UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ______________.

Commission File Number 1-32955

HOUSTON AMERICAN ENERGY CORP.

(Exact name of registrant as specified in its charter)

Delaware

76-0675953

(State or other jurisdiction

of incorporation or organization)

(IRS Employer

Identification No.)

1300 Post Oak Blvd., Suite 1305, Houston, Texas 77056

(Address of principal executive offices) (Zip Code)

(713) 322-8818

(Registrant’s telephone number, including area code)

801 Travis Street, Suite 1425

Houston, Texas 77002

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common stock, $0.001 par value per share		HUSA		NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☐	Accelerated filer	☐	Non-accelerated filer	☒
Smaller reporting company	☒	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes ☐ No ☒

As of November 18, 2025, we had 34,632,566 shares of common stock, par value $0.001 per share, outstanding.

HOUSTON AMERICAN ENERGY CORP.

FORM 10-Q

INDEX

		Page No.
PART I	FINANCIAL INFORMATION	3

Item 1.	Financial Statements	3

	Condensed Consolidated Balance Sheets as of September 30, 2025 (Unaudited) and December 31, 2024	3

	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2025 and 2024 (Unaudited)	4

	Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Three and Nine Months Ended September, 2025 and 2024 (Unaudited)	5

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024 (Unaudited)	6

	Notes to Condensed Consolidated Financial Statements (Unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23

Item 4.	Controls and Procedures	23

PART II	OTHER INFORMATION	24

Item 6.	Exhibits	25

PART I -FINANCIAL INFORMATION

ITEM 1

Financial Statements

HOUSTON AMERICAN ENERGY CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2025 (Unaudited)			December 31, 2024
ASSETS
CURRENT ASSETS
Cash	$	1,512,157		$	525,809
Accounts receivable - oil and gas sales		32,691			-
Government grant receivable		-			205,424
Prepaid expenses and other receivables		812,598			122,283
TOTAL CURRENT ASSETS		2,357,446			853,516

PROPERTY AND EQUIPMENT
Land		8,576,854			-
Other property and equipment, net		-			312
Oil and gas properties, full cost method
Costs subject to amortization		1,362,250			-
Accumulated depletion, depreciation, amortization, and impairment		(238,980	)		-
Total		1,123,270			312
PROPERTY AND EQUIPMENT, NET		9,700,124			312

Refundable acquisition deposit		160,000			-
Capitalized patents		1,497,382			1,145,860
Deposits on license agreements		2,115,000			2,115,000
Other assets		15,452			-
Goodwill		12,986,150			-

TOTAL ASSETS	$	28,831,554		$	4,114,688

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	1,257,109		$	279,537
HUSA convertible note payable		4,416,477			-
Note payable – related party		435,000			-
AGIG convertible note payable		-			5,860,274
Convertible note payable		-			5,860,274
Warrant liabilities		-			45,965
Other payables		38,311			7,775
TOTAL CURRENT LIABILITIES		6,146,897			6,193,551

LONG-TERM LIABILITIES
AGIG convertible note payable		6,159,452			-
Asset Retirement Obligation		32,248			-
TOTAL LONG-TERM LIABILITIES		6,191,700			-
TOTAL LIABILITIES		12,338,597			6,193,551

COMMITMENTS AND CONTINGENCIES		-			-

SHAREHOLDERS’ EQUITY
Capital and reserves attributable to equity holders of the Company
Common stock, par value $0.001 per share; 300,000,000 shares authorized: 34,222,566 and 31,778,032 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively		34,222			31,778
Other comprehensive loss		54,606			(16,377	)
Additional paid-in capital		42,242,006			14,586,077
Accumulated deficit		(25,805,866	)		(16,655,388	)
Noncontrolling Interest in Consolidated Subsidiary		(32,011	)		(24,953	)
TOTAL SHAREHOLDERS’ EQUITY/(DEFICIT)		16,492,957			(2,078,863	)
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	28,831,554		$	4,114,688

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

HOUSTON AMERICAN ENERGY CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024

(Unaudited)

	2025			2024			2025			2024
	Three Months Ended September 30,						Nine Months Ended September 30,
	2025			2024			2025			2024

OIL AND GAS REVENUE	$	225,678			-		$	225,678			-

EXPENSES OF OPERATIONS
Lease operating expense and severance tax		112,644			-			112,644			-
General and administrative expense		3,456,958			433,412			5,419,727			1,715,319
Depreciation and depletion		40,027			-			40,027			-
Impairment of oil and gas properties		198,950			-			198,950			-
Issuance cost of derivative instruments		3,342,000			-			3,342,000			-
Research and development		-			111,311			724,406			1,600,956
Patent write-off		10,508			-			10,508			-
Total operating expenses		7,161,087			544,723			9,848,262			3,316,275

