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~~ the quarterly period ended ~~January~~July 31, 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)

Securities registered pursuant to Section 12(b) of the Act: None

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 ~~March~~September 2523, 2019
Common Stock, $0.00001 par value per share		1718,~~938~~063,540 shares

TABLE OF 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
	Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	22
	Notes to Consolidated Financial Statements (Unaudited)	5
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	33
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	21
Item 4.	Controls and Procedures	33
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	28
Item 4.	Controls and Procedures	28
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	3430
Item 1A.	Risk Factors	3530
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3530
Item 3.	Default Upon Senior Securities	3530
Item 4.	Mine Safety Disclosures	3530
Item 5.	Other Information	3530
Item 6.	Exhibits	3630
SIGNATURES		3731

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PART I -– FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

Petro River Oil Corp. and Subsidiaries

Consolidated Balance Sheets

	As of
	January 31,	April 30,
	July 31, 2019	April 30, 2019
	2019	2018
Assets	(Unaudited)
Current Assets:
Cash and cash equivalents	$21,~~139~~074,~~841~~012	$471,~~330~~214,858
Accounts receivable - oil and gas	118,272	308,099
Accounts receivable – oil and gas	102,436	128,987
Accounts receivable - other	5,288	-
Accounts receivable – other	288	-
Prepaid expense and other current assets	243,~~447~~462	~~612~~206,210
Prepaid oil and gas asset development costs	~~55,116~~-	-55,116
Total Current Assets	21,~~320~~220,~~964~~198	~~356~~1,~~041~~605,171
Oil and gas assets, full cost method
Costs subject to amortization, net	65,~~566~~849,~~188~~494	35,~~779~~868,~~414~~932
Costs not being amortized, net	100,000	100,000
Property, plant and equipment, net	~~253~~-	~~822~~63
Investment in Horizon Energy Partners	12,~~950~~037,~~034~~151	12,~~592~~037,~~418~~151
Other assets	5,266	17,133
Investment in Horizon Energy Acquisition, LLC	400,000	400,000
Total Long-term Assets	8,621,741	5,489,787
Other assets	24,852	5,266
Total Assets	$10,942,705	$5,845,828
Total Long-Term Assets	8,411,497	8,411,412
Total Assets	$9,631,695	$10,016,583
Liabilities and Equity
Current Liabilities:
Accounts payable and accrued expense	$~~460~~570,~~506~~483	$~~908~~714,~~343~~786
Accrued interest on notes payable – related party	-	298,581
Asset retirement obligations, current portion	720,214	720,442
Redetermination liability	-	259,313
Total Current Liabilities	1,290,697	1,435,228
Asset retirement obligations, current portion	720,535	413,794
Long-Term Liabilities:
Total Current Liabilities	1,181,041	1,880,031
Asset retirement obligations, net of current portion	308,555	328,749
Long-term Liabilities:
Derivative liabilities	2,290,669	4,191,754
Asset retirement obligations, net of current portion	307,549	246,345
Total Long-Term Liabilities	2,599,224	4,520,503
Derivative liabilities	4,130,451	-
Total Liabilities	3,889,921	5,955,731
Notes payable - related parties, net of debt discount of $0 and $2,139,250, respectively	-	2,360,750
Commitments and Contingencies
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	-	-
Preferred shares – 5,000,000 authorized; par value $0.00001; 0 shares issued and outstanding	-	-
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	-
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	4	4
Preferred B shares - 29,500 authorized; par value $0.00001 per share; 0 shares issued and outstanding	-	-
Preferred B shares – 29,500 authorized; par value $0.00001; 0 shares issued and outstanding	-	-
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
Common shares – 150,000,000 authorized; par value $0.00001; 17,938,540 and 17,938,540 issued and outstanding, respectively	180	180
Additional paid-in capital	59,~~569~~706,~~741~~105	5259,~~407~~563,~~543~~627
Accumulated deficit	(5554,~~113~~599,~~469~~154)	(5156,~~049~~154,~~014~~121)
Subscription receivable	(150,005)	-
Total Petro River Oil Corp. Equity	5,107,135	3,409,690
Total Petro River Oil Corp. Equity	4,306,452	1,358,702
Non-controlling interests	634,639	651,162
Non-controlling interest	1,017,212	-
Total Equity	5,741,774	4,060,852
Total Equity	5,323,664	1,358,702
Total Liabilities and Equity	$9,631,695	$10,016,583
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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Table of Contents

Petro River Oil Corp. and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

	For the Three Months Ended January 31,		For the Nine Months Ended January 31,
	For the Three Months Ended
	2019	2018	2019	2018
	July 31, 2019	July 31, 2018
Revenue
Revenues
Oil and natural gas sales	$~~324~~319,~~115~~221	$~~250~~574,~~877~~065	~~$1,308,612~~	~~$275,918~~
Royalty revenue	153,~~871~~238	-	~~15,871~~	-
Total Revenue	~~339~~322,~~986~~459	~~250~~574,~~877~~065	~~1,324,483~~	~~275,918~~
Operating Expense
Lease operating expense	144,721	12,445	331,392	70,049
Lease operating expenses	257,316	77,612
Depreciation, depletion and accretion	~~158~~108,~~637~~882	9690,~~540~~547	~~345,933~~	~~117,405~~
Impairment of oil and gas assets	-	730,607	-	972,488
General and administrative	318,278	506,557
General and administrative	554,729	686,680	1,468,641	2,162,759
Total Operating Expense	684,476	674,716
Total Operating Expense	858,087	1,526,272	2,145,966	3,322,701
Operating Loss	(362,017)	(100,651)
Operating Loss	(518,101)	(1,275,395)	(821,483)	(3,046,783)
Other Income (Expense)
Other Income (Expense)
Interest income (expense), net	(624)	(319,580)
Interest income (expense), net	(2,490,539)	(50,173)	(3,107,865)	184,134
Change in fair value of derivative liabilities	1,901,085	-
Loss on assumption of Pearsonia interests	-	(3,351,965)	-	(3,351,965)
Other Income (Expense)	1,900,461	(319,580)
Loss on legal settlement	-	-	(75,000)	-
Net Income (Loss) Before Income Tax Provision	1,538,444	(420,231)
Loss on redetermination	-	(11,914,204)	-	(11,914,204)
Income Tax Provision	-	-
Loss on extinguishment of debt	(90,916)	-	(90,916)	-
Net Income (Loss)	1,538,444	(420,231)
Net (loss) gain on real estate rights	-	(3,756)	-	267,734
Net Income (Loss) Attributable to Non-controlling Interests	(16,523)	-
Other Income (Expense)	(2,581,455)	(15,320,098)	(3,273,781)	(14,814,301)
Net Income (Loss) Attributable to Petro River Oil Corp.	$1,554,967	$(420,231)
Net Loss Before Income Tax Provision	(3,099,556)	(16,595,493)	(4,095,264)	(17,861,084)
Income (Loss) Per Common Share –
Income Tax Provision	-	50,284	-	333,203
Basic	$0.09	$(0.02)
Net Loss	(3,099,556)	(16,645,777)	(4,095,264)	(18,194,287)
Diluted	$0.09	$(0.02)
Net Income (Loss) Attributable to Non-controlling Interest	(24,591)	28,198	(30,809)	101,423
Weighted Average Number of Common Shares Outstanding –
Net Loss Attributable to Petro River Oil Corp.	(3,074,965)	(16,673,975)	(4,064,455)	(18,295,710)
Basic	17,938,540	17,504,019
Deemed Dividend on Series A Preferred Stock	(3,512,021)	-	(3,512,021)	-
Diluted	17,938,540	17,504,019
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 Changes in Stockholders’ Equity

(Unaudited)

For the Three Months Ended July 31, 2019

	Preferred	Preferred	Common	Common	Additional Paid-in	Accumulated	Non-controlling	Total Stockholders’
	Shares	Amount	Shares	Amount	Capital	Deficit	Interests	Equity

Balance at May 1, 2019	435,403	$4	17,938,540	$180	$59,563,627	$(56,154,121)	$651,162	$4,060,852

Stock-based compensation	-	-	-	-	28,272	-	-	28,272

Contribution of overriding royalty interest	-	-	-	-	114,206	-	-	114,206

Net income (loss)	-	-	-	-	-	1,554,967	(16,523)	1,538,444

Balance at July 31, 2019	435,403	$4	17,938,540	$180	$59,706,105	$(54,599,154)	$634,639	$5,741,774

For the Three Months Ended July 31, 2018

	Preferred	Preferred	Common	Common	Additional Paid-in	Accumulated	Non-controlling	Total Stockholders’
	Shares	Amount	Shares	Amount	Capital	Deficit	Interests	Equity

Balance at May 1, 2018	-	$-	17,309,733	$173	$52,407,543	$(51,049,014)	$-	$1,358,702

Stock-based compensation	-	-	260,000	3	245,981	-	-	245,984

Net loss	-	-	-	-	-	(420,231)	-	(420,231)

Balance at July 31, 2018	-	$-	17,569,733	$176	$52,653,524	$(51,469,245)	$-	$1,184,455

