EON Resources Inc.

NOTE1 —DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS

Organization and General

EON Resources, Inc. (the “Company”) was incorporated in Delaware on* December**9,* 2020. The Company was a blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination withone or more businesses (the “Business Combination”). The Company is an “emerging growth company,” as defined in Section2(a) of the Securities Act of1933, as amended, or the “Securities Act,” as modified by the Jumpstart Our Business Startups Act of2012 (the “JOBS Act”). On* September 16, 2024,the Company filed a Certificate of Amendment (the “Certificate of Amendment”) to its Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to change the Company’s name from “HNR Acquisition Corp” to “EON Resources Inc.”, effective on September 17, 2024.*

Effective* November 15, 2023,*the Company completed its initial business combination. Through its subsidiary Pogo Resources, LLC, a Texas limited liability Company “(“Pogo” or “Pogo Resources”) and its subsidiary LH Operating, LLC, a Texas limited liability company “(“LHO”), the Company is an independent oil and natural gas company focused on the acquisition, development, exploration, and production of oil and natural gas properties in the Permian Basin. The Permian Basin is located in west Texas and southeastern New Mexico and is characterized by high oil and liquids-rich natural gas content, multiple vertical and horizontal target horizons, extensive production histories, long-lived reserves and historically high drilling success rates. The Company’s properties are in the Grayburg-Jackson Field in Eddy County, New Mexico, and the South Justis Field ("SJF") in Lea County, New Mexico, which are both sub-areas of the Permian Basin. The Company focuses exclusively on vertical development drilling.

Going Concern Considerations

At* June 30, 2026,the Company had $691,672 in cash and a working capital deficit of $22,631,223. These conditions raise substantial doubt about the Company’s ability to continue as a going concern withinone* year after the date that the financial statements are issued. The Company had positive cash flow from operations of $211,023 for thesix months ended* June 30, 2026and negative cash flow from operations of $7,645,418 for the year ended December 31, 2025.Additionally, management plans to alleviate this substantial doubt by improving profitability through streamlining costs, maintaining active hedge positions for its proven reserve production, and the issuance of additional shares of Class A Common Stock under the Common Stock Purchase Agreement. The Company has athree-year Common Stock Purchase Agreement with a maximum funding limit of $150,000,000 that can fund the Company operations and production growth, and be used to reduce liabilities of the Company. To date the Company has received $11,130,586 in cash proceeds related to the sale of 17,000,000 shares of Class A Common Stock under the Common Stock Purchase Agreement. The Company currently doesnot* have use of the Common Stock Purchase Agreement until an effective S-1 Registration statement is on file with the Securities and Exchange Commission. As of* June 30, 2026and as of the date of this filing, the substantial doubt about the Company’s ability to continue as a going concern hasnot* been alleviated. The financial statements donot include any adjustments that might result from the outcome of this uncertainty.

NOTE2 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation:

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Condensed Form10-Q and Article8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they donot include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the period presented.

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The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form10-K for the year ended* December 31, 2025,filed with the SEC on September 28, 2026,as amended by AmendmentNo.* 1 on Form10-K/A filed on* October 13, 2026.The interim results for thethree* andsix months ended* June 30, 2026arenot* necessarily indicative of the results to be expected for the year ending* December**31,* 2026 or for any future periods.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Segments Reporting

The Company manages its operations as a single segment for the purpose of assessing performance and making operating decisions. The Company’s Chief Operating Decision Maker (“CODM”) is its chief executive officer. The Company hasone reportable operating segment, its oil and gas operations which derives its revenue from the sale of oil and gas products. The CODM uses net income from operations to evaluate and make key operating decisions. The information regularly provided to the CODM on the segment’s revenues and significant expenses aligns with the categories presented in the Consolidated Statements of Operations. Furthermore, the segment’s assets are reported on the Consolidated Balance Sheets as total assets. All significant operating decisions are based upon an analysis of the Company asone operating segment, which is the same as its reporting segment.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions reflected in the financial statements include: i) estimates of proved reserves of oil and natural gas, which affect the calculation of depletion, depreciation, and amortization (“DD&A”) and impairment of capitalized oil and natural gas properties, ii) depreciation of property and equipment; iii) the valuation of derivative liabilities associated with convertible notes and put options and iv) the valuation of commodity derivative instruments. These estimates are based on information available as of the date of the financial statements; therefore, actual results could differ materially from management’s estimates using different assumptions or under different conditions. Future production* mayvary materially from estimated oil and natural gas proved reserves. Actual future prices may*vary significantly from price assumptions used for determining proved reserves and for financial reporting.

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Net Income (Loss) Per Share:

Net income (loss) per share of common stock is computed by dividing net income (loss) applicable to common stockholders by the weighted average number of shares of common stock outstanding during the period, excluding shares of common stock subject to forfeiture.

The Company’s Class B Common Stock doesnot have economic rights to the undistributed earnings of the Company, and arenot considered participating securities under ASC260. As such, they are excluded from the calculation of net income (loss) per common share.

The Company hasnot considered the effect of the following instruments in the calculation of diluted income per share for thethree andsix months ended* June 30, 2026and2025* since the effect of those instruments would be anti-dilutive:

As a result, diluted income (loss) per share of common stock is the same as basic loss per share of common stock for the period presented.

