S-1/A 1 fs12023a6_elephantoilcorp.htm REGISTRATION STATEMENT

As filed with the Securities and Exchange Commission on January 6, 2023.

Registration No. 333-263879

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

____________________

AMENDMENT NO. 6
TO

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

____________________

Elephant Oil Corp.
(Exact name of registrant as specified in its charter)

____________________

Nevada

 

1311

 

86-3759087

(State or other jurisdiction of
incorporation or organization)

 

(Primary Standard Industrial
Classification Code Number)

 

(I.R.S. Employer
Identification No.)

Pennzoil Place
700 Milam, Suite 1300
Houston, TX 77002
(832) 871-5050
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

____________________

Matthew Lofgran
Chief Executive Officer
Elephant Oil Corp.
Pennzoil Place
700 Milam, Suite 1300
Houston, TX 77002
(832) 871-5050
(Name, address, including zip code, and telephone number, including area code, of agent for service)

____________________

Copies to:

Robert Cohen, Esq.
Richard Bass, Esq.
McDermott Will & Emery LLP
One Vanderbilt Avenue
New York, 10017
Telephone: (212) 547
-5885

 

Joseph M. Lucosky, Esq.
Scott E. Linsky, Esq.
Lucosky Brookman LLP
101 Wood Avenue South, 5
th Floor
Woodbridge, NJ 08830
Telephone: (732) 395
-4402

____________________

Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement is declared effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. 

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

 

 

Accelerated filer

 

Non-accelerated filer

 

 

Smaller reporting company

 

       

Emerging growth company

 

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

  

 

Table of Contents

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED JANUARY 6, 2023

PRELIMINARY PROSPECTUS

1,827,957 Units Each Unit Consisting of One Share of Common Stock
and One Warrant to Purchase One Share of Common Stock

Elephant Oil Corp.

Unit Each Consisting of One Share of Common Stock
and One Warrant to Purchase One Share of Common Stock

This is our initial public offering. We are offering 1,827,957 units (“Units”), each Unit consisting of one share of common stock, par value $0.0001 per share (“Common Stock”), and one warrant to purchase one share of Common Stock (each a “Warrant”). We currently estimate that the initial public offering price will be between $4.15 and $5.15 per Unit. Each share of Common Stock is being sold together with one Warrant to purchase one share of Common Stock. Each whole share exercisable pursuant to the Warrants will have an exercise price of $5.81 per share, equal to 125% of the initial public offering price based on the midpoint of the price range above. The Warrants will be immediately exercisable and will expire on the fifth anniversary of the original issuance date. The Units will not be certificated. The shares of Common Stock and Warrants comprising the Units are immediately separable and will be issued separately, but must be purchased together as a Unit in this offering. We do not intend to list the Warrants for trading on any stock market or exchange.

Prior to the offering, there has been no public market for our Common Stock. We have applied to list our Common Stock on The Nasdaq Capital Market (“Nasdaq”) under the symbol “ELEP.” The closing of this offering is contingent upon the successful listing of our Common Stock on the Nasdaq Capital Market.

We are an “emerging growth company” under the federal securities laws and, as such, we have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings. See “Prospectus Summary — Implications of Being an Emerging Growth Company and a Smaller Reporting Company.”

Investing in our Common Stock or Warrants involves a high degree of risk. Before buying any Common Stock or Warrants, you should carefully read the discussion of the material risks of investing in our Common Stock or Warrants under the heading “Risk Factors” beginning on page 15 of this prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

 

Per Unit(1)

 

Total

Initial public offering price

 

$

4.65

 

$

8,500,000

Underwriting discounts and commissions(2)

 

$

0.37

 

$

680,000

Proceeds, before expenses, to us

 

$

4.28

 

$

7,820,000

____________

(1)      The public offering price and underwriting discount in respect of the Units corresponds to (i) a public offering price per share of common stock of $4.64 and (ii) a public offering price per Warrant of $0.01.

(2)      Does not include the following additional compensation payable to the underwriters. In addition to the compensation referenced above, we have agreed to pay the representative of the underwriters, Spartan Capital LLC, which we refer to as Spartan or the Representative, warrants (the “Representative’s Warrants”) to purchase in the aggregate the number of shares of our Common Stock equal to five percent (5%) of the number of shares of Common Stock sold in this offering. The registration statement of which this prospectus forms a part also registers the issuance of the shares of Common Stock issuable upon exercise of the Representative’s Warrants. See also “Underwriting” for a description of compensation payable to the underwriters.

We have granted a 45-day option to the representative of the underwriters to purchase up to 274,194 Units (equal to an additional 15% of the Units sold in this Offering) solely to cover over-allotments, if any. If the underwriters exercise the option in full, the total underwriting discounts and commissions payable by us will be $782,000, and the total proceeds to us, before expenses, will be $8,993,000.

Delivery of the Units is expected to be made on or about            , 2023.

Spartan Capital Securities, LLC

The date of this prospectus is            , 2023

 

Table of Contents

TABLE OF CONTENTS

 

Page

PROSPECTUS SUMMARY

 

1

RISK FACTORS

 

15

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

33

INDUSTRY AND OTHER DATA

 

35

USE OF PROCEEDS

 

36

DIVIDEND POLICY

 

38

CAPITALIZATION

 

39

DILUTION

 

41

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

43

BUSINESS

 

51

MANAGEMENT

 

60

EXECUTIVE AND DIRECTOR COMPENSATION

 

66

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

 

71

PRINCIPAL STOCKHOLDERS

 

73

DESCRIPTION OF CAPITAL STOCK

 

75

SHARES ELIGIBLE FOR FUTURE SALE

 

80

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES TO NON-U.S. HOLDERS OF OUR COMMON STOCK

 

82

UNDERWRITING

 

87

LEGAL MATTERS

 

92

EXPERTS

 

92

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

92

WHERE YOU CAN FIND MORE INFORMATION

 

93

INDEX TO FINANCIAL STATEMENTS

 

F-1

Neither we nor the underwriters have authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we have referred you. We take no responsibility for and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the Units offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus or in any applicable free writing prospectus is current only as of its date, regardless of its time of delivery or any sale of our Units. Our business, financial condition, results of operations and prospects may have changed since that date.

For investors outside the United States: Neither we nor the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the shares of Common Stock and the distribution of this prospectus outside the United States.

This prospectus contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. See “Risk Factors” and “Special Note Regarding Forward-Looking Statements.”

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FINANCIAL STATEMENT PRESENTATION

The consolidated financial statements as of June 30, 2022 and 2021, and for the three months ended September 30, 2022 (unaudited), represent the operations of Elephant Oil Corp. and its wholly-owned subsidiaries, Elephant Oil Limited (UK) and Elephant Oil Benin SA (Benin). All inter-company balances and transactions among the companies have been eliminated upon consolidation.

ABOUT THIS PROSPECTUS

Except where the context otherwise requires or where otherwise indicated throughout this registration statement, the terms “Elephant Oil,” “we,” “us,” our,” “our company,” “Company” and “our business” refer to Elephant Oil Corp. and its wholly-owned subsidiaries, Elephant Oil Limited (UK) and Elephant Oil Benin SA (Benin).

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PROSPECTUS SUMMARY

This summary highlights, and is qualified in its entirety by, the more detailed information and financial statements included elsewhere in this prospectus. This summary does not contain all of the information that may be important to you in making your investment decision. You should read this entire prospectus carefully, especially the “Risk Factors,” “Special Note Regarding Forward-Looking Statements,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision.

If our listing application is not approved by Nasdaq, we will not be able to consummate the offering.

ELEPHANT OIL CORP.

Overview

We are an independent oil and gas exploration stage company, led by an experienced management and technical team, which is focused on under-explored regions in Africa. Our current asset portfolio includes an exploration license onshore in the Republic of Benin (“Benin”), as well as an exploration license onshore in the Republic of Namibia (“Namibia”). As of the date of this prospectus, we have not drilled any wells. Additionally, the Company continues to review other potential assets for expansion.

Republic of Benin

In October 2013, Elephant Oil signed a Production Sharing Agreement with Benin (the “Production Sharing Agreement”) providing a 100% licensed interest under the Production Sharing Agreement in onshore Block B, which is over 1.1 million acres, or 1,772 square miles or 4,590 square kilometers and is accessible by local roadways in a low density tropical forest environment. The Benin Hydrocarbons Corporation (“SOBEH”), now known as SNH-Benin, the national oil company of Benin, has an option to acquire a 10% interest upon commercial discovery. The exploration period is 9 years and, unless extended, would have terminated in October 2022. However, we are in advanced negotiations with the Ministry of Water and Mines of Benin (the “Ministry of Water and Mines”) for a New Production Sharing Agreement (as defined below). Because we are currently in negotiations for a new agreement, as per a July 2018 letter from the Ministry of Water and Mines and Article 53 of the Petroleum Code (as defined below), our rights under the Production Sharing Agreement are extended and remain valid until the negotiations are finalized. We intend to continue exploring Block B while we continue negotiations with the Ministry of Water and Mines for a New Production Sharing Agreement (as defined below).

The Production Sharing Agreement provides for an initial exploration phase of three years, with two possible extension phases of three years each. Elephant Oil is currently under the exploration phase, and is in the second three year extension. As discussed below, by virtue of the enactment of the Petroleum Code, the Production Sharing Agreement is currently still in effect. In the event that a commercial discovery is made on Block B, the Production Sharing Agreement further entitles Elephant Oil to apply for and receive, subject to Benin government approval, a production license of up to 25 years, renewable for a period of up to 10 years, from the Ministry of Water and Mines.

The Production Sharing Agreement may be terminated by the Minister in charge of Hydrocarbons of the Republic of Benin upon the following scenarios: (i) if we fail to correct any significant breach, not attributable to the Government of Benin or any of its representatives, after thirty (30) days of notification of such breach; (ii) a delay of over three (3) months in payment to the Government of the Republic of Benin, for reasons not attributable to the Government of the Republic of Benin or any of its representatives; (iii) the interruption of field work that lasts over six (6) months unless either approved by the Government of the Republic of Benin or due to a Force Majeure event; (iv) breach of the agreement due to illegal operations or conducting business that violates national or international law; (v) if we fail to comply with an arbitration judgment that stems from this arrangement; or (vi) if we declare bankruptcy or go through a court-ordered liquidation. Royalties payable under the Production Sharing Agreement are as follows: (i) for oil - we shall pay royalties at a rate of 12.5% of the total available production excluding losses regarding operations starting with the first barrels produced, and the remaining quantity of the crude oil shall be referred to as ‘‘Available Crude,” and this royalty rate shall be negotiable for the condensate; and (ii) in case of discovery of gas - both parties shall come together to define the royalties as well as the sharing proportion for the gas. Pursuant to the Production Sharing Agreement, we shall be bound to pay in accordance with the Benin Tax Code all of the taxes and dues to which we shall be subject namely the Income Tax, which shall not exceed 45% of the taxable profit.

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In 2019, the government of Benin enacted a new petroleum code (the “Petroleum Code”) and model production sharing agreement (“Model PSA”). Prior to the enactment, Elephant Oil had held numerous discussions with the government to amend, advance and clarify its standing under the existing Production Sharing Agreement and petroleum code signed in 2013.

The government of Benin took the position that with the enactment of the Petroleum Code, it wanted all oil and gas stakeholders to negotiate and transfer their current license(s) under the new legislation. The existing Production Sharing Agreement expressly provides that upon a change in law in Benin that reduces the benefits or advantages of the contracting party, the terms of the Production Sharing Agreement shall be modified in order to balance the economic benefits of the contracting party. Elephant Oil and the government of Benin have entered into negotiations in good faith to bring the existing Production Sharing Agreement under the new code and model form.

In December 2021 Elephant Oil executed the new form of production sharing agreement (the “New Production Sharing Agreement”) and delivered the New Production Sharing Agreement to the government of Benin for signature and ratification. The New Production Sharing Agreement is anticipated to be signed in early 2023, but there can be no assurance that it will be signed in this time frame, or at all. In the event the New Production Sharing Agreement is not signed, we will continue with our exploration program in Namibia and accelerate our exploration of opportunities in other areas of Africa using the intended proceeds directed toward Benin.

Trilogy Resource Corporation had previously operated on Block B, but ceased its operations and relinquished its title to the property in 1992. Elephant Oil began exploration on Block B in 2013, and through the date of this prospectus has continued to explore Block B, including by: (i) procuring a Full Tensor Gravity (Aero Gravity Gradiometry) survey undertaken by Fugro Airborne Surveys Pty Ltd over the entire Block B, (ii) reprocessing existing onshore 2D seismic survey prepared by Trilogy Resource Corporation and integrating such data with new offshore 2D seismic data from SNH-Benin, (iii) procuring a Passive Seismic survey undertaken by GeoDynamics Worldwide, which has helped in Elephant Oil’s understanding of the structural fabric and basin setting and (iv) procuring an Environmental and Social Impact Assessment (ESIA), which was performed by RPS Energy Limited. We commissioned a third party evaluation by RISC (UK) Limited, which was provided in June 2021, to review exploration opportunities in Block B, onshore Benin, west Africa. The RISC review suggested the probable presence of exploration opportunities in Benin Block B, in particular identifying 5 plays (groups of oil fields or prospects in the same region controlled by the same set of geological circumstances) over Block B and reviewing 15 leads (subsurface structural or stratigraphic features with the potential to have entrapped oil or natural gas) associated with one of the plays. Seismic data shows that the offshore line ties into the onshore line, providing a discernible and exciting target for us to drill. Furthermore, Benin’s Block B is adjacent, on both sides, to oil refineries with significant production in Ghana and Nigeria. Elephant Oil plans to mobilize a drilling rig to Benin in 2023 to commence exploration drilling and additional surveys on the block. For further details on anticipated expenditures related to these plans, see “Use of Proceeds” contained elsewhere in this prospectus.

Republic of Namibia

In August 2021, Elephant Oil signed a Petroleum Agreement with Namibia for onshore Block 1919 (the “Petroleum Agreement”), which includes a minimum exploration expenditure of $5,000,000. The $5,000,000 minimum exploration expenditure condition will be deemed satisfied if the minimum work obligations are properly executed using best oil field practices, regardless of the specified expenditure amount. Elephant Oil holds a 70% working interest in Block 1919 on over 2.8 million acres, or 4,507 square miles, or 11,675 square kilometers, onshore and is accessible by local roadways in brushland environment. Niikela Exploration (PTY) LTD holds a 20% working interest and NAMCOR, a Namibian state-owned entity, holds the remaining 10% interest in the license on a carried interest basis. In August 2022, the Company paid $100,000 in license fees under the Petroleum Agreement. The exploration period is 8 years (as described in more detail below) and, unless extended, will terminate on August 22, 2029. After a period of four years, Elephant Oil must relinquish 50% of its interest of its interest in Block 1919, and after a period of an additional two years, it must relinquish an additional 25% of its interest. Elephant Oil is currently in the second year of the initial 4 year term of the exploration period under the Petroleum Agreement, which may be extended for two additional two year terms upon the NMME’s (as defined below) consent, bring the total exploration period to 8 years. In the event that an economically viable resource discovery is made at the licensed property, the Petroleum Agreement further entitles Elephant Oil to apply for and receive, subject to Namibian government approval, a production license of up to 25 years, renewable for a period of up to 10 years, from the Namibia Ministry of Mines and Energy (the “NMME”).

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The Petroleum Agreement shall continue to be in full force for as long as we hold an exploration license or production license. NMME may terminate the agreement with notice in writing if the Company is liquidated or it fails to comply with any final award made pursuant to arbitration proceedings arising under the Petroleum Agreement. Royalties payable under the Petroleum Agreement include a 5% quarterly royalty on the petroleum produced under the agreement. Pursuant to the Petroleum Agreement, the Company shall owe a petroleum income tax of 42% of any taxable income received in connection with the agreement, as well as certain additional profits taxes depending on the accumulated net cash position of the Company at the end of each year. Further, we are subject to an annual charge under the Petroleum Agreement, pursuant to which we pay a fee equal to the number of square kilometers included in Block 1919 increased by certain multipliers which increase each time our license is renewed.

Namibia has geology that is similar tectono-stratigraphically to prolific hydrocarbon regions on both sides of the Atlantic, including the Santos and the Campos basins in Brazil, the Kwanza basin in Angola, the Congo basin to the north, the Colorado basin in Argentina and the South Pelotas basin in Uruguay. According to “Basin Evolution, Configuration Styles, and Hydrocarbon Accumulation of the South Atlantic Conjugate Margins” by Z. Wen et al., 2019, a total of 111 giant oil and gas fields with recoverable reserves of nearly 260 billion barrels of oil have been discovered along the South Atlantic.

In 2022, there were two promising offshore oil discoveries in Namibia. On February 4, 2022 Shell plc (NYSE: SHEL) had a major discovery in Namibia. NAMCOR, Shell Namibia Upstream B.V., and Qatar Energy, announced that the Graff-1 deep-water exploration well has made a discovery of light oil in both primary and secondary targets. The Graff-1 well has proved a working petroleum system for light oil in the Orange Basin, offshore Namibia, 270 km from the town of Oranjemund. Drilling operations commenced in early December 2021 and were safely completed in early February 2022. On February 24, 2022 TotalEnergies SE (NYSE: TTE) had a major discovery. NAMCOR announced a major light oil and associated gas discovery on the Venus-1X prospect, located in block 2913B (PEL 56) in the Orange Basin, offshore southern Namibia. The Venus-1X discovery is located approximately 290 kilometres off the coast of Namibia, in the deep-water offshore exploration block. The well was drilled to a total depth of 6,296 metres, by the Maersk Voyager drillship, and encountered a high-quality, light oil-bearing sandstone reservoir of Lower Cretaceous age. We believe these recent discoveries will make Namibia one of Africa’s centres of oil and gas operations in the coming years. We do not own any interests in the foregoing properties, and any of the information reported is not indicative of our future results. As of now we have no proved reserves and areas that we decide to drill may not yield oil and natural gas in commercial quantities or quality, or at all. Further, any estimates provided above were taken from source material, and such estimates may or may not have been prepared in conformance with recognized industry standard reporting guidelines.

In the short term, we are immediately focused on onshore activities. Reconnaissance Energy Africa Ltd. (“ReconAfrica”) has announced onshore drilling in a block Namibia in April and June of 2021 and future drilling as well as seismic studies in the Kavango Basin. We have targeted a block adjacent to the south of ReconAfrica’s block in the Kavango Basin where the drilling and seismic studies have taken place as where we will be conducting our onshore activities. For further details on anticipated expenditures related to these plans, see “Use of Proceeds” contained elsewhere in this prospectus.

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Our Strategy

We believe that we will be able to achieve our primary business objective of creating value for our shareholders by executing on the following strategies in the next four years:

        Moving forward on our exploration program, including mobilizing a drilling rig in 2023, followed by drilling two oil wells onshore in Benin, on what we believe to be attractive identified leads in Block B. We will also continue to complete survey work in 2023 through 2025 to identify additional structures in Block B for future drilling.

Map of Benin & Namibia

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Map of “Block B” in Benin

Map of “Block 1919” in Namibia

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        In Namibia, we will begin exploration by performing surveys on shore, which we anticipate will lead to future drilling. Given the recent onshore drilling success of ReconAfrica and the recent offshore drilling successes of Shell plc and TotalEnergies SE as noted above, we may decide to increase our pace of exploration activity.

        We are focused on the acquisition, exploration, appraisal and development of existing and new opportunities in Africa, including identifying, capturing and testing additional high-potential prospects to grow resources and develop reserves with an aim of generating net asset value and delivering returns to our shareholders.

        We are led by an experienced management team with an average experience in the energy industry of over 12 years.

        Elephant Oil actively engages with local communities and partners to ensure a strong environmental, social & governance (“ESG”) policy, including:

        Donating numerous supplies and building schools in Benin.

        Completing rigorous Environmental Social Impact assessment prior to work in the field.

Our Team

We are led by a team of individuals with experience in the oil and gas sector, particularly in the area of conducting oil exploration and production activities, and officers and directors have an average of 24 years of experience. In addition, each of our three non-employee directors has an educational background in geological science, which we believe will aid our ability to manage and grow our operations. Further, we have a team of five technical specialists, who have expertise in geology, drilling, and international oil and gas operations, who will assist us in our endeavors.

Corporate Structure

Immediately after the consummation of this offering, we will file a Registration Statement on Form S-8 to register restricted stock and options to purchase stock issuable to certain of our executive officers, directors and employees under the 2022 Incentive Plan (the “2022 Incentive Plan” or “Plan”). The Plan provides for the grant of non-qualified stock options (“NQSOs”), incentive stock options (“ISOs”), restricted stock awards, restricted stock units (“RSUs”), unrestricted stock awards, stock appreciation rights, and other forms of stock based compensation. These restricted shares and options will be subject to certain vesting conditions. For a complete description of these transactions, please see the sections “Executive Compensation — 2022 Incentive Plan” in this prospectus.

The Company currently has the following wholly-owned subsidiaries which perform the following functions — Elephant Oil Limited functions as our holding company and Elephant Oil Benin SA functions as our local subsidiary handling all operations in Benin.

Name of Subsidiary

 

Jurisdiction of Incorporation

 

Date of Incorporation

Elephant Oil Limited

 

United Kingdom

 

January 14, 2013

Elephant Oil Benin SA

 

Benin

 

July 6, 2014

Summary of Risk Factors

Investing in our Common Stock or Warrants involves risks. In addition, our business and operations are subject to a number of risks, which you should be aware of prior to making a decision to invest in our Common Stock or Warrants. These risks are discussed more fully in the “Risk Factors” section of this prospectus immediately following this prospectus summary. Below is a summary of these risks.

Risks Relating to Our Business

        Our business and operations may be adversely affected by the COVID-19 pandemic and may be adversely affected by other similar outbreaks.

        We have no proved reserves and areas that we decide to drill may not yield oil and natural gas in commercial quantities or quality, or at all.

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        We face substantial uncertainties in estimating the characteristics of our prospects, so you should not place undue reliance on any of our measures.

        Drilling wells are speculative, often involving significant costs that may be more than our estimates and may not result in any discoveries or additions to our future production or future reserves. Any material inaccuracies in drilling costs, estimates or underlying assumptions will materially affect our business.

        Our identified future drilling locations are scheduled out over several years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their drilling.

        The oil and gas industry, including the acquisition of exploratory licenses in Africa, is intensely competitive and many of our competitors possess and employ substantially greater resources than us.

        Under the terms of our various license agreements, we are contractually obligated to drill wells and declare any discoveries in order to retain exploration and production rights. In the competitive market for our license areas, failure to declare any discoveries and thereby establish development areas may result in substantial license renewal costs or loss of our interests in the undeveloped parts of our license areas, which may include certain of our prospects.

        We have been an exploration stage entity and our future performance is uncertain.

        We are dependent on certain members of our management and technical team.

        Our business plan requires substantial additional capital, which we may be unable to raise on acceptable terms in the future, which may in turn limit our ability to develop our exploration, appraisal, development and production activities.

        A substantial or extended decline in both global and local oil and natural gas prices may adversely affect our business, financial condition and results of operations.

        We may not be able to commercialize our interests in any natural gas produced from our license areas in Africa.

        Our inability to access appropriate equipment and infrastructure in a timely manner may hinder our access to oil and natural gas markets or delay any future oil and natural gas production.

        We are subject to numerous risks inherent to the exploration and production of oil and natural gas.

        We are subject to drilling and other operational environmental hazards.

        The development schedule of oil and natural gas projects, including the availability and cost of drilling rigs, equipment, supplies, personnel and oilfield services, is subject to delays and cost overruns.

        Our licenses are in Africa, which subjects us to an increased risk of loss of revenue or curtailment of future production from factors specifically affecting Africa.

        Our future operations may be adversely affected by political and economic circumstances in the countries in which we operate.

        The oil and gas industry, including the acquisition of exploratory licenses in Africa, is intensely competitive and many of our competitors possess and employ substantially greater resources than us.

        Participants in the oil and gas industry are subject to numerous laws that can affect the cost, manner or feasibility of doing business.

        We and our operations are subject to numerous environmental, health and safety regulations which may result in material liabilities and costs.

        We may be exposed to liabilities under the U.S. Foreign Corrupt Practices Act (the “FCPA”) and other anti-corruption laws, and any determination that we violated the FCPA or other such laws could have a material adverse effect on our business.

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        We may incur substantial losses and become subject to liability claims as a result of future oil and natural gas operations, for which we may not have adequate insurance coverage.

        We may be subject to risks in connection with acquisitions and the integration of significant acquisitions may be difficult.

        If we fail to realize the anticipated benefits of a significant acquisition, our results of operations may be adversely affected.

        The requirements of being a public company may strain our resources, result in more litigation and divert management’s attention.

        We are a U.S.-based multinational company subject to tax in the U.S. and multiple foreign tax jurisdictions, and it is possible that our tax positions may be challenged by jurisdictional tax authorities, which may have a significant impact on our global provision for income taxes.

        We are currently negotiating a New Production Sharing Agreement with the Benin government, and cannot guarantee we will enter into a new agreement and this may impair our oil and gas assets, affect our operations and ultimately adversely impact our results of operations, liquidity and financial condition.

        Under the terms of our Production Sharing Agreement with Benin, we are contractually obligated to make a discovery of crude oil and/or natural gas. Failure to declare any discoveries and thereby establish development areas may result in substantial license renewal costs or loss of our interests in the undeveloped parts of Block B.

Risks Relating to This Offering

        An active and liquid trading market for our Common Stock may not develop.

        Our share price may be volatile, and purchasers of our Common Stock could incur substantial losses.

        A substantial portion of our total issued and outstanding shares of Common Stock may be sold into the market at any time. This could cause the market price of our Common Stock to drop significantly, even if our business is doing well.

        The concentration of our share capital ownership among our largest shareholders, and their affiliates, will limit your ability to influence corporate matters.

        Certain of our executive officers and directors have significant duties with, and spend significant time serving, entities that may compete with us in seeking acquisitions and business opportunities and, accordingly, may have conflicts of interest in allocating time or pursuing business opportunities.

        For as long as we are an emerging growth company, we will not be required to comply with certain reporting requirements, including those relating to accounting standards and disclosure about our executive compensation, that apply to other public companies.

        If you purchase our Common Stock in this offering, you will suffer immediate and substantial dilution of your investment.

Implications of Being an Emerging Growth Company and a Smaller Reporting Company

We qualify as an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, as amended, or JOBS Act. As an “emerging growth company” we may take advantage of reduced reporting requirements that are otherwise applicable to public companies. These provisions include, but are not limited to:

        the option to present only two years of audited financial statements and only two years of related “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this prospectus;

        not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act;

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        not being required to comply with any requirements that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);

        reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements; and

        exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

We may take advantage of these provisions until the last day of our fiscal year following the fifth anniversary of the completion of this offering. However, if any of the following events occur prior to the end of such five-year period, (i) our annual gross revenue exceeds $1.235 billion, (ii) we issue more than $1.0 billion of non-convertible debt in any three-year period, or (iii) we become a “large accelerated filer,” (as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), we will cease to be an emerging growth company prior to the end of such five-year period. We will be deemed to be a “large accelerated filer” at such time that we (a) have an aggregate worldwide market value of common equity securities held by non-affiliates of $700 million or more as of the last business day of our most recently completed second fiscal quarter, (b) have been required to file annual and quarterly reports under the Exchange Act for a period of at least 12 months and (c) have filed at least one annual report pursuant to the Exchange Act. Even after we no longer qualify as an emerging growth company, we may still qualify as a “smaller reporting company,” which would allow us to take advantage of many of the same exemptions from disclosure requirements including reduced disclosure obligations regarding executive compensation in this prospectus and our periodic reports and proxy statements.

We have elected to take advantage of certain of the reduced disclosure obligations in the registration statement of which this prospectus is a part and may elect to take advantage of other reduced reporting requirements in future filings. As a result, the information that we provide to our stockholders may be different than you might receive from other public reporting companies in which you hold equity interests.

In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. We have elected to take advantage of this extended transition period.

Corporate Information

We were formed as a Nevada corporation in March 2021. In April 2021, we acquired Elephant Oil Limited (UK), an oil and gas exploration company focused on under-explored areas in onshore West Africa founded in 2013. Our principal executive offices are located at Pennzoil Place, 700 Milam, Suite 1300, Houston, TX 77002 and our telephone number is (832) 871-5050. Our website address is http://elephant-oil.com. The information contained in, or accessible through, our website does not constitute a part of this prospectus. We have included our website address in this prospectus solely as an inactive textual reference.

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The Offering

Securities offered by us

 

1,827,957 Units (or 2,102,151 Units if the underwriters exercise the over-allotment option to purchase additional Units in full), each Unit consisting of one share of Common Stock and one Warrant to purchase one share of Common Stock at an exercise price of $5.81, equal to 125% of the initial public offering price, which will be immediately exercisable and will expire on the fifth anniversary of the original issuance date. The Common Stock and Warrants that are part of the Units are immediately separable and will be issued separately in this offering. The Warrants will not be tradable.

Warrants offered by us

 

Up to 1,827,957 Warrants to purchase up to 1,827,957 shares of Common Stock. Each share of Common Stock is being sold together with one Warrant to purchase one share of Common Stock. Each whole share exercisable pursuant to the Warrants will have an exercise price of $5.81 per share equal to 125% of the initial public offering price, will be immediately exercisable and will expire on the fifth anniversary of the original issuance date. Warrants may be exercised only for a whole number of Common Stock. The shares of Common Stock and Warrants are immediately separable and will be issued separately, but must be purchased together in this offering as Units. This prospectus also relates to the offering of the Common Stock issuable upon exercise of the Warrants. We do not intend to list the Warrants for trading on any stock market or exchange.

