MEXCO ENERGY CORP 10-Q

Item 1. Financial Statements Mexco Energy Corporation and Subsidiaries CONSOLIDATED BALANCE SHEETS September 30, 2023 March 31, 2023 (Unaudited) ASSETS Current assets Cash and cash equivalents $ 2,585,192 $ 2,235,771 Accounts receivable: Oil and natural gas sales 800,051 1,366,784 Trade 1,875 7,031 Prepaid costs and expenses 47,273 56,502 Prepaid drilling 37,247 67,951 Total current assets 3,471,638 3,734,039 Property and equipment, at cost Oil and gas properties, using the full cost method 46,750,776 45,391,634 Other 121,926 121,926 Accumulated depreciation, depletion and amortization ( 33,083,461 ) ( 32,215,095 ) Property and equipment, net 13,789,241 13,298,465 Investments – cost basis 900,000 700,000 Operating lease, right-of-use asset 47,709 75,629 Other noncurrent assets 10,747 12,156 Total assets $ 18,219,335 $ 17,820,289 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable and accrued expenses $ 178,749 $ 201,897 Operating lease liability, current 47,709 56,366 Total current liabilities 226,458 258,263 Long-term liabilities Operating lease liability, long-term - 19,263 Asset retirement obligations 697,552 710,276 Deferred income tax liabilities 149,862 - Total long-term liabilities 847,414 729,539 Total liabilities 1,073,872 987,802 Commitments and contingencies - - Stockholders’ equity Preferred stock - $ 1.00 par value; 10,000,000 shares authorized; none outstanding - - Common stock - $ 0.50 par value; 40,000,000 shares authorized; 2,221,916 and 2,221,416 shares issued; and, 2,110,500 and 2,136,000 shares outstanding as of September 30, 2023 and March 31, 2023, respectively 1,110,958 1,110,708 Additional paid-in capital 8,437,680 8,321,145 Retained earnings 8,512,576 7,991,129 Treasury stock, at cost ( 111,416 and 85,416 shares, respectively) ( 915,751 ) ( 590,495 ) Total stockholders’ equity 17,145,463 16,832,487 Total liabilities and stockholders’ equity $ 18,219,335 $ 17,820,289 The accompanying notes are an integral part of the consolidated financial statements. Page 3 Mexco Energy Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) 2023 2022 2023 2022 Three Months Ended September 30, Six Months Ended September 30, 2023 2022 2023 2022 Operating revenues: Oil sales $ 1,099,806 $ 1,397,875 $ 2,529,484 $ 2,957,196 Natural gas sales 280,904 884,020 566,316 1,740,812 Other 25,900 42,897 59,229 76,757 Total operating revenues 1,406,610 2,324,792 3,155,029 4,774,765 Operating expenses: Production 392,674 394,445 742,081 829,473 Accretion of asset retirement obligations 7,540 7,830 14,896 15,349 Depreciation, depletion, and amortization 382,180 384,379 868,366 771,507 General and administrative 305,543 297,956 646,512 588,199 Total operating expenses 1,087,937 1,084,610 2,271,855 2,204,528 Operating income 318,673 1,240,182 883,174 2,570,237 Other income (expenses): Interest income 26,364 58 50,059 93 Interest expense ( 1,079 ) ( 3,561 ) ( 2,160 ) ( 6,692 ) Net other income (expense) 25,285 ( 3,503 ) 47,899 ( 6,599 ) Income before provision for income taxes 343,958 1,236,679 931,073 2,563,638 Income tax expense: Current 13,346 24,963 46,164 53,250 Deferred 61,179 - 149,862 - Total income tax expense 74,525 24,963 196,026 53,250 Net income $ 269,433 $ 1,211,716 $ 735,047 $ 2,510,388 Income per common share: Basic: $ 0.13 $ 0.56 $ .35 $ 1.17 Diluted: $ 0.12 $ 0.55 $ .34 $ 1.13 Weighted average common shares outstanding: Basic: 2,122,336 2,149,416 2,129,213 2,149,416 Diluted: 2,174,713 2,218,511 2,178,719 2,217,627 The accompanying notes are an integral part of the consolidated financial statements. Page 4 Mexco Energy Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited) Common Stock Par Value Additional Paid-In Capital Retained Earnings (Losses) Treasury Stock Total Stockholders’ Equity Balance at April 1, 2023 $ 1,110,708 $ 8,321,145 $ 7,991,129 $ ( 590,495 ) $ 16,832,487 Net income - - 465,614 - 465,614 Dividends paid - - ( 213,600 ) - ( 213,600 ) Issuance of stock through options exercised 250 2,712 - - 2,962 Stock based compensation - 54,975 - - 54,975 Balance at June 30, 2023 $ 1,110,958 $ 8,378,832 $ 8,243,143 $ ( 590,495 ) $ 17,142,438 Net income - - 269,433 - 269,433 Purchase of stock - - - ( 325,256 ) ( 325,256 ) Stock based compensation - 58,848 - - 58,848 Balance at September 30, 2023 $ 1,110,958 $ 8,437,680 $ 8,512,576 $ ( 915,751 ) $ 17,145,463 Common Stock Par Value Additional Paid-In Capital Retained Earnings Treasury Stock Total Stockholders’ Equity Balance at April 1, 2022 $ 1,108,208 $ 8,133,982 $ 3,328,427 $ ( 346,001 ) $ 12,224,616 Net income - - 1,298,672 - 1,298,672 Stock based compensation - 25,571 - - 25,571 Balance at June 30, 2022 $ 1,108,208 $ 8,159,553 $ 4,627,099 $ ( 346,001 ) $ 13,548,859 Balance $ 1,108,208 $ 8,159,553 $ 4,627,099 $ ( 346,001 ) $ 13,548,859 Net income - - 1,211,716 - 1,211,716 Profit from purchase of stock