10-Q/A: Leopard Energy Restates Quarterly Financials Following Accounting Firm Issues and Strategic Shift

Leopard Energy, formerly Cyber Apps World Inc., has restated its financial statements for the quarter ended October 31, 2023, due to issues with its previous accounting firms and a strategic shift towards the energy sector.

Summary

• Leopard Energy, previously known as Cyber Apps World Inc., has filed an amended quarterly report due to issues with prior accounting firms not being registered with the PCAOB.
• The company has restated its financial statements for the three months ended October 31, 2023, and 2022.
• The restatement primarily relates to intangible asset valuation, impairment, and retrospective equity adjustments.
• The company reported a net loss of $18,571 for the three months ended October 31, 2023, compared to a net loss of $23,758 for the same period in 2022.
• There was no revenue generated during either of these periods.
• The company's total assets were $13,564 as of October 31, 2023, and total liabilities were $81,281.
• The company has an accumulated deficit of $11,490,718 as of October 31, 2023.
• The company has shifted its focus from mobile applications to the energy sector following a change in control in August 2023.
• Zenith Energy Ltd. became the controlling stockholder and has provided approximately $257,444 in working capital.
• The company acquired a 5% royalty interest in seven producing oil wells in Texas in January 2024.

Sentiment

Score: 3

Explanation: The sentiment is negative due to the restatement of financials, lack of revenue, significant losses, and going concern issues. However, the strategic shift to the energy sector and the support from Zenith Energy provide a glimmer of hope.

Positives

• Zenith Energy Ltd., the controlling stockholder, has provided $257,444 in working capital and intends to provide additional funding.
• The company has successfully shifted its focus to the energy sector, acquiring a royalty interest in producing oil wells.
• The company has written off significant liabilities, improving its balance sheet.
• The company has addressed issues with its previous accounting firms by restating its financials.

Negatives

• The company reported a net loss of $18,571 for the three months ended October 31, 2023.
• The company has an accumulated deficit of $11,490,718 as of October 31, 2023.
• The company has no revenue for the three months ended October 31, 2023.
• The company's disclosure controls and procedures were deemed not effective as of October 31, 2023.
• The company has a working capital deficit of $67,717 as of October 31, 2023.

Risks

• The company's ability to continue as a going concern is dependent on obtaining additional financing.
• There is no guarantee that the company will be successful in arranging financing on acceptable terms.
• The company's ability to raise additional capital is affected by trends and uncertainties beyond its control.
• The company's disclosure controls and procedures were not effective as of October 31, 2023.
• The company has a history of losses and has not generated revenue from operations.

Future Outlook

The company intends to complete additional acquisitions in the U.S. energy sector and expects to raise additional capital through the sale of equity or debt securities. Zenith Energy intends to provide additional working capital pending receipt of additional funding.

Management Comments

• Management believes these factors raise substantial doubt about the Company's ability to continue as a going concern for the next twelve months.
• Management plans are to finance operations through the sale of equity or other investments for the foreseeable future.
• Zenith Energy has indicated that intends to continue to finance the Company and its expansion into the energy sector, pending the receipt of additional financing.

Industry Context

The company's shift to the energy sector reflects a strategic move to capitalize on opportunities in a different market, moving away from the competitive mobile application space. The acquisition of a royalty interest in oil wells is a common strategy for smaller companies to gain exposure to the energy market.

Comparison to Industry Standards

• The company's lack of revenue and significant losses are not uncommon for early-stage companies, particularly those undergoing a strategic shift.
• The company's reliance on external funding is typical for companies in the exploration and production phase of the energy sector.
• The restatement of financials due to accounting firm issues is a serious concern and is not typical of well-established companies.
• The company's move into the energy sector is similar to other small companies seeking growth opportunities in a different industry.

Management Changes

Stakeholder Impact

• Shareholders face significant risk due to the company's financial instability and going concern issues.
• Employees may be impacted by the company's restructuring and strategic shift.
• Creditors face increased risk due to the company's financial difficulties.
• Customers are not directly impacted as the company has shifted away from its previous business model.

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 will continue to seek additional funding from Zenith Energy.

Key Dates

Keywords

Leopard Energy, financial restatement, energy sector, oil wells, Zenith Energy, accounting firm, PCAOB, working capital, convertible notes, royalty interest