LRDC 10-K & 10-Q changes, risk factors and insider trading
Laredo Oil, Inc. · OTC · Crude Petroleum & Natural Gas · CIK 1442492 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
Not available: the section could not be located automatically in both filings (non-standard layout or incorporated by reference). See the original filing. Open the filing on SEC.gov.
Management's Discussion & Analysis (MD&A)
Largest changes
As of May 31,see in full comparison2025,2026, our cash and cash equivalents and restricted cash balance was$277,367.$420,676. Our total debt outstanding as of May 31,20252026 was$3,966,351,$3,573,056, including (i) $617,934 owed toAlleghany,Alleghanywhichis in default and is classified as a current notepayable,payable as the original maturity date of December 31, 2023 has passed, and (ii)$887,430$825,701 pursuant to notes under the Paycheck Protection Program, or PPP, of which we have classified$825,701$763,352 as long-term debt, net of the current portion totaling$61,729,$62,349, which is classified as a current note payable, (iii)$352,478$202,261 short term bridge notes, net of deferred debt discount, (iv) a $310,061 revolving note classified as short-term, (v) a $750,000 note payable to Cali FieldsLLC,LLC is in default and is classified asshort-term,short-term as the original maturity date of December 31, 2023 has passed, (vi) a $181,349 promissory note, net of deferred debt discount classified as short-term, (vii) a $292,099 note payable due to our Chief Financial Officer, classified as short-term and (viiivii) $575,000 convertible debt contributed for net working interest.
We recognized revenues and direct costs totalingsee in full comparison$9,423$3,141 and$36,482,$9,423, respectively through our interest in oil and gas sales for the year ended May 31,20252026 and2024.2025. During the years ending May 31,20252026 and2024,2025, we incurred operating expenses from continuing operations of$3,331,853$7,049,571 and$3,426,709,$2,596,797, respectively. These expenses consisted primarily of general operating expenses incurred in connection with the day-to-day operation of our business, the preparation and filing of our required public reports, stock option compensation expense. In addition, lease operating expenses and impairment expenses are included in total operating expenses. Thedecreaseincrease in expenses for the year ended May 31,2025,2026, as compared to the same period in2024,2025, is primarily attributable to $1.1 million, $308,000 and $146,000 increases in legal, public relations and travel expenses, respectively related to pursuing UGD opportunities internationally, adecrease$2.1 million increase in stock-basedcompensationcompensation,totalingandapproximatelya$1$591,919 loss on conversionmillion,relatedoffsettobytheanissuanceincreaseof stock inincreasesexchangeinforotherdebtlegalrepayments.andFurther,accounting professional fees including public relations totaling $165,000 and increases in lease operating expenses primarily from the operationas oftheMayReddig31,11-21 well totaling $201,118. Further,2026 there isincreaseain$348,393 long-term asset impairment loss primarily comprised of $232,774 expired property leases and $110,525 oil and gas assets no longer utilized as compared to the $21,716 impairment lossonfromthecontinuingReddigoperations11-21 well which has been shut in and we determined may not be recoverable totaling $653,874 for the year ended May 31, 2025, as compared to $56,555 induring the year ending May 31,2024 During the year ended May 31, 2025, we recognized $300,000 other income on the sale of our working interest in Hell Creek Crude and $328,702 related to payments required under the Texakoma Development Agreement. During the year ended May 31, 2024, we recognized other income and expenses of $175,000 related to the sale of drilling equipment, $727,901 offset by $285,412 in direct lease acquisition costs related to payments required under the Texakoma Development Agreement, and an undisclosed payment related to a confidential legal settlement.2025.
