Note 2 - Significant Accounting Policies

12 Months Ended

Jul. 31, 2026

Notes to Financial Statements

Significant Accounting Policies [Text Block]

NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”).

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates.

Cash and Cash Equivalents

The Company considers all cash accounts, which are not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less as cash and cash equivalents. The carrying amount of financial instruments included in cash and cash equivalents approximates fair value because of the short maturity for the instruments held. The Company had no cash equivalents as of July 31, 2026 and 2025.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Kathis Energy LLC, Kathis Energy Fund 1, LP and Enmex Operations LLC. All financial information has been prepared in conformity with accounting principles generally accepted in the United States of America. All significant intercompany transactions and balances have been eliminated.

Mineral Property Acquisition and Exploration Costs

Mineral property acquisition and exploration costs are expensed as incurred until such time as economic reserves are quantified. Cost of lease, exploration, carrying and retaining unproven mineral lease properties are expensed as incurred. We have chosen to expense all mineral exploration costs as incurred given that it is still in the exploration stage. Once our company has identified proven and probable reserves in its investigation of its properties and upon development of a plan for operating a mine, it would enter the development stage and capitalize future costs until production is established. When a property reaches the production stage, the related capitalized costs will be amortized over the estimated life of the probable-proven reserves. When our company has capitalized mineral properties, these properties will be periodically assessed for impairment of value and any diminution in value.

Oil and Gas Properties

The Company follows the successful efforts method of accounting for its oil and gas properties. Under this method of accounting, all property acquisition costs and costs of exploratory and development wells are capitalized when incurred, pending determination of whether the well found proved reserves. If an exploratory well does not find proved reserves, the costs of drilling the well are charged to expense. The costs of development wells are capitalized whether those wells are successful or unsuccessful. Other exploration costs, including certain geological and geophysical expenses and delay rentals for oil and gas leases, are charged to expense as incurred. Maintenance and repairs are charged to expense, and renewals and betterments are capitalized to the appropriate property and equipment accounts. Depletion and amortization of oil and gas properties are computed on a well-by-well basis using the units-of-production method.

Unproved property costs are not subject to amortization and consist primarily of leasehold costs related to unproved areas. Unproved property costs are transferred to proved properties if the properties are subsequently determined to be productive and are assigned proved reserves. Proceeds from sales of partial interest in unproved leases are accounted for as a recovery of cost without recognizing any gain until all cost is recovered. Unproved properties are assessed periodically for impairment based on remaining lease terms, drilling results, reservoir performance, commodity price outlooks or future plans to develop acreage.

Asset Retirement Obligation

Accounting Standards Codification (“ASC”) Topic 410, Asset Retirement and Environmental Obligations (“ASC 410”) requires an entity to recognize the fair value of a liability for an asset retirement obligation in the period in which it is incurred. The net estimated costs are discounted to present values using credit-adjusted, risk-free rate over the estimated economic life of the oil and gas properties. Such costs are capitalized as part of the related asset. The asset is depleted on the equivalent unit-of-production method based upon estimates of proved oil and natural gas reserves. The liability is periodically adjusted to reflect (1) new liabilities incurred, (2) liabilities settled during the period, (3) accretion expense and (4) revisions to estimated future cash flow requirements.

Digital Assets

The Company holds Bitcoin as a digital asset for investment purposes. The Company accounts for its Bitcoin in accordance with ASC 350, Intangibles—Goodwill and Other, as amended by ASU 2023-08, Accounting for and Disclosure of Crypto Assets. Under this guidance, Bitcoin is measured at fair value at each reporting date, with changes in fair value recognized in earnings. The fair value of Bitcoin is determined using quoted prices in active markets for identical assets, representing Level 1 inputs under ASC 820, Fair Value Measurement. Gains and losses resulting from changes in fair value are recognized in other income (expense) in the consolidated statements of operations.

The Company's Bitcoin holdings are classified as noncurrent crypto assets on the consolidated balance sheets based on management's intent to hold the assets for long-term investment purposes. Purchases and sales of Bitcoin held for investment purposes are classified as investing activities in the consolidated statements of cash flows.

Fair Value of Financial Instruments

The fair value is an exit price representing the amount that would be received to sell an asset or required to transfer a liability in an orderly transaction between market participants. As such, fair value of a financial instrument is a market-based measurement that should be determined based on the assumptions that market participants would use in pricing an asset or a liability.