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 Nine Months
	For the Three Months Ended
	Ended
	July 31, 2019	July 31, 2018
	January 31, 2019	January 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$(4,095,264)	$(18,194,287)
Net income (loss)	$1,538,444	$(420,231)
Adjustments to reconcile net loss to net cash used in by operating activities:
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Stock-based compensation	~~413~~28,~~787~~272	~~811~~245,~~123~~984
Depreciation, depletion and accretion	~~345~~108,~~933~~882	~~117~~90,~~405~~547
Amortization of debt discount	~~2,139,250~~-	~~224~~156,~~000~~199
Impairment of oil and gas assets	-	972,488
Change in fair value of derivative liabilities	(1,901,085)	-
Loss on legal settlement	75,000	-
Net gain on interest in real estate rights	-	(267,734)
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	~~189~~26,~~827~~551	~~(97~~96,~~611)~~945
Accounts receivable – other	(5,288)	-
Accrued interest on notes receivable – related party	-	(593,021)
Prepaid expenses and other assets	143,162	(5,506)
Prepaid expense and other assets	10,032	149,391
Prepaid oil and gas development costs	55,116	-
Accounts payable and accrued expense	(465,326)	309,344
Accounts payable and accrued expenses	100,051	(284,489)
Accrued interest on notes payable – related party	~~331,493~~-	-150,415
Net Cash Used in Operating Activities	(460,709)	(969,530)
Net Cash Provided by Operating Activities	99,105	29,864
CASH FLOW FROM INVESTING ACTIVITIES:
Proceeds from the sale of interest in real estate rights	-	1,553,884
Capitalized expenditures on oil and gas property development costs	(239,951)	(372,552)
Prepaid oil and gas assets	-	(446,856)
Net Cash Used in Investing Activities	(239,951)	(372,552)
Issuance of notes receivable – related party	-	(1,558,501)
Capitalized expenditures on oil and gas assets	(568,030)	(2,116,602)
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	(786,960)	(3,067,215)
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from the issuance of Series A Preferred Stock and warrants	2,740,180	-
Proceeds from notes payable – related party	-	300,000
Proceeds from notes payable – related party	300,000	4,500,000
Net Cash Provided by Financing Activities	-	300,000
Cash paid for debt inducement	-	(250,000)
Change in cash and cash equivalents	(140,846)	(42,688)
Cash received from non-controlling interest contributions	300,000	-
Cash and cash equivalents, beginning of period	1,214,858	47,330
Net Cash Provided by Financing Activities	3,340,180	4,250,000
Cash and cash equivalents, end of period	$1,074,012	$4,642
Change in cash and cash equivalents	2,092,511	213,255
Cash and cash equivalents, beginning of period	47,330	631,232
Cash and cash equivalents, end of period	$2,139,841	$844,487
SUPPLEMENTARY CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes	$-	$~~86,876~~-
Interest paid	$-	$-
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Receivable for sale of oil and gas properties	$-	$17,449
Accrual of oil and gas development costs	$126,481	$77,307
Additions to asset retirement obligation from new drilling activities	$4,150	$16,875
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	$-

Change in estimate of asset retirement obligations	$21,696	$1,088
Additions to asset retirement obligation from new drilling	$-	$4,150
Change in accrued oil and gas development costs	$130,148	$84,020
Contribution of overriding royalty interest	$114,206	$-

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

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PETRO RIVER OIL CORP. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

1.	Organization

~~Petro~~ Petro River Oil Corp. (the “Company”, “we”, “us” or “our”) 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~~exploring ~~highly~~additional ~~prospective~~opportunities ~~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~~ 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 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~~ 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~~ 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 exchange for 300,000 restricted shares of the Company’s common stock, par value $0.00001 per share. 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

Horizon Subscription Agreement

On February 25, 2019, Company executed a Subscription Agreement, pursuant to which the Company 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 “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 of 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.

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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 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 method of accounting as specified in ASC 805 “Business Combinations.” This method of accounting requires the acquirer to record the net assets and liabilities acquired at the historical cost of LBE Partners because the Company determined that this acquisition was a related 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 indicative of either the actual operation results had the acquisition transaction occurred as of May 1, 2017 and May 1, 2018.

	For the Nine Months Ended January 31, 2019
	Petro River	LBE Partners	Pro-Forma Combined
Revenue	$1,324,483	$229,715	$1,554,198
Net income (loss)	(4,095,264)	55,432	(4,039,832)
Loss per share of common share - basic and diluted			$(0.42)
Weighted average number of common shares outstanding - basic and diluted			17,877,762

	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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2.	Going Concern and Management’s Plan

The accompanying consolidated financial statements have been 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 ~~January~~July 31, 2019, the Company had an accumulated deficit of approximately $5554.16 million, had a working capital deficit of approximately $~~1.1 million~~70,500, and had cash and cash equivalents of approximately $21.1 million. As a result of the utilization of cash in its operating activities, and the development of its assets, the Company 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 isremains ~~focusing~~focused 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.

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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.

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~~The ~~contained~~unaudited consolidated financial information furnished herein reflects all adjustments, consisting solely of normal recurring items, which in the ~~unaudited~~opinion ~~consolidated~~of management are necessary to fairly state the financial ~~statements~~position ~~for~~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 ~~January~~April 3130, ~~2018~~2019, filed with the Securities and ~~April~~Exchange Commission (the “SEC”) on August 3013, ~~2018~~2019, isas amended on August 14, 2019. The Company assumes that the users of the interim financial information ofherein ~~MegaWest,~~have ~~which~~read ~~prior~~or have access to ~~January~~the ~~31,~~audited ~~2018~~financial statements for the preceding fiscal year ~~was~~and 58that the adequacy of additional disclosure needed for a fair presentation may be determined in that context.~~51%~~ ~~owned~~Accordingly, footnote bydisclosure, which would substantially duplicate the disclosure contained in the Company.’s ~~The~~Annual ~~unaudited~~Report ~~consolidated~~on Form ~~financial~~10-K, ~~statements~~as amended, for the ~~nine~~year ~~months~~ ended ~~January~~April 3130, ~~2018~~2019, has been ~~include~~omitted. ~~the~~The results of operations offor ~~MegaWest; however,~~ the ~~assets~~interim periods ~~and~~presented ~~liabilities~~are ~~were~~not ~~written~~necessarily ~~off~~indicative inof results for the entire year ~~ended~~ending April 30, ~~2018~~ 2020.

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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.

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(b)

Cash and Cash Equivalents:

Cash and cash equivalents include all highly liquid monetary 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.~~

As of July 31, 2019, approximately $467,000 of cash and cash equivalents 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.

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 ~~January~~July 31, 2019 and April 30, ~~2018~~ 2019 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. As of July 31, 2019 and 2018, management engaged a third party to perform an independent study of the oil and gas assets. The Company recorded no impairment in the consolidated statements of operations for the three months ended July 31, 2019 and 2018, respectively.

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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 ~~nine~~three months ended ~~January~~July 31, 2019 and 2018.

(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.

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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.

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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)	Preferred Stock:

The Company applies the accounting standards for distinguishing liabilities from equity under U.S. GAAP when determining the classification and measurement of its preferred stock. Preferred shares subject to mandatory redemption are classified as liability instruments and are measured at fair value. Conditionally redeemable preferred shares (including preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, preferred shares are classified as permanent equity.

(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~~9 ~~derivative liabilities of $4,130,451 and $0 as of January 31, 2019 and April 30, 2018, respectively.~~-

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~~(h)~~ The Company ~~Revenue~~had ~~Recognition:~~derivative liabilities of $2,290,669 and $4,191,754 as of July 31, 2019 and April 30, 2019, respectively.

~~ASU 2014-09, “Revenue from Contracts with Customers~~ (~~Topic 606~~h),” ~~supersedes~~Income 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.Taxes:

~~The~~ ~~Company’s~~Income ~~revenue~~Tax 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.Provision

The Company utilizes the asset and liability method in accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for operating loss and tax credit carry-forwards and for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets unless it is more likely than not that the value of such assets will be realized.

The Company may recognize the 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. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement.

The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying consolidated balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its consolidated balance sheets and provides valuation allowances as management deems necessary.

Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.

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. At July 31, 2019 and April 30, 2019, the Company had $0 and $0, respectively, of liabilities for uncertain tax positions.

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)

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 May 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. Refer to Note 11 – Revenue from Contracts with Customers for additional information.

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The Company’s revenue is comprised of revenue from exploration and production activities as well as royalty revenue 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.

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 revenue.

(ij) 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.

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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.

(jm) ~~Income~~Per ~~Taxes~~Share Amounts:

Basic ~~Income~~earnings ~~Tax~~(loss) ~~Provision~~per share (“EPS”) is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if converted method. In computing diluted EPS, the average stock price for the period is used to determine the number of shares assumed to be purchased from the exercise of stock options and/or warrants. Diluted EPS excluded all dilutive potential shares if their effect is anti-dilutive. For the three months ended July 31, 2019, the dilutive potential common shares outstanding during the period included only a portion of the potentially issuable shares of common stock related to options and warrants as the majority of options and warrants were anti-dilutive.

~~The Company~~(n) ~~utilizes~~Recent ~~the~~Accounting asset and liability method in accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for operating loss and tax credit carry-forwards and for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets unless it is more likely than not that the value of such assets will be realized.Pronouncements:

In ~~Uncertain~~February ~~Tax~~2016, ~~Positions~~the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, “Leases (Topic 842)”. The new lease guidance supersedes Topic 840. The core principle of the guidance is that entities should recognize the assets and liabilities that arise from leases. Topic 840 does not apply to leases to explore for or use minerals, oil, natural gas and similar non-regenerative resources, including the intangible right to explore for those natural resources and rights to use the land in which those natural resources are contained. In July 2018, the FASB issued ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements”, which provides entities with an alternative modified transition method to elect not to recast the comparative periods presented when adopting Topic 842. The Company adopted Topic 842 as of May 1, 2019, using the alternative modified transition method, for which, comparative periods, including the disclosures related to those periods, are not restated.