“During fiscal year 2026, the environment and interest for UGD has increased, driven by the continued production decline of older depressurized oil fields. We are actively pursuing UGD international opportunities in Argentina, Mexico, the Middle East and Northern Africa region (“MENA”), Romania, Albania and Azerbaijan by engaging in conversations with government officials industry participants who have responsibility for domestic oil production. …”see in full comparison
“Prior to December 31, 2020, while implementing the UGD method projects for Allegheny, we gained specialized know-how and operational experience in evaluating, acquiring, operating and developing oil and gas properties, as well as expertise in designing, drilling and producing conventional oil wells. Based upon that know-how, we identified and acquired 45,246 gross acres, and 37,932 net acres, of mineral property interests in the State of Montana. We began drilling an exploratory well in Montana during May 2022. …”see in full comparison
“In future operations, we plan to use an Enhanced Oil Recovery (“EOR”) method entitled Underground Gravity Drainage (‘UGD”). The original UGD method uses conventional mining processes to establish a drilling chamber underneath an existing oil field from where closely spaced wellbores are intended to be drilled up into the reservoir, using residual radial pressure and gravity to then drain the targeted reservoir through the wellbores. As we gain experience through practical application of the processes involved in oil recovery, variants of the UGD concept are continually developed and evaluated. …”see in full comparison
“Until a total of the $3.5 million in cash, notes and accrued interest, plus any capital calls, is repaid to the various investors under the terms of the Participation Agreement, the net working interest payments from the Participation Agreement will be split between the various investors and HCC and Erehwon, collectively on a 90%/10% basis. After the repayment to the investors, the split between the investors, on one hand, and HCC and Erehwon, on the other hand, will be on a 50%/50% basis. …”see in full comparison
Full comparison: every changed paragraph (26)
As
of May 31, 2025,2026, our cash and cash equivalents
and restricted cash balance was $277,367.$420,676. Our total debt outstanding as of May 31,
2025 2026 was $3,966,351,$3,573,056, including (i) $617,934 owed
to Alleghany,Alleghany whichis in default and is classified as a current note payable,payable as the original maturity date of December 31, 2023 has passed,
and (ii) $887,430$825,701 pursuant
to notes under the Paycheck Protection Program, or PPP, of which we have classified $825,701$763,352 as long-term debt,
net of the current portion
totaling $61,729,$62,349, which is classified as a current note payable, (iii) $352,478$202,261 short term bridge notes, net
of deferred debt discount,
(iv) a $310,061 revolving note classified as short-term, (v) a $750,000 note payable to Cali Fields LLC,LLC is
in default and is classified as short-term,short-term as the original maturity date of December 31, 2023 has passed, (vi)
a $181,349 promissory note, net of deferred debt discount classified as short-term, (vii) a $292,099 note payable
due to our Chief Financial
Officer, classified as short-term and (viiivii) $575,000 convertible debt contributed for net working interest.
Our
As of May 31, 2025, our cash and cash equivalents
and restricted cash balance at May 31, 2024 was $1,990,189.$249,409. Our total debt outstanding as of May 31, 20242025 was $3,212,828,
$3,966,351, including (i) $617,934 owed to
Alleghany, which is classified as a current note payable,payable as the original maturity date of December 31, 2023 has passed, and (ii) $954,112 $887,430
pursuant to notes under the
Paycheck Protection Program, or PPP, of which we have classified $887,733$825,701 as long-term debt, net of the current
portion totaling $66,379,
$61,729, which is classified as a current note payable, (iii) $288,622$352,478 short term convertiblebridge notes, net of deferred debt
discount, (iv) a $310,061
revolving note classified as short-term, (v) a $750,000 note payable due to Cali Fields LLC, classified as short-term,short-term
as andthe original maturity date of December 31, 2023 has passed, (vi) a $181,349 promissory note, net of deferred debt discount classified
as short-term, (vii) a $292,099
note payable due to our Chief Financial Officer, classified as short-term.short-term and (viii) $575,000 convertible
debt contributed for net working interest.
We
have continued financing our business with a combination of stock sales and issuances of debt securities, as described above. During
fiscal year 2025,2026, we sold 2,894,4909,056,415 shares of our common stock to accredited investors at an average price of $0.437$0.455 per share for gross
proceeds of $1,265,200 of which $50,000 is recorded as an unissued stock subscription.$4,157,669. There were no finder’s fees related to the
sales of the shares described above. The issued shares have
not been registered under the Securities Act of 1933, as amended
(the “Securities Act”), and may not be offered
or sold in the United States absent registration or an applicable
exemption from registration requirements under the Securities
Act.
During
2025,fiscal 2026, we are seeing increased interest from multiple investors/funds and oil field ownership interests in our UGD methods, both
nationally nationally
and internationally. We believe this interest is due to a change in the climate for U.S. based energy projects. We believe
that this
change in the financial markets has made it easier for us to raise equity related funds, and we expect this to continue for
the foreseeable
future.
