Laredo Oil, Inc. - Annual Report: 2023 (Form 10-K)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K

For the fiscal year ended May 31, 2023

or

For the transition period from __________ to _________

Commission file number: 333-153168

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

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 o

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

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,” “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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

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

On November 30, 2022, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the registrant’s outstanding shares of common equity held by non-affiliates of the registrant was $2.67 million, based upon the closing price of the common stock on that date on the OTC Bulletin Board.

As of September 13, 2023, there were 66,220,306 shares of the registrant’s common stock outstanding.

Documents Incorporated by Reference: None.

LAREDO OIL, INC.

TABLE OF CONTENTS

Except as otherwise required by the context, references to “Laredo Oil,” “Laredo Oil, Inc.,” “the Company,” “we,” “us” and “our” are to Laredo Oil, Inc., a Delaware corporation, and its subsidiaries.

Forward-Looking Statements

From time to time, we may provide information, whether orally or in writing, including certain statements in this Annual Report on Form 10-K, which are deemed to be “forward-looking” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Litigation Reform Act”). These forward- looking statements and other information are based on our beliefs as well as assumptions made by us using information currently available.

The words “believe,” “plan,” “expect,” “intend,” “anticipate,” “estimate,” “may,” “will,” “should” and similar expressions are intended to identify forward-looking statements. Such statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended or using other similar expressions. We do not intend to update these forward-looking statements, except as required by law.

In accordance with the provisions of the Litigation Reform Act, we are making investors aware that such forward-looking statements, because they relate to future events, are by their very nature subject to many important factors that could cause actual results to differ materially from those contemplated by the forward-looking statements contained in this Annual Report on Form 10-K, any exhibits to this Annual Report on Form 10-K and other public statements we make. Such factors are discussed in the “Risk Factors” section of this Annual Report on Form 10-K.

PART I

Item 1. Business

Prior Operations

We are an oil exploration and production company, primarily engaged in acquisition and exploration efforts to find mineral reserves on various properties. From our inception in March 2008 through October 2009, we were primarily engaged in acquisition and exploration efforts for mineral properties. Beginning in October 2009, we shifted our focus to locating mature oil fields with the intention of acquiring those oil fields and recovering stranded oil reserves using enhanced recovery methods. From June 14, 2011 to December 31, 2020, we were a management services company, managing the acquisition and operation of mature oil fields, focused on the recovery of “stranded” oil from those mature fields using enhanced oil recovery methods for our then sole customer, Stranded Oil Resources Corporation, or SORC, a wholly owned subsidiary of Alleghany Corporation, or Alleghany. We performed those services in exchange for a quarterly management fee and reimbursement from SORC of our employee related expenses. Such fees and reimbursements were effectively all of our revenues prior to the closing of the Securities Purchase Agreement with Alleghany described below.

On December 31, 2020, we entered into a Securities Purchase Agreement with Alleghany. Under that agreement, we purchased all of the issued and outstanding shares of SORC. As consideration for the SORC shares, we paid Alleghany $72,678 in cash and agreed to pay Alleghany a seven-year royalty of 5.0% of our future revenues and net profits from our oil, gas, gas liquids and all other hydrocarbon operations, subject to certain adjustments. Currently, SORC is not conducting any ongoing operations.

Under the Securities Purchase Agreement with Alleghany, we also entered into a Consulting Agreement under which Alleghany paid us an aggregate of approximately $1.245 million during calendar year 2021 in exchange for our providing Alleghany with one to three years of consulting services from certain of our employees, including Mark See, our Chief Executive Officer. We no longer receive any management fees or reimbursement payments from Alleghany for the monthly expenses of any of our employees.

Current Operations

Prior to December 31, 2020, while implementing underground gravity drainage, or UGD, projects for Allegheny, we gained specialized know-how and operational experience in evaluating, acquiring, operating and developing oil and gas properties, as well as gaining expertise designing, drilling and producing conventional oil wells. Based upon that know-how, we identified and acquired 45,246 gross acres and 37,932 net acres of mineral property interests in the State of Montana. We began drilling an exploratory well in Montana during May 2022. That well has not yet been completed or put into production. We are continuing our efforts to complete the drilling of the well and begin commercial production. Simultaneously, we are attempting to raise additional funds to continue development of the other mineral property interests we purchased. We plan to have each additional well have an 80-acre footprint, so that the first ten wells would cover approximately 800 acres, or less than two percent of our leased acreage. Our ability to secure further funding will determine the extent of future production for the acreage, and the pace of field development.

In connection with our securing the acreage in Montana described above, our wholly owned subsidiary, Lustre Oil Company LLC, or Lustre, entered into an Acquisition and Participation Agreement with Erehwon Oil & Gas, LLC, or Erehwon. Our agreement with Erehwon allows us to acquire oil and gas interests, and drill, complete and equip wells in Valley County, Daniels County and Roosevelt County, Montana. Our agreement with Erehwon also specifies calculations for royalty interests and working interests that we will receive for the first ten well completions, and first ten well recompletions, which is defined as the completion of a well for production from an existing well bore in another formation. Under our agreement with Erehwon, we will acquire the initial mineral leases, and pay 100% of the initial acquisition costs, up to $500,000. When the total costs exceed $500,000, Erehwon has the option to acquire a 10% working interest in any lease we acquired by paying us 10% of our acquisition cost of that lease, resulting in our paying 90% of the applicable lease’s acquisition costs. Until we are repaid the full amount of the acquisition costs we paid to complete the first ten wells and first ten recompletions of older wells, the working interest split will remain 10% to Erehwon and 90% to us. After we have recovered our acquisition costs, Erehwon’s working interest will increase to a 20% working interest. Additional wells and recompletions will have a working interest split of 10% to Erehwon and 90% to us, unless Erehwon exercises its option to increase its working interest by 10%, as described above.