~~The~~In ~~Company~~addition, ~~evaluates~~the ~~uncertain~~Company ~~tax~~elected ~~positions~~practical toexpedients ~~recognize~~provided aby ~~tax~~the ~~benefit~~new ~~from~~standard anwhereby, ~~uncertain~~the ~~tax~~Company ~~position~~has ~~only~~elected ifto itnot isreassess ~~more likely~~its ~~than~~prior ~~not~~conclusions ~~that~~about ~~the~~lease ~~tax~~identification, ~~position~~lease ~~will~~classification, and beinitial ~~sustained~~direct oncosts ~~examination~~and ~~by the~~to ~~taxing~~retain ~~authorities~~off-balance ~~based~~sheet ontreatment of ~~the~~short-term ~~technical~~leases ~~merits of the position~~(i.e., ~~Those~~12 ~~tax~~months ~~positions~~or ~~failing~~less toand ~~qualify~~does ~~for~~not ~~initial~~contain ~~recognition~~a ~~are~~purchase ~~recognized~~option inthat the ~~first~~Company ~~interim~~is ~~period~~reasonably incertain ~~which~~to ~~they~~exercise). ~~meet~~As ~~the~~a ~~more~~result ~~likely~~of ~~than~~the ~~not~~short-term ~~standard~~expedient orelection, ~~are~~the Company ~~resolved~~has ~~through negotiation~~no orleases ~~litigation~~that ~~with~~require the ~~taxing~~recording ~~authority,~~of ora ~~upon~~net lease ~~expiration~~asset ofand ~~the~~lease ~~statute~~liability ofon ~~limitations.~~the ~~De-recognition~~Company’s ofconsolidated balance asheet ~~tax position~~or ~~that~~have ~~was~~a ~~previously~~material ~~recognized~~impact ~~occurs~~on ~~when~~consolidated anearnings ~~entity~~or ~~subsequently~~cash ~~determines~~flows ~~that~~as aof ~~tax~~July ~~position~~31, no2019. ~~longer~~Moving ~~meets~~forward, the Company will ~~more~~evaluate ~~likely~~any ~~than~~new ~~not~~lease ~~threshold~~commitments offor ~~being~~application ~~sustained~~of Topic 842.

~~Interpretation~~In September of2016, the ~~taxation~~FASB ~~rules~~issued ASU 2016-13, Financial Instruments ~~relating~~– Credit Losses. ASU 2016-13 was issued to ~~net~~provide ~~operating~~more ~~loss~~decision-useful ~~utilization~~information inabout the ~~real~~expected ~~estate~~credit ~~transactions~~losses ~~give~~on ~~rise~~financial toinstruments ~~uncertain~~and ~~positions.~~changes Inthe ~~connection~~loss ~~with~~impairment ~~the~~methodology. ~~uncertain~~ASU 2016-13 is ~~tax~~effective ~~position~~for reporting periods beginning after December 15, ~~there~~2019 using a ~~were~~modified noretrospective ~~interest~~adoption method. A prospective transition orapproach ~~penalties~~is ~~recorded~~required asfor debt securities for which an other-than-temporary impairment had been recognized before the effective ~~position~~date. The Company is ~~expected~~currently ~~but~~assessing the ~~tax~~impact this ~~returns~~accounting ~~are~~standard ~~not~~will ~~yet~~have ~~due~~on its financial statements and related disclosures.

~~The~~In June ~~Company~~2018, isthe ~~subject~~FASB toissued ~~ongoing~~Accounting ~~tax~~Standards ~~exposures~~Update (ASU) No. 2018-07, ~~examinations~~Compensation ~~and~~– ~~assessments~~Stock inCompensation ~~various~~(Topic ~~jurisdictions~~718): Improvements to Nonemployee Share-Based Payment Accounting. ~~Accordingly,~~Under the ~~Company~~new ~~may~~standard, ~~incur~~companies ~~additional~~will ~~tax~~no ~~expense~~longer ~~based~~be ~~upon~~required ~~the~~to ~~outcomes~~value ofnon-employee ~~such~~awards ~~matters~~differently from employee awards. InCompanies ~~addition,~~will ~~when~~value ~~applicable,~~all ~~the~~equity classified ~~Company~~awards ~~will~~at ~~adjust~~their ~~tax~~grant-date under ASC 718 and forgo ~~expense~~revaluing tothe ~~reflect~~award after the grant date. ASU 2018-07 is effective for annual reporting periods beginning after December 15, 2018, including interim reporting periods within that reporting period. Early adoption is permitted, but no earlier than the Company’s ~~ongoing~~adoption ~~assessments~~date of ~~such matters~~Topic 606, ~~which~~Revenue ~~require~~from ~~judgment~~Contracts ~~and~~with ~~can~~Customers (as ~~materially~~described ~~increase~~above orunder Revenue Recognition). The Company adopted ~~decrease~~the ~~its~~standard ~~effective~~during ~~rate~~the asthree ~~well~~months asended July 31, 3019 and the adoption did not have an impact ~~operating~~on the Company’s consolidated ~~results~~financial statements.

~~The number~~- of12 ~~years with open tax audits varies depending on the tax jurisdiction. The Company’s major taxing jurisdictions include the United States (including applicable states).~~-

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In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (kTopic 820): Disclosure ~~Per~~Framework ~~Share~~—Changes ~~Amounts:~~to the Disclosure Requirements for Fair Value Measurement”. This update is to improve the effectiveness of disclosures in the notes to the financial statements by facilitating clear communication of the information required by U.S. GAAP that is most important to users of each entity’s financial statements. The amendments in this update apply to all entities that are required, under existing U.S. GAAP, to make disclosures about recurring or nonrecurring fair value measurements. The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company is currently evaluating this guidance and the impact of this update on its consolidated financial statements.

~~Basic~~The ~~net~~Company ~~income~~does ~~(loss)~~not ~~per~~expect ~~common share is computed by dividing net loss attributable to stockholders by~~ the ~~weighted-average~~adoption ~~number~~ of ~~shares~~ ofany ~~common~~recently ~~stock outstanding during the period. Diluted net~~issued ~~income~~accounting ~~(loss)~~pronouncements ~~per~~to ~~common~~have ~~share~~a issignificant ~~determined~~impact ~~using~~on ~~the~~its ~~weighted-average~~financial ~~number of common shares outstanding during the period~~position, ~~adjusted~~results ~~for the dilutive effect~~ of ~~common stock equivalents. For the nine months ended January 31~~operations, ~~2019~~or ~~and~~cash ~~2018, potentially dilutive securities were not included in the calculation of diluted net loss per share because to do so would be anti-dilutive~~flows.

~~The Company~~(o) ~~had~~Subsequent ~~the following common stock equivalents at January 31, 2019 and 2018~~Events:

	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 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.

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~~Acquisition ~~and~~of ~~Gas~~Membership ~~Assets~~Interest in LBE Partners, LLC

~~The~~ ~~following~~On ~~table~~October ~~summarizes~~2, 2018, the ~~activity~~Company, ofICO ~~the~~Liquidating Trust, LLC (“ICO”) and LBE Partners, which owns various working interests in several oil and gas ~~assets~~wells located in the Hardin oil field in Liberty, byTexas, ~~project~~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 ~~nine~~Company’s ~~months~~common ~~ended~~stock valued ~~January~~at 31$333,000 ~~2019:~~based on the market value of the stock on the grant date. Both ICO and LBE Partners are managed by Scot Cohen, the Company’s Executive Chairman.

	Oklahoma	Texas	Other (1)	Total
Balance May 1, 2018	$3,779,414	$-	$100,000	$3,879,414
Additions	688,218	2,430,139	-	3,118,357
Depreciation, depletion and amortization	(207,700)	(123,883)	-	(331,583)
Balance January 31, 2019	$4,259,932	$2,306,256	$100,000	$6,666,188

~~(1)~~ The following ~~Other~~table ~~property~~summarizes, ~~consists~~on ~~primarily~~an ofunaudited ~~four~~pro ~~used~~forma ~~steam~~basis, ~~generators~~the results ~~and~~of ~~related~~operations ~~equipment~~of ~~that~~the ~~will~~Company beas ~~assigned~~though tothe ~~future~~acquisition ~~projects.~~had occurred Asas of ~~January~~May 311, ~~2019,~~2018 ~~and~~(the ~~April~~beginning ~~30,~~of ~~2018,~~the ~~management~~prior ~~concluded~~fiscal year). ~~that~~The ~~impairment~~pro-forma ~~was~~amounts presented are not ~~necessary~~necessarily indicative asof ~~all~~either ~~other~~the ~~assets~~actual ~~were~~operation ~~carried~~results athad ~~salvage~~the acquisition ~~value~~transaction occurred as of May 1, 2018.

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	For the Three Months Ended July 31, 2018
	Petro River	LBE Partners	Pro-Forma Combined
Revenue	$574,065	$151,705	$725,770
Net income (loss)	(420,231)	22,687	(397,544)
Loss per share of common share – basic and diluted	(0.02)		$(0.02)
Weighted average number of common shares outstanding – basic and diluted	17,504,019	300,000	17,804,019

For the three months ended July 31, 2019, the changes in non–controlling interest in LBE were as follows:

Non–controlling interest at April 30, 2019	$651,162
Non–controlling share of net loss	(16,523)
Non–controlling interest at July 31, 2019	$634,639

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6.	Oil and Gas Assets

The following table summarizes the activity in oil and gas assets by project:

Cost	Oklahoma	Texas	Other (1)	Total
Balance, May 1, 2019	$4,706,261	$1,162,671	$100,000	$5,968,932
Additions	109,803	-	-	109,803
Change in estimates	(17,746)	(3,950)	-	(21,696)
Depreciation, depletion and amortization	(72,213)	(35,332)	-	(107,545)
Impairment of oil and gas assets	-		-	-
Balance, July 31, 2019	$4,726,105	$1,123,389	$100,000	$5,949,494

(1)	Other property consists primarily of four, used steam generators and related equipment that will be assigned to future projects. As of July 31, 2019 and April 30, 2019, 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 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.