We
recognized revenues and direct costs totaling $9,423 $3,141
and $36,482,$9,423, respectively through our interest in oil and gas sales for the year
ended May 31, 20252026 and 2024.2025. During the years ending May
31, 20252026 and 2024,2025, we incurred operating expenses from continuing operations of $3,331,853$7,049,571 and $3,426,709,
$2,596,797, respectively. These expenses
consisted primarily of general operating expenses incurred in connection with the day-to-day operation of
our business, the preparation
and filing of our required public reports, stock option compensation expense. In addition, lease operating
expenses and impairment expenses
are included in total operating expenses. The decreaseincrease in expenses for the year ended May 31, 2025,
2026, as compared to the same period in 2024,
2025, is primarily attributable to $1.1 million, $308,000 and $146,000 increases in legal, public relations and travel expenses, respectively
related to pursuing UGD opportunities internationally, a decrease$2.1 million increase in stock-based compensationcompensation, totalingand approximatelya $1$591,919 loss on conversion
million,related offsetto bythe anissuance increaseof stock in increasesexchange infor otherdebt legalrepayments. andFurther, accounting professional fees including public relations totaling $165,000
and increases in lease operating expenses primarily from the operationas of theMay Reddig31, 11-21 well totaling $201,118. Further,2026 there
is increasea in$348,393 long-term asset
impairment loss primarily comprised of $232,774 expired property leases and $110,525 oil and gas assets no longer utilized as compared
to the $21,716 impairment loss onfrom thecontinuing Reddigoperations 11-21 well which has been shut in and we determined may not be recoverable
totaling $653,874 for the year ended May 31, 2025, as compared to $56,555 induring the year ending May 31, 2024 During
the year ended May 31, 2025, we recognized $300,000 other income on the sale of our working interest in Hell Creek Crude and $328,702
related to payments required under the Texakoma Development Agreement. During the year ended May 31, 2024, we recognized other income
and expenses of $175,000 related to the sale of drilling equipment, $727,901 offset by $285,412 in direct lease acquisition costs related
to payments required under the Texakoma Development Agreement, and an undisclosed payment related to a confidential legal settlement.2025.
We recognized a net loss from discontinued operations totaling $52,340 and $733,284 for the years ending May 31, 2026 and 2025, respectively related to the sale of Hell Creek Crude effective November 15, 2025.
During
fiscal 2025,2026, we focused our efforts on developing our UGD business model which requires substantial investment to acquire access to,
and to develop oil and gas properties for production. We also continued to develop our mineral rights through conventional drilling.
During fiscal year 2026, the environment and interest for UGD has increased, driven by the continued production decline of older depressurized oil fields. We are actively pursuing UGD international opportunities in Argentina, Mexico, the Middle East and Northern Africa region (“MENA”), Romania, Albania and Azerbaijan by engaging in conversations with government officials industry participants who have responsibility for domestic oil production. During fiscal year 2026, we met with officials from the United States Embassy located in Mexico City and conducted a visit to several MENA countries prior to the conflict in the region between the United State and Iran. Additionally, we visited both Romania and Albania and presently are conducting due diligence discussions and visits with industry participants in Argentina and Mexico.
No agreements have been consummated as of the filing date of this report. Discussions are ongoing.
Domestically in the United States, we are in the process of raising funds to develop possible oil fields in Texas that are compatible with the UGD oil recovery method. There is no assurance that we will be successful in our efforts.
In
future operations, we plan to use an Enhanced Oil Recovery (“EOR”) method entitled Underground Gravity Drainage (‘UGD”).
The original UGD method uses conventional mining processes to establish a drilling chamber underneath an existing oil field from where
closely spaced wellbores are intended to be drilled up into the reservoir, using residual radial pressure and gravity to then drain the
targeted reservoir through the wellbores. As we gain experience through practical application of the processes involved in oil recovery,
variants of the UGD concept are continually developed and evaluated. The UGD method is applicable to mature oil fields that have very
specific geological characteristics. We have done extensive research and have identified oil fields within the United States that it
believes are qualified for UGD recovery methods. We intend to pursue and recover stranded oil from selected mature fields chosen from
this group as funds become available.
We
believe the costs of implementing the UGD method are radically lower than those presently experienced by commonly used EOR methods. We
also estimate that we can materially increase the field oil production rate from prior periods and recover amounts of oil equal to or
greater than amounts previously recovered from the mature fields selected. We intend to seek oil fields with a minimum of 25 million
barrels of estimated recoverable oil.