by insider - 30,179 - - 30,179 Stock based compensation - 34,431 - - 34,431 Balance at September 30, 2022 $ 1,108,208 $ 8,224,163 $ 5,838,815 $ ( 346,001 ) $ 14,825,185 Balance $ 1,108,208 $ 8,224,163 $ 5,838,815 $ ( 346,001 ) $ 14,825,185 SHARE ACTIVITY Common stock shares, issued: Balance at April 1, 2023 2,221,416 Issued 500 Balance at September 30, 2023 2,221,916 Common stock shares, held in treasury: Balance at April 1, 2023 ( 85,416 ) Acquisitions ( 26,000 ) Balance at September 30, 2023 ( 111,416 ) Common stock shares, outstanding at September 30, 2023 2,110,500 The accompanying notes are an integral part of the consolidated financial statements. Page 5 Mexco Energy Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS For the Six Months Ended September 30, (Unaudited) 2023 2022 Cash flows from operating activities: Net income $ 735,047 $ 2,510,388 Adjustments to reconcile net income to net cash provided by operating activities: Deferred income tax expense 149,862 - Stock-based compensation 113,823 60,002 Depreciation, depletion and amortization 868,366 771,507 Accretion of asset retirement obligations 14,896 15,349 Amortization of debt issuance costs 2,159 6,263 Changes in operating assets and liabilities: Decrease in accounts receivable 571,889 124,486 Decrease in right-of-use asset 27,920 26,893 Decrease in prepaid expenses 9,229 9,540 Decrease in accounts payable and accrued expenses ( 27,933 ) ( 63,588 ) Settlement of asset retirement obligations ( 6,975 ) ( 15,860 ) Decrease in operating lease liability ( 27,919 ) ( 26,893 ) Net cash provided by operating activities 2,430,364 3,418,087 Cash flows from investing activities: Additions to oil and gas properties ( 1,650,812 ) ( 4,245,064 ) Drilling refund - 18,329 Investments in limited liability companies at cost ( 200,000 ) ( 25,000 ) Proceeds from sale of oil and gas properties and equipment 306,513 - Additions to other property and equipment - ( 1,718 ) Net cash used in investing activities ( 1,544,299 ) ( 4,253,453 ) Cash flows from financing activities: Proceeds from exercise of stock options 2,962 - Profits from purchase of stock by insider - 30,179 Acquisition of treasury stock ( 325,256 ) - Dividends paid ( 213,600 ) - Debt issuance costs ( 750 ) - Proceeds from long-term debt - 500,000 Reduction of long-term debt - ( 500,000 ) Net cash (used in) provided by financing activities ( 536,644 ) 30,179 Net increase (decrease) in cash and cash equivalents 349,421 ( 805,187 ) Cash and cash equivalents at beginning of period 2,235,771 1,370,766 Cash and cash equivalents at end of period $ 2,585,192 $ 565,579 Non-cash investing and financing activities: Asset retirement obligations $ 2,495 $ 21,197 The accompanying notes are an integral part of the consolidated financial statements. Page 6 Mexco Energy Corporation and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Nature of Operations Mexco Energy Corporation (a Colorado corporation) and its wholly owned subsidiaries, Forman Energy Corporation (a New York corporation), Southwest 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 crude oil, natural gas, 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. 2. Basis of Presentation and Significant Accounting Policies Principles of Consolidation . The consolidated financial statements include the accounts of Mexco Energy Corporation and its wholly owned subsidiaries. All significant intercompany balances and transactions associated with the consolidated operations have been eliminated. Estimates 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 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. 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. Interim 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, 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% in 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. 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. 3. Asset Retirement Obligations The Company’s asset retirement obligations (“ARO”) relate to the plugging of wells, the removal of facilities and equipment, 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 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. Page 7 The following table provides a rollforward of the AROs for the first six months of fiscal 2024: Schedule of Rollforward of Asset Retirement Obligations Carrying amount of asset retirement obligations as of April 1, 2023 $ 730,276 Liabilities incurred 2,495 Liabilities settled ( 30,115 ) Accretion expense 14,896 Carrying amount of asset retirement obligations as of September 30, 2023 717,552 Less: Current portion 20,000 Non-Current asset retirement obligation $ 697,552 4. Long Term Debt On December 28, 2018, the Company entered into a loan agreement (the “Agreement”) with West Texas National Bank (“WTNB”), 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. On 