CRCE 10-K & 10-Q changes, risk factors and insider trading
Circle Energy, Inc. · OTC · Crude Petroleum & Natural Gas · CIK 1911467 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “We have no revenue and will require additional capital; if we cannot obtain financing on acceptable terms, we may be unable to meet lease obligations or continue operations, and future financings may be highly dilutive.”
New heading “We have no proved reserves and no established production base.”
New heading “We may be deemed a shell company, which could restrict resales of our securities.”
New heading “Failure to maintain OTCQB eligibility could reduce liquidity of our common stock.”
New heading “Future issuances of equity securities may result in significant dilution.”
New heading “Our leasehold interests may expire or revert if we fail to meet drilling or primary term requirements.”
New heading “Drilling, completion, and production activities involve significant operational and financial risks that could materially adversely affect us.”
New heading “Risks Related to Regulation and the Energy Industry”
New heading “Commodity price volatility could render our acreage uneconomic to develop.”
New heading “Environmental, climate-related, and other regulatory requirements could increase costs, delay operations, or limit development.”
New heading “Risks Related to Management and Strategy”
New heading “Our management has limited time and resources and may have conflicts of interest, which could delay execution of our plans and harm our business.”
New heading “We rely on information technology systems and third-party service providers, and cybersecurity incidents could disrupt our operations or impair our ability to comply with reporting obligations.”
New heading “Risks Related to Our Common Stock and Corporate Structure”
New heading “Our principal stockholders hold a controlling interest in our common stock and can significantly influence corporate actions.”
New heading “Prospects that we decide to drill may not yield oil or natural gas in commercially viable quantities.”
Removed heading “We are a recently incorporated startup company with limited operating history and no revenues, and purchasers of the Shares will have no basis on which to evaluate our ability to achieve our business objective.”
Removed heading “Past performance by Messrs. Rochford and Broaddrick may not be indicative of future performance of an investment in us.”
Removed heading “Our officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete our initial business combination.”
Removed heading “We may issue notes or other debt securities, or otherwise incur substantial debt, to acquire further oil and gas projects or companies, which may adversely affect our leverage and financial condition and thus negatively impact the value of our stockholders’ investment in us.”
Removed heading “We may be unable to obtain additional financing to fund our oil and gas operations or growth acquisitions, which could compel us to restructure or abandon a particular project.”
Removed heading “Our founding stockholders will control the election of our board of directors until consummation of our initial business acquisition and will hold a substantial interest in us. As a result, they will elect all of our directors prior to the consummation of our initial acquisition and may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support.”
Removed heading “The recent US import ban on energy from Russia which has resulted in increased commodity prices, and a threatened corresponding export ban from Russia, creates uncertainty in the oil and gas markets which may affect the Company’s ability to commence operations.”
Removed heading “A substantial or extended decline in oil and natural gas prices may adversely affect our business, financial condition or results of operations and our ability to meet our capital expenditure obligations and financial commitments.”
Removed heading “We may be adversely affected by natural disasters, pandemics (including the recent coronavirus outbreak) and other catastrophic events, and by man-made problems such as terrorism, that could disrupt our business operations.”
Removed heading “Extreme weather conditions, which could become more frequent or severe due to climate change, could adversely affect our ability to conduct drilling, completion and production activities in the areas where we operate.”
Removed heading “Risks Relating to Technology and Cybersecurity”
Removed heading “We rely on computer and telecommunications systems, and failures in our systems or cyber security attacks or breaches could result in information theft, data corruption, disruption in operations and/or financial loss.”
Removed heading “Risks Relating to Our Common Stock”
Removed heading “We may authorize and issue shares of preferred stock to acquire an oil and gas property or company or shares of our common stock under an employee incentive plan after completion of an acquisition of such a company. Any such issuances would dilute the interest of our stockholders and likely present other risks.”
Removed heading “Provisions under Nevada law could delay or prevent a change in control of our company, which could adversely affect the price of our common stock.”