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 ~~nine~~three months ended ~~January~~ July 31, 2019, the Company recorded additions related to development ~~costs~~ costs incurred of approximately $~~688~~110,000 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 Impairment of Oil & Gas Properties. As ~~Asset~~of ~~Retirement~~July ~~Obligations~~31, 2019, the Company assessed its oil and gas assets for impairment and recognized a charge of $0 related to its Texas oil and gas properties. As of July 31, 2018, the Company assessed its oil and gas assets for impairment and recognized a charge of $0 related to its Oklahoma and Larne Basin oil and gas properties.

The total future asset retirement obligations were estimated based 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 timing of such payments7. ~~The~~Asset ~~Company~~Retirement estimated the present value of its asset retirement obligations at both January 31, 2019 and April 30, 2018 based on a future undiscounted liability of $1,098,706 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.Obligations

~~Changes~~The total future asset retirement obligations were estimated based 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 timing of such payments. The Company estimated the present value of its asset retirement obligations at both July 31, 2019 and April 30, 2019 based on a future undiscounted liability of $1,096,159 and $1,118,249, respectively. These costs are expected to be incurred within 1 to 42 years. A credit-adjusted risk-free discount rate of 10% and an inflation rate range of 1.5% to 2.66% were asused ~~follows:~~to calculate the present value.

	Nine Months Ended January 31, 2019	Nine Months Ended January 31, 2018
Balance, beginning of period	$660,139	$558,696
Additions	359,950	16,875
Change in estimates	(5,786)	55,098
Disposals	-	-
Accretion	13,781	6,535
	1,028,084	637,204
Less: Current portion for cash flows expected to be incurred within one year	(720,535)	(406,403)
Long-term portion, end of period	$307,549	$230,801

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During the nine months ended January 31, 2019 and 2018, the Company recorded accretion expense of $13,781 and $6,535, respectively.

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Changes to the asset retirement obligations were as follows:

	Three Months Ended July 31, 2019	Three Months Ended July 31, 2018
Balance, beginning of period	$1,049,191	$660,139
Additions	-	4,150
Change in estimates	(21,696)	(1,088)
Accretion	1,274	3,423
	1,028,769	666,624
Less: Current portion for cash flows expected to be incurred within one year	(720,214)	(406,403)
Long-term portion, end of period	$308,555	$260,221

Expected timing of asset retirement obligations:

Year Ending April 30,
2019	$720,535
2020	$720,214
2020	-
2021	-
2022	-
2023	-
Thereafter	378,171
2024	-
Subtotal	1,098,706
Thereafter	375,945
Effect of discount	(70,622)
Subtotal	1,096,159
Total	$1,028,084
Effect of discount	(67,391)
Total	$1,028,768

78. 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 Mr. Cohen. For more information regarding this transaction, see Note 15.

~~Related~~Series ~~Party~~A ~~Loan~~Financing

On ~~June~~ 18January 31, ~~2018~~2019, ~~Bandolier~~the ~~entered~~Company ~~into~~consummated athe ~~loan~~Series ~~agreement~~A ~~with Scot Cohen~~Financing (~~the~~ “~~Cohen~~Series ~~Loan~~A ~~Agreement~~Financing”), pursuant to which ~~Mr.~~the ~~Cohen~~Company ~~loaned~~sold ~~the~~and ~~Company~~issued ~~$300,000~~an ataggregate aof ~~10%~~178,101 ~~annual interest rate~~Units, ~~due~~for onan ~~September~~aggregate purchase 30price of $3,562,015, ~~2018.~~to ~~The~~certain ~~purpose~~accredited ofinvestors ~~the~~pursuant ~~Cohen~~to ~~Loan~~a Securities Purchase Agreement ~~was~~(“SPA”) and to ~~provide~~certain ~~the~~debtholders ~~Company~~pursuant ~~with~~to ~~short-term~~debt ~~financing~~conversion inagreements, ~~connection with~~ (the ~~Company’s~~“Debt ~~drilling~~Holder Agreement”) ~~program~~resulting in ~~Osage~~net ~~County,~~cash ~~Oklahoma.~~proceeds Onto the ~~December~~Company ~~17,~~of ~~2018,~~approximately ~~the~~$2.7 ~~maturity~~million ~~date~~and the termination of the Cohen ~~loan~~Loan ~~was~~Agreement ~~extended~~and ~~from September~~debt ~~30,~~owed ~~2018~~ to ~~March~~Fortis ~~31,~~Oil ~~2019~~& Gas. In addition, Onon January 31, 2019, the Company ~~and Mr. Cohen~~ entered into athe Secured Debt Conversion ~~Agreement~~Agreements, pursuant to which ~~Mr.~~Petro ~~Cohen agreed to convert all outstanding debt~~Exploration ~~and accrued interest owed under the Cohen Loan Agreement into units~~Funding, ~~consisting~~LLC ofand anPetro ~~aggregate~~Exploration ofFunding 15II,~~000~~ ~~shares~~LLC ofconverted ~~Series A~~all ~~Preferred~~outstanding ~~and~~senior ~~warrants~~secured todebt ~~purchase~~(including ~~750,000~~interest ~~shares~~and ~~of Company common~~unpaid ~~stock~~interest), ~~sold~~amounting ~~and~~to ~~issued~~an inaggregate ~~the~~of ~~Series~~approximately ~~A Financing~~$5.1 ~~As a result~~million, ~~the~~ ~~Cohen~~into ~~Loan~~shares ~~Agreement was terminated and deemed satisfied in full. For more information regarding the debt conversion, see Note 1. Upon conversion~~ of ~~the~~Series ~~note,~~A ~~the~~Preferred ~~Company recorded a loss on debt extinguishment totaling $90,916~~Stock.

In June and November 2017, the Company consummated Secured Note financings for an aggregate of $24.05 ~~Million~~million, which Secured ~~Note~~Notes accrued interest at a rate of 10% per annum and were scheduled to mature on June 13, 2020. On May 17, 2018, the parties executed an extension of the due date of the first interest payment due pursuant to each of the Secured Notes from June 1, 2018 to December 31, 2018. As consideration for the interest payment extension, the Company agreed to pay the holders an additional 10% of the interest due on June 1, 2018 on December 31, 2018. On December 17, 2018, the parties executed a second extension of the due date of the first interest payment due pursuant to each of the Secured Notes from December 31, 2018 to March 31, 2019. As a result of the Series A Financing discussed above, the outstanding balances of the Secured Notes were converted into shares of Series A Preferred Stock.

~~Scot Cohen~~- ~~owns~~15 or controls 31.25% of Funding Corp., 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 accrued interest at a rate of 10% per annum and 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 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 agreed to pay Funding Corp. an additional 10% of the interest due June 1, 2018 on December 31, 2018. The Company accrued an additional $19,160 of interest 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.

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Table of Contents

On ~~January~~Related ~~31,~~Party 2019, the Company and Funding Corp. entered into a Secured Debt Conversion Agreement, pursuant to which Funding Corp. agreed to convert the outstanding balance due under the June 2017 Secured Note, amounting to approximately $2.3 million, into 116,503 shares of Series A Preferred. As a result of the Secured Debt Exchange, all indebtedness, liabilities and other obligations arising under the June 2017 Secured Note were cancelled and deemed satisfied in full.Loan

~~In connection~~On ~~with the issuance of the~~ June 18, ~~2017 Secured Note~~2018, the Company ~~issued~~entered tointo ~~Funding~~a ~~Corp.~~Loan ~~warrants~~Agreement towith ~~purchase~~Scot ~~840,336~~Cohen (the ~~shares~~“Cohen Loan ofAgreement”), the Company’s ~~common~~Executive ~~stock~~Chairman, pursuant ~~(the~~to ~~“June~~which ~~2017 Warrant”)~~Mr. ~~Upon issuance~~Cohen ofloaned the ~~June~~Company ~~2017 Secured Note~~$300,000 ~~the~~at ~~Company~~a ~~valued~~10% annual ~~the~~interest ~~June 2017~~rate ~~Warrant~~due ~~using~~September ~~the~~30, ~~Black-Scholes~~2018. ~~Option~~On ~~Pricing~~December ~~model~~17, ~~and~~2018, ~~accounted~~the ~~for~~maturity itdate ~~using~~of the ~~relative~~Cohen ~~fair~~Loan ~~value~~Agreement ofwas ~~$952,056~~extended asto ~~debt~~March ~~discount~~31, on2019. ~~the~~The ~~consolidated~~Cohen ~~balance~~Loan ~~sheet.~~Agreement Onwas terminated on January 31, 2019, asin ~~additional~~exchange ~~consideration~~ for the ~~conversion~~issuance of ~~the~~units, ~~amounts due~~consisting ~~under~~of ~~the~~15,000 shares ~~June~~of ~~2017~~Series ~~Secured~~A ~~Note,~~Preferred ~~the~~and ~~Company~~warrants ~~agreed~~ to ~~(i)~~purchase 750,000 ~~reduce~~shares ~~the exercise price~~ of the ~~June~~Company’s ~~2017~~common ~~Warrant~~stock ~~from~~sold ~~$2.38 per share to $0.50 per share,~~ and ~~(ii)~~issued toin ~~extend~~ the ~~expiration date of~~ ~~the~~Series ~~June~~A ~~2017 Warrant to January 31, 2024~~Financing.