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 . On March 28, 2023, the Agreement was amended to extend the maturity date to March 28, 2026 . Under 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 of one percent ( 0.5 % ) floating daily. Interest on the outstanding amount under the Agreement is payable monthly. In addition, the Company will pay an unused commitment fee in an amount equal to one-half of one percent (0.5%) times the daily average of the unadvanced amount of the commitment . The unused commitment fee is payable quarterly in arrears on the last day of each calendar quarter. As of September 30, 2023, there was $ 1,500,000 available for borrowing by the Company on the facility. No principal payments are anticipated to be required through the maturity date of the credit facility, March 28, 2026 . Upon closing the 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. Amounts borrowed under the Agreement are collateralized by the common stock of the Company’s wholly owned subsidiaries and substantially all of the Company’s oil and gas properties. The Agreement contains customary covenants for credit facilities of this type including limitations on change in control, disposition of assets, mergers and reorganizations. The Company is also obligated to meet certain financial covenants under the Agreement and requires senior debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”) ratios (Senior Debt/EBITDA) less than or equal to 4.00 to 1.00 measured with respect to the four trailing quarters and minimum interest coverage ratios (EBITDA/Interest Expense) of 2.00 to 1.00 for each quarter. In addition, this Agreement prohibits the Company from paying cash dividends on its common stock without 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 approval. There was no balance outstanding on the line of credit as of September 30, 2023. 5. Stock-based Compensation The 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. During 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 . Page 8 Included 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, 2023 and 2022. All such amounts represent the weighted average amounts. Schedule of Grant-date Fair Value of Stock Options Granted and Assumptions Used Binominal Models Six Months Ended September 30 2023 2022 Grant-date fair value $ 8.73 $ 18.05 Volatility factor 56.5 % 57.3 % Dividend yield - - Risk-free interest rate 3.44 % 3.15 % Expected term (in years) 6.25 6.25 The following table is a summary of activity of stock options for the six months ended September 30, 2023: 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, 2023 139,250 $ 8.36 7.04 $ 419,853 Granted 32,000 12.68 Exercised ( 500 ) 5.93 Forfeited or Expired - - Outstanding at September 30, 2023 170,750 $ 9.18 7.10 $ 375,525 Vested at September 30, 2023 90,500 $ 6.42 5.72 $ 448,753 Exercisable at September 30, 2023 90,500 $ 6.42 5.72 $ 448,753 During the six months ended September 30, 2023, stock options covering 500 shares were exercised with a total intrinsic value of $ 2,416 . The Company received proceeds of $ 2,962 from these exercises. During the six months ended September 30, 2022, no stock options were exercised. There 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. Outstanding options at September 30, 2023 expire between August 2024 and April 2033 and have exercise prices ranging from $ 3.34 to $ 18.05 . 6. Leases The 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 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 . Page 9 The Company determines an arrangement is a lease at inception. Operating leases are recorded in operating lease right-of-use asset, operating lease liability, current, and operating lease liability, long-term on the consolidated balance sheets. Operating lease right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As the Company’s lease does not provide an implicit rate, the Company uses the incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The incremental borrowing rate used at adoption was 3.75 %. Significant judgement is required when determining the incremental borrowing rate. Rent expense for lease payments is recognized on a straight-line basis over the lease term. The balance sheets classification of lease assets and liabilities was as follows: Schedule of Operating Lease Assets and Liabilities September 30, 2023 Assets Operating lease right-of-use asset, beginning balance $ 75,629 Current period amortization ( 27,920 ) Total operating lease right-of-use asset $ 47,709 Liabilities Operating lease liability, current $ 47,709 Operating lease liability, long term - Total lease liabilities $ 47,709 Future minimum lease payments as of September 30, 2023 under non-cancellable operating leases are as follows: Schedule of Future Minimum Lease Payments Lease Obligation Fiscal Year Ended March 31, 2024 $ 29,120 Fiscal Year Ended March 31, 2025 19,413 Total lease payments $ 48,533 Less: imputed interest ( 824 ) Operating lease liability 47,709 Less: operating lease liability, current ( 47,709 ) Operating lease liability, long term $ - Net 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. 