Largest changes
“Cybersecurity incidents, including unauthorized access, phishing attacks, ransomware, malware, or other data breaches, could result in the loss or compromise of confidential information, disruption of our financial reporting processes, or impairment of our ability to meet our public reporting obligations. Because our management team is small and our administrative infrastructure is limited, any disruption to our systems could have a disproportionate impact on our operations.”see in full comparison
“Although we currently have no producing wells, any future drilling activities would be subject to federal, state, and local environmental and regulatory requirements. Compliance costs could be substantial, and failure to comply could result in penalties, delays, or loss of operating rights. In addition, evolving climate-related regulation, disclosure expectations, and stakeholder actions could increase compliance costs, limit access to capital, or reduce demand for oil and natural gas over time. …”see in full comparison
“We have not generated revenue from operations and do not expect to generate revenue unless and until we successfully drill and complete producing wells. Our operations are funded entirely through equity or debt financing. We may also issue preferred stock or other senior securities, and we may incur debt with restrictive covenants. If we are unable to obtain additional capital on acceptable terms, we may be unable to drill wells, maintain our leasehold interests, satisfy lease obligations, or continue operations. …”see in full comparison
“Future drilling decisions and the economic viability of our acreage are highly sensitive to oil and natural gas prices. Because we have no current production, commodity prices primarily affect whether our acreage can be economically developed and whether we can raise capital to fund development. We do not currently engage in hedging activities and because we have no producing wells, we have no revenue hedge against commodity price volatility. Sustained declines in commodity prices could render our acreage uneconomic and result in impairment of our leasehold interests. …”see in full comparison
“We rely on computer and telecommunications systems, and failures in our systems or cyber security attacks or breaches could result in information theft, data corruption, disruption in operations and/or financial loss.”see in full comparison
“We rely on information technology systems and third-party service providers, and cybersecurity incidents could disrupt our operations or impair our ability to comply with reporting obligations.”see in full comparison
Full comparison: every changed paragraph (111)
The following risks and uncertainties may affect our performance, results of operations and the trading price of our common stock.
Risks RelatingRelated to Our Business,Financial OperationsCondition and StrategyLiquidity
We have no revenue and will require additional capital; if we cannot obtain financing on acceptable terms, we may be unable to meet lease obligations or continue operations, and future financings may be highly dilutive.
We have not generated revenue from operations and do not expect to generate revenue unless and until we successfully drill and complete producing wells. Our operations are funded entirely through equity or debt financing. We may also issue preferred stock or other senior securities, and we may incur debt with restrictive covenants. If we are unable to obtain additional capital on acceptable terms, we may be unable to drill wells, maintain our leasehold interests, satisfy lease obligations, or continue operations. Future financings may be highly dilutive and could include securities with rights senior to our common stock. If we cannot raise capital when needed, we may be forced to delay or forgo drilling, relinquish acreage, reduce or suspend operations, or seek strategic transactions on terms unfavorable to stockholders. Because we have a limited operating history and no operating revenue, investors have limited historical financial information on which to evaluate our ability to execute our plans. If we incur debt, we may be subject to covenants and repayment obligations that could restrict our operations and financing flexibility. If we default, lenders could seek remedies against our assets.
We have no proved reserves and no established production base.
We have no proved oil or natural gas reserves, and our acreage may never generate economically recoverable reserves. As of December 31, 2025, we had no proved oil or natural gas reserves as defined under Rule 4-10(a) of Regulation S-X. All of our acreage is undeveloped and exploratory in nature. Because we have no proved reserves, the value of our leasehold interests is inherently speculative and may ultimately prove to be negligible.
The absence of proved reserves materially increases our business risk. Without proved reserves, we have no established production base, no reserve-based borrowing capacity, and no demonstrated ability to generate operating cash flow. Our ability to obtain financing, enter joint ventures, or attract strategic partners may be significantly impaired. If we are unable to establish commercially recoverable reserves, our leasehold interests may have little or no value, and investors could lose their entire investment.
We are a recently incorporated startup company with limited operating history and no revenues, and purchasers of the Shares will have no basis on which to evaluate our ability to achieve our business objective.
We were incorporated on December 7, 2021, and during our startup phase have only acquired our first oil and gas property in May 2022. Thus, we have no financial operating result on which to evaluate investment in the Company. Because we lack a significant operating history, you have no basis upon which to evaluate our ability to achieve our business objective of acquiring, drilling, and developing oil and gas properties and generating revenue therefrom.
Past performance by Messrs. Rochford and Broaddrick may not be indicative of future performance of an investment in us.