~~As additional consideration for the purchase of the June 2017 Secured Note, the Company issued to Funding Corp~~9. anDerivative 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.Liabilities

~~The~~As ~~debt~~noted ~~discount~~above isin ~~amortized~~Note ~~over~~8, ~~the~~on ~~earlier~~January of31, ~~(i)~~2019, the ~~term~~Company ofsold ~~the~~and ~~debt~~issued oran ~~(ii)~~aggregate ~~conversion~~ of ~~the~~178,101 ~~debt~~units, ~~using~~for ~~the~~an ~~effective~~aggregate ~~interest~~purchase ~~method.~~price ~~The amortization~~ of ~~debt~~$3,562,015, ~~discount~~to iscertain ~~included~~accredited asinvestors ~~a component~~and ofto ~~interest expense in the consolidated statements of~~certain ~~operations~~debtholders. ~~There~~The ~~was~~units ~~unamortized~~sold ~~debt~~and ~~discount~~issued ofin $0the asSeries ofA ~~January~~Financing ~~31,~~included ~~2019.~~five-year ~~During~~warrants ~~the~~to ~~nine~~purchase ~~months ended January 31~~8,905,037 ~~2019~~shares ~~and~~of ~~2018,~~ the Company’s ~~recorded~~common ~~amortization~~stock, ofat ~~debt~~an ~~discount~~exercise ~~totaling $994,189~~price ~~and~~of $~~144,749,~~0.50 ~~respectively~~per share.

~~As of~~The ~~January~~Company ~~31,~~identified ~~2019~~certain ~~and~~features ~~April~~embedded ~~30,~~in ~~2018,~~ the ~~outstanding balance, net~~warrants ofrequiring ~~debt~~the ~~discount,~~Company ~~was~~to $0classify ~~and~~the ~~$1,005,811,~~warrants ~~respectively,~~as ~~and~~a ~~accrued~~derivative ~~interest~~liability; onspecifically, the ~~June~~warrants ~~2017~~contain ~~Secured~~a ~~Note~~fundamental transaction ~~due~~provision tothat ~~related~~permits ~~party~~their ~~was~~settlement $0in cash at fair ~~and~~value ~~$174,065,~~of ~~respectively. As~~the aremaining ~~result~~unexercised portion of ~~the~~this ~~Secured~~warrant ~~Debt Exchange,~~at the option ~~June~~of ~~2017~~the ~~Secured~~holder ~~Note~~upon ~~was~~the ~~terminated~~occurrence as of ~~January 31,~~a ~~2019~~change in control.

The ~~November~~fair ~~2017~~value ~~$2.5~~of ~~Million~~the ~~Secured~~derivative ~~Note~~feature ~~Financing~~of the warrants on the date of issuance and balance sheet date were calculated using a binomial lattice model valued with the following weighted-average assumptions:

Scot Cohen owns or controls 41.20% of Funding Corp. II, the 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 accrued interest at a rate of 10% per annum and 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.

	July 31, 2019
Risk-free interest rate	1.84%
Expected life of grants	4.50 years
Expected volatility of underlying stock	138%
Dividends	0

OnAs ~~May~~of ~~17,~~July ~~2018~~31, ~~the~~2019 ~~parties~~and ~~executed~~April an30, ~~extension~~2019, of the ~~due~~derivative ~~date~~liability of the ~~first~~warrants ~~interest~~was ~~payment from June 1~~$2, ~~2018 to December 31~~290,669 ~~2018. As~~and ~~consideration for the interest payment extension~~$4,191,754, ~~the Company agreed to pay Funding Corp~~respectively. IIDuring ~~an additional 10% of~~ the ~~interest~~ ~~due~~three onmonths ~~June~~ended 1,July ~~2018 on December~~ 31, ~~2018.~~2019, ~~The~~the Company ~~accrued an~~also ~~additional~~ recorded $141,~~247 of interest expense related to this extension. On December 17~~901,085 ~~2018,~~as the ~~parties~~change ~~executed~~in ~~a second extension of~~ the ~~due~~value ~~date~~ of the ~~first interest payment from~~derivative ~~December 31, 2018 to March 31, 2019~~liabilities.

~~On January 31, 2019, the Company and Funding Corp~~10. IIStockholders’ 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.Equity

InDuring ~~connection with~~ the ~~issuance~~three ofmonths ~~the~~ended ~~November~~July ~~2017~~31, ~~Secured Note~~2019, the ~~Company~~ ~~issued to Funding Corp. II warrants to purchase 1.25 million shares of the~~ Company’s ~~common~~recorded ~~stock (the “November 2017 Warrant”). Upon issuance of the November 2017 Note~~$27,084 ~~the~~in ~~Company valued the November 2017 Warrant using the Black~~stock-~~Scholes~~based ~~Option~~compensation ~~Pricing model and accounted~~ for itvesting ~~using~~amortization ~~the relative fair value~~ of ~~$1,051,171 as debt discount on the~~restricted ~~consolidated~~shares ~~balance~~granted ~~sheet. In relation~~ to ~~the~~employees 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)~~consultants ~~extend~~in the ~~expiration~~prior ~~date of the November 2017 Warrant to January 31, 2024~~year.

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As additional consideration for the purchase of the November 2017 Secured Note, the Company issued to Funding Corp. II 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 (the “Existing Osage County Override”) then transferred to Funding Corp. as inducement for the June 2017 Secured Note. The Existing Osage County Override was then acquired by the Company from Mr. Cohen. As noted above, the override was accounted for as a debt discount and amortized over the term of the debt.

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 $1,145,061 and $79,251, respectively.

As of January 31, 2019 and April 30, 2018, the outstanding balance, net of debt discount, was $0 and $1,354,93, respectively, and accrued interest on the November 2017 Secured Note due to related party was $0 and $120,548, respectively. As a result of the Secured Debt Exchange, the November 2017 Secured Note was terminated as of January 31, 2019.

8. Derivative 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 per share.

The Company identified certain features embedded in the warrants requiring the Company to classify the warrants as a derivative liability; specifically, the warrants contain a fundamental transaction provision that permits their settlement in cash at fair value of the remaining unexercised portion of this Warrant at the option of the holder upon the occurrence of a change in control.

The fair value of the derivative feature of the warrants on the date of issuance was calculated using a binomial option model valued with the following weighted average assumptions:

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

As of January 31, 2019, the derivative liability of the warrants was $4,130,451. In addition, for the nine months ended January 31, 2019, the Company recorded $508,931 as additional interest expense on the statement of operations for the portion of the fair value of the warrant that exceeded face value of the Series A Preferred shares sold.

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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

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

	January 31, 2019
	July 31, 2019	July 31, 2018
Exercise price	$1.30 – 1.50
Risk-free interest rate	2.02%	2.08 – 2.96%
Expected dividends	0%
Expected life of grants	1 – 10 years	1 – 10 years
Expected volatility	153.10 - 158.73%
Expected volatility of underlying stock	151.40%	155.97 – 158.73%
Risk free interest rate	2.08 – 3.15
Dividends	0%	0%
Expected life of grants	1 – 10 years

~~The following~~- ~~table~~16 ~~summarizes information about the changes of options for the period from April 30, 2018 to January 31, 2019, and options outstanding and exercisable at January 31, 2019:~~-

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

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The ~~following~~expected ~~table~~stock ~~summarizes~~price ~~information~~volatility ~~about~~for the Company’s stock options was estimated using the historical volatilities of the ~~outstanding~~Company’s ~~and~~common ~~exercisable~~stock. atRisk ~~January~~free ~~31,~~interest ~~2019:~~rates were obtained from U.S. Treasury rates for the applicable periods.

	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

The following table summarizes the option activity for the period from April 30, 2019 to July 31, 2019, and options outstanding and exercisable at July 31, 2019:

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.

	Options	Weighted Average Exercise Prices

Outstanding – April 30, 2019	2,607,385	$2.13
Granted	-	-
Exercised	-	-
Forfeited/Cancelled	-	-
Outstanding – July 31, 2019	2,607,385	$2.13
Exercisable – July 31, 2019	2,591,385	$2.13

~~As of~~The ~~January~~following ~~31,~~table ~~2019,~~summarizes ~~the~~information ~~Company~~about ~~had~~the ~~approximately $50,244 in~~options ~~unrecognized~~outstanding ~~stock-based~~and ~~compensation~~exercisable ~~expense~~at ~~related~~July ~~to unvested options~~31, ~~which will be amortized over a weighted average exercise period of approximately three years.~~2019:

	Options Outstanding		Options Exercisable
Exercise Price	Options	Weighted Avg. Life Remaining (years)	Options	Weighted Average Exercise Price
$1.30	12,000	0.04	12,000	$0.01
$1.38	1,795,958	7.09	1,795,958	$0.96
$1.40	25,703	8.39	25,703	$0.01
$1.50	40,000	9.00	24,000	$0.01
$1.98	5,000	7.01	5,000	$0.00
$2.00	457,402	5.92	457,402	$0.35
$2.87	65,334	5.55	65,334	$0.07
$3.00	51,001	6.41	51,001	$0.06
$3.39	12,000	6.64	12,000	$0.02
$6.00	10,000	5.48	10,000	$0.02
$12.00	132,987	4.26	132,987	$0.62
	2,607,385		2,591,385
Aggregate Intrinsic Value	$-		$-

During the three months ended July 31, 2019 and 2018, the Company expensed an aggregate $1,188 and $191,818 to general and administrative expenses for stock-based compensation pursuant to employment and consulting agreements.

