Trio Petroleum Corp.

 

You should read the following discussion and analysis of financial condition and operating results together with our condensed consolidated financial statements and the related notes and other financial information included elsewhere in this quarterly report on Form 10-Q, as well as our audited financial statements and related notes as disclosed in our Form 10-K for the year ended October 31, 2025, filed with the SEC on January 20, 2026 (“our Form 10-K”). This discussion contains forward-looking statements that involve risks and uncertainties. As a result of many factors, such as those in this Quarterly Report on Form 10-Q, as well as the risk factors set forth in the section titled “Risk Factors” included in our Form 10-K, our actual results may differ materially from those anticipated in these forward-looking statements. For convenience of presentation some of the numbers have been rounded in the text below.

 

Throughout this report, the terms “our,” “we,” “us,” and the “Company” refer to Trio Petroleum Corp.

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q contains forward-looking statements that can involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future results of operations and financial position, business strategy, prospective products, product approvals, research and development costs, future revenue, timing and likelihood of success, plans and objectives of management for future operations, future results of anticipated products and prospects, plans and objectives of management are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

 

In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. Risks, risk factors and uncertainties involved in forward-looking statements contained in this Form 10-Q include, but are not limited to, the following:

 

●	our ability to find, acquire or gain access to other properties, discoveries and prospects and to successfully develop our current properties, discoveries and prospects;
●	uncertainties inherent in making estimates of our oil and natural gas resources;
●	the successful implementation of our prospective discovery, development and drilling plans with the South Salinas Project;
●	projected and targeted capital expenditures and other costs, commitments and revenues;
●	our dependence on our key management personnel and our ability to attract and retain qualified technical personnel;
●	the ability to obtain financing and the terms under which such financing may be available;
●	the volatility of oil and natural gas prices;
●	the availability and cost of developing appropriate infrastructure around and transportation to our discoveries and prospects;
●	the availability and cost of drilling rigs, production equipment, supplies, personnel and oilfield services;
●	other competitive pressures;
●	potential liabilities inherent in oil and natural gas operations, including drilling risks and other operational and environmental hazards;
●	current and future government regulation of the oil and gas industry;
●	cost of compliance with laws and regulations;
●	changes in environmental, health and safety or climate change laws, greenhouse gas regulation or the implementation of those laws and regulations;
●	environmental liabilities;
●	geological, technical, drilling and processing problems;
●	military operations, terrorist acts, wars or embargoes;
●	the cost and availability of adequate insurance coverage;
●	our vulnerability to severe weather events; and
●	other risk factors discussed in the “Risk Factors” section of this Quarterly Report and in our Form 10-K.

 

 

We have based these forward-looking statements largely on our current expectations and projections about our business, the industry in which we operate and financial trends that we believe may affect our business, financial condition, results of operations and prospects, and these forward-looking statements are not guarantees of future performance or development. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of risks, uncertainties and assumptions described in the section titled “Risk Factors” and elsewhere in this Quarterly Report. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein until after we distribute this Quarterly Report, whether as a result of any new information, future events or otherwise.

 

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and you are cautioned not to unduly rely upon these statements.

 

Overview

 

We are a California-based oil and gas exploration and development company with operations in Monterey County, California, Uintah County, Utah, and the Lloydminster region of Saskatchewan, Canada. Our strategy continues to focus on acquiring and developing assets that provide near-term production, long-term development potential, and opportunities for value creation through targeted operational investment.

 

We began generating revenues in fiscal 2024 following the restart of production at the McCool Ranch Oil Field and expanded our revenue base in fiscal 2025 through the acquisition of producing heavy-oil assets in Saskatchewan. During the six months ended April 30, 2026, our operational activity continued to center on our Canadian properties, which represent our most significant near-term growth opportunity. We are progressing workover and optimization programs on the assets acquired from Novacor in April 2025 and December 2025, as well as the assets acquired from Capital Land in November 2025.

 

In California, we continue to advance permitting efforts for the South Salinas Project, including conditional use permits and water-disposal permits. We are also evaluating potential joint-venture arrangements to support development activities and continue to assess the feasibility of a carbon capture and storage initiative leveraging existing deep wells and infrastructure. At the P.R. Spring project in Utah, we continue to monitor production performance at the Asphalt Ridge wells in connection with the non-binding Letter of Intent (“LOI”) with Heavy Sweet Oil LLC (“HSO”). In April 2026, we entered into a written extension with Heavy Sweet Oil LLC that extended the production-rate deadline under the LOI to May 15, 2028, or such later date as may be further extended by us.

 

In January 2026, we entered into an At Market Issuance Sales Agreement (the “ATM Agreement”) with Ladenburg Thalmann & Co. Inc. (“Ladenburg”), permitting the initial sale of up to $3,600,000 of common stock from time to time at our discretion. During the six months ended April 30, 2026, we sold an aggregate of 28,013,007 shares of common stock under the ATM program for total gross proceeds of $24,207,304. As of April 14, 2026, our public float exceeded $75 million and we are no longer subject to the sales limitations under General Instruction I.B.6 of Form S-3. On May 6, 2026, we filed Amendment No. 10 to the prospectus supplement to reflect the removal of the I.B.6 sales limitations, and the aggregate amount of shares available for sale under the ATM Agreement is $65,000,000. These proceeds and the expanded ATM capacity provide significant financial flexibility to support our development plans, including ongoing work in Canada and continued advancement of permitting and strategic initiatives at South Salinas.

 

 

Recent Developments

 

Ladenburg ATM Agreement

 

On January 9, 2026, we entered into an ATM Agreement with Ladenburg as agent, pursuant to which we may issue and sell shares of our common stock from time to time through Ladenburg. On the same date, we also filed a prospectus supplement with the SEC covering the sale of shares of common stock having an aggregate offering price of up to $3,600,000 (the “Placement Shares”), in connection with the ATM Offering. The ATM Agreement provides that Ladenburg will be entitled to aggregate compensation for its services up to 3.0% of the gross proceeds from each sale of Placement Shares sold through Ladenburg under the ATM Agreement.

