10-K: Okmin Resources Faces Going Concern, Shifts Focus to Pushmataha

Okmin Resources, Inc. reported a net loss of $597,167 for fiscal year 2025, reduced its Blackrock JV interest, and increased its stake in the Pushmataha Gas Field, while facing significant going concern doubts and capital constraints.

Summary

• Reported a net loss of $597,167 for the fiscal year ended June 30, 2025, an improvement from the $873,214 net loss in FY2024.
• Revenue from oil and gas sales decreased by 47.9% to $22,180 in FY2025 from $42,543 in FY2024.
• Disposed of its entire interest in the Blackrock Joint Venture for $25,000 cash and an additional 45% interest in the Pushmataha Gas Field, increasing its stake in Pushmataha from 50% to 95%.
• The company has no proven oil and gas reserves on any of its properties.
• The auditor expressed substantial doubt about the company's ability to continue as a going concern due to a history of operating losses and negative financial trends.
• Reported a working capital deficit of $742,439 as of June 30, 2025, an increase from $460,878 in FY2024.
• Anticipates cash needs of approximately $270,000 for fiscal year 2026 for general corporate overhead and existing lease operations, excluding funding for potential workovers or recompletions.
• Identified material weaknesses in internal control over financial reporting and concluded that disclosure controls and procedures were not effective as of June 30, 2025, and 2024, and have not been effective since approximately June 30, 2021.
• Subsequent to year-end, the company converted $131,135 in principal and $63,956 in accrued interest from a convertible note into 6,503,024 common shares.
• Also, subsequent to year-end, the company raised $30,000 from a private placement of 1,000,000 common shares.

Sentiment

Score: 2

Explanation: The company faces severe liquidity issues, a significant working capital deficit, and an auditor's going concern opinion. Revenues are declining, and operations on key assets are stalled due to lack of capital and infrastructure problems. While there was a strategic asset exchange and debt conversion, these are reactive measures to a challenging financial position, and the need for substantial additional financing remains critical with no assurance of availability.

Positives

• Net loss decreased to $597,167 in FY2025 from $873,214 in FY2024, indicating a reduction in overall losses.
• General and administrative expenses were lower at $388,579 in FY2025 compared to $406,175 in FY2024.
• Strategically increased its interest in the Pushmataha Gas Field from 50% to 95% through an asset exchange, consolidating a larger stake in a potentially valuable asset.
• Successfully converted outstanding convertible debt and accrued interest into common shares in September 2025, reducing liabilities and immediate cash obligations.
• A hydrocarbon survey conducted on Pushmataha leases provides valuable data for charting future development potential and optimal drilling locations.

Negatives

• Reported a net loss of $597,167 for FY2025.
• Revenue from oil and gas sales decreased significantly by 47.9% to $22,180 in FY2025 from $42,543 in FY2024.
• Cost of revenue ($42,713) exceeded total revenue ($22,180), resulting in a gross loss of $20,533 for FY2025.
• Working capital deficit increased to $742,439 as of June 30, 2025, from $460,878 in FY2024.
• The company's auditor expressed substantial doubt about its ability to continue as a going concern.
• Cash and cash equivalents decreased substantially from $72,281 in FY2024 to $11,488 in FY2025.
• No proven oil and gas reserves have been evaluated or calculated on any of the company's properties.
• Incurred a one-off impairment charge of $167,003 on oil and gas properties in FY2025.
• Operations on the Vitt lease are not currently active and require additional maintenance work.
• Gas sales from the West Sheppard Pool were suspended due to required pipeline work and equipment failure, resulting in no revenues from this project in FY2025.
• Active rework activity on the Pushmataha wells has been deferred due to the current downturn in natural gas pricing or until additional capital is available.
• Identified material weaknesses in internal control over financial reporting and ineffective disclosure controls and procedures since June 30, 2021.
• The company is highly dependent on its President/CEO/CFO, Jonathan Herzog, and has limited control over non-operated properties.
• Directors hold majority voting control, potentially limiting the influence of other common shareholders.
• The common stock is considered a 'penny stock' and trades on OTCQB with limited liquidity and high volatility.