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Impairment of Oil and Gas Properties

Proved oil and natural gas properties are reviewed for impairment quarterly and when events and circumstances indicate a possible decline in the recoverability of the carrying amount of such property. The Company estimates the expected future cash flows of its oil and natural gas properties and compares the undiscounted cash flows to the carrying amount of the oil and natural gas properties, on a field-by-field basis, to determine if the carrying amount is recoverable. If the carrying amount exceeds the estimated undiscounted future cash flows, the Company will write down the carrying amount of the oil and natural gas properties to estimated fair value. Risk-adjusted probable and possible reserves* maybe taken into consideration when determining estimated future net cash flows and fair value when such reserves exist and are economically recoverable. Due to the unavailability of relevant comparable market data, a discounted cash flow method is used to determine the fair value of proved properties. Significant unobservable inputs (Level3*) utilized in the determination of discounted future net cash flows include future commodity prices adjusted for differentials, forecasted production based on decline curve analysis, estimated future operating and development costs, property ownership interests, and a 10% discount rate. At* December 31, 2025,the Company’s commodity price assumptions were based on forward NYMEX strip prices through year-end2030* and were then escalated at 3% per year thereafter. Operating cost assumptions were based on current costs escalated at 3% per year beginning in2027.

Unobservable inputs to the Company’s fair value assessments are reviewed and revised as warranted based on a number of factors, including reservoir performance, new drilling, crude oil and natural gas prices, changes in costs, technological advances, new geological or geophysical data, or other economic factors. Fair value measurements of proved properties are reviewed and approved by certain members of the Company’s management.

As of* June 30, 2026,*estimated future net cash flows were determined to be in excess of cost basis, and thereforeno impairments were recorded for the Company’s proved crude oil and natural gas properties.

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Obligations

The Company provides an assurance-type warranty that guarantees its products comply with agreed-upon specifications. This warranty isnot sold separately and doesnot convey any additional goods or services to the customer; therefore, the warranty isnot considered a separate performance obligation. As the Company typically incurs minimal claims under the warranties,no liability is estimated at the time goods are delivered, but rather at the point of a claim.

Convertible Instruments

The Company reviews the terms of convertible debt and equity instruments to determine whether there are conversion features or embedded derivative instruments including embedded conversion options that are required to be bifurcated and accounted for separately as a derivative financial instrument. In circumstances where the convertible instrument contains more thanone embedded derivative instrument, including conversion options that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single compound instrument. Also, in connection with the sale of convertible debt and equity instruments, the Company* mayissue free standing warrants that may,depending on their terms, be accounted for as derivative instrument liabilities, rather than as equity. When convertible debt or equity instruments contain embedded derivative instruments that are to be bifurcated and accounted for separately, the total proceeds allocated to the convertible host instruments arefirst* allocated to the fair value of the bifurcated derivative instrument. The remaining proceeds, if any, are then allocated to the convertible instruments themselves, usually resulting in those instruments being recorded at a discount from their face amount.

Put Option Right Valuation

The Company has determined that the Put Option Right is a derivative liability required to be bifurcated from its host instrument. This liability was recorded as a liability at fair value on the consolidated balance sheet as of the reporting date in accordance with FASB ASC815 Derivatives and Hedging (“ASC815”). The fair value of the liability was estimated using a Monte-Carlo Simulation in a risk-neutral framework. Specifically, the future stock price is simulated assuming a Geometric Brownian Motion (“GBM”). For each simulated path, the forward purchase value is calculated based on the estimated term to exercise and then discounted back to present. Finally, the value of the Put Option Right is calculated as the average present value over all simulated paths.

Concentration of Credit Risk:

Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times,* mayexceed the Federal Depository Insurance Coverage (“FDIC”) of $250,000. As of June 30, 2026,the Company’s cash balances exceeded the FDIC limit by approximately $442,000. At June 30, 2026the Company hadnot* experienced losses on this account and management believes the Company isnot exposed to significant risks on such account.

The Company sold 100% of its crude oil and natural gas production tofour andtwo customers for thesix months ended* June 30, 2026,and2025,* respectively. Inherent to the industry is the concentration of crude oil, natural gas and natural gas liquids (“NGLs”) sales to a limited number of customers. As of* June 30, 2026and December**31,* 2025, the Company had approximately 99% and 100% of accounts receivable withtwo customers, respectively.

This concentration has the potential to impact the Company’s overall exposure to credit risk in that its customers* may*be similarly affected by changes in economic and financial conditions, commodity prices or other conditions. Given the liquidity in the market for the sale of hydrocarbons, the Company believes the loss of any single purchaser, or the aggregate loss of several purchasers, could be managed by selling to alternative purchasers in the operating areas.

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Income Taxes

The Company follows the asset and liability method of accounting for income taxes under FASB ASC740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

FASB ASC740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. There wereno unrecognized tax benefits as of* June 30, 2026and December 31, 2025.The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense.No amounts were accrued for the payment of interest and penalties at June 30, 2026and December 31, 2025.As further described in Note10,* in* October 2026the Company received notice from the Internal Revenue Service that its federal income tax return for the year ended December 31, 2023has been selected for examination. The examination is at a preliminary stage andno* adjustments have been proposed. The Company is subject to income tax examinations by major taxing authorities since inception.

The Company’s effective tax rate was approximately 25% and 20% for thesix month months ended* June 30, 2026and2025,* respectively. The Company's effective tax rate was approximately 45% and 15% for thethree month months ended* June 30, 2026and2025,* respectively. The effective income tax rate reflects the Company’s best estimate of the effective tax rate expected to be applicable for the full year and is significantly impacted by state income taxes, the tax effect of Company’s oil and gas activities and the tax impact of the change in fair value of the Company's derivative liabilities. The Company recorded income tax benefits of $576,270 and $534,259 for thethree months ended* June 30, 2026and2025,* respectively, and $2,119,384 and $1,239,128 for thesix months ended* June 30, 2026and2025,* respectively. These benefits were primarily related to temporary differences associated with the Company’s oil and gas operations, hedging activity and interest deduction limitations.