Under our agreement with Erehwon, we will fund 100% of the construction costs of the first ten wells and first ten recompletions. The lease acquisition costs of any additional wells will be funded 80% by us and 20% by Erehwon; provided, however, that Erehwon will have the option to increase its working interest to 20% only by reimbursing us for 10% of our acquisition costs. Royalty expenses for these wells will consist of a royalty interest to the landowner and an overriding royalty interest of between 3% and 6% for two individuals who generated the prospects, who will also receive an amount equal to 5% of the cost of the first ten new wells we complete and the first ten completed recompletions.

In January 2022, we executed a Net Profits Interest Agreement with Erehwon and Olfert No. 11-4 Holdings, LLC, or Olfert Holdings, for the purpose of funding the first well under the Acquisition and Participation Agreement described above, named Olfert #11-4. In exchange for Olfert Holdings’ funding of the development of the first well, Olfert Holdings receives 90% of amounts resulting from Olfert #11-4 prior to “Payout” and 50% after “Payout.” The Net Profits Interest Agreement defines “Payout” as the point in time when the aggregate of all ‘Net Profits Interest’ payments made to Olfert Holdings under the agreement equals 105% of the total well development costs.

In January 2022, we also entered into the Olfert Holdings operating agreement, under which we agreed to make a capital contribution to Olfert Holdings in the amount of $500,000, out of a total of $1,500,000 of capital to be raised by Olfert Holdings. As of May 31, 2022, we were credited with a contribution of $59,935 in market value of well development costs, representing a 5.5% interest in Olfert Holdings. Since then, other investors, including our chief financial officer, assumed and funded our remaining capital commitment under the Olfert Holdings operating agreement.

On June 30, 2020, we entered into the Limited Liability Company Agreement of Cat Creek Holdings LLC, a Montana limited liability company, with Lipson Investments LLC and Viper Oil & Gas, LLC. The limited liability company was formed to purchase certain oil and gas properties in the Cat Creek Field in Petroleum County and Garfield County in the State of Montana. On July 1, 2020, Cat Creek Holdings entered into an Asset Purchase and Sale Agreement with Carrell Oil Company. Under that agreement, Cat Creek Holdings agreed to pay Carrell Oil $400,000 in cash, subject to certain revenue adjustments and expense and tax allocations, in exchange for the Cat Creek Field properties. We invested $448,900 in Cat Creek Holdings in exchange for a 50% ownership interest. Lipson Investments LLC and Viper Oil & Gas, LLC, the other two members of Cat Creek Holdings, have ownership interests of 25% each, which they received for their respective investments of $224,450 in cash. We designate two of the four managers of Cat Creek Holdings.

Competition

Our operating results are largely impacted by competition from other exploration and production companies in all areas of operation, including the acquisition of mature fields. Our competitors include large, well-established, companies with substantially more capital resources than us.

Oil and Gas Price Volatility

Market prices for oil and gas declined significantly in the first six months of calendar year 2020, as the combination of the COVID-19 global pandemic and geopolitical tensions among the world’s energy producers resulted in the simultaneous reduction of demand and increase in supply of crude oil. Since then, oil and gas prices have recovered and have remained in the $70-80 per barrel range. However, oil and gas prices still remain volatile.

Operating Hazards and Uninsured Risks

Oil and gas drilling activities are subject to many risks, including, but not limited to, the risk that those activities will not produce commercially viable oil and gas reserves. The cost and timing of drilling, completing and operating wells is often uncertain and drilling operations may be curtailed, delayed or canceled as a result of numerous factors, including low oil and gas prices, title problems, reservoir characteristics, weather conditions, equipment failures, delays imposed by project participants, compliance with governmental requirements, shortages or delays in the delivery of equipment and services and increases in the cost for such equipment and services. Our future oil recovery activities may not be successful. If so, such failure may have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our operations are subject to hazards and risks inherent in drilling for and producing and transporting petroleum products, including fires, natural disasters, explosions, encountering formations with abnormal pressures, blowouts, craterings, and pipeline ruptures and spills. Any of these events may result in the loss of hydrocarbons, environmental pollution, personal injury claims and other damage to our properties and those of others. We maintain insurance against some, but not all, of the risks described above. In particular, the insurance we maintain does not cover claims relating to failure of title to oil leases, loss of surface equipment at well locations, business interruption, loss of revenue due to low commodity prices or loss of revenues due to well failure. The occurrence of any such event that is not covered, or not fully covered, by insurance that we maintain or may acquire, could have a material adverse effect on our operations.

Governmental Regulation

Oil and natural gas exploration, production, transportation and marketing activities are subject to extensive laws, rules and regulations promulgated by federal and state legislatures and agencies, including but not limited to the Mine Safety and Health Administration, or MSHA, the Federal Energy Regulatory Commission, or FERC, the Environmental Protection Agency, or EPA, the Bureau of Land Management, BLM, and various other federal or state regulatory agencies. Our failure to comply with any such laws, rules and regulations may result in substantial penalties, including the delay or prohibition of our operations. The legislative and regulatory burden on the oil industry described above increases our cost of doing business.

State regulatory agencies, as well as the federal government when we operate on federal or Indian lands, require permits for drilling operations, drilling bonds and reports, and impose other requirements relating to the exploration and production of oil and gas. There are also statutes or regulations addressing conservation matters, including provisions for the unitization or pooling of oil and natural gas properties, the establishment of maximum rates of production from wells and the regulation of spacing, plugging and abandonment of such wells. In each jurisdiction, we may need exceptions to some applicable regulations requiring regulatory approval. All of these matters could affect our operations.