Risks

• Inability to obtain sufficient cash flow from operations, borrowing, and/or other sources to fulfill the business plan.
• Volatility in oil and natural gas prices, including further declines, which would negatively impact operating cash flow and could require further ceiling test write-downs on oil and natural gas assets.
• The possibility that the oil and natural gas industry may be subject to new adverse regulatory or legislative actions (including changes to existing tax rules and environmental regulation).
• General risks of exploration and development activities, including the failure to find oil and natural gas in sufficient commercial quantities to provide a reasonable return on investment.
• Future oil and natural gas production rates.
• Environmental risks.
• Availability of pipeline capacity and other means of transporting crude oil and natural gas production, and related midstream infrastructure and services.
• Competition in acquiring interest in existing properties and new acreage with other operating companies, resulting in less favorable terms or fewer opportunities being available.
• Higher drilling and completion costs related to competition for drilling and completion services and shortages of labor and materials.
• Disruptions resulting from unanticipated weather events, natural disasters, and public health crises and pandemics, such as the coronavirus, resulting in possible delays of drilling and completions and the interruption of anticipated production streams of hydrocarbons, which could impact expenses and revenues.
• Lack of effective disclosure controls and procedures and internal control over financial reporting.
• Ability to maintain the market for common stock on OTC Markets.
• Dilution caused by new equity or debt offerings.
• Need for additional capital to conduct operations and fund the business, complete future acquisitions, and the ability to obtain such necessary funding on favorable terms, if at all.
• The speculative nature of oil and gas operations, and general risks associated with the exploration for, and production of oil and gas; including accidents, equipment failures or mechanical problems which may occur while drilling or completing wells or in production activities; operational hazards and unforeseen interruptions for which the company may not be adequately insured; the threat and impact of terrorist attacks, cyber-attacks or similar hostilities; declining production; and losses or costs incurred as a result of title deficiencies or environmental issues in the properties in which the company invests, any one of which may adversely impact operations.
• Changes in the legal and regulatory environment governing the oil and natural gas industry, including new or amended environmental legislation or regulatory initiatives which could result in increased costs, additional operating restrictions, or delays, or have other adverse effects.
• Improvements in or new discoveries of alternative energy technologies that could have a material adverse effect on financial condition and results of operations.
• The fact that officers and directors beneficially own a majority of common stock and that their interests may be different from other shareholders.
• Dependence on the continued involvement of present management.
• Economic downturns and possible recessions caused thereby (including as a result of COVID-19, increases in inflation or global conflicts).
• The effects of global pandemics, such as COVID-19 on operations, properties, the market for oil and gas, and the demand for oil and gas.
• The need to write-down assets and/or shut-in wells, or non-operated wells being shut-in by their operators.
• Future litigation or governmental proceedings which could result in material adverse consequences, including judgments or settlements.
• Unanticipated down-hole mechanical problems, which could result in higher-than-expected drilling and completion expenses and/or the loss of the wellbore or a portion thereof.
• Limited operating history and potential for not being successful in developing profitable business operations.
• The oil and gas industry is highly competitive and there is no assurance of success.
• Limited interests in oil and gas leases and no guarantee of identifying or acquiring additional viable leases or mineral property assets or interests.
• No proven oil and gas reserves, and future wells may not yield oil or natural gas in commercial quantities or at all.
• Drilling for and producing oil and natural gas are highly speculative and involve a high degree of risk.
• Permitting requirements could delay the ability to start or continue operations.
• Seasonal weather conditions adversely affect the ability to conduct drilling activities.
• Unanticipated costs could require new capital that may not be available.
• Shortages of equipment, services and qualified personnel could reduce cash flow and adversely affect results of operations.
• Competition may limit opportunities in the oil and natural gas business.
• Properties are concentrated in one geographic area (Oklahoma and Kansas), increasing vulnerability to adverse conditions.
• Restricted access to oil and natural gas markets could negatively impact production and revenues.
• Joint operating agreements contain provisions that may be subject to legal interpretation, including allocation of non-consent interests, complex payout calculations, and joint interest audits.
• Certain U.S. federal income tax deductions currently available with respect to oil and natural gas drilling and development may be eliminated as a result of future legislation.
• May purchase interests in oil and natural gas properties with unknown liabilities or incorrectly assessed risks.
• Negative public perception regarding the company and/or industry could have an adverse effect on operations.
• The company's auditors have expressed a Going Concern opinion.
• The principal officer and director may be subject to conflicts of interest.
• Difficulty managing growth in the business.
• Applicable regulatory requirements, including those contained in and issued under the Sarbanes-Oxley Act of 2002, may make it difficult to retain or attract qualified officers and directors.
• Lack of voluntary implementation of various corporate governance measures, potentially leading to more limited protections against interested director transactions and conflicts of interest.
• Insurance may be insufficient to cover future liabilities.
• Dependence upon information technology systems, which are subject to disruption, damage, failure and risks associated with implementation and integration.
• Common stock has been approved for trading on the OTCQB, but trading volume has been limited, and there is no assurance that an active market will develop.
• Stock price and trading volume may be volatile, which could result in substantial losses for stockholders.
• Subject to the penny stock rules which adversely affect the liquidity of common stock.
• FINRA sales practice requirements may limit a stockholder's ability to buy and sell common stock, which could depress the price.
• Shareholders may experience dilution of their ownership interests because of the future issuance of additional common shares.
• Common stock price may decrease due to factors beyond control.
• No dividends have been paid in the past and are not expected in the future, limiting return on investment to stock price appreciation.