Information regarding performance by, or businesses associated with, Messrs. Rochford and Broaddrick is presented for informational purposes only. Any past experience and performance is not a guarantee either: (i) that we will be able to successfully identify profitable oil and gas properties or companies; or (ii) of any results with respect to any such acquisitions we may consummate. You should not rely on the historical record and performance of Messrs. Rochford or Broaddrick as indicative of the specific future performance of an investment in us or the returns, if any, we may or could generate going forward. An investment in us is not an investment in Messrs. Rochford or Broaddrick.
Our officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete our initial business combination.
Our officers and directors are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating their time between our operations and our search for a business combination and their other responsibilities. We do not intend to have any full-time employees prior to the completion of our initial acquisition. Each of our officers and directors is engaged in other business endeavors for which they may be entitled to substantial compensation and our officers and directors are not obligated to contribute any specific number of hours per week to our affairs.
We may issue notes or other debt securities, or otherwise incur substantial debt, to acquire further oil and gas projects or companies, which may adversely affect our leverage and financial condition and thus negatively impact the value of our stockholders’ investment in us.
Although we have no commitments as of the date of this Form 10-K filing to issue any notes or other debt securities, or to otherwise incur outstanding debt following this offering, we may choose to incur substantial debt to initiate our principal business activities. The incurrence of debt could have a variety of negative effects, including:
·default and foreclosure on our assets if our operating revenues after an initial business acquisition are insufficient to repay our debt obligations;
·acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
·our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand;
·our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt security is outstanding;
·our inability to pay dividends on our common stock;
·using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;
·limitations on our flexibility in planning for and reacting to changes in our business and in the specific industry in which we operate;
·increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and
·limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.
We may be unable to obtain additional financing to fund our oil and gas operations or growth acquisitions, which could compel us to restructure or abandon a particular project.
Although we believe that the net proceeds from our founder and from our prior nonpublic offering will be sufficient to allow us to complete our initial operations, in order to complete our drilling obligation on our current lease or to acquire further properties or existing oil and gas companies. If our funds on hand prove to be insufficient, either because of the inability to partner with others for development of our current oil and gas lease, or the depletion of the available cash in search of new projects, we may be required to seek additional financing or to abandon a proposed acquisition. We cannot assure you that such financing will be available on acceptable terms, if at all. To the extent that additional financing proves to be unavailable when needed to complete our initial acquisition, we would be compelled to either restructure the transaction or abandon that particular target and seek an alternative candidate. The failure to secure additional financing could have a material adverse effect on the continued development or growth of our business. None of our officers, directors or stockholders is required to provide any financing to us in connection with or after any business transaction.
Our founding stockholders will control the election of our board of directors until consummation of our initial business acquisition and will hold a substantial interest in us. As a result, they will elect all of our directors prior to the consummation of our initial acquisition and may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support.
Our founding stockholders own approximately 75.2% of our outstanding common stock. In addition, the founder shares, all of which are held by our initial stockholders, will entitle the holders to elect all of our directors prior to the consummation of our initial business acquisition. As a result, other shareholders will not have any influence over the election of directors prior to our initial business acquisition.
Section 78.411 et seq. of the NRS affects the ability of an “interested stockholder” to engage in certain business combinations, for a period of two years following the time that the stockholder becomes an “interested stockholder.” We may elect in any future amendments to our articles of incorporation not to be subject these sections. These provisions may limit the ability of third parties to acquire control of our Company.
The successful acquisition of producing properties requires assessments of many factors, which are inherently inexact and may be inaccurate, including the following:
Our assessment will not reveal all existing or potential problems, nor will it permit us to become familiar enough with the properties to assess fully their capabilities and deficiencies. We plan to undertake further development of our properties through the use of cash flow from existing production. Therefore, a material deviation in our assessments of these factors could result in less cash flow being available for such purposes than we presently anticipate, which could either delay future development operations (and delay the anticipated conversion of reserves into cash) or cause us to seek alternative sources to finance development activities.
The recent US import ban on energy from Russia which has resulted in increased commodity prices, and a threatened corresponding export ban from Russia, creates uncertainty in the oil and gas markets which may affect the Company’s ability to commence operations.