Environmental Matters

The oil industry is subject to extensive and changing federal, state and local laws and regulations relating to environmental protection, including the generation, storage, handling, emission, transportation and discharge of materials into the environment, as well as safety and health. The recent trend in environmental legislation and regulation is generally toward stricter standards, and this trend is likely to continue. These laws and regulations may require a permit or other authorization before construction or drilling commences, and for certain other activities, limit or prohibit access, seismic acquisition, construction, drilling and other activities on certain lands lying within wilderness and other protected areas, impose substantial liabilities for pollution resulting from its operations, and require the reclamation of certain lands.

The permits that are required for oil and gas operations are subject to revocation, modification and renewal by issuing authorities.

Federal regulations require certain owners or operators of facilities that store or otherwise handle petroleum products to prepare and implement spill prevention, control countermeasures and response plans relating to the possible discharge of oil into surface waters. The Oil Pollution Act of 1990, or OPA, contains numerous requirements relating to the prevention of and response to oil spills into waters of the United States. For onshore and offshore facilities that may affect waters of the United States, the OPA requires the operator to demonstrate the financial ability to respond to discharges. Regulations are currently being developed under federal and state laws concerning oil pollution prevention and other matters that may impose additional regulatory burdens on participants in the oil and gas industry. In addition, the Clean Water Act and analogous state laws require permits to be obtained to authorize discharge into surface waters or to construct facilities in wetland areas. The Clean Air Act of 1970 and its subsequent amendments impose permit requirements and necessitate certain restrictions on point source emissions of volatile organic carbons (nitrogen oxides and sulfur dioxide) and particulates with respect to certain of our operations. The EPA and designated state agencies have in place regulations concerning discharges of storm water runoff and stationary sources of air emissions. These programs require covered facilities to obtain individual permits, participate in a covered group or seek coverage under an EPA general permit. A number of agencies, including but not limited to MSHA, the EPA, the BLM, and similar state commissions, have adopted regulatory guidance in consideration of the operational limitations on oil and gas facilities and their potential to emit pollutants.

Facilities

Our principal executive office is located at 2021 Guadalupe Street, Ste. 260, Austin, Texas 78705.

Personnel

As of May 31, 2023, we had 10 full-time employees and no part time employees.

Website Access

We make available on our web site our annual reports on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K, and all amendments to those reports, as soon as reasonably practicable after we file such reports electronically with the Securities and Exchange Commission. Information on our website is not included as part of this report.

Item 1A. Risk Factors

Not Applicable

Item 1B. Unresolved Staff Comments

Not Applicable

Item 2. Properties

In May 2022, Lustre began drilling an exploratory well, named Olfert #11-4, in the Lustre oil field located in northeastern Montana. As of the filing of this report, the Olfert #11-4 well has not been completed and put into production. As a result of the uncertainty surrounding successful well completion and the availability of future funding to develop our acquired mineral rights, we are not providing disclosures of proved reserves until we have updated reserve reports.

Item 3. Legal Proceedings

On February 4, 2021, Lustre filed a case captioned Lustre Oil Company LLC and Erehwon Oil & Gas, LLC v. Anadarko Minerals, Inc. and A&S Mineral Development Co., LLC in the Montana Seventeenth Judicial District Court for Valley County to initiate a quiet title action confirming Lustre’s rights under certain mineral leases in Valley County, Montana. Lustre is also seeking damages with respect to actions taken by A&S Mineral Development Co., LLC to improperly produce oil on the property subject to Lustre’s mineral leases. On January 14, 2022, the District Court granted the defendants’ Motion to Dismiss without addressing the merits of Lustre’s quiet title action. Lustre appealed the decision to the Montana Supreme Court. On April 6, 2023, in a unanimous decision, the Montana Supreme Court reversed the District Court’s decision related to Lustre’s quiet title action and remanded the case to the District Court for further proceedings. On June 1, 2023, we filed a First Amended Complaint with the District Court reopening the original suit with a different judge.

On March 20, 2023, Capex Oilfield Services, Inc. filed a lawsuit against Lustre in the Montana Tenth Judicial District Court, Petroleum County, demanding payment of $377,189.55 plus interest and collection costs for services provided by Capex to drill the Olfert 11-4 well. On May 18, 2023, Capstar Drilling, Inc. filed a lawsuit against Lustre in the Montana Seventeenth Judicial District Court, Valley County, demanding payment of $298,049.76 plus interest and collection costs for services provided by Capstar to drill the same well. Lustre intends to bring that well into production as soon as possible, and reimburse unpaid vendors from proceeds from such production.

Except as set forth above, we are not currently involved in any other legal proceedings and we are not aware of any other pending or potential legal actions.

Item 4. Mine Safety Disclosures

Not Applicable

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is currently traded under the symbol LRDC on the over-the-counter market and is quoted on the Pink Sheets, which is not recognized by the Securities and Exchange Commission, or SEC, as a stock exchange for reporting purposes.

Since our stock began trading on the Pink Sheets on November 5, 2009, there has been a limited trading market for our common stock. The following table presents the range of high and low bid information for our common equity for each full quarterly period within the two most recent fiscal years.

Laredo Oil, Inc. High/Low Market Bid Prices ($)

Over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or quotation system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of securities laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form, including language, type, size and format, as the SEC shall require by rule or regulation. The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with: (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a suitably written statement.

These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our stock if it becomes subject to these penny stock rules. Therefore, if our common stock becomes subject to the penny stock rules, stockholders may have difficulty selling those securities.

