

October 2023, the Company signed a Letter of Intent regarding a 3 -year Term Assignment of 98 % of the Company’s leasehold interest

in certain deep rights of 200 acres in Loving and Ward Counties, Texas.

The Company expects to receive $ 5,000 per net leasehold acre

in the total amount of approximately $ 980,000 .

The Company will retain the remaining 2% leasehold interest as a participating interest

in the full unit at approximately .625% working interest .

The Company will also retain an overriding royalty interest of 5 % proportionately

October 2023, the Company entered into an agreement, pending completion of title search, to purchase small producing and non-producing

mineral interests in 1,280 gross acres in Ector, Midland and Upton Counties, Texas for a purchase price of $ 60,500 .

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