7. Income Taxes On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022 (“IRA 2022”). The IRA 2022, among other tax provisions, imposes a 15% corporate alternative minimum tax on corporations with book financial statement income in excess of $1.0 billion, effective for tax years beginning after December 31, 2022. The IRA 2022 also establishes a 1% excise tax on stock repurchases made by publicly traded U.S. corporations, effective for stock repurchases in excess of an annual limit of $1.0 million after December 31, 2022 . The IRA 2022 did not impact the Company’s current year tax provision or the Company’s financial statements. The income tax provision consists of the following for the six months ended September 30, 2023 and 2022: Schedule of Income Tax Provision 2023 2022 Six Months Ended September 30 2023 2022 Current income tax expense: Federal $ - $ - State 46,164 53,250 Total current income tax expense 46,164 53,250 Deferred income tax expense: Federal 149,862 - State - - Total deferred income tax expense 149,862 - Total income tax expense: $ 196,026 $ 53,250 Page 10 Federal 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. A reconciliation of the provision for income taxes to income taxes computed using the federal statutory rate for the six months ended September 30 follows: Schedule of Reconciliation of Provision for Income Taxes 2023 2022 Tax expense at federal statutory rate (1) $ 195,525 $ 527,182 Statutory depletion carryforward ( 65,011 ) ( 98,658 ) Change in valuation allowance ( 3,578 ) ( 439,909 ) U. S. tax reform, corporate rate reduction - - Permanent differences 22,926 11,385 State income expense 46,164 53,250 Other - - Total income tax $ 196,026 $ 53,250 Effective income tax rate 21.1 % 2.1 % (1) The federal statutory rate was 21 % for six months ended September 30, 2023 and 2022. 8. Related Party Transactions Related 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, 2023 and 2022 was $ 8,612 and $ 13,649 , respectively. 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 . 9. Income Per Common Share The 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. Schedule of Reconciliation of Basic and Diluted Net Income (loss) Per Share 2023 2022 2023 2022 Three Months Ended September 30, Six Months Ended September 30, 2023 2022 2023 2022 Net income $ 269,433 $ 1,211,716 $ 735,047 $ 2,510,388 Shares outstanding: Weighted avg. shares outstanding – basic 2,122,336 2,149,416 2,129,213 2,149,416 Effect of assumed exercise of dilutive stock options 52,377 69,095 49,506 68,211 Weighted avg. shares outstanding – dilutive 2,174,713 2,218,511 2,178,719 2,217,627 Income per common share: Basic $ 0.13 $ 0.56 $ .35 $ 1.17 Diluted $ 0.12 $ 0.55 $ .34 $ 1.13 For 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. Page 11 10. Stockholders’ Equity In June 2023, the Board of Directors authorized the use of up to $ 1,000,000 to repurchase shares of the Company’s common stock, par value $ 0.50 , 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. On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022 (“IRA 2022”). The IRA 2022, among other tax provisions, establishes a 1 % excise tax on stock repurchases made by publicly traded U.S. corporations, effective for stock repurchases in excess of an annual limit of $ 1,000,000 after December 31, 2022. During 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 . On April 10, 2023, the Board of Directors declared a special dividend of $ 0.10 per common share. The Company paid the special dividend of $ 213,600 on May 15, 2023 to the stockholders of record at the close of business on May 1, 2023. The Company can provide no assurance that dividends will be declared in the future or as to the amount of any future dividend. Dividends declared by the Board and stock repurchased during the period are presented in the Company’s consolidated statements of changes in stockholders’ equity as dividends paid and purchases of treasury stock, respectively. Dividends paid and stock repurchased during the period are presented as cash used in financing activities in the Company’s consolidated statements of cash flows. Stock repurchases are included as treasury stock in the consolidated balance sheets. 11. Subsequent Events In 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 reduced. In 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 . The Company completed a review and analysis of all events that occurred after the consolidated balance sheet date to determine if any such events must be reported and has determined that there are no other subsequent events to be disclosed. Page 12