Holders

As of September 13, 2023, we had 66,220,508 shares of common stock issued and outstanding, and there were 27 holders of record, and more than 700 beneficial holders, of our common stock, including those who own their shares through their brokers in “street name.”

Dividends

Since our inception, we have not paid any dividends on our common stock. Our board of directors does not anticipate that it will declare dividends on our common stock in the foreseeable future.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Prior to December 31, 2020, we managed several projects for Stranded Oil Resources Corporation, or SORC, a subsidiary of Alleghany Corporation, or Alleghany. Also prior to December 31, 2020, SORC sold the assets of those projects and transferred the funds it received from those sales to Alleghany. On December 31, 2020, we purchased 100% of the outstanding stock of SORC from Alleghany. At that time, SORC only owned vehicles and oil field assets that were not included in the previous sale of assets to Alleghany.

During the period from June 14, 2011 through December 31, 2020, we gained specialized know-how and operational experience implementing underground gravity drainage, or UGD, projects, as well as experience developing conventional oil wells. As of August 15, 2023, based upon this knowledge we gained, we acquired approximately 45,766 gross acres and 38,153 net acres of mineral properties in northeastern Montana. We are currently drilling an exploratory well, Olfert #11-4, in that property. As of the date of this report, the Olfert 11-4 exploratory well has not yet been completed and put into production. We have discovered what we believe are economic levels of oil in the well, but have encountered saltwater intrusion into the well, which requires us to access a proximate saltwater injection well to economically dispose of the saltwater in the well. We are currently making efforts to gain access to a disposal well to complete the well and begin economical production.

Effective July 18, 2023, our subsidiary, Lustre Oil Company, LLC, or Lustre, and Erehwon Oil & Gas, LLC, or Erehwon, entered into an Exploration and Development Agreement, or the Development Agreement, with Texakoma Exploration & Production Company, or Texakoma, for the exploration and development of the “Lustre Field Prospect,” described in the Development Agreement. Lustre and Erehwon are parties to an existing Acquisition and Participation Agreement, under which they agreed to acquire certain oil and gas interests, and drill, complete, re-enter, re-complete, sidetrack, and equip wells, in certain counties in Montana.

Under the terms of the Development Agreement, Texakoma agreed to pay Lustre and Erehwon, jointly, the following amounts: (i) $175,000 on or before July 21, 2023, which amount was paid; and (ii) another $175,000 upon the beginning of the drilling of the initial test well under the agreement, which is scheduled to occur prior to October 1, 2023, subject to rig availability. Upon the drilling of that test well, Lustre and Erehwon are required to deliver to Texakoma a partial assignment of an 85% working interest in the applicable oil leases.

Texakoma will pay 100% of the costs associated with the drilling and completion of two initial test wells. Lustre and Erehwon will have an undivided 15% working interest in the two initial wells. Texakoma will have the option, but not the obligation, to participate in the development of the remainder of the Lustre Field Prospect, which option may be exercised by Texakoma by giving written notice of its intent to participate within 90 days after the completion rig is removed from the second test well location.

If Texakoma exercises its option described above, Texakoma will have the obligation to drill eight additional wells, with Lustre and Erehwon having a combined 15% working interest in those wells, and Texakoma will pay Lustre and Erehwon $706,603 for an 85% leasehold interest in the next eight drill sites and a 50% leasehold interest in the balance of the Lustre Field Prospect acreage. The working and net revenue interest in any wells drilled after the first ten wells will be shared by Texakoma, on one hand, and Lustre and Erehwon, on the other hand, on a 50:50 basis.

Not including our interest in the Texakoma transactions described above, we also retain a 100% leasehold interest and full control of an additional 30,556 net mineral acres in northeastern Montana at the western edge of the Williston Basin.

Liquidity and Capital Resources

Currently, we have no producing oil wells on our Montana leases. The agreement with Texakoma described above is expected to produce revenue sufficient to cover our ongoing operating expenses beginning later in calendar year 2024. Until we receive adequate funding from the Texakoma agreement described above, any cash needed for operations and oil field expansion and development will most likely come from the sale of our debt and equity securities.

An independent petroleum engineering firm has provided us with a reserve report estimating that interests of proved undeveloped, probable undeveloped and contingent reserves, and forecasts of economics attributable to certain properties in the Western Williston Basin of Montana for oil interests acquired by Lustre. The report estimates that the Lustre reserves may generate $67 million in cash flow, discounted at a rate of 10%. We are currently attempting to raise sufficient funds to drill and produce the properties identified in that reserve report. We are in the process of raising up to $7.5 million from the sale of our secured convertible promissory notes. We will use the proceeds from the sale of these notes for operating capital, and to fund the drilling of up to three production wells and a saltwater disposal well, on the selected acreage described above. The secured convertible notes are secured by interests in our wholly owned subsidiary, Hell Creek Crude, LLC. The notes are also convertible into shares of our common stock at a conversion rate of $1.00 per share. As of the filing date, we have issued $620,000 in principal amount of the notes.

We have also recently received $267,319 in proceeds from the sale of 6,062,886 shares of our common stock to an individual investor who previously purchased one of our secured convertible promissory notes described above.

Lustre and Erehwon have filed an action for quiet title in the State of Montana against Anadarko Minerals, Inc. and A&S Mineral Development Co, LLC. We are asking for damages in excess of $2 million in that action. However, we cannot assure you that we will prevail in that action and, if we do prevail, the timing of the resolution of the action, or the amount of any damages that we may receive.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

Our cash and cash equivalents at May 31, 2023 was $13,754. Our total debt outstanding as of May 31, 2023 was $3,669,429, including (i) $617,934 owed to Alleghany, which is classified as a current note payable, and (ii) $986,598 pursuant to notes under the Paycheck Protection Program, or PPP, of which we have classified $536,974 as long-term debt, net of the current portion totaling $449,624, which is classified as a current note payable, (iii) $839,798 short term convertible notes, net of deferred debt discount, (iv) a $183,000 revolving note classified as short-term, (v) a $750,000 note payable due to Cali Fields LLC, classified as short-term, and (vi) a $292,099 note payable due to our Chief Financial Officer, classified as short-term.

