Quarterly Impacts of Correction of Accounting for March 2024 Wildcat Acquisition and 2022 and 2023 Restatements

3 Months Ended

Mar. 31, 2024

Accounting Changes and Error Corrections [Abstract]

Quarterly Impacts of Correction of Accounting for March 2024 Wildcat Acquisition and 2022 and 2023 Restatements

12. Quarterly Impacts of Correction of Accounting for March 2024 Wildcat Acquisition and 2022 and 2023 Restatements

The accounting treatment of the stock issuance reported in our Form 10-Q for the quarter ended March 31, 2024, for the Wildcat acquisition, was based on an independent valuation of our common stock, which valuation was used in recording the subsequent sale of a portion of the assets acquired that resulted in a gain on sale of those assets of $618,502. After subsequently reconsidering the valuation method alternatives for the basis of the stock issued, the cash received from the subsequent sales (as described below) has been used as a basis for the initial valuation in recording of the sale of the assets. An adjustment of the transaction has been recorded to reduce the gain on sale to $-0-.

The following schedule summarizes the line-by-line quarterly impacts of the correction of the Wildcat accounting and includes the impacts of restatements of 2022 and 2023.

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QUARTERLY SUMMARY OF RESTATEMENTS

Three Months ended March 31, 2024

	Originally			Currently
	Reported			Restated
	March 31, 2024			March 31, 2024
BALANCE SHEETS
Oil and natural gas properties	$	205,413		$	54,766,237
Total Assets	$	3,092,940		$	57,575,243
Additional paid-in capital	$	72,496,356		$	107,590,866
Accumulated deficit	$	(120,096,191	)	$	(100,708,398	)
Total stockholders’ equity	$	(47,574,652	)	$	6,907,651
Total Liabilities and Stockholders’ Equity	$	3,092,940		$	57,575,243

STATEMENTS of OPERATIONS
Impairment expense	$	713,173	$	-
Total operating expenses	$	1,508,881	$	788,570
Gain on sale of properties	$	618,501	$	-
Net loss	$	876,813	$	775,003
STATEMENTS of CASH FLOWS
Net loss	$	876,813	$	775,003
Impairment expense	$	713,173	$	-
Gain on sale of properties	$	618,501	$	-

The impact of the above matters constitutes the adjustments to the following 2024 Interim Balance Sheets, Statements of Operations, and Statements of Cash Flows:

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CONSOLIDATED BALANCE SHEETS

Unaudited

	March 31, 2024
	As originally						As
	Filed			Restatement			Restated
ASSETS
Current assets:
Cash	$	2,174,661		$	-		$	2,174,661
Accounts receivable	$	243,113		$	-		$	243,113
Production receivable	$	1,382		$	-		$	1,382
Prepayments - development costs	$	228,367		$	-		$	228,367
Prepaid expenses	$	134,825		$	(78,521	)	$	56,304
Total current assets	$	2,782,348		$	(78,521	)	$	2,703,827
Oil and natural gas properties, net of impairment	$	205,413		$	54,560,824		$	54,766,237
Other assets	$	105,179		$	-		$	105,179
TOTAL ASSETS	$	3,092,940		$	54,482,303		$	57,575,243
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	1,341,084		$	-		$	1,341,084
Note payable - related party	$	42,499,082		$	-		$	42,499,082
Note payable	$	2,000,000		$	-		$	2,000,000
Accrued interest payable - related party	$	4,552,205		$	-		$	4,552,205
Accrued interest payable	$	20,667		$	-		$	20,667
Total current liabilities	$	50,413,038		$	-		$	50,413,038
Asset retirement obligations	$	254,554		$	-		$	254,554
Total liabilities	$	50,667,592		$	-		$	50,667,592
Commitments and contingencies
Stockholders’ deficit:
Preferred stock, par value $0.0001, 50,000,000 shares authorized; -0- issued and outstanding March 31, 2024 and December 31, 2023	$	-		$	-		$	-
Common stock, par value $0.0001; 500,000,000 shares authorized; 251,830,516 issued and outstanding at March 31, 2024	$	25,183		$	-		$	25,183
Additional paid-in capital	$	72,496,356		$	35,094,510		$	107,590,866
Accumulated deficit	$	(120,096,191	)	$	19,387,793		$	(100,708,398	)
Total stockholders’ deficit	$	(47,574,652	)	$	54,482,303		$	6,907,651
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	3,092,940		$	-		$	57,575,243