Future Outlook

The company anticipates requiring additional financing of at least $270,000 for fiscal year 2026 to cover general corporate overhead and existing lease operations, with further capital needed for potential workovers or new drilling. Management intends to raise these funds through debt financing or private sales of securities. The business strategy focuses on enhancing the value of acquired assets by increasing production, deploying capital strategically, and continuously evaluating value-enhancing transactions. Okmin plans to seek additional growth opportunities in the oil and gas and natural resources sectors, including further asset acquisitions and participation in new exploration and development projects. The operator of the Pushmataha Gas Field believes additional capital expenditures and newer technologies could optimize production potential, but active rework is currently deferred due to market conditions or lack of capital.

Management Comments

• "Our business strategy is to enhance the value of our acquired operated assets through evaluation of certain properties with the goal of increasing production."
• "We plan to deploy capital in a strategic manner and pursue value-enhancing transactions and expect to continuously evaluate strategic alternative opportunities that we believe will enhance shareholder value."
• "Based on the Company's cash position as of June 30, 2025, additional financing will be required to meet its budgeted expenditures for fiscal 2026."
• "Management intends to raise such additional funding through debt financing or private sales of the Company's securities, but no assurance can be given that such financing will be available on acceptable terms or at all."
• "The operator believes with additional capital expenditures for reworking and recompletion efforts it can optimize the production potential of this field."
• "The joint venture partners have deferred pursuing this active rework activity during the current downturn in natural gas pricing or until additional capital is available."

Industry Context

The oil and natural gas industry is characterized by high volatility, influenced by government regulations, taxation, climate change policies, and geopolitical events such as the Russian war with Ukraine and Middle East tensions. Global demand, inflation, and OPEC actions significantly impact oil prices, while natural gas prices are driven by North American supply/demand, LNG trade, and weather. The industry faces increasing environmental legislation and regulatory scrutiny, which can raise operating costs and impose liabilities. Negative public perception and activist pressure on funding sources for fossil fuel companies could make securing capital more challenging. The company's operations are concentrated in the Cherokee Platform, an established but mature oil-producing region, making it susceptible to localized adverse conditions and intense competition from larger, better-resourced companies.