When
we acquire a targeted oil field, we will continue to operate the producing field and expect to generate revenue and profit from doing
so. Once development of the underground chamber and the UGD method is prepared for operation, the conventional wells will be capped and
UGD production begun. The effect of such operations should result in minimal disruption of oil production from our field investments.
Prior
to December 31, 2020, while implementing the UGD method projects for Allegheny, we gained specialized know-how and operational experience
in evaluating, acquiring, operating and developing oil and gas properties, as well as expertise in designing, drilling and producing
conventional oil wells. Based upon that know-how, we identified and acquired 45,246 gross acres, and 37,932 net acres, of mineral property
interests in the State of Montana. We began drilling an exploratory well in Montana during May 2022. That well, named the Olfert 11-4
well, has not yet been completed or put into production. We are continuing our efforts to complete the Olfert 11-4 well and begin commercial
production. We have also developed relationships with Texakoma Exploration and Production, LLC, or Texakoma, and Erehwon Oil & Gas,
LLC, or Erehwon, designed to develop our acquired mineral property acreage. We also raised $2,854,000 of which $2,835,500 has been received
as of May 31, 2025 from accredited investors pursuant to a participation agreement to fund the development of up to three wells in the
Midfork oil field in Montana. We are continually attempting to raise additional funds to develop the other mineral property interests
we have purchased. We also have a 50% interest in the Cat Creek oil field, located in Montana. Our various projects and relationships
are described in more detail below. Our ability to secure additional funding will determine whether we can achieve any future production
for the acreage described above, and if we can secure such financing, the pace of field development.
In
January 2024, we entered into a Participation Agreement, through our wholly owned subsidiary, Hell Creek Crude, LLC (“HCC”),
Erehwon, and various accredited investors. The Participation Agreement provided us with over $2.8 million to acquire certain leases and
to drill a development well in the Midfork Field in Montana. Several of the investors also holdheld $575,000 in principal amount of our convertible
debt, plus accrued interest of $73,317, which indebtedness iswas included as investments under the Participation Agreement. Until final
disposition of the well and notes is determined, the Company reclassified the notes and accrued interest as debt and accrued interest
on May 31, 2025. These notes continue to accrue interest subsequent to the transfer to debt resulting in accrued interest totaling $142,695
as of May 31, 2026.
Drilling of the development well was completed in the Spring of 2025. After additional perforations and acidizing the well were performed, the well produced limited oil accompanied with water levels that makes it uneconomical to operate and was shut in.
In November, B&B Oil, LLC purchased 100% of the HCC membership units from us for consideration of a carried interest sharing 50% of any future distributions to B&B. As of November 15, 2025, we have no controlling interest or liabilities associated with HCC.
Until
a total of the $3.5 million in cash, notes and accrued interest, plus any capital calls, is repaid to the various investors under the
terms of the Participation Agreement, the net working interest payments from the Participation Agreement will be split between the various
investors and HCC and Erehwon, collectively on a 90%/10% basis. After the repayment to the investors, the split between the investors,
on one hand, and HCC and Erehwon, on the other hand, will be on a 50%/50% basis. In December 2024, an additional investor purchased a
9% net working interest before payout and 4% net working interest after payout from HCC for $300,000. The after-payout split between
the investors, on one hand, and the additional investor, HCC and Erehwon, on the other hand, will be on a 50%/4%/46% basis. After the
development well is drilled under the Participation Agreement, the investors will have the option to invest in up to two additional wells
in the field.
In
December 2024, in lieu of another capital call to the original investors, an additional investor invested $300,000 under the Participation
Agreement, sharing ratably with the original investors. The funds were spent on drilling expenses for the well. In the Spring of 2025,
another capita call of $150,000 was issued to investors to fund additional perforations and acidizing the well. To date, the well has
produced oil, but with accompanying water production that makes it uneconomical to operate. Currently, the well is shut in and being
evaluated for additional rework enhancements or alternative uses, such as conversion to a saltwater disposal well.
The
well was drilled in the first half of calendar 2023 and encountered excessive amounts of salt water. Although we still are working to
put the well into production, it has been three years since the well was shut-in pending gaining access to a proximate salt-water disposal
well making the well economically viable. Although the asset carrying value of the well has been reduced to zero, we will continue to
evaluate the well with the plan to bring it into production.production if economical.
