# EDGAR Filing Document

**Accession Number:** 0001341726
**File Stem:** 0001387131-23-002051
**Filing Date:** 2023-2
**Character Count:** 84473
**Document Hash:** 7e4f9f1ddff7c955b365d0cc21cb216c
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001387131-23-002051.hdr.sgml**: 20230214

**ACCESSION NUMBER**: 0001387131-23-002051

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 54

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230214

**DATE AS OF CHANGE**: 20230214

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** GULFSLOPE ENERGY, INC.
- **CENTRAL INDEX KEY:** 0001341726
- **STANDARD INDUSTRIAL CLASSIFICATION:** CRUDE PETROLEUM & NATURAL GAS [1311]
- **IRS NUMBER:** 161689008
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 0930

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-51638
- **FILM NUMBER:** 23628779

**BUSINESS ADDRESS:**
- **STREET 1:** 1331 LAMAR ST., SUITE 1665
- **CITY:** HOUSTON
- **STATE:** TX
- **ZIP:** 77010
- **BUSINESS PHONE:** 281-918-4100

**MAIL ADDRESS:**
- **STREET 1:** 1331 LAMAR ST., SUITE 1665
- **CITY:** HOUSTON
- **STATE:** TX
- **ZIP:** 77010

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Plan A Promotions, Inc.
- **DATE OF NAME CHANGE:** 20051018

?xml version="1.0" encoding="utf-8"?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**FORM 10-Q**

☒ **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

For the quarterly period ended December 31, 2022

or

☐ **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the transition period from _______________ to ________________**

Commission File No. <u>000-51638</u>

**GULFSLOPE ENERGY, INC.**

(Exact name of registrant as specified in its charter)

---

| | |
|:---|:---|
| **<u>Delaware</u>** | **<u>16-1689008</u>** |
| (State or other jurisdiction of<br> incorporation or organization) | (I.R.S. Employer Identification No.) |
| **1000 Main St., Suite 2300, <u>Houston, Texas</u>**<br> (Address of principal executive offices) | **<u>77002</u>**<br> (zip code) |

---

**<u>(281) 918-4100</u>**

(Registrant's telephone number, including area code)

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

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading Symbol** | **Name of each <br> exchange on<br> which registered** |
| Common stock, par value $0.001 per share | GSPE | OTCPK |

---

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 ☒ No ☐

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 such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☒ Emerging growth company ☐

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

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

The number of outstanding shares of the registrant's common stock, $0.001 par value, on February 10, 2023, was 1,268,240,346.

**FORWARD-LOOKING STATEMENTS**

This Quarterly Report on Form 10-Q ("Report") contains 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. All statements, other than statements of historical fact included in this communication, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this communication, the words "could," "believe," "anticipate," "intend," "estimate," "expect," "project," "forecast, "may," "objective," "plan," and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on our current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events.

We caution you that these forward-looking statements are subject to numerous risks and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks include, but are not limited to, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and other factors that may affect our future results and business, generally, including those discussed in the Company's periodic reports that are filed with the SEC and available on the SEC's website (http://www.sec.gov).

Should one or more of these risks occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements. All forward-looking statements, expressed or implied, are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, to reflect events or circumstances after the date of this communication.

**PART I – FINANCIAL STATEMENTS (Unaudited)**

**December 31, 2022**

**CONTENTS**

---

| | |
|:---|:---|
| [PART I – FINANCIAL STATEMENTS](#gspe10qa001) | 4 |
| [Item 1. Financial Statements](#gspe10qa002) | 4 |
| &nbsp;&nbsp;[Condensed Unaudited Balance Sheets](#gspe10qa003) | 4 |
| &nbsp;&nbsp;[Condensed Unaudited Statements of Operations](#gspe10qa004) | 5 |
| &nbsp;&nbsp;[Condensed Unaudited Statements of Stockholders' Equity](#gspe10qa005) | 6 |
| &nbsp;&nbsp;[Condensed Unaudited Statements of Cash Flows](#gspe10qa006) | 7 |
| &nbsp;&nbsp;[Notes to Condensed Unaudited Financial Statements](#gspe10qa007) | 8 |
| [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](#gspe10qa008) | 14 |
| [Item 3. Quantitative and Qualitative Disclosures about Market Risk](#gspe10qa009) | 17 |
| [Item 4. Controls and Procedures](#gspe10qa010) | 17 |
| [PART II – OTHER INFORMATION](#gspe10qa011) | 19 |

---

PART I – FINANCIAL STATEMENTS

Item 1. Financial Statements

**GulfSlope Energy, Inc.** 

**Condensed Balance Sheets**

**(Unaudited)**

---

| | | |
|:---|:---|:---|
|  | **December 31,<br> 2022** | **September 30,<br> 2022** |
| **Assets** |  |  |
| Current Assets |  |  |
| &nbsp;&nbsp;Cash | $63638 | $135381 |
| &nbsp;&nbsp;Accounts Receivable, Net |  | 12925 |
| &nbsp;&nbsp;Prepaid Expenses and Other Current Assets | 31726 | 33004 |
| Total Current Assets | 95364 | 181310 |
| &nbsp;&nbsp;Property and Equipment, net | 667 | 848 |
| &nbsp;&nbsp;Oil and Natural Gas Properties, Full Cost Method of Accounting, Unproved Properties | 5306415 | 5288915 |
| Total Non-Current Assets | 5307082 | 5289763 |
| Total Assets | $5402446 | $5471073 |
| **Liabilities and Stockholders' Equity** |  |  |
| Current Liabilities |  |  |
| &nbsp;&nbsp;Accounts Payable | $229968 | $135391 |
| &nbsp;&nbsp;Related Party Payable | 404469 | 404469 |
| &nbsp;&nbsp;Related Party Accrued Interest Payable | 3512343 | 3401489 |
| &nbsp;&nbsp;Loans from Related Parties | 8725500 | 8725500 |
| &nbsp;&nbsp;Accrued Interest Payable | 144769 | 138020 |
| &nbsp;&nbsp;Convertible Notes Payable, net of Debt Discount | 251258 | 227000 |
| &nbsp;&nbsp;Derivative Financial Instruments | 1018523 | 959222 |
| Total Current Liabilities | 14286830 | 13991091 |
| Total Liabilities | 14286830 | 13991091 |
| Commitments and Contingencies (Note 9) |  |  |
| Stockholders' (Deficit) Equity |  |  |
| Preferred Stock; par value ($0.001); Authorized 50,000,000 shares none issued or outstanding |  |  |
| Common Stock; par value ($0.001); Authorized 1,500,000,000 shares; issued and outstanding 1,268,240,346 and 1,268,240,346 as of December 31, 2022 and September 30, 2022, respectively | 1268240 | 1268240 |
| Additional Paid-in-Capital | 59116487 | 59116487 |
| Accumulated Deficit | (69269111) | (68904745) |
| Total Stockholders' (Deficit) Equity | (8884384) | (8520018) |
| Total Liabilities and Stockholders' (Deficit) Equity | $5402446 | $5471073 |

---

The accompanying notes are an integral part to these condensed financial statements.