On March 8, 2022, in response to Russia’s invasion of Ukraine, the President signed an executive order banning the import of Russian oil, liquified national gas, and coal to the US. In addition, the executive order mandates that the US will work with its allies to adopt a similar ban. Oil prices spiked to their highest levels since 2008 as a result of the executive order. Russia has threatened to retaliate with an embargo on gas exports, particularly to Europe, and has further demanded payment for gas by customers in Rubles, the Russian currency, rather than in euros or dollars. Historically, oil prices have been volatile, as evidenced most recently by the significant decline in oil and gas prices as a result of global reduction in the consumption of oil and gas products during the initial stages of the pandemic. The current import ban, and any Russian export ban, could result in much higher prices for oil and gas based on increased demand for oil and gas, particularly in the US and Europe. It is impossible to predict the ultimate effect actions to ban oil and gas imports and exports from and to Russia will have on the global economy and commodity prices in general. Uncertainty in the oil and gas markets could have an adverse impact on the proposed business of the Company if investors and others are reluctant to invest in oil and gas projects.
ProspectsExploratory that we decide to drilldrilling may not yield oil or natural gas inestablish commercially viablerecoverable quantities.reserves.
Any prospects we elect to drill may not yield oil or natural gas in commercially viable quantities. Because we have no proved reserves and no producing wells, any drilling program we undertake will be exploratory and inherently uncertain. Geological, geophysical, and seismic analyses are subject to interpretation and may not accurately predict the presence, quality, or recoverability of hydrocarbons.
Even if hydrocarbons are encountered, they may not exist in sufficient quantities, pressure, or reservoir characteristics to permit commercial production or to recover drilling and completion costs. Analogies drawn from other wells or producing fields may not be applicable to our acreage. As a result, we may expend substantial capital on drilling activities without establishing economically recoverable reserves.
We may be deemed a shell company, which could restrict resales of our securities.
We have not generated revenue from operations and are in the exploration stage of development, which may cause investors or regulators to evaluate our status under applicable securities laws.
The Company is an exploration-stage oil and gas company and owns leasehold interests in real property in Texas. Although we have not yet drilled wells or established proved reserves, our activities are directed toward exploration and development of our acreage position and not solely toward identifying or consummating a merger, acquisition of an operating business, or other business combination transaction. We believe our assets and operations are consistent with those of an early-stage oil and gas company. However, regulatory interpretation of “shell company” status involves factual and legal analysis, and there can be no assurance that regulators or market participants would not scrutinize our status.
Failure to maintain OTCQB eligibility could reduce liquidity of our common stock.
Continued quotation on OTCQB is subject to ongoing eligibility requirements, including current SEC reporting status, audited financial statements by a PCAOB-registered auditor, and minimum bid price and other standards. If we fail to satisfy these requirements, our securities may be downgraded or removed from OTCQB, which could materially reduce liquidity and investor confidence. If our common stock were removed from OTCQB, it could trade on a more limited market, which may reduce liquidity, increase volatility, and impair our ability to raise capital.
In addition, we currently do not have any independent directors and do not maintain a separately constituted audit committee composed of independent directors. Although OTCQB rules do not presently require a fully independent board for continued quotation, the absence of independent oversight may subject us to increased scrutiny from regulators, investors, and counterparties. Our limited board structure may also impair our ability to implement and maintain governance practices consistent with evolving market expectations for public companies. If OTC Markets were to modify its corporate governance requirements, or if investors or other market participants determine that our governance structure is inadequate, we could experience difficulty maintaining our OTCQB eligibility, attracting capital, or retaining investor confidence, which could adversely affect the market price and liquidity of our common stock.
Future issuances of equity securities may result in significant dilution.
We may issue additional shares of common stock or other securities to raise capital or acquire additional properties or interests in oil and gas properties. We may also issue preferred stock or other securities senior to our common stock. These issuances could reduce voting power, reduce future upside, and may include liquidation preferences, anti-dilution protections, or other rights adverse to holders of common stock. Any such issuances could significantly dilute existing stockholders.
A substantial or extended decline in oil and natural gas prices may adversely affect our business, financial condition or results of operations and our ability to meet our capital expenditure obligations and financial commitments.
