UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~October~~January 31, ~~2018~~2019

[ ] 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: 000-49760

PETRO RIVER OIL CORP.

(Exact Name of Registrant as Specified in Its Charter)

Delaware		98-0611188
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

55 5th Avenue, Suite 1702, New York, New York 10003

(Address of Principal Executive Offices, Zip Code)

(469) 828-3900

(Registrant’s Telephone Number, Including Area Code)

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 [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted to Rule 405 of Regulation S-T (Sec.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 [X] 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 the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ X] Smaller reporting company [X] 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 to Section 7(a)(2)(B) of the Securities Act. [ ]

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Issued and Outstanding at ~~December~~March 1725, ~~2018~~2019
Common Stock, $0.00001 par value per share		17,938,~~616~~540 shares

TABLE OF C ~~ONTENTS~~CONTENTS

		Page
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Consolidated Balance Sheets (Unaudited)	1
	Consolidated Statements of Operations (Unaudited)	2
	Consolidated Statements of Cash Flows (Unaudited)	3
	Notes to Consolidated Financial Statements (Unaudited)	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	1922
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2733
Item 4.	Controls and Procedures	2733
PART II - OTHER INFORMATION		28
Item 1.	Legal Proceedings	2834
Item 1A.	Risk Factors	2935
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2935
Item 3.	Default Upon Senior Securities	2935
Item 4.	Mine Safety Disclosures	2935
Item 5.	Other Information	2935
Item 6.	Exhibits	3036
SIGNATURES		3137

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

Petro River Oil Corp. and Subsidiaries

~~(Unaudited)~~ Consolidated Balance Sheets

	As of
Assets	October 31,	April 30,
	January 31,	April 30,
	2018	2018
	2019	2018
Assets	(Unaudited)
Current Assets:
Cash and cash equivalents	$~~101~~2,~~206~~139,841	$47,330
Accounts receivable - oil and gas	~~194~~118,~~500~~272	308,099
Prepaid expense and other current assets	4,282	612
Accounts receivable - other	5,288	-
Prepaid oil and gas asset development costs	84,959	-
Prepaid expense and other current assets	2,447	612
Total Current Assets	384,947	356,041
Prepaid oil and gas asset development costs	55,116	-
Total Current Assets	2,320,964	356,041
Oil and gas assets, full cost method
Costs subject to amortization, net	6,~~552~~566,~~570~~188	3,779,414
Costs not being amortized, net	100,000	100,000
Property, plant and equipment, net	~~443~~253	822
Investment in Horizon Energy Partners	1,~~592~~950,~~418~~034	1,592,418
Other assets	175,~~133~~266	17,133
Total Long-term Assets	8,~~262~~621,~~564~~741	5,489,787
Total Assets	$810,~~647~~942,~~511~~705	$5,845,828
Liabilities and Equity
Current Liabilities:
Accounts payable and accrued expense	$~~466~~460,~~484~~506	$908,343
Accrued interest on notes payable – related party	~~565,953~~-	298,581
Promissory note payable – related party	300,000	-
Redetermination liability	-	259,313
Redetermination liability	259,313	259,313
Asset retirement obligations, current portion	720,535	413,794
Asset retirement obligations, current portion	719,393	413,794
Total Current Liabilities	1,181,041	1,880,031
Total Current Liabilities	2,311,143	1,880,031
Long-term Liabilities:
Asset retirement obligations, net of current portion	~~328~~307,~~016~~549	246,345
Notes payable - related parties, net of debt discount of $1,808,744 and $2,139,250, respectively	2,691,256	2,360,750
Derivative liabilities	4,130,451	-
Total Long-term Liabilities	3,019,272	2,607,095
Notes payable - related parties, net of debt discount of $0 and $2,139,250, respectively	-	2,360,750
Total Liabilities	5,330,415	4,487,126
Total Long-term Liabilities	4,438,000	2,607,095
Total Liabilities	5,619,041	4,487,126
Commitments and contingencies
Equity:
Preferred shares - 5,000,000 authorized; par value $0.00001 per share; 0 shares issued and outstanding as of October 31, 2018 and April 30, 2018	-	-
Preferred shares - 5,000,000 authorized; par value $0.00001 per share; 0 shares issued and outstanding	-	-
Preferred B shares - 29,500 authorized; par value $0.00001 per share; 0 shares issued and outstanding as of October 31, 2018 and April 30, 2018	-	-
Preferred A shares - 500,000 authorized; par value $0.00001 per share; 435,403 and 0 issued and outstanding, respectively; liquidation preference of $8,708,060	5	-
Common shares - 150,000,000 authorized; par value $0.00001 per share; 17,938,540 and 17,309,733 issued and outstanding as of October 31, 2018 and April 30, 2018, respectively	179	173
Preferred B shares - 29,500 authorized; par value $0.00001 per share; 0 shares issued and outstanding	-	-
Additional paid-in capital	54,313,618	52,407,543
Common shares - 150,000,000 authorized; par value $0.00001 per share; 17,938,540 and 17,309,733 issued and outstanding, respectively	180	173
Accumulated deficit	(52,038,504)	(51,049,014)
Additional paid-in capital	59,569,741	52,407,543
Total Petro River Oil Corp. Equity	2,275,293	1,358,702
Accumulated deficit	(55,113,469)	(51,049,014)
Non-controlling interest	1,041,803	-
Subscription receivable	(150,005)	-
Total Equity	3,317,096	1,358,702
Total Petro River Oil Corp. Equity	4,306,452	1,358,702
Total Liabilities and Equity	$8,647,511	$5,845,828
Non-controlling interest	1,017,212	-
Total Equity	5,323,664	1,358,702
Total Liabilities and Equity	$10,942,705	$5,845,828

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

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Petro River Oil Corp. and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

	For the Three Months Ended October 31,		For the Six Months Ended October 31,
	For the Three Months Ended January 31,		For the Nine Months Ended January 31,
	2018	2017	2018	2017
	2019	2018	2019	2018
Revenue
Oil and natural gas sales	$~~410~~324,~~432~~115	$16250,~~238~~877	$~~984~~1,~~497~~308,612	$25275,~~041~~918
Total Revenue	410,432	16,238	984,497	25,041
Royalty revenue	15,871	-	15,871	-
Total Revenue	339,986	250,877	1,324,483	275,918
Operating Expense
Lease operating expense	~~109~~144,~~059~~721	3912,~~242~~445	~~186~~331,~~671~~392	5770,~~604~~049
Depreciation, depletion and accretion	96158,~~749~~637	1196,~~745~~540	~~187~~345,~~296~~933	20117,~~865~~405
Impairment of oil and gas assets	-	~~241~~730,~~881~~607	-	~~241~~972,~~881~~488
General and administrative	~~407~~554,~~355~~729	~~483~~686,~~522~~680	~~913~~1,~~912~~468,641	12,~~476~~162,~~079~~759
Total Operating Expense	~~613~~858,~~163~~087	~~776~~1,~~390~~526,272	12,~~287~~145,~~879~~966	13,~~796~~322,~~429~~701
Operating Loss	(~~202~~518,~~731~~101)	(~~760~~1,~~152~~275,395)	(~~303~~821,~~382~~483)	(13,~~771~~046,~~338~~783)
Other Income (Expense)
Interest income (expense), net	(~~297~~2,~~746~~490,539)	~~101~~(50,~~562~~173)	(~~617~~3,~~326~~107,865)	~~234~~184,~~307~~134
Loss on legal settlement	(75,000)	-	(75,000)	-
Loss on assumption of Pearsonia interests	-	(3,351,965)	-	(3,351,965)
Net gain on real estate rights	-	-	-	271,490
Loss on legal settlement	-	-	(75,000)	-
Total Other Income (Expense)	(372,746)	101,562	(692,326)	505,797
Loss on redetermination	-	(11,914,204)	-	(11,914,204)
Net Loss Before Income Tax Provision	(575,477)	(658,590)	(995,708)	(1,265,591)
Loss on extinguishment of debt	(90,916)	-	(90,916)	-
Income Tax Provision	-	84,715	-	282,919
Net (loss) gain on real estate rights	-	(3,756)	-	267,734
Net Loss	(575,477)	(743,305)	(995,708)	(1,548,510)
Other Income (Expense)	(2,581,455)	(15,320,098)	(3,273,781)	(14,814,301)
Net Income (Loss) Attributable to Non-controlling Interest	(6,218)	(1,346)	(6,218)	73,225
Net Loss Before Income Tax Provision	(3,099,556)	(16,595,493)	(4,095,264)	(17,861,084)
Net Loss Attributable to Petro River Oil Corp. and Subsidiaries	$(569,259)	$(741,959)	$(989,490)	$(1,621,735)
Income Tax Provision	-	50,284	-	333,203
Loss Per Common Share - Basic and Diluted	$(0.03)	$(0.05)	$(0.06)	$(0.10)
Net Loss	(3,099,556)	(16,645,777)	(4,095,264)	(18,194,287)
Weighted Average Number of Common Shares Outstanding - Basic and Diluted	17,712,126	15,842,558	17,607,863	15,838,826
Net Income (Loss) Attributable to Non-controlling Interest	(24,591)	28,198	(30,809)	101,423
Net Loss Attributable to Petro River Oil Corp.	(3,074,965)	(16,673,975)	(4,064,455)	(18,295,710)
Deemed Dividend on Series A Preferred Stock	(3,512,021)	-	(3,512,021)	-
Net Loss Available for Petro River Oil Corp. Common Shareholders	$(6,586,986)	$(16,673,975)	$(7,576,476)	$(18,295,710)
Loss Per Common Share - Basic and Diluted	$(0.37)	$(0.97)	$(0.43)	$(1.12)
Weighted average number of common shares outstanding - basic and diluted	17,938,540	17,214,081	17,718,489	16,298,951

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

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Petro River Oil Corp. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

	For the Six Months
	For the Nine Months
	Ended
	October 31, 2018	October 31, 2017
	January 31, 2019	January 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$(~~995~~4,~~708~~095,264)	$(118,~~548~~194,~~510~~287)
Adjustments to reconcile net loss to net cash used in by operating activities:
Stock-based compensation	~~334~~413,~~816~~787	~~708~~811,~~698~~123
Depreciation, depletion and accretion	~~187~~345,~~296~~933	20117,~~867~~405
Amortization of debt discount	~~330~~2,~~506~~139,250	84224,~~616~~000
Impairment of oil and gas assets	-	~~241~~972,~~881~~488
Loss on legal settlement	75,000	-
Net gain on interest in real estate rights	-	(~~271~~267,~~490~~734)
Deferred income tax expense	-	282,919
Loss on redetermination	-	11,914,204
Loss on assumption of Pearsonia interests	-	3,351,965
Deferred income tax expense	-	333,203
Derivative liability in excess of face value of equity instrument	508,931	-
Loss on extinguishment of debt	90,916	-
Changes in operating assets and liabilities:
Accounts receivable – oil and gas	~~113~~189,~~599~~827	(997,~~962~~611)
Accounts receivable – related party	-	(3,968)
Accounts receivable – other	(5,288)	-
Accrued interest on notes receivable – related party	-	(~~397~~593,~~842~~021)
Prepaid expense and other assets	~~(33~~10,~~513)~~032	~~179~~149,~~193~~391
Accrued interest on notes payable – related party	11,083	-
Accounts payable and accrued expense	(465,326)	309,344
Accounts payable and accrued expense	(262,480)	107,397
Accrued interest on notes payable – related party	331,493	-
Net Cash Used in Operating Activities	(~~239~~460,~~401~~709)	(~~606~~969,~~201~~530)
Cash Flows From Investing Activities:
CASH FLOW FROM INVESTING ACTIVITIES:
Proceeds from the sale of interest in real estate rights	-	1,~~557~~553,~~852~~884
Prepaid oil and gas assets	-	(446,856)
Issuance of notes receivable – related party	-	(1,558,501)
Capitalized expenditures on oil and gas assets	(~~445~~568,~~409~~030)	(~~985~~2,~~243~~116,602)
Cash paid in MegaWest exchange transaction	-	(119,722)
Cash received from acquisition of LBE Partners	138,686	-
Cash paid for cost method investment	-(357,616)	(379,418)
Net Cash Used in Investing Activities	(~~306~~786,~~723~~960)	(13,~~812~~067,~~166~~215)
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from related party advances	-	250,000
Proceeds from the issuance of Series A Preferred Stock and warrants	2,740,180	-
Proceeds from notes payable – related party	300,000	24,~~000~~500,000
Cash paid for debt inducement	-	(250,000)
Cash received from non-controlling interest contributions	300,000	-
Net Cash Provided by Financing Activities	~~600~~3,~~000~~340,180	24,250,000
Change in cash and cash equivalents	532,~~876~~092,511	~~(168~~213,~~367)~~255
Cash and cash equivalents, beginning of period	47,330	631,232
Cash and cash equivalents, end of period	$~~101~~2,~~206~~139,841	$~~462~~844,~~865~~487
SUPPLEMENTARY CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes	$-	$486,~~258~~876
Interest paid	$-	$-
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Additions to asset retirement obligation from new drilling activities	$4,150	$-
Receivable for sale of oil and gas properties	$-	$17,449
Change in estimate of asset retirement obligation	$16,213	$7,500
Accrual of oil and gas development costs	$126,481	$77,307
Accrued oil and gas development costs	$57,712	$55,458
Additions to asset retirement obligation from new drilling activities	$4,150	$16,875
Warrants issued with notes payable	$-	$952,056
Change in estimate of asset retirement obligation	$5,786	$55,098
Warrants issued with notes payable	$-	$2,003,227
Overriding interest contributed as debt inducement	$-	$250,000
Derivative liability from warrant issuances	$3,512,021	$-
Issuance of Series A Preferred Stock for conversion of debt	$5,798,994	$-
Issuance of Series A Preferred Stock for subscription receivable	$150,005	$-

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

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PETRO RIVER OIL CORP.

Notes to the Consolidated Financial Statements

(Unaudited)

1.	Organization

Petro River Oil Corp. (the “Company”) is an independent energy company focused on the exploration and development of conventional oil and gas assets with low discovery and development costs, utilizing modern technology. The Company is currently focused on moving forward with drilling wells on several of its properties owned directly and indirectly through its interest in Horizon Energy Partners, LLC (“Horizon Energy”), as well as entering highly prospective plays with Horizon Energy and other industry-leading partners. Diversification over a number of projects, each with low initial capital expenditures and strong risk reward characteristics, reduces risk and provides cross-functional exposure to a number of attractive risk adjusted opportunities.

The Company’s core holdings are in the Mid-Continent Region in in Oklahoma, including in Osage County and Kay County, Oklahoma. Following the acquisition of Horizon I Investments, LLC (“Horizon Investments”) in December 2015, the Company has additional exposure to a portfolio of domestic and ~~international~~ international oil and gas assets consisting of highly prospective ~~conventional~~ conventional plays diversified across project type, geographic location and risk profile, as well as access to a broad network of industry leaders from Horizon Investment’s interest in ~~Horizon~~ Horizon Energy. Horizon Energy is an oil and gas exploration ~~and~~ and development company owned and managed by former senior oil and ~~gas~~ gas executives. It has a portfolio of domestic and ~~international~~ international assets. Each of the assets in the Horizon Energy portfolio is characterized by low initial capital expenditure requirements and strong risk reward characteristics.

The Company’s prospects in Oklahoma are owned directly by the Company and indirectly through Spyglass Energy Group, LLC (“Spyglass”), a wholly owned subsidiary of Bandolier Energy, LLC (“Bandolier”). As of January 31, 2018, Bandolier became wholly-owned by the Company. Bandolier has a 75% working interest in an 87,754-acre concession in Osage County, Oklahoma. The remaining 25% working interest is held by the operator, Performance Energy, LLC. As discussed below in Recent Developments, on January 31, 2019, Bandolier entered into Assignment of Net Profit Interest agreements (the “Assignment Agreements”), pursuant to which Bandolier assigned and transferred a 75% interest in profits in certain planned wells to investors.

Effective September 24, 2018, the Company acquired a 66.67% membership interest in LBE Partners, LLC, a Delaware limited liability company (“LBE Partners”), from ICO Liquidating Trust, LLC in exchange for 300,000 restricted shares of the Company’s common stock. LBE Partners has varying working interests in multiple oil and gas producing wells located in Texas. The Company currently anticipates that this acquisition will provide additional positive cashflow to the Company and increase its oil and gas asset portfolio.

The execution of the Company’s business plan is dependent on obtaining necessary working capital. While no assurances can be given, in the event management is able to obtain additional working capital, the Company plans to continue drilling additional wells on its existing concessions, and to acquire additional high-quality oil and gas properties, primarily proved producing, and proved undeveloped reserves. The Company also intends to explore low-risk development drilling and work-over opportunities. Management is also exploring farm-in and joint venture opportunities for the Company’s oil and gas assets.

Recent Developments

~~Recent~~Horizon ~~Oil~~Subscription ~~Discoveries.~~Agreement

On February ~~July~~25, 242019, ~~2018~~Company executed a Subscription Agreement, pursuant to which the Company ~~announced~~purchased 145.454 membership units (approximately 14.6%) of Horizon Energy Acquisition, LLC (“Horizon”), a recently formed company focused on oil and gas exploration activities, for $400,000 (the ~~successful~~“Acquisition ~~drilling~~of Interest”). In connection with Acquisition of Interest, the Company also executed the ~~Arsaga~~Limited ~~25-2~~Liability ~~exploration~~Company ~~well~~Agreement for Horizon, ~~located~~which onprovides the ~~its~~Company ~~concession~~with inthe right to appoint one Manager to ~~Osage~~Horizon’s ~~County~~three-member Board of Managers. The Company appointed Mr. Cohen, ~~Oklahoma~~the Company’s Executive Chairman, to the Board of Managers. Mr. Cohen purchased 36.363 membership units of Horizon in a separate transaction.