Under
the terms of the Development Agreement, Texakoma agreed to pay Lustre and Erehwon, jointly, the following amounts: (i) $175,000 on or
before July 21, 2023; and (ii) another $175,000 upon the “spudding” of the initial test well subject to rig availability.
Upon the spudding of that test well, Lustre and Erehwon were required to deliver to Texakoma a partial assignment of an 85% working interest
in the oil and gas leases covering the first two initial drilling and spacing units. The first payment under the Development Agreement
was paid by Texakoma at the end of August 2023, and the second $175,000 payment on September 29, 2023.
TheUnder
twothe testDevelopment Agreement, three wells were successfully drilled and Texakoma paid 100% of the costs associated with the drilling and
completion of the wells.
Lustre and ErehwonErehwon, jointly, have an undivided 15% working interest, carried through the tanks, in those twothe wells.
In March 2024, Texakoma
exercised its option to participate in the development of the remainder of the Lustre Field Prospect. By exercising
its option, Texakoma
agreed to drill eight additional wells, with Lustre and Erehwon having a 15% working interest carried through the
tanks, and to paypaid Lustre
$706,603 over four months, for an 85% leasehold interest in the next eight drill sites and a 50% leasehold interest in the balance
of of
the Lustre Field Prospect acreage. As of August 1, 2024, Texakoma had paid the balance. The working and net revenue interest in any
future wells
drilled subsequent to the first ten wells will be shared by Texakoma and Lustre and Erehwon, jointly, on a 50:50 basis.
As of May 31, 2026, the oil production levels from the three drilled wells were not sufficient to maintain operation and the wells have been shut in pending evaluation and possibly more perforations. Development of the additional eight wells is paused evaluating oil prices and additional field information.
Texakoma
completed three wells and with the purchase of the Cranston saltwater disposal well purchased by Lustre on September 10, 2024, Texakoma
was to prepare the three wells for production pending evaluation of the well characteristics and better weather conditions in the field.
When the wells were started up for production, the oil levels were not sufficient to maintain operation and the wells have been shut
in pending evaluation and possibly more perforations.
We
arewere inunable theto process of raisingraise $7.5 million to drill the planned three exploratory wells by selling units of West Fork Resources, LLC. The purposePreliminary
of the raise is to prove up portions of our over 21,000 acres of mineral rights located north of the Fort Peck Reservation at the western
edge of the Williston Basin. Preliminary development operations such as acquiring seismic data, site selection, and permitting arewas in
process,started, as $1.0 million$750,000 of the $2.25 million funds
initially raised elected to commence drilling operations during fiscal year 2025.
Upon request, the remaining $1.25$1.5 million was returned
to the investorsinvestors. inUnspent Mayfunds 2025.were We continuetransferred to expectHell thatCreek theCrude $7.5LLC millionfor weworking seek
interest units and there will be completedno byadditional earlydevelopment
in FallWest 2025,Fork providingResources, adequateLLC funds to drillfor the threeforeseeable exploratoryfuture. wellsThe beforemembership yearinterest endunits andare finishrecorded early
as an investment in 2026,related weather permitting.party
entity.
The
process of preparing consolidated financial statements requires that we make estimates and assumptions that affect the reported amounts
of liabilities and stockholders’ equity/(deficit) at the date of the consolidated financial statements, and the reported amounts
of revenues and expenses during the reporting period. Significant estimates in these consolidated financial statements include estimates
related to purchasethe pricevaluation allocation.of stock-based compensation and asset retirement obligation. Changes in the status of certain facts or circumstances
could result in a material change to the
estimates used in the preparation of the consolidated financial statements and actual results
could differ from the estimates and assumptions.
What changed in the latest 10-Q
Risk Factors
We could not find a separate Risk Factors item in the latest 10-Q. Some companies leave it out of quarterly reports; see the annual 10-K risk factors and the original filing. Open the filing on SEC.gov.