As of July 31, 2019, the Company has $38,329 in unrecognized stock-based compensation expense which will be amortized over a weighted average exercise period of 6.97 years.

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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~~the Company’s common stock, at an exercise price of $0.50 per share. The relative fair value of the warrants were estimated to be $4,209,148 using the binomial lattice model.

~~The~~In ~~fair~~connection ~~values~~with the issuance of the ~~840,336~~Secured Note financings in June and November 2017 ~~Warrants~~(as ~~granted~~discussed in ~~conjunction~~ ~~with~~Note 8), the ~~June~~Company ~~2017~~issued warrants ~~Secured~~to ~~Note~~purchase ~~Financing~~2.1 ~~and~~million shares of the ~~1.25~~Company’s ~~million~~common ~~November~~stock ~~2017~~(the “Secured Note Warrants”). ~~granted~~Upon inissuance ~~connection~~of ~~with~~ the Secured Notes, ~~November~~the ~~2017~~Company valued the Secured Note ~~Financing~~Warrants ~~(as~~using ~~discussed~~the Black-Scholes inOption ~~Note~~Pricing 7)model ~~were estimated~~and onaccounted for it using the relative ~~date~~fair value of ~~grant~~$2,003,227 ~~using~~as ~~the~~debt ~~Black-Scholes~~discount on the ~~option-pricing~~consolidated ~~model~~balance sheet.

The following istable asummarizes ~~summary~~the ofwarrant ~~the~~activity ~~Company’s~~for ~~warrant~~the three ~~activity~~months ended July 31, 2019:

	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
Outstanding and exercisable – April 30, 2019	11,128,706	$1.09	4.71
Forfeited	-	-	-
Granted	8,905,037	0.50	5.0
Granted/Expired	-	-	-
Outstanding and exercisable – January 31, 2019	11,128,706	$1.09	4.34
Outstanding and exercisable – July 31, 2019	11,128,706	$1.09	4.46

The aggregate intrinsic value of the outstanding warrants was $~~5,497,687 at January 31, 2019~~0.

~~10.~~ The following ~~Revenue~~table ~~from~~provides ~~Contracts~~a ~~with~~reconciliation ~~Customers~~of the numerator and denominator used in computing basic and diluted net income (loss) attributable to common stockholders per common share.

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.

	For the Three Months Ended
	July 31, 2019	July 31, 2018
Numerator:
Net income (loss) attributable to common stockholders	$1,554,967	$(420,231)
Effect of dilutive securities:	-	-

Diluted net income (loss)	$1,554,967	$(420,231)

Denominator:
Weighted average common shares outstanding - basic	17,935,540	17,504,019
Dilutive securities (a):
Series A Preferred	-	-
Options	-	-
Warrants	-	-

Weighted average common shares outstanding and assumed conversion – diluted	17,935,540	17,504,019

Basic net income (loss) per common share	$0.09	$(0.02)

Diluted net income (loss) per common share	$0.09	$(0.02)

(a) - Anti-dilutive securities excluded:	35,506,241	4,651,257

~~Exploration~~- ~~and~~18 ~~Production. There were no significant changes to the timing or valuation of revenue recognized for sales of production from exploration and production activities.~~-

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For the ~~Disaggregation~~three months ended July 31, 2019 and 2018, potentially dilutive securities were not included in the calculation of ~~Revenue~~diluted ~~from~~net ~~Contracts~~loss per ~~with~~share ~~Customers~~because to do so would be anti-dilutive. The Company had the following ~~table~~common ~~disaggregates~~stock ~~revenue~~equivalents byat ~~significant~~July ~~product~~31, ~~type~~2019 and 2018 ~~for~~were excluded from the ~~nine~~computation ~~months~~of ~~ended~~diluted ~~January~~net ~~31,~~income ~~2019~~(loss) per share as the inclusion of such shares would be anti-dilutive:

	For the Three Months Ended January 31, 2019	For the Nine Months Ended January 31, 2019
	July 31, 2019	July 31, 2018
Oil sales	$309,381	$1,279,172
Series A Preferred Shares	21,770,150	-
Natural gas sales	14,734	29,440
Stock options	2,607,385	2,427,588
Royalty revenue	15,871	15,871
Stock purchase warrants	11,128,706	2,223,669
Total revenue from customers	$339,986	$1,324,483
Total	35,506,241	4,651,257

~~There were~~11. noRevenue ~~significant~~from ~~contract~~Contracts ~~liabilities~~with ~~or transaction price allocations to any remaining performance obligations as of January 31, 2019 or April 30, 2018.~~Customers

11 Disaggregation of Revenue from Contracts with Customers. ~~Contingency~~The following ~~and~~table ~~Contractual~~disaggregates ~~Obligations~~revenue by significant product type for the three months ended July 31, 2019 and 2018:

	For the Three Months Ended July 31, 2019	For the Three Months Ended July 31, 2018
Oil sales	$311,949	$572,701
Natural gas sales	7,272	1,364
Royalty revenue	3,238	-
Total revenue from customers	$322,459	$574,065

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

12.	Contingency and Contractual Obligations

Office Lease

Change in Accounting Policy. The Company adopted ASU No. 2016-02, “Leases (Topic 842)” and ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements”, on May 1, 2019, using the alternative modified transition method, for which, comparative periods, including the disclosures related to those periods, are not restated as of May 1, 2019. Refer to Note 4 – Significant Accounting Policies above for additional information.

In May 2019, the Company entered into a lease agreement for office space located at 55 5th Avenue, Suite 1702, New York, NY 10003. The lease is for a term of one year and set to expire on May 31, 2020 and has fixed annual rent of $119,151. Upon execution of the lease, the Company paid a security deposit of $19,859. On the effective date of the new lease, the Company applied the new lease Topic 842 and does not expect the lease to have a significant impact on its consolidated balance sheet or statements of operations or cash flows.

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For the three months ended July 31, 2019 and 2018, the Company incurred lease expense of $9,929 and $27,922, respectively, for the combined leases.

Pending Litigation

(a) In January 2010, the Company experienced a flood in its Calgary ~~office~~ office premises as a result of a broken water pipe. There was ~~significant~~ 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~~ hazardous conditions. The testing revealed the existence of ~~potentially~~ potentially hazardous mold and the consultant provided specific ~~written~~ written instructions for the effective remediation of the premises. ~~During~~ 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~~Landlord subsequently terminated the lease.

On 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 $~~574~~576,~~000~~400 as of ~~January~~July 31, 2019). The Company filed a defense and on October 20, 2014, it filed a summary judgment application stating that the landlord’s claim is barred, as it was commenced outside the ~~two~~2-year statute of limitation period under the Alberta Limitations Act. The 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 $~~503~~505,000 as of ~~January~~July 31, 2019). ~~The~~ 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. The net effect is that the landlord's claim for loss of prospective rent is to proceed. On October 4, 2018, the Company ~~settled~~ and the ~~dispute~~landlord ~~with~~entered ~~the~~into ~~landlord~~a insettlement agreement ~~exchange~~under ~~for~~which all actions by the ~~issuance~~landlord and the Company ofwere ~~68,807~~dismissed ~~shares~~for ofa ~~Company~~payment ~~common~~by ~~stock,~~the ~~satisfying~~Company to the landlord of ~~$75~~68,~~000~~807 ~~liability~~shares ~~related~~of tocommon ~~the lease~~stock.

(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.

~~-21-~~13. Subsequent Events

In August 2019, a holder of Preferred Series A converted 2,500 Preferred A shares to 125,000 shares of common stock.

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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 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 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~~2019, filed with the SEC on ~~July~~August 3013, 2019, ~~2018~~as amended on August 14, 2019.

Business Overview

~~Petro~~ 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~~ drilling wells on several of its properties owned directly and ~~indirectly~~ indirectly through its interest in Horizon Energy Partners, LLC (“Horizon Energy”), as well as exploring ~~entering~~opportunities ~~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~~ 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 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~~ 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, 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~~ 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 exchange for 300,000 restricted shares of the Company’s ~~Common~~ ~~Stock~~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.~~

While no assurances can be given, the Company anticipates that revenue in subsequent quarters will stabilize as a result of the Company’s discoveries in Osage County, Oklahoma, revenue resulting from the Company’s drilling program for calendar year 2019 and from the acquisition of LBE in October 2019.

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.

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~~2019 and ~~2017~~2018 on Form 10-K, filed with the SEC on ~~July~~August 3013, ~~2018~~2019, as amended on August 14, 2019, for the year ended April 30, ~~2018~~ 2019.

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~~22 ~~accounting policies rely upon assumptions and estimates and were used in the preparation of our consolidated financial statements:~~-

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

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.

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.

Derivative Liabilities

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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 10 12 – Revenue from Contracts with Customers for additional information.