OnCreation ~~May 22, 2018, the Company announced the discovery~~ of a ~~new~~New ~~oil field,~~Series ~~the~~A N.Convertible ~~Blackland~~Preferred ~~Field, in its concession in Osage County, Oklahoma, upon successfully testing of the 2-34 exploration well.~~Stock

On ~~In May~~January ~~2017~~31, ~~Bandolier~~2019, ~~discovered~~the ~~two~~Company ~~new~~filed ~~oil~~the ~~fields~~Certificate ~~with~~of ~~the~~Designations ~~successful~~of ~~drilling~~Preferences and Rights of Series A Convertible Preferred Stock (the W.“Series ~~Blackland~~A COD”) ~~1-3~~with ~~and~~the S.Secretary ~~Blackland~~of ~~2-11~~State for the State of ~~exploration~~Delaware ~~wells.~~– OnDivision ~~December~~of 15Corporations, ~~2017~~designating 500,000 shares of the Company’s ~~received permits~~preferred ~~from~~stock ~~the~~as ~~Bureau~~Series ofA Convertible ~~Indian~~Preferred, ~~Affairs~~par tovalue ~~drill~~$0.00001 ~~eight~~per ~~additional~~share ~~wells~~(“Series inA Preferred”), ~~the~~and W.each ~~Blackland~~share ~~Field,~~with ~~which~~a ~~were~~stated ~~successfully~~value ~~completed~~of in$20.00 ~~April~~per ~~2018.~~share ~~The~~(the ~~Company’s~~“Stated WValue”). ~~Blackland~~Shares ~~concessions~~of Series A Preferred are not ~~currently~~entitled ~~producing,~~to ~~and,~~dividends ~~with~~unless the ~~drilling~~Company ofelects ~~additional~~to ~~wells,~~pay dividends to ~~the~~holders ~~Company~~of ~~currently~~its ~~anticipates~~common ~~that~~stock. Shares ~~its~~of ~~revenue~~Series ~~will~~A ~~significantly~~Preferred ~~increase~~rank ~~throughout~~senior to the ~~remainder~~Company’s ofcommon ~~the~~stock ~~current~~and ~~fiscal~~Series ~~year~~B Cumulative Convertible Preferred Stock.

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Table of Contents

Holders Inof Series A Preferred have the right to vote, subject to a 9.999% ~~addition~~voting limitation (which does not apply to Scot Cohen), on an as-converted basis with the holders of the Company’s ~~current~~common stock ~~development~~on ~~plans,~~any ~~within~~matter presented to the Company’s stockholders ~~its~~for ~~current~~their ~~3-D~~action ~~seismic~~or ~~data~~consideration; provided, ~~additional~~however, ~~structures~~that inso long ~~Osage~~as ~~County~~shares of Series A Preferred remain outstanding, the ~~have~~Company ~~been~~may ~~identified. Assuming~~not, ~~that~~without itfirst isobtaining ~~able~~the toaffirmative ~~obtain~~consent of ~~sufficient~~a ~~working~~majority ~~capital,~~of the ~~Company~~shares ~~currently~~of ~~plans~~Series toA ~~drill~~Preferred outstanding, voting ~~ten~~as ~~additional~~a ~~wells~~separate inclass, ~~calendar~~take ~~year~~the ~~2019~~following actions: ~~seven~~(i) inalter ~~the N.~~or ~~Blackland~~change ~~Field~~adversely the power, ~~two~~preferences inand rights provided to the holders ~~Arsaga~~of ~~structure~~the ~~and~~Series ~~one~~A inPreferred under the ~~Section~~Series A COD, (ii) 13authorize ~~structure. The~~or ~~Company~~create ~~anticipates~~a ~~financing~~class of stock that is senior to the ~~drilling~~Series A Preferred, (iii) amend its Certificate of ~~these~~Incorporation ~~wells~~so ~~using~~as to adversely affect any rights of the ~~cash~~holders ~~flows~~of ~~from~~the ~~current~~Series ~~production~~A Preferred, (iv) increase the number of ~~its~~authorized shares of Series ~~existing~~A ~~wells~~Preferred, or (v) enter into any agreements with respect to the foregoing.

Each share of Series A Preferred has a liquidation preference equal to the Stated Value plus all accrued and unpaid dividends. Each share of Series A Preferred is convertible into that number of shares of the Company’s common stock (“Conversion Shares”) equal to the Stated Value, divided by $0.40 per share (the “Conversion Price”), which conversion rate is subject to adjustment in accordance with the terms of the Series A COD; provided, however, that holders of the Series A Preferred may not convert their shares of Series A Preferred in the event that such conversion would result in such holder’s ownership exceeding 4.999% of the Company’s outstanding common stock (the “Ownership Limitation”), which Ownership Limitation may be increased up to 9.999% at the sole election of the holder (the “Maximum Percentage”); provided, however, that the Ownership Limitation and Maximum Percentage do not apply to Mr. Cohen. Holders of Series A Preferred may elect to convert shares of Series C Preferred into Conversion Shares at any time.

Series A Financing

On January 31, 2019 (the “Closing Date”), the Company sold and issued an aggregate of 178,101 units of its securities, for an aggregate purchase price of $3,562,015, to certain accredited investors (the “New Investors”) pursuant to a Securities Purchase Agreement (“SPA”) and to certain debtholders (the “Debt Holders”) pursuant to Debt Conversion Agreements (the “Debt Conversion Agreements”) (the “Offering”). The sale of the units resulted in net cash proceeds of approximately $2.7 million. The units sold and issued in the Offering consisted of an aggregate of (i) 178,101 shares of the Company’s newly created Series A Preferred shares, convertible into 8,905,037 shares of the Company’s common stock, and (ii) five-year warrants to purchase 8,905,037 shares of Company’s common stock, at an exercise price of $0.50 per share. Pursuant to the Debt Conversion Agreements, the Debt Holders, consisting of Mr. Cohen and Fortis Oil & Gas (“Fortis”), agreed to convert all outstanding debt owed to the Debt Holders, amounting to $300,000 and $321,836, respectively, into units issued pursuant to the SPA. In addition to the conversion of outstanding debt, the Company and the Debt Holders also agreed to convert all accrued interest totaling $18,853 and $62,523, respectively.

The Offering resulted in net cash proceeds to the Company of approximately $2.7 million, which net proceeds do not include the amount of debt converted into units by the Debt Holders. The Company currently intends to use the net proceeds to fund the drilling of ten additional development and exploration wells in its Osage County concession (the “New Drilling Program”), and a large exploration venture in the North Sea, United Kingdom with Horizon Energy Partners, LLC.

In connection with the Offering, on January 31, 2019 Bandolier Energy, LLC (“Bandolier”), a wholly owned subsidiary of the Company, entered into Assignment of Net Profit Interest agreements (the “Assignment Agreements”) with each of the New Investors and Debt Holders, pursuant to which (i) Bandolier assigned and transferred to the New Investors and Debt Holders a 75% interest in profits, if any, derived from the ten new wells the Company intends to drill pursuant to the New Drilling Program, payments of which shall be made to the New Investors and Debt Holders, pro rata, on a quarterly basis following the full completion of the New Drilling Program, and (ii) in the event the Company elects to drill additional wells on its Osage County concession in the next two years, the New Investors and Debt Holders shall have the right to participate in and fund the drilling and production of the next ten wells on the same terms and conditions set forth in the Assignment Agreements.

Senior Secured Debt Exchange

On January 31, 2019, the Company entered into agreements (the “Secured Debt Conversion Agreements”) with Petro Exploration Funding, LLC and Petro Exploration Funding II, LLC (together, the “Secured Debt Holders”), pursuant to which they agreed to convert approximately $2.3 million and $2.8 million, respectively, of outstanding senior secured debt (including accrued and unpaid interest) (the “Senior Secured Debt”) owed under the terms of their respective Senior Secured Promissory Notes into 116,503 and 140,799 shares of the Company’s newly created Series A Preferred, respectively (the “Senior Secured Debt Exchange”). As a result of the Senior Secured Debt Exchange, all indebtedness, liabilities and other obligations arising under the respective Senior Secured Promissory Notes were cancelled and deemed satisfied in full.

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As additional consideration for the conversion of the Senior Secured Debt, the Company agreed to (i) reduce the exercise price of warrants issued to the Secured Debt Holders on June 15, 2017 and November 6, 2017 from $2.38 and $2.00, respectively, to $0.50 per share of Common Stock issuable upon the exercise of such warrants, and (ii) to extend the expiration date of such warrants to five years from the Closing Date.

Acquisition of Membership Interest in LBE Partners, LLC

On October 2, 2018, the Company, ICO Liquidating Trust, LLC (“ICO”) and LBE Partners, which owns various working interests in several oil and gas wells located in the Hardin oil field in Liberty, Texas, entered into a Membership Interest Purchase Agreement (the “LBE Purchase Agreement”), effective September 24, 2018, pursuant to which the Company purchased a 66.67% membership interest in LBE Partners from ICO in exchange for 300,000 shares of the Company’s common stock. Both ICO and LBE Partners are managed by Scot Cohen, the Company’s Executive Chairman.

The Company recorded the purchase of LBE Partners using the ~~acquisition~~ acquisition method of accounting as specified in ASC 805 “Business Combinations.” ~~This~~ This method of accounting requires the acquirer to record the net assets and liabilities acquired at the historical cost of LBE Partners because ~~since~~ the Company determined that this acquisition was a related ~~party~~ party transaction.

The following table summarizes fair values of the net assets acquired and liabilities assumed and the allocation of the aggregate value of the purchase consideration, and non-controlling interest:

Purchase consideration:
Common stock issued	$333,000
Total Purchase Consideration	$333,000

Purchase price allocation:
Cash	$138,686
Prepaid drilling costs	55,116
Oil and gas assets – net	2,425,482
Liabilities assumed – accounts payable	(19,198)
Liabilities assumed – asset retirement obligation	(355,800)
Non-controlling interest	(748,021)
Contributed capital	(1,163,265)
Net assets acquired	$333,000

The following table summarizes, on an unaudited pro forma basis, the results of operations of the Company as though the acquisition had occurred as of May 1, 2017 and May 1, 2018 (the beginning of the fiscal year). The pro-forma amounts presented are not ~~necessarily~~ necessarily indicative of either the actual operation results had ~~the~~ the acquisition transaction occurred as of May 1, 2017 and May 1, 2018.

	For the Six Months Ended October 31, 2018
	For the Nine Months Ended January 31, 2019
	Petro River	LBE Partners	Pro-Forma Combined
Revenue	$~~913~~1,~~870~~324,483	$~~300~~229,~~342~~715	$1,~~214~~554,~~212~~198
Net income (loss)	(~~970~~4,~~836~~095,264)	2755,~~678~~432	(~~943~~4,~~157~~039,832)
Loss per share of common share - basic and diluted	~~(0.06)~~		$(0.0542)
Weighted average number of common shares Outstanding - basic and diluted	17,607,863		17,607,863
Weighted average number of common shares outstanding - basic and diluted			17,877,762

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	For the Nine Months Ended January 31, 2018
	Petro River	LBE Partners	Pro-Forma Combined
Revenue	$275,918	$238,872	$514,790
Net loss	(18,194,287)	(2,501)	(18,196,788)
Loss per share of common share - basic and diluted			$(1.12)
Weighted average number of common shares outstanding - basic and diluted			16,298,951

At January 31, 2019 the non–controlling interest in LBE was as follows:

Non–controlling interest at April 30, 2018	$-
Acquisition of non–controlling interest in LBE Partners acquisition	748,021
Contributions from non–controlling interest	300,000
Non–controlling share of net loss	(30,809)
Non–controlling interest at January 31, 2019	$1,017,212

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At October 31, 2018 the non–controlling interest in LBE was as follows:

Non–controlling interest at April 30, 2018	$-
Acquisition of non–controlling interest in LBE Partners acquisition	748,021
Contributions from non–controlling interest	300,000
Non–controlling share of net loss	(6,218)
Non–controlling interest at October 31, 2018	$1,041,803

2.	Going Concern and Management’s Plan

The accompanying consolidated financial statements have been ~~prepared~~ prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred significant operating losses since its inception. As of ~~October~~January 31, ~~2018~~2019, the Company had an accumulated deficit of approximately $5255.01 million, had a working ~~deficit~~capital of approximately $1.91 million, and had cash and cash equivalents of approximately $02.1 million. As a result of the utilization of cash in its operating activities, and the development of its assets, the Company ~~had~~has incurred losses since it commenced operations. The Company’s primary source of operating funds since inception has been debt and equity financings. In addition, the Company has a limited operating history prior to its acquisition of Bandolier. These matters raise substantial doubt about the Company’s ability to continue as a going concern for the twelve months following the issuance of these financial statements.

The consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Management is focusing on specific target acquisitions and investments, limiting operating expenses, and exploring farm-in and joint venture opportunities for the Company’s oil and gas assets. No assurances can be given that management will be successful. In addition, Management intends to raise additional capital through debt and equity instruments in order to execute its business, operating and development plans. Management can provide no assurances that the Company will be successful in its capital raising efforts. In order to conserve capital, from time to time, management may defer certain development activity.

3.	Basis of Preparation

The accompanying unaudited interim consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and include the accounts of the Company and its wholly owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. Non–controlling interest represents the minority equity investment in the Company’s subsidiaries, plus the minority investors’ share of the net operating results and other components of equity relating to the non–controlling interest.

These unaudited consolidated financial statements include the Company and the following subsidiaries:

Bandolier Energy, LLC; Horizon I Investments, LLC; and MegaWest Energy USA Corp. and MegaWest Energy USA Corp.’s wholly owned subsidiaries:

MegaWest Energy Texas Corp.

MegaWest Energy Kentucky Corp.

MegaWest Energy Missouri Corp.

As a result of the acquisition of membership interest in the Osage County Concession in November 2017, Bandolier is now a wholly-owned subsidiary of the Company and the Company consolidates 100% of the financial information of Bandolier. Bandolier operates the Company’s Oklahoma oil and gas properties.

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As a result of the acquisition of a 66.67% membership interest in LBE Partners effective on September 24, 2018, LBE Partners is now a subsidiary of the Company, and the Company consolidates the financial information of LBE Partners with a non-controlling interest in the remaining 33.33% membership interest. LBE Partners has varying working interest in multiple oil fields located in Texas.

Also contained in the unaudited consolidated financial statements ~~for~~ for the periods ended ~~October~~January 31, ~~2017~~2018 and April 30, 2018 is ~~the~~ the financial information of MegaWest, which prior to January 31, ~~2018~~ 2018 was 58.51% owned by the Company. The unaudited consolidated financial statements for the ~~six~~nine months ended ~~October~~January 31, ~~2017~~2018 include the results of operations of MegaWest; however, the assets and liabilities were written off in the year ended April 30, 2018.

The unaudited consolidated financial information furnished herein reflects all adjustments, consisting solely of normal recurring items, which in the opinion of management are necessary to fairly state the financial position of the Company and the results of its operations for the periods presented. This report should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended April 30, 2018, filed with the Securities and Exchange Commission (the “SEC”) on July 30, 2018. The Company assumes that the users of the interim financial information herein have read or have access to the audited financial statements for the preceding fiscal year and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. Accordingly, footnote disclosure, which would substantially duplicate the disclosure contained in the Company’s Form 107-~~K for the year ended April 30, 2018, has been omitted. The results of operations for the interim periods presented are not necessarily indicative of results for the entire year ending April 30, 2019.~~

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The unaudited consolidated financial information furnished herein reflects all adjustments, consisting solely of normal recurring items, which in the opinion of management are necessary to fairly state the financial position of the Company and the results of its operations for the periods presented. This report should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended April 30, 2018, filed with the Securities and Exchange Commission (the “SEC”) on July 30, 2018. The Company assumes that the users of the interim financial information herein have read or have access to the audited financial statements for the preceding fiscal year and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. Accordingly, footnote disclosure, which would substantially duplicate the disclosure contained in the Company’s Annual Report on Form 10-K for the year ended April 30, 2018, has been omitted. The results of operations for the interim periods presented are not necessarily indicative of results for the entire year ending April 30, 2019.

4.	Significant Accounting Policies

(a)	Use of Estimates:

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates.

The Company’s financial statements are based on a number of significant estimates, including oil and natural gas reserve quantities, which are the basis for the calculation of depreciation, depletion and impairment of oil and natural gas properties, and timing and costs associated with its asset retirement obligations, as well as those related to the fair value of stock options, stock warrants and stock issued for services. Although management believes that its estimates and assumptions used in preparation of the financial statements are appropriate, actual results could differ from those estimates.

(b)	Cash and Cash Equivalents:

Cash and cash equivalents include all highly liquid monetary ~~instruments~~ instruments with original maturities of three months or less when purchased. These investments are carried at cost, which approximates fair value. Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash deposits. The Company maintains its cash in institutions insured by the Federal Deposit Insurance Corporation (“FDIC”). At times, the Company’s cash and cash equivalent balances may be uninsured or in amounts that exceed the FDIC insurance limits. The Company has not experienced any loses on such accounts. As of January 31, 2019, approximately $1,725,000 exceed the FDIC insurance limits.

(c)	Receivables:

Receivables that management has the intent and ability to hold for the foreseeable future are reported in the balance sheet at outstanding principal adjusted for any charge-offs and the allowance for doubtful accounts. Losses from uncollectible receivables are accrued when both of the following conditions are met: (a) information available before the financial statements are issued or are available to be issued indicates that it is probable that an asset has been impaired at the date of the financial statements, and (b) the amount of the loss can be reasonably estimated. These conditions may be considered in relation to individual receivables or in relation to groups of similar types of receivables. If the conditions are met, an accrual shall be made even though the particular receivables that are uncollectible may not be identifiable. The Company reviews each receivable individually for collectability and performs on-going credit evaluations of its customers and adjusts credit limits based upon payment history and the customer’s current credit worthiness, as determined by the review of their current credit information, and determines the allowance for doubtful accounts based on historical write-off experience, customer specific facts and general economic conditions that may affect a client’s ability to pay. Bad debt expense is included in general and administrative expenses, if any.

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Credit losses for receivables (uncollectible receivables), which may be for all or part of a particular receivable, shall be deducted from the allowance. The related receivable balance shall be charged off in the period in which the receivables are deemed uncollectible. Recoveries of receivables previously charged off shall be recorded when received. The Company charges off its account receivables against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

The allowance for doubtful accounts at ~~October~~January 31, ~~2018~~2019 and April 30, 2018 was $0.

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(d)	Oil and Gas Operations:

Oil and Gas Properties: The Company uses the full-cost method of accounting for its exploration and development activities. Under this method of accounting, the costs of both successful and unsuccessful exploration and development activities are capitalized as oil and gas property and equipment. Proceeds from the sale or disposition of oil and gas properties are accounted for as a reduction to capitalized costs unless the gain or loss would significantly alter the relationship between capitalized costs and proved reserves of oil and natural gas attributable to a country, in which case a gain or loss would be recognized in the consolidated statements of operations. All of the Company’s oil and gas properties are located within the continental United States, its sole cost center.

