Financial Condition

In FY19 operating activities provided $5,000 cash, and the Company used $13,000 cash to acquire 166,322 shares of its common stock. In FY18 the Company used $55,000 cash in operating activities and $20,000 cash to acquire 245,900 shares of its common stock. Consequently, cash balances decreased $8,000 and $75,000 in FY19 and FY18, respectively. At September 30, 2019 and 2018, other accrued expenses include $1,024,000 in salary payable to the Company's president, pursuant to his employment agreement, that the president has elected to defer, as well as $49,000 in related accrued payroll tax.

The Company is likely to experience negative cash flow from operations unless and until the Company invests in interests in producing oil and gas wells or in another venture that produces sufficient cash flow from operations. With the exception of capital expenditures related to production acquisitions or drilling or recompletion activities or an investment in another venture that produces cash flow from operations, none of which are currently planned, the cash flows that could result from such acquisitions, activities, or investments, and the possibility of a material change in the current level of interest rates or of oil and gas prices, the Company knows of no trends or demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in the Company's liquidity increasing or decreasing in any material way. Except for cash generated by the operation of the Company's producing oil and gas properties, asset sales, and interest income, the Company has no internal or external sources of liquidity other than its working capital. At December 26, 2019, the Company had no material commitments for capital expenditures.

The Company regularly assesses its exposure to both environmental liability and RR&D. The Company does not believe that it currently has any material exposure to environmental liability or to RR&D, net of salvage value, although this cannot be assured.


                             Results of Operations

In FY19 the Company wrote down the carrying value of it oil and gas properties by recognizing an impairment provision of $24,000. Interest income increased from $30,000 in FY18 to $51,000 in FY19 because of higher realized interest rates on cash balances. Included in other income in FY19 was $63,000 in bonus payments for undeveloped acreage leased to third parties.

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

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