The Company’s revenue is comprised 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~~Recent ~~Tax~~Accounting ~~Provision~~Pronouncements

~~The~~In ~~Company~~February ~~utilizes~~2016, the ~~asset~~Financial ~~and~~Accounting ~~liability~~Standards ~~method~~Board (“FASB”) ~~in accounting for~~issued ~~income~~ASU ~~taxes~~No. ~~Under~~2016-02, ~~this~~“Leases (Topic ~~method,~~842)”. ~~deferred~~The ~~tax~~new ~~assets~~lease ~~and~~guidance supersedes ~~liabilities~~Topic ~~are~~840. ~~recognized~~The ~~for~~core ~~operating~~principle ~~loss~~of ~~and~~the ~~tax~~guidance ~~credit carry-forwards~~is ~~and~~that ~~for~~entities should recognize the ~~future~~assets ~~tax~~and ~~consequences~~liabilities ~~attributable~~that ~~to differences~~arise ~~between~~from ~~the~~leases. Topic ~~financial~~840 ~~statement~~does ~~carrying~~not ~~amounts of~~apply to ~~existing~~leases ~~assets~~to ~~and~~explore ~~liabilities~~for ~~and~~or ~~their~~use ~~respective~~minerals, ~~tax~~oil, ~~bases. Deferred~~natural ~~tax~~gas ~~assets~~ and ~~liabilities~~similar non-regenerative ~~are~~resources, ~~measured~~including ~~using~~the ~~enacted~~intangible ~~tax rates~~right ~~expected~~ to explore ~~apply~~for tothose ~~taxable~~natural ~~income~~resources and rights into use the ~~year~~land in which those ~~temporary~~natural ~~differences~~resources are ~~expected to be recovered or~~ ~~settled~~contained. ~~The~~In ~~effect~~July on2018, ~~deferred~~the ~~tax~~FASB ~~assets~~issued ~~and~~ASU ~~liabilities~~No. of2018-11, “Leases a(Topic ~~change~~842): inTargeted ~~tax~~Improvements”, ~~rates~~which isprovides ~~recognized~~entities with inan ~~the~~alternative ~~results~~modified oftransition ~~operations~~method ~~in the~~to ~~period~~elect ~~that~~not ~~includes~~to recast the ~~enactment~~comparative ~~date.~~periods Apresented ~~valuation~~when ~~allowance~~adopting Topic is842. ~~recorded~~The toCompany ~~reduce~~adopted ~~the~~Topic ~~carrying~~842 ~~amounts~~as of ~~deferred~~May ~~tax~~1, ~~assets~~2019, using the ~~unless~~alternative itmodified istransition ~~more~~method, ~~likely~~for ~~than~~which, ~~not~~comparative periods, ~~that~~including the disclosures related ~~value~~to ofthose ~~such~~periods, ~~assets will~~are benot ~~realized~~restated.

In ~~Recently~~addition, ~~Issued~~the ~~Accounting~~Company ~~Standards~~elected practical expedients provided by the new standard whereby, the Company has elected to not reassess its prior conclusions about lease identification, lease classification, and initial direct costs and to retain off-balance sheet treatment of short-term leases (i.e., 12 months or less and does not contain a purchase option that the Company is reasonably certain to exercise). As a result of the short-term expedient election, the Company has no leases that require the recording of a net lease asset and lease liability on the Company’s consolidated balance sheet or have a material impact on consolidated earnings or cash flows as of July 31, 2019. Moving forward, the Company will evaluate any new lease commitments for application of Topic 842.

~~The~~In June ~~Company~~2018, ~~does~~the ~~not~~FASB ~~expect~~issued ~~the~~Accounting ~~adoption~~Standards ofUpdate ~~any~~(ASU) ~~other~~No. 2018-07, ~~recently~~Compensation ~~issued~~– ~~accounting~~Stock ~~pronouncements~~Compensation (Topic 718): Improvements to ~~have~~Nonemployee Share-Based aPayment ~~significant~~Accounting. ~~impact~~Under onthe ~~its~~new standard, ~~financial~~companies ~~position~~will no longer be required to value non-employee awards differently from employee awards. Companies will value all equity classified awards at their grant-date under ASC 718 and forgo revaluing the award after the grant date. ASU 2018-07 is effective for annual reporting periods beginning after December 15, ~~results~~2018, including interim reporting periods within that reporting period. Early adoption is permitted, but no earlier than the Company’s adoption date of ~~operations~~Topic 606, orRevenue ~~cash~~from Contracts with Customers ~~flows~~(as described above under Revenue Recognition). The Company adopted the standard during the three months ended July 31, 3019 and the adoption did not have an impact on the Company’s consolidated financial statements.

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In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework —Changes to the Disclosure Requirements for Fair Value Measurement”. This update is to improve the effectiveness of disclosures in the notes to the financial statements by facilitating clear communication of the information required by U.S. GAAP that is most important to users of each entity’s financial statements. The amendments in this update apply to all entities that are required, under existing U.S. GAAP, to make disclosures about recurring or nonrecurring fair value measurements. The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company is currently evaluating this guidance and the impact of this update on its consolidated financial statements.

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.

Results of Operations

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

Oil and Natural Gas Sales

During the three months ended ~~January~~July 31, 2019, the Company recognized $~~324~~319,~~115~~221 in oil and gas sales, compared to $~~250~~574,~~877~~065 for the three months ended ~~January~~July 31, 2018. The overall ~~increase~~decrease in sales of $73254,~~238~~844 is primarily due an overall reduction in production due to ~~the~~natural ~~commencement~~decline ofin production from existing producing wells located in Osage County, Oklahoma, ~~and~~as ~~the~~well as ~~acquisition~~lower ofmarket ~~LBE Partners~~prices.

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

	For the Three Months Ended January 31, 2019	For the Three Months Ended January 31, 2018
	For the Three Months Ended July 31, 2019	For the Three Months Ended July 31, 2018
Oil volume (BBL)	115,~~664~~897	48,~~620~~414
Gas volume (MCF)	76,~~911~~946	~~4,411~~763
Volume equivalent (BOE)(1)	127,~~983~~055	48,~~804~~541
Revenue	$~~324~~319,~~115~~221	$~~250~~574,~~877~~065

(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~~ Fork”), 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 revenue of $153,~~871~~238 ~~in revenue~~and $0 during the three months ended ~~January~~July 31, 2019 and 2018, respectively.

Lease Operating Expense

During the three months ended ~~January~~July 31, 2019, lease operating expense ~~was~~ was $~~144~~257,~~721~~316, compared to $1277,~~445~~612 for the three months ended ~~January~~ July 31, 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 the acquisition of LBE Partners. In addition, the increased LOE is due to a combination of more wells being online and some major expenses incurred in July 2019, including the acidizing of two wells and replacing several pumps.

~~Impairment~~- of25 ~~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 January 31, 2019 was $554,729, compared to $686,680 for the three months ended January 31, 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. These changes are outlined below:

	For the Three Months Ended	For the Three Months Ended
	January 31, 2019	January 31, 2018
Salaries and benefits	$116,470	$149,082
Professional fees	338,477	300,946
Office and administrative	99,782	236,652
Total	$554,729	$686,680

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Salaries and benefits included non-cash stock-based compensation of $78,971 for three months ended January 31, 2019, compared to $102,425 for the three months ended January 31, 2018. The decrease in stock-based compensation of $23,454 from the three months ended January 31, 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 nine months ended January 31, 2019, the Company recognized $1,308,612 in oil and gas sales, compared to $275,918 for the nine months ended January 31, 2018. The overall increase in sales of $1,032,694 is primarily due to the commencement of 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 nine months ended January 31, 2019 and 2018.

	For the Nine Months Ended	For the Nine Months Ended
	January 31, 2019	January 31, 2018
Oil volume (BBL)	24,859	4,978
Gas volume (MCF)	15,343	5,516
Volume equivalent (BOE)(1)	27,416	5,897
Revenue	$1,308,612	$275,918

(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 nine months ended January 31, 2019, lease operating expense was $331,392, compared to $70,049 for the nine months ended January 31, 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 ~~nine~~three months ended ~~January~~July 31, ~~2019~~ 2019 was $1318,~~468~~278,~~641,~~ compared to $2506,~~162,759~~557 for the ~~nine~~ three months ended July ~~January~~ 31, 2018. The decrease was ~~primarily~~ primarily attributable to decreases in salaries and benefits and office and administrative ~~expense, partially offset by an increase in professional fees~~expenses. These changes are outlined below:

	For the Nine	For the Nine
	For the Three Months Ended	For the Three Months Ended
	Months Ended January 31, 2019	Months Ended January 31, 2018
	July 31, 2019	July 31, 2018
Salaries and benefits	$~~507~~80,~~367~~772	$~~959~~283,~~721~~484
Professional fees	~~751~~178,~~039~~820	~~720~~139,~~078~~620
Office and administrative	~~210~~58,~~235~~686	~~482~~83,~~960~~453
Total	$1318,~~468,641~~278	$2506,~~162,759~~557

Salaries and benefits included non-cash stock-based compensation of $~~413~~28,~~787~~272 for ~~nine~~three months ended ~~January~~July 31, 2019, compared to $~~811~~245,~~123~~984 for the three ~~nine~~ months ended ~~January~~July 31, 2018. The decrease in stock-based compensation of $~~397~~217,~~336~~712 from the ~~nine~~three months ended ~~January~~July 31, ~~2018,~~ 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 ~~nine~~three months ended ~~January~~July 31, 2019, the Company recognized ~~$3,107,865~~ $624 of net interest expense, compared to net interest ~~income~~expense of $~~184~~319,~~134~~580 for the ~~nine~~three months ended ~~January~~July 31, 2018. ~~The~~In ~~interest expense for the nine months ended January 31~~addition, ~~2019 included~~in ~~$2,139,250~~relation ~~and~~to ~~$459,683, which included~~ the ~~amortization of the~~ debt ~~discount~~restructuring ~~and~~in ~~interest~~January ~~expense~~2019, ~~respectively,~~during ~~related to~~ the ~~June~~three ~~2017 $2.0 million and November 2017 $2.5 million Secured Note financings. In addition, during the nine~~ months ended ~~January~~July 31, 2019, the Company recognized ~~$75,000 of expense from~~ a ~~legal settlement.~~gain ~~In addition, in relation to the debt restructuring,~~of ~~during the nine months ended January 31~~$1, ~~2019~~901,085 ~~the Company recognized interest expense of $508,931~~ related to the ~~excess~~change in fair value of its derivative liabilities,. ~~and~~During athe ~~loss~~three onmonths ~~extinguishment of~~ended ~~debt of $90~~July 31,~~916.~~ ~~The income recorded in the~~ 2018, ~~period was~~the ~~attributable~~net ~~to $593,021 of~~ interest ~~income~~expense ~~accrued~~for on the ~~related~~three ~~party~~months ~~notes~~ended ~~receivable~~July 31, ~~which~~2018 ~~was~~included ~~offset by~~ $~~224~~156,~~000~~199 and $~~184~~163,~~887~~381, 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~~financings.

