ABUNDIA GLOBAL IMPACT GROUP, INC. quarterly report, Q1 FY2023

Filing summary

Important source mismatch: The request identifies Abundia Global Impact Group, Inc., but the supplied Form 10-Q is for Houston American Energy Corp. (NYSE American: HUSA). This summary reflects the supplied filing, for the quarter ended March 31, 2023; the financial statements are unaudited.

Business context and reporting period

Houston American Energy is an oil and gas company with U.S. properties and an equity investment in Hupecol Meta LLC, whose underlying operations are in Colombia. Its U.S. properties generated all reported oil and gas sales in the quarter. No drilling took place on company or Hupecol Meta properties during Q1. Site preparation and rig mobilization began in May for Hupecol Meta’s planned Venus 1-H well in Colombia.

Financial results and liquidity

At March 31, 2023, cash was $5.25 million, working capital was $5.48 million, and total assets were $12.81 million. Total liabilities were $401,683; the filing reports no borrowings, with liabilities principally comprising lease obligations and a plugging-and-abandonment reserve. Lease liabilities totaled $196,083, including $67,648 current. The filing does not state a specific gross or operating margin.

Material changes versus the prior period

• Revenue fell 46%, reflecting lower average oil and gas prices and lower oil production, partly offset by slightly higher gas production. Oil production declined 26%; gas production increased 2%. Average realized oil price fell 21% to $72.37 per barrel and gas price fell 66% to $1.42 per Mcf.
• The company moved from a net loss to net income, primarily because it recorded $334,111 of distributions from Hupecol Meta as other income, alongside $30,500 of interest income. The quarter still had an operating loss.
• Lease operating expense declined 30% to $113,686; general and administrative expense, excluding stock-based compensation, declined 14% to $245,374, primarily due to lower professional fees.
• Cash increased from $4.55 million at year-end to $5.25 million. The increase included $901,500 net proceeds from issuing 294,872 shares through the ATM offering.

Outlook, risks, and unusual items

• Management stated that cash on hand should fund operating costs and anticipated drilling for at least the next 12 months, including planned 2023 wells. The company reported an accumulated deficit of $73.7 million and continuing losses since 2011.
• The company estimated its share of Venus 1-H well costs at $576,000. Drilling timing, costs, and activity depend on operators and factors including financing, well performance, commodity prices, and service costs.
• Additional acquisitions or expanded drilling could require outside funding. The company has no funding commitments, limited authorized shares available for equity raises, and warns that inability to meet well costs could lead to penalties, loss of prospect interests, or curtailed activity.
• Commodity prices are volatile; the company reported that it has not historically used hedges to manage price exposure. Almost $4.95 million of cash deposits exceeded the FDIC insurance limit, and $8,024 was held in Colombian banks without FDIC insurance.
• Disclosure controls and procedures were assessed as ineffective at March 31, 2023 due to lack of segregation of duties following the CFO’s 2013 departure and the CEO’s assumption of principal financial officer duties. The company relies on outside consultants and its accounting firm for reporting assistance.
• After quarter-end, the company issued 283,835 additional shares under an ATM offering for $739,874 net proceeds. The filing reports 10,906,353 common shares outstanding as of May 15, 2023.
• Adoption of the expected-credit-loss accounting standard on January 1, 2023 had no reported impact on financial position, results, cash flows, or earnings per share.

Important facts for investors to verify

• Confirm the issuer: the supplied filing is Houston American Energy Corp., not Abundia Global Impact Group, Inc.
• Review the source and sustainability of the $334,111 Hupecol Meta distribution and the company’s equity-investment funding obligations.
• Track Venus 1-H drilling commencement, actual costs versus the $576,000 estimate, and funding for other proposed wells.
• Assess the effect of continued revenue declines, commodity-price exposure, and production decline on operating performance.
• Monitor ATM share sales, remaining offering capacity, dilution, and available authorized shares.
• Consider the disclosed ineffective controls and the company’s progress in addressing the segregation-of-duties weakness.