Recent Accounting Pronouncements

Adopted

In* July 2025,the FASB issued Accounting Standards Update2025*-05, Financial Instruments – Credit Losses (Topic326*): Measurement of Credit Losses for Accounts Receivable and Contract Assets* (“ASU2025-05”). ASU2025-05 provides a practical expedient that all entities can use when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC606, Revenue from Contracts with Customers. ASU2025-05 is effective for fiscal years beginning after* December 15, 2025,and interim reporting periods in those years. Entities that elect the practical expedient and, if applicable, make the accounting policy election are required to apply the amendments prospectively. Under this practical expedient, an entity is allowed to assume that the current conditions it has applied in determining credit loss allowances for current accounts receivable and current contract assets remain unchanged for the remaining life of those assets. The Company adopted the ASU effective January 1, 2026and elected the practical expedient. There has beenno* material impact to the Company's condensed consolidated financial statements.

Not Yet Adopted

In* Novemberof2024,* the FASB issued ASU2024-03, Income Statement–* Reporting Comprehensive Income*–* Expense Disaggregation Disclosures (Subtopic220-40): Disaggregation of Income Statement Expenses*. Under this ASU entities must disclose for interim and annual reporting periods, in the notes to financial statements, additional information about specific expense categories. The amendments in this update are effective for annual reporting periods beginning after* December 15, 2026,and interim reporting periods beginning after December 15, 2027.*Entities are permitted to apply either the prospective or retrospective transition methods. The Company is currently evaluating the impact of adopting this guidance on the consolidated financial statements and the notes to consolidated financial statements.

Other than as described above, management doesnot believe that any recently issued, butnot yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s consolidated financial statements.

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NOTE3 — OIL AND GAS PROPERTIES

Net capitalized costs related to the Company’s oil and gas producing activities at* June 30, 2026and December**31,* 2025 are as follows:

The Company recognized depreciation, depletion, and amortization expense totaling $2,136,209 and $458,190 forthree months ended* June 30, 2026and2025,* respectively, and $3,927,185 and $555,265 for thesix months ended* June 30, 2026and2025,* respectively.

NOTE4 — COMMODITIES DERIVATIVES

The Company is exposed to volatility in market prices and basis differentials for natural gas, oil and NGLs, which impacts the predictability of its cash flows related to the sale of those commodities. These risks are managed by the Company’s use of certain derivative financial instruments. The Company has historically used crude diff swaps, fixed price swaps, and costless collars. As of* June 30, 2026,*the Company’s derivative financial instruments consisted of costless collars and crude diff swaps, which are described below:

Costless Collars

Arrangements that contain a fixed floor price (“purchased put option”) and a fixed ceiling price (“sold call option”) based on an index price which, in aggregate, haveno net cost. At the contract settlement date, (1) if the index price is higher than the ceiling price, the Company pays the counterparty the difference between the index price and ceiling price, (2) if the index price is between the floor and ceiling prices,no payments are due from either party, and (3) if the index price is below the floor price, the Company will receive the difference between the floor price and the index price.

Additionally, the Company will occasionally purchase an additional call option at a higher strike price than the aforementioned fixed ceiling price. Often this is accomplished in conjunction with the costless collar atno additional cost. If an additional call option is utilized, at the contract settlement date, (1) if the index price is higher than the sold call strike price but lower than the purchased option strike price, then the Company pays the difference between the index price and the sold call strike price, (2) if the index price is higher than the purchased call price, then the Company pays the difference between the purchased call option and the sold call option, and the Company receives payment of the difference between the index price and the purchased option strike price, (3) if the index price is between the purchased put strike price and the sold call strike price,no payments are due from either party, (4) if the index price is below the floor price, the Company will receive the difference between the floor price and the index price.

The Company hadno agreements in place classified as costless collars as of* June 30, 2026or December 31, 2025.*

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Crude price differential swaps

The Company has entered into commodity swap contracts that are effective over the next1 to24 months and are used to hedge against location price risk of the respective commodity resulting from supply and demand volatility and protect cash flows against price fluctuations.

The following table reflects the weighted-average price of open commodity swap contracts as of* June 30, 2026:*

The following table reflects the weighted-average price of open commodity swap contracts as of* December 31, 2025:*

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Derivative Assets and Liabilities

As of* June 30, 2026and December 31, 2025,the Company is conducting derivative activities withone* counterparty, which is secured by the lender in the Company’s bank credit facility. The Company believes the counterparty is acceptable credit risk, and the credit worthiness of the counterparty is subject to periodic review. The assets and liabilities are netted given that all positions are held by a single counterparty and subject to a master netting arrangement. The combined fair value of derivatives included in the accompanying consolidated balance sheets as of* June 30, 2026and December**31,* 2025 is summarized below.

The effects of the Company’s derivatives on the consolidated statements of operations are summarized below:

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NOTE5 —LONG-TERM DEBT AND NOTES PAYABLE

The Company’s debt instruments are as follows:

Private Notes Payable, related party

On* December 9, 2025,the Company received proceeds of $200,000 from the issuance oftwo* promissory notes which were issued to a director, and the chief financial officer respectively. The notes have a maturity date of* December 31, 2028 and carry a 15% interest rate for which is to be paid quarterly beginning March 31, 2026.During thesix* months ended* June 30, 2026,*the Company received $100,000 in proceeds from an additional related party under the same terms.

During thesix months ended* June 30, 2026,officers, directors and other employees agreed to structure an aggregate of $3,446,454 of salary and bonuses into promissory notes. The notes carry interest at 15%, payable quarterly, and mature on July 1, 2029.*

Accrued interest on the promissory notes was $35,849 and $3,461 as of* June 30, 2026and December 31, 2025,*respectively.

Convertible Notes Payable

In2025, the Company and its Private Note Payable Investors (the “Exchange Investors”) entered into exchange agreements (the*“2025* Exchange Agreements”) whereby the Exchange Investors exchanged their promissory notes and warrants for convertible promissory notes (the “Convertible Notes”). The principal amounts of the Convertible Notes were determined by adding the original principal amount of the promissory notes and warrants.

