Management's Discussion and Analysis of Financial Condition and Results of Operation.

Financial Condition

The Company used $67,000 and $49,000 cash in operating activities in the six months ended March 31, 2026 and 2025, respectively. Accrued expenses, related party, $1,235,000 at March 31, 2026, and September 30, 2025, are accrued but unpaid salary and bonus, and related accrued payroll tax liability, due to the Company's president that the Company's president has elected to defer. The Company's president may cause the Company to pay the unpaid salary and bonus and payroll tax liability at any time. Pursuant to his employment agreement, the Company's president may elect to receive unpaid bonus in cash or shares of the Company's common stock at fair market

The Company is likely to experience negative cash flow from operations unless the Company invests in interests in producing oil and gas wells or in another venture that produces sufficient cash flow from operations. With the exception of capital expenditures related to production acquisitions or drilling or recompletion activities or an investment in another venture that produces cash flow from operations, none of which are currently planned, the cash flows that could result from such acquisitions, activities, or investments, and the possibility of a material change in the current level of interest rates or of oil and gas prices, the Company knows of no trends or demands, commitments, events, or uncertainties that will result in or that are reasonably likely to result in the Company's liquidity increasing or decreasing in any material way. Except for cash generated by the operation of the Company's producing oil and gas properties, asset sales, and interest income, the Company has no internal or external sources of liquidity other than its working capital. At May 1, 2026, the Company had no material commitments for capital expenditures.

Results of Operations

General and administrative expense decreased from $211,000 in the six months ended March 31, 2025, to $132,000 in the six months ended March 31, 2026, principally because, during the quarter ended December 31, 2024, the Company recognized bonus expense and related payroll tax liability of $94,000 pursuant to the president's employment agreement. General and administrative expense increased from $61,000 in the three months ended March 31, 2025, to $72,000 in the three months ended March 31, 2026, because of increased medical insurance premiums, audit fees, legal fees, office rent, and state franchise taxes. Interest income decreased from $57,000 in the six months ended March 31, 2025, to $46,000 in the six months ended March 31, 2026, and from $27,000 in the three months ended March 31, 2026, to $21,000 in the three months ended March 31, 2026, principally because of lower interest rates on cash balances.

At the current levels of net oil and gas production, cash balances, interest rates, and oil and gas prices, the Company's revenue is unlikely to exceed its expenses. Unless the Company invests a substantial portion of its cash balances in interests in producing oil and gas wells or in one or more other ventures that produce revenue and net income, the Company is likely to experience net losses. With the exception of unanticipated asset retirement obligations, unanticipated environmental expense, and possible changes in interest rates and oil and gas prices, the Company is not aware of any other trends, events, or uncertainties that have had or that are reasonably expected to have a material impact on net sales or revenues or income from continuing operations.

Climate Change

The company does not believe that climate change or regulations adopted to mitigate the consequences of climate change will have a material impact on the Company's financial condition or results of operations.