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 ~~January~~ July 31, 2019, the Company had working capital deficit of $170,~~139~~449,~~923,~~ consisting of $21,~~320~~220,~~964~~198 of current assets and $1,~~181~~290,~~041~~697 of current liabilities.

As a result of the utilization of cash in its operating activities, 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 ~~January~~July 31, 2019, the Company had cash and cash equivalents of approximately $21.1 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 31, 2019, the Company consummated the Series A Financing, pursuant to which the Company sold and issued an aggregate of 178,101 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~~as defined below, and debt owed to Fortis. In addition, on January 31, 2019, the Company entered into the Secured Debt Conversion Agreements, pursuant to which Funding Corp. and Funding Corp. II converted all outstanding debt due to them under the June 2017 Secured Note and November 2017 Secured Note, together amounting to an aggregate of ~~approximately~~ approximately $5.1 million, into shares of Series A Preferred. As a result, the Company increased its current assets and decreased its ~~current~~ current liabilities significantly.

On- ~~June 18,~~26 2018, the Company entered into a Loan Agreement with Scot Cohen (the “Cohen Loan Agreement”), the Company’s Executive Chairman, pursuant to which Mr. Cohen loaned the Company $300,000 at a 10% annual interest rate due September 30, 2018. On December 17, 2018, the maturity date of the Cohen Loan Agreement was extended to March 31, 2019. As noted above, the Cohen Loan Agreement was terminated on January 31, 2019 in exchange for the issuance of units, consisting of 15,000 share of Series A Preferred and warrants to purchase 750,000 shares of Company Common Stock sold and issued in the Series A Financing.-

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On June 18, 2018, the Company entered into a Loan Agreement with Scot Cohen (the “Cohen Loan Agreement”), the Company’s Executive Chairman, pursuant to which Mr. Cohen loaned the Company $300,000 at a 10% annual interest rate due September 30, 2018. On December 17, 2018, the maturity date of the Cohen Loan Agreement was extended to March 31, 2019. As noted above, the Cohen Loan Agreement was terminated on January 31, 2019 in exchange for the issuance of units, consisting of 15,000 shares of Series A Preferred and warrants to purchase 750,000 shares of Company common stock sold and issued in the Series A Financing.

In June and November 2017, the Company consummated the Secured Note financings for an aggregate of $4.5 million, which Secured Notes accrued interest at a rate of 10% per annum and were scheduled to mature on June 13, 2020. On May 17, 2018, the parties executed an extension of the due date of the first interest payment due pursuant to each of the Secured Notes from June 1, 2018 to December 31, 2018. As consideration for the interest payment extension, the Company agreed to pay the holders an additional 10% of the interest due on June 1, 2018 on December 31, 2018. On December 17, 2018, the parties executed a second extension of the due date of the first interest payment due pursuant to each of the Secured Notes from December 31, 2018 to March 31, 2019. As a result of the Series A Financing discussed above, the 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 ~~nine~~three months ended ~~January~~July 31, 2019, cash ~~used~~provided in by operating activities was $~~406~~99,~~709~~105, compared to $~~969~~29,~~530~~864 provided ~~used~~by in operating activities during the ~~nine~~three months ended ~~January~~July 31, 2018. The Company incurred a net ~~loss~~income during the ~~nine~~three months ended ~~January~~July 31, 2019 of $41,~~095~~538,~~264~~444, compared to a net loss of $18420,~~194,287~~231 for the ~~nine~~ three months ended ~~January~~July 31, 2018. For the ~~nine~~three months ended ~~January~~July 31, 2019, the net ~~loss~~income was offset by non-cash items such as stock-based compensation, depreciation, depletion and accretion of ~~asset~~ asset retirement obligation, ~~accretion~~and ofthe ~~debt~~change ~~discount, derivative liabilities~~ in ~~excess~~the offair ~~face~~ value of ~~equity instruments, loss on~~ ~~extinguishment~~derivative ~~of debt and loss on legal settlement~~liabilities. 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 the ~~nine~~three months ~~ended~~ ~~January~~ ended July 31, 2018, the net loss was offset by non-cash items ~~such~~ such as stock-based compensation, depreciation, depletion and ~~accretion~~ accretion of asset retirement obligation and ~~the~~accretion ~~deferred~~of ~~tax liability~~debt discount. Cash used in operations was also influenced by changes in accounts receivable, ~~accrued interest on notes receivable,~~ prepaid ~~expenses~~expense and accounts payable and accrued ~~expenses~~expense.

Investing Activities

Investing activities during the ~~nine~~ three months ended ~~January~~July 31, 2019 resulted in cash used of $~~786~~239,~~960~~951, compared to cash used of $3372,~~067,215~~ 552 during the ~~nine~~three months ended ~~January~~July 31, 2018. During the ~~nine~~ three months ended ~~January~~July 31, 2019, the Company ~~invested an additional~~ ~~$357,616~~incurred ~~in Horizon Energy, compared to~~ $~~379~~239,~~418~~951 ~~in the comparable period in 2018. During the nine months ended January 31, 2018, the Company received proceeds~~ of ~~$1,553,884 from profits in its real estate rights.~~ Asexpenditures a result of the Exchange Transaction entered into by and between the Company and MegaWest on January 31, 2018, the Company no longer has any interest in real estate rights, and thus did not receive any profits in real estate rights for the ~~nine~~development ~~months ended January 31, 2019. During the nine months ended January 31, 2019, the Company incurred $568,030~~ of ~~expenditures on~~ oil and gas assets, compared to $2372,~~116,602~~552 for the ~~nine~~three months ended ~~January~~July 31, ~~2018.~~ ~~During the nine months ended January 31, 2019, the Company executed no new notes receivable agreements with related parties, compared to $1,558,501 during the corresponding period ended January 31,~~ 2018. ~~During the nine months ended January 31, 2019, the Company received cash of $138,686 from the acquisition of LBE Partners.~~

Financing Activities

Financing activities during the ~~nine~~three months ended ~~January~~July 31, 2019 resulted in cash provided of $30,~~340,180,~~ compared to cash provided of $4300,~~250,~~000 during ~~the nine months ended January~~ ~~31, 2018. During~~ the ~~nine~~three months ended ~~January~~July 31, 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~~.

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Capitalization

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

As of	~~January~~July 31, 2019	~~January~~July 31, 2018
Convertible preferred shares	21,770,150	-
Common shares	17,938,540	17,~~309~~569,~~809~~733
Stock options	2,607,385	2,~~555~~607,385
Stock purchase warrants	11,128,706	2,223,669
	53,444,781	22,~~088~~400,~~863~~787

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~~2019, 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 to design and implement the operation of our internal controls. Upon obtaining additional capital, the Company intends to hire additional accounting staff, and operations 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.

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 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 $~~574~~576,~~000~~400 as of ~~January~~July 31, 2019). The Company filed a defense and on October 20, 2014, it filed a summary judgment application stating that the landlord’s claim is barred, as it was commenced outside the ~~two~~2-year statute of limitation period under the Alberta Limitations Act. The 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 $~~503~~505,000 as of ~~January~~July 31, 2019). ~~The~~ 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. OnThe net effect is that the landlord's claim for loss of prospective rent is to proceed. On October 4, 2018, the Company ~~settled~~ and the ~~dispute~~landlord ~~with~~entered ~~the~~into ~~landlord~~a settlement inagreement ~~exchange~~under ~~for~~which all actions by the ~~issuance~~landlord and ofthe ~~68,807~~Company ~~shares~~were ofdismissed ~~Company~~for ~~Common~~a ~~Stock,~~payment ~~satisfying~~by the Company to the ~~$75~~landlord of 68,~~000~~807 ~~liability~~shares ~~related~~of toits ~~the~~common ~~lease~~stock.

(b) In September 2013, the Company was notified by the Railroad ~~Commission~~ 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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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~~2019, filed on ~~July~~August 3013, ~~2018~~2019, as amended August 14, 2019. 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 ~~March~~September 2523, 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.

(a)

There is no information required to be disclosed on Form 8-K during the period covered by this Form 10-Q that was not so reported.

(b)

There were no material changes to the procedures by which security holders may recommend nominees to the registrant’s Board of ~~Directors~~ Directors during the quarter ended ~~January~~July 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
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)
31.1		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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)
31.2		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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)
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.
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)
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.
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)
101.INS		XBRL Instance Document
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)
101.SCH		XBRL Taxonomy Extension Schema Document
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)
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
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)
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
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)
101.LAB		XBRL Taxonomy Extension Labels Linkbase Document
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)
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document
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~~30 ~~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
Date: September 23, 2019	By:	/s/ Scot Cohen
	Name:	Scot Cohen
	Title:	Executive Chairman
	By:	/s/ David Briones
	Name:	David Briones
	Title	Chief Financial Officer
Date: March 25, 2019

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