Management's Discussion & Analysis (MD&A)
Largest changes
During fiscal year 2026, the environment and interest for UGD has increased, driven by the continued production decline of older depressurized oil fields. We are actively pursuing UGD international opportunities in Argentina, Mexico, the Middle East and Northern Africa region (“MENA”), Romania, Albania and Azerbaijan by engaging in conversations with government officials industry participants who have responsibility for domestic oil production. In thesee in full comparisonsecondthird fiscal quarter endingNovemberFebruary30,28,2025,2026, wemademet with officials from the United States Embassy located in Mexico City and conducted a visit to severaltripsMENA countries prior toMexicothe conflict in the region between the United State andformedIran.aAdditionally,TexasweregisteredvisitedentitybothnamedRomaniaLaredoand Albania and presently are conducting due diligence discussions andMex,visitsLLC,withorbothLarMex,countriestoformanage any futurepossible UGDoperations located there. No agreements have been consummated as of the filing date of this report. Discussions are ongoing.projects.
We recognized revenues totaling $3,141 andsee in full comparison$7,688,$9,423, respectively through our interest in oil and gas sales for thesixnine months ending February 28 ,2026 and 2025. During the nine months endingNovemberFebruary30,28,20252026 and2024. During the six months ending November 30, 2025 and 2024,2025, we incurred operating expenses from continuing operations of$3,645,630$5,430,629 and$1,369,119,$1,700,723, respectively. These expenses consisted primarily of general operating expenses incurred in connection with the day-to-day operation of our business, the preparation and filing of our required public reports. In addition, lease operating expenses are included in total operating expenses. The increase in expenses for thesixnine months endingNovemberFebruary30, 2025,28, 2026, as compared to the same period in2024,2025, is primarily attributable to a $2.0 million expense related to stock option grants. There were no stock options granted during the same periodinending2024.February 28, 2025. The remaining increase in expenses for thesixnine months endingNovemberFebruary30,28,2025,2026, as compared to the same period in2024,2025, is primarily attributable to$27,000$351,000 increase ininprofessional fees related to legal fees and public relations,$91,000$153,000 increase in payroll expenses primarily attributable to two new employees and$43,000$91,000 increase in travel expenses related to new potential opportunities.
Our cash and cash equivalents balance atsee in full comparisonNovemberFebruary30,28,20252026 was$568,831.$264,166. Our total debt outstanding as ofNovemberFebruary30,28,20252026 was$4,935,766,$4,783,585, including (i) $617,934 owed to Alleghany, which is classified as a current note payable, and (ii)$856,642$841,191 pursuant to notes under the Paycheck Protection Program, or PPP, of which we have classified$794,604$778,998 as long-term debt, net of the current portion totaling$62,038,$62,193, which is classified as a current note payable, (iii)$59,030 short term bridge notes, net of deferred debt discount, (iv)a $310,061 revolving note classified as short-term, (viv) a $750,000 note payable due to Cali Fields LLC, classified as short-term, (viv) a$1,475,000$1,397,300 promissory note, net of deferred debt discount classified as short-term, (viivi) a $292,099 note payable due to our Chief Financial Officer, classified as short-term, and (viii) a $575,000 convertible debt contributed for net working interest.
During the three months endingsee in full comparisonNovemberFebruary30,28,20252026 and2024,2025, we incurred operating expenses of$2,966,305$1,068,681 and$703,394$609,866 respectively. These expenses consisted of general operating expenses incurred in connection with the day-to-day operation of our business, the preparation and filing of our required public reports and stock option compensation expense. The increase in expenses for the three months endingNovemberFebruary30, 2025,28, 2026, as compared to the same period in2024,2025, is primarily attributable tostock-basedlegalcompensation expenses,fees, other professional fees primarily related to public relations, travel related to potential opportunities and payroll expense related to new employee hires.
We have continued financing our business with a combination of stock sales and issuances of debt securities, as described above. During thesee in full comparisonsix-monthsnine months endingNovemberFebruary30,28,2025,2026, we sold2,464,6502,871,626 shares of our common stock to accredited investors raising$1,059,800,$1,284,800, and we issued and repaid debt securities totaling$1,275,000.$1,275,000 and $77,700, respectively. During fiscal year 2025, we sold 2,894,490 shares of our common stock to accredited investors at an average price of $0.437 per share for gross proceeds of $1,265,200 of which $50,000 is recorded as an unissued stock subscription. There were no finder’s fees related to the sales of the shares described above. The issued shares have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements under the Securities Act.
