10-Q: Leopard Energy Q1 Loss Narrows, Revenue Declines

Leopard Energy, Inc. reported a reduced net loss of $2,353 for the quarter ended October 31, 2025, despite a decrease in net sales, as it continues its transition into the energy sector.

Summary

• Net loss significantly reduced to $2,353 for the three months ended October 31, 2025, compared to $9,048 for the same period in 2024.
• Net sales decreased to $1,153 for the quarter ended October 31, 2025, from $1,923 in the prior year's comparable quarter.
• Operating expenses were substantially lower at $3,416 for the quarter, down from $10,908 in the previous year, primarily due to reduced general and administrative costs.
• The company's business focus has shifted from mobile applications to the energy sector, specifically investing in royalty interests in oil and mineral production, following a change in controlling interest in August 2023.
• Zenith Energy Ltd., the controlling stockholder, has provided approximately $408,008 in capital through payments made on behalf of the company and $45,000 in cash paid-in capital since August 2023.
• As of October 31, 2025, the company had an accumulated deficit of $11,695,468 and a working capital deficit of $105,167.
• Management and the independent auditors have expressed substantial doubt about the company's ability to continue as a going concern.
• Disclosure controls and procedures were deemed not effective as of October 31, 2025, due to material weaknesses in internal controls over financial reporting.

Sentiment

Score: 3

Explanation: The company reported a significantly reduced net loss and operating expenses, which are positive. However, revenue declined, and the company continues to operate at a loss with a substantial accumulated deficit and working capital deficit. The explicit 'going concern' doubt from both management and auditors, coupled with ineffective internal controls, indicates significant underlying financial instability and operational challenges, despite the improved loss figures. Reliance on the controlling shareholder for future financing, which itself is pending, adds to the uncertainty.

Positives

• Net loss significantly reduced to $2,353 for the three months ended October 31, 2025, from $9,048 in the prior year.
• Operating expenses decreased substantially to $3,416, down from $10,908 in the comparable prior period.
• Cash balance increased to $13,181 as of October 31, 2025, from $12,118 as of July 31, 2025.
• The controlling stockholder, Zenith Energy Ltd., continues to provide financial support, having contributed approximately $408,008 in payments on behalf of the company and $45,000 in cash paid-in capital since August 2023.
• Total Stockholders Deficit improved (less negative) from $(83,534) to $(65,887).

Negatives

• Net sales decreased to $1,153 for the three months ended October 31, 2025, from $1,923 in the prior year.
• The company continues to incur net losses and has an accumulated deficit of $11,695,468 as of October 31, 2025.
• A working capital deficit of $105,167 exists as of October 31, 2025.
• Management and independent auditors have expressed substantial doubt about the company's ability to continue as a going concern.
• Disclosure controls and procedures were not effective as of October 31, 2025, due to material weaknesses in internal controls over financial reporting.
• Financial expenses increased to $90 for the quarter ended October 31, 2025, from $63 in the prior year.

Risks

• Substantial doubt about the company's ability to continue as a going concern due to recurring losses and dependence on external financing.
• Inability to obtain needed working capital through additional equity and/or debt financing.
• No guarantee of success in arranging financing on acceptable terms, with market factors potentially making financing unavailable.
• Material weaknesses in internal controls over financial reporting, leading to ineffective disclosure controls and procedures.
• Dependence on the controlling stockholder, Zenith Energy Ltd., for continued financing and expansion into the energy sector, which is pending receipt of additional financing by Zenith.
• The company does not receive significant revenue from its business operations and has historically not been successful in developing revenue from its prior mobile app operations.

Future Outlook

The company intends to complete additional acquisitions of royalty and/or ownership interests in the U.S. energy sector in the near future. Management plans to finance operations through the sale of equity or other investments for the foreseeable future, as significant revenue is not currently generated from business operations. The controlling stockholder, Zenith Energy Ltd., intends to continue financing the company and its expansion, pending receipt of additional financing.

Management Comments

• Management believes it is more likely than not that the Company can meet its obligations as they become due within one year from the reporting date and can continue as a going concern.
• We expect we will require additional capital to meet our long-term operating requirements. We expect to raise additional capital through, among other methods, the sale of equity or debt securities.
• Zenith Energy, our controlling stockholder, has advised us that intends to provide the Company with working capital to fund the operations and acquisitions, pending receipt of additional funding.
• Our Chief Executive Officer and President and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of October 31, 2025.

Industry Context

Leopard Energy's pivot to acquiring royalty interests in the U.S. energy sector, specifically oil production in the Eagle Ford Shale, aligns with a strategy to capitalize on established energy assets. This move positions the company within the broader oil and gas industry, where royalty interests offer a stream of revenue with reduced operational risk compared to direct exploration and production. However, the company's small scale and reliance on a single royalty interest (Eagle Acquisition) make it highly susceptible to fluctuations in commodity prices and the performance of the third-party operator. The stated intention to acquire additional royalties suggests a growth strategy within this niche, but it faces competition from larger, more established players with greater capital resources.

Comparison to Industry Standards

• NA

Management Changes

Corporate Governance

Legal Proceedings

• Not currently involved in any litigation that the company believes could have a material adverse effect on its financial condition or results of operations.

Related Party Transactions

• Zenith Energy Ltd., the controlling stockholder, has provided approximately $408,008 in capital in the form of payments made on behalf of the company and $45,000 in cash paid-in capital since August 2023.

Stakeholder Impact

• Shareholders: Potential dilution from future equity raises; risk of value erosion due to going concern doubts and accumulated deficit; potential for long-term growth if energy strategy is successful and additional financing is secured.
• Employees: Continued employment dependent on securing additional financing and achieving profitability.
• Creditors: Risk of default due to going concern doubts and working capital deficit, though accounts payable decreased.
• Management: Increased pressure to secure financing and improve financial performance; responsibility for addressing internal control weaknesses.
• Zenith Energy Ltd. (Controlling Shareholder): Continued financial commitment and strategic direction for Leopard Energy; potential for return on investment if energy strategy succeeds, but also exposure to Leopard Energy's financial risks.

Next Steps

• Complete additional acquisitions of royalty and/or ownership interests in the U.S. energy sector.
• Obtain additional equity and/or debt financing to fund operations and acquisitions.
• Zenith Energy Ltd. intends to continue financing the company and its expansion, pending its own receipt of additional financing.
• Address material weaknesses in internal controls over financial reporting to improve disclosure controls and procedures.

Key Dates

Recommendation

Despite a reduced net loss and lower operating expenses, the company faces significant challenges. The explicit 'going concern' doubt from both management and independent auditors, coupled with a substantial accumulated deficit and working capital deficit, indicates severe financial instability. Revenue declined, and the company's disclosure controls and procedures were deemed ineffective due to material weaknesses in internal controls. While the controlling shareholder provides support, future financing is uncertain and critical for survival. The risks associated with its financial health and governance issues outweigh the positive of a narrowed loss, making it a high-risk investment with a strong likelihood of further value erosion.

Keywords

Leopard Energy, CYAP, Zenith Energy, oil and gas, energy sector, royalty interest, Eagle Ford Shale, SEC filing, 10-Q, financial results, going concern, internal controls, oil production, Texas energy