Abundia Global Impact Group, Inc.: Form 10-Q for the period ended Sep 30, 2025

Forward-Looking Information

This Quarterly Report on Form 10-Q of Houston American Energy Corp. (the “Company”) for the quarterly period ended September 30, 2025 contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. To the extent that there are statements that are not recitations of historical fact, such statements constitute forward-looking statements that, by definition, involve risks and uncertainties. In any forward-looking statement, where we express an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation or belief will be achieved or accomplished.

The actual results or events may differ materially from those anticipated and as reflected in forward-looking statements included herein. Factors that may cause actual results or events to differ from those anticipated in the forward-looking statements included herein include the Risk Factors described in Item 1A herein, in our Quarterly Report on Form 10-Q of Houston American Energy Corp. (the “Company”) for the quarterly period ended June 30, 2025 (the “June Report”) and in our Form 10-K for the year ended December 31, 2024, as amended.

Readers are cautioned not to place undue reliance on the forward-looking statements contained herein, which speak only as of the date hereof. We believe the information contained in this Form 10-Q to be accurate as of the date hereof. Changes may occur after that date, and we will not update that information except as required by law in the normal course of our public disclosure practices.

Additionally, the following discussion regarding our financial condition and results of operations should be read in conjunction with the financial statements and related notes regarding the Company and AGIG contained in Item 1 of Part 1 of this Form 10-Q and in the exhibits filed with the Company’s Current Report on Form 8-K/A, filed with the SEC on August 14, 2025, as well as the Risk Factors in Item 1A, the June Report and the financial statements in Item 7 of Part II of our Form 10-K for the fiscal year ended December 31, 2024.

Overview

In November 2024, the Company recruited a new management team to assist with its diversification and to explore opportunities to add to its portfolio by seeking out new opportunities in various parts of the energy sector, recognizing the growing demand for all forms of energy and untapped opportunities in oil and gas, renewable energy, and energy transition technologies.

On July 1, 2025, the Company acquired all of the outstanding units of AGIG. Prior to the Share Exchange, the Company previously operated as an independent oil and gas company, focusing on the development, exploration, exploitation, acquisition, and production of natural gas and crude oil properties, with its principal properties and operations located in the U.S. Permian Basin and additional properties in the Louisiana U.S. Gulf Coast region. The Company intends to continue to maintain its legacy oil and gas assets as well as the AGIG business. The Company intends to pursue both businesses in order to keep its revenue streams diversified.

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

We, along with our partners, actively manage our resources through opportunistic acquisitions and divestitures where reserves can be identified, developed, monetized and financial resources redeployed with the objective of growing reserves, production and shareholder value.

Recent Developments

Sales Pursuant to the ELOC Agreement

Since September 30, 2025, the Company issued 410,000 shares of Common Stock under the ELOC Agreement, for total gross proceeds of $2,287,609.

Declassification of Board of Directors

On October 9, 2025, the Company filed a certificate of amendment (the “Certificate of Amendment”) to its certificate of incorporation, as amended (the “Certificate of Incorporation”), with the Secretary of State of the State of Delaware, pursuant to which the Certificate of Incorporation was amended to declassify the Company’s Board of Directors (the “Board”) so that all current and future members of the Board will be elected annually following the effectiveness of the Certificate of Amendment. On September 8, 2025, the Board approved an amendment (the “Bylaws Amendment”) to the Company’s amended and restated bylaws (the “Bylaws”) in order to make conforming changes to the Bylaws for the purpose of declassifying the Board. The Bylaws Amendment became effective on October 9, 2025.

Change in Accounting Firm

On October 2, 2025, the audit committee of the Company’s board of directors (the “Committee”) approved the dismissal of Baker Tilly US, LLP (“Baker Tilly”) and Marcum LLP as AGIG’s and the Company’s independent registered public accounting firms, and the Committee approved the engagement of CBIZ CPAs as the Company’s independent registered public accounting firm.

Critical Accounting Estimates

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. See Note 3 for descriptions of the Company’s significant accounting policies. Certain of these accounting policies involve judgments and uncertainties to such an extent there is a reasonable likelihood materially different amounts would have been reported under different conditions, or if different assumptions had been used. These critical accounting estimates are reviewed on a regular basis. The Company believes the following discussions of critical accounting estimates address all important accounting areas where the nature of accounting estimates or assumptions is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change.

Acquisitions and Business Combinations

For acquisitions meeting the definition of a business combination, the acquisition method of accounting is used. The consideration transferred for the acquired business is allocated to the assets acquired and liabilities assumed based on their fair values at the date of acquisition, including identifiable intangible assets. Any excess of the amount paid over the estimated fair values of the identifiable net assets acquired is allocated to goodwill. Acquisition-related costs, such as professional fees, are excluded from the consideration transferred and are expensed as incurred. The Company uses its best estimates and assumptions to assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date. The Company’s estimates are inherently uncertain and subject to refinement. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed, with the corresponding offset to goodwill.