The Convertible Notes mature on* January 31, 2028and accrue interest at a rate of 7.5% per annum. The Convertible Notes maybe prepaid by the Company at any time, in whole or in part, without any premium or penalty. The Convertible Notes maybe converted by the holders at any time after issuance into shares of Class A Common Stock at a conversion price equal to the greater of (a) $0.25 per share or (b)90% multiplied by the average of thethree* lowest VWAPs of the Class A Common Stock over theten trading days prior to conversion. If, at any time the Convertible Notes are outstanding, the Company issues or sells Class A Common Stock forno consideration or at a price lower than the then-current Conversion Price, then the conversion price of the Convertible Notes will be automatically reduced to the amount of consideration per share received by the Company in such sale or offering. In addition, so long as any Convertible Notes are outstanding, if the Company issues any security on terms more favorable than the Convertible Notes, then the Company must notify the holder and such more favorable term shall become a part of the Convertible Note, at the holder’s option. In accordance with ASC815, the Company determined that the embedded conversion option in the Convertible Notes should be bifurcated as a derivative liability.

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As of* June 30, 2026and December 31, 2025,*there was an outstanding principal balance of $4,250,000 and $2,315,000, respectively, on the Convertible Notes, including $1,250,000 with related parties at both periods.

On* July 11, 2025,the Company entered into a Note Purchase Agreement (the “NPA”) with White Lion Capital, LLC ("White Lion"), as subsequently amended, pursuant to which the Company issued convertible promissory notes (collectively, the “White Lion Notes”). The White Lion Notes bear interest at a rate of 5.0% per annum and were issued at a 6% original issue discount, with each $600,000 principal amount issued in exchange for cash proceeds of $564,000. White Lion mayconvert amounts outstanding under the applicable White Lion Note into shares of the Company’s Class A Common Stock at a conversion price generally equal to the greater of (i) $0.25 or (ii) the lower of (A) the Fixed Conversion Price (as defined below) or (B)90% multiplied by the lowest closing price of the Class A Common Stock during theten* trading days prior to the subject conversion date (representing a discount rate of 10%). The “Fixed Conversion Price” is the lower of (i) $0.75 per share and (ii) the closing price of the Class A Common Stock on the60th day following the date the SEC declared the applicable resale registration statement effective. The conversion price is subject to equitable adjustment for stock splits, stock dividends, rights offerings, combinations, recapitalizations, reclassifications, extraordinary distributions and similar events.

White Lion is subject to a beneficial ownership limitation of 4.99% of the outstanding Class A Common Stock, which* maybe increased to 9.99% at White Lion's election in accordance with the applicable White Lion Note. In accordance with ASC815,* the Company determined that the embedded conversion features of the White Lion Notes should be bifurcated and accounted for as derivative liabilities at fair value on a recurring basis, with the initial fair value recorded as a debt discount. See Note7.

On* January 12, 2026,the Company issued an additional White Lion Note with a principal amount of $600,000 for cash proceeds of $564,000. The note matures on July 11, 2027 and has a conversion price equal to the greater of: (i) $0.25 or (ii) the lower of (A) the Fixed Conversion Price (as defined below) or (B)90% multiplied by the lowest closing price of the Class A Common Stock during theten* trading days prior to the subject conversion date (representing a discount rate of 10%). Its “Fixed Conversion Price” is determined on the same basis as the* July 11, 2025*note.

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On* February 4, 2026,the Company issued an additional White Lion Note with a principal amount of $600,000 for cash proceeds of $564,000 as thesecond* closing under the NPA. The note matures on* January 1, 2027 and has a conversion price equal to the greater of: (i) $0.20 or (ii) the lower of (A) the Fixed Conversion Price (as defined below) or (B)90% multiplied by the lowest closing price of the Common Stock during theten* (10) Trading Days prior to the subject Conversion Date (representing a discount rate of 10%), provided however, in the event that such Conversion Price would be less than $0.20 per share (the “Floor Price”), in any instance, then the applicable Conversion Price for such conversion shall be equal to the Floor Price. Its Fixed Conversion Price is the lower of (i) $0.75 per share and (ii) the closing price of the Common Stock on the60th day following the date the SEC declared the applicable resale registration statement effective.

On* March 6, 2026,the Company issued an additional White Lion Note with a principal amount of $600,000 for cash proceeds of $564,000. The note matures on April 1, 2027 and has a conversion price equal to the greater of: (i) $0.10 or (ii) the lower of (A) the Fixed Conversion Price (as defined below) or (B)90% multiplied by the lowest closing price of the Common Stock during theten* (10) Trading Days prior to the subject Conversion Date (representing a discount rate of 10%), provided however, in the event that such Conversion Price would be less than $0.10 per share (the “Floor Price”). For this note, the Fixed Conversion Price is the lower of (i) the closing price of the Common Stock on thesix (6) month anniversary of the issuance date and (ii) the closing price of the Common Stock on the60th day following the date the SEC declared the applicable resale registration statement effective.