 

During the second quarter of fiscal 2026, we filed a series of amendments to the prospectus supplement to update the number of shares eligible for sale under General Instruction I.B.6 of Form S-3. These amendments, filed on March 3, 2026, March 4, 2026, March 5, 2026, March 10, 2026, March 30, 2026, April 6, 2026, April 7, 2026, April 8, 2026, and April 10, 2026, progressively increased the maximum aggregate offering amount available under the ATM program to $24,208,000 as of April 10, 2026. During the six months ended April 30, 2026, we sold an aggregate of 28,013,007 shares of common stock under the ATM Agreement for total gross proceeds of $24,207,304, with all such sales completed on or before April 13, 2026.

 

As of April 14, 2026, the aggregate market value of our outstanding shares of common stock held by non-affiliates exceeded $75 million, calculated using the closing price of our common stock on March 3, 2026 (within the 60-day measurement period permitted under General Instruction I.B.6 of Form S-3). As a result, we are no longer subject to the sales limitations under General Instruction I.B.6 of Form S-3. On May 6, 2026, we filed Amendment No. 10 to the prospectus supplement to reflect the removal of the I.B.6 sales limitations. Following the filing of Amendment No. 10, the aggregate amount of shares available for sale under the ATM Agreement is $65,000,000, and the maximum aggregate offering amount was increased to $89,208,000 (inclusive of shares previously sold).

 

Subsequent to April 30, 2026 and through the date of this filing, we sold an additional 6,159,229 shares of common stock for aggregate gross proceeds of $2,557,841. Management believes the expanded ATM capacity provides a significant opportunity to accelerate the expansion of the Company’s oil and gas assets in both Canada and the U.S., as we seek to acquire assets generating more significant cash flow with high-impact growth potential.

 

Capital Land Services Acquisition

 

On August 20, 2025, we, through our wholly owned subsidiary Trio Canada, entered into an Asset Purchase Agreement (“APA”) with Capital Land Services Ltd. (“Capital Land”). Pursuant to the APA, Trio Canada agreed to acquire certain mineral leasehold interests and related rights located in the County of Vermilion of River, Alberta, Canada, together with associated contracts, permits, and registrations (collectively, the “Assets”). The total purchase price consists of CAD $150,000 in cash and the issuance of restricted shares of our common stock having an aggregate value of CAD $150,000.

 

On November 3, 2025, the transactions contemplated under the APA were completed (the “Capital Land Acquisition”). At closing, Trio Canada paid Capital Land CAD $150,000 in cash and we issued 104,227 restricted shares of our common stock to Capital Land. In exchange, Trio Canada acquired the Assets, including certain wells that had been purchased out of receivership. Due to regulatory requirements of the Alberta Energy Regulator (“AER”), we arranged for all applicable licenses to be transferred to Novacor, an experienced operator with whom we have an existing commercial relationship. Novacor utilizes Capital Land as its AER agent. In consideration for Capital Land’s services as AER agent, we granted Capital Land a 1% gross overriding royalty with respect to the mineral rights, for as long as Capital Land continues to provide such services.

 

Asset Purchase Transaction with Novacor Exploration Ltd.

 

On December 30, 2025, we, through our wholly owned subsidiary Trio Canada, entered into an Asset Purchase Agreement with Novacor Exploration Ltd. (“Novacor”) to acquire certain oil and gas assets located in the Lloydminster, Saskatchewan heavy oil region of Canada (the “Novacor Acquisition”). The acquired assets include working interests in petroleum and natural gas leases, mineral rights, wells, surface rights, and related contracts, leases, and permits. Trio Canada also assumed certain specified liabilities of Novacor associated with the acquired assets.

 

The contractual purchase price was CAD $1,000,000 (approximately US$730,300 based on the exchange rate on the agreement date), payable through the issuance of 912,875 restricted shares of our common stock. The Novacor Acquisition closed simultaneously with the execution of the Asset Purchase Agreement on December 30, 2025. At closing, title to the acquired assets was transferred to Trio Canada, and we issued the 912,875 restricted shares to Novacor.

 

In accordance with ASC 820, we measured the equity consideration at its fair value of $748,649 based on the closing price of our common stock on the December 30, 2025 acquisition date. The difference between this GAAP fair value and the contractual CAD $1,000,000 (US$730,300) value reflects changes in our stock price between the agreement date and the closing date. See Note 5 to the condensed consolidated financial statements.

 

Under the Asset Purchase Agreement, Novacor will act as the on-site operator of the acquired assets following the closing and will perform certain post-closing work and services. For a period of two years following closing, operating costs are to be maintained at the levels detailed in the auditor’s report covering the eighteen months prior to closing, unless the parties mutually agree otherwise. After that two-year period, operating costs are to remain competitive with other operators in the area. Trio Canada may terminate Novacor’s post-closing role at any time upon 30 days’ prior written notice.

 

Although the Novacor Acquisition closed on December 30, 2025, the Asset Purchase Agreement provides for an Accounting Adjustment Date, or effective date, of April 1, 2026, as of which the revenues and expenses attributable to the acquired assets are apportioned between the parties. Novacor remains entitled to the revenues, and responsible for the expenses, from the ownership and operation of the acquired assets for periods prior to April 1, 2026, and the Company becomes entitled to such revenues, and responsible for such expenses, only from and after that date. Consistent with this arrangement, Novacor continues to act as the on-site operator of the assets following closing, as described above. Accordingly, the Company’s results of operations for the three and six months ended April 30, 2026 reflect revenue from these assets only to the extent that production on or after April 1, 2026 was sold during the period. Consistent with the Company’s revenue recognition policy under ASC 606, such revenue is recognized when control of the produced volumes transfers to the customer.

 

 

In connection with the closing, on December 30, 2025, we entered into a Registration Rights Agreement with Novacor (the “Registration Rights Agreement”) providing Novacor with “piggyback” registration rights with respect to the 912,875 shares (the “Registrable Securities”), subject to customary limitations and restrictions, requiring us to file a resale registration statement covering the Registrable Securities on or before March 31, 2026 if the Registrable Securities were not included in a piggyback registration statement filed by that date. On April 3, 2026, we filed a Registration Statement on Form S-3 (File No. 333-294870)  registering the resale of the Registrable Securities together with 446,149 shares previously issued to McDermott Will & Schulte LLP in the March 2026 settlement of legal fees described in Note 9 to the condensed consolidated financial statements. The Registration Statement was declared effective on April 13, 2026. We have agreed to pay all fees relating to the registration of the Registrable Securities, other than broker or similar commissions payable by a holder.

 

Extension of Letter of Intent with Heavy Sweet Oil

 

In May 2025, we entered into a non-binding Letter of Intent (“LOI”) with Heavy Sweet Oil LLC (“HSO”) regarding the potential acquisition of certain oil and gas assets located on approximately 2,000 acres in the P.R. Spring area of the Uinta Basin in Utah. The LOI required that, before the parties would proceed to definitive agreements, there be evidence of a minimum sustained production rate of 40 barrels per day for a continuous 30-day period from each of the two wells we operate at the nearby Asphalt Ridge site. The LOI provided that if this production requirement was not met by May 15, 2026, the LOI would expire unless extended by us.

 

As of April 20, 2026, the required production rate had not been achieved and was not expected to be achieved by the original deadline. As such, we and HSO entered into a written extension that extended the production-rate deadline to May 15, 2028, or such later date as may be further extended by us. All other terms of the LOI remain unchanged.

 

2026 Annual Meeting of Stockholders

 

On May 21, 2026, we held our annual meeting of stockholders. Our stockholders approved an amendment to our Amended and Restated Certificate of Incorporation to effect a reverse stock split of our outstanding common stock, if deemed necessary by our Board of Directors, at a ratio of not less than one-for-two and not more than one-for-ten, with the exact ratio to be determined by the Board in its sole discretion. As of the date of this filing, our Board had not determined a final ratio and no reverse stock split had been effected. Accordingly, the share and per-share amounts presented in this Quarterly Report have not been retroactively adjusted for the proposed reverse stock split. A reverse stock split, if implemented, would become effective upon the filing of a certificate of amendment to our Amended and Restated Certificate of Incorporation with the Secretary of State of Delaware.

 

Our stockholders also approved an amendment to our 2022 Equity Incentive Plan to increase the number of shares of common stock reserved for issuance thereunder by 3,500,000 shares, from 2,952,383 shares to 6,452,383 shares. In addition, our stockholders elected Robin Ross as a Class III director for a three-year term and ratified the appointment of Bush & Associates CPA LLC as our independent registered public accounting firm for the fiscal year ending October 31, 2026.

 

Executive and Director Compensation Arrangements

 

On June 2, 2026, the Compensation Committee of our Board of Directors approved certain compensation actions for our executive officers and non-employee directors, including changes to our Chief Executive Officer’s compensation, one-time restricted share grants under our 2022 Equity Incentive Plan, and an increase in non-employee director cash compensation. With respect to our Chief Executive Officer, the Compensation Committee approved (i) an increase in his annual base salary from $400,000 to $600,000, effective June 1, 2026; (ii) an increase in his maximum annual discretionary cash bonus from 100% to 200% of his annual base salary actually received in the applicable year; (iii) a one-time restricted share grant of 1,500,000 shares of our common stock, vesting upon issuance; and (iv) a cash bonus of $300,000, payable on August 1, 2026. With respect to our Chief Financial Officer, the Compensation Committee approved a one-time restricted share grant of 200,000 shares of our common stock, vesting upon issuance; no changes were made to his base salary or bonus arrangements. The Compensation Committee also approved one-time restricted share grants to our non-employee directors, vesting upon issuance, totaling 1,600,000 shares, and a 15% increase in annual cash compensation for non-employee directors, increasing the annual retainer from $50,000 to $57,500 and committee service compensation from $10,000 to $11,500 per committee. The restricted share grants described above, totaling 3,300,000 shares, were made under our 2022 Equity Incentive Plan and vest upon issuance. Because these awards vest upon issuance, we expect to recognize a significant stock-based compensation charge, measured at the grant-date fair value in accordance with ASC 718, during the third quarter of fiscal 2026.

 

Going Concern Considerations

 

We continue to incur operating losses and have not yet generated sufficient revenues to support our operations. As of April 30, 2026, we had an accumulated deficit of $29,735,797 and a working capital of $21,459,026. For the three and six months ended April 30, 2026, we incurred net losses of $1,367,356 and $2,379,985, respectively, and used $2,154,161 of cash in operating activities. Our auditors, in their report accompanying our audited financial statements as of October 31, 2025, provided that our financial situation raised substantial doubt about our ability to continue as a going concern. As a result of our having raised gross proceeds of $24,207,304, during the six months ended April 30, 2026, pursuant to the sale of an aggregate of 28,013,007 shares of common stock under the ATM Agreement, management no longer believes that there is a substantial doubt about our ability to continue as a going concern following the issuance of the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

 

Since inception, we have funded our operations primarily through equity and debt financings, including proceeds from common stock issuances, our April 2023 initial public offering, multiple convertible note financings, promissory notes, and sales under ATM offering programs. During the six months ended April 30, 2026, we sold an aggregate of 28,013,007 shares of common stock under the ATM program for total gross proceeds of $24,207,304. Subsequent to April 30, 2026 and through the date of issuance of these condensed consolidated financial statements, we raised an additional $2,557,841 in gross proceeds under the ATM program. On May 6, 2026, we filed Amendment No. 10 to the prospectus supplement reflecting that, based on the Company’s public float having exceeded $75 million as of April 14, 2026, the Company is no longer subject to the sales limitations under General Instruction I.B.6 of Form S-3. Following Amendment No. 10, the aggregate amount of shares available for sale under the ATM Agreement is $65,000,000.

 

These capital raises significantly improved our liquidity position and are expected to be sufficient to fund our operating and capital requirements for at least twelve months from the date of issuance of the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. Management evaluated whether these capital raises, together with our operating plans, alleviate the conditions that initially raised substantial doubt about our ability to continue as a going concern. Based on the additional capital raised during and subsequent to the six months ended April 30, 2026, management concluded that its plans are probable of being effectively implemented and sufficient to address the Company’s liquidity needs for the twelve month period following issuance. Accordingly, while substantial doubt previously existed, the raising of additional capital under the ATM Agreement and management’s plans have alleviated that substantial doubt as of the date of issuance of the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

 

Our condensed consolidated financial statements continue to be prepared on a going-concern basis and do not include any adjustments to the carrying amounts or classification of assets and liabilities that may result from future developments. Additional information regarding our going-concern assessment is provided in Note 3 to the condensed consolidated financial statements, which are included in this Quarterly Report on Form 10-Q.