Valuation of Warrants

Warrants are accounted in accordance with the guidance contained in ASC 815-40-15-7D. The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

Estimates used in Oil and Gas Reserves

Independent reserve engineers prepare the estimates of oil, NGL and natural gas reserves and associated future net cash flows on an annal basis. The SEC has defined proved reserves as the estimated quantities of oil, NGL and natural gas that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. The process of estimating oil, NGL and natural gas reserves is complex, requiring significant judgment in the evaluation of available geological, geophysical, engineering and economic data. In general, our estimates of future reserve volumes are primarily based on historical production on a well-to-well or property-to-property basis. The data for a given property may also change substantially over time as a result of numerous factors, including additional development activity, evolving production history and a continual reassessment of the viability of production under changing economic conditions. As a result, material revisions to existing reserve estimates occur from time to time. Although every reasonable effort is made to ensure that reserve estimates reported represent the most accurate assessments possible, the subjective assumptions and variances in available data for various properties increase the likelihood of significant changes in these estimates.

Impairments of long-lived assets

Oil & Gas

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

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

Results of Operations

Revenue. The Oil and Gas segment generates revenue from oil and gas operations whereas Renewables is in pre-revenue stage, primarily incurring research and development and start-up costs associated with its development of scalable technologies for converting plastic and biomass waste into renewable fuels and chemicals. Total revenue from the oil and gas segment was $225,678 for the three and nine months ended September 30, 2025.

General and Administrative Expenses (excluding professional fees). General and administrative expense increased to $3,456,958 during the three months ended September 30, 2025 from $433,412 during the three months ended September 30, 2024, and increased to $5,419,727 during the nine months ended September 30, 2025, from $1,715,319, during the nine months ended September 30, 2024. The change in general and administrative expense was primarily attributable to fees related to the acquisition of AGIG, which subsequently occurred during the third quarter of 2025.

Other Income (Expense). Other income/expense, net, totaled ($96,505) during the three months ended September 30, 2025, compared to $280,114 during the three months ended September 30, 2024, and totaled $472,106 during the nine months ended September 30, 2025, compared to $1,392,050 during the nine months ended September 30, 2024. The change in other income/expense is primarily related to the reduction of grant income as 2025 progressed.

Financial Condition

Liquidity and Capital Resources. At September 30, 2025, we had a cash balance of $1,512,157 and working capital deficiency of $(3,789,451), compared to a cash balance of $525,809 and working capital deficiency of $(5,340,035) at December 31, 2024. This increase was primarily due to the issuance of common stock under the ELOC agreement to support the working capital.

The Company is pre-revenue and will not generate revenue from product sales unless and until we successfully construct and commission the plastics recycling facility. In addition, we will likely incur significant expenses related to engineering and design services, product sales, marketing, and distribution activities.

As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity offerings and debt financings and other sources, such as potential collaboration agreements, strategic alliances and product pre-sales. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on acceptable terms, or at all. Our failure to raise capital or enter into such agreements as and when needed could have a material adverse effect on our business, results of operations and financial condition. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in case of equity financing.

Cash Flows. Operating activities used $4,606,146 of cash during the nine months ended September 30, 2025, compared to cash used $1,823,786 during the nine months ended September 30, 2024. The change in operating cash flow was primarily attributable to professional fees related to the Share Exchange which was subsequently consummated during the third quarter of 2025.

Investing: Investing activities used $1,839,093 of cash during the nine months ended September 30, 2025, compared to $347,127 during the nine months ended September 30, 2024. The change in cash used for investing activities was primarily attributable to the purchase of land for future operations.

Financing: Financing activities raised $7,431,486 of funding during the nine months ended September 30, 2025, compared to none during the nine months ended September 30, 2024. The change in cash received from financing activities was primarily attributable to the HUSA convertible note.

Long-Term Liabilities. At September 30, 2025, we had long-term liabilities of $6,191,700, compared to $5,860,274 at December 31, 2024. This reflects the extension of the AGIG Convertible note to January 1, 2027 thereby extending its maturity beyond 1 year and leading to reclassification as long-term.

Off-Balance Sheet Arrangements

The Company had no off-balance sheet arrangements or guarantees of third-party obligations at September 30, 2025.

Evaluation of Disclosure Controls and Procedures

Under the supervision and the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation as of September 30, 2025 of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act. Based on this evaluation under the Committee of Sponsoring Organizations - COSO Framework, management concluded that our internal control over financial reporting was not effective with regard to the assessment of the formal control environment and control activities. as of September 30, 2025.

The Company has identified material weaknesses in its internal controls over financial reporting with regard to the assessment of the formal control environment and control activities.

In addition, the Company has identified a material weakness in its internal controls over financial reporting related to the accounting for significant and unusual transactions. These weaknesses could result in errors or misstatements in its financial statements, which may not be detected in a timely manner.

Until we are able to remedy these material weaknesses, we are relying on third party consultants to assist. Additional time is required to complete our staffing, fully document our systems, implement control procedures, and test their operating effectiveness before we can conclude that we have fully remediated our material weaknesses.

Changes in Internal Control over Financial Reporting

The change in management following the completion of the Share Exchange has resulted in a change in the Company’s internal control, (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934). The Company has appointed a Chief Financial Officer to assume the duties of the principal financial officer thereby bringing the appropriate level of accounting knowledge and experience commensurate with the financial reporting requirements for a public company. In addition to this the management team and Board of the Company have been expanded which brings added oversight and governance.