On* April 1, 2026,the Company issued a convertible promissory note in the aggregate principal amount of $1,200,000 to White Lion in exchange for $1,128,000 in cash from White Lion with a maturity date of July 1, 2027 which bears interest at 5.0%. White Lion has the right, at any time until complete satisfaction of the amounts owed under the Initial Note, to convert any amounts owed under the Initial Note into Class A Common Stock of the Company at a conversion price equal to the greater of: (i) $0.15 or (ii) the lower of (A) the Fixed Conversion Price (as defined below) or (B)90% multiplied by the lowest closing price of the Common Stock during theten* (10) Trading Days prior to the subject Conversion Date (representing a discount rate of 10%), provided however, in the event that such Conversion Price would be less than $0.15 per share (the “Floor Price”), in any instance, then the applicable Conversion Price for such conversion shall be equal to the Floor Price. “Fixed Conversion Price” means the lower of (x) $1.25 (or, if such date isnot a Trading Day, then thefirst Trading Day thereafter), or (y) the closing price of the Common Stock on theninetieth (90th) day (or, if such date isnot a Trading Day, then thefirst Trading Day thereafter) following the Issue Date. The conversion price shall be automatically adjusted equitably for stock splits, stock dividends or rights offerings by the Company relating to the Company’s securities or the securities of any subsidiary of the Company, as well as combinations, recapitalization, reclassifications, extraordinary distributions and similar events. Atno time* mayWhite Lion hold or be required to take more than 4.99% (or up to 9.99% at the election of White Lion pursuant to the Initial Note) of the outstanding Class A Common Stock. In accordance with ASC815,* the Company determined that the embedded conversion option in the White Lion Notes should be bifurcated as a derivative liability and recorded as a discount, and the derivative liability accounted for at fair value on a recurring basis.

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As of* June 30, 2026and December 31, 2025,the balance on the White Lion Notes was $3,000,000 and$600,000, respectively with an unamortized discount balance of $763,392 and $153,513, respectively which will be amortized to interest expense through the maturity date. The Company amortized $282,295 and $519,301 of discount during thethree* andsix months ended* June 30, 2026*related to the White Lion notes.

During thesix months ended* June 30, 2026,*the Company issued an aggregate of 3,330,826 shares of Class A Common Stock for the conversion of $1,065,000 in convertible notes principal and $47,263 of accrued interest pursuant to the terms of the convertible notes described above.

Accrued interest on the convertible promissory notes was $0 and $9,153 as of* June 30, 2026and December 31, 2025,*respectively.

Merchant Cash Advances

On* November 18, 2025,the Company entered into a master receivables purchase agreement with athird* party. The Company received cash proceeds of $736,250 and will repay an aggregate of $1,038,500 to the lender on a weekly basis through* July 2026.This balance was repaid during thethree* months ended* June 30, 2026and as of June 30, 2026and December 31, 2025*the remaining balance owed on this advance was $0 and $865,417, respectively.

On* December 19, 2025,the Company entered into a master receivables purchase agreement with athird* party. The Company received cash proceeds of $900,000 and will repay an aggregate of $1,206,000 to the lender on a weekly basis through* December 2026.As of June 30, 2026and December 31, 2025*the remaining balance owed on this advance was $554,760 and $1,157,760, respectively.

On* May 5, 2026,the Company entered into a master receivables purchase agreement with athird* party. The Company received cash proceeds of $712,500 and will repay an aggregate of $1,027,500 to the lender on a weekly basis through* January 2027.As of June 30, 2026*the remaining balance owed on this advance was $799,166.

On* June 8, 2026,the Company entered into a master receivables purchase agreement with athird* party. The Company received cash proceeds of $760,000 and will repay an aggregate of $1,080,000 to the lender on a weekly basis through* February 2027.As of June 30, 2026*the remaining balance owed on this advance was $990,000.

As of* June 30, 2026and December 31, 2025,there was $566,312 and $505,841 of unamortized discount related to the merchant cash advances, and the Company recognized amortization of debt discount related to merchant cash advances of $325,267 and $164,825 for thethree* months ended* June 30, 2026and2025,* respectively, and $574,529 and $373,069 for thesix months ended* June 30, 2026and2025,* respectively.

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Future Maturities of Long-term debt

The following summarizes the Company’s maturities of all debt instruments described above:

NOTE6 —STOCKHOLDERS’** EQUITY**

Restricted Stock Units

On* February 16, 2026,the board of directors approved restricted stock units (“RSUs”) in the aggregate amount of 225,000 to the non-employee directors of the Company, which vest immediately, RSUs in the aggregate amount of 225,000 to the executive officers of the Company and 80,000 to various employees, which vest: (i)1/3 immediately, (ii)1/3 on November 15, 2027,and (iii)1/3 on November 15, 2028.In addition, the board of directors approved RSUs in the aggregate amount of 40,000 to various employees of the Company, which vest: (i)1/3 on each December 16, 2026,*2027 and2028, respectively. The Company estimated the fair value of these RSU’s to be $206,112 based on the closing price of the Company’s common stock at the grant date.

On* March 18, 2026,the board of directors approved RSUs in the aggregate amount of 245,902 totwo* non-employee directors of the Company, which vest on* November 15, 2026.*The Company estimated the fair value of these RSU’s to be $376,230 based on the closing price of the Company’s common stock at the grant date.

The Company recognized total stock-based compensation expense related to RSUs of $211,601 and $424,492 and $206,766 and $546,077 during thethree andsix months ended* June 30, 2026and2025,* respectively and expects to recognize an additional $415,294 through* December 31, 2028assuming all awards vest. During thethree* andsix months ended* June 30, 2026,*0 and 26,667 shares were issued to an employee related to vesting of RSU awards.

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Common Stock Purchase Agreement

On* October 17, 2022,the Company entered into a common stock purchase agreement (as amended, the “Common Stock Purchase Agreement”) and a related registration rights agreement (the “White Lion RRA”) with White Lion Capital, LLC, a Nevada limited liability company (“White Lion”). Pursuant to the Common Stock Purchase Agreement, the Company has the right, butnot* the obligation to require White Lion to purchase, from time to time, up to $150,000,000 in aggregate gross purchase price of newly issued shares of the Company’s common stock, par value $0.0001 per share, subject to certain limitations and conditions set forth in the Common Stock Purchase Agreement. Capitalized terms used butnot otherwise defined herein shall have the meaning given to such terms by the Common Stock Purchase Agreement.