In January 2024, we entered into a Participation Agreement, through our wholly owned subsidiary, Hell Creek Crude, LLC (“HCC”), Erehwon, and various accredited investors. The Participation Agreement provided us with over $2.8 million to acquire certain leases and to drill a development well in the Midfork Field in Montana. Several of the investors also held $575,000 in principal amount of our convertible debt, plus accrued interest of $73,317, which indebtedness was included as investments under the Participation Agreement. Until final disposition of the well and notes is determined, the Company reclassified the notes and accrued interest as debt and accrued interest on the May 31,see in full comparison20252025.andTheseNovembernotes30,continue2025toConsolidatedaccrueBalanceinterestSheets.subsequent to the transfer to debt resulting in accrued interest totaling $125,303 as of February 28, 2026.
Full comparison: every changed paragraph (16)
During
fiscal year 2026, the environment and interest for UGD has increased, driven by the continued production decline of older depressurized
oil fields. We are actively pursuing UGD international opportunities in Argentina, Mexico, the Middle East and Northern Africa region
(“MENA”),
Romania, Albania and Azerbaijan by engaging in conversations with government officials industry participants who
have responsibility for domestic oil production.
In the secondthird fiscal quarter ending NovemberFebruary 30,28, 2025,2026, we mademet with officials from the
United States Embassy located in Mexico City and conducted a visit to several tripsMENA countries prior to Mexicothe conflict in the region between
the United State and formedIran. aAdditionally, Texaswe registeredvisited entityboth namedRomania Laredoand Albania and presently are conducting due diligence discussions and
Mex,visits LLC,with orboth LarMex,countries tofor manage any futurepossible UGD operations located there. No agreements have been consummated as of the filing date of
this report. Discussions are ongoing.projects.
No agreements have been consummated as of the filing date of this report. Discussions are ongoing.
In
January 2024, we entered into a Participation Agreement, through our wholly owned subsidiary, Hell Creek Crude, LLC (“HCC”),
Erehwon, and various accredited investors. The Participation Agreement provided us with over $2.8 million to acquire certain leases and
to drill a development well in the Midfork Field in Montana. Several of the investors also held $575,000 in principal amount of our convertible
debt, plus accrued interest of $73,317, which indebtedness was included as investments under the Participation Agreement. Until final
disposition of the well and notes is determined, the Company reclassified the notes and accrued interest as debt and accrued interest
on the May 31, 20252025. andThese Novembernotes 30,continue 2025to Consolidatedaccrue Balanceinterest Sheets.subsequent to the transfer to debt resulting in accrued interest totaling
$125,303 as of February 28, 2026.
As
of NovemberFebruary 30,28, 2025,2026, the oil levels from the three drilled wells were not sufficient to maintain operation and the wells have been shut
in pending evaluation and possibly more perforations. Development of the additional eight wells is paused evaluating oil prices and additional
field information.
Our
cash and cash equivalents balance at NovemberFebruary 30,28, 20252026 was $568,831.$264,166. Our total debt outstanding as of NovemberFebruary 30,28, 20252026 was $4,935,766,$4,783,585,
including (i) $617,934 owed to Alleghany, which is classified as a current note payable, and (ii) $856,642$841,191 pursuant to notes under the
Paycheck Protection Program, or PPP, of which we have classified $794,604$778,998 as long-term debt, net of the current portion totaling $62,038,$62,193,
which is classified as a current note payable, (iii) $59,030 short term bridge notes, net of deferred debt discount, (iv) a $310,061
revolving note classified as short-term, (viv) a $750,000 note payable
due to Cali Fields LLC, classified as short-term, (viv) a $1,475,000
$1,397,300 promissory note, net of deferred debt discount classified as short-term,
(viivi) a $292,099 note payable due to our Chief Financial Officer,
classified as short-term, and (viii) a $575,000 convertible debt contributed
for net working interest.
We
have continued financing our business with a combination of stock sales and issuances of debt securities, as described above. During
the six-monthsnine months ending NovemberFebruary 30,28, 2025,2026, we sold 2,464,6502,871,626 shares of our common stock to accredited investors raising $1,059,800,$1,284,800, and
we issued and repaid debt securities totaling $1,275,000.$1,275,000 and $77,700, respectively. During fiscal year 2025, we sold 2,894,490 shares
of our common stock to accredited investors
at an average price of $0.437 per share for gross proceeds of $1,265,200 of which $50,000
is recorded as an unissued stock subscription.