 

 

Factors and Trends Affecting Our Business and Results of Operations

 

Our results continue to be influenced by global economic conditions and volatility in commodity prices. Fluctuations in oil prices, geopolitical developments, and changes in regulatory environments can affect our cash flows and operating margins. We continue to focus on cost management and operational efficiency, particularly at our Canadian properties, where lift costs remain relatively low compared to our California assets.

 

Our near-term strategy remains centered on expanding production and development activities across our recently acquired Canadian assets, which we believe offer the most immediate potential for revenue growth. We are pursuing workover and optimization programs on the assets acquired from Novacor and Capital Land and evaluating additional opportunities to enhance production.

 

In connection with our December 2025 acquisition of additional oil and gas assets in the Lloydminster, Saskatchewan heavy oil region from Novacor Exploration Ltd., we are recognizing revenue from these assets in accordance with applicable accounting standards. The assets are already producing and, based on management’s current expectations, are anticipated to materially expand our production levels, providing near-term cash flow and further supporting our strategy of scaling through disciplined, accretive acquisitions. 

 

At the South Salinas Project, we continue to advance permitting efforts with Monterey County, CalGEM, and the California Water Boards. We are also evaluating potential joint-venture arrangements to support development activities and continue to assess the feasibility of a carbon capture and storage initiative leveraging existing deep wells and infrastructure. While the HV-3A well remains capable of production testing under existing permits, operations are currently idled as we evaluate potential steps to increase production rates and assess joint-venture opportunities.

 

At the P.R. Spring project, we continue to monitor production performance at the Asphalt Ridge wells. In April 2026, we entered into a written extension with HSO that extended the production-rate deadline under the existing non-binding LOI to May 15, 2028, or such later date as may be further extended by us. We will continue to evaluate whether future production results support proceeding to definitive agreements, although we remain under no obligation to do so.

 

The additional capital raised through our ATM program represents a transformational step for the Company, enabling us to accelerate the pursuit of larger, higher impact oil and gas acquisitions over the coming quarters. During the six months ended April 30, 2026, we sold an aggregate of 28,013,007 shares of common stock under the ATM program for total gross proceeds of $24,207,304, with additional proceeds of $2,557,841 raised subsequent to quarter-end. Subsequent to April 30, 2026, on May 6, 2026, we filed Amendment No. 10 to the prospectus supplement under our existing Registration Statement on Form S-3 reflecting that, based on the Company’s public float having exceeded $75 million as of April 14, 2026, the Company is no longer subject to the sales limitations of General Instruction I.B.6 of Form S-3. Following Amendment No. 10, the aggregate amount of shares available for sale under the ATM Agreement is $65,000,000. This expanded capital capacity enhances our ability to target projects in both Canada and the United States in the range of 350 to 1,000 barrels per day, significantly expanding our production profile and long-term growth potential.

 

Our ability to execute our development plans and grow our business will depend in part on continued access to capital markets and our ability to secure financing on acceptable terms.

 

Emerging Growth Company Status

 

We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies. These exemptions include reduced disclosure obligations regarding executive compensation, the omission of auditor attestation requirements under Section 404(b) of the Sarbanes-Oxley Act, and extended transition periods for adopting new or revised accounting standards. We have elected to use the extended transition period for complying with new or revised accounting standards applicable to public companies.

 

Results of Operations

 

Three Months Ended April 30, 2026 compared to the Three Months Ended April 30, 2025 (unaudited)

 

Our financial results for the three months ended April 30, 2026 and 2025 are summarized as follows:

 

	For the Three Months Ended April 30,
	2026				2025			Change			% Change
Revenues, net	$	208,257			$	23,271		$	184,986			794.9	%
Cost of goods sold		314,320				9,262			305,058			3,293.7	%
Gross profit		(106,063	)			14,009			(120,072	)		(857.1	)%
Operating expenses:
Exploration expense	$	28,426			$	11,161		$	17,265			154.7	%
General and administrative expense		1,225,302				755,481			469,821			62.2	%
Stock-based compensation expense		41,090				115,652			(74,562	)		(64.5	)%
Accretion expense		3,766				694			3,072			442.7	%
Total operating expenses		1,298,584				882,988			415,596			47.1	%
Loss from Operations		(1,404,647	)			(868,979	)		(535,668	)		61.6	%
Other (income) expenses, net:
Interest expense		22,385				30,154			(7,769	)		(25.8	)%
Loss on abandonment of oil and gas properties		-				574,419			(574,419	)		(100.0	)%
(Gain) loss on extinguishment		(8,473	)			90,200			(98,673	)		(109.4	)%
Loss on note conversion		13,014				-			13,014			100.0	%
Settlement income		(43,532	)			-			(43,532	)		100.0	%
Dividend income		(20,685	)			-			(20,685	)		100.0	%
Total other (income) expenses, net		(37,291	)			694,773			(732,064	)		(105.4	)%
Loss before income taxes		(1,367,356	)			(1,563,752	)		196,396			(12.6	)%
Provision for income taxes		-				-			-			-
Net loss	$	(1,367,356	)		$	(1,563,752	)	$	196,396			(12.6	)%

 

 

Revenues, net  

 

Revenues, net increased for the three months ended April 30, 2026 by approximately $184,986, or 794.9%, compared to the same period in the prior year. Revenues from the prior period were from the sale of approximately 550 barrels of oil produced from our recently acquired assets in the Lloydminster, Saskatchewan region, and current revenues reflect an increase solely from sales from the same Lloydminster, Saskatchewan region to approximately 3,337 barrels of oil.  

 

Cost of goods sold

 

Cost of goods sold consists primarily of lease operating expenses, including well workover, servicing, repair and maintenance costs, and other field operating and production costs associated with our oil and gas properties. Cost of goods sold increased by $305,058, or 3,293.7%, for the three months ended April 30, 2026, compared to the same period in the prior year, reflecting the substantial expansion of our operations in the Lloydminster, Saskatchewan region following our recent acquisitions. The increase, however, was disproportionate to the increase in revenues. During the three months ended April 30, 2026, we incurred significant well workover and remediation costs on a number of wells that produced minimal or no revenue during the period. As a result, we reported a gross loss of $106,063 for the three months ended April 30, 2026, compared to gross profit of $14,009 in the prior year period. These workover activities are intended to restore or enhance production from the affected wells in future periods.