Loss from operations		(6,935,409	)		(544,723	)		(9,622,584	)		(3,316,275	)

OTHER INCOME, NET
Interest expense		(108,453	)		(100,822	)		(306,809	)		(300,274	)
Interest income		10,907			50,000			10,907			150,000
Grant income		-			340,546			737,811			2,340,359
Change in fair value of warrant liability		-			(6,204	)		45,965			(809,602	)
Foreign currency gain (loss)		1,041			(3,406	)		(15,768	)		11,567
Total other income (loss)		(96,505	)		280,114			472,106			1,392,050

Net loss before taxes		(7,031,914	)		(264,609	)		(9,150,478	)		(1,924,225	)

Income tax expense		-			-			-			-

Net loss	$	(7,031,914	)		(264,609	)	$	(9,150,478	)		(1,924,225	)
Net (loss) /income attributable to noncontrolling interest		2,922			(17,195	)		7,059			(25,990	)
Foreign currency translation gain		10,131			107,624			70,983			51,146

Comprehensive loss		(7,018,861	)		(174,180	)		(9,072,436	)		(1,899,069	)

Basic and diluted loss per common share	$	(0.21	)		(0.01	)	$	(0.27	)		(0.06	)

Basic and diluted weighted average number of common shares outstanding		33,995,899			31,778,032			33,995,899			31,778,032

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

HOUSTON AMERICAN ENERGY CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024

(Unaudited)

	Shares		Amount		Interest		Loss			Capital			Deficit			Total
	Common Stock				Additional Paid-in		Accumulated			Other Comprehensive			Non-Controlling
	Shares		Amount		Capital		Deficit			Loss			Interest			Total

Balance at December 31, 2024*		31,778,032	$	31,778	$	14,586,077	$	(16,655,388	)	$	(16,377	)	$	(24,953	)	$	(2,078,863	)
Foreign currency translation		-		-		-		-			(12,154	)		-			(12,154	)
Capital contributions		-		-		500,000		-			-			-			500,000
Net loss		-		-		-		(1,011,161	)		-			549			(1,010,612	)
Balance at March 30, 2025*		31,778,032		31,778		15,086,077		(17,666,549	)		(28,531	)		(25,502	)		(2,601,629	)
Foreign currency translation		-		-		-		-			73,006			-			73,006
Capital contributions		-		-		441,375		-			-			-			441,375
Net loss		-		-		-		(1,107,404	)		-			(4,687	)		(1,112,091	)
Balance at June 30, 2025*		31,778,032		31,778		15,527,452		(18,773,953	)		44,475			(29,091	)		(3,199,339	)
ELOC stock issuance		236,149		236		1,638,362								-			1,638,598
Commitment shares issued		300,000		300		3,342,000								-			3,342,300
Reverse acquisition - HUSA		1,908,385		1,908		21,734,192								-			21,736,100
Foreign currency translation											10,131			-			10,131
Other														(2,922	)		(2,922	)
Net Loss		-		-		-		(7,031,914	)		-						(7,031,914	)
Balance at September 30, 2025*		34,222,566		34,222		42,242,006		(25,805,866	)		54,606			(32,012	)		16,492,954

	Common Stock				Additional Paid-in		Accumulated			Other Comprehensive			Non-Controlling
	Shares		Amount		Capital		Deficit			Loss			Interest			Total

Balance at December 31, 2023		31,778,032	$	31,778	$	12,190,977	$	(13,047,039	)	$	-		$	(11,534	)	$	(835,638	)
Foreign currency translation		-		-		-		-			260,601			-			260,601
Capital contributions		-		-		2,100,000		-			-			-			2,100,000
Net loss		-		-		-		(1,919,033	)		-			(137,291	)		(2,056,324	)
Balance at March 30, 2024		31,778,032		31,778		14,290,977		(14,966,072	)		260,601			(148,685	)		(531,361	)
Foreign currency translation		-		-		-		-			(317,079	)		-			(317,079	)
Capital contributions		-		-		-		-			-			-			-
Net loss		-		-		-		250,622			-			146,086			396,708
Balance at June 30, 2024		31,778,032		31,778		14,290,977		(14,715,450	)		(56,478	)		(2,559	)		(451,732	)
Balance		31,778,032		31,778		14,290,977		(14,715,450	)		(56,478	)		(2,559	)		(451,732	)
Foreign currency translation		-		-							107,624						107,624
Capital contributions											-
Net Loss		-		-		-		(281,804	)		-			17,195			(264,609	)
Balance at September 30, 2024		31,778,032		31,778		14,290,977		(14,997,254	)		51,146			14,636			(608,717	)
Balance		31,778,032		31,778		14,290,977		(14,997,254	)		51,146			14,636			(608,717	)