The price we receive for our oil and natural gas production heavily influences our revenue, profitability, access to capital and future rate of growth. Oil and natural gas are commodities and, therefore, their prices are subject to wide fluctuations in response to relatively minor changes in supply and demand. Historically, the markets for oil and natural gas have been volatile. These markets will likely continue to be volatile in the future. The prices we receive for our production, and the levels of our production, depend on numerous factors beyond our control. These factors include, but are not limited to, the following:
·changes in global supply and demand for oil and natural gas;
·the actions of the Organization of Petroleum Exporting Countries, or OPEC;
·the oil price war between Russia and Saudi Arabia;
·the price and quantity of imports of foreign oil and natural gas;
·political conditions, including embargoes, in or affecting other oil-producing activity;
·theRisks levelRelated ofto globalOur oilExploration and naturalDevelopment gas exploration and production activity;Activities
Our leasehold interests may expire or revert if we fail to meet drilling or primary term requirements.
Our leasehold interests are subject to primary term expiration and, in certain cases, drilling commitments, including timing requirements under certain farmout or lease arrangements. If we do not commence drilling operations within required timeframes, our rights in the applicable acreage may terminate or revert to the lessor and we could lose all or a portion of our acreage position without compensation. Loss of acreage could materially impair our ability to develop reserves and generate future revenue.
Drilling, completion, and production activities involve significant operational and financial risks that could materially adversely affect us.
Under our current lease agreement, we are required to drill a certain number of wells. If we undertake drilling or completion operations, those activities will involve numerous operational risks, including equipment failure, well control incidents, mechanical difficulties, cost overruns, regulatory delays, shortages of rigs or services, adverse weather, title disputes, and accidents. The cost of drilling and completing a well is often uncertain until operations are underway. Budget overruns are common and may render a project uneconomic. Operational failures could result in the loss of the well, significant remediation expense, regulatory penalties, or liability exposure. Even if a well is successfully drilled and completed, production levels may decline more rapidly than expected, resulting in reduced economic returns. These operational risks are separate from and in addition to the geological uncertainties associated with exploratory drilling.
Risks Related to Regulation and the Energy Industry
Commodity price volatility could render our acreage uneconomic to develop.
Future drilling decisions and the economic viability of our acreage are highly sensitive to oil and natural gas prices. Because we have no current production, commodity prices primarily affect whether our acreage can be economically developed and whether we can raise capital to fund development. We do not currently engage in hedging activities and because we have no producing wells, we have no revenue hedge against commodity price volatility. Sustained declines in commodity prices could render our acreage uneconomic and result in impairment of our leasehold interests. Commodity price volatility can also affect the cost and availability of drilling rigs, tubular goods, and oilfield services. Tariffs, trade restrictions, or supply chain disruptions could increase the cost of tubular goods, equipment, and services required for any drilling program.
·the level of global oil and natural gas inventories;
Management's Discussion & Analysis (MD&A)
New heading “Known Trends and Uncertainties”
Largest changes
“Our future results are dependent on our ability to obtain additional capital to drill exploratory wells and to retain our leasehold interests. We are also subject to commodity price volatility, inflation in drilling and service costs, and capital market conditions affecting small public oil and gas companies. Increases in drilling costs due to labor shortages, equipment availability, or inflationary pressures could materially increase the capital required to develop our properties.”see in full comparison
“Because we are not currently producing oil or natural gas, inflation has primarily affected our general and administrative expenses, including professional fees and public company compliance costs. If we commence drilling operations, inflationary pressures in labor, drilling services, and equipment could materially increase development costs.”see in full comparison
“Revenue Recognition. The Company accounts for revenues according to Accounting Standards Update (“ASU”) 2014-09 Revenues from Contracts with Customers (Topic 606) (“ASU 2014-09”). The Company predominantly derives its revenue from the sale of produced crude oil and natural gas. The contractual performance obligation is satisfied when the product is delivered to the customer. Revenue is recorded in the month the product is delivered to the purchaser. The Company receives payment from one to three months after delivery. …”see in full comparison
“The oil and natural gas industry is very cyclical and the demand for goods and services of oil field companies, suppliers and others associated with the industry puts extreme pressure on the economic stability and pricing structure within the industry. Typically, as prices for oil and natural gas increase, so do associated costs. Material changes in prices impact the current revenue stream, estimates of future reserves, borrowing base calculations of bank loans and the value of properties in purchase and sale transactions. …”see in full comparison
“In addition to pursuing development of our existing oil and natural gas leasehold interests, we periodically evaluate strategic opportunities that may complement or enhance stockholder value. Such opportunities may include asset acquisitions, joint ventures, financing transactions, or other strategic arrangements. No definitive agreement has been entered into with respect to any such transaction as of the date of this report.”see in full comparison
Full comparison: every changed paragraph (19)
The following discussion and analysis should be read in conjunction with our accompanying financial statements and the notes to those financial statements included elsewhere in this Annual Report. The following discussion includes forward-looking statements that reflect our plans, estimatesestimates, and beliefsbeliefs, and our actual results could differ materially from those discussed in these forward-looking statements as a result of many factors, including those discussed under “Item 1A Risk Factors” and elsewhere in this Annual Report.
We are in our startup phase of operations and have not generated any revenues to date. Activities since inception include corporate organizational activities, our recently completed private offering, those activities necessary to prepare for the registration of shares for the Selling Stockholders, acquisition of our first oil and gas lease interest, and arrangements to expand operations in the current area of interest through a joint venture with a third party. We have incurred operating expenses related to legal and accounting services, and oil and gas lease acquisition costs. We expect to incur expenses to develop the oil and gas lease and anticipate increased expenses as a result of being a public company (for legal, financial reporting, accounting, and auditing compliance), as well as for due diligence expenses related to future oil and gas business growth. We expect our expenses to increase substantially as a result.
General and administrative expenses. General and administrative expenses were $63,936$73,663 for year ended 2024,2025, as compared to $78,380$63,936 for the year ended December 31, 2023.2024. The decreaseincrease is primarily related to lessan increase in legal costs related to evaluation of acquisition targets in 20242025 as compared to 2023.2024.
Net loss. The Company had net loss of $63,936$73,663 for year ended 2024,2025, as compared to $78,380$63,936 for the year ended December 31, 2023.2024. This increase in loss was the result of decreasedincreased general and administrative costs.
Known Trends and Uncertainties
Our future results are dependent on our ability to obtain additional capital to drill exploratory wells and to retain our leasehold interests. We are also subject to commodity price volatility, inflation in drilling and service costs, and capital market conditions affecting small public oil and gas companies. Increases in drilling costs due to labor shortages, equipment availability, or inflationary pressures could materially increase the capital required to develop our properties.
In addition to pursuing development of our existing oil and natural gas leasehold interests, we periodically evaluate strategic opportunities that may complement or enhance stockholder value. Such opportunities may include asset acquisitions, joint ventures, financing transactions, or other strategic arrangements. No definitive agreement has been entered into with respect to any such transaction as of the date of this report.
Cash Flows. There were no cash inflows during 20232024 and 2024.2025. We used cash in operating activity of $69,314$75,823 during the year ended December 31, 20242025 and $74,903$69,314 for the year ended December 31, 2023.2024. During 2025 we used cash in investing activities in the amount of $5,000 during the year ended December 31, 2025 with no similar cost expended in 2024.
In addition to cash resources, the Company holds leasehold oil and gas interests carried at $39,500, representing acquisition costs of real property interests with development potential. These interests are not passive financial assets but constitute operating oil and gas property rights.
Contractual Obligations. The Company has a short-term lease for executive office-sharing space in Tulsa, Oklahoma.Oklahoma, at nominal cost to the Company.
Because we are not currently producing oil or natural gas, inflation has primarily affected our general and administrative expenses, including professional fees and public company compliance costs. If we commence drilling operations, inflationary pressures in labor, drilling services, and equipment could materially increase development costs.
The oil and natural gas industry is very cyclical and the demand for goods and services of oil field companies, suppliers and others associated with the industry puts extreme pressure on the economic stability and pricing structure within the industry. Typically, as prices for oil and natural gas increase, so do associated costs. Material changes in prices impact the current revenue stream, estimates of future reserves, borrowing base calculations of bank loans and the value of properties in purchase and sale transactions. Material changes in prices can impact the value of oil and natural gas companies and their ability to raise capital, borrow money and retain personnel. We anticipate business costs will vary in accordance with commodity prices for oil and natural gas, and the associated increase or decrease in demand for services related to production and exploration.
Although we currently have no producing wells or proved reserves, we have adopted accounting policies applicable to oil and natural gas exploration and development companies.