Subject to the satisfaction of certain customary conditions including, without limitation, the effectiveness of a registration statement registering the shares issuable pursuant to the Common Stock Purchase Agreement, the Company’s right to sell shares to White Lion will commence on the effective date of the registration statement and extend until* December 31, 2026.During such term, subject to the terms and conditions of the Common Stock Purchase Agreement, the Company maynotify White Lion when the Company exercises its right to sell shares (the effective date of such notice, a “Notice Date”). The number of shares sold pursuant to any such notice may**not* exceed (i) the lower of (a) $2,000,000 and (b) the dollar amount equal to the product of (1) the Effective Daily Trading Volume (2) the closing price of common stock on the Effective Date (3)400% and (4)30%, divided by the closing price of common stock on NYSE American preceding the Notice Date and (ii) a number of shares of common stock equal to the Average Daily Trading Volume multiplied by the Percentage Limit. The Company’s right to sell shares of common stock to White Lion is in place until* December 31, 2026.*

The purchase price to be paid by White Lion for any such shares will equal 96% of the lowest daily volume-weighted average price of common stock during a period oftwo consecutive trading days following the applicable Notice Date.

The Company will have the right to terminate the Common Stock Purchase Agreement at any time after Commencement, atno cost or penalty, uponthree trading days’ prior written notice. Additionally, White Lion will have the right to terminate the Common Stock Purchase Agreement uponthree days’ prior written notice to the Company if (i) there is a Fundamental Transaction, (ii) the Company is in breach or default in any material respect of the White Lion RRA, (iii) there is a lapse of the effectiveness, or unavailability of, the Registration Statement for a period of45 consecutive trading days or for more than an aggregate of90 trading days in any365-day period, (iv) the suspension of trading of the common stock for a period offive consecutive trading days, (v) the material breach of the Common Stock Purchase Agreement by the Company, which breach isnot cured within the applicable cure period or (vi) a Material Adverse Effect has occurred and is continuing.No termination of the Common Stock Purchase Agreement will affect the registration rights provisions contained in the White Lion RRA.

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On* June 17, 2024,the Company entered into an AmendmentNo.* 2 to Common Stock Purchase Agreement (the*“2nd* Amendment”) with White Lion. Pursuant to the2nd Amendment, the Company and White Lion agreed to amend the process of a Rapid Purchase, whereby the parties will close on the Rapid Purchase on the trading day the notice of the applicable Rapid Purchase is given. The2nd Amendment, among other things, also removed the maximum number of shares required to be purchased upon notice of a Rapid Purchase, added a limit of 100,000 shares of Common Stock per individual request, and revised the purchase price of a Rapid Purchase to equal the lowest traded price of Common Stock during theone hour following White Lion’s acceptance of the Rapid Purchase for each request. In addition, White Lion agreed that, on any single business day, it shallnot publicly resell an aggregate amount of Commitment Shares in an amount that exceeds7% of the daily trading volume of the Common Stock for such business day, excluding any trades before or after regular trading hours and any block trades.

In addition, pursuant to the Amendment, the Company* may,from time to time while a Purchase Notice is active, issue a Rapid Purchase Notice to White Lion which the parties will close on the Rapid Purchase withintwo* Business Days of the applicable Rapid Purchase Date. Furthermore, White Lion agreed that, on any single Business Day, it shallnot publicly resell an aggregate amount of Commitment Shares in an amount that exceeds 7% of the daily trading volume of the Common Stock for the preceding Business Day.

To date the Company has received $11,130,586 in cash proceeds related to the sale of 17,000,000 shares of Class A Common Stock under the Common Stock Purchase Agreement.

Registration Rights Agreement (White Lion)

Concurrently with the execution of the Common Stock Purchase Agreement, the Company entered into the White Lion RRA with the White Lion in which the Company has agreed to register the shares of common stock purchased by White Lion with the SEC for resale within30 days of the consummation of a business combination. The White Lion RRA also contains usual and customary damages provisions for failure to file and failure to have the registration statement declared effective by the SEC within the time periods specified.

The Common Stock Purchase Agreement and the White Lion RRA contain customary representations, warranties, conditions and indemnification obligations of the parties. The representations, warranties and covenants contained in such agreements were made only for purposes of such agreements and as of specific dates, were solely for the benefit of the parties to such agreements and* may*be subject to limitations agreed upon by the contracting parties.

Class A Common Stock Options

During thesix months ended* June 30, 2026,the Compensation Committee of the Board of Directors approved common stock options to purchase 1,141,804 shares of Class A common stock to various employees including 247,951 each to the Company’s CEO, CFO and general counsel and 122,951 to a non-employee director. The options have a term of 10 years and an exercise price of $0.61 per share. The director awards vest on November 15, 2026,and all other awards vest inthree* equal installments through* November 2028.*

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The following table reflects the weighted average assumptions used to estimate the fair value of stock options granted during thesix months ended* June 30, 2026:*

The options had an estimated grant date fair value of $1,472,770. The Company recognized total stock-based compensation expense related to stock options of $213,562 and $272,611 and $30,886 and $61,771 during thethree andsix months ended* June 30, 2026and2025,* respectively and expects to recognize an additional $1,347,158 through the vesting period assuming all awards vest.

The following table summarizes the stock option activity for thesix months ended* June 30, 2026:*

The following table discloses information regarding outstanding and exercisable options at* June 30, 2026:*

Aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock option and the fair value of the Company’s common stock for stock options that were in-the-money at period end. As of* June 30, 2026,*the intrinsic value for the options vested and outstanding was $0.

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Class A Common Stock Warrants

The following table summarizes the stock warrant activity for thesix months ended* June 30, 2026and December 31, 2025:*

The following table discloses information regarding outstanding and exercisable warrants at* June 30, 2026:*

Aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock option and the fair value of the Company’s common stock for stock options that were in-the-money at period end.