Management Changes

Corporate Governance

Legal Proceedings

• Not currently a party to any material legal proceedings that could have a material adverse effect on financial condition or results of operations.

Related Party Transactions

• Jonathan Herzog (President, CEO, CFO, Director) is compensated $13,500 per month ($6,750 cash, $6,750 accrued/deferred). As of June 30, 2025, $438,750 in accrued compensation is owed to him.
• Jonathan Herzog owns all 5,000,000 shares of Series A Preferred Stock, which on an as-converted basis represents approximately 46% of the aggregate voting power in the company.
• Samuel Naparstek (Director) was issued 2,500,000 common shares at $0.04 per share (deemed value $100,000) in November 2024 for ongoing corporate consulting services.
• Roy Mansano (beneficial owner >5%) held a convertible note with an outstanding principal of $131,135 and $63,956 in accrued interest as of June 30, 2025. This note was fully converted into 6,503,024 common shares in September 2025.
• Sierra Land Resources, LLC (where Mr. Ed Sierra serves as the company's Advisor on Land and Resource Development) received common shares for services: 250,000 shares (Feb 2023), 151,305 shares (Nov 2023), 321,741 shares (June 2024), 225,000 shares (Dec 2024), and 173,090 shares (Sept 2025).

Stakeholder Impact

• Shareholders face significant dilution risk from ongoing and future equity raises, as well as high volatility and limited liquidity of the common stock on OTCQB. The majority voting control by directors limits the influence of other common shareholders.
• Employees and management, particularly CEO Jonathan Herzog, have substantial accrued and deferred compensation, indicating potential cash flow constraints for the company.
• Creditors, specifically the convertible noteholder, have seen their debt converted into equity, reducing the company's immediate cash obligations but shifting risk to equity holders.
• Customers and operating partners are impacted by suspended gas sales and deferred rework activities on key properties, which affects production and revenue generation.
• Regulatory bodies are likely to scrutinize the company's identified material weaknesses in internal controls and ineffective disclosure procedures, potentially leading to increased compliance burdens.

Next Steps

• Secure adequate additional financing through debt or private sales of securities to fund operations and planned growth.
• Deploy capital in a strategic manner and review opportunities to raise additional funds to maintain liquidity.
• Continuously evaluate strategic alternative opportunities to enhance shareholder value.
• Acquire rights to and participate in drilling and/or other mining operations, subject to securing adequate additional financing.
• Focus activities on development and production of oil and gas interests with joint interest operators during fiscal year 2026.
• Seek additional growth opportunities in the oil and gas and natural resources sectors in fiscal 2026 and beyond, including further asset acquisition, participation in exploration/development projects, and acquiring interests in existing companies.
• Implement changes to internal controls to address identified material weaknesses, including adding experienced accounting and financial personnel and retaining third-party consultants.
• Expand board membership in future periods to include independent directors.
• Adopt a written code of business conduct and ethics.
• Establish an audit committee, Nominating and Corporate Governance Committee, and Compensation Committee of the board of directors.

Key Dates

Recommendation

The company is in a precarious financial position, evidenced by a significant working capital deficit, declining revenues, and an auditor's going concern opinion. Operations on key assets are stalled or underperforming due to lack of capital and infrastructure issues. While management is attempting to raise capital and has made a strategic asset exchange, the fundamental challenges of limited proven reserves, high operational risks, and weak internal controls persist. The stock trades as a penny stock with limited liquidity and high volatility, and significant dilution is likely from ongoing capital raises. Given the high degree of risk, lack of profitability, and substantial uncertainties, a seasoned investor would likely recommend selling or avoiding this stock.

Keywords

Oil and Gas Exploration, Natural Resources, Oklahoma, Kansas, SEC Filing, 10-K, Energy Sector, Oil Production, Gas Production, Mineral Rights, Pushmataha Gas Field, Vitt Lease, West Sheppard Pool, Financial Reporting, Going Concern, Capital Raise, Corporate Governance, Risk Factors, OTC Markets, Penny Stock, Blackrock JV