 

Exploration expenses

 

Under the successful efforts method of accounting for crude oil and natural gas properties, exploration expenses consist primarily of exploratory, geological and geophysical costs, delay rentals, and exploratory overhead, and are expensed as incurred. Exploration expenses increased by $17,265, or 154.7%, compared to the same period in the prior year due to increased geological and geophysical (“G&G”) costs and delay rentals incurred during the three months ended April 30, 2026.

 

General and administrative expenses

 

General and administrative expenses consist primarily of personnel expenses, including salaries, benefits and stock-based compensation expense for employees and consultants in executive, finance and accounting, legal, operations support, information technology and human resource functions. General and administrative expenses also include corporate facility costs including rent, utilities, depreciation, amortization and maintenance, as well as legal fees related to intellectual property and corporate matters and fees for accounting and consulting services.

 

General and administrative expenses increased by $469,821 for the three months ended April 30, 2026, compared to the same period in the prior year. This change represents an increase of 62.2% and was primarily attributable to increases, during the three months ended April 30, 2026, in (i) consulting fees of approximately $80,000, (ii) salaries and bonus expense of $175,000 (iii) legal fees of approximately $175,000, and (iv) franchise taxes   paid of $160,000, offset by decreases in director fees and accounting fees of approximately $40,000 and $90,000, respectively.

 

Stock-based compensation expense

 

We record stock-based compensation expenses for costs associated with options and restricted shares granted in connection with the Plan, as well as for shares issued as payment for services. Stock-based compensation expense decreased by approximately $74,562, or 64.5%, for the three months ended April 30, 2026, compared to the same period in the prior year, due to the amortization of approximately 42,000 more options in the three month period, during the prior year, than in the three months ended April 30, 2026.

 

Accretion expense

 

Accretion expense increased by $3,072, or 442.7%, for the three months ended April 30, 2026, compared to the same period in the prior year. The increase is primarily due to the ARO liability recognized in December 2025 in connection with the acquisition of the Novacor oil and gas assets in Saskatchewan. AROs are recorded at fair value when incurred and subsequently accreted over the expected life of the related asset. As a result, the newly recorded Novacor ARO contributed incremental accretion expense during the three months ended April 30, 2026.

 

Other (income) expenses, net

 

Other (income) expenses, net was net income of $37,291 for the three months ended April 30, 2026, compared to net expense of $694,773 in the prior year period, for a favorable change of $732,064. The components of this change were as follows.

 

Interest expense decreased by $7,769, or 25.8%, to $22,385, primarily due to lower outstanding debt balances during the current period.

 

Loss on abandonment of oil and gas properties decreased by $574,419, reflecting the absence in the current period of a charge recorded in the prior year in connection with the abandonment of certain oil and gas properties.

 

We recognized a net gain on extinguishment of liabilities of $8,473 in the current period, compared to a $90,200 loss in the prior year, primarily reflecting the March 2026 settlement of past-due legal fees with McDermott Will & Schulte LLP through the issuance of 446,149 restricted shares of common stock.

 

We recognized a $13,014 loss on conversion of our August 2025 convertible promissory notes during the current period, with no comparable charge in the prior year.

 

Settlement income of $43,532 represents our distribution from a class action settlement involving BF Borgers CPA PC, our former independent registered public accounting firm, with no comparable amount in the prior year.

 

Dividend income of $20,685 was earned on our holdings in the Vanguard Treasury Money Market Fund, established during the second quarter of fiscal 2026, with no comparable amount in the prior year.  

 

Six Months Ended April 30, 2026 compared to the Six Months Ended April 30, 2025 (unaudited)

 

Our financial results for the six months ended April 30, 2026 and 2025 are summarized as follows:

 

	For the Six Months Ended April 30,
	2026				2025			Change			% Change
Revenues, net	$	330,450			$	34,090		$	296,360			869.3	%
Cost of goods sold		382,722				9,262			373,460			4,032.2	%
Gross profit		(52,272	)			24,828			(77,100	)		(310.5	)%
Operating expenses:
Exploration expense	$	48,116			$	35,882		$	12,234			34.1	%
General and administrative expense		1,977,126				1,467,027			510,099			34.8	%
Stock-based compensation expense		125,962				605,966			(480,004	)		(79.2	)%
Accretion expense		5,563				1,389			4,174			300.5	%
Total operating expenses		2,156,767				2,110,264			46,503			2.2	%
Loss from Operations		(2,209,039	)			(2,085,436	)		(123,603	)		5.9	%
Other expenses, net:
Interest expense		159,119				348,520			(189,401	)		(54.3	)%
Loss on abandonment of oil and gas properties		-				574,419			(574,419	)		(100.0	)%
(Gain) loss on extinguishment		(8,473	)			90,200			(98,673	)		(109.4	)%
Loss on note conversion		84,517				80,702			3,815			4.7	%
Settlement income		(43,532	)			-			(43,532	)		100.0	%
Dividend income		(20,685	)			-			(20,685	)		100.0	%
Total other expenses, net		170,946				1,093,841			(922,895	)		(84.4	)%
Loss before income taxes		(2,379,985	)			(3,179,277	)		799,292			(25.1	)%
Provision for income taxes		-				-			-			-
Net loss	$	(2,379,985	)		$	(3,179,277	)	$	799,292			(25.1	)%

 

 

Revenues, net

 

Revenues, net increased for the six months ended April 30, 2026 by approximately $296,360 as compared to the prior period. Revenues from the prior period were from the sale of (i) approximately 200 barrels of oil from our McCool Ranch location and (ii) approximately 550 barrels of oil produced from our recently acquired oil and gas assets in the Lloydminster, Saskatchewan region, and current revenues are from the sale of approximately 6,357 barrels of oil from the Lloydminster, Saskatchewan region.