As of* June 30, 2026,*the intrinsic value for the warrants vested and outstanding was $0.

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**NOTE7 **—FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC820, “Fair Value Measurement”, approximates the carrying amounts represented on the balance sheet.

Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes athree-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level1 measurements) and the lowest priority to unobservable inputs (Level3 measurements). These tiers include:

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Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are as follows:

Commodity Derivatives

The Company’s commodity price derivatives primarily represent crude oil collar contracts (some with long calls), fixed price swap contracts and differential swap contracts. The asset and liability measurements for the Company’s commodity price derivative contracts are determined using Level2 inputs. The asset and liability values attributable to the Company’s commodity price derivatives were determined based on inputs that include, butnot limited to, the contractual price of the underlying position, current market prices, crude oil forward curves, discount rates, and volatility factors. The Company had a net derivative liability of $1,051,190 as of* June 30, 2026and a net derivative asset of $63,334 as of December 31, 2025.*

Convertible Note embedded conversion option

During thesix months ended* June 30, 2026,certain of the Company’s convertible note agreements contained conversion terms that mayrequire the debt to be settled with a variable number of shares based on discounted pricing to market of the Company’s Class A Common Stock. Under ASC815,* the instrument is accounted for at fair value, which are determined using level3 inputs.

The Company estimated the fair value of the derivative liability as of* June 30 2026,*and at each respective issuance date using a Monte-Carlo simulation model, and the following key assumptions:

Upon conversion, the Company estimated the fair value of the derivative liability as the share price on the date of conversion multiplied by the shares issued upon conversion, less the principal amount converted.

The following table represents the activity related to the embedded conversion options during thesix months ended* June 30, 2026:*

As of* June, 2026,*a total of $437,838 of the derivative liability is classified as current based on the maturity date of the related White Lion Note

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Put Option Right

The Company has determined that the Put Option Right is a derivative liability required to be bifurcated from its host instrument. This liability was recorded as a liability at fair value on the consolidated balance sheet as of the reporting date in accordance with ASC815. The fair value of the liability was estimated using a Monte-Carlo Simulation in a risk-neutral framework. Specifically, the future stock price is simulated assuming a Geometric Brownian Motion (“GBM”). For each simulated path, the forward purchase value is calculated based on the estimated term to exercise and then discounted back to present. Finally, the value of the Put Option Right is calculated as the average present value over all simulated paths.

The Company estimated the fair value of the Put Option Right to be $1,803,000 and $2,309,000 as of* June 30, 2026and December 31, 2025,respectively. The Company recognized gains from the change in fair value of the derivative liability of $435,000 and $506,000, for thethree* andsix months ended* June 30, 2026,respectively and $449,000 and $562,000 for thethree* andsix months ended* June 30, 2025,respectively. The Company estimated the fair value of the derivative liability as of June 30, 2026using a Monte-Carlo simulation model, and the following key assumptions:1) Estimated CEO tenure of approximately 7.8 years from his appointment in December 2023;*2) equity volatility of 96.9%; 3) risk free-rate of 4.17%; and4) an estimated discount rate of 18.88%. The Company will accrete the value of the mezzanine equity to redemption value over the estimated period until exercise when the estimated redemption value exceeds the estimated fair value of the derivative liability. The estimated fair value of the Put Option Right is considered a level3 fair value measurement.

Nonrecurring Basis

The carrying value of the Company’s financial instruments, consisting of cash, accounts receivable, accounts payable and accrued expenses, approximates their fair value due to the short maturity of such instruments. Financial instruments also consist of debt for which fair value approximates carrying values as the debt bears interest at fixed or variable rates which are reflective of current rates otherwise available to the Company. The Company isnot exposed to significant interest, currency or credit risks arising from these financial instruments.

**NOTE8 **—RELATED PARTY TRANSACTIONS

During the fiscal year ended* December 31, 2021,the Company and Dante Caravagio entered into a side agreement in connection with his purchase of 400,000 shares of Class A Common Stock at $2.00 per share (the “Side Agreement”). The Side Agreement granted the holder aone year right to require the Company to repurchase his shares of Class A Common Stock at a price of $15.00 per share (the “Put Option Right”) in cash. The Put Option Right becomes exercisable upon the shares being considered freely tradeable and the holdernot* being an insider of the Company as defined by the SEC. To date these events havenot occurred. In accordance with U.S. GAAP, the shares of Class A Common Stock are classified as mezzanine equity at their initial purchase price, and the Put Option Right is bifurcated from the host instrument and accounted for as a derivative liability in accordance with ASC815 at fair value. See Note7.

On* December 9, 2025,the Company received proceeds of $200,000 from the issuance oftwo* promissory notes which were issued to a director, and the chief financial officer respectively. The notes have a maturity date of* December 31, 2028and carry a 15% interest rate for which is to be paid quarterly beginning March 31, 2026.During thesix* months ended* June 30, 2026,the Company received $100,000 in proceeds from an additional related party under the same terms. See Note5.*

During thesix months ended* June 30, 2026,officers, directors and other employees agreed to structure an aggregate of $3,446,454 of salary and bonuses into promissory notes. The notes carry interest at 15%, payable quarterly, and mature on July 1, 2029.Additionally, certain officers and a director hold a principal amount of $1,250,000 in Convertible Notes as of June 30, 2026.See Note5.*

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NOTE9 —COMMITMENTS AND CONTINGENCIES

Registration Rights Agreement (Founder Shares)