**GulfSlope Energy, Inc.**

**Condensed Statements of Operations**

**(Unaudited)**

---

| | | |
|:---|:---|:---|
|  | **For the Three Months Ended<br> December 31,** | **For the Three Months Ended<br> December 31,** |
|  | **2022** | **2021** |
| Revenues | $— | $— |
| General and Administrative Expenses | 254705 | 446960 |
| Net Loss from Operations | (254705) | (446960) |
| Other Income/(Expenses): |  |  |
| Interest Expense, net | (131040) | (138238) |
| Gain on Derivative Financial Instruments | 21379 | 80314 |
| Net Loss Before Income Taxes | (364366) | (504884) |
| Provision for Income Taxes |  |  |
| Net Loss | $(364366) | $(504884) |
| Loss Per Share - Basic and Diluted | $(0.00) | $(0.00) |
| Weighted Average Shares Outstanding – Basic and Diluted | 1268240346 | 1268240346 |

---

The accompanying notes are an integral part to these condensed financial statements.

**GulfSlope Energy, Inc.**

**Statements of Stockholders' Equity**

**(unaudited)**

**For the Three Months Ended December 31, 2022**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Common** | **Common** | | | |
|  | **Shares** | **Amount** | **Additional**<br>**Paid-in**<br>**Capital** |<br>**Accumulated**<br>**Deficit** | **Net**<br>**Stockholders'**<br>**Equity** |
| Balance at September 30, 2022 | 1268240346 | $1268240 | $59116487 | $(68904745) | $(8520018) |
| Net Loss |  |  |  | (364366) | (364366) |
| Balance at December 31, 2022 | 1268240346 | $1268240 | $59116487 | $(69269111) | $(8884384) |

---

**For the Three Months Ended December 31, 2021**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Common** | **Common** | | | |
|  | **Shares** | **Amount** | **Additional**<br>**Paid-in**<br>**Capital** |<br>**Accumulated**<br>**Deficit** |<br>**Stockholders'**<br>**Equity** |
| Balance at September 30, 2021 | 1268240346 | $1268240 | $58999585 | $(60207991) | $59834 |
| Stock based compensation |  |  | 31775 |  | 31775 |
| Net Loss |  |  |  | (504884) | (504884) |
| Balance at December 31, 2021 | 1268240346 | $1268240 | $59031360 | $(60712875) | $(413275) |

---

The accompanying notes are an integral part to these condensed financial statements.

**GulfSlope Energy, Inc.**

**Condensed Statements of Cash Flows**

**(Unaudited)**

---

| | | |
|:---|:---|:---|
|  | **For the Three Months Ended<br> December 31,** | **For the Three Months Ended<br> December 31,** |
|  | **2022** | **2021** |
| OPERATING ACTIVITIES |  |  |
| Net Loss | $(364366) | $(504884) |
| Adjustments to Reconcile Net Loss to Net Cash Used In Operating Activities: |  |  |
| Depreciation | 182 | 456 |
| Stock Based Compensation |  | 31775 |
| Gain on Derivative Financial Instruments | (21379) | (80314) |
| Debt Discount Amortization | 13437 | 21844 |
| Changes in Operating Assets and Liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts Receivable | 12925 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid Expenses and Other Current Assets | 1278 | (218473) |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts Payable | 94577 | 59092 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued Interest Payable | 117603 | 116394 |
| Net Cash Used In Operating Activities | (145743) | (574110) |
| INVESTING ACTIVITIES |  |  |
| Investments in Oil and Gas Properties | (17500) | (19317) |
| Net Cash Used In Investing Activities | (17500) | (19317) |
| FINANCING ACTIVITIES |  |  |
| Proceeds From Convertible Promissory Notes | 91500 |  |
| Net Cash Provided By Financing Activities | 91500 |  |
| Net Decrease in Cash | (71743) | (593427) |
| Beginning Cash Balance | 135381 | 1517522 |
| Ending Cash Balance | $63638 | $924095 |
| Non-Cash Financing and Investing Activities: |  |  |
| Capital Expenditures in Accounts Payable | $— | 26253 |
| Debt Discount Related to Issuance of Convertible Promissory Notes | 89179 |  |

---

The accompanying notes are an integral part to these condensed financial statements.

**GulfSlope Energy, Inc.**

**Notes to Condensed Financial Statements**

**December 31, 2022**

**(Unaudited)**

**NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS**

GulfSlope Energy, Inc. (the "Company" or "GulfSlope") is an independent oil and natural gas exploration company whose interests are concentrated in the United States Gulf of Mexico federal waters offshore Louisiana. The Company currently has under lease one federal Outer Continental Shelf block (referred to as "prospect," "portfolio" or "leases") and licensed three-dimensional (3-D) seismic data across its area of concentration.

**NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES**

The condensed financial statements included herein are unaudited. However, these condensed financial statements include all adjustments (consisting of normal recurring adjustments), which, in the opinion of management are necessary for a fair presentation of financial position, results of operations and cash flows for the interim periods. The results of operations for interim periods are not necessarily indicative of the results to be expected for an entire year. The preparation of financial statements in accordance with generally accepted accounting principles ("GAAP") in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the Company's condensed financial statements and accompanying notes. Actual results could differ materially from those estimates.

Certain information, accounting policies, and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been omitted pursuant to certain rules and regulations of the Securities and Exchange Commission ("SEC"). The condensed financial statements should be read in conjunction with the audited financial statements for the year ended September 30, 2022, which were included in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2022 and filed with the Securities and Exchange Commission on December 29, 2022.

**<u>Cash</u>**

GulfSlope considers highly liquid investments with original maturities to the Company of three months or less to be cash equivalents. There were no cash equivalents at December 31, 2022 and September 30, 2022.

**<u>Liquidity / Going Concern</u>**

The Company has incurred accumulated losses as of December 31, 2022 of $69.3 million, has negative working capital of $14.2 million and for the three months ended December 31, 2022 generated losses of $0.4 million. Further losses are anticipated in developing our business. As a result, there exists substantial doubt about our ability to continue as a going concern. As of December 31, 2022, we had $0.06 million of unrestricted cash on hand. The Company estimates that it will need to raise a minimum of $10.0 million to meet its obligations and planned expenditures. The $10.0 million is comprised primarily of capital project expenditures as well as general and administrative expenses. It does not include any amounts due under outstanding debt obligations, which amounted to $12.6 million of current principal and accrued interest as of December 31, 2022. The Company plans to finance operations and planned expenditures through the issuance of equity securities, debt financings and farm-out agreements, asset sales or mergers. The Company also plans to extend the agreements associated with all loans, the accrued interest payable on these loans, as well as the Company's accrued liabilities. There are no assurances that financing will be available with acceptable terms, if at all, or that obligations can be extended. If the Company is not successful in obtaining financing or extending obligations, operations would need to be curtailed or ceased, or the Company would need to sell assets or consider alternative plans up to and including restructuring. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

**<u>Accounts Receivable</u>**

The Company records an accounts receivable for operations expense reimbursements due from joint interest partners and also from normal operations. The Company estimates allowances for doubtful accounts based on the aged receivable balances and historical losses. If the Company determines any account to be uncollectible based on significant delinquency or other factors, the receivable and the underlying asset are assessed for recovery. As of December 31, 2022 and September 30, 2022, there was no allowance for doubtful accounts receivable. Gross accounts receivable was nil at December 31, 2022 and approximately $13,000 at September 30, 2022, respectively.

**<u>Full Cost Method</u>**

The Company uses the full cost method of accounting for its oil and gas exploration and development activities. Under the full cost method of accounting, all costs associated with successful and unsuccessful exploration and development activities are capitalized on a country-by-country basis into a single cost center ("full cost pool"). Such costs include property acquisition costs, geological and geophysical ("G&G") costs, carrying charges on non-producing properties, costs of drilling both productive and non-productive wells. Overhead costs, which includes employee compensation and benefits including stock-based compensation, incurred that are directly related to acquisition, exploration and development activities are capitalized. Interest expense is capitalized related to unevaluated properties and wells in process during the period in which the Company is incurring costs and expending resources to get the properties ready for their intended purpose. For significant investments in unproved properties and major development projects that are not being currently depreciated, depleted, or amortized and on which exploration or development activities are in progress, interest costs are capitalized. Proceeds from property sales will generally be credited to the full cost pool, with no gain or loss recognized, unless such a sale would significantly alter the relationship between capitalized costs and the proved reserves attributable to these costs. A significant alteration would typically involve a sale of 25% or more of the proved reserves related to a single full cost pool.

Proved properties are amortized on a country-by-country basis using the units of production method ("UOP"), whereby capitalized costs are amortized over total proved reserves. The amortization base in the UOP calculation includes the sum of proved property, net of accumulated depreciation, depletion and amortization ("DD&A"), estimated future development costs (future costs to access and develop proved reserves), and asset retirement costs, less related salvage value.

The costs of unproved properties and related capitalized costs (such as G&G costs) are withheld from the amortization calculation until such time as they are either developed or abandoned. Unproved properties and properties under development are reviewed for impairment at least quarterly and are determined through an evaluation that considers, among other factors, seismic data, requirements to relinquish acreage, drilling results, remaining time in the commitment period, remaining capital plan, and political, economic, and market conditions. In countries where proved reserves exist, exploratory drilling costs associated with dry holes are transferred to proved properties immediately upon determination that a well is dry and amortized accordingly. In countries where a reserve base has not yet been established, impairments are charged to earnings.

Companies that use the full cost method of accounting for oil and natural gas exploration and development activities are required to perform a ceiling test calculation each quarter. The full cost ceiling test is an impairment test prescribed by SEC Regulation S-X Rule 4-10. The ceiling test is performed quarterly, on a country-by-country basis, utilizing the average of prices in effect on the first day of the month for the preceding twelve-month period. The cost center ceiling is defined as the sum of (a) estimated future net revenues, discounted at 10% per annum, from proved reserves, (b) the cost of properties not being amortized, if any, and (c) the lower of cost or market value of unproved properties included in the cost being amortized. If such capitalized costs exceed the ceiling, the Company will record a write-down to the extent of such excess as a non-cash charge to earnings. Any such write-down will reduce earnings in the period of occurrence and results in a lower depreciation, depletion and amortization rate in future periods. A write-down may not be reversed in future periods even though higher oil and natural gas prices may subsequently increase the ceiling.

The Company capitalizes exploratory well costs into oil and gas properties until a determination is made that the well has either found proved reserves or is impaired. If proved reserves are found, the capitalized exploratory well costs are reclassified to proved properties. The well costs are charged to expense if the exploratory well is determined to be impaired.

As of December 31, 2022, the Company's oil and gas properties consisted of unproved properties, capitalized costs and no proved reserves.

**<u>Asset Retirement Obligations</u>**

The Company's asset retirement obligations will represent the present value of the estimated future costs associated with plugging and abandoning oil and natural gas wells, removing production equipment and facilities and restoring the seabed in accordance with the terms of oil and gas leases and applicable state and federal laws. Determining asset retirement obligations requires estimates of the costs of plugging and abandoning oil and natural gas wells, removing production equipment and facilities and restoring the sea bed as well as estimates of the economic lives of the oil and gas wells and future inflation rates. The resulting estimate of future cash outflows will be discounted using a credit-adjusted risk-free interest rate that corresponds with the timing of the cash outflows. Cost estimates will consider historical experience, third party estimates, the requirements of oil and natural gas leases and applicable local, state and federal laws, but do not consider estimated salvage values. Asset retirement obligations will be recognized when the wells drilled reach total depth or when the production equipment and facilities are installed or acquired with an associated increase in proved oil and gas property costs. Asset retirement obligations will be accreted each period through depreciation, depletion and amortization to their expected settlement values with any difference between the actual cost of settling the asset retirement obligations and recorded amount being recognized as an adjustment to proved oil and gas property costs. Cash paid to settle asset retirement obligations will be included in net cash provided by operating activities from continuing operations in the statements of cash flows. On a quarterly basis, when indicators suggest there have been material changes in the estimates underlying the obligation, the Company reassesses its asset retirement obligations to determine whether any revisions to the obligations are necessary. At least annually, the Company will assess all of its asset retirement obligations to determine whether any revisions to the obligations are necessary. Future revisions could occur due to changes in estimated costs or well economic lives, or if federal or state regulators enact new requirements regarding plugging and abandoning oil and natural gas wells.

**<u>Derivative Financial Instruments</u>**

The accounting treatment of derivative financial instruments requires that the Company record certain embedded conversion options and warrants as liabilities at their fair value as of the inception date of the agreement and at fair value as of each subsequent balance sheet date with any change in fair value recorded as income or expense. As a result of entering into certain note agreements, for which such instruments contained a variable conversion feature with no floor, the Company has adopted a sequencing policy in accordance with ASC 815-40-35-12 whereby all future instruments issued after such variable conversion feature instruments may be classified as a derivative liability with the exception of instruments related to share-based compensation issued to employees or directors, as long as the certain variable convertible instruments exist.

**<u>Basic and Dilutive Earnings Per Share</u>**

Basic income (loss) per share ("EPS") is computed by dividing net income (loss) (the numerator) by the weighted average number of common shares outstanding for the period (denominator). Diluted EPS is computed by dividing net income (loss) by the weighted average number of common shares and potential common shares outstanding (if dilutive) during each period. Potential common shares include stock options, warrants, and convertible notes payable. The number of potential common shares outstanding relating to stock options and warrants, is computed using the treasury stock method. The number of potential common shares related to convertible notes payable is determined using the if-converted method.

As the Company has incurred losses for the three months ended December 31, 2022, and 2021, the potentially dilutive shares are anti-dilutive and are not added into the loss per share calculations. As of December 31, 2022, and 2021, there were 353,099,289 and 288,396,467 potentially dilutive shares, respectively.

**<u>Use of Estimates</u>**

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

**<u>Recent Accounting Pronouncements Not Yet Adopted</u>**

In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity's own equity. Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share (EPS), which is consistent with the Company's accounting treatment under the current standard. This standard is effective for small reporting companies who adopt the private Company rules for fiscal years beginning after December 15, 2023. The adoption of ASU 2020-06 is not expected to have a material impact on the Company's financial statements or disclosures.

The Company has evaluated all other recent accounting pronouncements and believes either they are not applicable or that none of them will have a significant effect on the Company's financial statements.

**NOTE 3 – OIL AND NATURAL GAS PROPERTIES**

The Company currently has under lease one federal Outer Continental Shelf block and has licensed 2.2 million acres of three-dimensional (3-D) seismic data in its area of concentration. Our lease expires on October 31, 2025.

As of December 31, 2022, the Company's oil and natural gas properties consisted of unproved properties, capitalized exploration costs and no proved reserves. During the three months ended December 31, 2022, and 2021, the Company capitalized $0.018 and approximately $0.05 million to oil and gas properties, respectively. During the three months ended December 31, 2022, and 2021, the Company capitalized nil of interest expense to oil and natural gas properties, respectively.

**NOTE 4 – RELATED PARTY TRANSACTIONS**

During April 2013 through September 2017, the Company entered into convertible promissory notes whereby it borrowed a total of $8,675,500 from John Seitz, the chief executive officer ("CEO"). The notes are due on demand, bear interest at the rate of 5% per annum, and $5,300,000 of the notes are convertible into shares of common stock at a conversion price equal to $0.12 per share of common stock (the then offering price of shares of common stock to unaffiliated investors). As of December 31, 2022, the total amount owed to John Seitz is $8,675,500. This amount is included in loans from related parties within the condensed balance sheets. There was approximately $3.5 million and $3.07 million of unpaid interest associated with these loans included in accrued interest payable within the balance sheet as of December 31, 2022 and 2021, respectively.

On November 15, 2016, a family member of the CEO entered into a $50,000 convertible promissory note with associated warrants ("Bridge Financing") under the same terms received by other investors (see Note 5). This amount is included in loans from related parties within the condensed balance sheets.

Domenica Seitz, CPA, related to John Seitz, has provided accounting services to the Company through September 2020 as a consultant and beginning October 2020 as an employee. The total amount payable to Domenica Seitz is approximately $346,000 for unpaid past services as of December 31, 2022 and September 30, 2022, respectively. During the three months ended December 31, 2022 and 2021, salary of approximately $8,900 and $19,000, respectively, was paid.

**NOTE 5 – CONVERTIBLE NOTES PAYABLE**

The Company's convertible promissory notes consisted of the following as of September 30, 2022 and December 31, 2022.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **September 30, 2022** | **September 30, 2022** | **September 30, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
| | **Notes** | **Discount** | **Notes, Net** <br> **of Discount** | **Notes** | **Discount** | **Notes, Net** <br> **of Discount** |
| Bridge Financing Notes | $227000 | $— | $227000 | $227000 | $— | $227000 |
| 2022 Convertible Debenture |  |  |  | 100000 | (75742) | 24258 |
| &nbsp;&nbsp;&nbsp;Total | $227000 | $— | $227000 | $327000 | $(75742) | $251258 |

---

Bridge Financing Notes

Between June and November 2016, the Company issued eleven convertible promissory notes ("Bridge Financing Notes") with associated warrants in a private placement to accredited investors for total gross proceeds of $837,000, including $222,000 from related parties. These notes and associated warrants had a maturity of one year (which has been extended at maturity to April 30, 2024), an annual interest rate of 8% and can be converted at the option of the holder at a conversion price of $0.025 per share. In addition, the convertible notes will automatically convert if a qualified equity financing of at least $3 million occurs before maturity and such mandatory conversion price will equal the effective price per share paid in the qualified equity financing. The note balances as of December 31, 2022 and September 30, 2022 were $277,000, with unamortized debt discounts of nil, respectively. As noted above, on April 30, 2022, the maturity date related to these notes and associated warrants was extended to April 30, 2024. In consideration for the extension of the notes in April 2022, the Company extended the term of the related warrants until April 30, 2024 and recognized approximately $85,000 of loss on extinguishment of debt when the incremental fair value pre modification was compared to post modification and the incremental value of the modified warrants was over 10% of the old note and as such the warrants were expensed immediately.

2022 Convertible Debenture

In October 2022, the Company entered into a Securities Purchase Agreement ("SPA") under the terms of which the Company will issue and sell to Buyers up to an aggregate of $650,000 of convertible debentures ("Convertible Debentures"). On October 13, 2022, approximately $50,000 of Convertible Debentures were purchased upon the signing of the SPA (the "First Closing").

The Convertible Debentures accrue interest at eight percent per annum, and no earlier than six months after the issue date, are convertible at the option of the holder into common stock at a conversion rate of 65% of the lowest volume weighted adjusted price (as reported by OTCQB, OTCQX, Pink Sheets electronic quotation system or applicable trading market (the "OTC") as reported by a reliable reporting service ("Reporting Service") designated by the Holder (i.e. Bloomberg, LP) for the ten consecutive trading days immediately preceding conversion.

The Company evaluated the conversion feature and concluded that it should be bifurcated and accounted for as a derivative liability due to the variable conversion feature which does not contain an explicit limit on the number of shares that are required to be issued. Accordingly, the embedded conversion feature was recorded at fair value at issuance and will be subsequently remeasured to fair value at each reporting period.

The fair value of the embedded conversion feature was determined utilizing a Geometric Brownian Motion Stock Path Based Monte Carlo Simulation that utilized the following key assumptions:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Tranche 1**<br> **October 13, 2022** | **Tranche 2**<br> **December 5, 2022** | **Tranche 1**<br> **December 31, 2022** | **Tranche 1**<br> **December 31, 2022** |
| &nbsp;&nbsp;Stock Price | $0.0052 | $0.0041 | $0.0045 | $0.0045 |
| &nbsp;&nbsp;Volatility | 158.12% | 156.37% | 168.03% | 159.49% |
| &nbsp;&nbsp;Remaining Term | 0.98 | 0.98 | 0.77 | 0.91 |
| &nbsp;&nbsp;Risk Free Rate | 4.46% | 4.77% | 4.73% | 4.73% |

---

In addition to the fixed exercise price noted above, the model incorporates the variable conversion price which is simulated as 65% of the lowest trading price within the ten consecutive days preceding presumed conversion.

The Company's convertible promissory notes consisted of the following as of December 31, 2022. Debt discount amortization for the quarter ended December 31, 2022 was approximately 13,000.

---

| | | | |
|:---|:---|:---|:---|
| **Notes Payable at December 31, 2022** | **Notes** | **Discount** | **Notes, Net of Discount** |
| &nbsp;&nbsp;&nbsp;&nbsp;Bridge Financing Notes | $227000 | $— | $227000 |
| &nbsp;&nbsp;&nbsp;&nbsp;2022 Convertible Debenture | 100000 | (75742) | 24258 |
| Total | $327000 | $(75742) | $251258 |

---

**NOTE 6 – FAIR VALUE MEASUREMENT**

Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are classified and disclosed in one of the following categories:

---

| | |
|:---|:---|
| Level 1: | Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis. |
| Level 2: | Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. This category includes those derivative instruments that the Company values using observable market data. Substantially all of these inputs are observable in the marketplace throughout the term of the derivative instrument, can be derived from observable data, or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category include non-exchange traded derivative financial instruments as well as warrants to purchase common stock and long-term incentive plan liabilities calculated using the Black-Scholes model to estimate the fair value as of the measurement date. |
| Level 3: | Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources (i.e. supported by little or no market activity). |

---

As required by ASC 820-10, financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

**Fair Value on a Recurring Basis**

The following table sets forth by level within the fair value hierarchy the Company's derivative financial instruments that were accounted for at fair value on a recurring basis as of September 30, 2022 and December 31, 2022, respectively:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Description** | **Quoted Prices in** <br> **Active Markets for** <br> **Identical Assets**<br> **(Level 1)**  | **Significant Other** <br> **Observable Inputs**<br> **(Level 2)**  | **Significant**<br> **Other** <br> **Unobservable** <br> **Inputs**<br> **(Level 3)**  | **Total Fair<br> Value as of** |
| Derivative Financial Instrument at September 30, 2022 | $– $| (959222) | $– $| (959222) |
| Derivative Financial Instrument at December 31, 2022 | $– $| (1018523) | $– $| (1018523) |

---

The change in derivative financial instruments for the three months ended December 31, 2022 is as follows:

---

| | |
|:---|:---|
| &nbsp;&nbsp;September 30, 2022 balance | $(959222) |
| &nbsp;&nbsp;New derivative instruments issued | (80679) |
| &nbsp;&nbsp;Derivative instruments extinguished |  |
| &nbsp;&nbsp;Change in fair value | 21378 |
| &nbsp;&nbsp;December 31, 2022 balance | $(1018523) |

---

Non-recurring fair value assessments include impaired oil and natural gas property assessments and stock-based compensation. There was no impairment charge recorded for the quarters ended December 31, 2022 and 2021, respectively. The Company recorded stock-based compensation of nil and approximately $32,000 for the three months ended December 31, 2022 and 2021, respectively.

**NOTE 7 – COMMON STOCK/PAID IN CAPITAL**

The following table summarizes the Company's outstanding warrants at September 30, 2022 and December 31, 2022, respectively:

---

| | | | |
|:---|:---|:---|:---|
| **Warrants** | **Number of Options** | **Weighted Average<br> Exercise Price** | **Weighted Average<br> Remaining<br> Contractual Term<br> (In years)** |
| Outstanding at September 30, 2022 | 64665000 | $0.040 | 2.75 |
| Granted |  |  |  |
| Exercised |  |  |  |
| Expired | 2200000 | $0.100 |  |
| Outstanding at December 31, 2022 | 62465000 | $0.023 | 1.45 |

---

**NOTE 8 – STOCK-BASED COMPENSATION**

Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award using the Black Scholes option pricing model, and is recognized over the vesting period. The Company recognized stock-based compensation of nil and approximately $32,000 for the three months ended December 31, 2022 and 2021, respectively. Of the $32,000 of stock-based compensation recognized for the three months ended December 31, 2021, all was recorded as compensation expense within general and administrative expense.

The following table summarizes the Company's stock option activity at September 30, 2022 and for the three months ended December 31, 2022:

---

| | | | |
|:---|:---|:---|:---|
|  | **Number of Options** | **Weighted Average<br> Exercise Price** | **Weighted Average<br> Remaining<br> Contractual Term<br> (In years)** |
| Outstanding at September 30, 2022 | 146000000 | $0.0444 | 2.8 |
| Granted |  |  |  |
| Exercised |  |  |  |
| Cancelled |  |  |  |
| Outstanding at December 31, 2022 | 146000000 | $0.0444 | 2.51 |
| Exercisable at December 31, 2022 | 146000000 | $0.0444 | 2.51 |

---

As of December 31, 2022, there was no unrecognized stock-based compensation expense.

**NOTE 9 – COMMITMENTS AND CONTINGENCIES**

From time to time, the Company may become involved in litigation relating to claims arising out of its operations in the normal course of business. No legal proceedings, government actions, administrative actions, investigations, or claims are currently pending against us or involve the Company.

In July 2018, the Company entered into a 39 month lease for approximately 5,000 square feet of office space in 4 Houston Center in downtown Houston. Annual base rent was approximately $94,000 for the first 18 months, increasing to approximately $97,000 and $99,000 respectively during the remaining term of the lease. The lease term ended on September 30, 2021, and the Company entered into a twelve-month lease that could be terminated with at least 30 days prior written notice. The lease was terminated in August 2022 and the company made alternative arrangements and entered into a new month to month lease.

The Company reached an agreement in August 2018 for the settlement of approximately $1 million in debt owed to a third party. The vendor was paid $150,000 in cash, future cash payments of $7,500 and 10 million shares of GulfSlope common stock. The agreement contains a provision that upon the sale of the common stock if the original debt is not fully satisfied, full payment will be made, under a mutually agreed payment plan. If the stock is sold for a gain any surplus in excess of $1.3 million shall be a credit against future purchases from the vendor. The agreement was determined to meet the definition of a derivative in accordance with ASC 815. On December 31, 2022 and September 30, 2022, there is a fair value liability of approximately $781,000 and $784,000, respectively, which is included within Derivative Financial Instruments on the condensed balance sheet.

**NOTE 10 – SUBSEQUENT EVENTS**

A convertible promissory note facility for up to $125,000 was transacted with a related party in February 2023. Through the date of this filing $65,000 has been borrowed.

**Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.**

**Forward-looking Statements**

The following discussion and analysis should be read in conjunction with our accompanying unaudited condensed consolidated financial statements and the notes to those financial statements included in Item 1 of this Quarterly Report on Form 10-Q. The following discussion contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"). These forward-looking statements involve risks, uncertainties and assumptions. If the risks or uncertainties materialize or the assumptions prove incorrect, our results may differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, such as those statements that address activities, events or developments that we expect, believe or anticipate will or may occur in the future. These statements are based on certain assumptions and analyses made by us in light of our experience and perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate in the circumstances. Known material risks that may affect our financial condition and results of operations are discussed in Item 1A, Risk Factors of our Annual Report on Form 10-K for the year ended September 30, 2022 and this Quarterly Report on Form 10-Q, Part II, Item 1A, Risk Factors, and may be discussed or updated from time to time in subsequent reports filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We assume no obligation, nor do we intend to update these forward-looking statements. Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to "GulfSlope" "we," "us," "our" and the "Company" refer to GulfSlope Energy, Inc.

**Overview**

GulfSlope Energy, Inc. is an independent crude oil and natural gas exploration and production company whose interests are concentrated in the United States Gulf of Mexico federal waters. We are a technically driven company, and we use our licensed 2.2 million acres of advanced three-dimensional (3-D) seismic data to identify, evaluate, and acquire assets with attractive economic profiles. GulfSlope Energy commenced commercial operations in March 2013. GulfSlope Energy was originally organized as a Utah corporation in 2004 and became a Delaware corporation in 2012.

We have focused our operations in the Gulf of Mexico because we believe this area provides us with favorable geologic and economic conditions, including multiple reservoir formations, comprehensive geologic databases, extensive infrastructure, relatively favorable royalty regime, and an attractive acquisition market and because our management and technical teams have significant experience and technical expertise in this geologic province. Additionally, we licensed 2.2 million acres of advanced 3-D seismic data, a significant portion of which has been enhanced by new, state-of-the-art reprocessing and noise attenuation techniques including reverse time migration depth imaging. We have used our broad regional seismic database and our reprocessing efforts to generate and high-grade oil and natural gas prospects. The use of our extensive seismic database, coupled with our ability, knowledge, and expertise to effectively reprocess this seismic data, allows us to further optimize our operations and to effectively evaluate acquisition and joint venture opportunities. We consistently assess opportunities for drilling and producing property acquisitions in order to deploy capital as efficiently as possible. We have given preference to areas with water depths of 450 feet or less where production infrastructure already exists, which will allow for any discoveries to be developed rapidly and cost effectively with the goal to reduce economic risk while increasing returns.

We have historically operated our business with working capital deficits and these deficits have been funded by equity and debt investments and loans from management. As of December 31, 2022, we had $0.06 million of cash on hand. The Company estimates that it will need to raise a minimum of $10.0 million to meet its obligations and planned expenditures through February 2024 assuming execution of our prospect drilling and acquisition strategy. The Company plans to finance operations and planned expenditures through equity and/or debt financings, farm-out agreements, and/or other transactions. There are no assurances that financing will be available with acceptable terms, if at all.

**Competitive Advantages**

***Experienced management*.** Our management team has a track record of finding, developing and producing oil and natural gas in various hydrocarbon producing basins including the US Gulf of Mexico. Our team has significant experience in acquiring and operating oil and natural gas producing assets worldwide with particular emphasis on conventional reservoirs. We deployed a technical team with over 150 years of combined industry experience finding and developing oil and natural gas in the development and execution of our technical strategy. We believe the application of advanced geophysical techniques on a specific geographic area with unique geologic features such as conventional reservoirs whose trapping configurations have been obscured by overlying salt layers provides us with a competitive advantage.

***Advanced seismic image processing*.** Commercial improvements in 3-D seismic data imaging and the development of advanced processing algorithms, including pre-stack depth, beam, and reverse time migration have allowed the industry to better distinguish hydrocarbon traps and identify previously unknown prospects. Specifically, advanced processing techniques improve the definition of the seismic data from a scale of time to a scale of depth, thus locating the images in three dimensions. The Company has invested significant technical person hours in the reprocessing and interpretation of seismic data. We believe the proprietary reprocessing and interpretation and the contiguous nature of our licensed 3-D seismic data gives us an advantage over other exploration and production companies operating in our core area.

***Industry leading position in our core area*.** We have licensed 2.2 million acres of 3-D seismic data which covers over 440 Outer Continental Shelf ("OCS") Federal lease blocks on the highly prolific Louisiana outer shelf, offshore US Gulf of Mexico. We believe the proprietary and state-of-the-art reprocessing of our licensed 3-D seismic data, along with our proprietary and leading-edge geologic depositional and petroleum trapping models, gives us an advantage in identifying and high grading drilling and acquisition opportunities in our core area.

**Technical Strategy**

We believe that a major obstacle to identifying potential hydrocarbon accumulations globally has been the inability of seismic technology to accurately image deeper geologic formations because of overlying massive, extensive, and complex salt bodies. Large and thick laterally extensive subsurface salt layers highly distort the seismic ray paths traveling through them, which often has led to misinterpretation of the underlying geology and the potential major accumulations of oil and gas. We believe the opportunity exists for a technology-driven company to extensively apply advanced seismic acquisition and processing technologies, with the goal of achieving attractive commercial discovery rates for exploratory wells, and their subsequent appraisal and development, potentially having a very positive impact on returns on invested capital. These tools and techniques have been proven to be effective in deep water exploration and production worldwide, and we are using them to identify and drill targets below the salt bodies in an area of the shallower waters of the Gulf of Mexico where industry activity has largely been absent for over 20 years. GulfSlope management led the early industry teams in their successful efforts to discover and develop five new fields below the extensive salt bodies in our core area during the 1990's, which have produced over 125 million barrels of oil equivalent.

Our technical approach to exploration and development is to deploy a team of highly experienced geo-scientists who have current and extensive understanding of the geology and geophysics of the petroleum system within our core area, thereby decreasing the traditional timing and execution risks of advancing up a learning curve. For data licensing, re-processing and interpretation, our technical staff has prioritized specific geographic areas within our 2.2 million acres of seismic coverage, with the goal to optimize capital outlays.

Modern 3-D seismic datasets with acquisition parameters that are optimal for improved imaging at multiple depths are readily available in many of these sub-basins across our core area and can be licensed on commercially reasonable terms. The application of state-of-the-art seismic imaging technology is necessary to optimize delineation of prospective structures and to detect the presence of hydrocarbon-charged reservoirs below many complex salt bodies. An example of such a seismic technology is reverse time migration, which we believe to be the most accurate, fastest, and yet affordable, seismic imaging technology for critical depth imaging available today.

**Lease and Partner Strategy**

Our prospect identification and analytical strategy is based on a thorough understanding of the geologic trends within our core area. Exploration efforts have been focused in areas where lease acquisition opportunities are readily available. We entered into two master 3-D license agreements, together covering approximately 2.2 million acres and we have completed advanced processing on select areas within this licensed seismic area exceeding one million acres. We can expand this coverage and perform further advanced processing, both with currently licensed seismic data and seismic data to be acquired. We have sought to acquire and reprocess the highest resolution data available in the potential prospect's direct vicinity. This includes advanced imaging information to further our understanding of a particular reservoir's characteristics, including both trapping mechanics and fluid migration patterns. Reprocessing is accomplished through a series of model building steps that incorporate the geometry of the geology to optimize the final image. Our integration of existing geologic understanding and enhanced seismic processing and interpretation provides us with unique insights and perspectives on existing producing areas and especially underexplored formations below and adjacent to salt bodies that are highly prospective for hydrocarbon production.

We currently hold one lease, and we are evaluating the acquisition of additional leases in our core area. Our lease has a five-year primary term, plus a three year extension and the lease expires on October 31, 2025. The Bureau of Ocean Energy Management's ("BOEM") regulatory framework provides multiple options for leaseholders to apply to receive extensions of lease terms under specified conditions. GulfSlope is exploring all options contained in BOEM's regulatory framework to extend the terms of the leases. Additional prospective acreage can be obtained through lease sales, farm-in, or purchase. As is consistent with a prudent and successful exploration approach, we believe that additional seismic licensing, acquisition, processing, and/or interpretation may become highly advantageous, to more precisely define the most optimal drillable location(s), particularly for development of discoveries.

Our plan has been to partner with other entities which could include oil and gas companies and/or financial investors. Our goal is to diversify risk and minimize capital exposure to drilling costs. We expect a portion of our drilling costs to be paid by our partners through these transactions, in return for our previous investment in prospect generation and delivery of an identified prospect on acreage we control. Such arrangements are a commonly accepted industry method of proportionately recouping pre-drill cost outlays for seismic, lease costs, and associated interpretation expenses. We cannot assure you, however, that we will be able to enter into any such arrangements on satisfactory terms.

**Merger and Acquisition Strategy**

We believe there is an opportunity to consolidate oil and gas assets located in the offshore Gulf of Mexico. Multiple oil and gas companies have explicitly stated their intentions to exit the Gulf of Mexico and we believe that GulfSlope is well positioned to take advantage of these opportunities due to our highly specialized subsurface and engineering capabilities, relevant operational experience, and regional knowledge and expertise. We have developed a significant pipeline of potential acquisition opportunities with the following characteristics: (i) strong cash flow, (ii) inventory of low-risk capital projects, and (iii) manageable plugging and abandonment liabilities. In addition to asset acquisitions, we are also evaluating the combination of GulfSlope with other GOM oil and gas companies. Any merger or acquisition is likely to be financed through the issuance of debt and equity securities.

**Recent Developments**

During the past fiscal year, the Company has conducted engineering, geotechnical and economic evaluations on a total of 10 producing property acquisitions, all located in the Gulf of Mexico. The Company submitted bids on four of those opportunities, one of which was deemed non-competitive by the seller. The Company is currently engaged in seeking debt and equity financing for the remaining opportunities.

**Significant Accounting Policies**

The Company uses the full cost method of accounting for its oil and gas exploration and development activities. Under the full cost method of accounting, all costs associated with successful and unsuccessful exploration and development activities are capitalized on a country-by-country basis into a single cost center ("full cost pool"). Such costs include property acquisition costs, geological and geophysical ("G&G") costs, carrying charges on non-producing properties, costs of drilling both productive and non-productive wells. Overhead costs, which includes employee compensation and benefits including stock-based compensation, incurred that are directly related to acquisition, exploration and development activities are capitalized. Interest expense is capitalized related to unevaluated properties and wells in process during the period in which the Company is incurring costs and expending resources to get the properties ready for their intended purpose. For significant investments in unproved properties and major development projects that are not being currently depreciated, depleted, or amortized and on which exploration or development activities are in progress, interest costs are capitalized. Proceeds from property sales will generally be credited to the full cost pool, with no gain or loss recognized, unless such a sale would significantly alter the relationship between capitalized costs and the proved reserves attributable to these costs. A significant alteration would typically involve a sale of 25% or more of the proved reserves related to a single full cost pool.

Proved properties are amortized on a country-by-country basis using the units of production method ("UOP"), whereby capitalized costs are amortized over total proved reserves. The amortization base in the UOP calculation includes the sum of proved property, net of accumulated depreciation, depletion and amortization ("DD&A"), estimated future development costs (future costs to access and develop proved reserves), and asset retirement costs, less related salvage value.

The costs of unproved properties and related capitalized costs (such as G&G costs) are withheld from the amortization calculation until such time as they are either developed or abandoned. Unproved properties and properties under development are reviewed for impairment at least quarterly and are determined through an evaluation by management and third-party consultants considering, among other factors, seismic data, requirements to relinquish acreage, drilling results, remaining time in the commitment period, remaining capital plan, and political, economic, and market conditions. In countries where proved reserves exist, exploratory drilling costs associated with dry holes are transferred to proved properties immediately upon determination that a well is dry and amortized accordingly. In countries where a reserve base has not yet been established, impairments are charged to earnings.

Companies that use the full cost method of accounting for oil and natural gas exploration and development activities are required to perform a ceiling test calculation each quarter. The full cost ceiling test is an impairment test prescribed by SEC Regulation S-X Rule 4-10. The ceiling test is performed quarterly, on a country-by-country basis, utilizing the average of prices in effect on the first day of the month for the preceding twelve-month period. The cost center ceiling is defined as the sum of (a) estimated future net revenues, discounted at 10% per annum, from proved reserves, (b) the cost of properties not being amortized, if any, and (c) the lower of cost or market value of unproved properties included in the cost being amortized. If such capitalized costs exceed the ceiling, the Company will record a write-down to the extent of such excess as a non-cash charge to earnings. Any such write-down will reduce earnings in the period of occurrence and results in a lower depreciation, depletion and amortization rate in future periods. A write-down may not be reversed in future periods even though higher oil and natural gas prices may subsequently increase the ceiling.

The Company capitalizes exploratory well costs into oil and gas properties until a determination is made that the well has either found proved reserves or is impaired. If proved reserves are found, the capitalized exploratory well costs are reclassified to proved properties. The well costs are charged to expense if the exploratory well is determined to be impaired.

As of December 31, 2022, the Company's oil and gas properties consisted of unproved properties, capitalized costs and no proved reserves.

Property and equipment are carried at cost. We assess the carrying value of our property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

There has been no change to our critical accounting policies as included in our annual report on Form 10-K as of September 30, 2022, which was filed with the Securities and Exchange Commission on December 29, 2022.

**Three Months Ended December 31, 2022, Compared to Three Months Ended December 31, 2021**

There was no revenue during the three months ended December 31, 2022 and 2021. General and administrative expenses were approximately $0.3 million for the three months ended December 31, 2022, compared to approximately $0.4 million for the three months ended December 31, 2021. Net interest expense was approximately $131,000 for the three months ended December 31, 2022 as compared to approximately $138,000 for the three months ended December 31, 2021. Gain on derivative financial instruments was approximately $21,000 and $80,000 for the three months ended December 31, 2022 and 2021, respectively, which was caused by the change in fair value of the underlying derivative financial instruments.

**Liquidity and Capital Resources**

The Company has incurred accumulated losses for the period from inception to December 31, 2022, of approximately $69.3 million, and has a negative working capital of $14.2 million. For the three months ended December 31, 2022, the Company has generated losses of approximately $0.4 million and net cash used in operations of approximately $0.1 million. As of December 31, 2022, there was $0.06 million of cash on hand. The Company estimates that it will need to raise a minimum of $10 million to meet its obligations and planned expenditures through February 2024. The $10 million is comprised primarily of capital project expenditures as well as general and administrative expenses. It does not include any amounts due under outstanding debt obligations and accrued interest, which amounted to approximately $12.6 million as of December 31, 2022. The Company plans to finance operations and planned expenditures through the issuance of equity securities, debt financings, farm-out agreements, mergers or other transactions. Our policy has been to periodically raise funds through the sale of equity on a limited basis, to avoid undue dilution while at the early stages of execution of our business plan. Short term needs have been historically funded through loans from executive management. There are no assurances that financing will be available with acceptable terms, if at all. If the Company is not successful in obtaining financing, operations would need to be curtailed or ceased. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

For the three months ended December 31, 2022, the Company used approximately $0.1 million of net cash in operating activities, compared with approximately $0.6 million of net cash used in operating activities for the three months ended December 31, 2021. For the three months ended December 31, 2022 and 2021, approximately $0.02 million of cash was used in investing, respectively. For the three months ended December 31, 2022, the Company received approximately $0.09 million of net cash from financing activities compared with nil for the three months ended December 31, 2021.

The Company will need to raise additional funds to cover planned expenditures, as well as any additional, unexpected expenditures that we may encounter. Future equity financings may be dilutive to our stockholders. Alternative forms of future financings may include preferences or rights superior to our common stock. Debt financings may involve a pledge of assets and will rank senior to our common stock. We have historically financed our operations through private equity and debt financings. We do not have any credit or equity facilities available with financial institutions, stockholders or third-party investors, and will continue to rely on best efforts financings. The failure to raise sufficient capital could cause us to cease operations, or the Company would need to sell assets or consider alternative plans up to and including restructuring.

**Off-Balance Sheet Arrangements**

None.

**Item 3. Quantitative and Qualitative Disclosures About Market Risk**

Not required for smaller reporting companies.

**Item 4. Controls and Procedures.**

**Evaluation of Disclosure Controls and Procedures**

Disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in rules and forms adopted by the SEC's rules and forms, and that such information is accumulated and communicated to management, including the principal executive and principal financial officers, to allow timely decisions regarding required disclosures.

Under the supervision and with the participation of our principal executive and principal financial officers, our management evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, our principal executive and principal financial officers concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective at a reasonable assurance level to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms.

As noted in the Company's Annual Report on Form 10-K for the year ended September 30, 2022, the design and operating effectiveness of our controls were adequate to ensure that certain account analysis and accounting judgments related to certain estimates throughout the year were properly accounted for and reviewed in a timely manner.

**Limitations on the Effectiveness of Controls**

The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company's internal control over financial reporting is designed to provide reasonable assurance as to the reliability of the Company's financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

**Changes in Internal Control Over Financial Reporting**

During the fiscal quarter covered by this Report, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

**PART II – OTHER INFORMATION**

**Item 1. Legal Proceedings**

From time to time, the Company may become involved in litigation relating to claims arising out of its operations in the normal course of business. No legal proceedings, government actions, administrative actions, investigations or claims are currently pending against us or involve the Company.

**Item 1A. Risk Factors**

In addition to the other information set forth in this Quarterly Report, you should carefully consider the risk factors and other cautionary statements described under the heading Part I, Item 1A. "Risk Factors" included in our September 30, 2022 Annual Report, and the risk factors and other cautionary statements contained in our other SEC filings, which could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results. The risks and uncertainties described below should be read together with those disclosed in our 2022 Form 10-K, Annual Report filed with the SEC on December 29, 2022 and our other SEC filings.

**Item 2. Unregistered Sales of Equity Securities and Use of Proceeds**

None.

**Item 3. Defaults Upon Senior Securities**

None.

**Item 4. Mine Safety Disclosures**

Not applicable.

**Item 5. Other Information**

None.

**Item 6. Exhibits**

The following exhibits are attached hereto or are incorporated by reference:

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| | |
|:---|:---|
| **Exhibit No.** | **Description** |
| [3.1](http://www.sec.gov/Archives/edgar/data/1341726/000138713122010266/ex3-1.htm) | [Amended and Restated Certificate of Incorporation of GulfSlope Energy, Inc., dated effective September 30, 2022 incorporated by reference to Exhibit 3.1 of the Company's Form 8-K filed October 4, 2022](http://www.sec.gov/Archives/edgar/data/1341726/000138713122010266/ex3-1.htm) |
| [3.2](http://www.sec.gov/Archives/edgar/data/1341726/000158069514000447/ex3-2.htm) | [Amended and Restated Bylaws of GulfSlope Energy, Inc., incorporated by reference to Exhibit 3.2 of Form 10-Q for the quarter ended June 30, 2014.](http://www.sec.gov/Archives/edgar/data/1341726/000158069514000447/ex3-2.htm) |
| [4.1](http://www.sec.gov/Archives/edgar/data/1341726/000121478212000174/ex4-1.htm) | [Common Stock Specimen, incorporated by reference to Exhibit 4.1 of Form 10-K for the year ended September 30, 2012.](http://www.sec.gov/Archives/edgar/data/1341726/000121478212000174/ex4-1.htm) |
| [31.1<sup>(1)</sup>](ex31-1.htm) | [Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.](ex31-1.htm) |
| [31.2<sup>(1)</sup>](ex31-2.htm) | [Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.](ex31-2.htm) |
| [32.1<sup>(2)</sup>](ex32-1.htm) | [Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.](ex32-1.htm) |
| [32.2<sup>(2)</sup>](ex32-2.htm) | [Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.](ex32-2.htm) |
| 101.INS<sup>(3)</sup> | XBRL Instance Document. |
| 101.SCH<sup>(3)</sup> | XBRL Schema Document. |
| 101.CAL<sup>(3)</sup> | XBRL Calculation Linkbase Document. |
| 101.DEF<sup>(3)</sup> | XBRL Definition Linkbase Document. |
| 101.LAB<sup>(3)</sup> | XBRL Label Linkbase Document. |
| 101.PRE<sup>(3)</sup> | XBRL Presentation Linkbase Document. |

---

(1) Filed
 herewith.

(2) Furnished herewith.

(3) Pursuant
 to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration
 statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed
 for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability
 under those sections.

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the Issuer has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

---

| | | | |
|:---|:---|:---|:---|
|  |  | **GULFSLOPE ENERGY, INC.** | **GULFSLOPE ENERGY, INC.** |
|  |  | **(Issuer)** | **(Issuer)** |
| *Date:* | *February 14 ,2023* | *By:* | */s/ John N. Seitz* |
|  |  |  | *John N. Seitz, Chief Executive Officer, and Chairman* |

---

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the Issuer has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

---

| | | | |
|:---|:---|:---|:---|
|  |  | **GULFSLOPE ENERGY, INC.** | **GULFSLOPE ENERGY, INC.** |
|  |  | **(Issuer)** | **(Issuer)** |
| *Date:* | *February 14, 2023* | *By:* | */s/ John H. Malanga* |
|  |  |  | *John H. Malanga, Chief Financial Officer,* |
|  |  |  | *and Chief Accounting Officer* |

---

## Exhibit 31.1

[GulfSlope Energy, Inc. 10-Q](gspe-10q_123122.htm)

**Exhibit 31.1**

**Certification Pursuant to** 

**Section 302 of the Sarbanes-Oxley Act of 2002**

**(18 U.S.C. Section 7241)**

I, John N. Seitz, certify that:

---

| | |
|:---|:---|
| 1. | I have reviewed this quarterly report on Form 10-Q for the quarter ended December 31, 2022 of GulfSlope Energy, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|  | (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|  | (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|  | (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|  | (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
| 5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
|  | (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
|  | (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |

---

Date: February 14, 2023

---

| |
|:---|
| */s/ John N. Seitz* |
| John N. Seitz, Principal Executive Officer |

---

## Exhibit 31.2

[GulfSlope Energy, Inc. 10-Q](ex32-2.htm)

**Exhibit 31.2**

**Certification Pursuant to** 

**Section 302 of the Sarbanes-Oxley Act of 2002**

**(18 U.S.C. Section 7241)**

I, John H. Malanga, certify that:

---

| | |
|:---|:---|
| 1. | I have reviewed this quarterly report on Form 10-Q for the quarter ended December 31, 2022 of GulfSlope Energy, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|  | (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|  | (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|  | (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|  | (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
| 5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
|  | (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
|  | (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |

---

Date: February 14, 2023

---

| |
|:---|
| */s/ John H. Malanga* |
| John H. Malanga, Principal Financial Officer |

---

## Exhibit 32.1

[GulfSlope Energy, Inc. 10-Q](gspe-10q_123122.htm)

**Exhibit 32.1**

**Certification Pursuant to** 

**Section 906 of the Sarbanes-Oxley Act of 2002**

**(18 U.S.C. Section 1350)**

In connection with this quarterly report on Form 10-Q of GulfSlope, Energy, Inc. (the "Company"), for the quarter ended December 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), John N. Seitz, Principal Executive Officer, certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 14, 2023

---

| |
|:---|
| */s/ John N. Seitz* |
| John N. Seitz, Principal Executive Officer |

---

## Exhibit 32.2

[GulfSlope Energy, Inc. 10-Q](gspe-10q_123122.htm)

**Exhibit 32.2**

**Certification Pursuant to** 

**Section 906 of the Sarbanes-Oxley Act of 2002**<br> **(18 U.S.C. Section 1350)**

In connection with this quarterly report on Form 10-Q of GulfSlope, Energy, Inc. (the "Company"), for the quarter ended December 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), John H. Malanga, Principal Financial Officer, certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 14, 2023

---

| |
|:---|
| */s/ John H. Malanga* |
| John H. Malanga, Principal Financial Officer |

---