Results of Operations

During the fiscal year ending May 31, 2022, we recorded other revenue and direct costs totaling $667,608 and $1,286,244, respectively, for continued consulting services we provided to Alleghany after the termination of the Management Services Agreement. We did not record any similar revenues and direct costs during the fiscal year ending May 31, 2023, as the consulting services were completed effective December 31, 2021.

During the fiscal years ended May 31, 2023 and May 31, 2022, we incurred operating expenses of $2,770,285 and $1,580,069, respectively. These expenses consisted of general operating expenses incurred in connection with the day to day operation of our business, the preparation and filing of our required public reports and stock option compensation expense. In addition, commencing on January 1, 2022, our payroll related expenses are now included in our general operating expenses as we no longer provide any direct management services to Alleghany. The increase in our expenses for fiscal 2023, as compared to the same period in fiscal 2022, is primarily attributable to these payroll costs, increased accounting and other professional fees, including public relations, advisory services and stock-based compensation. We also experienced increases in other general and administrative expenses, including insurance and SEC filing fees.

During fiscal 2023, we recognized other income and expenses comprised of the $122,682 employee retention credit, $84,290 equity method loss related to our July 2020 equity investment, and $74,225 of other income upon the settlement of debt.

Recently Issued Accounting Pronouncements

Refer to Note 3 of the Notes to Consolidated financial statements for a discussion of recently issued accounting pronouncements.

Critical Accounting Policies and Estimates

The process of preparing consolidated financial statements requires that we make estimates and assumptions that affect the reported amounts of liabilities and stockholders’ equity/(deficit) at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates in these consolidated financial statements include estimates related to purchase price allocation. Changes in the status of certain facts or circumstances could result in a material change to the estimates used in the preparation of the consolidated financial statements and actual results could differ from the estimates and assumptions.

Going Concern

These consolidated financial statements have been prepared on a going concern basis. We have routinely incurred losses since inception, resulting in an accumulated deficit. We have recently received loans from accredited investors to fund our operations. There is no assurance that such financing will be available in the future to meet our operating needs. This situation raises substantial doubt about our ability to continue as a going concern within the one-year period after the issuance date of the consolidated financial statements included in this report.

Our management has undertaken steps to improve operations, with the goal of sustaining operations for the next twelve months and beyond. These steps include an ongoing effort to raise funds through the issuance of debt to fund our well development program and maintain operations. We have attracted and retained key personnel with significant experience in the industry. At the same time, in an effort to control costs, we have required a number of our personnel to multi-task and cover a wider range of responsibilities in an effort to restrict the growth of our headcount. There can be no assurance that we can successfully accomplish these steps and it is uncertain that we will achieve a profitable level of operations and obtain additional financing. We cannot assure you that any additional financing will be available to us on satisfactory terms and conditions, if at all.

The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of us to continue as a going concern.

Off Balance Sheet Arrangements

We do not currently have any off-balance sheet arrangements or other such unrecorded obligations, and we have not guaranteed the debt of any other party.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

We are not required to provide the information required by this Item as we are a “smaller reporting company,” as defined in Rule 229.10(f)(1)

Item 8. Consolidated Financial Statements and Supplementary Data

Our consolidated financial statements required by this item are included on the pages immediately following the Index to Consolidated Financial Statements appearing on page F-1.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, or the SEC. Our disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosures. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives, and management necessarily is required to use its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

An evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer, or CEO, and Chief Financial Officer, or CFO, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report as defined in Exchange Act Rule 13a-15(e) and Rule 15d-15(e). Based on that evaluation, our CEO and CFO have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are not effective in ensuring that information required to be disclosed in our Exchange Act reports is (1) recorded, processed, summarized and reported in a timely manner, and (2) accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow for timely decisions regarding required disclosure.

Our small size and limited resources have prevented us from being able to employ sufficient resources to enable us to have an adequate level of supervision and segregation of duties. Further we have limited specific oil and gas accounting personnel in our accounting department due to our small size, lack of resources and limited technical accountants on staff. Therefore, it is difficult for us to effectively segregate accounting duties and have proper financial reporting, which creates a material weakness in internal controls. This lack of segregation of duties and limited personnel leads management to conclude that our financial reporting disclosure controls and procedures are not effective to give reasonable assurance that the information required to be disclosed in reports that we file under the Exchange Act is recorded, processed, summarized and reported as and when required.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)). Under the supervision and with the participation of our management, including our CEO and CFO, we conducted an evaluation of the effectiveness of our internal controls over financial reporting based on the framework in Internal Controls – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control – Integrated Framework, our management concluded that our internal controls over financial reporting were not effective as of May 31, 2023. As we grow, we are working on further improving our segregation of duties and level of supervision.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to SEC rules adopted in conformity with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Exchange Rules 13a-15(f) and 15d-15(f)) that occurred during the year ended May 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The following table sets forth as of September 13, 2023, the name, age, and position of each of our executive officers and directors, and the term of office of each of our executive officers and directors.

Each of our directors serves for a term of three years, until his successor is elected at our annual stockholders’ meeting, and is qualified, subject to removal by our stockholders. Each officer serves at the pleasure of the Board of Directors.