The holders of the Founder Shares and the Private Placement Units and warrants that* maybe issued upon conversion of Private Notes Payable (and any shares of common stock issuable upon the exercise of the Private Placement Units or warrants issued upon conversion of the working capital loans) will be entitled to registration rights pursuant to a registration rights agreement to be signed on or before the date of the prospectus for the Initial Public Offering. The holders of these securities are entitled to make up tothree* demands in the case of the founder shares, excluding short form registration demands, andone demand in the case of the private placement warrants, the working capital loan warrants and, in each case, the underlying shares that the Company register such securities for sale under the Securities Act. In addition, these holders will have “piggy-back” registration rights to include their securities in other registration statements filed by the Company. In the case of the private placement warrants, representative shares issued to EF Hutton, the demand registration rights provided willnot be exercisable for longer thanfive years from the effective date of the registration statement in compliance with FINRA Rule5110(f)(2)(G)(iv) and the piggyback registration right provided willnot be exercisable for longer thanseven years from the effective date of the registration statement in compliance with FINRA Rule5110(f)(2)(G)(v). The Company will bear the expenses incurred in connection with the filing of any such registration statements.

Contingencies

The Company is a party to various legal actions arising in the ordinary course of its businesses. In accordance with ASC450, Contingencies, the Company accrues reserves for outstanding lawsuits, claims and proceedings when a loss contingency is probable and can be reasonably estimated. The Company estimates the amount of loss contingencies using current available information from legal proceedings, advice from legal counsel and available insurance coverage. Due to the inherent subjectivity of the assessments and unpredictability of the outcomes of the legal proceedings, any amounts accrued or included in this aggregate amount* may**not* represent the ultimate loss to the Company from the legal proceedings in question. Thus, the Company’s exposure and ultimate losses* may*be higher, and possibly significantly more, than the amounts accrued.

As of* June 30, 2026,the Company has accrued approximately $1.75 million related to various employment disputes which were acquired as part of the fiscal year2023* acquisition, which is included in “Accrued liabilities and other” in the accompanying consolidated balance sheet.

Environmental

From time to time, and in the ordinary course of business, the Company* maybe subject to certain environmental liabilities. Environmental expenditures that relate to an existing condition caused by past operations and haveno* future economic benefits are expensed. Environmental expenditures that extend the life of the related property or mitigate or prevent future environmental contamination are capitalized. Liabilities for expenditures that willnot qualify for capitalization are recorded when environmental assessment and/or remediation is probable, and the costs can be reasonably estimated. Such liabilities are undiscounted unless the timing of cash payments for the liability is fixed or reliably determinable. Environmental liabilities normally involve estimates that are subject to revision until settlement or remediation occurs.

As of* June 30, 2026and December 31, 2025,the Company had recorded an environmental remediation liability of $675,000 relating to an oil spill atone* of the Company’s producing sites in fiscal year2017 which is recorded in other liabilities in the consolidated balance sheets. The producing site was subsequently sold in2019 and the Predecessor indemnified the purchaser for the remediation costs. Management based the remediation liability on the undiscounted cost received fromthird-party quotes to remediate the spill. As of* June 30, 2026,the Company doesnot* believe that remediation will be required within the nextfive years.

NOTE10 — SUBSEQUENT EVENTS

On* October 9, 2026,the Company entered into an unsecured promissory note with a previous investor of the Company for total principal of $1,500,000 (the“2026* Private Notes Payable”). The Private Notes Payable bear interest of 28% or the highest rate allowed under law, and have a stated maturity date of thetwo-year anniversary of the funding (or “closing”) of the Private Notes Payable. The Company has the right to pre-payment without penalty after12 months from closing. The investors also received 165,000 common stock warrants. Each warrant entitles the holder to purchase three quarters ofone share of common stock at a price of $11.50. Each warrant will become exercisable at the date of the Private Notes Payable and is exercisable through thefive-year anniversary of the Private Notes Payable agreement date. The warrants also grant the holder aone-time redemption right to require the Company pay the holder in cash equal to $1 per warrant24 months following the closing of the Private Notes Payable.

On* October 1, 2026,the Company received Letter2205*-L from the Internal Revenue Service notifying the Company that its U.S. federal income tax return on Form1120 for the tax year ended* December 31, 2023has been selected for examination. The examination is in its preliminary stages and the Internal Revenue Service hasnot* proposed any adjustments. The Company intends to cooperate fully with the examination. The Company is unable at this time to predict the outcome of the examination or to estimate the amount or range of any potential adjustment, and accordinglyno amounts have been accrued in the condensed consolidated financial statements as of* June 30, 2026.*

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NOTE11 — RESTATEMENT OF PREVIOUSLY ISSUED UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As previously reported in the Annual Report on Form10-K/A filed with the Securities and Exchange Commission (“SEC”) on* September 28, 2026,the Company previously restated its financials because of (i) a series of comment letters (“Comment Letters”) from the staff (the “Staff”) of the Division of Corporation Finance of the SEC regarding the income allocation to noncontrolling interests, (ii) a side agreement with the Company’s Chief Executive Officer related to certain founders’ shares which contains a put option recognized as redeemable common stock, (iii) conversion options within the2025* Convertible Notes and the White Lion Notes should be bifurcated as derivative liabilities and accounted for at fair value, (iv) incorrect recognition of royalties payable at the proper ownership interest and historical differentials, (v) recognition of certain natural gas sales in the wrong period, (vi) recognition of certain lease operating expenses and capital expenditures in the wrong period, (vii) improper recognition and classification of cash received for settlement of commodity derivatives, and (viii) the related estimated tax impacts of the previously mentioned errors in its consolidated financial statements. See Note14 of our previously filed10-K/A for full discussion of the errors.

The impact of the errors on the previously issued unaudited condensed consolidated financial statements is as follows:

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(a) These adjustments represent the restatements previously disclosed in the Company's2024 Form10-K/A as previously filed with the SEC on* April 27, 2026.*

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