Table of Contents

VERDE BIO HOLDINGS INC.

Notes to the Condensed Consolidated Financial Statements

(Expressed in US dollars)

(unaudited)

1.Nature of Operations and Continuance of Business 

Verde Bio Holdings Inc. (the “Company”) was incorporated in the State of Nevada on February 24, 2010. Currently, the Company is in the business of oil and gas exploration and investment.

On March 11, 2020,2021, the World Health Organization declared COVID-19 a global pandemic. This contagious disease outbreak and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, leading to an economic downturn. The impact on the Company has not been significant but management continues to monitor the situation.

Going Concern

These condensed consolidated financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. During the period ended July 31, 2021,2022, the Company incurred a net loss of $672,995$764,008 and used cash of $612,892$427,111 for operating activities.  As at July 31, 2021,2022, the Company had an accumulated deficit of $11,509,740.$15,022,899. The continuation of the Company as a going concern is dependent upon the continued financial support from its management, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing, and generating profitable operations from the Company’s future operations. The Company will continue to rely on equity sales of its common shares in order to continue to fund business operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern for a period of one year from the date these financial statements are issued.  These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

2.Summary of Significant Accounting Policies

(a)Basis of Presentation and Principles of Consolidation 

The accompanying condensed consolidated interim financial statements of the Company should be read in conjunction with the consolidated interim financial statements and accompany notes filed with the U.S. Securities and Exchange Commission for the year ended April 30, 2021.2022. These interim condensed consolidated interim financial statements are unaudited and have been prepared on the same basis as the annual consolidated financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period.

These condensed consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars. The condensed consolidated interim financial statements are comprised of the records of the Company and its wholly owned subsidiary, IP Control Risk Inc., a company incorporated in the State of Nevada, United States. All intercompany transactions have been eliminated on consolidation. The Company’s fiscal year end is April 30.

(b)Use of Estimates 

The preparation of financial statements in conformity with US GAAP requires 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.

Table of ContentsF-7

VERDE BIO HOLDINGS INC.

Notes to the Condensed Consolidated Interim Financial Statements

(Expressed in US dollars)

(unaudited)

2.Summary of Significant Accounting Policies (continued) 

(b)Use of Estimates (continued) 

The Company regularly evaluates estimates and assumptions related to the collectability of accounts receivable relating to oil and gas interests which is based on the operator’s production statements, carrying value of oil and gas properties, the useful life, carrying value, and incremental borrowing rate used for right-of-use assets and lease liabilities, the fair value of convertible debentures, derivative liabilities, stock-based compensation, revenue recognition including the calculation of the reserves and the fair value of the reserves for oil and gas interests, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

(c)Basic and Diluted Net Loss per Share  

The Company computes net loss per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.  As of July 31, 2021,2022, the Company had 5,00091,230,233 (April 30, 20212022 – 7,718,600)143,609,408) potentially dilutive common shares outstanding.

(d)  Fair Value Measurements

The Company measures and discloses the estimated fair value of financial assets and liabilities using the fair value hierarchy prescribed by U.S. generally accepted accounting principles. The fair value hierarchy has three levels, which are based on reliable available inputs of observable data. The hierarchy requires the use of observable market data when available. The three-level hierarchy is defined as follows:

Level 1 – quoted prices for identical instruments in active markets;

Level 2 – quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model derived valuations in which significant inputs and significant value drivers are observable in active markets; and

Level 3 – fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

Financial instruments consist principally of cash, accounts payable and accrued liabilities, notes payable, convertible debentures and amounts due to related parties. The fair value of cash is determined based on Level 1 inputs. There were no transfers into or out of “Level 3” during the yearsperiod ended April 30, 2021, and 2020.July 31, 2022. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations.

Table of ContentsF-8

VERDE BIO HOLDINGS INC.

Notes to the Condensed Consolidated Interim Financial Statements

(Expressed in US dollars)

(unaudited)

2.Summary of Significant Accounting Policies (continued) 

(d)  Fair Value Measurements (continued)

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

(j)(e)Recent 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.

3.Right-of-Use Operating Lease Asset and Lease Liability

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the ROU asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the ROU asset result in straight-line rent expense over the lease term. ROU assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term.

On March 11, 2021,2022, the Company entered into a sublease agreement with a sublandlord regarding its office at 5750 Genesis Court, Suite 220, Frisco, Texas 75036. The agreement was treated as an operating lease in accordance with ASC 842, Lease, which resulted in initial recognition of right-of-use asset and lease liability of $122,120. The incremental borrowing rate used in the calculation is 18%.

Table of ContentsF-9

VERDE BIO HOLDINGS INC.

Notes to the Condensed Consolidated Interim Financial Statements

(Expressed in US dollars)

(unaudited)

3.Right-of-Use Asset and Lease Liability (continued) 

4.Royalty Interests in Oil and Gas Properties 

On July 19, 2020, the Company signed a purchase agreement for a 50% right, title and interest to certain oil and gas properties located in the United States in exchange for 10,000,000 shares of common stock of the Company with fair value of $245,000 which was determined based on the fair value of the Company’s common shares on the date of issuance on August 10, 2020.

On September 21, 2020, the Company signed a purchase agreement for a 100% right, title and interest to certain oil and gas properties located in the United States for consideration of 5,000,000 shares of common stock of the Company with a fair value of $126,500.

On March 5, 2021, the Company signed a purchase and sale agreement for 100% right, title and interest to certain oil and gas properties located in Adams County, Colorado for cash consideration of $150,000.

On March 16, 2021, the Company signed a purchase and sale agreement for 50% right, title and interest to certain oil and gas properties located in Weld County, Colorado for cash consideration of $152,000.

Table of Contents

VERDE BIO HOLDINGS INC.

Notes to the Condensed Consolidated Interim Financial Statements

(Expressed in US dollars)

(unaudited)

4.Royalty Interests in Oil and Gas Properties (continued) 

On March 18, 2021, the Company signed a purchase and sale agreement for 100% right, title and interest to certain oil and gas properties located in Desoto and Sabine Parish, LA and Loving County, Texas for cash consideration of $127,500.

On March 18, 2021, the Company signed a purchase and sale agreement for 100% right, title and interest to certain oil and gas properties located in Adams County, Colorado for cash consideration of $150,000.

On March 22, 2021, the Company signed a purchase and sale agreement for 100% right, title and interest to certain oil and gas properties located in Weld County, Colorado for cash consideration of $152,000.

On March 26, 2021, the Company signed a purchase and sale agreement for 100% right, title and interest to certain oil and gas properties located in Red River and Sabine Parish, LA for cash consideration of $380,952.

On April 1, 2021, the Company signed a purchase and sale agreement for 100% right, title and interest to certain oil and gas properties located in Red River and Desoto Parish, LA for cash consideration of $359,975.

On April 1, 2021, the Company signed a purchase and sale agreement for 100% right, title and interest to certain oil and gas properties located in Ohio County, West Virginia for cash consideration of $133,000.

On April 13, 2021, the Company signed a purchase and sale agreement for 100% right, title and interest to certain oil and gas properties located in Laramie County, Wyoming for cash consideration of $502,764.

On April 19, 2021, the Company signed a purchase and sale agreement for 100% right, title and interest to certain oil and gas properties located in Howard County, Texas for cash consideration of $430,000.

On May 4, 2021, the Company signed a purchase and sale agreement for 100% right, title, and interest to certain properties located in Laramie County, Wyoming for cash consideration of $431,425.

On May 13, 2021, the Company signed a purchase and sale agreement for 100% right, title, and interest to certain properties located in Colorado and Ohio for cash consideration of $1,100,000.

On June 14, 2021, the Company signed a purchase and sale agreement for 100% right, title, and interest to certain properties located in Jack County, Texas for cash consideration of $1,600,000.

On July 16, 2021, the Company signed a purchase and sale agreement for 100% right, title, and interest to certain properties located in Bienville, Louisiana for cash consideration of $800,000.

5.Related Party Transactions

(a)During the period ended July 31, 2021, the Company incurred $nil (2020 - $204,000) in management fees to the President and Director of the Company which was paid in common shares (see Note 11). 

6.Convertible Debenture

On July 19, 2017, the Company issued a convertible debenture, to a non-related party, in the amount of $33,333. Pursuant to the agreement, the note was issued with an original issue discount and as such the purchase price was $28,000. Under the terms of the debenture, the amount is unsecured, bears interest at 12% per annum, and was due on July 19, 2018. The debenture is convertible into common shares of the Company at a conversion price equal to 50% of the lowest trading price of the Company’s common stock of the past twenty-five trading days prior to notice of conversion or the issuance of the note. In the event of default, the interest rate increases to 24%.

Due to this provision, the embedded conversion option qualifies for derivative accounting under ASC 815-15 “Derivatives and Hedging”. The fair value of the derivative liability resulted in a discount to the note payable of $33,333, of which $5,333 of the discount resulted from debt issuance costs. The carrying value of the convertible note was be accreted over the term of the convertible note up to the face value of $33,333.  During the period ended July 31, 2021, the Company repaid the balance owing on the debenture.

As at July 31, 2021, the carrying value of the note was $nil (April 30, 2021 - $1,203) and the Company recorded derivative liability of $nil (April 30, 2021 - $8,519).

Table of Contents

VERDE BIO HOLDINGS INC.

Notes to the Condensed Consolidated Interim Financial Statements

(Expressed in US dollars)

(unaudited)

7.Derivative Liability

The fair value of the derivative liability was calculated using a Binomial model. The fair value of the derivative liability is revalued on each balance sheet date with corresponding gains and losses recorded in the consolidated statement of operations. During the period ended July 31, 2021, the Company recorded a loss on the change in fair value of $nil (2020 –$471,266). As at July 31, 2021, the Company recorded a derivative liability of $nil (April 30, 2021 - $8,519).

A summary of the activity of the derivative liability is shown below:

5.Property and Equipment

F-10

VERDE BIO HOLDINGS INC.

Notes to the Condensed Consolidated Financial Statements

(Expressed in US dollars)

(unaudited)

6.Convertible Loan

On June 3, 2022, the Company entered into a convertible loan agreement with an arms-length party for $200,200 net of original issuance discount of $21,450 and legal fees of $3,750.  Under the terms of the agreement, the Company incurred a one-time interest charge of $24,024 upon the closing of the agreement, which has been recorded in accounts payable and accrued liabilities and is required to remit a monthly repayment of $22,422 commencing in July 2022.  If the Company defaults on the loan agreement, the outstanding principal balance will increase to 150% of the principal balance owing at the time of default, and the holder has the right to convert the remaining balance outstanding at the time of default at 75% of the lowest trading price of the Company’s common stock for the last 10 trading days prior to default.  

7.Related Party Transactions

(a)During the quarter ended July 31, 2022, the Company paid $40,000 to Scott Cox for accrued management and consulting fees.    

8.Convertible Preferred Series B Stock Liability

On June 13, 2019, the Company designated 1,000,000 shares of preferred stock as Series B. The holders of Series B preferred shares are not entitled to receive dividends except as may be declared by the Board at its sole and absolute discretion. Each Series B preferred share is convertible into common shares according to the following formula: the Stated Value of $1.10 per share of Series B preferred stock divided by the closing price of the Common Stock on the day prior to the conversion. Holders of Series B preferred stock shall not have voting rights.

On June 17, 2019, the Company issued 530,000 shares of Series B preferred stock at a fair value of $583,000 based on the stated value of $1.10 per share, in exchange for the settlement of accounts payable of $266,523, notes payable of $990, accrued interest of $535, and management fees of $33,000. As the Series B shares represent an unconditional obligation that the Company must or may settle in a variable number of its equity shares and the monetary value of the obligation is predominantly based on a fixed monetary amount, the 530,000 shares with a balance of $583,000 is recorded as a liability on the balance sheet. During the year ended April 30, 2021, the Company issued 21,441,440 shares of common stock for the conversion of 334,600 shares of Series B preferred stock. During the period ended July 31, 2021, the Company issued 15,030,769 common shares for the conversion of 195,400 Series B preferred stock.  As of July 31, 2021, the carrying value of nil Convertible Preferred Series B Stock was $nil (April 30, 2021 - $214,940). As of July 31, 2021 there was zero Convertible Preferred Series B Stock outstanding (April 30, 2021 – 195,400).

9.Common Shares 

Authorized:5,000,000,000 common shares with a par value of $0.001 per share.

During the three months ended July 31, 2021,On May 10, 2022, the Company issued 451,550,0008,219,179 common shares at $0.01 per common share for proceedspursuant to the conversion of $4,545,500,50 shares of which $595,000 was received as at April 30, 2021. As part of the financing, the Company paid share issuance costs of $33,165 which is recorded as a charge against additional paid-in capital.Series C preferred stock.

On May 4, 4021,13, 2022, the Company issued 3,000,00013,000,000 common shares with a fair value of $45,300$96,200 for consulting services.

On May 13, 2021, the Company issued 15,030,769 common shares pursuant to the conversion of 195,400 shares of Series B convertible preferred stock.  Refer to Note 8.

On May 14, 2021,17, 2022, the Company issued 100,000 common shares with a fair value of $1,330$750 for consulting services.

On May 17, 2021,26, 2022, the Company issued 1,000,00018,079,097 common shares with a fair valuepursuant to the conversion of $10,000 for settlement80 shares of accounts payable.Series C preferred stock.

On June 21, 2021,15, 2022, the Company issued 100,000 common shares with a fair value of $1,400$680 for consulting services.

On June 16, 2022, the Company issued 19,900,498 common shares pursuant to the conversion of 100 shares of Series C preferred stock.

On July 15, 2021,8, 2022, the Company issued 17,204,302 common shares pursuant to the conversion of 40 shares of Series C preferred stock.

On July 18, 2022, the Company issued 100,000 common shares with a fair value of $1,080$380 for consulting services.

On July 22, 2021,21, 2022, the Company issued 3,000,00021,505,377 common shares with a fair value of $30,000 for settlement of accounts payable.  

Table of Contents

VERDE BIO HOLDINGS INC.

Notespursuant to the Condensed Consolidated Interim Financial Statementsconversion of 50 shares of Series C preferred stock.

(Expressed in US dollars)

(unaudited)

10.9.Preferred Shares 

Authorized: 10,000,000500,000 Series A preferred shares with a par value of $0.001 per Series A share

7,600 Series C preferred shares with a par value of $0.001 per Series C share 

Convertible Preferred Series A stock

On April 18, 2017, the Company designated 500,000 shares of preferred stock as Series A. The holders of Series A preferred shares are entitled to receive dividends equal to the amount of the dividend or distribution per share of common stock payable multiplied by the number of shares of common stock the shares of Series A preferred shares held by such holder are convertible into. Each Series A preferred shares is convertible into one common share. Each holder of Series A preferred shares is entitled to cast 10,000 votes for every one Series A preferred share held.

F-11

VERDE BIO HOLDINGS INC.

Notes to the Condensed Consolidated Financial Statements

(Expressed in US dollars)

(unaudited)

Convertible Preferred Series BC stock

On December 3, 2021, the Company entered into a securities purchase agreement (the “December Agreement”) with an arms-length party for the issuance of up to 1,000 shares of convertible preferred Series C stock (“Series C”) for $1,000,000 based on the stated value of $1,000 per share.  Under the December Agreement, the Company has a put option with regards to the Series C shares.  Under the terms of the December Agreement, the Series C shares are non-redeemable, subject to annual dividend payments of 10% and are convertible into common stock of the Company at a discount to the market price of the Company’s common stock at the date of the notice of conversion form the note holder. In addition to the Series C shares, the Company issued an additional 40 Series C shares, with a fair value of $40,000, to the note holder as a commitment fee on the Agreement.  During the period ended July 31, 2022, the Company issued 84,908,453 common shares upon the conversion of 320 Series C preferred stock.  As at July 31, 2022, 720 (April 30, 2022 – see Note 8.1,040) shares of Series C preferred stock remained unpurchased and outstanding under the December Agreement.

On May 24, 2022, the Company entered into an additional securities purchase agreement (the “May Agreement”) with an arms-length party for the issuance of up to 250 shares of convertible preferred Series C stock for $250,000.  Under the May Agreement, the Company has a put option with regards to the Series C shares.  Under the terms of the May Agreement, the Series C shares are entitled to receive dividends at 8% per annum and are convertible into common stock of the Company at a discount to the market price of the Company’s common stock at the date of the notice of conversion from the note holder.  During the period ended July 31, 2022, the Company issued 231 Series C preferred stock for $219,000, net of issuance and transaction costs of $12,000.  In addition, the Company issued 5 Series C preferred stock with a fair value of $5,000 as a commitment fee with respect to the Agreement.  As at July 31, 2022, the 236 (April 30, 2022 – nil) shares of Series C preferred stock remained unpurchased and outstanding under the May Agreement.  

The Series C preferred stock and the accrued dividends relating to the stock are classified as temporary equity.  As at July 31, 2022, the Company had 956 (April 30, 2022 – 1,040) shares of Series C stock with a carrying value of $1 (April 30, 2022 - $1) and recorded accrued dividend payable of $42,917 (April 30, 2022 - $20,308) which is included in temporary equity and offset against additional paid in capital.  

In addition to the Series C stock, the Company issued 61,885,671 warrants on December 8, 2021 with a conversion price of $0.01067 per share for a period of five years and 63,157,895 warrants on January 27, 2022 with a conversion price of $0.01045 per share for a period of five years.  The fair value of the warrants was $1,228,018 based on the Black-Scholes option pricing model assuming an expected life of 5 years, volatility of 314-318%, risk-free rate of 1.2-1.7%, and no expected dividends.  The fair value of the warrants was treated as a liability as it met the conditions of a liability in accordance with ASC 480, Distinguishing Liabilities from Equity.  As the fair value of the warrants were greater than the gross proceeds received on the issuance of the Series C shares, the excess difference of $228,019 was recorded in the statement of operations as a finance cost.  

10.Share Purchase Warrants

Additional information regarding share purchase warrants as of July 31, 2022 is as follows:

F-12

VERDE BIO HOLDINGS INC.

Notes to the Condensed Consolidated Financial Statements

(Expressed in US dollars)

(unaudited)

11. Commitments and Contingencies

On May 28, 2020, the Company and an unrelated party entered into equity financing agreement, whereby the investor shallagreed to invest up to $5,000,000 over the period of 36 months pursuant to a “put” option held by the Company, subject to certain limitations. The price of the common shares shall be equal to 80% of the lowest traded price during the last 10 trading days leading up to each put notice, subject to a floor of $0.001 per share. As part of the agreement, the Company issued a convertible promissory note to the unrelated party to offset transaction costs of $20,000, which was deemed as earned upon the execution of the agreement. The note wasis convertible into common stock of the Company at a fixed price of $0.01, which equals the lowest traded price for the common stock on the trading day preceding the execution of the note. DuringThe purchase of the year ended April 30, 2021,shares are subject to a “put” option held by the convertible promissory note was repaid.Company.  As of July 31, 2021,2022 and April 30, 2022, no common shares have been sold pursuant to the equity financing agreement.

12.Subsequent Events

(a)In August 2022, the Company repaid $44,845 of principal and accrued interest on the outstanding convertible loan.  Refer to Note 6.    

(b)On August 3, 2021, the Company issued 1,000,000 common shares to a non-related party for consulting services.

On August 16, 2021,15, 2022, the Company issued 100,000 shares of common shares to a non-related partystock for consulting services.

(c)On August 20, 2021,18, 2022, the Company acquired 100% right, title, and interestissued 22,222,223 shares of common stock pursuant to certain properties locatedthe conversion of 35 shares of Series C preferred stock.   

(d)On August 29, 2022, the Company issued 31 shares of its Series C preferred stock for $31,000 in Jack County, Texascash. 

(e)On September 12, 2022, the Company received a notice of conversion for cash consideration45 shares of $900,000.Series C preferred stock into 24,000,000 shares of the Company’s common stock.  

F-13

Table of Contents

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
OR PLAN OF OPERATION

FORWARD-LOOKING STATEMENTS

This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements.  You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms.  These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements.  Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements.  We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

RESULTS OF OPERATIONS

Working Capital

Cash Flows

Operating Revenues

During the three months ended July 31, 2021,2022, the Company earned royalty revenues of $209,910 compared to royalty revenues of $64,599 relating tofor the three months ended July 31, 2021.  The revenue is derived from its interests in various oil and gas properties compared to $nil duringand the three months ended July 31, 2020 as the Company did not investincrease in any oil and gas propertiesroyalty revenues in the samecurrent period in the prior year.

Operating Expenses and Net Loss

During the three months ended July 31, 2021, the Company incurred operating expenses of $741,949 compared to operating expenses of $341,562 during the three months ended July 31, 2020.  The increase in operating expenses was dueattributed to an increase in the investment in royalty rights based on the Company’s continued investment and development in its operating activity during the period as the Company has invested in significant oil and gas properties and commenced earning royalty revenues during the current fiscal period compared to minimal operations in the prior year.  Expenditures included $98,134 of additional maintenance and general costs relating to maintaining the oil and gas properties as well as $436,024 of general and administrative expenses which includes over $208,000 of payroll costs.activities.  As part of the revenues generated from the oil and gas properties, the Company recorded depletion expense of $145,121 during the three months ended July 31, 2022 compared to depletion expense of $21,989 during the period ended July 31, 2021 which represents the proportionate use of the produced units in the properties relative to proven and probable reserves.  ThereThe overall increase in depletion expense is reflective of the overall increase in investment in royalty properties.  

4

Operating Expenses and Net Loss

Three Months Ended July 31, 2022 and 2021

During the three months ended July 31, 2022, the Company incurred operating expenses of $908,371 compared to operating expenses of $741,949 during the three months ended July 31, 2021.  The increase in operating expenses was no depletiondue to an increase in operating activity for the majority of the Company’s operating activities, which is due in part to an increase in the overall number of royalty properties held by the Company during the current fiscal period compared to the prior fiscal period.  Included in the increase in operating expenses was an increase in consulting fees of $59,113, an increase in general and administrative costs of $33,599, and an increase in professional fees of $10,550.  Offsetting the increase in operating expenses was a decrease in project expenditures of $75,106, as the Company was heavily investing in new properties during the period ended July 31, 20202021 whereas the current year period was focused on building economic stability based on the Company’s portfolio of assets, as the Company haddid not acquired its oil and gasadd any new royalty properties atduring the time.

4

current fiscal period.  

Table of Contents

Net loss for the three months ended July 31, 20212022 was $672,995$764,008 compared to a net loss of $910,547$672,995 during the three months ended July 31, 2020.  The decrease2021.  In addition to revenues and operating expenses, the Company incurred financing costs of $38,200 related to issuance discounts and legal and transaction fees related to a new convertible loan agreement for $200,200 and a new agreement signed in net loss was dueMay 2022 for additional issuances of up to 250 Series C preferred shares.  Furthermore, the Company incurred $27,347 of interest expense, which included $24,024 of interest expense on a one-time interest charge relating to the fact that the Company recorded a loss on the change in fair valuenew convertible loan agreement, and accrued dividends related to outstanding Series C preferred stock of derivative liability of $471,266 and interest expense of $96,717$22,609.  Conversely, during the three months ended July 31, 2020 from the convertible debentures that2021, the Company had to support its operations.  In the current year, the Company has obtained financing through the issuancea gain on extinguishment of common sharesoutstanding debt of $4,722 and no longer has any outstanding convertible debentures.interest expense of $367.  

For the three months ended July 31, 2022 and 2021, the Company recorded a basic and diluted loss per share of $0.00 as compared with a basic and diluted net loss per share of $0.04 per share for the three months ended July 31, 2020.$0.00.

Liquidity and Capital Resources

As at July 31, 2021,2022, the Company had cash of $1,320,479$101,110 and total assets of $6,495,542$4,886,079 compared to cash of $2,087,897$141,206 and total assets of $3,217,998$5,085,057 as at April 30, 2020.  The increase in total assets was due to2022.  Overall, the purchase of an additional $3,911,265 ofCompany’s cash and asset balances were relatively consistent, as the Company did not acquire any new oil and natural gas property interestsproperties during the period and the decrease in cash was dueonly received financing from a convertible loan agreement and Series C preferred stock issuances to the fact that the oilsupport its ongoing development and gas acquisitions were paid by cash based on the Company’s existing holdings and new financing of common shares in a Regulation A filing for $0.01 per share.operating activities.  

The Company had total liabilities of $321,396$1,705,502 as at July 31, 20212022 compared to $562,242$1,474,482 as at April 30, 2021.2022.  The decreaseincrease in liabilities iswas due to a new convertible loan agreement for $200,200, which included an additional accrued interest charge of $24,024 which was recorded in accounts payable and accrued liabilities.  Outside of the conversion of $214,940 of itsnew convertible preferred Series B shares in exchange for 15,030,769 common shares.  As at July 31, 2021,loan agreement, there were no other significant transactions relating to the Company no longer has any outstanding convertible preferred Series B shares.  The Company also repaid its remaining convertible debentures of $1,203 which also resulted in the decrease in derivative liability of $8,519 as the Company no longer has any convertible debentures or any fair value related to any beneficial conversion of debt to common shares.Company’s total liabilities.  

As of July 31, 2021,2022, the Company had a working capital deficit of $1,223,257$1,437,706 compared to a working capital deficit of $1,723,019.$1,157,272 as at April 30, 2022.  The decreaseincrease in the working capital deficit was due to the usenew convertible loan agreement of cash$200,200 with the accrued interest charge of $24,024, which was used to acquire additional oilfund the Company’s ongoing operating activity.  

During the period ended July 31, 2022, the Company entered into a new Series C preferred stock agreement that allowed investors to subscribe for up to 250 Series C preferred stock at $1,000 per stock for overall proceeds of $250,000.   As at July 31, 2022, the Company had issued 231 shares of Series C preferred stock for proceeds of $231,000 less $12,000 for legal and gas properties offset by additional proceeds received from issuance oftransaction costs.  The Company also issued 13,300,000 common shares duringfor services with a fair value of $98,010 and issued 84,908,453 common shares pursuant to the current period.exercise of 320 shares of Series C preferred stock related to the December 2021 Series C preferred stock agreement.  

Cash Flow from Operating Activities

During the three months ended July 31, 2021,2022, the Company used $612,892$427,111 of cash for operating activities compared with $61,769to $612,892 of cash for operating activities during the three months ended July 31, 2020.2021.  The increasedecrease in the use of cash for operating activities was due to an overall increase in general operationslower project expenditure costs as the Company purchasedincurred more time and cost in the prior fiscal period on project evaluation as the Company was focused on acquisition of new properties whereas in the current fiscal period, the Company was focused on the overall management of the Company’s existing portfolio of oil and natural gas properties and earned royalty revenue during the current period compared to minimal operations during the prior year.properties.

5

Cash Flow from Investing Activities

During the three months ended July 31, 2022, the Company used $6,985 of cash for investing activities, which was used for acquisition of equipment.  Conversely, during the three months ended July 31, 2021, the Company usedincurred cash of $4,036,861 of cash for investing activities including $3,911,266 for purchases of oil and gas properties and $125,595 of equipment. Theequipment as the Company did not have any investing activitieswas heavily focused on building its portfolio of oil and natural gas properties during the three months ended July 31, 2020.prior year.  

Cash Flow from Financing Activities

During the three months ended July 31, 2022, the Company raised $394,000 of cash from financing activities, which included $175,000 (net of OID and legal fees of $25,200) from the issuance of a convertible note payable and $219,000 (net of legal and transaction fees of $12,000) from the issuance of 231 Series C preferred stock.  During the three months ended July 31, 2021, the Company raisedreceived $3,882,335 of cash from financing activities, including $3,920,500$3,950,500 from the issuance of common shares less repayment of $5,000 to repay the outstanding balance of a convertible debenture and $33,165 of share issuance costs.  During the three months ended July 31, 2020, the Company raised $62,917 of cash from financing activities which included $40,000 from the issuance of common shares and share subscriptions as well as $22,917 of loans payable related to the SBA paycheck protection program.

Going Concern

We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. During the period ended July 31, 2021,2022, the Company incurred a net loss of $672,995$764,008 and used cash of $612,892$427,111 for operating activities.  At July 31, 2021,2022, the Company has an accumulated deficit of $11,509,740.$15,022,899. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.  The unaudited condensed financial statements included in this report on Form 10-Q does not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Table of Contents

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

Future Financings

We will continue to rely on equity sales of our Common Shares in order to continue to fund our business operations.  Issuances of additional shares will result in dilution to existing stockholders.  There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund planned acquisitions and exploration activities.

Critical Accounting Policies

Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis.  The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements.  In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances.  Actual results could differ from those estimates made by management.

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.

6

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 4.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of July 31, 2021.2022. Based on the evaluation of these disclosure controls and procedures, and in light of the material weaknesses found in our internal controls over financial reporting, our Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were not effective.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting identified in connection with our evaluation we conducted of the effectiveness of our internal control over financial reporting as of July 31, 2021,2022, that occurred during the period that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Table of Contents

PART II - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS.

We know of no material, existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation.  There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

ITEM 1A.  RISK FACTORS.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

1.Quarterly Issuances: 

Other than as previously disclosed in the above Notes to the Condensed Consolidated Financial Statements, we did not issue any unregistered securities during the quarter.

2.Subsequent Issuances: 

Other than as previously disclosed in the above Notes to the Condensed Consolidated Financial Statements, we did not issue any unregistered securities subsequent to the quarter.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES.

None.

7

ITEM 4.   MINE SAFETY DISCLOSURES.

Not Applicable.

ITEM 5.   OTHER INFORMATION.

None.

Table of Contents

ITEM 6.  EXHIBITS

*Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections. 

8

Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company caused this amended report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirement of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated: