CJAX 10-Q
CoJax Oil & Gas Corp (CJAX)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30 , 2022
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 333 - 232845
CoJax Oil and Gas Corporation
(Exact Name of registrant as specified in its charter)
| Virginia | 46 - 1892622 |
|---|---|
| (State or other jurisdiction of incorporation or<br>organization) | (IRS Employer Identification No.) |
| --- | --- |
| 3033 Wilson Blvd, Suite E-605<br><br>Arlington , VA | 22201 |
| (Address of principal executive offices) | (Zip Code) |
( 703 ) 216 - 8606
(Registrant ' s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act
| Title of each Class | Trading Symbol | Name of each exchange on which registered |
| None | N/A | N/A |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
☐ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer,” "accelerated filer,” "smaller reporting company," and emerging growth company" in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Non-accelerated filer ☒ | Smaller reporting company ☒ |
| Emerging growth company ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-b-2 of the Exchange Act).
☐ Yes ⌧ No
The registrant has one class of common stock, of which 7,614,466 shares were outstanding as of November 21, 2022.
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CoJax Oil and Gas Corporation
Form 10-Q
For the Quarter Ended September 30 , 2022
TABLE OF CONTENTS
NOTE ABOUT FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The statements contained in this report that are not historical facts are forward-looking statements that represent management's beliefs and assumptions based on currently available information. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, need for financing, competitive position, and potential growth opportunities. Our forward-looking statements do not consider the effects of future legislation or regulations. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words "believes,” "intends,” "may,” "should,” "anticipates,” "expects,” "could,” "plans,” "estimates,” "projects,” "targets" or comparable terminology or by discussions of strategy or trends. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurances that these expectations will prove to be correct. Such statements, by their nature, involve risks and uncertainties that could significantly affect expected results, and actual future results could differ materially from those described in such forward-looking statements.
Among the factors that could cause actual future results to differ materially are the risks and uncertainties discussed in this report and in our annual report on Form 10-K for the year ended December 31, 2021. While it is not possible to identify all factors, we continue to face many risks and uncertainties including, but not limited to:
·declines or volatility in the prices we receive for our oil and natural gas;
·our ability to raise additional capital to fund future capital expenditures;
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·our ability to generate sufficient cash flow from operations, borrowings or other sources to enable us to fully develop and produce our oil and natural gas properties;
·general economic conditions, whether internationally, nationally or in the regional and local market areas in which we do business;
·risks associated with drilling, including completion risks, cost overruns and the drilling of non-economic wells or dry holes;
·uncertainties associated with estimates of proved oil and natural gas reserves;
·the presence or recoverability of estimated oil and natural gas reserves and the actual future production rates and associated costs;
·risks and liabilities associated with acquired companies and properties;
·risks related to the integration of acquired companies and properties;
·potential defects in title to our properties;
·cost and availability of drilling rigs, equipment, supplies, personnel, and oilfield services;
·geological concentration of our reserves;
·environmental or other governmental regulations, including the legislation of hydraulic fracture stimulation;
·our ability to secure firm transportation for oil and natural gas we produce and to sell the oil and natural gas at market prices;
·exploration and development risks;
·management's ability to execute our plans to meet our goals;
·our ability to retain key members of our management team on commercially reasonable terms;
·the occurrence of cybersecurity incidents, attacks or other breaches to our information technology systems or on systems and infrastructure used by the oil and gas industry;
·weather conditions;
·effectiveness of our internal control over financial reporting;
·actions or inactions of third-party operators of our properties;
·costs and liabilities associated with environmental, health and safety laws;
·our ability to find and retain highly skilled personnel;
·operating hazards attendant to the oil and natural gas business;
·competition in the oil and natural gas industry;
·evolving geopolitical and military hostilities in the Middle East;
·economic and competitive conditions;
·lack of available insurance;
·cash flow and anticipated liquidity;
·continuing compliance with the financial covenant contained in our amended and restated credit agreement;
·the ongoing COVID-19 pandemic, including any reactive or proactive measures taken by businesses, governments, and other organizations related thereto, and the direct and indirect effects of COVID-19 on the market for and price of oil; and
·the other factors discussed under "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
Should our underlying assumptions prove incorrect, or the consequences of the aforementioned risks worsen, actual results could differ materially from those expected.
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Forward-looking statements speak only as to the date hereof. All such forward-looking statements and any subsequent written or oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the statements contained herein or referred to in this section and any other cautionary statements that may accompany such forward-looking statements. Except as otherwise required by applicable law, we disclaim any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events, or otherwise.
There may also be other risks and uncertainties that we are unable to predict at this time or that we do not now expect to have a material adverse impact on our business.
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PART I – FINANCIAL INFORMATION
[The unaudited condensed consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, certain disclosures required by accounting principles generally accepted in the United States and normally included in Annual Reports on Form 10-K have been omitted. Although management believes that our disclosures are adequate to make the information presented not misleading, these unaudited interim financial statements should be read in conjunction with the Company's audited financial statements and related footnotes included in its most recent Annual Report on Form 10-K. COJAX OIL AND GAS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS September 30 , December 31, 2022 2021 ASSETS(Unaudited) Current Assets Cash and cash equivalents$31,327 $12,098 Prepaid expenses16,667 91,667 Total Current Assets47,994 103,765 Properties and Equipment Oil and natural gas properties (successful efforts method)2,779,802 2,779,802 Total Properties and Equipment2,779,802 2,779,802 Total Assets2,827,796 2,883,567 LIABILITIES AND STOCKHOLDERS ' EQUITY (DEFICIT) Current Liabilities Accounts payable102,339 46,261 Accrued interest payable490 - Accrued salaries and payroll taxes394,815 696,452 Notes payable – SBA PPP – current portion9,998 51,663 Notes payable – related party73,000 - Total Current Liabilities580,642 794,376 Long-term Liabilities Notes payable – SBA PPP75,089 39,994 Asset retirement obligations86,431 84,566 Total long -term liabilities161,520 124,560 Total Liabilities742,162 918,936 Stockholders' Equity (Deficit) Preferred stock, $0.10 par value, 50,000,000 current shares authorized, 55,000 and 30,000 Series A shares, $0.01 par value issued and outstanding, respectively.550 300 Common stock, $0.01 par value, 300,000,000 current shares authorized, 5,992,131 and 5,780,577 shares issued and outstanding, respectively.59,922 57,806 Additional paid-in capital5,723,791 4,803,049 Accumulated deficit(3,698,629) (2,896,524) Total Stockholders’ Equity (Deficit)2,085,634 1,964,630 Total Liabilities and Stockholders' Equity (Deficit)$2,827,796 $2,883,567 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 5 COJAX OIL AND GAS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) For the Three Months For the Nine Months Ended September 30 , Ended September 30 , 2022 2021 2022 2021 Oil and Natural Gas Revenues$- $- $- $8,160 Costs and Operating Expenses Lease operating expenses1,659 1,468 30,544 29,878 Ad valorem taxes- - - 490 Asset retirement obligation accretion621 604 1,865 1,812 General and administrative 125,832 84,818 748,176 429,804 Total Operating Expenses128,112 86,890 780,585 461,984 Loss from Operations(128,112) (86,890) (780,585) (453,824) Other Income (Expense) Interest income2 5 6 10 Interest expense(243) (643) (21,526) (1,909) Net Other Income (Expense)(241) (638) (21,520) (1,899) Net Loss$(128,353) $(87,528) $(802,105) $(455,723) Basic and Diluted Earnings (Loss) per share$(0.02) $(0.02) $(0.14) $(0.11) Weighted average common shares – basic and diluted5,992,131 4,096,751 5,931,354 4,072,930 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 6 COJAX OIL AND GAS CORPORATION CONDENSED CONSOL IDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Nine Months Ended September 30 , 2022 2021 Cash flows from operating activities: Net loss$(802,105) $(455,724) Common stock issued for services 423,108 220,000 Adjustments to reconcile Net loss to net cash used in operations: Accretion of asset retirement obligation1,865 1,812 Accounts payable56,077 25,529 Prepaid expense75,000 Accrued salaries and payroll taxes198,363 128,814 Accrued interest payable490 1,909 Total adjustments to reconcile net loss to net cash (used in) operations 754 , 903 376,064 Net cash used in operating activities ( 47 , 202 ) (79,660) Cash flows from investing activities:- - Cash flows from financing activities: Proceeds from loans payable – related party73,000 - Proceeds from PPP loan - 41,665 Payments on PPP loan principal(6,569) - Proceeds from the sale of common stock- 35,000 Net cash provided by financing activities 66, 43 1 76,665 Net change in cash19,229 (2,995) Cash at beginning of period12,098 44,051 Cash at end of period $ 31 , 327 $ 41,056 Supplemental disclosure of non-cash investing and financing activities: Preferred shares issued for accrued compensation$500,000 $600,000 Accrued M&A fees settled with common stock$- $620,500 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 7 COJAX OIL AND GAS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS ' EQUITY (DEFICIT) (UNAUDITED) Additional Total Series A Preferred stock Common stock paid-in Accumulated Stockholder ' s Shares Amount Shares Amount capital deficit deficit Balance, December 31, 2020 - $ - 3,659,001 $ 36,590 $ (18,588) $ (1,406,328) $ (1,388,326) Common stock issued for cash- - 17,500 175 34,825 - 35,000 Common stock issued for services- - 420,250 4,203 836,297 - 840,500 Preferred stock issued for accrued officer compensation30,000 300 - - 597,000 - 600,000 Net loss for the three months ending March 31, 2021- - - - - (261,918) (261,918) Balance, March 31, 2021 30,000 $ 300 4,096,751 $ 40,968 $ 1,449,534 $ (1,668,246) $ (174,744) Net loss for the three months ending June 30, 2021- - - - - (106,278) (106,278) Balance, June 30 , 2021 30,000 $ 300 4,096,751 $ 40,968 $ 1,449,534 $ (1,774,524) $ (281,022) Net loss for the three months ending September 30, 2021- - - - - (87,528) (87,528) Balance, September 30 , 2021 30,000 $ 300 4,096,751 $ 40,968 $ 1,449,534 $ (1,862,052) $ (368,550) Balance, December 31, 2021 30,000 $ 300 5,780,577 $ 57,806 $ 4,803,049 $ (2,896,52 5 ) $ 1,964,63 0 Common stock issued for services- - 180,000 1,800 358,200 - 360,000 Preferred stock issued for accrued officer compensation25,000 250 - - 499,750 - 500,000 Net loss for the three months ending March 31, 2022- - - - - (474,182) (474,182) Balance, March 31, 202255,000 $ 550 5,960,577 $ 59,606 $ 5,660,999 $ (3,370,70 7 ) $ 2,350,44 8 Common stock issued for services- - 31,554 316 62,792 - 63,108 Net loss for the three months ending June 30, 2022- - - - - (199,569) (199,569) Balance, June 30 , 2022 55,000 $ 550 5,992,131 $ 59,922 $ 5,723,791 $ (3,570,27 6 ) $ 2,213,98 7 Net loss for the three months ending September 30, 2022- - - - - (128,353) (128,353) Balance, September 30 , 2022 55,000 $ 550 5,992,131 $ 59,922 $ 5,723,791 $ (3, 69 8 , 62 9 ) $ 2,08 5 , 63 4 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 8 COJAX OIL AND GAS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Condensed Consolidated Financial Statements – The accompanying condensed consolidated financial statements prepared by CoJax Oil and Gas Corporation (the "Company" or "CoJax") have not been audited by an independent registered public accounting firm. In the opinion of the Company's management, the accompanying unaudited financial statements contain all adjustments necessary for the fair presentation of the results of operations for the periods presented, which adjustments were of a normal recurring nature. The results of operations for the three and nine months ended September 30, 2022, are not necessarily indicative of the results to be expected for the full year ending December 31, 2022, for various reasons, including as a result of the impact of fluctuations in prices received for oil and natural gas, natural production declines, the uncertainty of exploration and development drilling results, fluctuations in the fair value of derivative instruments, the impacts of COVID-19 and other factors. These unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information, and, accordingly, do not include all the information and footnotes required by GAAP for complete financial statements. Therefore, these financial statements should be read in conjunction with the Company's annual report on Form 10-K for the year ended December 31, 2021. Organization and Nature of Operations – The Company is a Virginia corporation that owns interests in oil and natural gas properties located in Alabama. The Company's oil and natural gas sales, profitability, and future growth are dependent upon prevailing and future prices for oil and natural gas and the successful acquisition, exploration, and development of oil and natural gas properties. Oil and natural gas prices have historically been volatile and may be subject to wide fluctuations in the future. A substantial decline in oil and natural gas prices could have a material adverse effect on the Company's financial position, results of operations, cash flows, and quantities of oil and natural gas reserves that may be economically produced. COVID-19 – In March 2020, the World Health Organization classified the outbreak of COVID-19 as a pandemic. The nature of COVID-19 led to worldwide shutdowns, reductions in commercial and interpersonal activity, and changes in consumer behavior. In attempting to control the spread of COVID-19, governments worldwide imposed laws and regulations such as shelter-in-place orders, quarantines, executive orders, and similar restrictions. As a result, the global economy has been marked by significant slowdown and uncertainty, which in turn has led to a precipitous decline in oil prices in response to decreased demand, further exacerbated by global energy storage shortages and by the price war among members of the Organization of Petroleum Exporting Countries ("OPEC") and other non-OPEC producer nations (collectively with OPEC members, "OPEC+") during the first quarter 2020. As of the third quarter of 2022, prices have recovered to pre-pandemic levels, due in part to the accessibility of vaccines, the reopening of states after the lockdown, and optimism about the economic recovery. The continued spread of COVID-19, including-vaccine resistant strains, or repeated deterioration in oil and natural gas prices, could result in additional adverse impacts on the Company's results of operations, cash flows, and financial position, including further asset impairments. 9 Liquidity and Capital Considerations – We strive to maintain an adequate liquidity level to address volatility and risk. Sources of liquidity include loans from our CEO, our cash flow from operations, cash on hand, and sales of shares. While changes in oil and natural gas prices affect the Company's liquidity, if oil or natural gas prices rapidly deteriorate due to a resurgence of COVID-19 or other reasons, this could have a material adverse effect on the Company's cash flows. The Company expects ongoing oil price volatility over the short term. Extended depressed oil prices have historically had and could continue to have a material adverse impact on the Company's oil revenue. The Company is always mindful of oil price volatility and its impact on our liquidity. Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses during the reporting period. The Company's unaudited condensed financial statements are based on a number of significant estimates, including estimates of oil and natural gas reserve quantities, which are the basis for the calculation of depletion and impairment of oil and gas properties. Reserve estimates, by their nature, are inherently imprecise. Actual results could differ from those estimates. Changes in the future estimated oil and natural gas reserves or the estimated future cash flows attributable to the reserves that are utilized for impairment analysis could have a significant impact on the Company's future results of operations. Fair Value Measurements – Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Financial Accounting Standards Board ("FASB") has established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy consists of three broad levels. Level 1 inputs are the highest priority and consist of unadjusted quoted prices in active markets for identical assets and liabilities. Level 2 is inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. Level 3 is unobservable inputs for an asset or liability. Fair Values of Financial Instruments – The carrying amounts of accounts receivables and accounts payable and other current assets and liabilities approximate fair value because of the short-term maturities and/or liquid nature of these assets and liabilities. Concentration of Credit Risk –The Company maintains cash and cash equivalent balances at a single financial institution that are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. At September 30, 2022, and December 31, 2021, the Company had no exposure in excess of insurance. Oil and Gas Properties – The Company uses the successful efforts method of accounting for oil and gas activities. Under this method, the costs of productive exploratory wells, all development wells, related asset retirement obligation assets, and productive leases are capitalized and amortized, principally by field, on a units-of-production basis over the life of the remaining proved reserves. Exploration costs, including personnel costs, geological and geophysical expenses, and delay rentals for oil and gas leases, are charged to expense as incurred. Exploratory drilling costs are initially capitalized but charged to expense if and when the well is determined not to have found reserves in commercial quantities. 10 Depreciation, depletion, and amortization expense for the three and nine months ended September 30, 2022, was $0 per barrel of oil equivalent compared to $0, for the three and nine months ended September 30, 2021. Equipment, V ehicles , and L easehold I mprovements – Currently, the Company has no office equipment. Going forward, office equipment will be valued at historical cost adjusted for impairment loss less accumulated depreciation. Historical costs include all direct costs associated with the acquisition of office equipment and placing such equipment in service. Depreciation will be calculated using the straight-line method based on an estimated useful life of 3 to 10 years. Asset Retirement Obligation – The Company records a liability in the period in which an asset retirement obligation ("ARO") is incurred, in an amount equal to the discounted estimated fair value of the obligation that is capitalized. Thereafter, this liability is accreted up to the final estimated retirement cost. An ARO is a future expenditure related to the disposal or other retirement of certain assets. The Company's ARO relates to future plugging and abandonment expenses of its oil and natural gas properties and related facilities disposal. Share-Based Employee Compensation – The Company has no outstanding stock option grants and restricted stock awards to directors, officers, and employees. The Company recognizes the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award and recognizes the related compensation expense over the period during which an employee is required to provide service in exchange for the award, which is generally the vesting period. Share-Based Compensation to Non-Employees – The Company accounts for share-based compensation issued to non-employees as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The measurement date for these issuances is the earlier of (i) the date at which a commitment for performance by the recipient to earn the equity instruments is reached or (ii) the date at which the recipient's performance is complete. Income Taxes – Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes. Deferred taxes are based on differences between the tax bases of assets and liabilities and their reported amounts in the financial statements and tax carryforwards. Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was enacted on March 27, 2020, and includes income tax provisions that, among other things, allow net operating losses to be carried back, permit interest expense to be deducted up to a higher percentage of adjusted taxable income, and modify tax depreciation of qualified improvement property. Due to the Company having taxable losses in all years eligible for the net operating loss (“NOL”) carryback, no benefit was recorded, and these provisions have no material impact on the Company. For the period ended September 30, 2022, the Company recorded no income tax expense or benefit due to the Company having a full valuation allowance against its net deferred tax assets. Since December 31, 2020, the Company has determined that a full valuation allowance is necessary due to the Company’s assessment that it is more likely than not that it will be unable to obtain the benefits of its deferred tax 11 assets due to the Company's history of taxable losses. The Company reviews its Deferred Tax Assets ("DTAs") and valuation allowance on a quarterly basis. Recently Issued Accounting Pronouncements – The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. Basic and Diluted Earnings per Share – Basic earnings per share are computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted earnings per share reflect the potential dilution that could occur if all contracts to issue common stock were converted into common stock, except for those that are anti-dilutive. The dilutive effect of stock options and other share-based compensation is calculated using the treasury method. The computation of diluted loss per share does not assume the exercise or conversion of securities that would have an anti-dilutive effect. As of September 30, 2022, the effect of 55,000 convertible preferred shares into 550,000 common shares was excluded from the computation of diluted net loss per common share as their effect is anti-dilutive. NOTE 2 – GOING CONCERN DISCLOSURE The Company's financial statements are prepared using U.S. GAAP applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business. In 2020, the Company acquired Barrister Energy with identified proven or probable reserves and correspondingly expects to be generating revenue during its exploration stage. There can be no assurance that the Company will be able to achieve its business plan, raise any additional capital, or secure the additional financing necessary to implement its current operating plan. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. The Company has yet to achieve profitable operations, expects to incur further losses in the development of its business, has negative cash flows from operating activities, and is dependent upon future issuances of equity or other financings to fund ongoing operations, all of which raises substantial doubt about the Company's ability to continue as a going concern for a period of one year from the issuance of these financial statements. The Company's ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing from shareholders or other sources to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances; however, there is no assurance of additional funding being available or on acceptable terms, if at all. NOTE 3 – REVENUE RECOGNITION The Company predominantly derives its revenue from the sale of produced crude oil and natural gas. The contractual performance obligation is satisfied when the product is delivered to the customer. Revenue is recorded in the month the product is delivered to the purchaser, and the Company receives payment from one to three months after delivery. The transaction price includes variable consideration as product 12 pricing is based on published market prices and reduced for contract-specified differentials. The guidance does not require that the transaction price be fixed or stated in the contract. Oil sales Under the Company's oil sales contracts, the Company sells oil production at the point of delivery and collects an agreed-upon index price, net of pricing differentials. The Company recognizes revenue when control transfers to the purchaser at the point of delivery at the net price received. Natural gas sales The Company currently is not producing natural gas. Disaggregation of Revenue. The following table presents revenues disaggregated by product for the three and nine months ended September 30, 2022, and 2021: For the Three Months For the Nine Months Ended September 30, Ended September 30 , 2022 2021 2022 2021Revenues by Product: Oil$- $- $- $8,160 Natural gas- - - - Oil and natural gas revenues$- $- $- $8,160 All revenues are from production from the Gulf State Drilling Region in Alabama. NOTE 4 – LEASES Effective January 1, 2019, the Company adopted ASU 2016-02, Leases (Topic 842). The purpose of this guidance is to increase transparency and comparability among organizations by recognizing certain lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The main difference between the previous GAAP methodology and the method proposed by this new guidance is the recognition on the balance sheet of certain lease assets and lease liabilities by lessees for those leases that were classified as operating leases under the previous GAAP. The Company made accounting policy elections to not capitalize leases with a lease term of twelve months or less and to not separate lease and non-lease components for all asset classes. The Company has also elected to adopt the package of practical expedients within ASU 2016-02 that allows an entity to not reassess prior to the effective date (i) whether any expired or existing contracts are or contain leases, (ii) the lease classification for any expired or existing leases, or (iii) initial direct costs for any existing leases and the practical expedient regarding land easements that exist prior to the adoption of ASU 2016-02. The Company did not elect the practical expedient of hindsight when determining the lease term of existing contracts at the effective date. The Company has a month-to-month rental agreement for our offices in Arlington, Virginia, and Laurel, Mississippi. NOTE 5 –LOSS PER SHARE INFORMATION 13 The Company computes basic loss per share by dividing net loss by the weighted-average number of common shares outstanding during the period. The Company computes diluted loss per share by dividing net loss by the sum of the weighted-average number of common shares outstanding and the weighted-average dilutive common share equivalents outstanding. For the Three Months For t he Nine Months Ended September 30. Ended September 30 , 2022 2021 2022 2021Net Income (Loss)$(128,353) $(87,528) $(802,105) $(455,724) Basic Weighted-Average Shares Outstanding5,992,131 4,096,751 5,931,354 4,072,930 Effect of dilutive securities: Stock optionsn/an/an/an/aConvertible preferred stockn/an/an/an/aRestricted stockn/an/an/an/aCommon warrantsn/an/an/an/aDiluted Weighted-Average Shares Outstanding5,992,131 4,096,751 5,931,354 4,072,930 Basic and Diluted Earnings (Loss) per Share$(0.02) $(0.02) $(0.14) $(0.11) NOTE 6 – FAIR VALUE MEASUREMENTS Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The authoritative guidance requires disclosure of the framework for measuring fair value and requires that fair value measurements be classified and disclosed in one of the following categories: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. We consider active markets as those in which transactions for the assets or liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability. This category includes those derivative instruments that we value using observable market data. Substantially all these inputs are observable in the marketplace throughout the full term of the derivative instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Level 3: Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources (i.e., supported by little or no market activity). Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of September 30, 2022, and September 30, 2021. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. NOTE 7 – ASSET RETIREMENT OBLIGATION 14 The Company records the obligation to plug and abandon oil and gas wells at the dates the properties are either acquired, or the wells are drilled. The asset retirement obligation is adjusted each quarter for any liabilities incurred or settled during the period, accretion expense, and any revisions made to the costs or timing estimates. The asset retirement obligation is incurred using an annual credit-adjusted risk-free discount rate at the applicable dates. Changes in the asset retirement obligation were as follows: Balance, December 31, 2021**$** 84 , 566 Liabilities incurred- Liabilities acquired- Liabilities sold- Revision of previous estimates- Liabilities settled- Accretion expense1,865 Balance, September 30, 2022**$** 86 , 431 NOTE 8 – CONTINGENCIES AND COMMITMENTS Operating Lease Commitments The Company has no lease obligations at September 30, 2022, and September 30, 2021. The Company has a month-to-month rental agreement for an office share in Arlington, Virginia, beginning on April 1, 2018, for $50 per month. Additionally, the Company has no known contingencies as of September 30, 2022, and September 30, 2021. Purchase Commitments The Company has no purchase obligations at September 30, 2022. Significant Risks and Uncertainties Concentration of Credit Risk – Cash – The Company maintains cash and cash equivalent balances at a single financial institution that are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. At September 30, 2022, and December 31, 2021, the Company had no exposure in excess of insurance. Concentration of Credit Risk – Accounts Receivable – The Company had no revenue-generating operations and, therefore, no accounts receivable as of the date of these financial statements. Legal Matters During the course of business, litigation commonly occurs. From time to time, the Company may be a party to litigation matters involving claims against the Company. The Company operates in a highly regulated industry and employs personnel, which may inherently lend itself to legal matters. Management is aware that litigation has associated costs and that results of adverse litigation verdicts could have a material effect on the Company's financial position or results of operations. There are no known legal proceedings against the Company or its officers and directors in their capacity as officers and directors of the Company.]()
NOTE 9 – RELATED PARTY TRANSACTIONS
On January 13, 2022, the Company's Executive Chairman loaned $10,000 to the Company, and the Company issued a promissory note for such an amount. The promissory note is unsecured and bears interest at 2% per annum principal, and accrued interest matures on January 24, 2023.
On September 16, 2022, the Company's Executive Chairman loaned $15,000 to the Company, and the Company issued a promissory note for such an amount. The promissory note is unsecured and bears interest at 2% per annum principal, and accrued interest matures on September 16, 2023.
On January 4, 2022, the Company issued 12,500 shares of Series A convertible preferred stock to Jeffrey J. Guzy, the CEO, and 12,500 shares of Series A convertible stock to Wm. Barrett Wellman, the CFO (see NOTE 9). Each share is convertible at the option of the holder to ten (10) shares of common stock. Since these shares were not issued until 2022, the fair value of $500,000 ($20 per share) has been recorded as part of accrued salaries and payroll taxes. The fair value was based on the value assigned to common stock ($2 per share) multiplied by 10. No gain or loss was recognized.
On February 1, 2022, the Company issued 170,000 shares for settlements and consulting fees at $2.00 per share.
During the period ending September 30, 2021, the company issued 310,250 shares of common stock to Newbridge Securities Corporation in settlement of $620,500 in M&A fees for the Barrister acquisition,100,000shares of common stock to various vendors in settlement of $200,000 in service and consulting fees and 10,000 shares of common stock to its executive officers.
Item 2. Management ' s Discussion and Analysis of Financial Condition and Results of Operations
Oil and gas production costs. Lease operating expenses were $30,544 for the nine months ended September 30, 2022, and $29,878 for the nine months ended September 30, 2021.Lease operating
General and administrative expenses. General and administrative expense increased $318,372 to $748,176 for the nine months ended September 30, 2022, as compared to $429,804 for the nine months ended September 30, 2021.The increase in general and administrative expense is primarily attributable to stock-based compensation-related expensesand the acquisition of Barrister Energy, LLC. General and administrative expense increased $41,014 to $125,832 for the three months ended September 30, 2022, as compared to $84,818 for the three months ended September 30, 2021. The increase in general and administrative expense is primarily attributable to increased legal, stock transfer, and audit fees.
Net income (loss).For the nine months ended September 30, 2022, the Company had a net loss of $802,105, as compared to a net loss of $455,723 for the nine months ended September 30, 2021. For the three months ended September 30, 2022, the Company had a net loss of $128,353, as compared to a net loss of $87,528 for the three months ended September 30, 2021.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Item 2. Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
[CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER I, Jeffrey J. Guzy, certify that: 1.I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, of CoJax Oil and Gas Corporation; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.Date: November 21, 2022
/s/ JEFFREY J. GUZY
Jeffrey J. Guzy
Chief Executive Officer
(Principal Executive Officer) CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER I, Wm. Barrett Wellman, certify that: 1.I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, of CoJax Oil and Gas Corporation; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: November 21, 2022 /s/ Wm. Barrett Wellman
Wm. Barrett Wellman
Chief Financial Officer
(Principal Accounting Officer) CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with this quarterly report of CoJax Oil and Gas Corporation (the “Company”) on Form 10-Q for the quarter ended September 30, 2022, as filed with the Securities and Exchange Commission (the “Report”), the undersigned principal executive officer of the Company, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1)the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: November 21, 2022/s/ JEFFREY J. GUZYJeffrey J. Guzy
Chief Executive Officer
(Principal Executive Officer) CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with this quarterly report of CoJax Oil and Gas Corporation (the “Company”) on Form 10-Q for the quarter ended September 30, 2022, as filed with the Securities and Exchange Commission (the “Report”), the undersigned principal financial officer of the Company, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1)the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: November 21, 2022/s/ WM. BARRETT WELLMAN Wm. Barrett WellmanChief Financial Officer(Principal Financial Officer)]()