10-Q/A: Leopard Energy Restates Financials After Accounting Firm Issues and Shifts Focus to Energy Sector

Leopard Energy, formerly Cyber Apps World, restated its financials for the three and six months ended January 31, 2024, due to issues with prior accounting firms and is now focusing on energy sector acquisitions.

Summary

• Leopard Energy, Inc., formerly Cyber Apps World Inc., has restated its financial statements for the three and six months ended January 31, 2024, and 2023.
• The restatement was prompted by issues with previous accounting firms not being properly registered with the Public Company Accounting Oversight Board (PCAOB).
• The company is shifting its business focus to acquiring energy production and development opportunities in the U.S., starting with a 5% royalty interest in producing oil wells in Lavaca County, Texas.
• For the three months ended January 31, 2024, the company reported a net loss of $36,986.
• For the six months ended January 31, 2024, the company reported a net loss of $55,557.
• As of January 31, 2024, the company had an accumulated deficit of $11,527,704 and a working capital deficit of $89,625.
• Zenith Energy Ltd., the company's controlling stockholder, has provided approximately $321,000 in working capital and intends to continue financing the company's expansion into the energy sector.
• The company's name changed from Cyber Apps World Inc. to Leopard Energy, Inc. effective April 26, 2024.
• The company's disclosure controls and procedures were deemed not effective as of January 31, 2024, due to material weaknesses in internal controls over financial reporting.

Sentiment

Score: 4

Explanation: The sentiment is cautiously negative. While the shift to the energy sector and support from Zenith Energy are positive, the restatement, accumulated deficit, working capital deficit, and ineffective disclosure controls raise significant concerns.

Positives

• Zenith Energy's financial support provides a lifeline for Leopard Energy's transition into the energy sector.
• The acquisition of a royalty interest in producing oil wells marks the company's entry into the U.S. energy market.
• The company has written off convertible notes and loan payables, improving the balance sheet.

Negatives

• The company has a significant accumulated deficit of $11,527,704 as of January 31, 2024.
• The company has a working capital deficit of $89,625 as of January 31, 2024.
• The company's disclosure controls and procedures were not effective as of January 31, 2024.
• The company incurred net losses for both the three and six months ended January 31, 2024.

Risks

• The company's ability to continue as a going concern is dependent on obtaining additional financing and generating revenue.
• The company's disclosure controls and procedures were not effective as of January 31, 2024, indicating potential weaknesses in financial reporting.
• The company's transition into the energy sector involves inherent risks associated with the industry, including commodity price volatility and regulatory changes.
• The company has no revenues during the three and six months ended January 31, 2024 and 2023.

Future Outlook

The company intends to complete additional acquisitions in the U.S. energy sector and expects to require additional capital to meet long-term operating requirements, potentially through the sale of equity or debt securities. Zenith Energy intends to provide the company with working capital pending receipt of additional funding.

Management Comments

• Zenith Energy has advised us that intends to provide the Company with additional working capital to fund the operations and acquisitions, pending receipt of additional funding.

Industry Context

The company's shift to the energy sector aligns with a broader trend of companies diversifying into potentially lucrative industries. The acquisition of royalty interests in producing oil wells is a common strategy for smaller companies to gain exposure to the energy market without significant capital expenditure. However, the company faces competition from established players and must navigate the complexities of the energy industry.

Comparison to Industry Standards

• Smaller energy companies often pursue royalty interests as a lower-risk entry point compared to direct exploration and production.
• Companies like Texas Pacific Land Corporation focus primarily on royalty interests in the Permian Basin, demonstrating the potential profitability of this model.
• However, Leopard Energy's 5% royalty interest is relatively small, and its success will depend on the productivity of the acquired wells and its ability to secure additional acquisitions.
• Compared to larger, integrated energy companies like ExxonMobil or Chevron, Leopard Energy's scale and scope are significantly smaller, requiring a more focused and opportunistic approach.

Management Changes

Stakeholder Impact

• Shareholders face uncertainty due to the company's financial challenges and restatement.
• Employees may experience changes as the company shifts its business focus.
• Customers of the previous mobile app business may be affected by the change in direction.
• Suppliers and creditors may be impacted by the company's financial condition and need for additional capital.

Next Steps

• The company intends to complete additional acquisitions in the U.S. energy sector.
• The company expects to raise additional capital through the sale of equity or debt securities.
• The company needs to improve its disclosure controls and procedures to ensure accurate and reliable financial reporting.

Key Dates

Keywords

Leopard Energy, financial restatement, energy sector, oil wells, Zenith Energy, PCAOB, acquisition, working capital, accumulated deficit, disclosure controls