There were no finder’s fees related to the sales of the shares described above.
The issued shares have not been registered under
the Securities Act of 1933, as amended (the “Securities Act”),
and may not be offered or sold in the United
States absent registration or an applicable exemption from registration requirements
under the Securities Act.
During
fiscal year 2025, we
saw increased interest from multiple investors/funds and oil field ownership interests in our UGD methods, both
nationally and internationally,
which interest has continued during the firstnine halfmonths of fiscal year 2026. We believe this interest is
due to a change in the climate for
U.S. based energy projects. We believe that this change in the financial markets has made it easier
for us to raise equity-related funds,
and we expect this to continue for the foreseeable future. Additional funds will need to be raised
either from investors or operations
in order to maintain current operations for the next twelve months.
We
recognized revenues totaling $3,141 and $7,688,
$9,423, respectively through our interest in oil and gas sales for the sixnine months ending
February 28 ,2026 and 2025. During the nine months ending NovemberFebruary 30,28, 20252026 and 2024. During the six months ending
November 30, 2025 and 2024,2025, we incurred operating expenses from continuing
operations of $3,645,630$5,430,629 and $1,369,119,$1,700,723, respectively. These
expenses consisted primarily of general operating expenses incurred in
connection with the day-to-day operation of our business, the preparation
and filing of our required public reports. In addition,
lease operating expenses are included in total operating expenses. The increase
in expenses for the sixnine months ending NovemberFebruary 30, 2025,28,
2026, as compared to the same period in 2024,2025, is primarily attributable to a $2.0 million
expense related to stock option grants.
There were no stock options granted during the same period inending 2024.February 28, 2025. The remaining increase in
expenses for the six nine
months ending NovemberFebruary 30,28, 2025,2026, as compared to the same period in 2024,2025, is primarily attributable to $27,000$351,000 increase in
inprofessional fees related to legal fees and public relations, $91,000$153,000 increase in payroll expenses primarily attributable to two
new employees and $43,000$91,000 increase in travel expenses related
to new potential opportunities.
During
the sixnine months ended NovemberFebruary 30,28, 2025,2026, we
recognized approximately $16,000 in other income as compared to other income totaling $328,993 $628,702
related to payments required under the
Texakoma Development Agreement during the quarternine months ended NovemberFebruary 30,28, 2024.2025.
We
recognized interest expenses totaling $584,479
$735,422 and $238,552$355,268 during the sixnine months ended NovemberFebruary 30,28, 20252026 and 2024,2025, respectively. The
increase in interest expenses is primarily related
to interest expense recorded in connection with the amortization of the debt discount
on the short-term demand notes issued during the
fourth quarter ending May 31, 2025 and sixnine months ending NovemberFebruary 30,28, 2025.2026.
In
connection with the sale of HCC, we recorded a
loss from discontinued operations totaling $52,340 and $13,383$3,962 for sixnine months ending NovemberFebruary
28, 30, 20252026 and 2024,2025, respectively.
During the three months ending November 30, 2025 and
2024, respectively, the Company recognized $1,598 and $1,640 of revenue from one of the three Texakoma wells being put into production.
During the three months ending February 28, 2026 and 2025, respectively, the Company recognized $0 and $1,735 of revenue from one of the three Texakoma wells being put into production.
During
the three months ending NovemberFebruary 30,28, 20252026 and
2024, 2025, we incurred operating expenses of $2,966,305$1,068,681 and $703,394$609,866 respectively. These expenses
consisted of general operating expenses incurred
in connection with the day-to-day operation of our business, the preparation and filing
of our required public reports and stock option
compensation expense. The increase in expenses for the three months ending NovemberFebruary 30, 2025,28,
2026, as compared to the same period in 2024,
2025, is primarily attributable to stock-basedlegal compensation expenses,fees, other professional fees primarily related to
public relations, travel
related to potential opportunities and payroll expense related to new employee hires.
During
the three months that
ended NovemberFebruary 30,28, 20252026 and 2024,2025, we recognized minimal other income.
In
connection with the sale of HCC, we recorded a
lossincome from discontinued operations totaling $38,247$0 and $9,316$9,421 for three months ending NovemberFebruary
28, 30, 20252026 and 2024,2025, respectively.
LRDC 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 LRDC (13F)
None of the 59 investors we track reported a position in their latest 13F.