 

Cost of goods Sold

 

Cost of goods sold increased by $373,460, or 4,032.2%, for the six months ended April 30, 2026, compared to the same period in the prior year, reflecting the significant expansion of our operations in the Lloydminster, Saskatchewan region following our recent acquisitions. Consistent with the three-month period, the increase was driven not only by higher production volumes but also by substantial well workover and remediation costs, concentrated in the second quarter of fiscal 2026, incurred on wells that generated minimal or no revenue during the period. As a result, we reported a gross loss of $52,272 for the six months ended April 30, 2026, compared to gross profit of $24,828 in the prior year period.

 

Exploration expenses

 

Under the successful efforts method of accounting for crude oil and natural gas properties, exploration expenses consist primarily of exploratory, geological and geophysical costs, delay rentals, and exploratory overhead, and are expensed as incurred. Exploration expenses increased as compared to the prior year period due to increased geological and geophysical (“G&G”) costs and delay rentals incurred during the period.

 

General and administrative expenses

 

General and administrative expenses consist primarily of personnel expenses, including salaries, benefits and stock-based compensation expense for employees and consultants in executive, finance and accounting, legal, operations support, information technology and human resource functions. General and administrative expenses also include corporate facility costs including rent, utilities, depreciation, amortization and maintenance, as well as legal fees related to intellectual property and corporate matters and fees for accounting and consulting services.

 

General and administrative expenses increased by $510,099 for the six months ended April 30, 2026. This increase is primarily due to increases, during the six months ended April 30, 2026, in (i) legal fees of $200,000, (ii) consulting fees of $75,000, (iii) bonus expense of $155,000, (iv) franchise taxes paid of $160,000 and (v) filing fees of $75,000, offset by a decrease in salaries and wage expense of approximately $110,000.

 

Stock-based compensation expense

 

We record stock-based compensation expenses for costs associated with options and restricted shares granted in connection with the Plan, as well as for shares issued as payment for services. Stock-based compensation expense decreased by approximately $480,004 for the six months ended April 30, 2026 due to the amortization of approximately 104,000 more options in the prior six month period than in the current period.

 

Accretion expense

 

Accretion expense increased by $4,174 for the six months ended April 30, 2026 compared to the same period in the prior year. The increase is primarily due to the ARO liability recognized in December 2025 in connection with the acquisition of the Novacor oil and gas assets in Saskatchewan. AROs are recorded at fair value when incurred and subsequently accreted over the expected life of the related asset. As a result, the newly recorded Novacor ARO contributed incremental accretion expense during the current quarter.

 

Other expenses, net

 

Other expenses, net was $170,946 for the six months ended April 30, 2026, compared to $1,093,841 in the prior year period, for a favorable change of $922,895. The components of this change were as follows.

 

Interest expense decreased by $189,401, or 54.3%, to $159,119, primarily due to lower outstanding debt balances during the current period.

 

Loss on abandonment of oil and gas properties decreased by $574,419, reflecting the absence in the current period of a charge recorded in the prior year in connection with the abandonment of certain oil and gas properties.

 

We recognized a net gain on extinguishment of liabilities of $8,473 in the current period, compared to a $90,200 loss in the prior year, primarily reflecting the March 2026 settlement of past-due legal fees with McDermott Will & Schulte LLP through the issuance of 446,149 restricted shares of common stock.

 

Loss on conversion of our August 2025 convertible promissory notes increased by $3,815, to $84,517 from $80,702.

 

Settlement income of $43,532 represents our distribution from a class action settlement involving BF Borgers CPA PC, our former independent registered public accounting firm, with no comparable amount in the prior year.

 

Dividend income of $20,685 was earned on our holdings in the Vanguard Treasury Money Market Fund, established during the second quarter of fiscal 2026, with no comparable amount in the prior year.  

 

Liquidity and Capital Resources

 

Working Capital

 

A comparison of our working capital is presented below:

 

	April 30, 2026		October 31, 2025
Current assets	$	22,458,200	$	1,070,988
Current liabilities		999,174		1,856,890
Working capital	$	21,459,026	$	(785,902	)

 

Our working capital position improved significantly as of April 30, 2026 compared to October 31, 2025. The improvement was primarily driven by the additional capital raised under our ATM offering program during the six months ended April 30, 2026, which strengthened our cash position and reduced our reliance on short-term liabilities. As a result, we moved from a working capital deficiency at October 31, 2025 to a positive working capital position at April 30, 2026. We expect that our enhanced liquidity, together with our current operating plans, will support our near-term development activities and ongoing operations.

 

Current assets increased primarily due to a $21.2 million increase in cash, reflecting the proceeds from our ATM offering. Current liabilities decreased by $0.9 million, driven by a reduction of approximately $0.5 million in convertible notes and $0.5 million in accounts payable and accrued liabilities, partially offset by a $0.1 million increase in other current liabilities.

 

Cash Flows

 

Our cash flows for the six months ended April 30, 2026, in comparison to our cash flows for the six months ended April 30, 2025, can be summarized as follows:

 

	Six months ended April 30,
	2026				2025
Net cash used in operating activities	$	(2,154,161	)		$	(1,660,469	)
Net cash used in investing activities		(56,704	)			(453,616	)
Net cash provided by financing activities		23,480,763				3,250,350
Effect of foreign currency exchange		(53,874	)			34,846
Net change in cash	$	21,216,024			$	1,171,111

 

 

Cash Flows from Operating Activities

 

Net cash used in operating activities was $2,154,161 for the six months ended April 30, 2026, compared to $1,660,469 for the six months ended April 30, 2025, an increase of $493,692. Although our net loss decreased by $799,292 period over period, the prior year net loss included substantially higher non-cash charges that did not recur at the same level in the current period. As a result, the prior year reflected larger non-cash add-backs, and net cash used in operating activities increased in the current period even though our net loss was lower.

 

Non-cash adjustments partially offset the impact of our net loss and included $157,825 of amortization of debt discounts, $125,962 of stock-based compensation, $40,950 of common shares issued for services, $84,517 related to a loss on the issuance of common shares in lieu of cash for debt payments and $5,563 of accretion expense, partially offset by an $8,473 gain on extinguishment of liabilities. In total, non-cash adjustments declined by $1,319,107 from the prior year period, driven primarily by a $574,419 loss on abandonment of oil and gas properties recognized in the prior year with no comparable charge in the current period, a $480,004 decrease in stock-based compensation and a $186,950 decrease in amortization of debt discounts.

