Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations analyzes the major elements of our balance sheets and statements of operations. This section should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2024, and our interim unaudited financial statements and accompanying notes to these financial statements.

NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (the "Quarterly Report") contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 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, 2024. While it is not possible to identify all factors, we continue to face many risks and uncertainties including, but not limited to:

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declines or volatility in the prices we receive for our oil and natural gas;

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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;

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general economic conditions, whether internationally, nationally or in the regional and local market areas in which we do business;

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risks associated with drilling, including completion risks, cost overruns and the drilling of non-economic wells or dry holes;

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uncertainties associated with estimates of proved oil and natural gas reserves;

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the presence or recoverability of estimated oil and natural gas reserves and the actual future production rates and associated costs;

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risks and liabilities associated with acquired companies and properties;

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risks related to the integration of acquired companies and properties;

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potential defects in title to our properties;

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cost and availability of drilling rigs, equipment, supplies, personnel, and oilfield services;

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geological concentration of our reserves;

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environmental or other governmental regulations, including the legislation of hydraulic fracture stimulation;

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our ability to secure firm transportation for oil and natural gas we produce and to sell the oil and natural gas at market prices;

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exploration and development risks;

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management's ability to execute our plans to meet our goals;

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our ability to retain key members of our management team on commercially reasonable terms;

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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;

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weather conditions;

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effectiveness of our internal control over financial reporting;

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actions or inactions of third-party operators of our properties;

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costs and liabilities associated with environmental, health and safety laws;

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our ability to find and retain highly skilled personnel;

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operating hazards attendant to the oil and natural gas business;

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competition in the oil and natural gas industry;

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evolving geopolitical and military hostilities in the Middle East;

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economic and competitive conditions;

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lack of available insurance;

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cash flow and anticipated liquidity;

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the other factors discussed under "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Forward-looking statements speak only as to the date hereof. 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.

Overview

CoJax is a growth-oriented independent exploration and production company based in Shreveport, Louisiana, and is engaged in oil and natural gas development, production, acquisition, and exploration activities currently focused on the Gulf States Drill Region.

Business Description and Plan of Operation

CoJax is currently engaged in oil and natural gas acquisition, exploration, development, and production in Mississippi and Alabama. We focus on developing our existing properties while continuing to pursue acquisitions of oil and gas properties with upside potential in the Gulf States Drill Region.

Our goal is to increase stockholder value by investing in oil and natural gas projects with attractive rates of return on capital employed. We plan to achieve this goal by exploiting and developing our existing oil and natural gas properties and pursuing strategic acquisitions of additional properties, while remaining cash flow positive, maintaining low operating costs, and striving to show a gain in annual production while reducing the Company's debt.

Executive Summary - Second Quarter 2025 Developments and Highlights

Risks and Uncertainties

The oil and natural gas industry is a global market impacted by many factors, including government regulations, particularly in the areas of trade sanctions, taxation, energy, climate change and the environment, geopolitical instability, and military conflicts (including the Russian-Ukrainian conflict in the Middle East), fluctuations in worldwide commodity demand, and the extent to which members of OPEC and other oil exporting nations manage oil supply through export quotas. In general, natural gas prices are determined by North American supply and demand and are affected by the import and export of liquefied natural gas. Oil and natural gas prices have been, and are expected to continue to be, volatile. This volatility could negatively impact future prices for oil, natural gas, petroleum products, and industrial products.

Results of Operations - For the Three and Nine Months Ended September 30, 2025, and 2024

		For the Three Months Ended September 30,																	For the Nine Months Ended September 30,
										Change				Change													Change				Change
		2025				2024				Amount				%					2025				2024				Amount				%
Revenues		$	212,868			$	250,619			$	(37,751	)			(15.1)	%			$	784,714			$	750,678			$	34,036				4.5	%
Lease operating expenses			143,715				110,318				33,397				30.3	%				367,340				273,801				93,539				34.2	%
General & administrative expenses			135,813				205,508				(69,695	)			(33.9)	%				614,394				730,054				(115,660	)			(15.8	%)
Depletion and accretion on discounted liabilities			90,757				83,978				6,779				8.1	%				308,537				273,634				34,903				12.8	%
Loss from operations			(157,417	)			(149,185	)			(8,232	)			5.5	%				(505,557	)			(526,811	)			21,254				(4.0	%)
Interest expense, net			(288	)			(573	)			285				(49.7)	%				(1,015	)			(871	)			(144	)			16.5	%
Net loss		$	(157,705	)		$	(149,758	)		$	(7,947	)			5.3	%				(506,572	)			(527,682	)			21,110				(4.0	%)

Revenues

Revenues were $212,868 and $784,714 for the three and nine months ended September 30, 2025, compared to $250,619 and $750,678 for the three and nine months ended September 30, 2024. The decrease in revenue of 15.1% for the three months ended September 30, 2025, compared to the same period in 2024, was primarily driven by a decrease in the average sale price for crude oil. The increase in revenue of 4.5% for the nine months ended September 30, 2025, compared to the same period in 2024, was primarily driven by production in the Liberty and Pine Grove Assets during the first quarter of 2025, which were acquired in May 2024 and August 2024, respectively.

Lease Operating Expenses

Lease operating expenses were $143,715 and $367,340 for the three and nine months ended September 30, 2025, compared to $110,318 and $273,801 for the three and nine months ended September 30, 2024, representing an increase of 30.3% or $33,397 and 34.2% or $93,539, respectively. The increase in expense for both periods presented was primarily attributable to the Liberty and Pine Grove Assets.

Loss from Operations

Total operating loss was $157,417 and $149,185 for the three months ended September 30, 2025 and 2024, respectively. The increased loss was driven by a decrease in revenues during the third quarter.

Total operating loss was $505,557 and $526,811 for the nine months ended September 30, 2025 and 2024, respectively. The decreased loss was primarily driven by revenues earned in the first quarter of 2025, lending to a net increase in revenue for the nine-month period, and an increase in lease operating expenses. These increases were partially offset by a decrease of $115,660 in general and administrative expenses driven by a reduction in payroll expenses.

Other Expense, Net

Other expense, net was $288 and $1,015 for the three and nine months ended September 30, 2025, as compared to $573 and $871 for the three and nine months ended September 30, 2024, due to an increase in interest expense.

Net Loss

As a result of the above factors, for the three and nine months ended September 30, 2025, the Company had a net loss of $157,705 and $506,572 as compared to a net loss of $149,758 and $527,682 for the three and nine months ended September 30, 2024.

Sales volumes and commodity prices received

The following table presents our sales volumes and received pricing information for the three and nine month periods ended September 30, 2025, and 2024:

		For the Three Months Ended September 30,							For the Nine Months Ended September 30,
		2025				2024			2025				2024
Oil volume (Bbls)			3,108				3,523			11,490				10,249
Natural gas volume (Mcf)			-				-			-				225
Total Production (Boe)			3,108				3,523			11,490				10,287
Average Sales Price:
Oil price (per Bbl)		$	62.97			$	70.56		$	67.17			$	92.92
Gas price (per Mcf)			-				-			-				4.16
Total per BOE		$	62.97			$	70.56		$	67.17			$	92.67

Liquidity and Capital Resources

Sources of Liquidity

The Company had cash on hand of $71,119 at September 30, 2025 compared to $46,738 at December 31, 2024. For the nine months ended September 30, 2025, the Company had net cash provided by operating activities of $31,938 compared to $59,219 provided by operating activities for the same period of 2024. The decrease in cash provided by operating activities was driven by the lack of common stock issuances for services and salaries during the period, and by a net loss increase.

Net cash used in investing activities was $0 for the nine months ended September 30, 2025, and September 30, 2024.

Net cash used in financing activities was $7,557 for the nine months ended September 30, 2025, compared to net cash used in financing activities of $7,477 for the same period in 2024.

Capital Resources for Future Acquisition and Development Opportunities

We continuously evaluate potential acquisitions and development opportunities. To the extent possible, we intend to acquire producing properties and/or developed undrilled properties rather than exploratory properties. We do not intend to limit our evaluation to any one state. We presently have no intention to evaluate offshore properties or properties located outside of the United States.

Effects of Inflation and Pricing

The oil and natural gas industry is very cyclical and the demand for goods and services of oil field companies, suppliers, and others associated with the industry puts pressure on the economic stability and pricing structure within the industry. Typically, as prices for oil and natural gas increase, so do all associated costs. Material changes in prices impact the current revenue stream, estimates of future reserves, borrowing base calculations of bank loans, and the value of properties in purchase and sale transactions. Material changes in prices can impact the value of oil and natural gas companies and their ability to raise capital, borrow money and retain personnel. We anticipate business costs will vary in accordance with commodity prices for oil and natural gas, and the associated increase or decrease in demand for services related to production and exploration.

Off Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements, and it is not anticipated that the Company will enter into any off-balance sheet arrangements.

Disclosures About Market Risks

Like other natural resource producers, the Company faces certain unique market risks associated with the exploration and production of oil and natural gas. The most salient risk factors are the volatile prices of oil and gas, operational risks, the ability to integrate properties and businesses, and certain environmental concerns and obligations.

Oil and Gas Prices

The price we receive for our oil and natural gas will heavily influence our revenue, profitability, access to capital, and future rate of growth. Oil and natural gas are commodities and, therefore, their prices are subject to wide fluctuations in response to relatively minor changes in supply and demand. The prices we receive for our production depend on numerous factors beyond our control. These factors include, without limitation, the following: worldwide and regional economic conditions impacting the global supply and demand for oil and natural gas; the price and quantity of imports of foreign oil and natural gas; the level of global oil and natural gas inventories; localized supply and demand fundamentals; the availability of refining capacity; price and availability of transportation and pipeline systems with adequate capacity; weather conditions, natural disasters, and public health threats; governmental regulations; speculation as to the future price of oil and the speculative trading of oil and natural gas futures contracts; price and availability of competitors' supplies of oil and natural gas; energy conservation and environmental measures; technological advances affecting energy consumption; the price and availability of alternative fuels and energy sources; and domestic and international drilling activity.

A substantial or extended decline in oil or natural gas prices may result in impairments of our proved oil and gas properties and may materially and adversely affect our future business, financial condition, cash flows, and results of operations.

Transportation of Oil and Natural Gas

CoJax is presently committed to using the services of the existing gatherers in its present areas of production. This gives such gatherers certain short-term relative monopolistic powers to set gathering and transportation costs. Obtaining the services of an alternative gathering company would require substantial additional costs since an alternative gatherer would be required to lay a new pipeline and/or obtain new rights-of-way.

Competition in the Oil and Natural Gas Industry

We operate in a highly competitive environment for developing and acquiring properties, marketing oil and natural gas, and securing equipment and trained personnel. As a relatively small oil and natural gas company, many large producers possess and employ financial, technical, and personnel resources substantially greater than ours. Those companies may be able to develop and acquire more prospects and productive properties than our financial or personnel resources permit. It is also significant that more favorable prices can usually be negotiated for larger quantities of oil and/or gas products, such that CoJax views itself as having a price disadvantage compared to larger producers.

Retention of Key Personnel

We depend to a large extent on the services of our officers. These individuals have extensive experience in the energy industry, as well as expertise in evaluating and analyzing producing oil and natural gas properties and drilling prospects, maximizing production from oil and natural gas properties, and developing and executing financing strategies. The loss of any of these individuals could have a material adverse effect on our operations and business prospects. Our success may be dependent on our ability to continue to hire, retain and utilize skilled executive and technical personnel.

Environmental and Regulatory Risks

Our business and operations are subject to and impacted by a wide array of federal, state, and local laws and regulations governing the exploration for and development, production, and marketing of oil and natural gas, the operation of oil and natural gas wells, taxation, and environmental and safety matters. Many laws and regulations require drilling permits and govern the spacing of wells, rates of production, water, waste use and disposal, prevention of waste hydraulic fracturing, and other matters. From time to time, regulatory agencies have imposed price controls and limitations on production in order to conserve supplies of oil and natural gas. In addition, the production, handling, storage, transportation, and disposal of oil and natural gas, byproducts thereof, and other substances and materials produced or used in connection with oil and natural gas operations are subject to regulation under federal, state, and local laws and regulations.

Compliance with these regulations may constitute a significant cost and effort for CoJax. To date, no specific accounting for environmental compliance has been maintained or projected by CoJax. CoJax does not presently know of any environmental demands, claims, adverse actions, litigation, or administrative proceedings in which it or the acquired properties are involved or subject to or arising out of its predecessor operations.

In the event of a violation of environmental regulations, these environmental regulatory agencies have a broad range of alternative or cumulative remedies including ordering a cleanup of any spills or waste material and restoration of the soil or water to conditions existing prior to the environmental violation; fines; or enjoining further drilling, completion or production activities.

Going Concern

There can be no assurance that the Company will be able to achieve its business plan, raise 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 only recently begun producing positive 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. The Company's ability to continue as a going concern is dependent upon its ability to generate future profitable operations 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 developed a capital investment proposal plan and is currently pursuing funding opportunities; however, there is no assurance of additional funding being available or on acceptable terms, if at all.