Subject to certain exemptions outlined in the Warrant, for a period until two years from the date of issuance of the Warrant, if the Company shall sell, enter into an agreement to sell, or grant any option to purchase, or sell, enter into an agreement to sell, or grant any right to reprice, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any Common Stock or convertible security, at an effective price per share less than the exercise price of the Warrant then in effect (a “Dilutive Issuance”), the exercise price of the Warrant shall be reduced to equal the effective price per share in such Dilutive Issuance; provided, however, that in no event shall the exercise price of the Warrant be reduced to an exercise price lower than 50% of the exercise price of the Warrants on the issuance date (the “Initial Exercise Price”).

On the date that is 90 calendar days immediately following the initial issuance date of the Warrants, the exercise price of the Warrants will adjust to be equal to the Reset Price (as defined below), provided that such value is less than the exercise price in effect on that date. The Reset Price means such number equal to the greater of (a) 50% of the initial exercise price (as adjusted for share splits, share dividends, recapitalizations and similar events pursuant to Section 3(b) of the Warrants) of the Warrants on the issuance date or (b) 100% of the lowest volume weighted average price per share of Common Stock occurring during the 90 calendar days following the issuance date of the Warrants.

The lowest Reset Price is $2.91, which is 50% of the initial exercise price, based on an assumed public offering price of $4.65 per Unit, the midpoint of the price range of the Units, per share of Common Stock.

The Company reserves the right to redeem all or a portion, on a pro rata basis, of the outstanding Warrants, at any time and from time to time prior to their exercise, with a notice of redemption in writing to the holders (the “Redemption Notice”), giving not less than fifteen (15) days’ notice of such redemption at any time during which the Warrants are exercisable (the “Notice Period”) if the closing sale price of our Common Stock is at or above 250% of the exercise price for ten (10) consecutive trading days preceding the date the Warrants are called. The Company shall pay to the holders of record of redeemed Warrants all amounts to which the holders of record of such redeemed Warrants who shall have surrendered their Warrants are entitled.

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Shares outstanding immediately before the offering:

 


12,228,411 shares of Common Stock.

Over-allotment option

 

We have granted to the underwriters a 45-day option to purchase from us up to an additional 15% of the total number of securities to be offered by us in this Offering, solely for the purpose of covering over-allotments. This over-allotment option shall be for whole Units as priced in this Offering and not for components of the Units, less the underwriting discounts.

Common stock to be outstanding after this offering

 


14,056,368 shares of Common Stock, which includes the Units sold in this offering (excludes 1,827,957 shares issuable upon exercise of the Warrants sold in this offering and any securities that would be issued if the underwriters exercise their over-allotment option in full).

Use of proceeds

 

We estimate that the net proceeds from this offering will be approximately $5.0 million (or approximately $6.2 million if the underwriters exercise their over-allotment option in full), based on an assumed initial public offering price of $4.65 per Unit, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds of this offering for oil and drilling activities (including exploration and production operations), and for working capital and other general corporate purposes. For a more complete description of our intended use of the proceeds from this offering, see “Use of Proceeds.”

Representative’s Warrants

 

Upon the closing of this offering, we have agreed to issue to the representative of the underwriters, Spartan Capital Securities, LLC, (the “Representative”), or its designees, the Representative’s Warrants that will be exercisable for the period commencing six months from the effective date of this offering and expiring four and a half years from the effective date of the offering, entitling the Representative to purchase five percent (5%) of the number of shares of Common Stock sold in this offering. The registration statement of which this prospectus is a part also covers the Representative’s Warrants and the Common Stock issuable upon the exercise thereof. For additional information regarding our arrangement with the underwriters, please see “Underwriting.”

Lock-up agreements

 

We and our executive officers, directors and stockholders have agreed with the underwriters not to sell, transfer or dispose of any Common Stock or similar securities for 180 days after the date of this prospectus. For additional information regarding our arrangement with the underwriters, please see the section titled “Underwriting.”

Risk factors

 

You should read the section titled “Risk Factors” beginning on page 15 and the other information included in this prospectus for a discussion of factors you should consider carefully before deciding to invest in our Common Stock or Warrants.

Proposed Nasdaq Capital Market Symbol

 


We have applied to list our Common Stock on The Nasdaq Capital Market under the symbol “ELEP.” We do not intend to list the Warrants for trading on any stock market or exchange. If our listing application is not approved by Nasdaq, we will not be able to consummate the offering and will terminate the offering.

Immediately after the consummation of this offering, we will file a Registration Statement on Form S-8 to register restricted stock and options to purchase stock issuable to certain of our executive officers, directors and employees under the 2022 Incentive Plan. The Plan provides for the grant of NQSOs, ISOs, restricted stock awards, RSUs, unrestricted stock awards, stock appreciation rights, and other forms of stock based compensation. These restricted shares and options will be subject to certain vesting conditions. For a complete description of these transactions, please see the sections “Executive Compensation — 2022 Incentive Plan” in this prospectus.

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The number of shares of our Common Stock to be outstanding after this offering is based on 12,228,411 shares of our Common Stock outstanding as of January 6, 2023 and excludes:

        up to 1,890,596 shares of Common Stock issuable upon exercise of NQSOs, ISOs, RSUs, unrestricted stock awards, stock appreciation rights, and other forms of stock based compensation which we intend to grant to our employees and directors under the 2022 Incentive Plan, pursuant to a Registration Statement on Form S-8 to be filed immediately after the consummation of this offering, at an exercise price equal to the offering price of the Units in this offering, or $4.65 per share;

        up to 1,827,957 shares of Common Stock issuable upon exercise of Warrants included in the Units being offered by us; and

        up to 91,398 shares of Common Stock issuable upon exercise of the Representative’s Warrants issued in connection with this offering.

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SUMMARY FINANCIAL DATA

The following tables set forth our summary financial data for the periods indicated. We have derived the following summary of our consolidated statements of operations data for the years ended June 30, 2022 and 2021, and the balance sheet data as of June 30, 2022, from our audited consolidated financial statements included elsewhere in this prospectus, as well as our interim unaudited condensed consolidated statement of operations data for the three months ended September 30, 2022 and 2021, and the unaudited balance sheet data as of September 30, 2022, which is included elsewhere in this prospectus. We have prepared the financial statements on the same basis as the audited financial statements and have included all adjustments, consisting only of normal recurring adjustments that, in our opinion, are necessary to state fairly the financial information set forth in those statements. Our historical results are not necessarily indicative of the results that should be expected for any future period. You should read the following summary financial data in conjunction with the other financial information contained in this prospectus, including under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as our financial statements and the related notes included elsewhere in this prospectus.

 

As of June 30,

 

Three Months
Ended
September 30,
2022

 

Three Months
Ended
September 30,
2021

   

2022

 

2021

 
   

(Audited)

 

(Audited)

 

(Unaudited)

 

(Unaudited)

Revenue

 

$

 

 

$

 

 

$

 

 

$

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exploration expense

 

 

63,238

 

 

 

98,352

 

 

 

 

 

 

 

Selling, general and administrative

 

 

2,901,209

 

 

 

77,854

 

 

 

535,856

 

 

 

144,192

 

Total operating expenses

 

 

2,964,447

 

 

 

176,206

 

 

 

535,856

 

 

 

144,192

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(2,964,447

)

 

 

(176,206

)

 

 

(535,856

)

 

 

(144,192

)

Other (expense)

 

 

(81,376

)

 

 

(50,312

)

 

 

(210,834

)

 

 

(12,285

)

Loss before income taxes

 

 

(3,045,823

)

 

 

(226,518

)

 

 

(746,690

)

 

 

(156,477

)

Provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(3,045,823

)

 

$

(226,518

)

 

$

(746,690

)

 

$

(156,477

)

Weighted-average Common Stock outstanding, basic and diluted

 

 

12,198,951

 

 

 

9,015,963

 

 

 

12,178,407

 

 

 

11,453,724

 

Basic and diluted net loss per share of Common Stock

 

$

(0.25

)

 

$

(0.03

)

 

$

(0.06

)

 

$

(0.01

)

 

As of
June 30, 2022

 

As of
September 30, 2022
(Unaudited)

   

Actual

 

As
Adjusted
(1)(2)

 

Actual

 

As
Adjusted
(1)(2)(4)

Balance Sheet Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$

45,175

 

 

$

5,688,516

 

 

$

23,126

 

 

$

4,653,635

 

Working capital(3)

 

$

(2,547,853

)

 

$

4,690,064

 

 

$

(3,669,010

)

 

$

3,566,201

 

Total assets

 

$

3,850,494

 

 

$

8,632,303

 

 

$

4,360,115

 

 

$

7,708,773

 

Total liabilities

 

$

2,628,396

 

 

$

1,766,865

 

 

$

3,721,605

 

 

$

1,639,754

 

Accumulated deficit

 

$

(4,771,730

)

 

$

(4,771,730

)

 

$

(5,518,420

)

 

$

(5,518,420

)

Total equity

 

$

1,222,098

 

 

$

6,865,439

 

 

$

638,510

 

 

$

6,069,019

 

____________

(1)      The as adjusted balance sheet data gives effect to the issuance and sale of shares of Common Stock in this offering at an assumed initial public offering price of $4.65 per Unit, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

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(2)      Each $1.00 increase (decrease) in the assumed initial public offering price of $4.65 per Unit, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) as adjusted cash and cash equivalents, working capital, total assets, and total equity by approximately $1.7 million, assuming that the number of Units offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase (decrease) of 100,000 Units in the number of Units offered by us at the assumed initial public offering price, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us would increase (decrease) as adjusted cash and cash equivalents, working capital, total assets, and total equity by approximately $0.43 million. The as adjusted information discussed above is illustrative only and will be adjusted based on the actual initial public offering price and other terms of our initial public offering determined at pricing.

(3)      We define working capital as current assets less current liabilities and deferred offering costs.

(4)      The as adjusted cash balances have been increased to reflect the expected net proceeds from this offering after estimated offering costs and underwriting discounts, less the payment of the Dragon Note upon IPO in the approximate amount of $400,000. For purposes of the “Use of Proceeds”, we have added back approximately $900,000 of deferred offering expenses as that amount has already been paid by the Company.

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RISK FACTORS

You should carefully consider the risks and uncertainties described below and the other information in this prospectus, including our financial statements and related notes appearing elsewhere in this prospectus and in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before deciding whether to invest in our securities. Our business, financial condition, results of operations or prospects could be materially and adversely affected if any of these risks occurs, and as a result, the market price of our securities could decline and you could lose all or part of your investment. This prospectus also contains forward-looking statements that involve risks and uncertainties. See “Special Note Regarding Forward-Looking Statements.” Our actual results could differ materially and adversely from those anticipated in these forward-looking statements as a result of certain factors, including those set forth below. For a summary of these risk factors, please see “Summary of Risk Factors” in the section titled “Prospectus Summary” beginning on page 1 of this prospectus.

Risks Relating to Our Business

Our business and operations may be adversely affected by the COVID-19 pandemic and may be adversely affected by other similar outbreaks.

As a result of the COVID-19 pandemic or other adverse public health developments, including voluntary and mandatory quarantines, travel restrictions, and other restrictions, our operations, may experience delays or disruptions and temporary suspensions of operations. In addition, our financial condition and results of operations may be adversely affected by the COVID-19 pandemic.

The timeline and potential magnitude of the COVID-19 outbreak are currently unknown. The continuation or amplification of this coronavirus could continue to more broadly affect the United States and global economy, including our business and operations, and the demand for oil and gas. For example, the outbreak of coronavirus has resulted in a widespread health crisis that will adversely affect the economies and financial markets of many countries, resulting in an economic downturn that will affect our operating results. Other contagious diseases in the human population could have similar adverse effects. In addition, the effects of COVID-19 and concerns regarding its global spread have recently negatively impacted the domestic and international demand for crude oil and natural gas, which has contributed to price volatility, impacted the price we receive for oil and natural gas, and has materially and adversely affected the demand for and marketability of production, and is anticipated to continue to adversely affect the same for the foreseeable future. As the potential impact from COVID-19 is difficult to predict, the extent to which it will negatively affect our operating results, or the duration of any potential business disruption is uncertain. The magnitude and duration of any impact will depend on future developments and new information that may emerge regarding the severity and duration of COVID-19 and the actions taken by authorities to contain it or treat its impact, all of which are beyond our control. These potential impacts might negatively affect our operations along with other factors, including potential further decreases in, or prolonged periods of decreased pricing in, oil and gas, and the possible continued decline in global demand for oil and gas.

We have no proved reserves and areas that we decide to drill may not yield oil and natural gas in commercial quantities or quality, or at all.

We have no proved reserves. The entirety of our oil and natural gas portfolio consists of identified yet unproven prospects based on available seismic and geological information that indicates the potential presence of hydrocarbons. However, the areas we decide to drill may not yield oil or natural gas in commercial quantities or quality, or at all. Most of our current prospects are in various stages of evaluation that will require substantial additional analysis and interpretation. Even when properly used and interpreted, 2D and 3D seismic data and visualization techniques are only tools used to assist geoscientists in identifying subsurface structures and hydrocarbon indicators and do not enable the interpreter to know whether hydrocarbons are, in fact, present in those structures. Accordingly, we do not know if any of our prospects will contain oil or natural gas or contain oil or natural gas in sufficient quantities or quality to recover drilling and completion costs or to be economically viable. Even if oil or natural gas is found on our prospects in commercial quantities, construction costs of gathering lines, and transportation costs may prevent such discoveries or prospects from being economically viable, and approval of plans of development (“PoDs”) by various regulatory authorities, a necessary step in order to designate a discovery as “commercial,” may not be forthcoming. Additionally, the analogies drawn by us using available data from other wells, more fully explored discoveries or producing fields may not prove valid with respect to our drilling prospects. We may terminate our drilling program for a discovery or

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prospect if data, information, studies and previous reports indicate that the possible development of a discovery or prospect is not commercially viable and, therefore, does not merit further investment. If a significant number of our discoveries or prospects do not prove to be successful, our business, financial condition and results of operations will be materially adversely affected.

Block B in Benin is an area in which we focus a substantial amount of our exploration efforts. We currently do not have reserves and we may not be successful in developing commercially viable production from Block B or any other discoveries and prospects in Benin. “Block 1919” in Namibia is a newly acquired license that will require substantial amount of exploration, efforts, prior to knowing the potential economic viability for future hydrocarbon production. We currently do not have reserves and we may not be successful in developing commercially viable production from Block 1919 or any other discoveries and prospects in Namibia.

We face substantial uncertainties in estimating the characteristics of our prospects, so you should not place undue reliance on any of our measures.

