Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations analyzes the major elements of our balance sheets and statements of operations. This section should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2025, and our interim unaudited financial statements and accompanying notes to these financial statements.

NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (the "Quarterly Report"), including in Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. Statements which are not historical reflect our current expectations and projections about our future results, performance, liquidity, financial condition, prospects and opportunities and are based upon information currently available to us and our management and their interpretation of what is believed to be significant factors affecting our business, including many assumptions regarding future events Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, need for financing, competitive position, and potential growth opportunities. Our forward-looking statements do not consider the effects of future legislation or regulations. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words "believes," "intends," "may," "should," "anticipates," "expects," "could," "plans," "estimates," "projects," "targets" or comparable terminology or by discussions of strategy or trends. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurances that these expectations will prove to be correct. Such statements by their nature involve risks and uncertainties that could significantly affect expected results, and actual future results could differ materially from those described in such forward-looking statements.

Among the factors that could cause actual future results to differ materially are the risks and uncertainties discussed in this Quarterly Report and in our annual report on Form 10-K for the year ended December 31, 2025. While it is not possible to identify all factors, we continue to face many risks and uncertainties including, but not limited to:

	●	declines or volatility in the prices we receive for our oil and natural gas;
	●	our ability to raise additional capital to fund future capital expenditures;

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our ability to generate sufficient cash flow from operations, borrowings or other sources to enable us to fully develop and produce our oil and natural gas properties;

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general economic conditions, whether internationally, nationally or in the regional and local market areas in which we do business;

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risks associated with drilling, including completion risks, cost overruns and the drilling of non-economic wells or dry holes;

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uncertainties associated with estimates of proved oil and natural gas reserves;

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the presence or recoverability of estimated oil and natural gas reserves and the actual future production rates and associated costs;

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risks and liabilities associated with acquired companies and properties;

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risks related to the integration of acquired companies and properties;

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potential defects in title to our properties;

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

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geological concentration of our reserves;

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environmental or other governmental regulations, including the legislation of hydraulic fracture stimulation;

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our ability to secure firm transportation for oil and natural gas we produce and to sell the oil and natural gas at market prices;

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exploration and development risks;

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management's ability to execute our plans to meet our goals;

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our ability to retain key members of our management team on commercially reasonable terms;

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the occurrence of cybersecurity incidents, attacks or other breaches to our information technology systems or on systems and infrastructure used by the oil and gas industry;

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weather conditions;

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effectiveness of our internal control over financial reporting;

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actions or inactions of third-party operators of our properties;

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costs and liabilities associated with environmental, health and safety laws;

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our ability to find and retain highly skilled personnel;

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operating hazards attendant to the oil and natural gas business;

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competition in the oil and natural gas industry;

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evolving geopolitical and military hostilities in the Middle East;

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economic and competitive conditions;

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lack of available insurance;

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cash flow and anticipated liquidity;

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the other factors discussed under "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Forward-looking statements speak only as to the date hereof. Except as otherwise required by applicable law, we disclaim any intention or obligation to update publicly or revise such statements whether as a result of new information, future events or otherwise.

There may also be other risks and uncertainties that we are unable to predict at this time or that we do not now expect to have a material adverse impact on our business.

Overview

CoJax is a growth-oriented independent exploration and production company based in Shreveport, Louisiana, and is engaged in oil and natural gas development, production, acquisition, and exploration activities currently focused on the Gulf States Drill Region.

Business Description and Plan of Operation

CoJax is currently engaged in oil and natural gas acquisition, exploration, development, and production in Mississippi and Alabama. We focus on developing our existing properties while continuing to pursue acquisitions of oil and gas properties with upside potential in the Gulf States Drill Region.

Our goal is to increase stockholder value by investing in oil and natural gas projects with attractive rates of return on capital employed. We plan to achieve this goal by exploiting and developing our existing oil and natural gas properties and pursuing strategic acquisitions of additional properties, while remaining cash flow positive, maintaining low operating costs, and striving to show a gain in annual production while reducing the Company's debt.

Executive Summary - Third Quarter 2026 Developments and Highlights

Risks and Uncertainties

The oil and natural gas industry is a global market impacted by many factors, including government regulations, particularly in the areas of trade sanctions, taxation, energy, climate change and the environment, geopolitical instability, and military conflicts (including the ongoing Russian-Ukrainian conflict and conflict in the Middle East), fluctuations in worldwide commodity demand, and the extent to which members of OPEC and other oil exporting nations manage oil supply through export quotas. In general, natural gas prices are determined by North American supply and demand and are affected by the import and export of liquefied natural gas. Oil and natural gas prices have been, and are expected to continue to be, volatile. This volatility could negatively impact future prices for oil, natural gas, petroleum products, and industrial products.