Set forth below is certain biographical information regarding each of our executive officers and directors.

DONALD BECKHAM has served as a director since March 1, 2011. Since July 2015, he has been a Partner with Copestone Energy Partners, LLC. In 1993 he founded Beckham Resources, Inc. (“BRI”) which for the past 20 years has been a licensed, bonded and insured operator in good standing with the Railroad Commission of Texas. Through BRI, Mr. Beckham has drilled and operated fields for his own account. His expertise is in the acquisition, exploitation, exploration and production enhancement of mature oil and gas fields through which he has been able to enhance production by compressor optimization, pump design, work-over programs, stimulation techniques and identifying new pay zones. BRI has operated wells in the following fields: Hull, Liberty, Aransas Pass, McCampbell, Mission River, Garcitas Creek, Sour Lake, Batson, Barton Ranch and Dayton. Prior to BRI, Mr. Beckham was the chief operations manager for Houston Oil Fields Corporation (“HOFCO”) where he began his career. There he was responsible for drilling, production and field operations and managed approximately 100 people including engineers, geologists, land men, pumpers, and other contract personnel, as well as state and federal environmental and regulatory functions. He managed an annual capital budget of approximately $30 million and operated approximately 100 wells. HOFCO drilled about 20 wells per annum and performed approximately 30 recompletions and work over operations each year. HOFCO owned interests in about 10 key fields principally in Texas, and company-managed production was approximately 1,000 bpd of crude oil and 10 mm cfd of natural gas. Fields that he managed were as follows: Manvell, Cold Springs, Shepherd, Turtle Bay, Red Fish Bay, Dickinson, Refugio, Lost Lake, Liberty and Abbeville. Mr. Beckham is a petroleum engineer and 1984 graduate of Mississippi State University.

MICHAEL H. PRICE, has served as a director since August 1, 2012 and has over 40 years of senior financial and petroleum experience in the global oil and gas industry. He has been a principal in Octagon Energy Advisors, a Houston based energy investment advisory firm, from 2002 to the present. The firm advises financial institutions and institutional investors participating in energy investments. Since 2008, he has been a Managing Director at ING Capital which provides debt financing to domestic exploration and production companies. From 1998 through 2002, Mr. Price was the Chief Financial Officer of Forman Petroleum Corporation. Before that, Mr. Price was Managing Director at Chase Manhattan Bank for fifteen years where he was in charge of technical support for Chase’s worldwide energy merchant banking activities. In his early career, he worked as a consulting principal on domestic petroleum engineering and landowner matters, and gained extensive international experience working with major oil companies in a variety of operating positions. He holds a BS and MS from Illinois Institute of Technology, an MBA from the University of Chicago, a M.Sc. from the London School of Economics, and a MS in Petroleum Engineering from Tulane University.

Item 10. Directors, Executive Officers and Corporate Governance - continued

MARK SEE has been our Chief Executive Officer and Chairman of the Board of Directors since October 16, 2009. He has over 25 years of experience in tunneling, natural resources and the petroleum industries. He was the founder and founding CEO of Rock Well Petroleum, a private oil & gas company from January 2005 until December 2008 and worked from then until October 2009 forming Laredo Oil. He was employed with Albian Sands as the Manager for the Alberta Oil Sands Projects at Fort McMurray, Alberta, Canada, a joint venture between Shell Canada and Chevron. Mr. See was also President of Oil Recovery Enhancement LLC in Bozeman, Montana, a private oil company. He was selected as one of the top 25 Engineers in North America by the Engineering News Record for his innovations in the petroleum industry. He is a member of the Society of Mining Engineers and the Society of Petroleum Engineers.

BRADLEY E. SPARKS is our Chief Financial Officer and Treasurer and has been a director since March 1, 2011. Before joining us in October 2009, Mr. Sparks was the Chief Executive Officer, President and a Director of Visualant, Inc. Prior to joining Visualant, he was the Chief Financial Officer of WatchGuard Technologies, Inc. from 2005 to 2006. Before joining WatchGuard, he was the founder and managing director of Sunburst Growth Ventures, LLC, a private investment firm specializing in emerging-growth companies. Previously, he founded Pointer Communications and served as Chief Financial Officer for several telecommunications and internet companies, including eSpire Communications, Inc., Digex, Inc., Omnipoint Corporation, and WAM!NET. He also served as Vice President and Treasurer of MCI Communications from 1988-1993 and as Vice President and Controller from 1993-1995. Before his tenure at MCI, Mr. Sparks held various financial management positions at Ryder System, Inc. Mr. Sparks currently serves on the Board of Directors of Comrise. Mr. Sparks graduated from the United States Military Academy at West Point in 1969 and is a former Army Captain in the Signal Corps. He received a Master of Science in Management degree from the Sloan School of Management at the Massachusetts Institute of Technology in 1975 and is a licensed CPA in Florida.

To the knowledge of our management, except as noted below, during the past ten years, no present or former director, executive officer or person nominated to become a director or an executive officer of the Company has:

Item 10. Directors, Executive Officers and Corporate Governance - continued

In calendar year 2014, Mr. Beckham served as an executive officer of Mining Oil, Inc., which filed for bankruptcy in January 2015. Four months prior to that filing, Mr. Beckham resigned his position due to policy differences with members of that company’s management team.

Section 16(a) Beneficial Ownership Reporting Compliance

During the fiscal year ended May 31, 2023, we had no class of equity securities registered pursuant to Section 12 of the Securities Exchange Act of 1934. Accordingly, no reports were required to be filed pursuant to Section 16(a) with respect to our officers, directors, and beneficial holders of more than ten percent of any class of equity securities.