In this prospectus, we may provide numerical and other measures of the characteristics, including with regard to size and quality, of our prospects. These measures may be incorrect, as the accuracy of these measures is a function of available data, geological interpretation and judgment. To date, none of our prospects have been drilled. Any analogies drawn by us from other wells, discoveries or producing fields may not prove to be accurate indicators of the success of developing reserves from our discoveries and prospects. Furthermore, we have no way of evaluating the accuracy of the data from analog wells or prospects produced by other parties, which we may use.

It is possible that few or none of our wells to be drilled in the future will find accumulations of hydrocarbons in commercial quality or quantity. Any significant variance between actual results and our assumptions could materially affect the quantities of hydrocarbons attributable to any particular prospect.

Drilling wells are speculative, often involving significant costs that may be more than our estimates, and may not result in any discoveries or additions to our future production or future reserves. Any material inaccuracies in drilling costs, estimates or underlying assumptions will materially affect our business.

Exploring for and developing hydrocarbon reserves involves a high degree of operational and financial risk, which precludes definitive statements as to the time required and costs involved in reaching certain objectives. The budgeted costs of planning, drilling, completing and operating wells are often exceeded and can increase significantly when drilling costs rise due to a tightening in the supply of various types of oilfield equipment and related services or unanticipated geologic conditions. Before a well is spud, we incur significant geological and geophysical (seismic) costs, which are incurred whether a well eventually produces commercial quantities of hydrocarbons, or is drilled at all. Drilling may be unsuccessful for many reasons, including geologic conditions, weather, cost overruns, equipment shortages and mechanical difficulties. Exploratory wells bear a much greater risk of loss than development wells. Furthermore, the successful drilling of a well does not necessarily result in the commercially viable development of a field. A variety of factors, including geologic and market-related, can cause a field to become uneconomic or only marginally economic. All of our prospects will require significant additional exploration and development, regulatory approval and commitments of resources prior to commercial development. The successful drilling of a single well may not be indicative of the potential for the development of a commercially viable field. In Africa, we face higher above-ground risks necessitating higher expected returns, the requirement for increased capital expenditures due to a general lack of infrastructure and underdeveloped oil and gas industries, and increased transportation expenses due to geographic remoteness, which either require a single well to be exceptionally productive, or the existence of multiple successful wells, to allow for the development of a commercially viable field. See risk factor heading “— Our future operations may be adversely affected by political and economic circumstances in the countries in which we operate.” Furthermore, if our actual drilling and development costs are significantly more than our estimated costs, we may not be able to continue our business operations as proposed and would be forced to modify our PoD.

Our identified future drilling locations are scheduled out over several years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their drilling.

Our management team has identified and scheduled future drilling locations on our license areas over a multi-year period. Our ability to drill and develop these locations depends on a number of factors, including the availability of equipment and capital, approval by block regulators, seasonal conditions, oil prices, assessment of risks, costs

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and drilling results. The final determination on whether to drill any of these locations will be dependent upon the factors described elsewhere in this prospectus. Because of these uncertainties, we do not know if the drilling locations we have identified will be drilled within our expected timeframe or at all or if we will be able to economically produce hydrocarbons from these or any other potential drilling locations. As such, our actual drilling activities may be materially different from our current expectations, which could adversely affect our results of operations and financial condition.

The oil and gas industry, including the acquisition of exploratory licenses in Africa, is intensely competitive and many of our competitors possess and employ substantially greater resources than us.

The international oil and gas industry, including in Africa, is highly competitive in all aspects, including the exploration for, and the development of, new license areas. We operate in a highly competitive environment for acquiring exploratory licenses and hiring and retaining trained personnel. Many of our competitors possess and employ financial, technical and personnel resources substantially greater than us, which can be particularly important in the areas in which we operate. These companies may be better able to withstand the financial pressures of unsuccessful drill attempts, sustained periods of volatility in financial markets and generally adverse global and industry-wide economic conditions, and may be better able to absorb the burdens resulting from changes in relevant laws and regulations, which would adversely affect our competitive position. Our ability to acquire additional prospects and to find and develop reserves in the future will depend on our ability to evaluate and select suitable licenses and to consummate transactions in a highly competitive environment. Also, there is substantial competition for available capital for investment in the oil and gas industry. As a result of these and other factors, we may not be able to compete successfully in an intensely competitive industry, which could cause a material adverse effect on our results of operations and financial condition.

Under the terms of our various license agreements, we are contractually obligated to drill wells and declare any discoveries in order to retain exploration and production rights. In the competitive market for our license areas, failure to declare any discoveries and thereby establish development areas may result in substantial license renewal costs or loss of our interests in the undeveloped parts of our license areas, which may include certain of our prospects.

In order to protect our exploration and production rights in our license areas, we must meet various drilling and declaration requirements. In general, unless we make and declare discoveries within certain time periods specified in our various petroleum agreements and licenses, our interests in the undeveloped parts of our license areas may lapse. While we expect that our current drilling schedule will enable us to retain the rights to develop the prospects we have identified in this prospectus under the agreements currently in place, or the agreements expected to be entered into in the near future, should they yield discoveries, we cannot assure you that we will not face delays in drilling these prospects or otherwise have to relinquish these prospects. The costs to maintain our licenses over such areas may fluctuate and may increase significantly since the original term, and we may not be able to renew or extend such licenses on commercially reasonable terms or at all. Our actual future drilling activities may therefore materially differ from our current expectations, which could adversely affect our business.

Regarding our license in Benin, the Production Sharing Agreement, and the subsequent New Production Sharing Agreement which is anticipated to be signed in early 2023 (but there can be no assurance that it will be signed in this time frame, or at all), both cover Block B and include three exploration phases covering nine years, from their respective effective dates. The production periods are for up to 25 years and can be extended an additional 10 years.

Regarding our license in Namibia, the Petroleum Agreement for onshore Block 1919 includes three exploration phases covering eight years, from its effective date. The production period is for 25 years and can be extended an additional 10 years.

For each of these license areas, we cannot assure you that any renewals or extensions will be granted or whether any new agreements will be available on commercially reasonable terms, or, in some cases, at all.

We have been an exploration stage entity and our future performance is uncertain.

We have been an exploration stage entity and will continue to be so until we generate revenue. Exploration stage entities face substantial business risks and may suffer significant losses. We have generated substantial net losses and negative cash flows from operating activities since our inception and expect to continue to incur substantial net losses as we continue our exploration and appraisal program. We face challenges and uncertainties in financial planning as a result

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of the unavailability of historical data and uncertainties regarding the nature, scope and results of our future activities. As a new public company, we will need to develop additional business relationships, establish additional operating procedures, hire additional staff, and take other measures necessary to conduct our intended business activities. We may not be successful in implementing our business strategies or in completing the development of the facilities necessary to conduct our business as planned. In the event that one or more of our drilling programs is not completed, is delayed or terminated, our operating results will be adversely affected and our operations will differ materially from the activities described in this prospectus. There are uncertainties surrounding our future business operations which must be navigated if we transition from a exploration stage entity and commence generating revenues, some of which may cause a material adverse effect on our results of operations and financial condition.

We are dependent on certain members of our management and technical team.

Investors in our Common Stock and Warrants must rely upon the ability, expertise, judgment and discretion of our management and the success of our technical team in identifying, discovering, evaluating and developing reserves. Our performance and success are dependent, in part, upon key members of our management and technical team, and their loss or departure could be detrimental to our future success. In making a decision to invest in our Common Stock or Warrants, you must be willing to rely to a significant extent on our management’s discretion and judgment. A significant amount of the pre-offering interests in our Company held by members of our management and technical team will be vested at the time of this offering. While a new equity incentive plan will be in place following this offering, there can be no assurance that our management and technical team will remain in place. The loss of any of our management and technical team members could have a material adverse effect on our results of operations and financial condition, as well as on the market price of our Common Stock and Warrants. See “Management.”

Our business plan requires substantial additional capital, which we may be unable to raise on acceptable terms in the future, which may in turn limit our ability to develop our exploration, appraisal, development and production activities.

We expect our capital outlays and operating expenditures to be substantial over the next several years as we expand our operations. Obtaining seismic data, as well as exploration, appraisal, development and production activities entail considerable costs, and we expect that we will need to raise substantial additional capital, through future private or public equity offerings, strategic alliances or debt financing.

Our future capital requirements will depend on many factors, including:

        the scope, rate of progress and cost of our exploration, appraisal, development and production activities;

        oil and natural gas prices;

        our ability to locate and acquire hydrocarbon reserves;

        our ability to produce oil or natural gas from those reserves;

        the terms and timing of any drilling and other production-related arrangements that we may enter into;

        the cost and timing of governmental approvals and/or concessions; and

        the effects of competition by larger companies operating in the oil and gas industry.

While we believe our operations, upon the consummation of this offering, will be adequately funded through the initial exploration phase on each license, additional financing may not be available on favorable terms, or at all. Even if we succeed in selling additional securities to raise funds, at such time the ownership percentage of our existing shareholders would be diluted, and new investors may demand rights, preferences or privileges senior to those of existing shareholders. If we raise additional capital through debt financing, the financing may involve covenants that restrict our business activities. If we choose to farm-out interests in our licenses, we may lose operating control or influence over such license areas.

Assuming we are able to commence exploration, appraisal, development and production activities or successfully exploit our licenses during the exploratory term, our interests in our licenses (or the development/production area of such licenses as they existed at that time, as applicable) would extend beyond such term for a fixed period or life of production, depending on the jurisdiction. If we are unable to meet our well commitments and/or declare development

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of the prospective areas of our licenses during this time, we may be subject to significant potential forfeiture of all or part of the relevant license interests. If we are not successful in raising additional capital, we may be unable to continue our future exploration and production activities or successfully exploit our license areas, and we may lose the rights to develop these areas upon the expiration of exploratory terms.

A substantial or extended decline in both global and local oil and natural gas prices may adversely affect our business, financial condition and results of operations.

The prices that we will receive for our oil and natural gas will significantly affect our revenue, profitability, access to capital and future growth rate. Historically, the oil and natural gas markets have been volatile and will likely continue to be volatile in the future. The prices that we will receive for our future production and the levels of our future production depend on numerous factors. These factors include, but are not limited to, the following:

        changes in supply and demand for oil and natural gas;

        the actions of the Organization of the Petroleum Exporting Countries (“OPEC”);

        speculation as to the future price of oil and natural gas and the speculative trading of oil and natural gas futures contracts;

        global economic conditions;

        political and economic conditions, including embargoes in oil-producing countries or affecting other oil-producing activities, particularly in the Middle East, Africa, Russia and South America;

        the continued threat of terrorism and the impact of military and other action, including U.S. military operations in the Middle East;

        the level of global oil and natural gas exploration and production activity;

        the level of global oil inventories and oil refining capacities;

        weather conditions and natural disasters;

        technological advances affecting energy consumption;

        governmental regulations and taxation policies;

        proximity and capacity of transportation facilities;

        the price and availability of competitors’ supplies of oil and natural gas; and

        the price and availability of alternative fuels.

Lower oil prices may not only decrease our revenues on a per share basis but also may reduce the amount of oil that we can produce economically. A substantial or extended decline in oil and natural gas prices may materially and adversely affect our future business, financial condition, results of operations, liquidity or ability to finance planned capital expenditures.

We may not be able to commercialize our interests in any natural gas produced from our license areas in Africa.

The development of the market for natural gas in Africa is in its early stages. Currently the infrastructure to transport and process natural gas on commercial terms is limited and the expenses associated with constructing such infrastructure ourselves may not be commercially viable given local prices currently paid for natural gas. Accordingly, there may be limited or no value derived from any natural gas produced from our African license areas.

Unless we replace our oil reserves, our reserves and production will decline over time. Our business is dependent on our continued successful identification of productive fields and prospects and the identified locations in which we drill in the future may not yield oil or natural gas in commercial quantities.

Production from oil properties declines as reserves are depleted, with the rate of decline depending on reservoir characteristics. Accordingly, our current proved reserves will decline as these reserves are produced. Our future oil reserves and production, and therefore our cash flows and income, are highly dependent on our success in efficiently

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developing our current reserves and economically finding or acquiring additional recoverable reserves. While we have had success in identifying and developing commercially exploitable deposits and drilling locations in the past, we may be unable to replicate that success in the future. We may not identify any more commercially exploitable deposits or successfully drill, complete or produce more oil reserves, and the wells which we have drilled and currently plan to drill within our blocks or concession areas may not discover or produce any further oil or gas or may not discover or produce additional commercially viable quantities of oil or gas to enable us to continue to operate profitably. If we are unable to replace our current and future production, the value of our reserves will decrease, and our business, financial condition and results of operations will be materially adversely affected.

Our inability to access appropriate equipment and infrastructure in a timely manner may hinder our access to oil and natural gas markets or delay our future oil and natural gas production.

Our ability to market our future oil production will depend substantially on the availability and capacity of processing facilities, oil tankers and other infrastructure. Our failure to obtain such facilities on acceptable terms could materially harm our business. We will also rely on access to drilling rigs suitable for the environment in which we operate. The delivery of drilling rigs may be delayed or cancelled, and we may not be able to gain access to suitable rigs. We may be required to shut in oil wells because of the absence of a market or because access to processing facilities may be limited or unavailable. If that were to occur, then we would be unable to realize revenue from those wells until arrangements were made to deliver the production to market, which could cause a material adverse effect on our financial condition and results of operations.

Additionally, the exploitation and sale of associated and non-associated natural gas and liquids will be subject to timely commercial processing and marketing of these products, which depends on the contracting, financing, building and operating of infrastructure by third parties.

We are subject to numerous risks inherent to the exploration and production of oil and natural gas.

Oil and natural gas exploration and future production activities involve many risks that a combination of experience, knowledge and interpretation may not be able to overcome. Our future will depend on the success of our exploration and future production activities and on the development of infrastructure that will allow us to take advantage of our discoveries. As a result, our oil and natural gas exploration and future production activities are subject to numerous risks, including the risk that drilling will not result in commercially viable oil and natural gas production. Our decisions to purchase, explore or develop discoveries, prospects or licenses will depend in part on the evaluation of seismic data through geophysical and geological analyses, production data and engineering studies, the results of which are often inconclusive or subject to varying interpretations.

Furthermore, the marketability of expected oil and natural gas production from any future discoveries and prospects will also be affected by numerous factors. These factors include, but are not limited to, market fluctuations of prices, proximity, capacity and availability of processing facilities, transportation vehicles and pipelines, equipment availability and government regulations (including, without limitation, regulations relating to prices, taxes, royalties, allowable production, domestic supply requirements, importing and exporting of oil and natural gas, environmental protection and climate change). The effect of these factors, individually or jointly, may result in us not receiving an adequate return on invested capital.

In the event that our currently undeveloped discoveries and prospects are developed and become operational, they may not produce oil and natural gas in commercial quantities or at the costs anticipated, and our projects may cease production, in part or entirely, in certain circumstances. Discoveries may become uneconomic as a result of an increase in operating costs to produce oil and natural gas. Our actual operating costs may differ materially from our current estimates. Moreover, it is possible that other developments, such as increasingly strict environmental, climate change, health and safety laws and regulations and enforcement policies thereunder and claims for damages to property or persons resulting from our operations, could result in substantial costs and liabilities, delays, an inability to complete the development of our discoveries or the abandonment of such discoveries, which could cause a material adverse effect on our financial condition and results of operations.

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We are subject to drilling and other operational environmental hazards.

The oil and natural gas business involves a variety of operating risks, including, but not limited to:

        fires, blowouts, spills, cratering and explosions;

        mechanical and equipment problems, including unforeseen engineering complications;

        uncontrolled flows or leaks of oil, well fluids, natural gas, brine, toxic gas or other pollution;

        gas flaring operations;

        formations with abnormal pressures;

        pollution, other environmental risks, and geological problems; and

        weather conditions and natural disasters.

The development schedule of oil and natural gas projects, including the availability and cost of drilling rigs, equipment, supplies, personnel and oilfield services, is subject to delays and cost overruns.

Historically, some oil and natural gas development projects have experienced delays and capital cost increases and overruns due to, among other factors, the unavailability or high cost of drilling rigs and other essential equipment, supplies, personnel and oilfield services. To the extent we locate commercially viable reserves through our exploration activities, the cost to develop our projects will not have been fixed and will remain dependent upon a number of factors, including the completion of detailed cost estimates and final engineering, contracting and procurement costs. Our construction and operation schedules may not proceed as planned and may experience delays or cost overruns. Any delays may increase the costs of the projects, requiring additional capital, and such capital may not be available in a timely and cost-effective fashion.

Our licenses are in Africa, which subjects us to an increased risk of loss of revenue or curtailment of production from factors specifically affecting Africa.

Our current exploration licenses are in Africa. Our licenses could be affected should such region experience any of the following factors (among others):

        severe weather or natural disasters or other acts of God;

        delays or decreases in production, the availability of equipment, facilities, personnel or services;

        delays or decreases in the availability of capacity to transport, gather or process production; or

        military conflicts.

For example, oil and natural gas operations in Africa may be subject to higher political and security risks than those operations under the sovereignty of the United States. We plan to maintain insurance coverage for only a portion of risks we face from doing business in these regions. There also may be certain risks covered by insurance where the policy does not reimburse us for all of the costs related to a loss.

Our future operations may be adversely affected by political and economic circumstances in the countries in which we operate.

Oil and natural gas exploration, development and future production activities are subject to political and economic uncertainties (including but not limited to changes in energy policies or the personnel administering them), changes in laws and policies governing operations of foreign based companies, expropriation of property, cancellation or modification of contract rights, revocation of consents or approvals, obtaining various approvals from regulators, foreign exchange restrictions, currency fluctuations, royalty increases and other risks arising out of foreign governmental sovereignty, as well as risks of loss due to civil strife, acts of war, guerrilla activities, terrorism, acts of sabotage, territorial disputes and insurrection. In addition, we are subject both to uncertainties in the application of the tax laws in the countries in which we operate and to possible changes in such tax laws (or the application thereof), each of which could result in an increase in our tax liabilities. These risks may be higher in the developing countries in which we conduct our activities.

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Our operations in these areas increase our exposure to risks of war, local economic conditions, political disruption, civil disturbance, expropriation, piracy, tribal conflicts and governmental policies that may:

        disrupt our operations;

        require us to incur greater costs for security;

        restrict the movement of funds or limit repatriation of profits;

        lead to U.S. government or international sanctions; or

        limit access to markets for periods of time.

Some countries in Africa have experienced political instability in the past. Disruptions may occur in the future, and losses caused by these disruptions may occur that will not be covered by insurance. Consequently, our Africa exploration, development and production activities may be substantially affected by factors which could have a material adverse effect on our results of operations and financial condition. Furthermore, in the event of a dispute arising from non-U.S. operations, we may be subject to the exclusive jurisdiction of courts outside the United States or may not be successful in subjecting non-U.S. persons to the jurisdiction of courts in the United States, which could adversely affect the outcome of such dispute.

Our operations may also be adversely affected by laws and policies of the jurisdictions, including Benin, Namibia, the United States, the United Kingdom, and other jurisdictions in which we do business, that affect foreign trade and taxation. Changes in any of these laws or policies or the implementation thereof, could materially and adversely affect our financial position, results of operations and cash flows.

The oil and gas industry, including the acquisition of exploratory licenses in Africa, is intensely competitive and many of our competitors possess and employ substantially greater resources than us.

The international oil and gas industry, including in Africa, is highly competitive in all aspects, including the exploration for, and the development of, new license areas. We operate in a highly competitive environment for acquiring exploratory licenses and hiring and retaining trained personnel. Many of our competitors possess and employ financial, technical and personnel resources substantially greater than us, which can be particularly important in the areas in which we operate. These companies may be better able to withstand the financial pressures of unsuccessful drill attempts, sustained periods of volatility in financial markets and generally adverse global and industry-wide economic conditions, and may be better able to absorb the burdens resulting from changes in relevant laws and regulations, which would adversely affect our competitive position. Our ability to acquire additional prospects and to find and develop reserves in the future will depend on our ability to evaluate and select suitable licenses and to consummate transactions in a highly competitive environment. Also, there is substantial competition for available capital for investment in the oil and gas industry. As a result of these and other factors, we may not be able to compete successfully in an intensely competitive industry, which could cause a material adverse effect on our results of operations and financial condition.

Participants in the oil and gas industry are subject to numerous laws that can affect the cost, manner or feasibility of doing business.

Exploration and production activities in the oil and gas industry are subject to local laws and regulations. We may be required to make large expenditures to comply with governmental laws and regulations, particularly in respect of the following matters:

        licenses for drilling operations;

        tax increases, including retroactive claims;

        unitization of oil accumulations;

        local content requirements (including the mandatory use of local partners and vendors); and

        environmental requirements and obligations, including remediation or investigation activities.

Under these and other laws and regulations, we could be liable for personal injuries, property damage and other types of damages. Failure to comply with these laws and regulations also may result in the suspension or termination of our operations and subject us to administrative, civil and criminal penalties. Moreover, these laws and regulations could

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change, or their interpretations could change, in ways that could substantially increase our costs. These risks may be higher in the developing countries in which we conduct our operations, where there could be a lack of clarity or lack of consistency in the application of these laws and regulations. Any resulting liabilities, penalties, suspensions or terminations could have a material adverse effect on our financial condition and results of operations

The enforcement of laws in the African countries we operate in may depend on and be subject to the interpretation of the relevant local authority. Such authority may adopt an interpretation of an aspect of local law which differs from the advice given to us by local lawyers or even previous advice given by the local authority itself. Matters of local autonomy are extremely controversial in Africa, adding further uncertainty to the interpretation and application of the relevant legal and regulatory requirements. Furthermore, there is limited or no relevant case law providing guidance on how courts would interpret such laws and the application of such laws to its concessions, join operations, licenses, license applications or other arrangements. Even where such case law exists, it lacks the binding precedential value found in the U.S. legal system.

We and our operations are subject to numerous environmental, health and safety regulations which may result in material liabilities and costs.

We and our operations are subject to various international, foreign, federal, state and local environmental, health and safety laws and regulations governing, among other things, the emission and discharge of pollutants into the ground, air or water, the generation, storage, handling, use and transportation of regulated materials and the health and safety of our employees. We are required to obtain environmental permits from governmental authorities for our operations, including drilling permits for our wells. We have not been or may not be at all times in complete compliance with these permits and the environmental laws and regulations to which we are subject, and there is a risk that these laws and regulations could change in the future or become more stringent. If we violate or fail to comply with these laws, regulations or permits, we could be fined or otherwise sanctioned by regulators, including through the revocation of our permits or the suspension or termination of our operations. If we fail to obtain permits in a timely manner or at all (due to opposition from community or environmental interest groups, governmental delays or any other reasons), or if we face additional requirements imposed as a result of changes in or enactment of laws or regulations, such failure to obtain permits or such changes in or enactment of laws could impede or affect our operations, which could have a material adverse effect on our results of operations and financial condition.

We, as an interest owner or as the designated operator of certain of our current and future discoveries and prospects, could be held liable for some or all environmental, health and safety costs and liabilities arising out of our actions and omissions as well as those of our block partners, third-party contractors or other operators. To the extent we do not address these costs and liabilities or if we do not otherwise satisfy our obligations, our operations could be suspended or terminated. We have contracted with and intend to continue to hire third parties to perform services related to our operations. There is a risk that we may contract with third parties with unsatisfactory environmental, health and safety records or that our contractors may be unwilling or unable to cover any losses associated with their acts and omissions. Accordingly, we could be held liable for all costs and liabilities arising out of the acts or omissions of our contractors, which could have a material adverse effect on our results of operations and financial condition.

In both Namibia and Benin, there are environmental laws in place that impose certain requirements on petroleum license holders. In Namibia all license holders are required to submit an Environmental Impact Assessment (an “EIA”), a document prepared by an environmental specialist that assesses the potential environmental impact that oil and gas operations could have in the country, and an Environmental Management Plan, a detailed plan of action for a license holder that describes the steps it will take to mitigate any environmental impacts its operations may have, for approval before any seismic surveys or drilling activity can occur under a petroleum license. In addition, the NMME requires all petroleum license holders to undertake a course on the prevention of environmental damages while conducting petroleum-related operations and activities.

In Benin, a license holder under a production sharing agreement is required to undertake an EIA and be granted a certificate of environmental compliance by the Minister of Environment in before any seismic surveys or drilling activity is undertaken under the petroleum license. In addition, similar to in Namibia, it is regular practice for license holders in Benin to undertake a course on the prevention of environmental damages while conducting petroleum-related operations and activities.

We maintain insurance at levels that we believe are consistent with industry practices, but we are not fully insured against all risks. Our insurance may not cover any or all environmental claims that might arise from our future operations or at any of our license areas. If a significant accident or other event occurs and is not covered by insurance, such accident or event could have a material adverse effect on our results of operations and financial condition.

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In addition, we expect continued and increasing attention to climate change issues. Various countries and regions have agreed to regulate emissions of greenhouse gases, including methane (a primary component of natural gas) and carbon dioxide (a by product of oil and natural gas combustion). The regulation of greenhouse gases and the physical impacts of climate change in the areas in which we, our customers and the end-users of our products operate could adversely impact our operations and the demand for our products.

Environmental, health and safety laws are complex, change frequently and have tended to become increasingly stringent over time. Our costs of complying with current and future climate change, environmental, health and safety laws, the actions or omissions of our block partners and third party contractors and our liabilities arising from releases of, or exposure to, regulated substances may adversely affect our results of operations and financial condition. See “Business — Environmental Matters.”

We may be exposed to liabilities under the FCPA and other anti-corruption laws, and any determination that we violated the FCPA or other such laws could have a material adverse effect on our business.

We are subject to the FCPA and other laws that prohibit improper payments or offers of payments to foreign government officials and political parties for the purpose of obtaining or retaining business. We do business and may do additional business in the future in countries and regions in which we may face, directly or indirectly, corrupt demands by officials. Although the company has implemented strict policies and training programs for its employees on such matters, we face the risk of unauthorized payments or offers of payments by one of our employees or consultants. Our existing safeguards and any future improvements may prove to be less than effective in preventing such unauthorized payments, and our employees and consultants may engage in conduct for which we might be held responsible. Violations of the FCPA may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition. In addition, the United States government may seek to hold us liable for successor liability FCPA violations committed by companies in which we invest or that we acquire.

We may incur substantial losses and become subject to liability claims as a result of future oil and natural gas operations, for which we may not have adequate insurance coverage.

We intend to maintain insurance against risks in the operation of the business we plan to develop and in amounts in which we believe to be reasonable. Such insurance, however, may contain exclusions and limitations on coverage. For example, we are not insured against political or terrorism risks. We may elect not to obtain insurance if we believe that the cost of available insurance is excessive relative to the risks presented. Losses and liabilities arising from uninsured and underinsured events could materially and adversely affect our business, financial condition and results of operations.

The ongoing conflict in Ukraine could negatively affect the price of oil.

On February 24, 2022, Russia commenced a military attack on Ukraine. The outbreak of hostilities between the two countries could result in more widespread conflict and could have a severe adverse effect on the region and the markets for securities and commodities, including oil. In addition, sanctions imposed on Russia by the United States and other countries, and any sanctions imposed in the future could have a significant adverse impact on the Russian economy and related markets. The price and liquidity of oil may fluctuate widely as a result of the conflict and related events. How long such conflict and related events will last and whether it will escalate further cannot be predicted. Impacts from the conflict and related events could have significant impact on our performance, and the value of an investment in our Common Stock may decline significantly.

We may be subject to risks in connection with acquisitions and the integration of significant acquisitions may be difficult.

We periodically evaluate acquisitions of prospects and licenses, reserves and other strategic transactions that appear to fit within our overall business strategy. The successful acquisition of these assets requires an assessment of several factors, including:

        recoverable reserves;

        future oil and natural gas prices and their appropriate differentials;

        development and operating costs; and

        potential environmental and other liabilities.

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The accuracy of these assessments is inherently uncertain. In connection with these assessments, we perform a review of the subject assets that we believe to be generally consistent with industry practices. Our review will not reveal all existing or potential problems nor will it permit us to become sufficiently familiar with the assets to fully assess their deficiencies and potential recoverable reserves. Inspections may not always be performed on every well, and environmental problems are not necessarily observable even when an inspection is undertaken. Even when problems are identified, the seller may be unwilling or unable to provide effective contractual protection against all or part of the problems. We may not be entitled to contractual indemnification for environmental liabilities and could acquire assets on an “as is” basis. Significant acquisitions and other strategic transactions may involve other risks, including:

        diversion of our management’s attention to evaluating, negotiating and integrating significant acquisitions and strategic transactions;

        the challenge and cost of integrating acquired operations, information management and other technology systems and business cultures with those of ours while carrying on our ongoing business;

        difficulty associated with coordinating geographically separate organizations; and

        the challenge of attracting and retaining personnel associated with acquired operations.

The process of integrating operations could cause an interruption of, or loss of momentum in, the activities of our business. Members of our senior management may be required to devote considerable amounts of time to this integration process, which will decrease the time they will have to manage our business. If our senior management is not able to effectively manage the integration process, or if any significant business activities are interrupted as a result of the integration process, our business could suffer.

If we fail to realize the anticipated benefits of a significant acquisition, our results of operations may be adversely affected.