In accordance with ASC 805 the historical shareholders’ equity of AGIG prior to the reverse acquisition has been retrospectively adjusted for the equivalent number of shares received in the Share Exchange with the difference between the par value of these shares and the consideration reflected in Additional Paid-in Capital. See Note 5 – Acquisition.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

HOUSTON AMERICAN ENERGY CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024

(Unaudited)

	2025			2024
	For the Nine Months Ended September 30,
	2025			2024

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(9,150,478	)	$	(1,924,225	)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation, depletion and amortization		55,337			7,676
Impairment of oil and gas properties		198,950			-
Patent cost write off		10,508			-
Accrued interest		299,041			-
Change in fair value of warrant liability		(45,965	)		809,602
Issuance costs of derivative instruments		3,342,300			-
Changes in operating assets and liabilities:
Decrease in accounts receivable		215			-
Decrease in government grant receivable		276,407			(289,400	)
Increase in prepaid expenses and other current assets		(368,689	)		(144,075	)
Increase in other assets		(11,974	)		-
Increase in other payables		10,955			152
Increase in accounts payable and accrued expenses		777,248			167,630
Net cash (used in) operating activities		(4,606,145	)		(1,372,640	)

CASH FLOWS FROM INVESTING ACTIVITIES
Note receivable - related party					(400,000	)
Payment related to patent application costs		(377,337	)		(347,127	)
Land acquisition		(8,414,670	)		-
Cash acquired in Share Exchange		6,952,914			-
Net cash (used in) investing activities		(1,839,093	)		(747,127	)

CASH FLOWS FROM FINANCING ACTIVITIES
Capital contributions		941,375			2,100,000
Proceeds from issuance of convertible note		5,000,000			-
Cash received from ELOC draw downs		1,638,597			-
HUSA Convertible Note repayments		(583,386	)		-
Note payable – related party		435,000			-
Net cash provided by financing activities		7,431,586			2,100,000

Increase in cash		986,348			(19,767	)
Cash, beginning of period		525,809			390,324
Cash, end of period	$	1,512,157		$	370,557

SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES
Net assets assumed in Share Exchange	$	14,791,697			-
Issuance costs from derivative instruments	$	(3,342,300	)		-

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

HOUSTON AMERICAN ENERGY CORP.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 1 – DESCRIPTION OF BUSINESS AND ORGANIZATION

On July 1, 2025, Houston American Energy Corp., a Delaware corporation (the “Company”), acquired all of the outstanding units of Abundia Global Impact Group, LLC, a Delaware limited liability company (“AGIG”), as described below (the “Share Exchange”). Prior to such transaction, the Company operated as an independent oil and gas company, which had previously focused on the development, exploration, exploitation, acquisition, and production of natural gas and crude oil properties, with its principal properties and operations located in the U.S. Permian Basin and additional properties in the Louisiana U.S. Gulf Coast region. The Company intends to continue to maintain its legacy oil and gas assets as well as the AGIG business. The Company intends to pursue both businesses in order to keep its revenue streams diversified.

After the Share Exchange the Company primarily operates as a technology solutions company in the recycling and renewable energy, environmental change, fuels and chemicals sectors. The Company, through its now wholly owned subsidiary, AGIG, is focused on using waste products to decarbonize the energy, fuels and chemicals sector by providing renewable or recycled alternatives. AGIG uses a combination of proprietary, licensed and commercialized technologies to produce a complete process that turns waste plastics and biomass into crude or drop-in alternatives to fossil derived energy, fuels and chemicals. AGIG’s holistic approach has brought together the complete commercial chain with feedstocks, technology, a diverse management team, and world class off-take partners for the growing suite of products in place.

NOTE 2 – GOING CONCERN

The Company’s financial statements are prepared following accounting principles generally accepted in the United States of America, (“GAAP”) which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. The Company has an accumulated deficit of $25.8 million as of September 30, 2025. For the three and nine months ended September 30, 2025, The Company’s legacy HUSA business generated $225,678 from oil and gas related activities, and AGIG received grant income of $737,811. The term of Company’s grant ended effective March 31, 2025, and no further grant income is anticipated at this time. For the nine months ended September 30, 2025, the Company reported a net loss of $9.2 million and negative working capital of $3.8 million. No assurances can be given that the Company’s share price or that the volume of shares traded will be sufficient for the Company to be able to draw down sufficient funds under its ELOC Agreement to fund the Company’s working capital needs to implement its business plan. As a result, there is substantial doubt about the Company’s ability to continue as a going concern within one year after the date the condensed consolidated financial statements are available to be issued.

NOTE 3 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited condensed consolidated financial statements of the Company, have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q. They do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for a complete financial presentation. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation, have been included in the accompanying unaudited condensed consolidated financial statements. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the full year.