Code of Ethics

Our Code of Ethics is included herein by reference to Exhibit 14.1 to this Annual Report on Form 10-K and can be found on our web site at www.laredo-oil.com.

Item 11. Executive Compensation

Compensation Summary for Executive Officers

The following table sets forth compensation paid or accrued by us for the last two years ended May 31, 2023 and 2022 with regard to individuals who served as the Principal Executive Officer, the Principal Financial Officer and for executive officers receiving compensation in excess of $100,000 during these fiscal periods.

Named Executive Officers Compensation and Termination of Employment Provisions

Pursuant to a letter agreement dated October 16, 2009, and subsequently amended, between us and Mr. See, we pay Mr. See an annual base salary of $495,000 (which, together with previously approved allowances for Mr. See equaling $30,000, is an aggregate of $525,000 per year). If Mr. See is terminated by us without “Cause” (as such term is defined in the letter agreement) or if Mr. See terminates his employment with us for “Good Reason” (as such term is defined in his change in control agreement), we will pay severance to Mr. See equal to 100% of his then-current annualized base salary, and any bonuses earned, paid out on a pro rata basis over our regular payroll schedule over the two-year period following the effective date of such termination, provided that if such termination occurs within 12 months after a Change of Control, such two-year period shall be increased to a three-year period. In addition, Mr. See will continue to receive all applicable benefits under our standard benefits plans currently available to other senior executives, for a period not to exceed 24 months following the termination of his employment.

Beginning January 1, 2020, the annual cash salary compensation payable to Mr. See was increased from $485,000 to $498,580 per year (which, together with previously approved allowances for Mr. See equaling $30,000, is an aggregate of $528,580 per year). Amounts received above Mr. See’s $495,000 contract salary reduces his cumulative deferred compensation, and amounts received below the $495,000 contract salary increase deferred compensation.

Item 11. Executive Compensation - continued

For calendar year 2021, we paid Mr. See as follows: (a) $100,000 in cash on or before January 7, 2021, less applicable withholding taxes; and (b) four (4) equal cash installments of $99,645, less applicable withholding taxes, with the first payment made on or before January 15, 2021, the second payment made on or before April 8, 2021, the third payment payable on or before July 8, 2021 and the fourth payment on or before October 8, 2021. In consideration of the payments described above, Mr. See waived any obligations we had to pay for any severance benefits included in the letter agreement dated October 16, 2009 referenced above, and such letter was terminated effective December 31, 2021. Effective January 1, 2022, our Board of Directors reinstated the terms of the letter agreement with Mr. See that was in place on December 30, 2020.

As of May 31, 2023, Mr. See has $553,840 of deferred compensation owed to him under his contract, which is the cumulative difference between his contract salary and the actual cash compensation he has received thereunder through May 31, 2023.

Pursuant to a letter agreement dated October 20, 2009, as amended, we pay Mr. Sparks an annual base salary of $385,000 (which, together with previously approved annual payments for Mr. Sparks equaling $30,000, is an aggregate of $415,000 per year). If Mr. Sparks is terminated by us without “Cause” (as such term is defined in the letter agreement) or if Mr. Sparks terminates his employment with us for “Good Reason” (as such term is defined in the change in letter agreement),, we will pay Mr. Sparks severance equal to 100% of his then-current annualized base salary, and any bonuses earned, paid out on a pro rata basis over our regular payroll schedule over the two-year period following the effective date of such termination; provided, however, that if such termination occurs within 12 months after a Change of Control, such two-year period is increased to a three-year period. In addition, Mr. Sparks will continue to receive all applicable benefits under our standard benefits plans currently available to other senior executives, for a period not to exceed 24 months following the termination of employment.

For calendar year 2021, we paid Mr. Sparks as follows: four (4) equal cash installments of $96,250, less applicable withholding taxes, with the first payment made on or before January 15, 2021; the second payment made on or before April 8, 2021, the third payment made on or before July 8, 2021 and the fourth payment made on or before October 8, 2021. In consideration of the payments above, Mr. Sparks waived our obligations to pay for any severance benefits included in his letter agreement referenced above, and terminated the letter agreement effective December 31, 2021. Effective January 1, 2022, our Board of Directors reinstated the terms of the letter agreement that was in place on December 30, 2020.

On May 28, 2022, our Board of Directors awarded Mr. Sparks fully vested options to purchase 1,500,000 shares of our common stock at $0.12 per share, which options replaced 1,500,000 options previously granted to Mr. Sparks, which expired in April 2022.

As of May 31, 2023, we owe Mr. Sparks $1,550,183 of cumulative deferred compensation under his letter agreement with us with respect to his compensation. The amount owed under the letter agreement is the cumulative difference between the amount of compensation we owe Mr. Spark under the agreement and the actual cash compensation he has received under his agreement with us.

Item 11. Executive Compensation - continued

Outstanding equity awards as of May 31, 2023:

In February 2011, we approved the Laredo Oil, Inc. 2011 Equity Incentive Plan. The Equity Incentive Plan was filed with the Securities and Exchange Commission on Form S-8 on November 8, 2011, and was amended in December 2014 to increase the number of shares available for issuance thereunder to an aggregate of 15,000,000 shares.

Director Compensation

Historically, the compensation for each non-employee member of our Board of Directors has been as follows: quarterly cash payment of $12,500 payable mid-quarter in arrears, 500,000 shares of restricted common stock vesting in three equal installments over three years, and fully vested in fiscal 2016. We also reimburse directors for all reasonable expenses associated with attendance at meetings of our Board of Directors. During the last quarter of fiscal year 2022, we suspended cash payments to directors indefinitely. However, such payments were accrued for future payment. During fiscal year 2023, no cash payments to directors were made, but were accrued for future payment. On May 28, 2022, we granted fully vested options to purchase 500,000 shares of our common stock to each of Mr. Beckham and Mr. Price. Since they are executive officers, Messrs. See and Sparks receive no additional compensation for serving on the Board of Directors.