A three-tier fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value:

● Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

● Level 2: Observable inputs that reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

● Level 3: Unobservable inputs reflecting our own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participants assumptions that are reasonably available.

The carrying amount of the Company’s financial assets and liabilities, such as cash, accounts receivable, accounts payable, accrued expenses and loans payable approximate their fair value because of the short maturity of those instruments.

The following table classifies the Company’s assets measured at fair value on a recurring basis into the fair value hierarchy as of:

July 31, 2026

Description	Level 1		Level 2		Level 3
Bitcoin	$	31,476	$	—	$	—
Total	$	31,476	$	—	$	—

Basic and Diluted Earnings Per Share

The Company computes net income (loss) per common share in accordance with ASC 260, Earnings Per Share. Basic net income (loss) per common share is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per common share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.

For the years ended July 31, 2026 and 2025, the Company had 1,306,620 and 2,740,822 potentially dilutive common shares, respectively, issuable upon conversion of a related party note payable. These shares were excluded from the calculation of diluted net loss per common share because their inclusion would have been antidilutive. Accordingly, basic and diluted net loss per common share was the same for both periods.

Revenue Recognition

The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. Revenue is recognized when control of the promised goods or services is transferred to a customer in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services.

The Company's revenues are primarily derived from the production and sale of oil and natural gas. Revenue from oil and natural gas sales is recognized at the point in time when control of the product transfers to the purchaser, generally upon delivery to the purchaser or designated delivery point, in accordance with the terms of the applicable sales agreements. At that time, the Company's performance obligation is satisfied, and the Company has an enforceable right to payment.

The transaction price is generally based on market prices for oil and natural gas, adjusted for applicable contractual pricing provisions, quality differentials, and other adjustments. Revenue is recorded based on the Company's proportionate ownership interest in the production sold, net of amounts attributable to other working interest or royalty owners, as applicable.

The Company evaluates its sales arrangements to determine whether it acts as a principal or an agent in accordance with ASC 606. Revenue is presented on a gross basis when the Company controls the product before it is transferred to the customer and on a net basis when the Company acts solely as an agent.

Accounts receivable arising from oil and natural gas sales are generally due within customary industry payment terms. The Company evaluates its receivables for expected credit losses in accordance with ASC 326, Financial Instruments—Credit Losses.

The Company does not generally have significant contract assets, contract liabilities, or material unsatisfied performance obligations associated with its oil and natural gas sales arrangements.

Accounts Receivable

Accounts receivable consists of expected amounts due for the percentage of the sale of oil and natural gas from the investment in Lost Creek Acquisitions LLC. As of July 31, 2026 and 2025, the Company has recorded $31,500 and $6,750 of accounts receivable, respectively.

Allowance for Credit Losses

The Company estimates its allowance for credit losses using the Current Expected Credit Loss (CECL) model under ASC 326. The CECL model requires recognition of expected credit losses over the contractual life of financial assets held at the reporting date, considering the nature of debt, industry expectations, current conditions, and reasonable and supportable forecasts.

Financial assets subject to CECL include trade receivables. The Company groups financial assets based on shared risk characteristics and evaluates them collectively. The allowance is measured using a combination of historical activity, industry expectations, adjusted for current economic trends and forward-looking factors such as industry outlook and macroeconomic indicators (e.g., unemployment rate, GDP).

Under CECL, the carrying amount of a financial asset (net of the allowance for credit losses) represents the amount the Company expects to collect. This means that when the CECL estimate is appropriately recorded, the net reported balance of financial assets reflects management’s best estimate of collectible cash flows, based on available and supportable information.

Management reviews the adequacy of the allowance at each reporting period and updates estimates as appropriate. Changes in estimates are recorded in the income statement as a component of credit loss expense. As of July 31, 2026, there was no indication that the Company required an allowance for credit losses.

Operating Segments

Operating segments are defined as components of an entity for which discrete financial information is available that is regularly reviewed by the Chief Operating Decision Maker (“CODM”), or decision maker group, in deciding how to allocate resources to an individual segment and in assessing performance. Our chief operating decision–making group is composed of the Chief Executive Officer. The Company has one operating segment as of July 31, 2026 and 2025.

Recently issued accounting pronouncements

Management has evaluated other recently issued accounting pronouncements that are not yet effective and believes that their adoption is not expected to have a material impact on the Company's financial position, results of operations, or cash flows. The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations