10-Q: Leopard Energy Reports Q3 Profit Driven by Debt Write-Off Amidst Energy Sector Pivot and Ongoing Going Concern Concerns

Leopard Energy, Inc. reported a net profit for the three and nine months ended April 30, 2025, primarily due to a significant accounts payable write-off, as the company continues its strategic shift into the U.S. energy sector despite persistent going concern doubts and ineffective internal controls.

Summary

• Leopard Energy, Inc. (formerly Cyber Apps World Inc.) reported a net income of $86,172 for the three months ended April 30, 2025, a significant improvement from a net loss of $144,390 in the prior year period.
• For the nine months ended April 30, 2025, the company achieved a net income of $52,869, compared to a net loss of $199,947 for the same period in 2024.
• The profit was primarily driven by a $91,071 gain from an accounts payable write-off, where the controlling stockholder, Zenith Energy Ltd., renounced its credit for expenses paid on behalf of the company.
• Revenue for the nine months ended April 30, 2025, was $4,752, generated from a 5% royalty interest in seven producing oil wells in the Eagle Ford Shale, Texas, acquired in January 2024.
• Operating expenses significantly decreased to $6,167 for the three months and $42,756 for the nine months ended April 30, 2025, down from $146,243 and $246,951 respectively in the prior year.
• As of April 30, 2025, the company had cash of $10,986, total assets of $50,266, and total liabilities of $145,516, resulting in a working capital deficit of $134,530.
• The company's accumulated deficit improved to $11,672,081 as of April 30, 2025, from $11,724,950 at July 31, 2024.
• Management continues to express substantial doubt about the company's ability to continue as a going concern for the next twelve months, citing the working capital deficit and historical losses.
• Zenith Energy Ltd., the controlling stockholder, has provided approximately $375,274 in capital since August 2023 and intends to continue financing the company's operations and expansion into the energy sector.
• The company's disclosure controls and procedures were deemed not effective as of April 30, 2025, due to material weaknesses in internal controls over financial reporting.

Sentiment

Score: 4

Explanation: While the company reported a net profit, it was largely due to a non-recurring gain from a debt write-off. Significant concerns remain regarding its going concern status, working capital deficit, and ineffective internal controls. The strategic pivot to energy and ongoing shareholder support offer some positive outlook, but the underlying operational revenue is minimal.

Positives

• The company achieved a net income of $86,172 for the three months and $52,869 for the nine months ended April 30, 2025, a significant turnaround from prior year losses.
• Total operating expenses decreased substantially to $42,756 for the nine months ended April 30, 2025, from $246,951 in the prior year, indicating improved cost management.
• Total liabilities decreased significantly to $145,516 as of April 30, 2025, from $243,346 at July 31, 2024.
• The accumulated deficit was reduced to $11,672,081 from $11,724,950.
• The company successfully pivoted its business focus to the energy sector and acquired a revenue-generating royalty interest in the Eagle Ford Shale.
• The controlling stockholder, Zenith Energy Ltd., has demonstrated strong financial support, providing capital and renouncing credit, and intends to continue financing the company.

Negatives

• The net profit was primarily due to a non-recurring $91,071 gain from an accounts payable write-off, rather than sustained operational profitability.
• Revenue for the three months ended April 30, 2025, decreased to $1,333 from $2,014 in the prior year period.
• The company continues to operate with a working capital deficit of $134,530 as of April 30, 2025.
• Management has raised substantial doubt about the company's ability to continue as a going concern for the next twelve months.
• The company's disclosure controls and procedures were concluded to be not effective as of April 30, 2025, due to material weaknesses in internal controls over financial reporting.
• The company remains highly dependent on additional equity and/or debt financing and financial support from its controlling shareholder to fund operations and future acquisitions.

Risks

• Substantial doubt exists about the company's ability to continue as a going concern for the next twelve months due to its working capital deficit and historical losses.
• The company's continued existence is dependent upon its ability to obtain needed working capital through additional equity and/or debt financing and generate sufficient revenue.
• There is no guarantee that the company will be successful in arranging financing on acceptable terms, as its ability to raise capital is affected by trends and uncertainties beyond its control.
• Market factors may make the timing, amount, terms, or conditions of additional financing unavailable to the company.
• The company does not currently receive significant revenue from its business operations, relying heavily on external financing.
• Material weaknesses in internal controls over financial reporting could adversely affect the company's ability to record, process, summarize, and report financial information accurately.

Future Outlook

Leopard Energy intends to complete additional acquisitions of royalty interests and/or ownership interests in the U.S. energy sector in the near future. The controlling stockholder, Zenith Energy Ltd., has indicated its intent to continue financing the company and its expansion into the energy sector, pending the receipt of additional financing.

Management Comments

• "Management believes these factors [accumulated deficit and working capital deficit] raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months."
• "Management monitors and analyzes the Company’s cash on-hand, its ability to generate sufficient revenue sources in the future, and its operating and capital expenditure commitments."
• "Managements plans are to finance operations through the sale of equity or other investments for the foreseeable future, as the Company does not receive significant revenue from its business operations."
• "Zenith Energy has indicated that intends to continue to finance the Company and its expansion into the energy sector, to acquire additional royalties and/or ownership interest, pending the receipt of additional financing."
• "All the expenses [related to the $91,071 write-off] were paid by our controlling stockholder Zenith Energy, who renounced its credit."

Industry Context

Leopard Energy, Inc. has undergone a significant strategic pivot from its historical mobile application development business to focus on the energy sector, specifically acquiring royalty interests in U.S. oil and gas production properties. This move aligns with broader trends of companies seeking opportunities in the energy market, particularly in established shale plays like the Eagle Ford. The acquisition of a royalty interest provides exposure to oil production revenues without direct operational risks, a common strategy for smaller entities entering the sector.

Management Changes

Corporate Governance

Related Party Transactions

• Zenith Energy Ltd., the controlling stockholder, provided approximately $375,274 in capital since August 2023, including $49,515 in the nine months ended April 30, 2025, in the form of payments made on behalf of the company and cash.
• Zenith Energy Ltd. renounced its credit for $91,071 in expenses paid on behalf of the company, which resulted in a gain from accounts payable write-off for Leopard Energy, Inc.

Stakeholder Impact

• Shareholders: Potential for value creation from the strategic pivot into the energy sector, but also risk of dilution from future capital raises and ongoing uncertainty due to going concern issues and ineffective controls.
• Employees: Stability concerns given the company's going concern status and reliance on external financing.
• Creditors: Liabilities have decreased, but the company still has a working capital deficit and relies on shareholder support to meet obligations.
• Customers (of the royalty interest): No direct impact as the royalty interest is managed by a non-affiliated third party.
• Suppliers: Accounts payable have been significantly reduced, partly due to a write-off by the controlling shareholder, which could improve relationships with remaining suppliers.

Next Steps

• Acquire additional royalties and/or ownership interests in the U.S. energy sector.
• Obtain additional equity and/or debt financing to meet long-term operating requirements and fund acquisitions.
• Continue to receive financial support from the controlling shareholder, Zenith Energy Ltd.

Key Dates

Recommendation

Keywords

Energy sector, Oil and gas, Royalty interest, Eagle Ford Shale, SEC filing, 10-Q, Financial report, Going concern, Corporate turnaround, Zenith Energy, Microcap