BRN

New in FY2025

• Entity-Wide Risks The Company faces issues that could impair our ability to continue as a going concern in the future.
• Our ability to sustain our business in the future will depend on sufficient oil and natural gas operating cash flows which are dependent on oil and natural gas prices, which can and in the past have fluctuated significantly, and on oil and natural gas operating expenses which are both variable and fixed.
• A sufficient level of oil and natural gas operating cash flows are necessary to fund discretionary oil and natural gas capital expenditures which must be economically successful to provide sufficient returns to grow reserves and production or at a minimum replace declining production from aging wells.
• Such a level of oil and natural gas capital expenditures will require funding from external debt and/or equity sources that are not currently in place, but those sources may not be feasible or sufficient.
• In addition, we will need sufficient cash flows to fund our non-discretionary outflows such as oil and natural gas asset retirement obligations, ongoing oil and natural gas operating expenses and general and administrative expenses, both those related to our oil and natural gas operations and those related to our being a public company.
• Continued actions by an activist shareholder have had, and may continue to have, a significant negative impact on our ability to execute our business strategies and have had, and may continue to have, an adverse affect on our results of operations and financial condition.
• Sherwood and certain affiliated shareholders (collectively, the “Sherwood Group”), the Board of Directors appointed an Executive Committee comprised of Messrs.
• Kinzler, Grossman and Horowitz and this Executive Committee retained the services of various professionals, including attorneys, proxy solicitors, proxy advisors, and public relations and financial advisors.
• We have incurred substantial legal, public relations and other advisory fees and proxy solicitation expenses, and we currently expect those costs and expenses may continue.
• In addition, continuing perceived uncertainties as to our future direction, strategy or leadership created as a consequence may result in the loss of potential business opportunities, harm our ability to attract new or retain existing directors and employees, disrupt relationships with the Company, and the market price of our common stock could also experience periods of increased volatility as a result.
• Stockholders may be diluted significantly through our efforts to obtain financing, satisfy obligations through the issuance of securities or use our stock as consideration in certain transactions.
• Our Board of Directors has authority, without action or vote of the stockholders, subject to the requirements of the NYSE American stock exchange and applicable law, to issue all shares of our common stock or other debt or equity instruments to purchase such shares of our common stock.
• As of September 30, 2025, our General Counsel and Secretary and two other stockholders hold approximately 48% of our outstanding common stock.
• The overfunded amount is included on our balance sheet as an asset titled “Asset for retirement benefits.” As of September 30, 2025, the value of that asset was $5,928,000, which represented 28% of the Company’s total assets of $20,812,000 and 85% of our stockholders’ equity.
• As of September 30, 2025, the value of the Barnwell common stock held by the pension plan was $866,000, representing approximately 6% of the fair market value of the pension plan’s assets.
• Under the AER, an inventory reduction program has also been implemented which requires mandatory annual minimum expenditures towards outstanding decommissioning and reclamation obligations in accordance with AER targets which are adjusted by the AER on an annual basis.
• The target for 2026 is 6.5% of an individual company’s inactive liability.
• We derive a significant portion of our revenues from our operations in Canada; 91% in fiscal 2025.
• Because all our oil and natural gas production is in Canada, changes in tariffs, trade barriers, and other regulatory requirements could have an adverse effect on our business, prospects, financial condition and operating results, the extent of which cannot be predicted with certainty at this time.

Gone since FY2024

• Entity-Wide Risks Stockholders may be diluted significantly through our efforts to obtain financing, satisfy obligations through the issuance of securities or use our stock as consideration in certain transactions.
• Our Board of Directors has authority, without action or vote of the stockholders, subject to the requirements of the NYSE American and applicable law, to issue all shares of our common stock or warrants or other instruments to purchase such shares of our common stock.
• As of September 30, 2024, our General Counsel and Secretary, who is the Executive Chairman of the Board of Directors, and two other stockholders hold approximately 48% of our outstanding common stock.
• The overfunded amount is included on our balance sheet as an asset titled “Asset for retirement benefits.” As of September 30, 2024, the value of that asset was $4,899,000, which represented 16% of the Company’s total assets of $30,669,000 and 38% of our stockholders’ equity.
• As of September 30, 2024, the value of the Barnwell common stock held by the pension plan was $934,000, representing approximately 7% of the fair market value of the pension plan’s assets.
• Under the LCA Program, an inventory reduction program has also been implemented which requires mandatory annual minimum expenditures towards outstanding decommissioning and reclamation obligations in accordance with AER targets which are adjusted by the AER on an annual basis.
• The target for 2025 is 6.2% of an individual company’s inactive liability.
• An increase in operating costs greater than anticipated could have a material adverse effect on our results of operations and financial condition.
• Higher operating costs for our properties will directly decrease the amount of cash flow received by us.
• Electricity, supplies, and labor costs are a few of the operating costs that are susceptible to material fluctuation.
• The need for significant repairs and maintenance of infrastructure may increase as our properties age.
• A significant increase in operating costs could negatively impact operating results and cash flow.
• Our operating results are affected by our ability to market the oil and natural gas that we produce.
• Our business depends in part upon the availability, proximity and capacity of oil and natural gas gathering systems, pipelines and processing facilities.
• Canadian federal and provincial, as well as U.S. federal and state, regulation of oil and natural gas production, processing and transportation, tax and energy policies, general economic conditions, and changes in supply and demand could adversely affect our ability to produce and market oil and natural gas.
• If market factors change and inhibit the marketing of our production, overall production or realized prices may decline.
• We derive a significant portion of our revenues from our operations in Canada; 70% in fiscal 2024.
• Because most of our oil and natural gas production is in Canada, changes in tariffs, trade barriers, and other regulatory requirements could have an adverse effect on our business, prospects, financial condition and operating results, the extent of which cannot be predicted with certainty at this time.
• We are entitled to receive future payments based on a percentage of the sales prices of residential lots sold within the Kaupulehu area by KD II as well as a percentage of future distributions KD II makes to its members.
• However, in order to collect such payments we are reliant upon the developer, KD II, in which we own a non-controlling ownership interest, to proceed with the development or sale of the remaining portion of Increment II.
• Additionally, future cash distributions from the Kukio Resort Land Development Partnerships, which includes KD II, are also dependent on the development or sale of Increment II by KD II.
• It is uncertain when or if KD II will develop or sell the remaining portion of Increment II, and there is no assurance with regards to the amounts of future sales from Increment II.
• We do not have a controlling interest in the partnerships, and therefore are dependent on the general partner for development decisions.
• The receipt of future payments and cash distributions could be jeopardized if the developer fails to proceed with development of the property.
• Risks Related to Contract Drilling Segment Demand for water well drilling and/or pump installation is volatile.
• A decrease in demand for our services could adversely affect our revenues and results of operations.
• Demand for services is highly dependent upon land development activities in the state of Hawaii.
• The real estate development industry is cyclical in nature and is particularly vulnerable to shifts in local, regional, and national economic conditions outside of our control such as interest rates, housing demand, population growth, employment levels and job growth and property taxes.
• A decrease in water well drilling and/or pump installation contracts will result in decreased revenues and operating results.
• If we are unable to accurately estimate the overall risks, requirements or costs when bidding on or negotiating a contract that is ultimately awarded, we may achieve a lower than anticipated profit or incur a loss on the contract.
• Contracts are usually fixed price per lineal foot drilled and require the provision of line-item materials at a fixed unit price based on approved quantities irrespective of actual per unit costs.
• Under such contracts, prices are established in part on cost and scheduling estimates, which are based on a number of assumptions, many of which are beyond our control.
• Expected profits on contracts are realized only if costs are accurately estimated and successfully controlled.
• We may not be able to obtain compensation for additional work performed or expenses incurred as a result of changes or inaccuracies in these estimates and underlying assumptions, such as unanticipated sub-surface site conditions, unanticipated technical problems, equipment failures, inefficiencies, cost of raw materials, schedule delays due to constraints on drilling hours, weather delays, or accidents.
• If cost estimates for a contract are inaccurate, or if the contract is not performed within cost estimates, then cost overruns may result in losses or cause the contract not to be as profitable as expected.
• A significant portion of our contract drilling business is dependent on municipalities and a decline in municipal spending could adversely impact our business.
• A significant portion of our contract drilling division revenues is derived from water and infrastructure contracts with governmental entities or agencies; 18% in fiscal 2024.
• Reduced tax revenues and governmental budgets may limit spending by local governments which in turn will affect the demand for our services.
• Material reductions in spending by a significant number of local governmental agencies could have a material adverse effect on our business, results of operations, liquidity and financial position.
• Our contract drilling operations face significant competition.

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