Results of Operations - For the Three and Nine Months Ended September 30, 2026, and 2025

		For the Three Months Ended September 30,																For the Nine Months Ended September 30,
											Change				Change													Change				Change
			2026				2025				Amount				%					2026				2025				Amount				%
Revenues			$	593,640			$	212,868			$	380,772				178.9%				$	1,035,102			$	784,714			$	250,388				31.9%
Lease operating expenses				208,337				143,715				64,622				45.0%					390,852				367,340				23,512				6.4%
General & administrative expenses				153,681				135,813				17,868				13.2%					504,008				614,394				(110,386)				(18.0%)
Depletion and accretion on discounted liabilities				228,250				90,757				137,493				151.5%					399,362				308,537				90,825				29.4%
Gain/loss from operations				3,372				(157,417	)			160,789				(102.1%)					(259,120)				(505,557	)			246,437				(48.7%)
Other expense, net				(477)				(288	)			(189	)			65.6%					(1,330)				(1,015	)			(315)				31.0%
Net income/loss			$	2,895			$	(157,705	)		$	160,600				(101.8%)					(260,450)				(506,572	)			246,122				(48.6%)

Revenues

Revenues were $593,640 for the three months ended September 30, 2026, compared to $212,868 for the corresponding period in 2025. The increase in revenues of 178.9% for the three months ended September 30, 2026, compared to the same period in 2025, was primarily attributable to higher sales volumes from the Buckley Assets following the completion of workover activities in the second quarter of 2026, as well as higher realized oil prices. Oil sales volumes increased to 6,398 Bbls from 3,108 Bbls, and the average realized oil price increased to $91.45 per Bbl from $62.97 per Bbl.

For the nine month period ended September 2026 revenues were $1,035,102 compared to revenues of $784,714 the corresponding period ended September 30, 2025, an increase of approximately 31.9% compared to September 30, 2025, which was primarily driven by higher oil prices in 2026, with the average realized oil price increasing to $89.87 per Bbl from $67.17 per Bbl. Sales volumes were relatively consistent at 11,346 Bbls compared to 11,490 Bbls, as higher production from the Buckley Assets following the workover in the second quarter of 2026 was offset by lower production volumes from the Pine Grove Assets due to well downtime during the first quarter of 2026. In addition, revenues for the nine months ended September 30, 2025 are inclusive of $78,152 from the NONOP assets which were disposed prior to Jan 1, 2026, and $39,645 from the Liberty field, which had no sales in 2026.

Lease Operating Expenses

Lease operating expenses were $208,337 for the three months ended September 30, 2026, an increase of approximately 45.0% from $143,715 during the same period in 2025. The increase was primarily driven by higher production-related costs associated with increased production from the Buckley Assets, including production taxes of $63,054, equipment rental of $30,491, and higher contract labor, swab unit, hauling, and materials and supplies costs, partially offset by a $65,832 true-up of estimated lease operating expenses recorded in the first half of 2026.

Lease operating expenses were $390,852 for the nine months ended September 30, 2026, an increase of approximately 6.4% from $367,340 during the same period in 2025. The increase was primarily due to production taxes of $63,054 and higher production-related costs associated with increased production from the Buckley Assets in the third quarter of 2026, partially offset by lower lease operating expenses in the first six months of 2026 of $182,514 compared to $223,625 for the same period in 2025.

General and Administrative Expenses

General and administrative expenses consisted primarily of accounting and audit fees, legal and professional services fees, and payroll-related expenses. For the three-month periods ended September 2026 and 2025 general and administrative expenses were $153,681 and $135,813 respectively, representing an increase of approximately 13.2% period over period. The increase was primarily attributable to higher accrued salaries and related payroll taxes.

For the nine months ended September 30, 2026 general and administrative expenses were $504,008 compared to $614,394 in the same period in 2025, representing a decrease of approximately 18.0% or $110,386. The decrease was primarily driven by reserve evaluation fees, directors' and officers' insurance, and wages and related payroll taxes incurred in the first quarter of 2025, as well as estimated management fees associated with the NONOP assets incurred in 2025, which did not recur in 2026.