 

Working-capital changes also influenced operating cash flows. During the six months ended April 30, 2026, an increase of $72,235 in other liabilities provided cash. This favorable movement was partially offset by a $52,146 increase in accounts receivable, a $116,835 increase in prepaid expenses and other receivables and an $83,775 decrease in accounts payable and accrued liabilities, all of which used cash. On a net basis, working capital changes used $180,521 of cash in the current period, comparable to $206,643 used in the prior year period. Overall, while our net loss decreased and working capital movements were modestly favorable period over period, the significantly lower level of non-cash adjustments more than offset these factors, resulting in higher cash used in operating activities for the six months ended April 30, 2026, compared to the same period in the prior year.

 

Cash Flows from Investing Activities

 

Net cash used in investing activities was $56,704 for the six months ended April 30, 2026, compared to net cash used of $453,616 for the six months ended April 30, 2025. The change primarily reflects the timing of capital expenditures and operator settlements. During the six months ended April 30, 2026, we paid $55,242 for oil and gas property additions, which was nominally offset by a $1,462 decrease in amounts due to operators. During the six months ended April 30, 2025, investing cash outflows were driven by approximately $0.4 million for assets acquired at the Lloydminster, Saskatchewan properties.

 

Cash Flows from Financing Activities

 

Net cash provided by financing activities was $23,480,763 for the six months ended April 30, 2026, compared to $3,250,350 for the six months ended April 30, 2025. The financing inflows for the six months ended April 30, 2026, reflect proceeds from sales of common stock under the ATM program. During the six months ended April 30, 2025, cash provided by financing activities was primarily attributable to (i) proceeds of approximately $3.5 million from the issuance of common shares in connection with the Company’s prior ATM facility and (ii) proceeds from the issuance of convertible debt of approximately $0.6 million, offset by repayments of related party debt and promissory notes of approximately $0.2 million and $0.6 million, respectively.

 

Capital Resources

 

Since our inception, we have funded our operations primarily through equity and debt financings. We have historically experienced liquidity constraints due to our limited ability to raise capital on acceptable terms and have relied on the issuance of equity and convertible promissory notes and sales under our ATM offering programs to support our operations. During the six months ended April 30, 2026, we sold an aggregate of 28,013,007 shares of common stock under the ATM program for total gross proceeds of $24,207,304, with all such sales completed on or before April 13, 2026. Subsequent to April 30, 2026 and through the date of issuance of these condensed consolidated financial statements, we raised additional gross proceeds of $2,557,841 under the ATM program. On May 6, 2026, we filed Amendment No. 10 to the prospectus supplement reflecting that, based on the Company’s public float having exceeded $75 million as of April 14, 2026, the Company is no longer subject to the baby shelf sales limitations under General Instruction I.B.6 of Form S-3. Following Amendment No. 10, the aggregate amount of shares available for sale under the ATM Agreement is $65,000,000.

 

These capital raises significantly strengthened our capital resources by improving our cash position and eliminating our working capital deficit. Based on the additional capital raised during and subsequent to the six months ended April 30, 2026, together with management’s current operating plans, we believe that our existing cash resources are sufficient to meet our working capital and capital expenditure requirements for at least twelve months following the issuance of the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

 

Future capital requirements will depend on a number of factors, including the timing and scope of planned operational activities, the development and operation of wells, and potential acquisitions of additional oil and gas properties. To the extent that existing capital and expected operating cash flows are not sufficient to fund future activities, we may seek additional financing through equity or debt offerings, including continued sales under the expanded ATM program. There can be no assurance that such financing will be available on favorable terms or at all. Failure to obtain additional financing, if needed, could have a material adverse effect on our financial position, results of operations, and cash flows. See “Going Concern Considerations” above for additional information regarding our liquidity assessment.

 

Contractual Obligations and Commitments

 

Unproved Property Leases

 

South Salinas Project

 

We hold various leases related to unproved properties in the South Salinas Project. Two leases with the same lessor remain active:

 

●	Lease 1 (8,417 acres): The lease remains valid through continued operations and production at the HV-3A well.
●	Lease 2 (160 acres): Held by delay rental. The annual rental payment of $30 per acre for the period October 2025 through October 2026 was paid in advance, and we remain in compliance.

 

All additional South Salinas leases entered into during 2023 were abandoned during fiscal 2025 following an evaluation of economic and operational factors. No further obligations remain under the abandoned leases.

 

Property Leases Held by Production – Saskatchewan, Canada

 

In April 2025, we acquired oil and gas lease rights for four proved properties located in Saskatchewan, Canada. The leases total 320 net acres and are held by production. As of April 30, 2026, we remained in compliance with all lease terms. We made lease payments of $6,175 and $10,275 during the three and six months ended April 30, 2026, respectively.

 

 

Board of Directors Compensation

 

Under a compensation plan approved on July 11, 2022, non-employee directors are entitled to an annual cash retainer of $50,000, plus an additional $10,000 per Board committee served. Payments are made quarterly in arrears. For the three and six months ended April 30, 2026, we recognized director compensation expense of $67,506 and $143,346, respectively, and for the three and six months ended April 30, 2025, we recognized director compensation expense of $102,508 and $161,675, respectively.

 

Agreements with Advisors

 

Spartan Capital Securities, LLC

 

We previously entered into placement agent agreements with Spartan Capital Securities, LLC (“Spartan”) in connection with our IPO, subsequent private placements and our first ATM offering, which occurred in September 2024. Under these agreements, with respect to the IPO and subsequent private placements, Spartan received cash fees and warrants to purchase common stock, and cash fees only, with respect to the ATM offering. All warrants issued to Spartan remain outstanding as of April 30, 2026.

 

Ladenburg, Thalman & Co. Inc.

 

On January 9, 2026, we entered into an ATM Agreement with Ladenburg as sales agent (the “Sales Agent”), pursuant to which we may offer and sell shares of our common stock from time to time through the Sales Agent. We concurrently filed a prospectus supplement covering the sale of shares having an initial aggregate offering price of up to $3,600,000, under our existing shelf Registration Statement on Form S-3 (File No. 333-281813), which became effective on September 10, 2024. Sales, if any, are made by any method deemed to be an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act, including sales made directly on or through the NYSE American.