Oil and gas properties may include costs that are excluded from costs being depleted. Oil and gas costs excluded represent investments in unproved properties and major development projects in which the Company owns a direct interest. These unproved property costs include non-producing leasehold, geological and geophysical costs associated with leasehold or drilling interests and in process exploration drilling costs. All costs excluded are reviewed at least annually to determine if impairment has occurred.

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate.

Proved Oil and Gas Reserves: Proved oil and gas reserves are the estimated quantities of crude oil, natural gas and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. All of the Company’s oil and gas properties with proved reserves were impaired to the salvage value prior to the Company’s acquisition of its interest in Bandolier. The price used to establish economic viability is the average price during the 12-month period preceding the end of the entity’s fiscal year and calculated as the un-weighted arithmetic average of the first-day-of-the-month price for each month within such 12-month period.

Depletion, Depreciation and Amortization: Depletion, depreciation and amortization is provided using the unit-of-production method based upon estimates of proved oil and gas reserves with oil and gas production being converted to a common unit of measure based upon their relative energy content. Investments in unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is deducted from the capitalized costs to be amortized. Once the assessment of unproved properties is complete and when major development projects are evaluated, the costs previously excluded from amortization are transferred to the full cost pool and amortization begins. The amortizable base includes estimated future development costs and, where significant, dismantlement, restoration and abandonment costs, net of estimated salvage value.

In arriving at rates under the unit-of-production method, the quantities of recoverable oil and natural gas reserves are established based on estimates made by the Company’s geologists and engineers, which require significant judgment, as does the projection of future production volumes and levels of future costs, including future development costs. In addition, considerable judgment is necessary in determining when unproved properties become impaired and in determining the existence of proved reserves once a well has been drilled. All of these judgments may have significant impact on the calculation of depletion expenses. There have been no material changes in the methodology used by the Company in calculating depletion, depreciation and amortization of oil and gas properties under the full cost method during the ~~six~~nine months ended ~~October~~January 31, ~~2018~~2019 and ~~2017~~2018.

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(e)	Fair Value of Financial Instruments:

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in U.S. GAAP and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

Level 1	Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2	Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3	Pricing inputs that are generally observable inputs and not corroborated by market data.

Level 1 Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

Level 2 Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Level 3 Pricing inputs that are generally observable inputs and not corroborated by market data.

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Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

The carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid expenses, and accounts payable and accrued liabilities approximate their fair value because of the short maturity of those instruments.

Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.

(f) ~~Revenue~~Preferred ~~Recognition~~Stock:

~~ASU~~The ~~2014-09,~~Company ~~“Revenue~~applies ~~from Contracts~~the ~~with~~accounting ~~Customers~~standards ~~(Topic~~for ~~606),” supersedes the~~distinguishing ~~revenue~~liabilities ~~recognition~~from ~~requirements~~equity ~~and industry-specific guidance~~ under ~~Revenue Recognition (Topic 605)~~U.S. ~~Topic~~GAAP ~~606 requires an entity to recognize revenue~~ when it ~~transfers~~determining ~~promised goods or services to customers in an amount that reflects~~ the ~~consideration the entity expects to be entitled~~ toclassification inand ~~exchange~~measurement ~~for~~of ~~those~~its ~~goods~~preferred ~~or services~~stock. ~~The Company adopted~~Preferred ~~Topic~~shares ~~606~~subject ~~on May 1, 2018, using the modified retrospective method applied~~ to ~~contracts~~mandatory ~~that~~redemption ~~were~~are ~~not~~classified ~~completed~~ as ~~of January 1, 2018.~~liability ~~Under~~instruments ~~the modified retrospective method, prior period financial positions~~ and ~~results~~are ~~will~~measured ~~not~~at befair ~~adjusted~~value. ~~The cumulative effect~~Conditionally ~~adjustment~~redeemable ~~recognized~~preferred inshares ~~the~~(including ~~opening~~preferred ~~balances~~shares ~~included no~~that ~~significant~~feature ~~changes~~redemption asrights athat ~~result~~are ofeither ~~this~~within ~~adoption.~~the ~~Although~~control of the ~~Company~~holder ~~does~~or ~~not~~subject ~~expect~~to ~~2018~~redemption ~~net~~upon ~~earnings~~the tooccurrence beof ~~materially impacted~~uncertain byevents ~~revenue~~not ~~recognition~~solely ~~timing~~within ~~changes, Topic 606 requires certain changes to~~ the ~~presentation~~Company’s ofcontrol) ~~revenues and related expenses~~are ~~beginning~~classified ~~May~~as 1,temporary ~~2018~~equity. ~~Refer~~At toall ~~Note~~other 9times, –preferred shares ~~Revenue~~are ~~from~~classified ~~Contracts~~as ~~with~~permanent ~~Customers for additional information~~equity.

~~-9-~~(g) Derivative Liabilities:

The Company evaluates its options, warrants, convertible notes, or other contracts, if any, to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with paragraph 815-10-05-4 and Section 815-40-25 of the FASB Accounting Standards Codification. The result of this accounting treatment is that the fair value of the embedded derivative is marked-to-market each balance sheet date and recorded as either an asset or a liability. The change in fair value is recorded in the consolidated statement of operations as other income or expense. Upon conversion, exercise or cancellation of a derivative instrument, the instrument is marked to fair value at the date of conversion, exercise or cancellation and then the related fair value is reclassified to equity.

In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities will be classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument is expected within 12 months of the balance sheet date.

The Company adopted Section 815-40-15 of the FASB Accounting Standards Codification (“Section 815-40-15”) to determine whether an instrument (or an embedded feature) is indexed to the Company’s own stock. Section 815-40-15 provides that an entity should use a two-step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument’s contingent exercise and settlement provisions.

The Company utilizes a binomial option pricing model to compute the fair value of the derivative liability and to mark to market the fair value of the derivative at each balance sheet date. The Company records the change in the fair value of the derivative as other income or expense in the consolidated statements of operations.

The Company had derivative liabilities of $4,130,451 and $0 as of January 31, 2019 and April 30, 2018, respectively.

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~~The Company’s~~(h) ~~revenue~~Revenue is comprised entirely of revenue from exploration and production activities. The Company’s oil is sold primarily to marketers, gatherers, and refiners. Natural gas is sold primarily to interstate and intrastate natural-gas pipelines, direct end-users, industrial users, local distribution companies, and natural-gas marketers. NGLs are sold primarily to direct end-users, refiners, and marketers. Payment is generally received from the customer in the month following delivery.Recognition:

ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” supersedes the revenue recognition requirements and industry-specific guidance under Revenue Recognition (Topic 605). Topic 606 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services. The Company adopted Topic 606 on May 1, 2018, using the modified retrospective method applied to contracts that were not completed as of January 1, 2018. Under the modified retrospective method, prior period financial positions and results will not be adjusted. The cumulative effect adjustment recognized in the opening balances included no significant changes as a result of this adoption. Although the Company does not expect 2018 net earnings to be materially impacted by revenue recognition timing changes, Topic 606 requires certain changes to the presentation of revenue and related expense beginning May 1, 2018. Refer to Note 10 – Revenue from Contracts with Customers for additional information.

The Company’s revenue is comprised of revenue from exploration and production activities as well as royalty revenue related to royalty interest agreement executed in February 2018. The Company’s oil is sold primarily to marketers, gatherers, and refiners. Natural gas is sold primarily to interstate and intrastate natural-gas pipelines, direct end-users, industrial users, local distribution companies, and natural-gas marketers. NGLs are sold primarily to direct end-users, refiners, and marketers. Payment is generally received from the customer in the month following delivery.

Contracts with customers have varying terms, including spot sales or month-to-month contracts, contracts with a finite term, and life-of-field contracts where all production from a well or group of wells is sold to one or more customers. The Company recognizes sales revenue for oil, natural gas, and NGLs based on the amount of each product sold to a customer when control transfers to the customer. Generally, control transfers at the time of delivery to the customer at a pipeline interconnect, the tailgate of a processing facility, or as a tanker lifting is completed. Revenue is measured based on the contract price, which may be index-based or fixed, and may include adjustments for market differentials and downstream costs incurred by the customer, including gathering, transportation, and fuel costs.

Revenue is recognized for the sale of the Company’s net share of production volumes. Sales on behalf of other working interest owners and royalty interest owners are not recognized as ~~revenues~~revenue.

(gi) Stock-Based Compensation:

Generally, all forms of stock-based compensation, including stock option grants, warrants, and restricted stock grants are measured at their fair value utilizing an option pricing model on the award’s grant date, based on the estimated number of awards that are ultimately expected to vest.

Under fair value recognition provisions, the Company recognizes equity–based compensation net of an estimated forfeiture rate and recognizes compensation cost only for those shares expected to vest over the requisite service period of the award.

The fair value of an option award is estimated on the date of grant using the Black–Scholes option valuation model. The Black–Scholes option valuation model requires the development of assumptions that are input into the model. These assumptions are the expected stock volatility, the risk–free interest rate, the option’s expected life, the dividend yield on the underlying stock and the expected forfeiture rate. Expected volatility is calculated based on the historical volatility of the Company’s common stock over the expected option life and other appropriate factors. Risk–free interest rates are calculated based on continuously compounded risk–free rates for the appropriate term. The dividend yield is assumed to be zero, as the Company has never paid or declared any cash dividends on its common stock and does not intend to pay dividends on the common stock in the foreseeable future. The expected forfeiture rate is estimated based on historical experience.

Determining the appropriate fair value model and calculating the fair value of equity–based payment awards requires the input of the subjective assumptions described above. The assumptions used in calculating the fair value of equity–based payment awards represent management’s best estimates, which involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and the Company uses different assumptions, the equity–based compensation expense could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rate and recognize expense only for those shares expected to vest. If the actual forfeiture rate is materially different from the Company’s estimate, the equity–based compensation expense could be significantly different from what the Company has recorded in the current period.

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The Company determines the fair value of the stock–based payments to non-employees as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of the equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either (1) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty’s performance is complete.

The expense resulting from stock-based compensation is recorded as general and administrative expenses in the consolidated statement of operations, depending on the nature of the services provided.

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(h) Income Taxes:

Income Tax Provision

OnThe ~~December 22,~~Company ~~2017,~~utilizes the ~~Tax~~asset ~~Cuts~~ and ~~Jobs~~liability ~~Act (“Tax~~method ~~Act”)~~in ~~was~~accounting for ~~signed~~income ~~into law~~taxes. ~~ASC~~Under ~~740~~this method, ~~Accounting~~deferred ~~for~~tax ~~Income~~assets ~~Taxes, requires~~and ~~companies~~liabilities toare ~~recognize~~recognized ~~the~~for ~~effects~~operating ofloss ~~changes~~and in tax ~~laws and rates~~credit oncarry-forwards ~~deferred tax assets~~ and ~~liabilities~~for ~~and~~ the ~~retroactive~~future ~~effects of~~tax ~~changes~~consequences inattributable ~~tax~~to differences ~~laws~~between in the ~~period~~financial instatement ~~which~~carrying ~~the~~amounts ~~new legislation~~of isexisting ~~enacted.~~assets ~~The~~and ~~Company’s~~liabilities ~~gross~~and ~~deferred~~their respective tax ~~assets were~~bases. ~~revalued~~Deferred ~~based~~tax onassets ~~the~~and ~~reduction~~liabilities inare ~~the~~measured ~~federal~~using ~~statutory~~enacted tax ~~rate~~ ~~from~~rates ~~35%~~expected to ~~21%.~~apply Ato ~~corresponding~~taxable ~~offset~~income ~~has~~in ~~been~~the ~~made~~year toin ~~the~~which ~~valuation~~those ~~allowance,~~temporary ~~and~~differences ~~any~~are ~~potential~~expected ~~other~~to ~~taxes~~be ~~arising~~recovered ~~due to~~or ~~the~~settled. ~~Tax~~The ~~Act~~effect ~~will~~on ~~result~~deferred intax ~~reductions~~assets toand ~~the~~liabilities ~~Company’s~~of ~~net~~a ~~operating~~change ~~loss~~in ~~carryforward~~tax ~~and~~rates ~~valuation~~is ~~allowance.~~recognized ~~The~~in ~~Company will~~the ~~continue~~results toof ~~analyze~~operations in the ~~Tax~~period ~~Act~~that toincludes ~~assess~~the ~~its~~enactment ~~full~~date. ~~effects~~A onvaluation allowance ~~the~~is ~~Company’s~~recorded ~~financial~~to ~~results,~~reduce ~~including~~the ~~disclosures,~~carrying ~~for the~~amounts ~~Company’s~~of ~~fiscal~~deferred ~~year~~tax ~~ending~~assets unless ~~April 30,~~it ~~2019,~~is ~~but~~more ~~the Company~~likely ~~does~~than not ~~expect~~that the ~~Tax~~value ~~Act~~of tosuch ~~have a material impact on~~assets ~~the~~will ~~Company’s~~be ~~consolidated financial statements~~realized.

Uncertain Tax Positions

The Company evaluates uncertain tax positions to recognize a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. Those tax positions failing to qualify for initial recognition are recognized in the first interim period in which they meet the more likely than not standard or are resolved through negotiation or litigation with the taxing authority, or upon expiration of the statute of limitations. De-recognition of a tax position that was previously recognized occurs when an entity subsequently determines that a tax position no longer meets the more likely than not threshold of being sustained.

Interpretation of taxation rules relating to net operating loss utilization in real estate transactions give rise to uncertain positions. In connection with the uncertain tax position, there were no interest or penalties recorded as the position is expected but the tax returns are not yet due.

The Company is subject to ongoing tax exposures, examinations and assessments in various jurisdictions. Accordingly, the Company may incur additional tax expense based upon the outcomes of such matters. In addition, when applicable, the Company will adjust tax expense to reflect the Company’s ongoing assessments of such matters, which require judgment and can materially increase or decrease its effective rate as well as impact operating results.

The number of years with open tax audits varies depending on the tax jurisdiction. The Company’s major taxing jurisdictions include the United States (including applicable states).

~~(i) Per Share Amounts:~~-12-

Basic net income (loss) per common share is computed by dividing net loss attributable to stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. For the six months ended October 31, 2018 and 2017, potentially dilutive securities were not included in the calculation of diluted net loss per share because to do so would be anti-dilutive.

The Company had the following common stock equivalents at October 31, 2018 and 2017:

	October 31, 2018	October 31, 2017
Stock Options	2,607,385	2,529,682
Stock Purchase Warrants	2,223,669	973,669
Total	4,831,054	3,503,351

(j) Recent Accounting Pronouncements:

In February 2016, the FASB issued ASU 2016-02, Leases, which aims to make leasing activities more transparent and comparable and requires substantially all leases be recognized by lessees on their balance sheet as a right-of-use asset and corresponding lease liability, including leases currently accounted for as operating leases. This ASU is effective for all interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted. The Company expects to adopt ASU 2016-02 beginning May 1, 2019 and is in the process of assessing the impact that this new guidance is expected to have on the Company’s financial statements and related disclosures.

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(k)	Per Share Amounts:

Basic net income (loss) per common share is computed by dividing net loss attributable to stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. For the nine months ended January 31, 2019 and 2018, potentially dilutive securities were not included in the calculation of diluted net loss per share because to do so would be anti-dilutive.

The Company had the following common stock equivalents at January 31, 2019 and 2018:

	January 31, 2019	January 31, 2018
Series A Preferred Shares	21,770,150	-
Stock Options	2,607,385	2,555,385
Stock Purchase Warrants	11,128,706	2,223,669
Total	35,506,241	4,779,054

(l)	Recent Accounting Pronouncements:

In September 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses. ASU 2016-13 was issued to provide more decision-useful information about the expected credit losses on financial instruments and changes the loss impairment methodology. ASU 2016-13 is effective for reporting periods beginning after December 15, 2019 using a modified retrospective adoption method. A prospective transition approach is required for debt securities for which an other-than-temporary impairment had been recognized before the effective date. The Company is currently assessing the impact this accounting standard will have on its financial statements and related disclosures.

The Company does not expect the adoption of any other recently issued accounting pronouncements to have a significant impact on its financial position, results of operations, or cash flows.

(k)	Subsequent Events:

The Company has evaluated all transactions through the date the consolidated financial statements were issued for subsequent event disclosure consideration.

5.	Oil and Gas Assets

The following table summarizes the activity of the oil and gas ~~assets~~ assets by project for the ~~six~~nine months ended ~~October~~January 31, ~~2018~~ 2019:

	Oklahoma	Texas	Other (1)	Total
Balance May 1, 2018	$3,779,414	$-	$100,000	$3,879,414
Additions	~~520~~688,~~006~~218	2,~~428~~430,~~960~~139	-	23,~~948~~118,~~966~~357
Depreciation, depletion and amortization	(~~146~~207,~~920~~700)	(28123,~~890~~883)	-	(~~175~~331,~~810~~583)
Balance October 31, 2018	$4,152,500	$2,400,070	$100,000	$6,652,570
Balance January 31, 2019	$4,259,932	$2,306,256	$100,000	$6,666,188

(1) Other property consists primarily of four used steam generators and related equipment that will be assigned to future projects. As of ~~October~~January 31, ~~2018~~2019, and April 30, 2018, management concluded that impairment was not necessary as all other assets were carried at salvage value.

Kern and Kay County Projects. On February 14, 2018, the Company entered into a Purchase and Exchange Agreement with Red Fork Resources (“Red Fork”), pursuant to which (i) the Company agreed to convey to Mountain View Resources, LLC, an affiliate of Red Fork, 100% of its -13.7% working interest in and to an area of mutual interest (“AMI”) in the Mountain View Project in Kern County, California, and (ii) Red Fork agreed to convey to the Company 64.7% of its 85% working interest in and to an AMI situated in Kay County, Oklahoma (the “Red Fork Exchange”). The fair value of the assets acquired was $108,333 as of the effective date of the agreement. Following the Red Fork Exchange, the Company and Red Fork each retained a 2% overriding royalty interest in the projects that they respectively conveyed. Under the terms of the Agreement, all revenues and costs, expenses, obligations and liabilities earned or incurred prior to January 1, 2018 (the “Effective Date”) shall be borne by the original owners of such working interests, and all of such costs, expenses, obligations and liabilities that occur subsequent to the effective date shall be borne by the new owners of such working interests.-

The acquisition of the additional concessions in Kay County, Oklahoma added additional prospect locations adjacent to the Company’s 106,000-acre concession in Osage County, Oklahoma. The similarity of the prospects in Kay and Kern County allows for the leverage of assets, infrastructure and technical expertise.