Loss from Operations

Total operating gain was $3,372 for the three months ended September 30, 2026, compared to $157,417 loss for the corresponding period in 2025, a decrease in loss of $160,789. The decrease in loss was primarily driven by higher revenues, partially offset by higher lease operating expenses as production increased during the period and an increase in depletion and accretion on discounted liabilities.

Total operating loss was $259,120 and $505,557 for the nine months ended September 30, 2026 and 2025, respectively. The decrease in loss of $246,437 was primarily driven by higher revenues and lower general and administrative expenses, partially offset by higher lease operating expenses and depletion and accretion on discounted liabilities.

Other Expense, Net

Other expense, net was $477 and $1,330 for the three and nine months ended September 30, 2026, compared to $288 and $1,015 for the corresponding periods in 2025. Other expense, net consists primarily of interest expense accrued on the related-party notes payable, which bear interest at 2% per annum, partially offset by interest income of $42 and $211 for the three and nine months ended September 30, 2026, respectively.

Net income/loss

As a result of the above factors, for the three months ended September 30, 2026, the Company had net income of $2,895 compared to a net loss of $157,705 for the three months ended September 30, 2025 and a net loss of $260,450 for the nine months ended September 30, 2026 compared to a net loss of $506,572 for the nine months ended September 30, 2025.

Sales volumes and commodity prices received

The following table presents our sales volumes and received pricing information for the three- and nine-month periods ended September 30, 2026, and 2025:

		For the Three Months Ended September 30,							For the Nine Months Ended September 30,
		2026				2025			2026				2025
Oil volume (Bbls)			6,398				3,108			11,346				11,490
Natural gas volume (Mcf)			-				-			-				-
Total Production (Boe)			6,398				3,108			11,346				11,490
Average Sales Price:
Oil price (per Bbl)		$	91.45			$	62.97		$	89.87			$	67.17
Gas price (per Mcf)			-				-			-				-
Total per BOE		$	91.45			$	62.97		$	89.87			$	67.17

Liquidity and Capital Resources

Sources of Liquidity

The Company had cash on hand of $55,601 at September 30, 2026, compared to $71,119 at September 30, 2025.

For the nine months ended September 30, 2026, the Company had net cash provided by operating activities of $73,239, compared to $31,938 provided by operating activities for the same period of 2025. The increase was primarily driven by a larger increase in accounts payable and accrued liabilities of $348,978 and a lower net loss, partially offset by an increase in accounts receivable of $409,735 due to higher revenues in the third quarter of 2026.

The Company had cash flows used in investing activities of $87,223 for the nine months ended September 30, 2026, primarily related to capitalized workover costs on the Buckley Assets, compared to no investing cash flows for the nine months ended September 30, 2025.

Net cash used in financing activities was $7,634 for the nine months ended September 30, 2026, compared to net cash used in financing activities of $7,557 for the same period in 2025.

Capital Resources for Future Acquisition and Development Opportunities

We continuously evaluate potential acquisitions and development opportunities. To the extent possible, we intend to acquire producing properties and/or developed undrilled properties rather than exploratory properties. We do not intend to limit our evaluation to any one state. We presently have no intention to evaluate offshore properties or properties located outside of the United States. Funding for future acquisitions and development opportunities would be dependent on the availability of cash flows from operating activities, debt, or issuance of equity.

Effects of Inflation and Pricing

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 pressure on the economic stability and pricing structure within the industry. Typically, as prices for oil and natural gas increase, so do all 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.

Off Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements, and it is not anticipated that the Company will enter into any off-balance sheet arrangements.

Disclosures About Market Risks

Like other natural resource producers, the Company faces certain unique market risks associated with the exploration and production of oil and natural gas. The most salient risk factors are the volatile prices of oil and gas, operational risks, the ability to integrate properties and businesses, and certain environmental concerns and obligations.

Oil and Gas Prices

The price we receive for our oil and natural gas will heavily influence 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. The prices we receive for our production depend on numerous factors beyond our control. These factors include, without limitation, the following: worldwide and regional economic conditions impacting the global supply and demand for oil and natural gas; the price and quantity of imports of foreign oil and natural gas; the level of global oil and natural gas inventories; localized supply and demand fundamentals; the availability of refining capacity; price and availability of transportation and pipeline systems with adequate capacity; weather conditions, natural disasters, and public health threats; governmental regulations; speculation as to the future price of oil and the speculative trading of oil and natural gas futures contracts; price and availability of competitors' supplies of oil and natural gas; energy conservation and environmental measures; technological advances affecting energy consumption; the price and availability of alternative fuels and energy sources; and domestic and international drilling activity.