 

Under the ATM Agreement, we designate the maximum number of shares and a minimum price for any sale and have no obligation to sell any shares. We or the Sales Agent may suspend or, upon written notice, terminate the ATM Agreement at any time in its sole discretion, and the ATM Agreement will automatically terminate upon the sale of all shares covered by the agreement. The Sales Agent is entitled to compensation of up to 3.0% of the gross proceeds from any shares sold under the ATM Agreement, and we have agreed to provide customary indemnification and contribution to the Sales Agent, including for liabilities under the Securities Act.

 

During the six months ended April 30, 2026, we sold an aggregate of 28,013,007 shares of common stock under the ATM Agreement for total gross proceeds of $24,207,304, with all such sales completed on or before April 13, 2026, resulting in net proceeds of $23,480,763 after Sales Agent commissions of approximately $726,219 (3.0% of gross proceeds) and other offering costs. As of April 30, 2026, we had sold substantially all of the shares then available under the prospectus supplement, as amended through April 10, 2026 to an aggregate offering amount of $24,208,000. Subsequent to April 30, 2026, on May 6, 2026, we filed Amendment No. 10 to the prospectus supplement reflecting that, based on our public float having exceeded $75 million as of April 14, 2026, we are no longer subject to the sales limitations under General Instruction I.B.6 of Form S-3. Following Amendment No. 10, the aggregate amount of common stock available for sale under the ATM Agreement is $65,000,000. Through the date of this filing, we sold an additional 6,159,229 shares of common stock under the ATM Agreement for aggregate gross proceeds of $2,557,841.

 

Critical Accounting Policies and Estimates

 

The preparation of our condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures. We base our estimates and assumptions on historical experience, current conditions, and other factors that management believes to be reasonable under the circumstances. Actual results could differ materially from those estimates. Our critical accounting policies and estimates are those that require significant judgment and are most important to the portrayal of our financial condition and results of operations.

 

The critical accounting policies and estimates disclosed in our Annual Report on Form 10-K for the year ended October 31, 2025 continue to be our critical accounting policies for the six months ended April 30, 2026. There have been no material changes to these policies during the current interim period, except as noted below where updates relate to recent acquisitions or current-period activity. Additional information regarding these policies is included in “Note 2 – Summary of Significant Accounting Policies” to our condensed consolidated financial statements.

 

Oil and Gas Assets and Exploration Costs – Successful Efforts

 

We continue to apply the successful efforts method of accounting for crude oil and natural gas properties. Exploration costs, including geological and geophysical costs, delay rentals, and exploratory overhead, are expensed as incurred. Costs associated with exploratory wells that indicate the potential for proved reserves are capitalized pending further evaluation. Management reviews the status of all suspended exploratory well costs each quarter to determine whether sufficient progress is being made toward assessing the existence of proved reserves.

 

During the six months ended April 30, 2026, we continued to evaluate the wells acquired in the April 2025 and December 2025 Novacor acquisitions and the November 2025 Capital Land acquisition. These wells remain in early production and evaluation stages, and we expect to update reserve estimates once additional production history is available. No material changes were made to our capitalization or evaluation policies during the current period.

 

Proved and Unproved Oil and Natural Gas Properties

 

Unproved oil and natural gas properties continue to be assessed for impairment on a property-by-property basis based on remaining lease terms, drilling results, and future development plans. As of April 30, 2026, our unproved properties remain in exploration or early evaluation stages, and no material impairments were recorded during the period.

 

Proved properties are subject to depreciation, depletion, and amortization (“DD&A”) using the unit-of-production method based on proved reserves. As of April 30, 2026, we continue to evaluate the reserve potential of our recently acquired Saskatchewan properties. Reserve values will be incorporated into our DD&A calculations once sufficient production history and engineering data are available. There were no material changes to our DD&A methodology during the quarter.

 

 

Impairment of Long-Lived Assets

 

We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. This includes proved oil and gas properties, support equipment, and other long-lived assets. The impairment assessment compares the carrying value of the asset group to estimated future undiscounted cash flows. If the carrying value exceeds those cash flows, the asset is written down to fair value.

 

During the six months ended April 30, 2026, we monitored commodity prices, production trends, and operating results for indicators of impairment. No triggering events were identified that required an impairment charge during the period. Our impairment methodology remains unchanged from that disclosed in our Form 10-K.

 

Asset Retirement Obligations

 

Our asset retirement obligations (“ARO”) represent the estimated future costs to plug and abandon wells and restore sites. ARO is initially recorded at fair value when incurred or acquired, with a corresponding increase to the carrying amount of the related asset. The liability is accreted each period, and the capitalized cost is depreciated over the useful life of the asset.

 

During the first quarter of fiscal 2026, the Company recorded an initial ARO liability of approximately $124,201 (USD) in connection with the December 2025 acquisition of oil and gas assets from Novacor Exploration Ltd. The ARO was measured based on well-specific abandonment and reclamation cost estimates included in the independent Petrotech reserve and economics report, which was prepared in accordance with COGE Handbook standards and served as an input in the valuation basis for the acquired petroleum assets.

 

Management is continuing to evaluate certain assumptions related to the timing and method of abandonment activities for the Canadian wells. Any refinements to these assumptions will be reflected in future periods as changes in estimate under ASC 410. No revisions to the initial ARO estimate were recorded during the quarter, and accretion expense recognized during the period was immaterial.

 

Fair Value Measurements

 

We apply the fair value hierarchy under ASC 820 to measure certain assets and liabilities. Our financial instruments, including cash, payables, and short-term obligations, approximate fair value due to their short maturities.

 

During the first half of fiscal 2026, the only fair value measurement performed related to the valuation of publicly traded common stock issued as consideration in connection with the December 2025 Novacor acquisition. Because the fair value of this equity consideration is based on quoted market prices for our common stock, this measurement is classified as a Level 1 fair value measurement.

 

We did not perform any Level 2 or Level 3 fair value measurements during the period, and no assets or liabilities were measured at fair value on a recurring basis.

 

Recent Accounting Pronouncements

 

There have been no new accounting pronouncements issued during the six months ended April 30, 2026 that are expected to have a material impact on our condensed consolidated financial statements.