As previously disclosed, on February 20, 2025, the Company entered into a share exchange agreement, as amended by that certain amendment to the share exchange agreement, dated as of June 27, 2025 (the “Share Exchange Agreement”), with Abundia Financial, LLC, a Delaware limited liability company (“Abundia Financial”), and Bower Family Holdings, LLC, a North Carolina limited liability company (“BFH”, and together with Abundia Financial, the “AGIG Unitholders”). The AGIG Unitholders were the record and beneficial owners of all the issued and outstanding units of Abundia Global Impact Group, LLC, a Delaware limited liability company (“AGIG”). On July 1, 2025, as contemplated by the Share Exchange Agreement, the Company acquired all of the outstanding units of AGIG from the AGIG Unitholders in exchange for issuing to the AGIG Unitholders an aggregate of 31,778,032 shares of the Company’s common stock, which equaled 94% of the sum of the Company’s aggregate issued and outstanding common stock at the time of the closing of such transaction and certain shares of common stock to be issued pursuant to a future Company equity incentive plan (the “Share Exchange”).

For accounting purposes, the Share Exchange is treated as a reverse acquisition, with AGIG as the surviving entity. As such, the historical financial statements of the accounting acquirer, AGIG, became the historical condensed consolidated financial statements of the Company. Accordingly, references to the “Company” solely in the condensed consolidated financial statements and these accompanying notes refer to AGIG unless the context indicates otherwise.

See the discussion of the Share Exchange Agreement at Note 5 – Acquisition. These unaudited condensed consolidated financial statements should be read in conjunction with AGIG’s audited consolidated financial statements and footnotes for the year ended December 31, 2024, which are included as exhibits to the Company’s Current Report on Form 8-K/A, filed with the U.S. Securities and Exchange Commission (“SEC”) on August 14, 2025.

Consolidation

The accompanying unaudited condensed consolidated financial statements include all accounts of the Company and its subsidiaries. All significant inter-company balances and transactions have been eliminated in consolidation.

Segment Reporting

Following the Share Exchange, management reassessed the Company’s chief operating decision maker (“CODM”) and its segment reporting units. Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) 280, Segment Reporting, operating segments are defined as components of an entity for which separate discrete information is available for evaluation by the CODM, or decision-making group, in deciding how to allocate resources and assess performance. Based on this guidance, the Company’s segment structure now reflects the Company’s two operating and reporting segments; legacy oil and gas (“O&G”) operations and its newly added emerging renewables initiatives (“Renewables”). See Note 6 – Segment Reporting.

Foreign Currency Translation and Transaction Gains & Losses

The Company has functional currencies in Euros, US Dollars and British Pounds Sterling and its reporting currency is the US Dollar. Management has adopted Accounting Standards Codification (“ASC”) 830-20, “Foreign Currency Matters – Foreign Currency Transactions”. All assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. For revenues and expenses, the weighted average exchange rate for the period is used. Gains and losses arising on translation of foreign currency denominated transactions are included in other comprehensive loss.

Foreign currency transactions are initially recorded in the reporting currency (US Dollars) using the spot exchange rate (the exchange rate at that specific date). When the transaction is finally settled (paid or received in cash), the actual exchange rate on the settlement date is used. A final realized gain or loss is calculated based on the difference between the value at the initial transaction date and the settlement date. This realized gain or loss is recognized as foreign currency gain (loss) in the statements of operations.

Related Party Transactions

A related party is generally defined as (i) any person that holds 10% or more of our shares of common stock and all other voting equity securities, including such person’s immediate families, (ii) our management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with us, or (iv) anyone who can significantly influence our financial and operating decisions. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. See Note 10 - Debt, for details of related party transactions during the three and nine months ended September 30, 2025, and 2024.

Cash and Cash Equivalents

Cash represents cash deposits held at financial institutions. Cash equivalents include short-term highly liquid investments of sufficient credit quality that are readily convertible to known amounts of cash and have original maturities of three months or less. Cash equivalents are held for meeting short-term liquidity requirements, rather than for investment purposes. Cash and cash equivalents are held at major financial institutions and are subject to credit risk to the extent they exceed government deposit insurance limits in the country in which they are located. The Company has not experienced any losses to date on depository accounts.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of amounts paid in advance for goods or services to be received in future periods, a refundable deposit related to a feasibility study for a potential real estate acquisition and a receivable from the Irish government for recoverable value-added tax (“VAT”) incurred on expenses.