Oklahoma Properties. During the six months ended October 31, 2018, the Company recorded additions related to development costs incurred of approximately $506,000 for proven oil and gas assets.

Texas Properties. Effective on September 24, 2018, the Company acquired a 66.67% membership interest in LBE Partners from ICO in exchange for 300,000 restricted shares of the Company’s common stock. LBE Partners has varying working interest in multiple oil and gas producing wells located in Texas. The Company recorded additions of approximately $2,429,000 for oil and gas assets related to this acquisition.

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Kern and Kay County Projects. On February 14, 2018, the Company entered into a Purchase and Exchange Agreement with Red Fork Resources (“Red Fork”), pursuant to which (i) the Company agreed to convey to Mountain View Resources, LLC, an affiliate of Red Fork, 100% of its 13.7% working interest in and to an area of mutual interest (“AMI”) in the Mountain View Project in Kern County, California, and (ii) Red Fork agreed to convey to the Company 64.7% of its 85% working interest in and to an AMI situated in Kay County, Oklahoma (the “Red Fork Exchange”). The fair value of the assets acquired was $108,333 as of the effective date of the agreement. Following the Red Fork Exchange, the Company and Red Fork each retained a 2% overriding royalty interest in the projects that they respectively conveyed. Under the terms of the Purchase and Exchange Agreement, all revenue and costs, expense, obligations and liabilities earned or incurred prior to January 1, 2018 (the “Effective Date”) shall be borne by the original owners of such working interests, and all of such revenue and costs, expense, obligations and liabilities that occur subsequent to the effective date shall be borne by the new owners of such working interests.

Oklahoma Properties. During the nine months ended January 31, 2019, the Company recorded additions related to development costs incurred of approximately $688,000 for proven oil and gas assets.

Texas Properties. Effective on September 24, 2018, the Company acquired a 66.67% membership interest in LBE Partners from ICO in exchange for 300,000 restricted shares of the Company’s common stock. LBE Partners has varying working interest in multiple oil and gas producing wells located in Texas. The Company recorded additions of approximately $2,430,000 for oil and gas assets related to this acquisition.

6.	Asset Retirement Obligations

The total future asset retirement obligations were estimated based on on the Company’s ownership interest in all wells and facilities, the estimated legal obligations required to retire, dismantle, abandon and reclaim the wells and facilities and the ~~estimated~~ estimated timing of such payments. The Company estimated the present value of its asset retirement obligations at both ~~October~~ January 31, ~~2018~~2019 and April 30, 2018 based on a future undiscounted liability of $1,~~119~~098,~~685~~706 and $728,091, respectively. These costs are expected to be incurred within 1 to 24 years. A credit-adjusted risk-free discount rate of 10% and an inflation rate of 2% were used to calculate the present value.

Changes to the asset retirement obligations were as follows:

	Six Months Ended October 31, 2018	Six Months Ended October 31, 2017
	Nine Months Ended January 31, 2019	Nine Months Ended January 31, 2018
Balance, beginning of period	$660,139	$558,696
Additions	359,950	716,~~500~~875
Change in estimates	16(5,~~213~~786)	-55,098
Disposals	-	-
Accretion	1113,~~107~~781	56,~~975~~535
	1,047,409	572,171
	1,028,084	637,204
Less: Current portion for cash flows expected to be incurred within one year	(~~719~~720,~~393~~535)	(406,403)
Long-term portion, end of period	$~~328~~307,~~016~~549	$~~165~~230,~~768~~801

During the ~~six~~nine months ended ~~October~~January 31, ~~2018~~2019 and ~~2017~~2018, the Company recorded accretion expense of $1113,~~107~~781 and $56,~~975~~535, respectively.

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Expected timing of asset retirement obligations:

Year Ending April 30,
2019	$~~719~~720,~~393~~535
2020	-
2021	-
2022	-
2023	-
Thereafter	~~400~~378,~~292~~171
Subtotal	1,~~119~~098,~~685~~706
Effect of discount	(7270,~~276~~622)
Total	$1,~~047~~028,~~409~~084

7.	Related Party Transactions

Series A Financing

On January 31, 2019, the Company entered into a Securities Purchase Agreement with Scot Cohen, the Company’s Executive Chairman, pursuant to which Mr. Cohen purchased $737,616 of units in connection with the Series A Financing (the “Cohen Investment”). In addition, Mr. Cohen also converted $300,000 and $18,853 of debt and accrued interest, respectively, owed under the Cohen Loan Agreement, as set forth below, into units pursuant to a Debt Conversion Agreement (the “Cohen Debt Conversion”). As a result of the Cohen Investment and the Cohen Debt Conversion, the Company issued Mr. Cohen an aggregate of 51,881 shares of Series A Preferred and warrants to purchase 2,594,040 shares of the Company’s common stock. For more information regarding this transaction, see Note 1.

Acquisition of Membership Interest in LBE Partners

On October 2, 2018, the Company, ICO and LBE Partners entered into the LBE Assignment Agreement and the LBE Purchase Agreement, pursuant to which, effective September 24, 2018, the Company purchased a 66.67% membership interest in LBE Partners from ICO in exchange for 300,000 restricted shares of the Company’s common stock to ICO. Both ICO and LBE Partners are managed by ~~Scot Cohen, the~~Mr. ~~Company’s Executive Chairman~~Cohen. For more information regarding this transaction, see Note 1.

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Related Party Loan

On ~~June~~ June 18, 2018, Bandolier entered into a loan agreement with Scot Cohen (the “Cohen Loan Agreement”), pursuant to which Mr. Cohen loaned the Company $300,000 at a 10% annual interest rate, due on September 30, 2018. The purpose of the Cohen Loan Agreement was to provide the Company with short-term financing in connection with the Company’s drilling program in Osage County, Oklahoma. As On December 17, 2018, the maturity date of ~~October~~the 31loan was extended from September 30, 2018 to March 31, 2019. On January 31, 2019, the Company and Mr. Cohen entered into a Debt Conversion Agreement, pursuant to which Mr. Cohen agreed to convert all outstanding debt and accrued interest owed under the Cohen Loan Agreement into ~~was~~units, ~~$11~~consisting of an aggregate of 15,~~083. On~~000 ~~December~~shares 17of Series A Preferred and warrants to purchase 750,000 ~~2018~~shares of Company common stock, sold and issued in the ~~maturity~~Series ~~date~~A ofFinancing. As a result, the ~~loan~~Cohen Loan Agreement was ~~extended~~terminated ~~from~~and ~~September~~deemed 30satisfied in full. For more information regarding the debt conversion, ~~2018~~see toNote ~~March~~1. Upon 31conversion of the note, the Company recorded a loss on debt ~~2019~~extinguishment totaling $90,916.

June 2017 $2.0 Million Secured Note Financing

Scot Cohen owns or controls 31.25% of Funding Corp. I, the former holder of the senior secured promissory note in the principal amount of $2.0 million (the “June 2017 Secured Note”) issued by the Company on June 13, 2017. The June 2017 Secured Note ~~accrues~~ accrued interest at a rate of 10% per annum and ~~matures~~was scheduled to mature on June 30, 2020. The June 2017 Secured Note is presented as “Note payable – – related party, net of debt discount” on the ~~consolidated~~ consolidated balance sheets.

On May 17, 2018, the parties executed an extension of the due date of the first interest payment from June 1, 2018 to December 31, 2018. As consideration for the interest payment extension, the ~~Company~~ Company agreed to pay Funding Corp. I an additional 10% of the interest due on June 1, 2018 on December 31, 2018. The Company accrued an additional $19,160 of interest ~~expenses~~expense related to this extension. On December 17, 2018, the parties executed a second extension of the due date of the first interest payment from December 31, 2018 to March 31, 2019.

In connection with the issuance of the June 2017 Secured Note, the Company issued to Funding Corp. I warrants to purchase 840,336 shares of the Company’s common stock (the “June 2017 Warrant”). Upon issuance of the June 2017 Secured Note, the Company valued the June 2017 Warrant using the Black-~~Scholes Option Pricing model and accounted for it using the relative fair value of $952,056 as debt discount on the consolidated balance sheet.~~15-

AsTable ~~additional consideration for the purchase~~ of the June 2017 Secured Note, the Company issued to Funding Corp. I an overriding royalty interest equal to 2% in all production from the Company’s interest in the Company’s concessions located in Osage County, Oklahoma, originally held by Spyglass, valued at $250,000, which was recorded as contributed capital and debt discount on the consolidated balance sheet.Contents

On ~~The~~January ~~debt~~31, ~~discount~~2019, ~~is amortized over~~ the ~~earlier~~Company ofand ~~(i)~~Funding ~~the~~Corp. ~~term~~entered ofinto a ~~the~~Secured ~~debt~~Debt orConversion ~~(ii)~~Agreement, ~~conversion~~pursuant ofto ~~the~~which ~~debt,~~Funding ~~using the effective~~Corp. ~~interest~~agreed ~~method.~~to ~~The~~convert ~~amortization~~the ofoutstanding ~~debt~~balance ~~discount~~due isunder ~~included~~the asJune a2017 ~~component~~Secured ofNote, ~~interest~~amounting ~~expense~~to inapproximately ~~the~~$2.3 ~~consolidated~~million, ~~statements~~into of116,503 ~~operations.~~shares ~~There~~of ~~was~~Series ~~unamortized~~A ~~debt~~Preferred. ~~discount~~As ofa ~~$843,892~~result as of ~~October~~ ~~31, 2018. During~~ the ~~six~~Secured ~~months~~Debt Exchange, ~~ended~~all ~~October 31~~indebtedness, ~~2018~~liabilities and other obligations ~~2017,~~arising under the ~~Company~~June ~~recorded~~2017 ~~amortization~~Secured ofNote ~~debt~~were ~~discount~~cancelled ~~totaling $150,296~~ and ~~$84,616,~~deemed satisfied ~~respectively~~in full.

In Asconnection with the issuance of ~~October~~the 31June 2017 Secured Note, ~~2018~~the Company ~~and~~issued ~~April~~to ~~30,~~Funding ~~2018~~Corp. warrants to purchase 840,336 shares of the ~~outstanding~~Company’s ~~balance,~~common stock (the “June 2017 Warrant”). Upon ~~net~~issuance of ~~debt~~the ~~discount,~~June ~~was~~2017 $1Secured Note,~~156,108~~ the Company valued the June 2017 Warrant using the Black-Scholes Option Pricing model and accounted for it using the relative fair value of $1952,~~005,811,~~056 ~~respectively~~as debt discount on the consolidated balance sheet. On January 31, ~~and~~2019, ~~accrued~~as ~~interest~~additional onconsideration for the conversion of the amounts due under the June 2017 Secured Note, ~~due~~the Company agreed to ~~related~~(i) ~~party~~reduce ~~was~~the exercise price of the June 2017 Warrant from $~~274~~2.38 per share to $0.50 per share,~~887~~ and ~~$174~~(ii) to extend the expiration date of the June 2017 Warrant to January 31,~~065,~~ ~~respectively~~2024.

As additional consideration for the purchase of the June 2017 Secured Note, the Company issued to Funding Corp. an overriding royalty interest equal to 2% in all production from the Company’s interest in the Company’s concessions located in Osage County, Oklahoma, originally held by Spyglass, valued at $250,000, which was recorded as contributed capital, since no repayment was required, and debt discount on the consolidated balance sheet.

The debt discount is amortized over the earlier of (i) the term of the debt or (ii) conversion of the debt, using the effective interest method. The amortization of debt discount is included as a component of interest expense in the consolidated statements of operations. There was unamortized debt discount of $0 as of January 31, 2019. During the nine months ended January 31, 2019 and 2018, the Company recorded amortization of debt discount totaling $994,189 and $144,749, respectively.

As of January 31, 2019 and April 30, 2018, the outstanding balance, net of debt discount, was $0 and $1,005,811, respectively, and accrued interest on the June 2017 Secured Note due to related party was $0 and $174,065, respectively. As a result of the Secured Debt Exchange, the June 2017 Secured Note was terminated as of January 31, 2019.

November 2017 $2.5 Million Secured Note Financing

Scot Cohen owns or controls 41.20% of Funding Corp. II, the ~~holder~~former holder of the senior secured promissory note in the principal amount of $2.5 million (the “November 2017 Secured Note”) issued by the Company on November 6, 2017. The November 2017 Secured Note ~~accrues~~ accrued interest at a rate of 10% per annum and ~~matures~~was scheduled to mature on June 30, 2020. The November 2017 Secured Note is presented as “Note payable – related party, net of debt discount” on the consolidated balance sheets.

On May 17, 2018, the parties executed an extension of the due date of the first interest payment from June 1, 2018 to December 31, 2018. As consideration for the interest payment extension, the ~~Company~~ Company agreed to pay Funding Corp. II an additional 10% of the ~~interest~~ interest due on June 1, 2018 on December 31, 2018. The Company ~~accrued~~ accrued an additional $14,247 of interest ~~expenses~~expense related to this extension. On December 17, 2018, the parties executed a second extension of the due date of the first interest payment from December 31, 2018 to March 31, 2019.

~~-14-~~ On January 31, 2019, the Company and Funding Corp. II entered into a Secured Debt Conversion Agreement, pursuant to which Funding Corp. II agreed to convert the outstanding balance due under the November 2017 Secured Note, amounting to approximately $2.8 million, into 140,799 shares of Series A Preferred stock. As a result of the Secured Debt Exchange, all indebtedness, liabilities and other obligations arising under the November 2017 Secured Note were cancelled and deemed satisfied in full.

In connection with the issuance of the November 2017 Secured Note, the Company issued to Funding Corp. II warrants to purchase 1.25 million shares of the Company’s common stock (the “November 2017 Warrant”). Upon issuance of the November 2017 Note, the Company valued the November 2017 Warrant using the Black-Scholes Option Pricing model and accounted for it using the relative fair value of $1,051,171 as debt discount on the consolidated balance sheet. In relation to the financing, Scot Cohen paid $250,000 for an overriding royalty interest from Funding Corp. (as discussed below), which was recorded as additional debt discount on the consolidated balance sheet. On January 31, 2019, as additional consideration for the conversion of the amounts due under the November 2017 Secured Note, the Company agreed to (i) reduce the exercise price of the November 2017 Warrant from $2.00 per share to $0.50 per share, and (ii) extend the expiration date of the November 2017 Warrant to January 31, 2024.

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As Inadditional ~~connection~~consideration ~~with~~for the ~~issuance~~purchase of the November 2017 Secured Note, the Company issued to Funding Corp. II ~~warrants~~an overriding royalty interest equal to ~~purchase~~2% ~~1.25 million~~in ~~shares~~all ofproduction ~~the~~from the Company’s ~~common~~interest ~~stock~~in (the ~~“November~~ ~~2017 Warrant”).~~Company’s ~~Upon~~concessions ~~issuance~~located ofin ~~the~~Osage ~~November~~County, ~~2017 Note~~Oklahoma, ~~the~~originally ~~Company~~held ~~valued~~by ~~the~~Spyglass ~~November 2017~~(the ~~Warrant~~“Existing Osage ~~using~~County ~~the~~Override”) ~~Black-Scholes Option Pricing model and accounted~~then ~~for~~transferred itto ~~using~~Funding ~~the~~Corp. ~~relative fair value of $1,051,171~~ as ~~debt~~inducement ~~discount on~~for the ~~consolidated~~June ~~balance~~2017 Secured ~~sheet~~Note. InThe ~~relation~~Existing toOsage ~~the~~County ~~financing, Scot~~Override ~~Cohen~~was ~~paid~~then ~~$250,000~~acquired by ~~for~~the anCompany ~~overriding royalty interest~~ from ~~Funding~~ ~~Corp~~Mr. ICohen. ~~(as~~As ~~discussed~~noted ~~below)~~above, ~~which~~the override was accounted ~~recorded~~for as ~~additional~~ a debt discount onand amortized over the ~~consolidated~~term ~~balance~~of the ~~sheet~~debt.

The Asdebt ~~additional~~discount ~~consideration~~is ~~for~~amortized over the ~~purchase~~earlier of (i) the ~~November~~term ~~2017~~of the ~~Secured~~debt ~~Note,~~or ~~the~~(ii) ~~Company~~conversion ~~issued~~of tothe ~~Funding~~debt, ~~Corp.~~using IIthe aneffective ~~overriding~~interest ~~royalty~~method. ~~interest~~The ~~equal~~amortization toof 2%debt indiscount ~~all~~is ~~production~~included ~~from~~as ~~the~~a ~~Company’s~~component of interest expense in the ~~Company’s~~consolidated ~~concessions~~statements ~~located~~of inoperations. ~~Osage~~There ~~County,~~was ~~Oklahoma,~~unamortized ~~originally~~debt ~~held~~discount byof ~~Spyglass~~$0 ~~(the~~as of ~~“Existing~~January ~~Osage~~31, ~~County Override”) then transferred to Funding Corp~~2019. IDuring ~~as inducement for~~ the ~~June~~nine ~~2017 Secured~~months ~~Note.~~ended ~~The~~January ~~Existing Osage County Override was then acquired~~31, by2019 ~~the~~and ~~Company from Scot Cohen. As noted above~~2018, the ~~override~~Company ~~was accounted~~recorded ~~for~~amortization asof a debt discount totaling $1,145,061 and ~~amortized~~$79,251, ~~over the term of the debt~~respectively.

~~The~~As ~~debt discount is amortized over the earlier~~ of ~~(i) the term of~~ ~~the~~January ~~debt~~31, or2019 ~~(ii)~~and ~~conversion~~April of30, ~~the debt~~2018, ~~using~~ the ~~effective interest~~outstanding ~~method.~~balance, ~~The amortization~~ net of debt discount, iswas ~~included~~$0 asand ~~a component~~$1,354,93, ofrespectively, and accrued interest ~~expense~~on in the ~~consolidated~~November ~~statements~~2017 ~~of operations.~~Secured ~~There~~Note ~~was~~due ~~unamortized~~to ~~debt~~related ~~discount~~party of was $~~964,852~~0 asand ~~of October 31~~$120,548, ~~2018~~respectively. ~~During~~As ~~the~~a ~~six~~result ~~months~~of ~~ended~~the ~~October~~Secured ~~31, 2018~~Debt ~~and 2017~~Exchange, the ~~Company~~November ~~recorded~~2017 ~~amortization~~Secured ofNote ~~debt~~was ~~discount totaling~~terminated ~~$180,210~~as ~~and~~of January $031, ~~respectively~~2019.