The success of a significant acquisition will depend, in part, on our ability to realize anticipated growth opportunities from combining the acquired assets or operations with those of ours. Even if a combination is successful, it may not be possible to realize the full benefits we may expect in estimated proved reserves, production volume, cost savings from operating synergies or other benefits anticipated from an acquisition or realize these benefits within the expected time frame. Anticipated benefits of an acquisition may be offset by operating losses relating to changes in commodity prices, or in oil and gas industry conditions, or by risks and uncertainties relating to the exploratory prospects of the combined assets or operations, or an increase in operating or other costs or other difficulties, including the assumption of environmental or other liabilities in connection with the acquisition. If we fail to realize the benefits we anticipate from an acquisition, our results of operations may be adversely affected.

The requirements of being a public company may strain our resources, result in more litigation and divert management’s attention.

As a public company, we will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, the listing requirements of Nasdaq and other applicable securities rules and regulations. Complying with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time consuming or costly and increase demand on our systems and resources, including management. The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and operating results. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. We are required to disclose changes made in our internal control and procedures on a quarterly basis. In order to maintain and, if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight may be required. As a result, management’s attention may be diverted from other business concerns, which could adversely affect our business and operating results. We may also need to hire additional employees or engage outside consultants to comply with these requirements, which will increase our costs and expenses.

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance

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matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us and our business may be adversely affected.

These new rules and regulations may make it more expensive for us to obtain director and officer liability insurance and, in the future, we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.

By disclosing information in this prospectus and in future filings required of a public company, our business and financial condition will become more visible, which we believe may result in threatened or actual litigation, including by competitors and other third parties. If those claims are successful, our business could be seriously harmed. Even if the claims do not result in litigation or are resolved in our favor, the time and resources needed to resolve them could divert our management’s resources and seriously harm our business.

We have identified material weaknesses in our internal controls over financial reporting, which, if not corrected, could affect the reliability of our financial statements and have other adverse consequences.

In connection with the audit of our consolidated balance sheets as of June 30, 2022 and 2021, the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity, and cash flows for the years ended June 30, 2022 and 2021, we and our former independent registered public accounting firm have identified material weaknesses in our internal controls over financial reporting. We intend to remediate these material weaknesses during the calendar year 2023 by taking the actions described below and do not anticipate any material costs associated with remediation. Our former independent registered public accounting firm’s identification of material weaknesses did not influence our decision to replace them with our current independent registered public accounting firm. A material weakness is a deficiency, or a combination of deficiencies, in internal controls over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

The material weaknesses identified relate to (a) an insufficient complement of personnel to permit the segregation of duties among personnel with access to the Company’s accounting and information systems and controls; (b) insufficient review of the cash flow statement regarding the proper presentation of deferred offering costs, proceeds from convertible notes and bank deposits; (c) a lack of controls needed to assure that (1) the accounting for its accounts payable and accrued expenses are accurate and complete; (2) the accounting for its stock compensation expense is accurate and complete; (3) the accounting for its convertible notes payable and warrants is accurate and complete; (4) an adequate review the proper presentation and disclosures of the short and long term accrued interest expense was performed; and (5) an adequate review to the initial tax assessment as it related to the reorganization of the Company and to assure the complete disclosures in the financial statements footnotes was performed. Neither we nor our former independent registered public accounting firm undertook a comprehensive assessment of our internal controls under the Sarbanes-Oxley Act for purposes of identifying and reporting any weakness in our internal controls over financial reporting. Had we performed a formal assessment of our internal controls over financial reporting, or had our former independent registered public accounting firm performed an audit of our internal control over financial reporting, additional material weaknesses or internal control deficiencies may have been identified.

To remediate our identified material weakness, our Chief Financial Officer with appropriate understanding of U.S. GAAP and financial reporting requirements set forth by the SEC, has been tasked in addressing these issues. We also plan take the following actions and adopt measures to improve our internal controls over financial reporting, including, among others: (i) hiring additional qualified accounting and financial personnel with appropriate knowledge and experience in U.S. GAAP and SEC reporting requirements, (ii) organizing regular training for our accounting staff, especially training related to U.S. GAAP and SEC reporting requirements, (iii) formulating U.S. GAAP accounting policies and procedures manual, which will be maintained, reviewed and updated, on a regular basis, to the latest U.S. GAAP accounting standards, and (iv) establishing period end financial closing policies and procedures for preparation of consolidated financial statements. However, these actions or the implementation of these measures in the future may not fully address these weaknesses in our internal control over financial reporting, and we may not be able to conclude that they have been fully remediated. Our failure to correct these deficiencies or failure to discover and address any other deficiencies could result in inaccuracies

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in our financial statements and impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis. Moreover, ineffective internal control over financial reporting could significantly hinder our ability to prevent fraud. Finally, if we are unable to ensure effective control over financial reporting, we may fail to meet our reporting obligations and investors could lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.

Our effective tax rate could be materially adversely affected by several factors.

We are a U.S.-based multinational company subject to tax in the U.S. and multiple foreign tax jurisdictions. Significant judgment is required in determining our global provision for income taxes, deferred tax assets or liabilities and in evaluating our tax positions on a worldwide basis. While we believe our tax positions are consistent with the tax laws in the jurisdictions in which we conduct our business, it is possible that these positions may be challenged by jurisdictional tax authorities, which may have a significant impact on our global provision for income taxes.

Tax laws are being re-examined and evaluated globally. New laws and interpretations of the law are taken into account for financial statement purposes in the quarter or year that they become applicable. Tax authorities are increasingly scrutinizing the tax positions of companies. Many countries in the European Union, as well as a number of other countries and organizations such as the Organization for Economic Cooperation and Development (OECD) and the European Commission, are actively considering changes to existing tax laws that, if enacted, could increase our tax obligations in countries where we do business. Moreover, if the U.S. or other foreign tax authorities change applicable tax laws, our overall taxes could increase, and our business, financial condition or results of operations may be adversely impacted.

In addition, any significant changes enacted by the current U.S. presidential administration to the Code or specifically to the Tax Cuts and Jobs Act (“U.S. Tax Act”) enacted in 2017, or to regulatory guidance associated with the U.S. Tax Act, could materially adversely affect our effective tax rate.

Our business and results of operations may be materially adversely effected by inflationary and supply chain pressures.

As of the date of this prospectus, inflationary and supply chain pressures have led to increased construction materials and labor costs, specifically associated with steel, cement, and other materials. We believe we will continue to experience such pressures in future quarters, as well as potential delays in our contractors’ ability to requisition such materials. These pressures have led to an overall increase in budgeted construction costs. No assurance can be given that the costs of our projects will not exceed budgets. Any such cost overruns or delays could have a material adverse effect on our business.

We are currently negotiating a New Production Sharing Agreement with the Benin Government, and cannot guarantee we will enter into a new agreement, and this may impair our oil and gas assets, affect our operations and ultimately adversely impact our results of operations, liquidity and financial condition.

In October 2013, we signed a Production Sharing Agreement with the Benin government that was negotiated under Benin’s prior petroleum code, Law No. 2006-18, with an exploration period that would have expired in October 2022 in the event a commercial discovery was not made or the exploration period has not been extended. While we did not make a commercial discovery by October 2022, we are currently negotiating a new agreement and were granted the ability to continue to operate under the existing agreement until negotiations for the new agreement have concluded.

Negotiations for a new agreement began on or about January 26, 2019, when the Benin government adopted a new petroleum code, Law No. 2019-06. After the passing of Law No. 2019-06, in January 2021, we mutually agreed with the Benin government it would be in both parties’ best interest to negotiate a New Production Sharing Agreement in light of the new petroleum code, and are currently negotiating said agreement. We believe this agreement to be material to our intended business in Benin, and failure to consummate this agreement on terms acceptable to the company, or at all, could result in the company not being able to achieve its intended business objectives in Benin.

In the event that we are unable to reach a mutually acceptable agreement with the Benin Government, we may substantially reduce or abandon our exploration efforts in Benin, which may result in an impairment of our investment in the Production Sharing Agreement, affect our operations and ultimately adversely impact our results of operations, liquidity and financial condition.

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Risks Relating to This Offering

An active and liquid trading market for our Common Stock may not develop.

Prior to this offering, our Common Stock were not traded on any market. An active and liquid trading market for our Common Stock may not develop or be maintained after this offering. Liquid and active trading markets usually result in less price volatility and more efficiency in carrying out investors’ purchase and sale orders. The market price of our shares of common stock could vary significantly as a result of a number of factors, some of which are beyond our control. In the event of a drop in the market price of our Common Stock, you could lose a substantial part or all of your investment in our Common Stock. The initial public offering price will be negotiated between us and the representative of the underwriters and may not be indicative of the market price of our Common Stock after this offering. Consequently, you may not be able to sell our Common Stock at prices equal to or greater than the price paid by you in the offering.

The price of our Common Stock may be volatile, and purchasers of our Common Stock could incur substantial losses.

Our share price may be volatile. The stock market in general has experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, investors may not be able to sell their Common Stock at or above the initial public offering price. The market price for our Common Stock is influenced by many factors, including, but not limited to:

        the price of oil and natural gas;

        the success of our exploration and development operations, and the marketing of any oil and natural gas we produce;

        regulatory developments in Benin, Namibia, the United States, the United Kingdom, and foreign countries where we operate;

        the recruitment or departure of key personnel;

        quarterly or annual variations in our financial results or those of companies that are perceived to be similar to us;

        market conditions in the industries in which we compete and issuance of new or changed securities;

        analysts’ reports or recommendations;

        the failure of securities analysts to cover our Common Stock after this offering or changes in financial estimates by analysts;

        the inability to meet the financial estimates of analysts who follow our Common Stock;

        the issuance of any additional securities of ours;

        investor perception of our company and of the industry in which we compete; and

        general economic, political and market conditions.

A substantial portion of our total issued and outstanding shares may be sold into the market at any time. This could cause the market price of our Common Stock to drop significantly, even if our business is doing well.

All of the Common Stock being sold in this offering will be freely tradable without restrictions or further registration under the federal securities laws, unless purchased by our “affiliates” as that term is defined in Rule 144 under the Securities Act. Of the remaining Common Stock issued and outstanding upon the closing of this offering, approximately 87% are restricted securities as defined in Rule 144 under the Securities Act. Restricted securities may be sold in the United States public market only if registered or if they qualify for an exemption from registration, including by reason of Rules 144 or 701 under the Securities Act. All of our restricted Common Stock will be eligible for sale in the public market for a period of 180 days following the effective date of the registration for this offering, subject in certain circumstances to the volume, manner of sale and other limitations under Rule 144, and also the lock-up agreements

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described under “Underwriting” in this prospectus. Additionally, we intend to register all our Common Stock that we may issue under our employee benefit plans. Once we register these Common Stock, they can be freely sold in the public market upon issuance, unless pursuant to their terms these share awards have transfer restrictions attached to them. Sales of a substantial number of our Common Stock, or the perception in the market that the holders of a large number of shares intend to sell Common Stock, could reduce the market price of our Common Stock.

The concentration of our share capital ownership among our largest shareholders, and their affiliates, will limit your ability to influence corporate matters.

After our offering, we anticipate that our five largest shareholders will collectively own approximately 51% of our issued and outstanding Common Stock. Consequently, these shareholders have significant influence over all matters that require approval by our shareholders, including the election of directors and approval of significant corporate transactions. This concentration of ownership will limit your ability to influence corporate matters, and as a result, actions may be taken that you may not view as beneficial.

Certain of our executive officers and directors have significant duties with, and spend significant time serving, entities that may compete with us in seeking acquisitions and business opportunities and, accordingly, may have conflicts of interest in allocating time or pursuing business opportunities.

Certain of our executive officers and directors, who are responsible for managing the direction of our operations, hold positions of responsibility with other entities (including affiliated entities) that are in the oil and natural gas industry. For example, our CEO is currently CEO of Nostra Terra Oil and Gas Company plc and certain members of our board of directors hold board seats with other companies. These executive officers and directors may become aware of business opportunities that may be appropriate for presentation to us as well as to the other entities with which they are or may become affiliated. Due to these existing and potential future affiliations, they may present potential business opportunities to other entities prior to presenting them to us, which could cause additional conflicts of interest. They may also decide that certain opportunities are more appropriate for other entities with which they are affiliated, and as a result, they may elect not to present those opportunities to us. These conflicts may not be resolved in our favor. For additional discussion of our management’s business affiliations and the potential conflicts of interest of which our stockholders should be aware, see “Certain Relationships and Related Party Transactions.”

If our listing application for our Common Stock is not approved by Nasdaq, we will not be able to consummate the offering and will terminate this offering.

If our listing application is not approved by Nasdaq, we will not be able to consummate the offering and will terminate this offering. Failure to have our Common Stock listed on Nasdaq would make it more difficult for our stockholders to dispose of our Common Stock and more difficult to obtain accurate price quotations on our Common Stock. Our ability to issue additional securities for financing or other purposes, or otherwise to arrange for any financing we may need in the future, may also be materially and adversely affected if our Common Stock is not traded on a national securities exchange.

The market price of our Common Stock may be highly volatile, and you could lose all or part of your investment.

The trading price of our Common Stock is likely to be volatile. Upon the consummation of this offering, we will have a relatively small public float due to the relatively small size of this offering, and the concentrated ownership of our Common stock among our executive officers and directors, and greater than 5% stockholders. As a result of our small public float, our Common Stock may be less liquid and have greater stock price volatility than the common stock of companies with broader public ownership.

Our stock price could be subject to wide fluctuations in response to a variety of other factors, which include:

        whether we achieve our anticipated corporate objectives;

        changes in financial or operational estimates or projections;

        termination of the lock-up agreement or other restrictions on the ability of our stockholders and other security holders to sell shares after this offering; and

        general economic or political conditions in the United States or elsewhere.

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In addition, the stock market in general, and the stock of oil and gas companies in particular, has recently experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Such rapid and substantial price volatility, including any stock run-up, may be unrelated to our actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our stock. This volatility may prevent you from being able to sell your securities at or above the price you paid for your securities. If the market price of our Common Stock after this offering does not exceed the initial public offering price, you may not realize any return on your investment in us and may lose some or all of your investment.

For as long as we are an emerging growth company, we will not be required to comply with certain reporting requirements, including those relating to accounting standards and disclosure about our executive compensation, that apply to other public companies.

We are classified as an “emerging growth company” under the JOBS Act. For as long as we are an emerging growth company, which may be up to five full fiscal years, unlike other public companies, we will not be required to, among other things: (i) provide an auditor’s attestation report on management’s assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; (ii) comply with any new requirements adopted by the PCAOB requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer; (iii) provide certain disclosures regarding executive compensation required of larger public companies; or (iv) hold nonbinding advisory votes on executive compensation. We will remain an emerging growth company for up to five years, although we will lose that status sooner if we have more than $1.235 billion of revenues in a fiscal year, have more than $700 million in market value of our Common Stock held by non-affiliates, or issue more than $1.0 billion of non-convertible debt over a three-year period.

To the extent that we rely on any of the exemptions available to emerging growth companies, you will receive less information about our executive compensation and internal control over financial reporting than issuers that are not emerging growth companies. If some investors find our Common Stock to be less attractive as a result, there may be a less active trading market for our Common Stock and their trading prices may be more volatile.

If you purchase our Units in this offering, you will suffer immediate and substantial dilution of your investment.

The initial public offering price of our Units is substantially higher than the net tangible book value per share. Therefore, if you purchase our Units in this offering, your interest will be diluted immediately to the extent of the difference between the initial public offering price per share and the net tangible book value per share after this offering. See “Dilution.”

We have broad discretion in the use of our net proceeds from this offering and may not use them effectively.

Our management will have broad discretion in the application of the net proceeds from this offering and could spend the proceeds in ways that do not improve our operating results or enhance the value of our Common Stock. Our shareholders may not agree with the manner in which our management chooses to allocate and spend the net proceeds. The failure by our management to apply these funds effectively could result in financial losses that could have a material adverse effect on our business and cause the price of our Common Stock to decline. Pending their use, we may invest our net proceeds from this offering in a manner that does not produce income or that loses value. See “Use of Proceeds” in this prospectus.

The Warrants may not have any value.

The Warrants will be exercisable for five years from the date of initial issuance at an initial exercise price equal to 125% of the public offering price per Unit set forth on the cover page of this prospectus. There can be no assurance that the market price of our shares of Common Stock will ever equal or exceed the exercise price of the Warrants. In the event that the price of our Common Stock does not exceed the exercise price of the Warrants during the period when the Warrants are exercisable, the Warrants may not have any value.

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There is no established public trading market for our Warrants and shareholders may find it difficult to sell them.

We do not intend to list our Warrants for trading on any stock market or exchange. As a result, investors may find it difficult to sell, or to obtain accurate quotations as to the price of our Warrants. We cannot predict the extent to which investor interest in us and our Warrants will lead to the development or continuance of an active trading market or how liquid that trading market for our Warrants might become. If an active trading market for our Warrants does not develop, it may be difficult for investors to sell our Warrants particularly large quantities thereof, at a price that is attractive or at all. As a result, an investment in our securities may be illiquid and investors may not be able to liquidate their investment readily or at all when they desire to sell.

We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.

We have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at 250% of the exercise price, as adjusted, provided that the closing sale price of our Common Stock equals or exceeds 250% of the exercise price per share (as adjusted for stock splits, stock dividends, reorganizations and the like) on each of the ten (10) consecutive trading days prior to the date on which we send proper notice of such redemption. Redemption of the outstanding warrants could (i) force a warrant holder to exercise his, her or its warrants and pay the exercise price therefore at a time when it may be disadvantageous for the holder to do so, or (ii) to accept the redemption price which, at the time the outstanding warrants are called for redemption, may be substantially less than the market value of its common stock.

By purchasing securities in this offering, you are bound by the fee-shifting provision contained in our warrant, which may discourage you to pursue actions against us and could discourage shareholder lawsuits that might otherwise benefit the Company and its shareholders.

Section 6(e) of the warrant provides that “Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Warrant (whether brought against a party hereto or their respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York other than for claims arising under the Securities Act or Exchange Act.” Section 6(e) of the warrant further provides “If either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for their reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. The fee-shifting provision applies broadly to all actions brought under the warrant, other than for claims arising under the Exchange Act or the Securities Act.

There is no set level of recovery required to be met by a plaintiff to avoid payment under this provision. Instead, whoever is the prevailing party is entitled to recover the reasonable attorneys’ fees, costs and expenses incurred in connection with the prosecution or defense of such action. Additionally, any party who brings an action, and the party against whom such action is brought under the warrant, which could include former and current shareholders, Company directors, officers, affiliates, legal counsel, expert witnesses and other parties, would be able to recover fees under this provision.

In the event you initiate or assert a claim against us, in accordance with the provisions contained in the warrant, and you do not, in a judgment prevail, you will be obligated to reimburse us for all reasonable costs and expenses incurred in connection with such claim, including, but not limited to, reasonable attorney’s fees and expenses and costs of appeal, if any. This provision in Section 6(e) of the warrant could discourage shareholder lawsuits that might otherwise benefit the Company and its shareholders.

Holders of Warrants purchased in this offering will have no rights as shareholders until such holders exercise their Warrants and acquire our shares of Common Stock.

Until holders of the Warrants purchased in this offering acquire shares of Common Stock upon exercise thereof, such holders will have no rights with respect to the shares of Common Stock underlying the Warrants. Upon exercise of the Warrants, the holders will be entitled to exercise the rights of a shareholder only as to matters for which the record date occurs after the date they were entered in the register of members of the Company as a shareholder.

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We do not intend to pay dividends on our Common Stock and, consequently, your only opportunity to achieve a return on your investment is if the price of our Common Stock appreciates.

We do not plan to declare dividends on shares of our Common Stock in the foreseeable future. Consequently, your only opportunity to achieve a return on your investment in us will be if the market price of our Common Stock appreciates, which may not occur, and you sell your Common Stock at a profit. There is no guarantee that the price of our Common Stock that will prevail in the market after this offering will ever exceed the price that you pay.

We cannot assure you that our plans to raise capital will be successful.

As of June 30, 2022 and September 30, 2022, we had negative working capital of $2,547,853 and $3,669,010, respectively. Management’s plans to address this need for capital are discussed in the section of this prospectus titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We cannot assure you that our plans to raise capital will be successful. These factors, among others, raise substantial doubt about our ability to continue as a going concern. The financial statements contained elsewhere in this prospectus do not include any adjustments that might result from our inability to continue as a going concern.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that can involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this prospectus, including statements regarding our future results of operations and financial position, business strategy, prospective products, product approvals, research and development costs, future revenue, timing and likelihood of success, plans and objectives of management for future operations, future results of anticipated products and prospects, plans and objectives of management are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. Forward-looking statements contained in this prospectus include, but are not limited to, statements about:

        our ability to find, acquire or gain access to other discoveries and prospects and to successfully develop our current discoveries and prospects;

        uncertainties inherent in making estimates of our oil and natural gas data;

        the successful implementation of our and our block partners’ prospect discovery and development and drilling plans;

        projected and targeted capital expenditures and other costs, commitments and revenues;

        termination of or intervention in concessions, rights or authorizations granted by the Benin government, the Namibian government, or national oil companies, or any other federal, state or local governments, to us;

        our dependence on our key management personnel and our ability to attract and retain qualified technical personnel;

        the ability to obtain financing and the terms under which such financing may be available;

        the volatility of oil and natural gas prices;

        the availability and cost of developing appropriate infrastructure around and transportation to our discoveries and prospects;

        the availability and cost of drilling rigs, production equipment, supplies, personnel and oilfield services;

        other competitive pressures;

        potential liabilities inherent in oil and natural gas operations, including drilling risks and other operational and environmental hazards;

        current and future government regulation of the oil and gas industry;

        cost of compliance with laws and regulations;

        changes in environmental, health and safety or climate change laws, greenhouse gas regulation or the implementation of those laws and regulations;

        environmental liabilities;

        geological, technical, drilling and processing problems;

        military operations, terrorist acts, wars or embargoes;

        the cost and availability of adequate insurance coverage;

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        our vulnerability to severe weather events; and

        other risk factors discussed in the “Risk Factors” section of this prospectus.

We have based these forward-looking statements largely on our current expectations and projections about our business, the industry in which we operate and financial trends that we believe may affect our business, financial condition, results of operations and prospects, and these forward-looking statements are not guarantees of future performance or development. These forward-looking statements speak only as of the date of this prospectus and are subject to a number of risks, uncertainties and assumptions described in the section titled “Risk Factors” and elsewhere in this prospectus. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein whether as a result of any new information, future events or otherwise.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this prospectus, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.

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INDUSTRY AND OTHER DATA

This prospectus contains industry, market and competitive position data from our own internal estimates and research as well as industry and general publications and research surveys and studies conducted by third parties. Industry publications, studies and surveys generally state that they have been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. Our internal data and estimates are based upon information obtained from trade and business organizations and other contacts in the markets in which we operate and our management’s understanding of industry conditions. While we believe that each of these studies and publications is reliable, we have not independently verified market and industry data from third-party sources. While we believe our internal company research is reliable and the market definitions are appropriate, neither such research nor definitions have been verified by an independent source.

The industry in which we operate is subject to risks and uncertainties due to a variety of factors, including those described in the section titled “Risk Factors.” These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by us.

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USE OF PROCEEDS

We estimate that the net proceeds to us from this offering will be approximately $6.0 million(1), assuming an initial public offering price of $4.65 per Unit, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. If the underwriters’ over-allotment option is exercised in full, we estimate that our net proceeds will be approximately $6.7 million(1). Each $1.00 increase (decrease) in the assumed initial public offering price of $4.65 per Unit would increase (decrease) the net proceeds to us from this offering by approximately $1.7 million, assuming that the number of Units offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. Each increase (decrease) of 100,000 in the number of Units we are offering would increase (decrease) the net proceeds to us from this offering, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, by approximately $0.43 million, assuming the assumed initial public offering price stays the same.

The principal purposes of this offering are to increase our capitalization and financial flexibility, to create a public market for our Common Stock and to facilitate our future access to the capital markets. As of the date of this prospectus, we cannot specify with certainty all of the particular uses for the net proceeds we receive from this offering. However, we currently intend to use the net proceeds we receive from this offering as follows:

        approximately $4.5 million to mobilize a drilling rig to Benin, to commence exploration and drilling activities as well as additional surveys on Block B and to pay license fees in Benin;

        approximately $0.3 million for initial surveys and license fees in Namibia;

        approximately $0.2 million for further expansion of portfolio or further exploration activity of existing assets;

        approximately $0.4 million for repayment of the Dragon Note (as defined below); and

        approximately $0.6 million, for working capital and selling, general and administrative purposes.

The Dragon Note had a maturity date of the earlier of i) August 26, 2022 or ii) the date of the completion of the IPO and bears no interest, except in the event of default, in which case interest will begin to accrue at a rate of 20% per annum. Because the IPO has not been completed and the note has not been repaid by as of the date of this prospectus, interest on the Dragon Note has begun to accrue from the date of the lapse at a rate of 20% per annum and the original issue discount rate has increased from 20% to 30%. Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operation — Contractual Obligations and Commitments — Note Payable-Dragon” for more information.

The December 2022 Note has a maturity date of the earlier of i) April 16, 2023 or ii) the date of the completion of the Company’s IPO, and bears interest at a rate of 15% per annum, which will be waived in the event the IPO occurs on or before the maturity date. Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operation — Contractual Obligations and Commitments — December 2022 Financing” for more information. For purposes of this use of proceeds, since the receipt and repayment of cash totaling $500,000 for the December 2022 Note occurs after the balance sheet date and nets to zero, the effect has not been included above.

We will have broad discretion over how to use the net proceeds we receive from this offering. In the event the New Production Sharing agreement is not signed, we will divert proceeds intended to be used in Benin to continue with our exploration program in Namibia and accelerate our exploration of opportunities in other areas of Africa using the intended proceeds directed toward Benin.

We intend to invest the net proceeds we receive from this offering that are not used as described above in a variety of capital preservation investments, including short-term, investment-grade, interest-bearing instruments and U.S. government securities.

____________

(1)      For purposes of this Use of Proceeds section, deferred offering costs in the amount of approximately $0.9 million that have already been paid by the Company have been added back to the net proceeds calculation.

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This expected use of the net proceeds from this offering represents our intentions based upon our current plans and business conditions, which could change in the future as our plans and business conditions evolve. We may also use a portion of the net proceeds to acquire or invest in other areas of the energy industry.

We believe that the net proceeds from this offering, together with our existing cash and cash equivalents, will enable us to fund our operating expenses and capital expenditure requirements for the next 24 months following the closing of this offering. We have based this estimate on assumptions that may prove to be incorrect, and we could use our available capital resources sooner than we currently expect. To complete exploration and development of resources we may find, if any, we will be required to raise additional capital. We may satisfy our future cash needs through the sale of equity securities, debt financings, working capital lines of credit, corporate collaborations or license agreements, interest income earned on invested cash balances or a combination of one or more of these sources.

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DIVIDEND POLICY

We have never declared or paid any cash dividends on our capital stock. We intend to retain future earnings, if any, to finance the operation and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future. Any future determination related to our dividend policy will be made at the discretion of our board of directors after considering our financial condition, results of operations, capital requirements, business prospects and other factors the board of directors deems relevant, and subject to the restrictions contained in any future financing instruments.

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CAPITALIZATION

The following table sets forth our cash and cash equivalents and capitalization as of September 30, 2022 (unaudited), as follows:

        on an actual basis; and

        on an as adjusted basis to give further effect to (i) our issuance and sale of 1,827,957 shares of our Common Stock in this offering at an assumed initial public offering price of $4.65 per Unit, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us and therefore providing net proceeds of approximately $5.0 million (assumes no exercise by the underwriters of their option to purchase additional units from us and no exercise of the Warrants included in the Units) and (ii) the repayment of the principal and accrued interest outstanding on the Dragon Notes in the amount of approximately $400,000.

Information below on an as adjusted basis is illustrative only, and our capitalization following the closing of this offering will be adjusted based on the actual initial public offering price and other terms of this offering determined at pricing. You should read this information in conjunction with our financial statements and the related notes included elsewhere in this prospectus and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section and other financial information contained in this prospectus.

 

As of
September 30, 2022
(Unaudited)

   

Actual

 

As Adjusted(1)

Total indebtedness

 

$

1,483,769

 

 

$

683,769

(2)

Warrant liability

 

 

19,657

(3)  

 

 

185,988

(4)   

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, par value $0.0001, 10,000,000 shares authorized; 0 issued and outstanding

 

 

 

 

 

 

Common Stock, par value $0.0001, 490,000,000 shares authorized; 12,178,411 and 14,006,368 shares issued and outstanding as of
September 30, 2022 actual and as adjusted, respectively

 

 

1,218

 

 

 

1,413

 

Additional paid-in capital

 

 

6,885,153

 

 

 

12,315,467

 

Accumulated other comprehensive loss

 

 

(729,441

)

 

 

(729,441

)

Accumulated deficit

 

 

(5,518,420

)

 

 

(5,518,420

)

Total stockholders’ equity

 

 

638,510

 

 

 

6,069,019

 

Total capitalization

 

$

2,141,936

 

 

$

6,938,776

 

____________

(1)      Each $1.00 increase (decrease) in the assumed initial public offering price of $4.65 per Unit, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) the as adjusted amount of each of cash and cash equivalents, total equity and total capitalization by approximately $1.7 million, assuming that the number of Units offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase (decrease) of 100,000 Units in the number of Units offered by us at the assumed initial public offering price per Unit, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) the as adjusted amount of each of cash and cash equivalents, total equity and total capitalization by approximately $0.43 million.