Property and Equipment

The Company uses the full cost method of accounting for oil and gas property acquisition, exploration and development activities. Under this method, all productive and nonproductive costs incurred in connection with the exploration for and development of oil and gas reserves are capitalized. Capitalized costs include lease acquisition, geological and geophysical work, delay rentals, costs of drilling, completing and equipping successful and unsuccessful oil and gas wells and related internal costs that can be directly identified with acquisition, exploration and development activities, but does not include any cost related to production, general corporate overhead or similar activities. Gain or loss on the sale or other disposition of oil and gas properties is not recognized unless significant amounts of oil and gas reserves are involved.

The Company follows the full cost method of accounting for oil and gas property acquisition, exploration and development activities. Under this method, all productive and nonproductive costs incurred in connection with the exploration for and development of oil and gas reserves are capitalized. Capitalized costs include lease acquisition, geological and geophysical work, delay rentals, costs of drilling, completing and equipping successful and unsuccessful oil and gas wells and related internal costs that can be directly identified with acquisition, exploration and development activities, but does not include any cost related to production, general corporate overhead or similar activities. Gain or loss on the sale or other disposition of oil and gas properties is not recognized unless significant amounts of oil and gas reserves are involved. The capitalized costs of oil and gas properties, plus estimated future development costs relating to proved reserves, are amortized on a units-of-production method over the estimated productive life of the reserves. Unevaluated oil and gas properties are excluded from this calculation. The capitalized oil and gas property costs, less accumulated amortization, are limited to an amount (the ceiling limitation) equal to the sum of: (a) the present value of estimated future net revenues from the projected production of proved oil and gas reserves, calculated using the average oil and natural gas sales price received by the company as of the first trading day of each month over the preceding twelve months (such prices are held constant throughout the life of the properties) and a discount factor of 10%; (b) the cost of unproved and unevaluated properties excluded from the costs being amortized; (c) the lower of cost or estimated fair value of unproved properties included in the costs being amortized; and (d) related income tax effects. Costs in excess of this ceiling are charged to proved properties impairment expense.

All other plant, property and equipment is recorded at cost, less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Additions and major replacements or betterments are added to the assets at cost. Maintenance and repair costs and minor replacements are charged to expense when incurred.

Land

Freehold land is initially recorded at its purchase price plus any directly attributable costs, it is considered to have an indefinite life and so no depreciation is recorded in respect of freehold land.

Freehold land is subject to review for impairment only when specific triggering events or changes in circumstances indicate that its carrying amount might not be recoverable.

Capitalized Patent Costs

Patent costs, including legal fees associated with the creation of intellectual property and patent registration costs are capitalized as incurred. These costs are amortized over the estimated useful life of the patent commencing from the date the patent has been granted.

Deposits on License Agreements

Deposits paid in connection with license agreements that are to be applied against future license fees are capitalized as other assets pending the commencement of fee generating operations under the license agreements. When fee generating operations under the license agreements commence, the deposits will be applied against the balance of fees due and payable. In the event fee generating operations under the license agreements fail to occur, the deposits will be expensed as abortive transaction costs.

Impairment of Long-Lived Assets

Oil & Gas Assets

Under the full cost method of accounting, the Company is required to perform a ceiling test each quarter. The test determines a limit, or ceiling, on the net book value of the oil and natural gas properties. Net capitalized costs are limited to the lower of unamortized cost net of deferred income taxes, or the cost center ceiling.

During the three and nine months ended September 30, 2025 and 2024, the Company reviewed its long-lived assets for impairment and determined an impairment amount of $198,950 and nil was required based on the full cost ceiling test, respectively.

Non-Oil & Gas Assets

The Company reviews long-lived assets for impairment in accordance with ASC 360, “Property, Plant, and Equipment,” whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. These events or changes in circumstances include, but are not limited to, significant underperformance relative to historical or projected future operating results, significant changes in the manner of use of the acquired assets or the strategy for the overall business, significant negative industry or economic trends. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset group to the estimated undiscounted cash flows over the estimated remaining useful life of the primary asset included in the asset group. If the asset group is not recoverable, the impairment loss is calculated as the excess of the carrying value over the fair value.

Equity Line of Credit (“ELOC”)

The Company accounts for its Equity Line of Credit (“ the ELOC”) facility as a derivative financial asset in accordance with ASC 815, Derivatives and Hedging. The ELOC does not meet the “fixed-for-fixed” criterion for equity classification nor does it meet the criteria for liability classification under ASC 480. As such, The ELOC is measured at fair value, with changes in fair value recognized in earnings. The Company’s ELOC is structured as a put option under the Common Stock Purchase Agreement and the initial fair value of the ELOC is de minimis due to near or at-market pricing. The Company analyzed the terms of the ELOC Agreement and concluded that the put option had de minimis value as of September 30, 2025.

Commitment shares issued in connection with the ELOC are accounted for as an issuance of equity in accordance with ASC 505, Equity and treated as a day one expense as prescribed by ASC 825. Transaction costs related to the ELOC, are expensed as incurred in accordance with ASC 825, Financial Instruments. See Note 12 – Capital Stock for further details.