A substantial or extended decline in oil or natural gas prices may result in impairments of our proved oil and gas properties and may materially and adversely affect our future business, financial condition, cash flows, and results of operations.

Transportation of Oil and Natural Gas

CoJax is presently committed to using the services of the existing gatherers in its present areas of production. This gives such gatherers certain short-term relative monopolistic powers to set gathering and transportation costs. Obtaining the services of an alternative gathering company would require substantial additional costs since an alternative gatherer would be required to lay a new pipeline and/or obtain new rights-of-way.

Competition in the Oil and Natural Gas Industry

We operate in a highly competitive environment for developing and acquiring properties, marketing oil and natural gas, and securing equipment and trained personnel. As a relatively small oil and natural gas company, many large producers possess and employ financial, technical, and personnel resources substantially greater than ours. Those companies may be able to develop and acquire more prospects and productive properties than our financial or personnel resources permit. It is also significant that more favorable prices can usually be negotiated for larger quantities of oil and/or gas products, such that CoJax views itself as having a price disadvantage compared to larger producers.

Retention of Key Personnel

We depend to a large extent on the services of our officers. These individuals have extensive experience in the energy industry, as well as expertise in evaluating and analyzing producing oil and natural gas properties and drilling prospects, maximizing production from oil and natural gas properties, and developing and executing financing strategies. The loss of any of these individuals could have a material adverse effect on our operations and business prospects. Our success may be dependent on our ability to continue to hire, retain and utilize skilled executive and technical personnel.

Environmental and Regulatory Risks

Our business and operations are subject to and impacted by a wide array of federal, state, and local laws and regulations governing the exploration for and development, production, and marketing of oil and natural gas, the operation of oil and natural gas wells, taxation, and environmental and safety matters. Many laws and regulations require drilling permits and govern the spacing of wells, rates of production, water, waste use and disposal, prevention of waste hydraulic fracturing, and other matters. From time to time, regulatory agencies have imposed price controls and limitations on production in order to conserve supplies of oil and natural gas. In addition, the production, handling, storage, transportation, and disposal of oil and natural gas, byproducts thereof, and other substances and materials produced or used in connection with oil and natural gas operations are subject to regulation under federal, state, and local laws and regulations.

Compliance with these regulations may constitute a significant cost and effort for CoJax. To date, no specific accounting for environmental compliance has been maintained or projected by CoJax. CoJax does not presently know of any environmental demands, claims, adverse actions, litigation, or administrative proceedings in which it or the acquired properties are involved or subject to or arising out of its predecessor operations.

In the event of a violation of environmental regulations, these environmental regulatory agencies have a broad range of alternative or cumulative remedies including ordering a cleanup of any spills or waste material and restoration of the soil or water to conditions existing prior to the environmental violation; fines; or enjoining further drilling, completion or production activities.

Going Concern

There can be no assurance that the Company will be able to achieve its business plan, raise additional capital, or secure the additional financing necessary to implement its current operating plan. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

During Q2 and Q3, the Company was able to achieve profitable operations, however profits are not strong enough to support expansion of the business. The Company expects to incur further losses in the development of its business and is dependent upon future issuances of equity or other financings to fund ongoing operations. This raises substantial doubt about the Company's ability to continue as a going concern. The Company's ability to continue as a going concern is dependent upon its ability to generate future profitable operations or to obtain the necessary financing from shareholders or other sources to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has not yet finalized a formal plan to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances, however, there is no assurance of additional funding being available or on acceptable terms, if at all.

Critical accounting estimates

The Company's statements are prepared in conformity with Generally Accepted Accounting Principles in the United States of America ("GAAP"), which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Critical accounting policies are those that require the application of management's most difficult, subjective or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and that may change in subsequent periods.

In preparing the financial statements, management utilizes available information-including historical performance, industry benchmarks, and current economic conditions-to inform its estimates and judgments, with appropriate consideration of materiality. Actual results may differ materially from these estimates. In addition, other companies may utilize different estimates, which may impact the comparability of the Company's results of operations to those of companies in similar businesses.

For the nine months ended on September 30, 2026, the Company did not have any critical accounting estimates to disclose. The Company will continue to evaluate and disclose additional critical accounting policies as operations expand and as new standards or interpretations emerge.