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CONSOLIDATED STATEMENTS OF OPERATIONS

Unaudited

	Three Months Ended March 31, 2024
	As originally						As
	Filed						Restated
	July 31, 2024			Restatement			March 31, 2024
Oil and natural gas sales	$	3,567		$	-		$	3,567
Operating expenses:
Lease operating expenses	$	36,811		$	-		$	36,811
Production taxes	$	257		$	-		$	257
General and administrative	$	758,640		$	(7,138	)	$	751,502
Impairment loss	$	713,173		$	(713,173	)	$	-
Total operating expenses	$	1,508,881		$	(720,311	)	$	788,570
Other income (expense)
Gain on sale of properties	$	618,501		$	(618,501	)	$	-
Administration income	$	10,000		$	-		$	10,000
Total other income	$	628,501		$	(618,501	)	$	10,000
Loss before income taxes	$	(876,813	)	$	101,810		$	(775,003	)
Provision for income taxes	$	-		$	-		$	-
Net loss	$	(876,813	)	$	101,810		$	(775,003	)
Loss per common share:
Basic and Diluted	$	(0.00	)				$	(0.00	)
Weighted average number of common shares outstanding:
Basic and Diluted		249,055,791						249,055,791

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CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited

	Three Months Ended March 31, 2024
	As Originally						As
	Filed			Restatement			Restated
Cash Flows Used in Operating Activities
Net loss	$	(876,813	)	$	101,810		$	(775,003	)
Adjustments to reconcile net loss to net cash from operations:
Gain on sale of property interests	$	(618,501	)	$	618,501		$	-
Accretion expense	$	5,903		$	-		$	5,903
Expense related to stock based compensation	$	90,000		$	(85,659	)	$	4,341
Impairment loss	$	713,173		$	(713,173	)	$	-
Change in:
Accounts receivable	$	(35,613	)	$	-		$	(35,613	)
Prepayments - development costs	$	(97,027	)	$	-		$	(97,027	)
Prepaid expenses	$	(58,084	)	$	78,521		$	20,437
Accounts payable and accrued expenses	$	(2,436,608	)	$	-		$	(2,436,608	)
Net cash used in operating activities	$	(3,313,570	)	$	-		$	(3,313,570	)
Cash Flows (Used in) From in Investing Activities
Investment in oil and natural gas properties	$	(10,477	)	$	-		$	(10,477	)
Proceeds from sale of assets	$	-		$	1,141,142		$	1,141,142
Net cash (used in) from investing activities	$	(10,477	)	$	1,141,142		$	1,130,665
Cash Flows From Financing Activities
Proceeds from notes payable, related party	$	1,000,000		$	-		$	1,000,000
Proceeds from sale of assets	$	1,141,142		$	(1,141,142	)	$	-
Proceeds form promissory note	$	2,000,000		$	-		$	2,000,000
Prepayments, working interest owners	$	(311,281	)	$	-		$	(311,281	)
Net cash from financing activities	$	3,829,861		$	(1,141,142	)	$	2,688,719
Net increase in cash	$	505,814		$	-		$	505,814
Cash - beginning of period	$	1,668,847		$	-		$	1,668,847
Cash - end of period	$	2,174,661		$	-		$	2,174,661
Supplemental disclosure of cash flow information:
Cash paid for interest	$	-		$	-		$	-
Cash paid for income tax	$	-		$	-		$	-
Supplemental disclosure of non-cash investing and financing activities:
Common stock issued in property acquisition	$	450,000		$	793,565		$	1,243,565
Capitalized Interest	$	702,697		$	-		$	702,697
Addition to note payable to reimburse lease payments	$	278,054		$	-		$	278,054