Convertible Notes

The Company has evaluated the accounting treatment for the Convertible Note issued (as defined in Note 10 - Debt) and concluded that they do not meet the criteria for classification as an ASC 480 liability. Management classified the Convertible Notes as current and non-current liabilities on the balance sheet upon issuance, measured at their carrying amounts.

Management identified certain embedded features within the Convertible Note and determined that both the contingent conversion option (i.e., conversion upon Event of Default) and the non-contingent conversion option (i.e., conversion at any time after Issuance Date) should be analyzed as one feature with a contingency and various adjustments. The conversion features were evaluated under the indexation guidance within ASC 815-40-15 and management determined that the Conversion Option qualifies to be classified in stockholders’ equity at issuance as if they were freestanding shares of common stock. Therefore, the conversion options are not required to be bifurcated from the host contract and are accounted for as derivative financial instruments at issuance.

All other embedded derivative features are considered clearly and closely related and do not require separate bifurcation pursuant to ASC 815.

Issuance costs and any lender fees will be presented as a reduction to the carrying balance of the Convertible Notes and amortized over their expected life, which corresponds to the contractual term. See Note 10 – Debt below for further details.

Accounting Principles and Use of Estimates

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. In preparing financial statements, management makes informed judgments and estimates that affect the reported amounts of assets and liabilities as of the date of the financial statements and affect the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management reviews its estimates, including those related to such potential matters as litigation, environmental liabilities, income taxes and the related valuation allowance, determination of proved reserves of oil and gas and asset retirement obligations. Changes in facts and circumstances may result in revised estimates and actual results may differ from these estimates.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to a concentration of credit risk include cash, cash equivalents (if any) and any marketable securities (if any). The Company had cash deposits of $1,262,157 in excess of the FDIC’s current insured limit on interest bearing accounts of $250,000 as of September 30, 2025. The Company has not experienced any losses on its deposits of cash and cash equivalents.

Earnings (Loss) per Share

Basic earnings (loss) per share is computed by dividing net loss available to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue shares of common stock were exercised or converted. In periods in which the Company reports a net loss, dilutive securities are excluded from the calculation of diluted net loss per share amounts as the effect would be anti-dilutive. See Note 13- Earnings (Loss) Per Share Common Share

Income Taxes

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (“OBBBA”). The OBBBA includes significant changes to U.S. tax law, including making permanent certain provisions originally enacted under the Tax Cuts and Jobs Act, such as 100% bonus depreciation, the immediate expensing of domestic research and development costs, and the limitation on the deductibility of business interest expense. The Company has evaluated the potential impact of the OBBBA on its condensed consolidated financial statements and related disclosures and does not believe that it will have any material impact.

Research and Development

In accordance with ASC 730, Research and Development, the Company follows the policy of expensing its third-party research and development consulting costs in the period in which they are incurred. The Company incurred research and development expenses of none and $ 111,311 and $ 724,406 and $ 1,600,956 during the three and nine months ended September 30, 2025 and 2024, respectively.

Grant Income and Government Grant Receivable

In the absence of comprehensive recognition and measurement guidance within the scope of authoritative US generally accepted accounting principles (“GAAP”) for the government grant that the Company has been awarded, in accordance with guidance in ASC 832 “Government Assistance”, the Company has accounted for the grant it has received from the government by analogy using the terms of IAS 20, Accounting for Government Grants and Disclosures of Government Accounting Assistance. The Company receives funding under a government grant which reimburses the Company for certain qualifying research and development and related expenditures. Grant funding for research and development received under grant agreements where there is no obligation to repay grant funds is recognized as grant income in the period during which the related qualifying expenses are incurred, provided that the grants are fully approved by the granting agencies and the conditions under which the grants were provided have been met. Grant income recognized upon incurring qualifying expenses in advance of receipt of grant funding is recorded in the condensed consolidated balance sheet as government grants receivable.

Recent Accounting Pronouncements

Adopted Standards

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disaggregated information about a reporting entity’s effective tax rate reconciliation, as well as information related to income taxes paid to enhance the transparency and decision usefulness of income tax disclosures. This ASU is effective for the annual period ending December 31, 2025. On January 1, 2025, the Company adopted the provisions of ASU 2023-09 on a prospective basis and the required disclosures will be included in our Annual Report on Form 10-K for the year ending December 31, 2025. The Company does not expect the adoption of ASU 2023-09 to have a material impact on its annual disclosures. ASU 2023-09 did not have an impact on our disclosures included in this Quarterly Report on Form 10-Q.

The guidance should be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted.