Our discussion of financial condition and results of operations is based upon the information reported in our financial statements. The preparation of these statements requires us to make assumptions and estimates that affect the reported amounts of assets, liabilities, revenues and expenses as well as the disclosure of contingent assets and liabilities at the date of our financial statements. We base our assumptions and estimates on historical experience and other sources that we believe to be reasonable at the time. Actual results may vary from our estimates due to changes in circumstances, weather, politics, global economics, mechanical problems, general business conditionsconditions, and other factors. Our significant accounting policies are detailed in Note 1 to our financial statements included in this Annual Report. We have outlined below certain of these policies as being of particular importance to the portrayal of our financial position and results of operations and which require the application of significant judgment by our management.
Revenue Recognition. We have not generated any revenues to date. If and when production commences, we intend to account for revenues in accordance with Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606). Under this standard, revenue would be recognized when control of produced crude oil or natural gas is transferred to the customer.
Revenue Recognition. The Company accounts for revenues according to Accounting Standards Update (“ASU”) 2014-09 Revenues from Contracts with Customers (Topic 606) (“ASU 2014-09”). The Company predominantly derives its revenue from the sale of produced crude oil and natural gas. The contractual performance obligation is satisfied when the product is delivered to the customer. Revenue is recorded in the month the product is delivered to the purchaser. The Company receives payment from one to three months after delivery. The transaction price includes variable consideration as product pricing is based on published market prices and reduced for contract specified differentials. The guidance regarding ASU 2014-09 does not require that the transaction price be fixed or stated in the contract. Revenue is recognized net of royalties due to third parties in an amount that reflects the consideration the Company expects to receive in exchange for those products. See Note 2 of our financial statements for additional information.
Full Cost Method of Accounting. We account for our oil and natural gas operations using the full cost method of accounting. Under this method, all costs (internal or external) associated with property acquisition, explorationexploration, and development of oil and gas reserves are capitalized. Costs capitalized include acquisition costs, geological and geophysical expenditures, lease rentals on undeveloped properties and cost of drilling and equipping productive and non-productive wells. Drilling costs include directly related overhead costs. All of our properties are located within the continental United States. As of December 31, 2025, we have not capitalized any drilling costs and have no proved reserves subject to depletion.
Write-down of Oil and Natural Gas Properties. Companies that use the full cost method of accounting for oil and natural gas exploration and development activities are required to perform a ceiling test calculation each quarter. The full cost ceiling test is an impairment test prescribed by SEC Regulation S-X Rule 4-10. The ceiling test is performed quarterly utilizing the average of prices in effect on the first day of the month for the preceding twelve-month period in accordance with SEC Release No. 33-8995. The ceiling limits such pooled costs to the aggregate of the present value of future net revenues attributable to proved crude oil and natural gas reserves discounted at 10%, plus the lower of cost or market value of unproved properties, less any associated tax effects. If such capitalized costs exceed the ceiling, the Company will record a write-down to the extent of such excess as a non-cash charge to earnings. Any such write-down will reduce earnings in the period of occurrence and results in a lower depletion, depreciationdepreciation, and amortization (“DD&A”) rate in future periods. A write-down may not be reversed in future periods even though higher oil and natural gas prices may subsequently increase the ceiling.
Oil and Natural Gas Reserve Quantities. Reserve quantities and the related estimates of future net cash flows affect our periodic calculations of depletion and impairment of our oil and natural gas properties. Proved oil and natural gas reserves are the estimated quantities of crude oil, natural gas and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be recoverable in future periods from known reservoirs under existing economic and operating conditions. As of December 31, 2025, we have not established any proved reserves.
What changed in the latest 10-Q
Risk Factors
There have been no material changes to the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Six Months Ended June 30, 2026 Compared to the Six Months Ended June 30, 2025”
Largest changes
“Six Months Ended June 30, 2026 Compared to the Six Months Ended June 30, 2025”see in full comparison
Cash Flows.see in full comparisonThereWewerehad no cash inflows during either of theeithersix-monththree monthsperiods endedMarchJune31,30, 2026 orMarch 31,2025. During thethreesix months endedMarchJune31,30,20262026, we had cash outflow of$2,526$31,912 from operating activities as compared to cash outflow from operations of$7,653$27,139 for the same period of 2025. During the six months ended June 30, 2025, we had cash outflow from investing activities of $5,000 with no similar cash outflows in 2026. As ofMarchJune31,30, 2026, we had cash on hand of$108,675$79,289 and working capital of$90,985,$80,128, as compared to cash on hand of $111,201 and working capital of $125,263 as of December 31, 2025.
