Formation Minerals Reports Mixed Financial Results Following Merger, Focus Shift to Energy Assets

SensaSure Technologies, Inc., now operating as Formation Minerals, Inc. following a merger with Verde Bio Holdings, reported significant financial changes in its latest 10-Q filing for the period ending July 31, 2024. The company has transitioned from a medical technology focus to energy-related businesses, specifically targeting oil and gas mineral interests.

For the three months ended July 31, 2024, Formation Minerals generated revenue of $36,139, a substantial decline from $75,694 in the same period of 2023. This decrease is attributed to lower production levels and declining oil and gas prices. Total operating expenses surged to $728,801, up from $402,647 year-over-year, primarily due to increased professional fees and merger-related costs. Consequently, the net operating loss widened to $(692,662) compared to $(326,953) in the prior year. However, the company reported a net income of $289,013 for the quarter, a turnaround from a net loss of $(316,796) in the previous year, largely due to a gain from the extinguishment of warrant liabilities amounting to $1,043,542.

As of July 31, 2024, total assets decreased to $325,153 from $548,564 as of April 30, 2024, primarily due to the sale of certain mineral properties. Total liabilities slightly increased to $2,549,576, with a working capital deficit of $(2,460,908), reflecting higher cash usage for operating activities. The accumulated deficit grew to $(20,000,176).

The merger, completed on May 9, 2024, involved the issuance of 6,921,350 shares of common stock to acquire Verde's shares, with a fair value of consideration transferred estimated at $11,414,040. The company has since focused on acquiring and exploiting upstream energy assets, with plans to reinvest proceeds from the sale of lower-performing assets into higher-performing royalty properties.

Formation Minerals has also engaged in several capital raises post-merger, generating approximately $371,450 in gross proceeds. However, the company faces substantial doubt regarding its ability to continue as a going concern, relying on future investment opportunities and financing.

Management has identified material weaknesses in internal controls and is actively seeking to enhance these through increased staffing and the establishment of an audit committee. The company has not engaged in hedging activities and does not anticipate doing so in the future.