In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810) —Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity, which requires an entity involved in an acquisition transaction effected primarily by exchanging equity interests when the legal acquiree is a VIE that meets the definition of a business to consider the factors in paragraphs 805-10-55-12 through 55-15 to determine which entity is the accounting acquirer. ASU 2025-03 applies to all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. The Company has evaluated the impact of this guidance on its consolidated financial statements and has elected for early adoption as permitted by the guidance. The impact is reflected in the consolidated financial statements.

Not Yet Adopted Standards

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). ASU 2024-03 requires additional disclosure of specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. ASU 2024-03 may be applied prospectively with the option for retrospective application for all prior periods presented. The Company is currently evaluating the impact of adopting this guidance on the Company’s current financial position, results of operations or financial statement disclosures.

In May 2025, the FASB issued ASU 2025-04, Compensation—Stock Compensation (Topic 718) and Revenues from Contracts with Customers (Topic 606)—Clarifications to Share-Based Consideration Payable to a Customer. The amendments in this ASU revise the master glossary definition of the term performance condition for share-based consideration payable to a customer. Further, the amendments in this ASU clarify that share-based consideration encompasses the same instruments as share-based payment arrangements but the grantee does not need to be a supplier of goods or services to the grantor. Finally, the amendments in this ASU clarify that a grantor should not apply the guidance in Topic 606 on constraining estimates of variable consideration to share-based consideration payable to a customer. The amendments in this ASU are effective for all entities for annual reporting periods (including interim reporting periods within annual reporting periods) beginning after December 15, 2026 with updates to be applied on a retrospective or modified retrospective basis Early adoption is permitted for all entities. The Company is currently evaluating the impact of ASU 2025-04 on its consolidated financial statements.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326). The amendments in this ASU provide that in developing reasonable and supportable forecasts as part of estimating expected credit losses, all entities may elect a practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. The amendments in this ASU are effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods with updates to be applied on a prospective basis. The Company is currently evaluating the impact of ASU 2025-05 on its consolidated financial statements.

In September 2025, the FASB issued ASU 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606). The amendments in this ASU (i) exclude from derivative accounting non-exchange-traded contracts with underlyings that are based on operations or activities specific to one of the parties to the contract and (ii) clarify that an entity should apply the guidance in Topic 606, including the guidance on noncash consideration in paragraphs 606-10-32-21 through 32-24, to a contract with share-based noncash consideration (for example, shares, share options, or other equity instruments) from a customer for the transfer of goods or services. The amendments in this ASU are effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods with updates to be applied on a prospective or modified prospective basis. The Company is currently evaluating the impact of ASU 2025-07 on its consolidated financial statements.

NOTE 4 – REVENUE FROM CONTRACTS WITH CUSTOMERS

Disaggregation of Revenue from Contracts with Customers

The following table disaggregates revenue by significant product type for the three and nine-month periods ended September 30, 2025 and 2024:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Oil sales	$	97,401	$	-	$	97,401	$	-
Natural gas sales		84,813		-		84,813		-
Natural gas liquids sales		43,464		-		43,464		-
Total revenue from customers	$	225,678	$	-	$	225,678	$	-

There were no significant contract liabilities or transaction price allocations to any remaining performance obligations as of September 30, 2025 or 2024. The oil and gas revenues for legacy HUSA from July 1, 2025 were included in the statement of operations. See Note 5 – Acquisition.

NOTE 5 – ACQUISITION

On July 1, 2025, as contemplated by the Share Exchange Agreement, the Company acquired all of the outstanding units of AGIG from the AGIG Unitholders in exchange for issuing to the AGIG Unitholders an aggregate of 31,778,032 shares of Common Stock, which was equal to 94% of the sum of (a) the aggregate issued and outstanding Common Stock at the time of the Closing, plus (b) all Common Stock approved for issuance by the Company under a future equity incentive plan at the time of the Closing. Total consideration transferred was $21.7 million.

The Share Exchange was accounted for as a reverse acquisition in accordance with GAAP within Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”), whereby AGIG, the legal acquiree, is considered the accounting acquirer and HUSA, the legal acquirer, is treated as the acquired company for financial reporting purposes. AGIG was considered the accounting acquirer as its controlling shareholder, Abundia Financial, will hold approximately 84.9% of the issued and outstanding common stock and was deemed a controlling shareholder of the Company following the Share Exchange.

We recorded the assets acquired and liabilities assumed at their respective fair values as of the closing date of the Share Exchange. The preliminary purchase price allocations were comprised of the components presented below, which represent the preliminary determination of the fair value of the assets acquired and liabilities assumed, with the excess of the purchase price over the fair value of net identifiable assets acquired recorded to goodwill. The final determination of the fair value of certain assets and liabilities and the allocation of goodwill to reporting units will be completed within the measurement period in accordance with FASB ASC Topic 805.

The preliminary purchase price allocation is as follows:

SCHEDULE OF ACQUISITION

Fair value of net assets acquired
Cash and cash equivalents	$	6,951,006
Accounts receivable		32,906
Prepaid expenses - others		483,810
Oil and gas properties, full cost method		1,362,248
Refundable acquisition deposit		160,000
Other assets		3,167
Goodwill		12,986,150
Total Assets Acquired		21,979,287
Accounts payable and accrued liabilities		(193,266	)
Other payables		(19,581	)
Asset Retirement Obligation		(32,248	)
Total Liabilities Assumed		(245,095	)
Total Purchase Price	$	21,734,192

Goodwill resulting from the Share Exchange reflects the benefits expected to be gained from the Company’s public company status and governance infrastructure which will enable the Company to gain access to public sources of capital that can then be used in the deployment and development of their suite of technologies that will assist in the evolution of fuel, chemical and waste markets, providing commercial alternatives and sustainable products.

The Company incurred $13.1 million of acquisition-related expenses related to the transaction during the three and nine months ended September 30, 2025, which are included in Professional fees.

The operating results of the Company’s legacy business were included in the condensed consolidated results of operations from the date of the Share Exchange. Consolidated revenues and net loss were $0.2 million and $5.8 million, respectively, for the three and nine months ended September 30, 2025 from the transaction.

The following unaudited pro forma financial information presents the combined results of operations for the Company and AGIG for the three and nine months ended September 30, 2025, and 2024, respectively. The unaudited condensed consolidated pro forma results of operations are as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
(Unaudited)	2025			2024			2025			2024
Revenue	$	225,678		$	130,239		$	438,580		$	393,729
Net loss	$	(6,996,800	)	$	(7,117,486	)	$	(9,150,478	)	$	(19,979,915	)

The unaudited pro forma combined financial information presented above has been prepared from historical financial statements that have been adjusted to give effect to the transaction as though it had occurred on January 1, 2024 and includes adjustments for acquisition and other transaction costs. The unaudited pro forma financial information is not intended to reflect the actual results of operations that would have occurred if the transaction had occurred on January 1, 2024, nor is it indicative of future operating results.

NOTE 6 – SEGMENT REPORTING

Upon completion of the Share Exchange, the Company re-evaluated its reporting segments. Our determination of reporting segments was made on the basis of our operations, products, and the economic characteristics of each of our operating segments and corresponds to the manner in which our the CODM reviews and evaluates performance to make decisions about resources to be allocated to the segment. As a result, the Company’s segment structure has been reassessed and now reflects the Company’s legacy oil and gas (“O&G”) operations as well as its newly added emerging renewables initiatives (“Renewables”).

The O&G segment generates revenue from oil and gas operations whereas Renewables is in the pre-revenue stage, primarily incurring research and development and start-up costs associated with its development of scalable technologies for converting plastic and biomass waste into renewable fuels and chemicals. The CODM is a committee including the Company’s Chief Executive Officer, Chief Operating Officer and Chief Financial Officer.

The Company measures and evaluates its reportable segments based on their respective adjusted net income (loss), general and administrative expenses, research and development costs and professional fees. The Company excludes certain corporate-related expenses and certain transactions or adjustments that the CODM considers to be non-operational, such as changes in fair value of warrant liabilities, restructuring charges, interest expense and income and amounts related to depreciation, depletion and amortization expense. Although these amounts are excluded, they are included in reported Loss before income taxes within the accompanying unaudited condensed consolidated statements of operations and are included in the reconciliation below. The CODM uses segment adjusted net income (loss) in the budget and forecasting process and to monitor budgets versus actual results, which are used in assessing the performance of the reportable segments and to allocate resources across the reportable segments. The balance sheet is presented on a consolidated basis, as the CODM does not use segment specific asset or liability information, including fixed assets, to assess performance. As a result, segment asset and liability details are disclosed at the aggregate level.

A reconciliation of net loss for the reportable segments to the applicable line items within the accompanying unaudited consolidated statements of operations is as follows.


	Three Months Ended September 30, 2025
	O&G			Renewables			Total
Revenue	$	225,678		$	-		$	225,678

Segment expense:
General and administrative expenses		-			3,456,958			3,456,958
Research and development costs		-
Operating lease expense and severance tax		112,644			-			112,644
Adjusted segment operating loss/(income)		(113,034	)		3,456,958			3,343,924

Reconciliation of “Adjusted segment operating loss” to “Loss before income taxes”
Depreciation and amortization		40,027			-			40,027
Grant income		-			-			-
Interest income					(10,907	)		(10,907	)
Changes in fair value of warrant liability		-			-			-
Other expense		198,950			10,508

SEC Form 10-Q filed by Houston American Energy Corporation