Item 12. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth as of the date of the filing of this Form 10-K, the name and address and the number of shares of the Company’s common stock, with a par value of $0.0001 per share, held of record or beneficially by each person who held of record, or was known by the Company to own beneficially, more than 5% of the issued and outstanding shares of the Company’s common stock, and the name and shareholdings of each executive officer, director and of all officers and directors as a group.

Item 12. Security Ownership of Certain Beneficial Owners and Management - continued

Securities authorized for issuance under equity compensation plans

The following table provides information as of May 31, 2023 concerning the issuance of equity securities with respect to compensation plans under which our equity securities are authorized for issuance.

Equity Compensation Plan Information

Item 13. Certain Relationships and Related Transactions, and Director Independence

Transactions with Management and Others

On June 22, 2022, we assigned to our Chief Financial Officer, or CFO, the right to purchase up to 356,243 of the 500,000 membership interests in Olfert #11-4 in exchange for our CFO’s payment of $356,243 of our capital commitment to Olfert #11-4. On August 15, 2022, our CFO purchased an additional 109,590 membership interests in Olfert #11-4 for a payment of $109,590.

On October 26, 2022, we borrowed $150,000 from our CFO pursuant to a demand note bearing an annual interest rate of 10%. The note is secured by a pledge of all of the interests in our wholly-owned subsidiary Lustre Oil Company LLC.

In February 2023, our Chief Financial Officer made several advances to us, totaling $50,000. The advances were not made pursuant to a promissory note, and are not secured. On March 15, 2023, we received a loan of $30,000 from our Chief Financial Officer. During April and May of 2023, our Chief Financial Officer advanced another $62,099. The total amount of these advances aggregate to $292,099. We expect that these amounts will be incorporated into the October 26, 2022 demand note described above.

Director Independence.

Both Mr. Price and Mr. Beckham serve as “independent” directors based on the definition of independence in the listing standards of NASDAQ Marketplace Rule 4200(a)(15).

Item 14. Principal Accounting Fees and Services

(1) Audit Fees

The aggregate fees billed by the independent accountants for each of the last two fiscal years for professional services for the audit of the Company’s annual consolidated financial statements and the review of consolidated financial statements included in the Company’s Form 10-Q and services that are normally provided by the accountants in connection with statutory and regulatory filings or engagements for those fiscal years were $134,970 for the fiscal year ended May 31, 2023 and $110,270 for the fiscal year ended May 31, 2022. Weaver and Tidwell, L.L.P. provided our audit for the year ended 2022 and BF Borgers CPA PC provided our audit for the year ended 2023. The firms engaged during 2023 and 2022, respectively, provided no other services, other than those listed above for their respective years.

(2) Audit-Related Fees

The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountants that are reasonably related to the performance of the audit or review of the Company’s consolidated financial statements and are not reported under paragraph (1) above was $0.

(3) Tax Fees

The aggregate fees billed in each of the last two fiscal years ending May 31, 2023 and 2022 for professional services rendered by the principal accountants for tax compliance, tax advice, and tax planning was $9,476 and $19,418, respectively.

(4) All Other Fees

During the last two fiscal years ending May 31, 2023 and 2022, respectively there were $0 fees charged by the principal accountants other than those disclosed in (1), (2) and (3) above.

(5) Audit Committee’s Pre-approval Policies and Procedures

The Audit Committee pre-approves the engagement with the independent auditor. It meets four times annually and reviews consolidated financial statements with the independent auditor. Additionally, the Audit Committee meets in executive session with the independent auditor at the conclusion of those meetings.

PART IV

Item 15. Exhibits, Financial Statement Schedules

(a) (1) Consolidated Financial Statements. See Index to Consolidated Financial Statements on page F-1.

(a) (2) Financial Statement Schedules

The following financial statement schedules are included as part of this report:

None.

(a) (3) Exhibits

The exhibits required to be filed herewith by Item 601 of Regulation S-K, as described in the following index of exhibits, are attached hereto unless otherwise indicated as being incorporated herein by reference, as follows:

Item 15. Exhibits, Financial Statement Schedules - continued

Item 15. Exhibits, Financial Statement Schedules - continued

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.

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

LAREDO OIL, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

To the shareholders and the board of directors of Laredo Oil, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Laredo Oil, Inc. (the "Company") as of May 31, 2023, the related statement of operations, stockholders' equity (deficit), and cash flows for the year then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of May 31, 2023, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States.

Substantial Doubt about the Company’s Ability to Continue as a Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or are required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

/s/ BF Borgers CPA PC

BF Borgers CPA PC. (PCAOB 5041)

We have served as the Company's auditor since 2022

Lakewood, Colorado

September 13, 2023

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of

Laredo Oil, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Laredo Oil, Inc. and it’s subsidiary (the Company) as of May 31, 2022 and 2021, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for each of the two years in the period ended May 31, 2022, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Company as of May 31, 2022 and 2021, and the consolidated results of its operations and cash flows for each of the two years in the period ended May 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the entity has routinely incurred losses since inception, resulting in an accumulated deficit, and is dependent upon one customer for its revenue. These factors raise substantial doubt that the Company will be able to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2 to the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion of the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits include performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. 

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgements. We determined that there are no critical audit matters. 

WEAVER AND TIDWELL, L.L.P.

We have served as the Laredo Oil, Inc.’s auditor since 2011.

Dallas, Texas

September 13, 2022

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

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

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