As8. ofDerivative October 31, 2018 and April 30, 2018, the outstanding balance, net of debt discount, was $1,535,148 and $1,354,938, respectively, and accrued interest on the November 2017 Secured Note due to related party was $246,575 and $120,548, respectively.Liabilities

As discussed above in Note 1, on January 31, 2019, the Company sold and issued an aggregate of 178,101 units, for an aggregate purchase price of $3,562,015, to certain accredited investors and to certain debtholders. The units sold and issued in the Offering included five-year warrants to purchase 8,905,037 shares of Company common stock, at an exercise price of $0.50 ~~Stockholders’~~per ~~Equity~~share.

The AsCompany ofidentified ~~October~~certain ~~31,~~features ~~2018~~embedded ~~and~~in ~~April~~the ~~30,~~warrants requiring ~~2018,~~ the Company ~~had 5,000,000~~to ~~shares~~classify ofthe ~~preferred~~warrants ~~stock,~~as ~~par~~a ~~value $0.00001 per share,~~derivative ~~authorized.~~liability; ~~As of October 31~~specifically, ~~2018,~~the ~~and~~warrants ~~April~~contain ~~30,~~a ~~2018, the Company~~fundamental ~~had~~transaction ~~29,500~~provision ~~shares~~that ofpermits ~~Series~~their Bsettlement ~~Preferred~~in ~~Stock,~~cash ~~par~~at fair value ~~$0.00001 per~~of ~~share~~the ~~(“Series~~remaining ~~B Preferred”),~~unexercised ~~authorized. No~~portion ~~Series~~of Bthis ~~Preferred~~Warrant ~~shares~~at ~~are~~the option ~~currently~~of ~~issued~~the orholder ~~outstanding, and~~upon nothe ~~other~~occurrence ~~series~~ of ~~preferred~~a ~~stock~~change ~~has been~~in ~~designated~~control.

The Asfair value of ~~October~~the ~~31,~~derivative ~~2018~~feature ~~and~~of ~~April~~the ~~30,~~warrants ~~2018,~~on the ~~Company~~date ~~had~~of ~~150,000,000~~issuance ~~shares~~was ofcalculated ~~common~~using ~~stock~~a ~~authorized.~~binomial option model valued with the following weighted average assumptions:

In May 2018, the Company granted a total of 260,000 shares of restricted common stock to Scot Cohen and Steven Brunner in exchange for a reduction in cash compensation with a fair value of approximately $325,000, based on the market price of the Company’s common stock on the grant date. The shares vest monthly in equal installments over a 12-month period. During the six months ended October 31, 2018, the Company recorded stock-based compensation of $135,416 related to these grants.

	January 31, 2019
Risk free interest rate	2.43%
Dividend yield	0.00%
Expected volatility	141.62%
Remaining term (years)	5.0

As of ~~discussed~~January in31, ~~Note 1~~2019, onthe ~~October~~derivative 2,liability ~~2018~~of the warrants was $4,130,451. ~~pursuant~~In toaddition, for the ~~LBE Purchase~~nine ~~Agreement~~months ended January 31, 2019, the Company ~~issued~~recorded ~~300~~$508,~~000~~931 ~~shares~~as ofadditional ~~restricted~~interest expense ~~common~~on ~~stock~~the tostatement ~~ICO~~of inoperations ~~exchange~~ for athe ~~66.67%~~portion ~~interest~~of inthe ~~LBE~~fair value of ~~Partners~~the warrant that exceeded face value of the Series A Preferred shares sold.

As discussed in Note 10, on October 4, 2018, the Company settled the dispute with its former landlord in exchange for the issuance of 68,807 shares of Company common stock satisfying, the $75,000 liability related to the lease.-17-

There were 17,938,540 and 17,309,733 shares of Company common stock issued and outstanding as of October 31, 2018 and April 30, 2018, respectively.

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9.	Stockholders’ Equity

As of January 31, 2019 and April 30, 2018, the Company had 5,000,000 shares of preferred stock, par value $0.00001 per share, authorized. As of January 31, 2019 and April 30, 2018, the Company had 29,500 shares of Series B Preferred Stock, par value $0.00001 per share (“Series B Preferred”), authorized, and no Series B Preferred issued or outstanding. On January 31, 2019, the Company filed the Series A COD with the Secretary of State with the State of Delaware, designating 500,000 shares of the Company’s preferred stock as Series A Preferred. As of January 31, 2019, there were 435,403 shares of Series A Preferred issued and outstanding.

On January 31, 2019, the Company sold and issued 178,101 shares of Series A Preferred to the New Investors and the Debt Holders in connection with the Series A Financing. In addition, the Company issued an aggregate of 257,302 shares of Series A Preferred to Funding Corp. and Funding Corp. II in connection with the Senior Secured Debt Exchange. See Note 1 for additional information regarding the Series A Financing and the Senior Secured Debt Exchange.

As of January 31, 2019 and April 30, 2018, the Company had 150,000,000 shares of common stock authorized.

In May 2018, the Company granted a total of 260,000 shares of restricted common stock to Scot Cohen and Steven Brunner in exchange for a reduction in cash compensation with a fair value of approximately $325,000, based on the market price of the Company’s common stock on the grant date. The shares vest monthly in equal installments over a 12-month period. During the nine months ended January 31, 2019, the Company recorded stock-based compensation of $216,666 related to these grants.

As discussed in Note 1, on October 2, 2018, pursuant to the LBE Purchase Agreement, the Company issued 300,000 shares of restricted common stock to ICO in exchange for a 66.67% interest in LBE Partners.

As discussed in Note 11, on October 4, 2018, the Company settled the dispute with its former landlord in exchange for the issuance of 68,807 shares of Company common stock, satisfying the $75,000 liability related to the lease.

There were 17,938,540 and 17,309,733 shares of Company common stock issued and outstanding as of January 31, 2019 and April 30, 2018, respectively.

Stock Options

~~The~~During the nine months ended January 31, 2019, the Company granted options to purchase 52,000 shares of common stock at an exercise price of $1.50 per share to consultants. These options vest over a 24-month period and expire ten years from grant date. The assumptions used for the fair value of the options granted during the ~~six~~nine months ended ~~October~~January 31, ~~2018~~2019 were as follows:

	October 31, 2018
	January 31, 2019
Exercise price	$1.30 – 1.50
Expected dividends	0%
Expected volatility	~~155~~153.9710 - 158.73%
Risk free interest rate	2.08 – 23.9615
Expected life of grants	1 – 10 years

The following table summarizes information about the changes of ~~options~~ options for the period from April 30, 2018 to ~~October~~January 31, ~~2018~~ 2019, and options outstanding and exercisable at ~~October~~January 31, ~~2018~~2019:

	Options	Weighted Average Exercise Prices
Outstanding April 30, 2018	2,555,385	$2.14
Granted	52,000	1.50
Exercised	-
Forfeited/Cancelled	-
Outstanding – October 31, 2018	2,607,385	$2.13
Outstanding – January 31, 2019	2,607,385	$2.13
Exercisable – October 31, 2018	2,469,593	$2.17
Exercisable – January 31, 2019	2,520,289	$2.17
Outstanding – Aggregate Intrinsic Value		$-
Exercisable – Aggregate Intrinsic Value		$-

~~The following table summarizes information about the options outstanding and exercisable at October 31, 2018:~~-18-

	Options Outstanding		Options Exercisable
Exercise Price	Options	Weighted Avg. Life Remaining(years)	Options
$1.30 – 44.00	2,607,385	0.05 to 9.75	2,469,593

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The ~~During~~following ~~the~~table ~~six~~summarizes ~~months~~information ~~ended~~about ~~October 31, 2018 and 2017,~~ the ~~Company~~options ~~expensed $199,400 and $179,366, respectively, related to the vesting of~~ outstanding ~~options to general~~ and ~~administrative expense~~exercisable ~~for~~at ~~stock-based~~January ~~compensation~~31, ~~pursuant to employment and consulting agreements.~~ 2019:

As of October 31, 2018, the Company had approximately $51,892 in unrecognized stock-based compensation expense related to unvested options, which will be amortized over a weighted average exercise period of approximately three years.

	Options Outstanding
Exercise Price	Options	Weighted Avg. Life Remaining (years)	Options Exercisable
$1.30 – 44.00	2,607,385	0.05 to 9.50	2,535,864

During the nine months ended January 31, 2019 and 2018, the Company expensed $197,117 and $811,123, respectively, related to the vesting of outstanding options to general and administrative expense for stock-based compensation pursuant to employment and consulting agreements.

As of January 31, 2019, the Company had approximately $50,244 in unrecognized stock-based compensation expense related to unvested options, which will be amortized over a weighted average exercise period of approximately three years.

Warrants

As discussed above, on January 31, 2019, the Company sold and issued an aggregate of 178,101 units to certain accredited investors and to certain debtholders. The units sold and issued in the Offering included five-year warrants to purchase 8,905,037 shares of Company common stock, at an exercise price of $0.50 per share.

The fair values of the 840,336 June 2017 Warrants granted in conjunction with the June 2017 Secured Note Financing and the 1.25 million November 2017 Warrants granted in connection with the November 2017 Secured Note Financing (as discussed in Note 7) were estimated on the date of grant using the Black-Scholes option-pricing model.

The following is a summary of the Company’s warrant activity:

	Number of Warrants	Weighted Average Exercise Price	Weighted Average Life Remaining (Years)
Outstanding and exercisable – April 30, 2018	2,223,669	$5.02	2.57
Forfeited	-	-	-
Granted	-8,905,037	-0.50	-5.0
Outstanding and exercisable – October 31, 2018	2,223,669	$5.02	1.83
Outstanding and exercisable – January 31, 2019	11,128,706	$1.09	4.34

The aggregate intrinsic value of the outstanding warrants was $05,497,687 at January 31, 2019.

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9. Revenue from Contracts with Customers

Change in Accounting Policy. The Company adopted ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” on May 1, 2018, using the modified retrospective method applied to contracts that were not completed as of May 1, 2018. Refer to Note 4 –Significant Accounting Policies for additional information.

Exploration and Production. There were no significant changes to the timing or valuation of revenue recognized for sales of production from exploration and production activities.

~~Disaggregation of Revenue from Contracts with Customers. The following table disaggregates revenue by significant product type for the six months ended October 31, 2018:~~-19-

	For the Three Months Ended October 31, 2018	For the Six Months Ended October 31, 2018
Oil sales	$397,090	$969,791
Natural gas sales	13,342	14,706
Total revenue from customers	$410,432	$984,497

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~~There~~ ~~were~~Disaggregation noof ~~significant~~Revenue ~~contract~~from ~~liabilities~~Contracts orwith ~~transaction~~Customers. ~~price~~The ~~allocations~~following totable ~~any~~disaggregates ~~remaining~~revenue ~~performance~~by ~~obligations~~significant asproduct ~~of October~~type ~~31,~~for ~~2018~~the ornine ~~April~~months 30ended January 31, ~~2018.~~2019:

10. Contingency and Contractual Obligations

	For the Three Months Ended January 31, 2019	For the Nine Months Ended January 31, 2019
Oil sales	$309,381	$1,279,172
Natural gas sales	14,734	29,440
Royalty revenue	15,871	15,871
Total revenue from customers	$339,986	$1,324,483

There were no significant contract liabilities or transaction price allocations to any remaining performance obligations as of January 31, 2019 or April 30, 2018.

11.	Contingency and Contractual Obligations

Pending Litigation

(a) In January 2010, the Company experienced a flood in its Calgary office premises as a result of a broken water pipe. There was significant damage to the premises, rendering them unusable until the landlord had completed remediation. Pursuant to the lease contract, the Company asserted that rent should be abated during the remediation process and accordingly, the Company did not pay any rent after December 2009. During the remediation process, the Company engaged an independent environmental testing company to test for air quality and for the existence of other potentially hazardous conditions. The testing revealed the existence of potentially hazardous mold and the consultant provided specific written instructions for the effective remediation of the premises. During the remediation process, the landlord did not follow the consultant’s instructions and correct the potentially hazardous mold situation, and subsequently in June 2010 gave notice and declared the premises to be ready for occupancy. The Company re-engaged the consultant to re-test the premises and the testing results again revealed the presence of potentially hazardous mold. The Company determined that the premises were not fit for re-occupancy and considered the landlord to be in default of the lease. The landlord subsequently terminated the lease.

On January 30, 2014, the landlord filed a Statement of Claim ~~against~~ against the Company for rental arrears in the amount aggregating ~~CAD~~ CAD $759,000 (approximately USD $~~578~~574,000 as of ~~October~~January 31, ~~2018~~2019). ~~The~~ The Company filed a defense and on October 20, 2014, it filed a ~~summary~~ summary judgment application stating that the landlord’s claim is barred, as it was commenced outside the two-year statute of of limitation period under the Alberta Limitations Act. The ~~landlord~~ landlord subsequently filed a cross-application to amend its Statement of Claim to add a claim for loss of prospective rent in an amount of CAD $665,000 (approximately USD $~~507~~503,000 as of ~~October~~ January 31, ~~2018~~2019). The applications were heard on June 25, 2015 and the court ~~allowed~~ allowed both the Company’s summary judgment application and ~~the~~ the landlord’s amendment application. Both of these orders ~~were~~ were appealed though two levels of the Alberta courts and the ~~appeals~~ appeals were dismissed at both levels. On October 4, 2018, the ~~Company~~ Company settled the dispute with the landlord in exchange for the ~~issuance~~ issuance of 68,807 shares of Company common stock, satisfying the $75,000 liability related to the lease.

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(b) In September 2013, the Company was notified by the Railroad Commission of Texas (the “Railroad Commission”) that the Company was not in compliance with regulations promulgated by the Railroad Commission. The Company was therefore deemed to have lost its corporate privileges within the State of Texas and as a result, all wells within the state would have to be plugged. The Railroad Commission therefore collected $25,000 from the Company, which was originally deposited with the Railroad Commission, to cover a portion of the estimated costs of $88,960 to plug the wells. In addition to the above, the Railroad Commission also reserved its right to separately seek any remedies against the Company resulting from its noncompliance.

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(c) On August 11, 2014, Martha Donelson and John Friend amended their complaint in an existing lawsuit by filing a class action complaint styled: Martha Donelson and John Friend, et al. v. United States of America, Department of the Interior, Bureau of Indian Affairs and Devon Energy Production, LP, et al., Case No. 14-CV-316-JHP-TLW, United States District Court for the Northern District of Oklahoma (the “Proceeding”). The plaintiffs added as defendants twenty-seven (27) specifically named operators, including Spyglass, as well as all Osage County lessees and operators who have obtained a concession agreement, lease or drilling permit approved by the Bureau of Indian Affairs (“BIA”) in Osage County allegedly in violation of National Environmental Policy Act (“NEPA”). Plaintiffs seek a declaratory judgment that the BIA improperly approved oil and gas leases, concession agreements and drilling permits prior to August 12, 2014, without satisfying the BIA’s obligations under federal regulations or NEPA, and seek a determination that such oil and gas leases, concession agreements and drilling permits are void ab initio. Plaintiffs are seeking damages against the defendants for alleged nuisance, trespass, negligence and unjust enrichment. The potential consequences of such complaint could jeopardize the corresponding leases.

On October 7, 2014, Spyglass, along with other defendants, filed a Motion to Dismiss the August 11, 2014 Amended Complaint on various procedural and legal grounds. Following the significant briefing, the Court, on March 31, 2016, granted the Motion to Dismiss as to all defendants and entered a judgment in favor of the defendants against the plaintiffs. On April 14, 2016, Spyglass with the other defendants, filed a Motion seeking its attorneys’ fees and costs. The motion remains pending. On April 28, 2016, the Plaintiffs filed three motions: a Motion to Amend or Alter the Judgment; a Motion to Amend the Complaint; and a Motion to Vacate Order. On November 23, 2016, the Court denied all three of Plaintiffs’ motions. On December 6, 2016, the Plaintiffs filed a Notice of Appeal to the Tenth Circuit Court of Appeals. That appeal is pending as of the filing date of these financial statements. There is no specific timeline by which the Court of Appeals must render a ruling. Spyglass intends to continue to vigorously defend its interest in this matter.

(d) MegaWest Energy Missouri Corp. (“MegaWest Missouri”), a wholly owned subsidiary of the Company, is involved in two cases related to oil leases in West Central, Missouri. The first case (James Long and Jodeane Long v. MegaWest Energy Missouri and Petro River Oil Corp., case number 13B4-CV00019) is a case for unlawful detainer, pursuant to which the plaintiffs contend that MegaWest Missouri oil and gas lease has expired and MegaWest Missouri is unlawfully possessing the plaintiffs’ real property by asserting that the leases remain in effect. The case was originally filed in Vernon County, Missouri on September 20, 2013. MegaWest Missouri filed an Answer and Counterclaims on November 26, 2013 and the plaintiffs filed a motion to dismiss the counterclaims. MegaWest Missouri filed a motion for Change of Judge and Change of Venue and the case was transferred to Barton County. The court granted the motion to dismiss the counterclaims on February 3, 2014. As to the other allegations in the complaint, the matter is still pending.

The Company is from time to time involved in legal proceedings in the ordinary course of business. It does not believe that any of these claims and proceedings against it is likely to have, individually or in the aggregate, a material adverse effect on its financial condition or results of operations.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Except as otherwise indicated by the context, references in this ~~Quarterly~~ Quarterly Report to “we,” “us,” “our,” or the “Company” are to the consolidated businesses of Petro River Oil Corp. and its wholly-owned direct and indirect subsidiaries and majority-owned subsidiaries, except that references to “our common stock” or “our capital stock” or similar terms refer to the common stock, par value $0.00001 per share (“~~common~~Common ~~stock~~Stock”), of Petro River Oil Corp., a Delaware corporation (the “Company”).

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide information that is supplemental to, and should be read together with, the Company’s consolidated financial statements and the accompanying notes contained in this Quarterly Report on Form 10-Q (the “Quarterly Report”). Information in this Item 2 is intended to assist the reader in obtaining an understanding of the consolidated financial statements, the changes in certain key items in those financial statements from quarter to quarter, the primary factors that accounted for those changes, and any known trends or uncertainties that the Company is aware of that may have a material effect on the Company’s future performance, as well as how certain accounting principles affect the consolidated financial statements. This includes discussion of (i) Liquidity, (ii) Capital Resources, (iii) Results of Operations, and (iv) Off-Balance Sheet Arrangements, and any other information that would be necessary to an understanding of the Company’s financial condition, changes in financial condition and results of operations.