“General and administrative expenses. General and administrative expenses were $45,135 for six months ended June 30, 2026, as compared to $44,492 for the same period of 2025. The largest costs during the period for both 2026 and 2025 were legal, accounting and transfer agent fees.”see in full comparison
General and administrative expenses. General and administrative expenses weresee in full comparison$34,278$10,857 for three months endedMarchJune31,30, 2026, as compared to$24,273$20,219 for the same period of 2025. Theincreaselargestiscostsprimarilyduring theresultperiodofforincreasedbothlegal2026 andengineering2025feeswereassociatedlegal,withaccountinganalysisandoftransferpotentialagenttransactions.fees.
“Production, sales, production costs and production taxes. The Company does not currently have any producing wells and thus has no production, sales, production costs or production taxes nor has it ever had any to date.”see in full comparison
“Net loss. The Company had net loss of $45,135 for six months ended June 30, 2026, as compared to $44,492 for the same period of 2025. This decrease in loss was the result of decreased general and administrative costs.”see in full comparison
Full comparison: every changed paragraph (11)
Three Months Ended MarchJune 31,30, 2026 Compared to the Three Months Ended MarchJune 31,30, 2025
Revenue, production,Production, sales, production costs and production taxes. The Company does not currently have any producing wells and thus has no revenue, production, sales, production costs or production taxes nor has it ever had any to date.
General and administrative expenses. General and administrative expenses were $34,278$10,857 for three months ended MarchJune 31,30, 2026, as compared to $24,273$20,219 for the same period of 2025. The increaselargest iscosts primarilyduring the resultperiod offor increasedboth legal2026 and engineering2025 feeswere associatedlegal, withaccounting analysisand oftransfer potentialagent transactions.fees.
Net loss. The Company had net loss of $34,278$10,857 for three months ended MarchJune 31,30, 2026, as compared to $24,273$20,219 for the same period of 2025. TheThis increasedecrease in net loss iswas the result of increaseddecreased general and administrative expenses.costs.
Six Months Ended June 30, 2026 Compared to the Six Months Ended June 30, 2025
Production, sales, production costs and production taxes. The Company does not currently have any producing wells and thus has no production, sales, production costs or production taxes nor has it ever had any to date.
Depreciation, depletion and amortization. We have no production and our current oil and gas properties thus are not yet subject to amortization. Further, we have no depreciable assets.
General and administrative expenses. General and administrative expenses were $45,135 for six months ended June 30, 2026, as compared to $44,492 for the same period of 2025. The largest costs during the period for both 2026 and 2025 were legal, accounting and transfer agent fees.
Net loss. The Company had net loss of $45,135 for six months ended June 30, 2026, as compared to $44,492 for the same period of 2025. This decrease in loss was the result of decreased general and administrative costs.
If the Company is not successful in adding additional acreage, we would proceed with developing our initial acreage, beginning with the drilling of the two vertical wells as required by the current oil and gas lease. Each of these wells would cost approximately $750,000 to drill and complete. To fund this drilling, the Company would likely enter into agreements with industry partners who would provide funding in return for a portion of the working interest in the wells. Management has not yet entered into any agreements but has had extended conversations with those industry partners regarding potential participation in the drilling. These discussions have concluded with positive indications that they would wish to participate and so the required funding would be available.available, although there can be no assurance financing will be available on acceptable terms. In the alternative, management may seek funding through the sale of equity in the Company after the Common Stock commences trading, if ever.
Cash Flows. ThereWe werehad no cash inflows during either of the eithersix-month three monthsperiods ended MarchJune 31,30, 2026 or March 31, 2025. During the threesix months ended MarchJune 31,30, 20262026, we had cash outflow of $2,526$31,912 from operating activities as compared to cash outflow from operations of $7,653$27,139 for the same period of 2025. During the six months ended June 30, 2025, we had cash outflow from investing activities of $5,000 with no similar cash outflows in 2026. As of MarchJune 31,30, 2026, we had cash on hand of $108,675$79,289 and working capital of $90,985,$80,128, as compared to cash on hand of $111,201 and working capital of $125,263 as of December 31, 2025.
CRCE insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
No Form 4 stock transactions in this period.
Well-known investors holding CRCE (13F)
None of the 59 investors we track reported a position in their latest 13F.