(2)      Includes repayment of the approximate amount of $400,000 related to the Dragon Note (see “Management’s Discussion and Analysis of Financial Condition and Results of Operation — Contractual Obligations and Commitments — Note Payable-Dragon”), which will be paid upon IPO; this also includes the conversion of the Bolitho Note in the approximate amount of $400,000, which will be converted upon IPO. With respect to the December 2022 Note and for purposes of the capitalization schedule above, since the receipt and repayment of cash totaling $500,000 for the December 2022 Note occurs after the balance sheet date and nets to zero, the effect has not been included above.

(3)      The fair value of these warrants (more fully described in the attached financial statements) as of September 30, 2022 was estimated using the Black-Scholes pricing model based on the following inputs and assumptions: a unit and exercise price of $4.65, a risk-free interest rate of 4.06, an expected term in years of 2.5, expected volatility of 70% and a dividends rate of 0%.

(4)      If converted upon IPO, the fair value of the Bolitho warrants are estimated using a Black-Scholes option model calculation based on the following inputs and assumptions: a unit price of $4.65, an exercise price of $5.81, a risk-free interest rate of 4.06%, an expected term in years of 5.0, expected volatility of 70%, a dividends rate of 0% and a probability of IPO of 75%.

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The number of shares of our Common Stock on an as adjusted basis set forth in the table above is based on shares of our Common Stock outstanding as of and excludes:

        up to 1,890,596 shares of Common Stock issuable upon exercise of NQSOs, ISOs, RSUs, unrestricted stock awards, stock appreciation rights, and other forms of stock based compensation which we intend to grant to our employees and directors under the 2022 Incentive Plan, pursuant to a Registration Statement on Form S-8 to be filed immediately after the consummation of this offering, at an exercise price equal to the offering price of the shares in this offering, or $4.65 per share;

        up to 1,827,957 shares of Common Stock issuable upon exercise of Warrants included in the Units being offered by us; and

        up to 91,398 shares of Common Stock issuable upon exercise of the Representative’s Warrants issued in connection with this offering.

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DILUTION

If you invest in our Common Stock or Warrants in this offering, your ownership interest will be immediately diluted to the extent of the difference between the assumed initial public offering price of $4.65 per Unit (the midpoint of the range appearing on the front cover of this prospectus) and the as adjusted net tangible book value per Unit immediately upon the consummation of this offering. Net tangible book value per share represents the book value of our tangible assets less the book value of our total liabilities divided by the number of shares of Common Stock then issued and outstanding.

Our net tangible book value as of September 30, 2022 was approximately ($1,566,192), or ($0.13) per share. After giving effect to our sale of 1,827,957 shares of Common Stock in this offering at an assumed initial public offering price of $4.65 per Unit, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, our as adjusted net tangible book value as of September 30, 2022 would have been approximately $5.7 million, or approximately $0.40 per share (assuming no exercise of the underwriters’ option to purchase additional Units). This amount represents an immediate and substantial dilution of $4.25 per share to new investors purchasing Common Stock in this offering (assuming no exercise of the Warrants included in the Units to be sold in this offering). The following table illustrates this dilution per Unit:

Assumed initial public offering price per Unit

 

$

4.65

 

Net tangible book value per share as of September 30, 2022

 

$

(0.13

)

Increase in net tangible book value per share attributable to this offering

 

$

0.53

 

As adjusted net tangible book value per share after giving effect to this offering

 

$

0.40

 

Dilution per share to new investors participating in this offering

 

$

4.25

 

A $1.00 increase (decrease) in the assumed initial public offering price of $4.65 per Unit (the midpoint of the range appearing on the front cover of this prospectus) would increase (decrease) the as adjusted net tangible book value by approximately $1.7 million, or approximately $0.12 per share, and increase (decrease) the dilution per share to new investors by approximately $0.12 per share, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses (assuming no exercise of the over-allotment option to purchase additional Units, and assuming no exercise of the Representative’s Warrants), in each case payable by us. We may also increase or decrease the number of shares we are offering. An increase (decrease) of 100,000 Units in the number of Units offered by us would increase (decrease) our as adjusted net tangible book value by approximately $0.43 million, or $0.03 per share and increase (decrease) the dilution per share to new investors by approximately $0.03 per share, assuming the assumed initial public offering price remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. The as adjusted information discussed above is illustrative only and will change based on the actual initial public offering price and other terms of this offering determined at pricing.

If the underwriters exercise their over-allotment option in full to purchase the additional 274,194 Units in this offering, the as adjusted net tangible book value per share after this offering would be $0.24 per share, and the as adjusted dilution to new investors would be $4.41 per share, in each case assuming an initial public offering price of $4.65 per Unit, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting underwriting discounts and commissions and the estimated offering expenses payable by us.

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The following table summarizes, on an as adjusted basis described above, as of September 30, 2022, the differences between the number of shares of Common Stock purchased from us, the total consideration paid and the average price per Unit paid by existing stockholders and by new investors participating in this offering at an assumed initial public offering price of $4.65 per Unit, which is the midpoint of the price range set forth on the cover page of this prospectus, before deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. As the table shows, new investors purchasing Common Stock in this offering will pay an average price per share substantially higher than our existing stockholders paid.

(In thousands, except per share amounts and percentages)

 

Shares Purchased

 

Total Consideration

 

Average
Share
Price

   

Number

 

Percent

 

Amount

 

Percent

 

Existing stockholders

 

12,178,411

 

87.0

%

 

$

4,061,713

 

32.3

%

 

$

0.33

New investors

 

1,827,957

 

13.0

%

 

 

8,500,000

 

67.7

%

 

 

4.65

Total

 

14,006,368

 

100.0

%

 

$

12,561,713

 

100.0

%

 

$

2.49

If the underwriters exercise their over-allotment option to purchase additional Units, the percentage of shares of Common Stock held by existing stockholders will decrease to approximately 85.3% of the total number of shares of our Common Stock outstanding after this offering, and the number of shares held by new investors will increase to 2,102,251, or approximately 14.7% of the total number of shares of our Common Stock outstanding after this offering.

The foregoing tables and calculations are based on shares of our Common Stock outstanding as of and excludes:

        up to 1,890,596 shares of Common Stock issuable upon exercise of NQSOs, ISOs, RSUs, unrestricted stock awards, stock appreciation rights, and other forms of stock based compensation which we intend to grant to our employees and directors under the 2022 Incentive Plan, pursuant to a Registration Statement on Form S-8 to be filed immediately after the consummation of this offering, at an exercise price equal to the offering price of the shares in this offering, or $4.65 per share;

        up to 1,827,957 shares of Common Stock issuable upon exercise of Warrants included in the Units being offered by us; and

        up to 91,398 shares of Common Stock issuable upon exercise of the Representative’s Warrants issued in connection with this offering.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of financial condition and operating results together with our financial statements and the related notes and other financial information included elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. We assume no obligation to update any of these forward-looking statements. As a result of many factors, such as those set forth in the section of the prospectus captioned “Risk Factors” and elsewhere in this prospectus, our actual results may differ materially from those anticipated in these forward-looking statements. For convenience of presentation some of the numbers have been rounded in the text below.

Overview

The Company was incorporated in the State of Nevada on March 29, 2021. The Company is an African focused, oil and gas exploration stage company.

The Company is headquartered in Houston, Texas.

As of June 30, 2021, the Company had not commenced core operations. All activity for the period from March 29, 2021 (inception) through June 30, 2021 relates to the Company’s formation and raising funds through issuing shares of the Company’s Common Stock. The Company’s fiscal year end is June 30.

We are an independent oil and gas exploration stage company, led by an experienced management and technical team, which is focused on under-explored regions in Africa. Our current asset portfolio includes exploration prospects onshore Benin, as well as an exploration license onshore Namibia. As of the date of this prospectus, we have not drilled any wells. Additionally, the Company continues to review other potential assets for expansion.

The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The consolidated financial statements include the consolidated financial statements of the Company and its wholly owned subsidiaries, Elephant Oil Limited (UK) and Elephant Oil Benin SA (Benin). All inter-company balances and transactions among the companies have been eliminated upon consolidation.

Reverse Acquisition with EOL

Effective April 21, 2021, Elephant Oil entered into a Deed of Agreement (the “Agreement”) with Elephant Oil Limited (“EOL”), a private limited company registered in the United Kingdom on January 14, 2013 (the “Acquisition”), pursuant to which, Elephant Oil acquired all of the outstanding shares of EOL. Upon closing, EOL became a wholly-owned subsidiary of the Company (the “Acquisition”).

EOL has a wholly-owned subsidiary, Elephant Oil Benin SA (“EOB”), which is a private company incorporated in the Republic of Benin, West Africa, in 2014.

In accordance with the terms of the Agreement, Elephant Oil issued 7,739,394 shares of its Common Stock to EOL as consideration for the shares exchanged. As a result of the transaction, EOL shareholders acquired 70% of Elephant Oil’s issued and outstanding shares of Common Stock.

Immediately following the Acquisition, the Company had 11,056,278 shares of Common Stock issued and outstanding. The pre-Acquisition shareholders of the Company retained an aggregate of 3,316,884 shares of Common Stock of the Company, representing 30% ownership of the post-Acquisition Company. Therefore, upon consummation of the Acquisition, there was a change in control of Company, with the former owners of EOL effectively acquiring control of the Company. The Acquisition was treated as a reverse recapitalization effected by a share exchange for financial and reporting purposes since Elephant Oil was deemed to be a shell corporation with nominal operations and assets at the time of the Acquisition. EOL is considered the acquirer for accounting purposes, and Elephant Oil’s historical financial statements before the Acquisition have been replaced with the historical consolidated financial statements of EOL before the Acquisition in future filings.

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Impact of COVID-19 Pandemic

In March 2020, the World Health Organization characterized the outbreak of the novel strain of coronavirus, specifically identified as COVID-19, as a global pandemic. This has resulted in governments enacting emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans, self-imposed quarantine periods and social distancing, have caused material disruption to business, resulting in a global economic slowdown. Equity markets have experienced significant volatility and weakness and the governments and central banks have reacted with significant monetary and fiscal interventions designed to stabilize economic conditions.

The current challenging economic climate may lead to adverse changes in cash flows, working capital levels and/or debt balances, which may also have a direct impact on the Company’s operating results and financial position in the future. The ultimate duration and magnitude of the impact and the efficacy of government interventions on the economy and the financial effect on the Company is not known at this time. The extent of such impact will depend on future developments, which are highly uncertain and not in the Company’s control, including new information which may emerge concerning the spread and severity of COVID-19 and actions taken to address its impact, among others. The repercussions of this health crisis could have a material adverse effect on the Company’s business, financial condition, liquidity and operating results.

In response to COVID-19, the Company has implemented working practices to address potential impacts to its operations, employees and customers, and will take further measures in the future if and as required. At present, we do not believe there has been any appreciable impact on the Company specifically associated with COVID-19.

Emerging Growth Company Status

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

RESULTS OF OPERATIONS

For the Three Months September 30, 2022 and 2021 (unaudited)

For the three months ended September 30, 2022, we incurred operating expenses of $535,856, which were primarily attributable to stock-based compensation expense of $243,405 and consulting and salaries fees of $186,102. We also incurred other expenses of $216,928, which were primarily related to the amortization of debt discounts as interest expense. For the three months ended September 30, 2021, we incurred operating expenses of $144,192. The operating expenses were attributable to exploration expense, as well as selling, general and administrative expenses of $144,192.

For the three months ended September 30, 2022 and 2021, due to our minimal exploration activities, we did not experience any supply chain disruptions that materially affected our outlook or business goals and that, as a result, have materially impacted our results of operations or capital resources.

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Net Loss and Comprehensive Income and Loss

For the three months ended September 30, 2022, we incurred a net loss of $746,690 and a comprehensive loss of $826,993.

For the three months ended September 30, 2021, we incurred a net loss of $156,477 and a comprehensive loss of $182,297.

For the Years June 30, 2022 and 2021

For the fiscal year ended June 30, 2022, we incurred operating expenses of $2,964,447, as compared to $176,206 for the fiscal year ended June 30, 2021, an increase of $2,788,241. The operating expenses for the fiscal years ended June 30, 2022 and 2021 were attributable to exploration expense of $63,238 and $98,352, respectively, and selling, general and administrative expenses of $2,901,209 and $77,854, respectively. The increase in selling, general and administrative expenses was attributable to stock-based compensation expense of $1,908,010 and salaries expense of $273,000 as part of our increase in personnel and for legal and professional expenses of $272,853 in preparation for our proposed initial public offering.

For the fiscal years ended June 30, 2022 and 2021, due to our minimal exploration activities, we did not experience any supply chain disruptions that materially affected our outlook or business goals and that, as a result, have materially impacted our results of operations or capital resources.

Net Loss

For the year ended June 30, 2022, we incurred a net loss of $3,045,823 and a comprehensive loss of $3,198,270.

For the year ended June 30, 2021, we incurred a net loss of $226,518 and a comprehensive loss of $162,462.

Liquidity and Capital Resources

As of September 30, 2022 (unaudited), we had $2,227,828 in current assets and $3,692,136 in current liabilities. We had $23,126 in cash and our accumulated deficit was $5,518,420.

As of June 30, 2022, we had $1,639,751 in current assets and $2,593,028 in current liabilities. We had $45,175 in cash and our accumulated deficit was $4,771,730.

As of June 30, 2021, we had $518,966 in current assets and $985,930 in current liabilities. We had $334,344 in cash and our accumulated deficit was $1,725,907.

Cash Flows:

 

September 30,

 

June 30,

2022

 

2021

 

2022

 

2021

(Unaudited)

 

(Unaudited)

       

Cash used in operating activities

 

$

(43,080

)

 

$

(53,154

)

 

$

(493,820

)

 

$

(81,893

)

Cash used in investing activities

 

 

(77,232

)

 

 

(94,040

)

 

 

(184,763

)

 

 

(3,482

)

Cash provided by financing activities

 

 

125,901

 

 

 

(123,386

)

 

 

382,793

 

 

 

350,400

 

Effect of foreign currency exchange

 

 

(27,638

)

 

 

(14,634

)

 

 

6,622

 

 

 

5,592

 

Net increase (decrease) in cash

 

$

(22,049

)

 

$

(285,214

)

 

$

(289,169

)

 

$

270,617

 

Cash Flows From Operating Activities

For the three months ended September 30, 2022 (unaudited), we used $43,080 of cash in our operating activities, which was primarily attributable to expenses related to the stock-based compensation, the amortization of debt discounts and our initial public offering.

For the three months ended September 30, 2021 (unaudited), we used $53,154 of cash in our operating activities, which was primarily attributable to expenses related to prepaid accounts and our initial public offering.

For the year ended June 30, 2022, we used $493,820 of cash in our operating activities, which was attributable to increased expenses related to initial public offering and expenses related to stock-based compensation.