Forward Looking Statements

The following is management’s discussion and analysis of certain significant factors that have affected our financial position and operating results during the periods included in the accompanying consolidated financial statements, as well as information relating to the plans of our current management and should be read in conjunction with the accompanying financial statements and their related notes included in this Quarterly Report.

This Quarterly Report contains forward-looking statements. Generally, the words “believes,” “anticipates,” “may,” “will,” “should,” “expects,” “intends,” “estimates,” “continues,” and similar expressions or the negative thereof or comparable terminology are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, including the matters set forth in this Quarterly Report or other reports or documents we file with the Securities and Exchange Commission (“SEC”) from time to time, which could cause actual results or outcomes to differ materially from those projected. Undue reliance should not be placed on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to update these forward-looking statements.

The following discussion of our financial condition and results of operations is based upon and should be read in conjunction with our consolidated financial statements and their related notes included in this Quarterly Report and our Annual Report on Form 10-K for the year ended April 30, 2018, filed with the SEC on July 30, 2018.

Business Overview

Petro River Oil Corp. is an independent energy company focused on the exploration and development of conventional oil and gas assets with low discovery and development costs, utilizing modern technology. The Company is currently focused on moving forward with drilling wells on several of its properties owned directly and indirectly through its interest in Horizon Energy Partners, LLC (“Horizon Energy”), as well as entering highly prospective plays with Horizon Energy and other industry-leading partners. Diversification over a number of projects, each with low initial capital expenditures and strong risk reward characteristics, reduces risk and provides cross-functional exposure to a number of attractive risk adjusted opportunities.

The Company’s core holdings are in the Mid-Continent Region in Oklahoma, including in Osage County and Kay County, Oklahoma. Following the acquisition of Horizon I Investments, LLC (“Horizon Investments”), the Company has additional exposure to a portfolio of domestic and international oil and gas assets consisting of highly prospective conventional plays diversified across project type, geographic location and risk profile, as well as access to a broad network of industry leaders from Horizon Investment’s interest in Horizon Energy. Horizon Energy is an oil and gas exploration and development company owned and managed by former senior oil and gas executives. It has a portfolio of domestic and international assets. Each of the assets in the Horizon Energy portfolio is characterized by low initial capital expenditure requirements and strong risk reward characteristics.

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The Company’s prospects in Oklahoma are owned directly by the Company and indirectly through Spyglass Energy Group, LLC (“Spyglass”), a wholly owned subsidiary of Bandolier Energy, LLC (“Bandolier”). As of January 31, 2018, Bandolier became wholly-owned by the Company. Bandolier has a 75% working interest in ~~the~~an 87,754-acre concession in Osage County, Oklahoma. The remaining 25% working interest is held by the operator, Performance Energy, LLC. As discussed below, on January 31, 2019 Bandolier entered into Assignment of Net Profit Interest agreements (the “Assignment Agreements”), pursuant to which Bandolier assigned and transferred a 75% interest in profits in certain planned wells to investors.

Effective September 24, 2018, the Company acquired a 66.67% ~~membership~~ membership interest in LBE Partners, LLC., a Delaware limited liability company (“LBE Partners”), from ICO Liquidating Trust, LLC in ~~(“ICO”)~~exchange for 300,000 restricted shares of the Company’s Common ~~common stock~~Stock. LBE Partners has varying working ~~interest~~ ininterests in multiple oil and gas producing wells located in Texas. The Company currently anticipates that this acquisition will provide additional positive cashflow to the Company and increase its oil and gas asset portfolio.

The execution ~~Company~~of ~~anticipates~~the ~~increasing~~Company’s ~~revenue~~business inplan ~~subsequent~~is ~~quarters~~dependent on asobtaining anecessary ~~result~~working ofcapital. While ~~the~~no ~~Company’s~~assurances ~~discoveries~~can be given, in ~~Osage~~the ~~County,~~event management is able to obtain additional ~~Oklahoma~~working capital, ~~and~~the ~~its~~Company ~~new~~plans ~~ten~~to ~~well~~continue drilling ~~program~~additional wells ~~for~~on ~~calendar~~its ~~year 2019. Management~~existing ~~anticipates~~concessions, ~~deriving~~and ~~increased~~to ~~revenue~~acquire ~~from~~additional ~~existing~~high-quality oil and gas ~~assets~~properties, primarily proved producing, and ~~following~~proved ~~the~~undeveloped ~~completion~~reserves. ofThe ~~its~~Company also intends to ~~calendar~~explore ~~year~~low-risk ~~2019~~development drilling ~~program,~~and ~~although~~work-over opportunities. Management nois ~~assurances~~also ~~can~~exploring befarm-in and joint ~~given~~venture opportunities for the Company’s oil and gas assets.

The execution of our business plan is dependent on obtaining necessary working capital. While no assurances can be given, in the event management is able to obtain additional working capital, we plan to continue drilling additional wells on our existing concessions, and to acquire additional high-quality oil and gas properties, primarily proved producing, and proved undeveloped reserves. We also intend to explore low-risk development drilling and work-over opportunities. Management is also exploring farm-in and joint venture opportunities for our oil and gas assets.

Recent Developments

Horizon Subscription Agreement

On February 25, 2019, Company executed a Subscription Agreement, pursuant to which the Company purchased 145.454 membership units, or approximately 14.6% ownership, of Horizon Energy Acquisition, LLC (“Horizon”), a recently formed company focused on oil and gas exploration activities, for $400,000 (the “Acquisition of Interest”). In connection with Acquisition of Interest, the Company also executed the Limited Liability Company Agreement for Horizon, which provides the Company with the right to appoint one Manager to Horizon’s three-member Board of Managers. The Company appointed Mr. Cohen, the Company’s Executive Chairman, to the Board of Managers. Mr. Cohen purchased 36.363 membership units in Horizon in a separate transaction.

Creation of a New Series A Convertible Preferred Stock

On January 31, 2019, the Company filed the Certificate of Designations of Preferences and Rights of Series A Convertible Preferred Stock (the “Series A COD”) with the Secretary of State for the State of Delaware – Division of Corporations, designating 500,000 shares of the Company’s preferred stock as Series A Convertible Preferred, par value $0.00001 per share (“Series A Preferred”), and each share with a stated value of $20.00 per share (the “Stated Value”). Shares of Series A Preferred are not entitled to dividends unless the Company elects to pay dividends to holders of its Common Stock. Shares of Series A Preferred rank senior to the Company’s Common Stock and Series B Cumulative Convertible Preferred Stock.

Holders of Series A Preferred have the right to vote, subject to a 9.999% voting limitation (which does not apply to Scot Cohen), on an as-converted basis with the holders of the Company’s Common Stock on any matter presented to the Company’s stockholders for their action or consideration; provided, however, that so long as shares of Series A Preferred remain outstanding, the Company may not, without first obtaining the affirmative consent of a majority of the shares of Series A Preferred outstanding, voting as a separate class, take the following actions: (i) alter or change adversely the power, preferences and rights provided to the holders of the Series A Preferred under the Series A COD, (ii) authorize or create a class of stock that is senior to the Series A Preferred, (iii) amend its Certificate of Incorporation so as to adversely affect any rights of the holders of the Series A Preferred, (iv) increase the number of authorized shares of Series A Preferred, or (v) enter into any agreements with respect to the foregoing.

Each share of Series A Preferred has a liquidation preference equal to the Stated Value plus all accrued and unpaid dividends. Each share of Series A Preferred is convertible into that number of shares of the Company’s Common Stock (“Conversion Shares”) equal to the Stated Value, divided by $0.40 per share (the “Conversion Price”), which conversion rate is subject to adjustment in accordance with the terms of the Series A COD; provided, however, that holders of the Series A Preferred may not convert their shares of Series A Preferred in the even that such conversion would result in such holder’s ownership exceeding 4.999% of the Company’s outstanding Common Stock (the “Ownership Limitation”), which Ownership Limitation may be increased up to 9.999% at the sole election of the holder (the “Maximum Percentage”); provided, however, that the Ownership Limitation and Maximum Percentage do not apply to Mr. Cohen. Holders of Series A Preferred may elect to convert shares of Series C Preferred into Conversion Shares at any time.

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Pursuant to the original Series A COD, holders of the Series A Preferred may also require the Company to redeem all or any portion of such holder’s shares of Series A Preferred in the event of the occurrence of (i) a Triggering Event, as such term is defined in the Series A COD, at a price equal to the greater of (a) 115% of the Stated Value plus all accrued by unpaid dividends (the “Event Equity Value”) or (b) the Event Equity Value of the shares of Common Stock issuable as Conversion Shares; or (ii) a Change of Control, as such term is defined in the Series A COD, at a price equal to the greater of (a) the Event Equity Value or (b) the product of the Conversion Price and the VWAP of the Common Stock on the trading day immediately preceding the Change of Control. In addition, in the event of a Bankruptcy Event, as such term is defined in the Series A COD, the Company shall automatically be required to redeem all of the outstanding shares of Series A Preferred and all such underling shares at price equal to the Event Equity Value.

On March 13, 2019, the Series A COD was amended and restated in order to (i) decrease the Event Equity value to 100% of the Stated Value plus all accrued but unpaid dividends thereon through the date of payment, and (ii) remove the right of holders of the Series A Preferred to require the Company to redeem all or a portion of such holders’ Series A Preferred in the event of a Change of Control. Except for the forgoing changes, all other terms of the original Series A COD were unaffected by the amendment and restatement.

Series A Financing

On January 31, 2019 (the “Closing Date”), the Company sold and issued an aggregate of 178,101 units (“Units”), for an aggregate purchase price of $3,562,014.95, to certain accredited investors (the “New Investors”) pursuant to a Securities Purchase Agreement (“SPA”) and to certain debtholders (the “Debt Holders”) pursuant to Debt Conversion Agreements (the “Debt Conversion Agreements”) (the “Offering”). The sale of the Units resulted in net cash proceeds of approximately $2.7 million. The Units sold and issued in the Offering consisted of an aggregate of (i) 178,101 shares of the Company’s newly created Series A Preferred shares, convertible into 8,905,037 shares of the Company’s Common Stock, and (ii) five-year warrants to purchase 8,905,307 shares of Company’s Common Stock, at an exercise price of $0.50 per share. Pursuant to the Debt Conversion Agreement, the Debt Holders, consisting of Mr. Cohen and Fortis Oil & Gas, (“Fortis”) agreed to convert all outstanding debt owed to the Debt Holders, amounting to $300,000 and $321,836, respectively, into Units issued pursuant to the SPA. In addition to the conversion of outstanding debt, the Company and the Debt Holders also agreed to convert all accrued interest totaling $18,853 and $62,523, respectively.

The Offering resulted in net cash proceeds to the Company of approximately $2.7 million, which net proceeds do not include the amount of debt converted into Units by the Debt Holders. The Company currently intends to use the net proceeds to fund the drilling of ten additional development and exploration wells in its Osage County concession (the “New Drilling Program”), and a large exploration venture in the North Sea, United Kingdom with Horizon Energy Partners, LLC.

Senior Secured Debt Exchange

On January 31, 2019, the Company entered into agreements (the “Secured Debt Conversion Agreements”) with Petro Exploration Funding, LLC and Petro Exploration Funding II, LLC (together, the “Secured Debt Holders”), pursuant to which they agreed to convert approximately $2.3 million and $2.8 million, respectively, of outstanding senior secured debt (including accrued and unpaid interest) (the “Senior Secured Debt”) owed under the terms of their respective Senior Secured Promissory Notes into 116,374 and 140,130 shares of the Company’s newly created Series A Preferred, respectively (the “Senior Secured Debt Exchange”). As a result of the Senior Secured Debt Exchange, all indebtedness, liabilities and other obligations arising under the respective Senior Secured Promissory Notes were cancelled and deemed satisfied in full.

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Acquisition of Membership Interest in LBE Partners, LLC

On October 2, 2018, the Company, ICO Liquidating Trust, LLC (“ICO”) and LBE Partners, which owns various working interests in several oil and gas wells located in the Hardin oil field in Liberty, Texas, entered into a Membership Interest Purchase Agreement (the “LBE Purchase Agreement”), effective September 24, 2018, pursuant to which the Company purchased a 66.67% membership interest in LBE Partners from ICO in exchange for 300,000 shares of the Company’s Common Stock. Both ICO and LBE Partners are managed by Scot Cohen, the Company’s Executive Chairman.

Recent Oil Discoveries

On July 24, 2018, the Company announced the successful drilling of the Arsaga 25-2 exploration well, located on its concession in Osage County, Oklahoma.

On May 22, 2018, the Company announced the discovery of a new oil field, the N. Blackland Field, in its concession in Osage County, Oklahoma, upon successfully testing of the 2-34 exploration well.

In May 2017, Bandolier discovered two new oil fields with the successful drilling of the W. Blackland 1-3 and S. Blackland 2-11 exploration wells. On December 15, 2017, the Company received permits from the Bureau of Indian Affairs to drill eight additional wells in the W. Blackland Field, which were successfully completed in April 2018. The Company’s W. Blackland concessions are currently producing, and, with the drilling of additional wells, the Company currently anticipates that its revenue will significantly increase throughout the remainder of the current fiscal year.

In addition to the Company’s current development plans, within its current 3-D seismic data, additional structures in Osage County have been identified. Assuming that it is able to obtain sufficient working capital, the Company currently plans to drill ten additional wells in calendar year 2019: seven in the N. Blackland Field, two in the Arsaga structure and one in the Section 13 structure. The Company anticipates financing the drilling of these wells using the cash flows from current production of its existing wells.

Acquisition of Membership Interest in LBE Partners

On October 2, 2018, the Company, ICO and LBE Partners, which owns various working interests in several oil and gas wells located in the Hardin oil field in Liberty, Texas, entered into a Membership Interest Purchase Agreement (the “LBE Purchase Agreement”), effective September 24, 2018, pursuant to which the Company purchased a 66.67% membership interest in LBE Partners from ICO in exchange for the issuance by the Company of 300,000 shares of the Company’s common stock to ICO. Both ICO and LBE Partners are managed by Scot Cohen, the Company’s Executive Chairman.

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Critical Accounting Policies and Estimates

The Company’s significant accounting policies are described in Note 4 to the annual consolidated financial statements for the years ended April 30, 2018 and 2017 on Form 10-K, filed with the SEC on July 30, 2018 for the year ended April 30, 2018.

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements. These consolidated financial statements are prepared in accordance with U.S. GAAP, which requires us to make estimates and assumptions that affect the reported amounts of our assets and liabilities and revenues and expenses, to disclose contingent assets and liabilities on the date of the consolidated financial statements, and to disclose the reported amounts of revenues and expenses incurred during the financial reporting period. The most significant estimates and assumptions include the valuation of accounts receivable, and the useful lives and impairment of property and equipment, goodwill and intangible assets, the valuation of deferred tax assets and inventories and the provision for income taxes. We continue to evaluate these estimates and assumptions that we believe to be reasonable under the circumstances. We rely on these evaluations as the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates. Some of our accounting policies require higher degrees of judgment than others in their application. We believe critical accounting policies as disclosed in this Quarterly Report reflect the more significant judgments and estimates used in preparation of our consolidated financial statements. We believe there have been no material changes to our critical accounting policies and estimates.

The following critical accounting policies rely upon assumptions and estimates and were used in the preparation of our consolidated financial statements:

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Oil and Gas Operations

The Company follows the full-cost method of accounting for oil and gas operations, whereby all costs related to exploration and development of oil and gas reserves are capitalized. Under this method, the Company capitalizes all acquisition, exploration and development costs incurred for the purpose of finding oil and natural gas reserves, including salaries, benefits and other internal costs directly attributable to these activities. Costs associated with production and general corporate activities, however, are expensed in the period incurred. Costs are capitalized on a country-by-country basis. To date, there has only been one cost center, the United States.

The present value of estimated future net cash flows is computed by applying the average first-day-of-the-month prices during the previous twelve-month period of oil and natural gas to estimated future production of proved oil and natural gas reserves as of year-end less estimated future expenditures to be incurred in developing and producing the proved reserves and assuming continuation of existing economic conditions. Prior to December 31, 2009, prices and costs used to calculate future net cash flows were those as of the end of the appropriate quarterly period.

Following the discovery of reserves and the commencement of production, the Company will compute depletion of oil and natural gas properties using the unit-of-production method based upon production and estimates of proved reserve quantities. Costs associated with unproved properties are excluded from the depletion calculation until it is determined whether or not proved reserves can be assigned to such properties. Unproved properties are assessed for impairment annually. Significant properties are assessed individually.

The Company assesses all items classified as unproved property on an annual basis for possible impairment. The Company assesses properties on an individual basis or as a group if properties are individually insignificant. The assessment includes consideration of the following factors, among others: land relinquishment; intent to drill; remaining lease term; geological and geophysical evaluations; drilling results and activity; the assignment of proved reserves; and the economic viability of development if proved reserves are assigned. During any period in which these factors indicate impairment, the related exploration costs incurred are transferred to the full cost pool and are then subject to depletion and the ceiling limitations on development oil and natural gas expenditures.

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Proceeds from the sale of oil and gas assets are applied against capitalized costs, with no gain or loss recognized, unless a sale would alter the rate of depletion and depreciation by 25% or more.

Significant changes in these factors could reduce our estimates of future net proceeds and accordingly could result in an impairment of our oil and gas assets. Management will perform annual assessments of the carrying amounts of its oil and gas assets as additional data from ongoing exploration activities becomes available.

Revenue Recognition

ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” supersedes the revenue recognition requirements and industry-specific guidance under Revenue Recognition (Topic 605). Topic 606 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services. The Company adopted Topic 606 on May 1, 2018, using the modified retrospective method applied to contracts that were not completed as of January 1, 2018. Under the modified retrospective method, prior period financial positions and results will not be adjusted. The cumulative effect adjustment recognized in the opening balances included no significant changes as a result of this adoption. While the Company does not expect 2018 net earnings to be materially impacted by revenue recognition timing changes, Topic 606 requires certain changes to the presentation of revenues and related expenses beginning May 1, 2018. Refer to Note 910 – Revenue from Contracts with Customers for additional information.

The Company’s revenue is comprised ~~entirely of~~ revenue from exploration and production activities as well as royalty revenues related to a royalty interest agreement executed in February 2018. The Company’s oil is sold primarily to marketers, gatherers, and refiners. Natural gas is sold primarily to interstate and intrastate natural-gas pipelines, direct end-users, industrial users, local distribution companies, and natural-gas marketers. NGLs are sold primarily to direct end-users, refiners, and marketers. Payment is generally received from the customer in the month following delivery.

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Contracts with customers have varying terms, including spot sales or month-to-month contracts, contracts with a finite term, and life-of-field contracts where all production from a well or group of wells is sold to one or more customers. The Company recognizes sales revenues for oil, natural gas, and NGLs based on the amount of each product sold to a customer when control transfers to the customer. Generally, control transfers at the time of delivery to the customer at a pipeline interconnect, the tailgate of a processing facility, or as a tanker lifting is completed. Revenue is measured based on the contract price, which may be index-based or fixed, and may include adjustments for market differentials and downstream costs incurred by the customer, including gathering, transportation, and fuel costs.

Revenues are recognized for the sale of the Company’s net share of production volumes. Sales on behalf of other working interest owners and royalty interest owners are not recognized as revenues.

Income Tax Provision

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New Accounting Standards

Recently Issued Accounting Standards

In September 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses. ASU 2016-13 was issued to provide more decision-useful information about the expected credit losses on financial instruments and changes the loss impairment methodology. ASU 2016-13 is effective for reporting periods beginning after December 15, 2019 using a modified retrospective adoption method. A prospective transition approach is required for debt securities for which a an other-than-temporary impairment had been recognized before the effective date. The Company is currently assessing the impact this accounting standard will have on its financial statements and related disclosures.

The Company does not expect the adoption of any other recently issued accounting pronouncements to have a significant impact on its financial position, results of operations, or cash flows.

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Results of Operations

Results of Operations for the Three Months Ended ~~October~~January 31, ~~2018~~2019 Compared to Three Months Ended ~~October~~January 31, ~~2017~~2018

Oil Sales

During the three months ended ~~October~~January 31, ~~2018~~2019, the Company ~~recognized~~ recognized $~~410~~324,~~432~~115 in oil and gas sales, compared to $16250,~~238~~877 for the three months ended ~~October~~January 31, ~~2017~~2018. The overall increase in sales of $~~394~~73,~~194~~238 is primarily due to the commencement of ~~production~~ production in Osage County, Oklahoma and the acquisition of LBE Partners.

We have listed below the total production volumes and total revenue net to the Company for the three months ended ~~October~~January 31, ~~2018~~2019 and ~~2017~~2018.

	For the Three Months Ended October 31, 2018	For the Three Months Ended October 31, 2017
	For the Three Months Ended January 31, 2019	For the Three Months Ended January 31, 2018
Oil volume (BBL)	611,~~452~~664	~~248~~4,620
Gas volume (MCF)	67,~~669~~911	24,~~062~~411
Volume equivalent (BOE)(1)	712,~~564~~983	~~592~~4,804
Revenue	$~~410~~324,~~432~~115	$16250,~~238~~877

(1) Assumes 6 Mcf of natural gas is equivalent to 1 barrel of oil.

Royalty Revenue

In connection with the Purchase and Exchange Agreement dated February 14, 2018 between Petro River and Red Fork Resources (“Red Ford”), a subsidiary of Horizon Energy, Petro River conveyed to Red Fork its 13.75% interest in the Mountain View Project and received a 64.70% interest from Red Fork in a new project in Kay County. Petro River also retained a 2% royalty interest in the membership interest conveyed to Red Fork in the Mountain View Project. In relation to this agreement, the Company recognized $15,871 in revenue during the three months ended January 31, 2019.

Lease Operating Expense

During the three months ended ~~October~~January 31, ~~2018~~2019, lease operating ~~expense~~ expense was $~~109~~144,~~059~~721, compared to $3912,~~242~~445 for the three months ended January ~~October~~ 31, ~~2017~~2018. The overall increase in lease operating ~~expense~~ expense was primarily attributable to increased activity in the Company’s drilling activity in Osage County, Oklahoma and the acquisition of LBE Partners.

Impairment of Oil and Gas Assets

The Company assesses all items classified as unproved property on an annual basis for possible impairment. The Company assesses properties on an individual basis or as a group if properties are individually insignificant. The assessment includes consideration of the following factors, among others: land relinquishment; intent to drill; remaining lease term; geological and geophysical evaluations; drilling results and activity; the assignment of proved reserves; and the economic viability of development if proved reserves are assigned. Significant changes in these factors could reduce our estimates of future net proceeds and accordingly could result in an impairment of our oil and gas assets. During the three months ended January 31, 2019 and 2018, the Company reviewed the oil and gas assets for impairment and recognized an impairment charge of $0 and $730,607, respectively.

General and Administrative Expense

General and administrative expense for the three months ended ~~October~~ January 31, 2019 ~~2018~~ was $~~407~~554,~~355~~729, compared to $~~483~~686,~~522~~680 for the three months ended January ~~October~~ 31, ~~2017~~2018. The decrease was primarily attributable to decreases in salaries and benefits and office and administrative expense, partially offset by an increase in professional fees ~~and benefits~~. These changes are outlined below:

	For the Three Months Ended	For the Three Months Ended
	October 31, 2018	October 31, 2017
	January 31, 2019	January 31, 2018
Salaries and benefits	$~~107~~116,~~413~~470	$~~232~~149,~~216~~082
Professional fees	~~208~~338,~~942~~477	~~152~~300,~~164~~946
Office and administrative	9199,~~000~~782	99236,~~142~~652
Total	$~~407~~554,~~355~~729	$~~483~~686,~~522~~680

~~Salaries and benefits include non~~-~~cash stock~~28-based compensation of $88,832 for three months ended October 31, 2018, compared to $179,366 for the three months ended October 31, 2017. The decrease in stock-based compensation of $90,534 from the three months ended October 31, 2017 was due to fewer awards made during the current period. General and administrative expenses decreased due to management’s commitment to substantially reduce expenses.

Other Income (Expense)

During the three months ended October 31, 2018, the Company recognized $297,746 of net interest expense, compared to interest income of $101,562 for the three months ended October 31, 2017. The interest expense for the three months ended October 31, 2018 included $174,307 and $123,439, which were the accretion of the debt discount and interest expense, respectively, related to the June 2017 $2.0 million and November 2017 $2.5 million Secured Note financings. In addition, during the three months ended October 31, 2018, the Company recognized $75,000 of expense from a legal settlement. During the three months ended October 31, 2017, the Company recorded interest income $199,211 accrued on the related party notes receivable. The interest income was offset by $47,238 and $50,411, which were the accretion of the debt discount and interest expense, respectively, related to the June 2017 $2.0 million Secured Note financing.

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Salaries ~~Results~~and ofbenefits ~~Operations~~included non-cash stock-based compensation of $78,971 for three months ended January 31, 2019, compared to $102,425 for the ~~Six~~three ~~Months~~months ~~Ended~~ended ~~October~~January 31, 2018. The decrease in ~~Compared~~stock-based tocompensation ~~Six~~of ~~Months~~$23,454 ~~Ended~~from ~~October~~ the three months ended January 31, ~~2017~~2018 was due to fewer awards made during the current period. General and administrative expense decreased due to management’s commitment to substantially reduce expense.

Other Income (Expense)

During the three months ended January 31, 2019, the Company recognized $2,490,539 of net interest expense, compared to net interest expense of $50,173 for the three months ended January 31, 2018. The net interest expense for the three months ended January 31, 2019 included $1,808,744 and $172,863, which included the amortization of the debt discount and interest expense, respectively, related to the June 2017 $2.0 million and November 2017 $2.5 million Secured Note financings. In addition, in relation to the debt restructuring, during the three months ended January 31, 2019, the Company recognized additional interest expense of $508,931 related to the excess fair value of its derivative liabilities, and a loss on extinguishment of debt of $90,916. During the three months ended January 31, 2018, the Company recorded net interest income $199,211 accrued on the related party notes receivable. The net interest income was offset by $139,384 and $110,000, which were the accretion of the debt discount and interest expense, respectively, related to the June 2017 $2.0 million and November 2017 $2.5 million Secured Note financings.

Loss on Assumption of Pearsonia Interests

On November 6, 2017, the Company entered into Membership Interest Assignment with Pearsonia West Investments, LLC (“Pearsonia”), the owner of a 46.81% membership interest in Bandolier. Pursuant to the Membership Interest Assignment, the Company issued 1,466,667 shares of its common stock to Pearsonia in exchange for all membership interests in Bandolier held by Pearsonia, resulting in the Company acquiring an additional 46.81% stake in Bandolier’s 106,500-acre concession in Osage County, Oklahoma. Upon recording this transaction, the Company recorded a loss on assumption of $3,351,965 during the three months ended January 31, 2018.

Loss on Redetermination

On January 31, 2018, the Company entered into the Assignment Agreement with MegaWest Energy Kansas Corp. (“MegaWest”), whereby the Company transferred its MegaWest in exchange for MegaWest’s 50% membership interests in Bandolier then held by MegaWest (the “Exchange Transaction”). The Exchange Transaction followed the receipt by the Company of a notice of Redetermination of MegaWest’s assets, including MegaWest’s interest in Bandolier (the “MegaWest Assets”) conducted by Fortis. Upon execution of the agreement, the Company wrote-off the MegaWest Assets and recorded a loss of $11,914,204 during the three months ended January 31, 2018.

Results of Operations for the Nine Months Ended January 31, 2019 Compared to Nine Months Ended January 31, 2018

Oil Sales

During the ~~six~~nine months ended ~~October~~ January 31, ~~2018~~2019, the Company recognized $~~984~~1,~~497~~308,612 in oil and gas sales, compared to $25275,~~041~~918 for the ~~six~~ nine months ended ~~October~~January 31, ~~2017~~ 2018. The overall increase in sales of $~~959~~1,~~456~~032,694 is primarily due to the commencement of production in Osage County, Oklahoma and the acquisition of ~~LBE~~ LBE Partners.

We have listed below the total production volumes and total revenue net to the Company for the ~~six~~nine months ended ~~October~~January 31, ~~2018~~2019 and ~~2017~~2018.

	For the Six Months Ended	For the Six Months Ended
	For the Nine Months Ended	For the Nine Months Ended
	October 31, 2018	October 31, 2017
	January 31, 2019	January 31, 2018
Oil volume (BBL)	1424,~~866~~859	~~358~~4,978
Gas volume (MCF)	715,~~432~~343	45,~~411~~516
Volume equivalent (BOE)(1)	1627,~~105~~416	15,~~093~~897
Revenue	$~~984~~1,~~497~~308,612	$25275,~~041~~918

(1) Assumes 6 Mcf of natural gas is equivalent to 1 barrel of oil.

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Royalty Revenue

In connection with the Purchase and Exchange Agreement dated February 14, 2018 between Petro River and Red Fork, Petro River conveyed to Red Fork its 13.75% interest in the Mountain View Project and received a 64.70% interest from Red Fork in a new project in Kay County. Petro River also retained a 2% royalty interest in the membership interest conveyed to Red Fork in the Mountain View Project. In relation to this agreement, the Company recognized $15,871 in revenue during the nine months ended January 31, 2019.

Lease Operating Expense

During the ~~six~~nine months ended ~~October~~January 31, ~~2018~~2019, lease operating expense was $~~186~~331,~~671~~392, compared to $5770,~~604~~049 for the ~~six~~nine months ended ~~October~~ January 31, ~~2017~~ 2018. The overall increase in lease operating expense was primarily attributable to increased activity in the Company’s drilling activity in Osage County, Oklahoma and acquisition of LBE Partners.

General and Administrative Expense

General and administrative expense for the ~~six~~nine months ended ~~October~~ January 31, 2019 ~~2018~~ was $~~913~~1,~~912~~468,641, compared to $12,~~476~~162,~~079~~759 for the ~~six~~ nine months ended ~~October~~January 31, ~~2017~~2018. The decrease was primarily attributable to decreases in salaries, ~~professional fees~~ and benefits, and office and administrative ~~expenses~~expense, partially offset by an increase in professional fees. These changes are outlined below:

	For the Six Months Ended	For the Six Months Ended
	For the Nine	For the Nine
	October 31, 2018	October 31, 2017
	Months Ended January 31, 2019	Months Ended January 31, 2018
Salaries and benefits	$~~390~~507,~~897~~367	$~~810~~959,~~639~~721
Professional fees	~~348~~751,~~562~~039	~~419~~720,~~132~~078
Office and administrative	~~174~~210,~~453~~235	~~246~~482,~~308~~960
Total	$~~913~~1,~~912~~468,641	$12,~~476~~162,~~079~~759

Salaries and benefits ~~include~~included non-cash stock-based compensation of $~~334~~413,~~816~~ 787 for ~~six~~nine months ended ~~October~~January 31, ~~2018~~2019, compared to $~~708~~811,~~698~~123 for the ~~six~~nine months ended ~~October~~January 31, ~~2017~~2018. The decrease in stock-based compensation of $~~373~~397,~~882~~336 from the ~~six~~nine months ended ~~October~~ January 31, ~~2017~~ 2018, was due to fewer awards made during the current period. General and administrative ~~expenses~~expense decreased due to management’s commitment to substantially reduce ~~expenses~~ expense.

Other Income (Expense)

During the ~~six~~nine months ended ~~October~~January 31, ~~2018~~2019, the Company recognized $~~617~~3,~~326~~107,865 of net interest expense, compared to interest income of $~~234~~184,~~307~~134 for the ~~six~~nine months ended ~~October~~January 31, ~~2017~~ 2018. The interest expense for the ~~six~~nine months ended ~~October~~January 31, ~~2018~~ ~~included~~2019 included $~~330~~2,~~506~~139,250 and $~~286~~459,~~820~~683, which ~~were~~included the ~~accretion~~amortization of ~~the~~ the debt discount and interest expense, respectively, related to ~~the~~ the June 2017 $2.0 million and November 2017 $2.5 million Secured ~~Note~~ Note financings. In addition, during the ~~three~~nine months ended ~~October~~ January 31, ~~2018~~ 2019, the Company recognized $75,000 of expense from a legal settlement. ~~The~~In ~~income~~addition, ~~recorded~~ in ~~the~~relation ~~2017 period was attributable~~ to ~~$393,810 of interest income accrued on~~ the ~~related~~debt ~~party notes receivable~~restructuring, during ~~which~~the ~~was~~nine ~~offset~~months byended ~~$84~~January 31,~~616~~ ~~and $74~~2019,~~887,~~ the ~~accretion~~Company ofrecognized ~~the debt discount and~~ interest expense of $508,931 related to the ~~June~~excess ~~2017~~fair ~~$2.0~~value ~~million~~of ~~Secured~~its ~~Note~~derivative ~~financing. During the~~liabilities, ~~six~~and ~~months~~a ~~ended~~loss ~~October 31,~~on ~~2017,~~extinguishment of ~~the~~debt ~~Company~~of ~~recognized~~ $~~271~~90,~~490~~916. ~~net~~The ~~gain~~income onrecorded ~~its interest~~ in ~~real~~the ~~estate~~2018 ~~rights.~~period ~~The net~~was ~~gain~~attributable onto ~~interest~~$593,021 inof ~~real~~interest ~~estate~~income ~~rights~~accrued ~~during~~on the ~~six months ended~~related ~~October~~party 31notes receivable, ~~2017~~which was ~~due~~offset toby $224,000 and $184,887, the ~~sale~~accretion of ~~one~~the ~~condominium~~debt ~~unit~~discount ~~by Fortis~~ and ~~the~~interest ~~resulting~~expense ~~profits~~related ~~which were assigned~~ to ~~MegaWest~~ ~~pursuant~~the toJune ~~the~~2017 ~~Contribution~~$2.0 ~~Agreement,~~million ~~less~~and ~~the~~November ~~book~~2017 ~~value recorded~~$2.5 bymillion ~~MegaWest~~Secured Note Financings.

~~-25-~~ Loss on Assumption of Pearsonia Interests

On November 6, 2017, the Company entered into Membership Interest Assignment with Pearsonia, the owner of a 46.81% membership interest in Bandolier. Pursuant to the Membership Interest Assignment, the Company issued 1,466,667 shares of its Common Stock to Pearsonia in exchange for all membership interests in Bandolier held by Pearsonia, resulting in the Company acquiring an additional 46.81% stake in Bandolier’s 106,500-acre concession in Osage County, Oklahoma. Upon recording this transaction, the Company recorded a loss on assumption of $3,351,965.

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Loss on Redetermination

On January 31, 2018, the Company entered into the Assignment Agreement with MegaWest, whereby the Company transferred its interest in MegaWest in exchange for MegaWest’s membership interests in Bandolier. The Exchange Transaction followed the receipt by the Company of a notice of Redetermination of MegaWest’s Assets conducted by Fortis. Upon execution of the agreement, the Company wrote-off the MegaWest Assets and recorded a loss of $11,914,204.

Liquidity and Capital Resources

At ~~October~~January 31, ~~2018~~2019, the Company had working capital ~~deficit~~ of $1,~~926~~139,~~196~~923, consisting of $~~384~~2,~~947~~320,964 of current assets and $21,~~311~~181,~~143~~ 041 of current liabilities.

As a result of the utilization of cash in its operating activities, ~~and~~ and the development of its assets, the Company has incurred losses since it commenced operations. In addition, the Company has a limited operating history. At ~~October~~January 31, ~~2018~~2019, the Company had cash and cash equivalents of approximately $~~101,200~~2.1 million. The Company’s primary source of operating funds since inception has been equity and note financings, as well as through the consummation of the Horizon Acquisition.

On January ~~June~~31, 182019, ~~2018~~the Company consummated the Series A Financing, pursuant to which the Company ~~entered~~sold ~~into~~and aissued ~~Loan~~an ~~Agreement~~aggregate ~~with~~of ~~Scot~~178,101 ~~Cohen~~Units, (for an aggregate purchase price of $3,562,015, to certain accredited investors pursuant to an SPA and to certain debtholders pursuant to Debt Conversion Agreements, resulting in net cash proceeds to the “Company of approximately $2.7 million and the termination of the Cohen Loan Agreement”) and debt owed to Fortis. In addition, on January 31, 2019, the Company’s ~~Executive~~entered into ~~Chairman~~the Secured Debt Conversion Agreements, pursuant to which Funding MrCorp. ~~Cohen~~and Funding Corp. II converted all outstanding debt ~~loaned~~due to them under the ~~Company~~June ~~$300~~2017 Secured Note and November 2017 Secured Note,~~000~~ attogether aamounting ~~10%~~to ~~annual~~an ~~interest~~aggregate ~~rate~~of ~~due~~approximately ~~September~~$5.1 30million, ~~2018.~~into Onshares ~~December~~of ~~17,~~Series ~~2018,~~A ~~the~~Preferred. ~~maturity~~As ~~date~~a ofresult, the ~~Cohen~~Company ~~Loan~~increased ~~Agreement~~its ~~was~~current ~~extended~~assets toand ~~March~~decreased ~~31,~~its current ~~2019~~liabilities significantly.

InOn June ~~and~~18, ~~November 2017~~2018, the Company ~~consummated~~entered ~~the~~into ~~Secured~~a ~~Note~~Loan Agreement with Scot Cohen ~~financings~~(the ~~for~~“Cohen anLoan Agreement”), ~~aggregate~~the ofCompany’s ~~$4.5~~Executive ~~million~~Chairman, pursuant to which ~~Secured~~Mr. ~~Notes accrue~~Cohen ~~interest~~loaned atthe aCompany ~~rate~~$300,000 ofat a 10% annual ~~per~~interest ~~annum~~rate ~~and~~due ~~mature~~September ~~on June 13~~30, ~~2020~~ 2018. On ~~May~~December 17, 2018, the ~~parties~~maturity ~~executed an extension of the due~~ date of the ~~first~~Cohen ~~interest~~Loan ~~payment~~Agreement ~~due~~was ~~pursuant~~extended to ~~each of the~~March ~~Secured Notes from June 1, 2018 to December~~ 31, ~~2018~~2019. As ~~consideration~~ ~~for~~noted ~~the interest payment extension~~above, the ~~Company agreed~~Cohen toLoan ~~pay~~Agreement ~~the~~was ~~holders an additional 10% of the interest due on~~terminated ~~June 1, 2018~~ on ~~December~~ January 31, ~~2018.~~2019 Onin ~~December~~exchange ~~17,~~for ~~2018,~~ the ~~parties~~ ~~executed~~issuance aof ~~second~~units, consisting ~~extension~~ of ~~the~~15,000 ~~due~~share ~~date~~ of ~~the~~Series ~~first interest~~A ~~payment~~Preferred ~~due~~and ~~pursuant~~warrants to purchase ~~each~~750,000 shares of ~~the~~Company ~~Secured~~Common ~~Notes~~Stock ~~from December~~sold ~~31,~~and ~~2018~~issued toin the ~~March~~Series ~~31,~~A ~~2019~~Financing.

In June ~~The~~and ~~current~~November ~~level~~2017, the Company consummated the Secured Note financings for an aggregate of ~~working~~$4.5 ~~capital~~million, ~~along~~which ~~with~~Secured ~~results~~Notes accrued ~~from~~interest at a rate of 10% per annum and were scheduled to ~~operations~~mature on June 13, ~~may~~2020. beOn ~~insufficient~~May to17, ~~maintain~~2018, ~~current~~the ~~operations~~parties asexecuted an ~~well~~extension asof the ~~planned~~due ~~added~~date ~~operations~~of ~~for~~ the ~~next~~first 12interest ~~months.~~payment due ~~Management~~pursuant ~~intends~~ to ~~raise~~each ~~capital~~of ~~through~~the ~~debt~~Secured ~~and~~Notes ~~equity~~from June 1, 2018 ~~instruments~~to December 31, if2018. ~~necessary~~As consideration for the interest payment extension, inthe ~~order~~Company agreed to ~~execute~~pay ~~its~~the ~~business~~holders ~~and~~an ~~operating~~additional ~~plans.~~10% ~~Management~~of ~~can~~the ~~provide~~interest nodue ~~assurances~~on ~~that~~June 1, 2018 on December 31, 2018. On December 17, 2018, the parties executed a second ~~Company~~extension ~~will~~of bethe ~~successful~~due indate ~~any~~of ~~capital~~the ~~raising~~first ~~efforts.~~interest Inpayment ~~order~~due pursuant to ~~conserve~~each ~~capital,~~of the Secured Notes from ~~time~~December 31, 2018 to March ~~time~~31, ~~management~~2019. ~~may~~As ~~defer~~a result of the Series A Financing discussed ~~certain~~above, ~~development~~the ~~activity~~outstanding balances of the Secured Notes were converted into shares of Series A Preferred.

The current level of working capital, along with results from operations, may be insufficient to maintain current operations as well as the planned added operations for the next 12 months. Management intends to raise additional capital through debt and equity instruments, if necessary, in order to execute its business and operating plans. Management can provide no assurances that the Company will be successful in any capital raising efforts. In order to conserve capital, from time to time, management may defer certain development activity.

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Operating Activities

During the ~~six~~ nine months ended ~~October~~January 31, ~~2018~~2019, ~~operating~~cash ~~activities~~ used ~~cash~~in ofoperating activities was $~~239~~406,~~401~~709, compared to $~~606~~969,~~201~~530 used in operating activities during the ~~six~~nine months ended ~~October~~January 31, ~~2017~~2018. The Company incurred a net loss during the ~~six~~nine months ended ~~October~~January 31, ~~2018~~2019 of $~~995~~4,~~708~~095,264, compared to a net loss of $118,~~548~~194,~~510~~287 for the ~~six~~ nine months ended ~~October~~ January 31, ~~2017~~ 2018. For the ~~six~~nine months ended ~~October~~January 31, ~~2018~~ 2019, the net loss was offset by non-cash items such as stock-based compensation, depreciation, depletion and accretion of asset retirement obligation, accretion of debt discount, derivative liabilities in excess of face value of equity instruments, loss on extinguishment of debt and loss on legal settlement. Cash used in operations was also influenced by changes in accounts receivable, accrued interest on notes receivable, prepaid expense and accounts payable and accrued expense. For ~~six~~the nine months ended ~~October~~ January 31, ~~2017~~2018, the net loss was offset by non-cash items such as stock-based compensation, depreciation, depletion and accretion of asset retirement obligation, ~~impairment of oil~~ and ~~gas assets, and~~ the deferred tax liability. Cash used in operations was also influenced by changes in accounts receivable, accrued interest on notes receivable, prepaid ~~expense~~expenses and accounts payable and accrued ~~expense~~expenses.

Investing Activities

Investing activities during the ~~six~~nine months ended ~~October~~January 31, ~~2018~~ 2019 resulted in cash used of $~~306~~786,~~723~~960, compared to cash used of $13,~~812~~067,~~166~~ 215 during the ~~six~~nine months ended ~~October~~January 31, ~~2017~~2018. During the ~~six~~ nine months ended ~~October~~ January 31, ~~2018~~2019, the Company ~~did~~invested ~~not invest~~an ~~any~~ additional $357,616 ~~funds~~ in Horizon Energy, compared to $379,418 in the comparable period in ~~2017~~2018. During the ~~six~~nine months ended ~~October~~ January 31, ~~2017~~2018, the Company received proceeds of $1,~~557~~553,~~852~~884 from profits in its real estate rights. As a result of the ~~assignment~~Exchange ~~and~~Transaction ~~assumption of membership interest~~ entered into by and between the Company and MegaWest ~~Energy Kansas Corp.~~ on January 31, 2018, the Company no ~~longer~~ longer has any interest in real estate rights, and thus did not ~~receive~~ receive any profits in real estate rights for the ~~six~~nine months ended ~~October~~ January 31, ~~2018~~2019. During the ~~six~~nine months ended ~~October~~January 31, ~~2018~~ 2019, the Company incurred $~~445~~568,~~409~~030 of expenditures on oil and gas assets, compared to $~~985~~2,~~243~~116,602 for the ~~six~~nine months ended ~~October~~ January 31, ~~2017~~2018. During the ~~six~~nine months ended ~~October~~January 31, ~~2018~~2019, the Company executed no new notes receivable agreements with related parties, compared to $1,558,501 during the corresponding period ended ~~October~~January 31, ~~2017~~2018. During the ~~six~~ nine months ended ~~October~~January 31, ~~2018~~ 2019, the Company received cash of $138,686 from the acquisition of LBE Partners.

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Financing Activities

Financing activities during the ~~six~~nine months ended ~~October~~January 31, ~~2018,~~2019 resulted in cash provided of $~~600~~3,~~000~~340,180, compared to cash provided of $24,250,000 during the ~~six~~nine months ended January 31, 2018. During the nine months ended ~~October~~January 31, ~~2017~~2019, the Company received $2,640,179, $300,000 and $300,000 from the issuance of Series A Preferred stock and Warrants issued in connection with the Series A Financing, proceeds from a related party note payable and cash received from the acquisition of LBE Partners, respectively. During the nine months ended January 31, 2018, the Company received net proceeds of $4,250,000 from a related party note payable.

Capitalization

The number of outstanding shares of Company ~~common~~Common ~~stock~~Stock and the ~~number~~ number of shares that could be issued if all ~~common~~Common ~~stock~~ Stock equivalents are converted to shares is as follows:

As of	~~October~~January 31, ~~2018~~2019	~~October~~January 31, ~~2017~~2018
Common shares	17,938,540	15,843,066
Convertible preferred shares	21,770,150	-
Stock options	2,607,385	2,529,682
Common shares	17,938,540	17,309,809
Stock purchase warrants	2,223,669	973,669
Stock options	2,607,385	2,555,385
	22,769,594	19,346,417
Stock purchase warrants	11,128,706	2,223,669
	53,444,781	22,088,863

Off-Balance Sheet Arrangements

None.

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ITEM 3. QUANTITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable

ITEM 4. CONTROLS AND PROCEDURES

A. Material Weaknesses

As discussed in Item 9A of our Annual Report on Form 10-K for the fiscal year ended April 30, 2018, we identified material weaknesses in the design and operation of our internal controls. The material weaknesses are due to the limited number of employees, which impacts our ability to conduct a thorough internal review, and the Company’s reliance on external accounting personnel to prepare financial statements.

To remediate the material weakness, the Company is developing a ~~plan~~ plan to design and implement the operation of our internal controls. Upon ~~the Company~~ obtaining additional capital, the ~~Company~~ Company intends to hire additional accounting staff, and operations ~~and~~ and administrative executives in the future to address its material weaknesses.

We will continue to monitor and assess our remediation initiatives to ensure that the aforementioned material weaknesses are remediated.

B. Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures and internal controls designed to ensure that information required to be disclosed in the Company’s filings under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. The Company’s management, with the participation of its principal executive and principal financial officers, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this Quarterly Report. Based upon that evaluation and solely due to the unremediated material weaknesses described above, the Company’s principal executive and financial officers have concluded that such disclosure controls and procedures were not effective for the purpose for which they were designed as of the end of such period. As a result of this conclusion, the financial statements for the period covered by this report were prepared with particular attention to the unremediated material weaknesses previously disclosed. Accordingly, management believes that the consolidated financial statements included in this report fairly present, in all material respects, the Company’s financial condition, results of operations and cash flows as of and for the periods presented, in accordance with U.S. GAAP, notwithstanding the unremediated weaknesses.

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C. Changes in Internal Control over Financial Reporting

There was no change in the Company’s internal control over financial reporting that was identified in connection with such evaluation that occurred during the period covered by this Quarterly Report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

On January 30, 2014, the landlord filed a Statement of Claim ~~against~~ against the Company for rental arrears in the amount aggregating ~~CAD~~ CAD $759,000 (approximately USD $~~578~~574,000 as of ~~October~~January 31, ~~2018~~2019). ~~The~~ The Company filed a defense and on October 20, 2014, it filed a ~~summary~~ summary judgment application stating that the landlord’s claim is barred, as it was commenced outside the two-year statute of of limitation period under the Alberta Limitations Act. The ~~landlord~~ landlord subsequently filed a cross-application to amend its Statement of Claim to add a claim for loss of prospective rent in an amount of CAD $665,000 (approximately USD $~~507~~503,000 as of ~~October~~ January 31, ~~2018~~2019). The applications were heard on June 25, 2015 and the court ~~allowed~~ allowed both the Company’s summary judgment application and ~~the~~ the landlord’s amendment application. Both of these orders ~~were~~ were appealed though two levels of the Alberta courts and the ~~appeals~~ appeals were dismissed at both levels. On October 4, 2018, the ~~Company~~ Company settled the dispute with the landlord in exchange for the ~~issuance~~ issuance of 68,807 shares of Company ~~common~~Common ~~stock~~Stock, satisfying the $75,000 liability related to the lease.

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ITEM 1A. RISK FACTORS

Our results of operations and financial condition are subject to numerous risks and uncertainties described in our Annual Report on Form 10-K for our fiscal year ended April 30, 2018, filed on July 30, 2018. You should carefully consider these risk factors in conjunction with the other information contained in this Quarterly Report. Should any of these risks materialize, our business, financial condition and future prospects could be negatively impacted. As of ~~December~~March 1725, ~~2018~~ 2019, there have been no material changes to the disclosures made in the above-referenced Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

On December 17, 2018, the Company entered into agreements with Petro Exploration Funding, LLC and Petro Exploration Funding II, LLC to extend the due date of the first interest payment due pursuant to each of the Secured Notes entered into with the foregoing parties in June and November 2017, respectively, from December 31, 2018 to March 31, 2019. The Secured Notes have an aggregate principal amount of $4.5 million, accrue interest at (a ~~rate of 10% per annum, and mature on June 13, 2020.~~)

~~In addition,~~There onis ~~December 17, 2018, the Company entered into an~~no ~~Agreement~~information ~~with~~required ~~Scot Cohen, the Company’s Executive Chairman,~~ to ~~extend~~be ~~the~~disclosed ~~maturity~~on ~~date~~Form of8-K ~~the~~during ~~Cohen Loan Agreement from September 30, 2018 to March 31, 2018. Pursuant to~~ the ~~Cohen Loan~~period ~~Agreement,~~covered ~~Mr.~~by ~~Cohen~~this ~~loaned~~Form ~~the~~10-Q ~~Company~~that anwas ~~aggregate~~not ofso ~~$300,000 in June 2018, which amount accrues interest at a rate of 10% per annum~~reported.

~~There were no material changes to the procedures by which security holders may recommend nominees to the registrant’s Board of Directors during the quarter ended October 31, 2018.~~ (b)

~~-29-~~There were no material changes to the procedures by which security holders may recommend nominees to the registrant’s Board of Directors during the quarter ended January 31, 2019.

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ITEM 6. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Financial Statements.

Our financial statements as set forth in the Index to Financial Statements attached hereto commencing on page F-1 are hereby incorporated by reference.

(b) Exhibits.

The following exhibits, which are numbered in accordance with Item 601 of Regulation S-K, are filed herewith or, as noted, incorporated by reference herein:

Exhibit Number		Exhibit Description
10.1		Membership Interest Purchase Agreement, by and between Petro River Oil Corp., ICO Liquidating Trust, LLC and LBE Partners, LLC, dated October 2, 2018 (incorporated by reference to our Current Report on Form 8-K, filed on October 3, 2018)
3.1		Certificate of Designations of Preferences and Rights of Series A Convertible Preferred Stock, dated January 31, 2019 (incorporated by reference to Exhibit 3.1 of our Current Report on Form 8-K, filed February 6, 2019)
10.2		Assignment and Assumption Agreement, by and between Petro River Oil Corp., ICO Liquidating Trust, LLC and LBE Partners, LLC, dated October 2, 2018 (incorporated by reference to our Current Report on Form 8-K, filed on October 3, 2018)
3.2		First Amended and Restated Certificate and Restated Certificate of Designations of Preferences and Rights of Series A Convertible Preferred Stock, dated March 13, 2019 (incorporated by reference to Exhibit 3.1 of our Current Report on Form 8-K, filed March 18, 2019)
10.3		June 2017 Secured Note Extension Agreement, by and between the Company and Petro Exploration Funding, LLC, dated December 17, 2018
4.1		Form of Warrant, dated January 31, 2019 (incorporated by reference to Exhibit 4.1 of our Current Report on Form 8-K, filed February 6, 2019)
10.4		November 2017 Secured Note Extension Agreement, by and between the Company and Petro Exploration Funding II, LLC, dated December 17, 2018
10.1		Form of Securities Purchase Agreement, dated January 31, 2019 Debt Conversion Agreement by and between Petro River Oil Corp. and Scot Cohen, dated January 31, 2019 (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K, filed February 6, 2019)
10.5		Loan Agreement Extension, by and between Bandolier Energy, LLC and Scot Cohen, dated December 17, 2018
10.2		Debt Conversion Agreement by and between Petro River Oil Corp. and Scot Cohen, dated January 31, 2019 (incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K, filed February 6, 2019)
10.3		Debt Conversion Agreement by and between Petro River Oil Corp. and Fortis Oil & Gas, dated January 31, 2019 (incorporated by reference to Exhibit 10.3 of our Current Report on Form 8-K, filed February 6, 2019)
10.4		Form of Assignment of Net Profit Interest, dated January 31, 2019 (incorporated by reference to Exhibit 10.4 of our Current Report on Form 8-K, filed February 6, 2019)
10.5		Secured Debt Conversion Agreement by and between Petro River Oil Corp. and Petro Exploration Funding, LLC, dated January 31, 2019 (incorporated by reference to Exhibit 10.5 of our Current Report on Form 8-K, filed February 6, 2019)
10.6		Secured Debt Conversion Agreement by and between Petro River Oil Corp. and Petro Exploration Funding II, LLC, dated January 31, 2019 (incorporated by reference to Exhibit 10.6 of our Current Report on Form 8-K, filed February 6, 2019)
10.7		Subscription Agreement, dated February 25, 2019 (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K, filed February 27, 2019)
10.8		Horizon Energy Acquisition, LLC Limited Liability Company Agreement (incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K, filed February 27, 2019)
31.1*		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*		XBRL Instance Document
101.SCH*		XBRL Taxonomy Extension Schema Document
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		XBRL Taxonomy Extension Labels Linkbase Document
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document

*	Filed herewith.

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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	PETRO RIVER OIL CORP.
	By:	/s/ Scot Cohen
	Name:	Scot Cohen
	Title:	Executive Chairman
	By:	/s/ David Briones
	Name:	David Briones
	Title	Chief Financial Officer
Date: December 17, 2018
Date: March 25, 2019

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