Financial Analysis

COMMITMENTS AND CONTINGENCIES Incentive compensation plan Barnwell established incentive compensation plans to compensate the four oil and natural gas segment Canadian executive officers. The value of the plans are directly related to our oil and natural gas segment's free cash flows from Canadian properties and the divestiture of Canadian oil and natural gas assets. As of September 30, 2025, Barnwell has accrued approximately $118,000 in bonus compensation under these plans and the amount is reported in Accrued compensation on the Consolidated Balance Sheet. Environmental Matters Because of the inherent uncertainties associated with environmental assessment and remediation activities, future expenses to remediate sites identified in the future, if any, could be incurred. Barnwell's management is not currently aware of any significant environmental contingent liabilities requiring disclosure or accrual. Legal and Regulatory Matters Barnwell is routinely involved in disputes with third parties that occasionally require litigation. In addition, Barnwell is required to maintain compliance with all current governmental controls and regulations in the ordinary course of business. Barnwells management is not aware of any claims or litigation involving Barnwell that are likely to have a material adverse effect on its results of operations, financial position or liquidity, other than the shareholder contest actions discussed elsewhere in this filing. Other Matters Barnwell is obligat …

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DEBT Insurance Premium Financing In March 2025, the Company entered into a short-term financing agreement with a third-party to finance the Companys directors and officers insurance premium in the amount of $183,000, with a term of 11 months and an annual interest rate of 9.4%. The Company had made a down payment of $15,000 and was required to make monthly principal and interest payments of $16,000 over the term of the agreement, which was set to mature in February 2026. The insurance premium financing was repaid in full in September 2025. …

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The following tables provide information about disaggregated revenue by revenue streams, reportable segments, geographical region, and timing of revenue recognition based upon continuing operations for the years ended September 30, 2025 and 2024. Year ended September 30, 2025 Oil and natural gas Land investment Other Total Revenue streams: Oil $ 10,476,000 $ $ $ 10,476,000 Natural gas 1,499,000 1,499,000 Natural gas liquids 1,588,000 1,588,000 Other 80,000 80,000 Total revenues before interest income $ 13,563,000 $ $ 80,000 $ 13,643,000 Geographical regions: United States $ 1,171,000 $ $ 1,000 $ 1,172,000 Canada 12,392,000 79,000 12,471,000 Total revenues before interest income $ 13,563,000 $ $ 80,000 $ 13,643,000 Timing of revenue recognition: Goods transferred at a point in time $ 13,563,000 $ $ 80,000 $ 13,643,000 Year ended September 30, 2024 Oil and natural gas Land investment Other Total Revenue streams: Oil $ 13,509,000 $ $ $ 13,509,000 Natural gas 2,007,000 2,007,000 Natural gas liquids 1,880,000 1,880,000 Contingent residual payments 500,000 500,000 Other 91,000 91,000 Total revenues before interest income $ 17,396,000 $ 500,000 $ 91,000 $ 17,987,000 Geographical regions: United States $ 2,303,000 $ 500,000 $ $ 2,803,000 Canada 15,093,000 91,000 15,184,000 Total revenues before interest income $ 17,396,000 $ 500,000 $ 91,000 $ 17,987,000 Timing of revenue recognition: Goods transferred at a point in time $ 17,396,000 $ 500,000 $ 91,000 $ 17,987,000 …

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FAIR VALUE MEASUREMENTS Fair Value of Financial Instruments The carrying values of cash and cash equivalents, accounts and other receivables, note receivable, accounts payable and accrued current liabilities approximate their fair values due to the short-term nature of the instruments. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis The estimated fair values of oil and natural gas properties and the asset retirement obligation incurred in the drilling of oil and natural gas wells or assumed in the acquisitions of additional oil and natural gas working interests are based on an estimated discounted cash flow model and market assumptions. The assumptions used in the calculation of estimated discounted cash flows were primarily Level 3 assumptions; assumptions included future commodity prices, projections of estimated quantities of oil and natural gas reserves, expectations for timing and amount of future development, operating and asset retirement costs, projections of future rates of production, expected recovery rates and risk adjusted discount rates. Barnwell estimates the fair value of asset retirement obligations based on the projected discounted future cash outflows required to settle abandonment and restoration liabilities. Such an estimate requires assumptions and judgments regarding the existence of liabilities, the amount and timing of cash outflows required to settle the liability, what constitutes adequate restoration, inflation factors, credit …

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"INCOME TAXES The components of loss from continuing operations before income taxes, after adjusting the loss for non-controlling interests, are as follows: Year ended September 30, 2025 2024 United States $ (5,980,000) $ (1,360,000) Canada (1,064,000) (2,532,000) $ (7,044,000) $ (3,892,000) The components of the income tax provision related to the above losses are as follows: Year ended September 30, 2025 2024 Current provision: United States State Before operating loss carryforwards $ 82,000 $ 23,000 Benefit of operating loss carryforwards After operating loss carryforwards 82,000 23,000 Canadian Before operating loss carryforwards 71,000 148,000 Benefit of operating loss carryforwards After operating loss carryforwards 71,000 148,000 Total current 153,000 171,000 Deferred (benefit) provision: United States State (82,000) 42,000 Total deferred (82,000) 42,000 $ 71,000 $ 213,000 Consolidated taxes do not bear a customary relationship to pretax results due primarily to the fact that the Company is taxed separately in Canada based on Canadian source operations and in the U.S. based on consolidated operations, and essentially all deferred tax assets, net of relevant offsetting deferred tax liabilities, are not estimated to have a future benefit as tax credits or deductions. The Company operates two subsidiaries in Canada, one of which is a U.S. corporation operating as a branch in Canada that is treated as a non-resident for Canadian tax purposes and thus has operating results …

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LEASES The Companys right-of-use (ROU) assets and lease liabilities at September 30, 2025, primarily relate to non-cancelable operating leases for our Hawaii corporate and Canadian office spaces and our leasehold land interest for Lot 4C held by Kaupulehu Developments. Management determines if a contract is or contains a lease at inception of the contract or modification of the contract. A contract is or contains a lease if the contract conveys the right to control the use of the asset for a period in exchange for consideration. Operating lease ROU assets and liabilities are recognized based on the present value of future minimum lease payments over the expected lease term at commencement date. The Companys leases do not provide a readily determinable implicit rate; therefore, management uses the Companys incremental borrowing rate to discount lease payments based on information available at lease commencement. Our lease terms may include options to extend or terminate the lease when it is reasonably certain we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the expected lease terms. The Company has lease agreements with lease and non-lease components and the non-lease components are excluded in the calculation of the ROU asset and lease liability and expensed as incurred. None of the Companys lease agreements contain material residual value guarantees or material restrictions or covenants. A ROU asset and corres …

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Recently Adopted Accounting Pronouncements In November 2023, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands reportable segment disclosure requirements on an annual and interim basis, primarily through enhanced disclosures about significant segment expenses. The Company adopted the provisions of this ASU in the annual reporting period for fiscal year ended September 30, 2025. The adoption of this update did not have an impact on Barnwells consolidated financial statements. …

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RETIREMENT PLANS Barnwell sponsors a noncontributory defined benefit pension plan (Pension Plan) covering substantially all of its U.S. employees, with benefits based on years of service and the employees highest consecutive 5 years average earnings. Barnwells funding policy is intended to provide for both benefits attributed to service to date and for those expected to be earned in the future. In addition, Barnwell sponsors a Supplemental Executive Retirement Plan (SERP), a noncontributory supplemental retirement benefit plan which covers certain current and former employees of Barnwell for amounts exceeding the limits allowed under the Pension Plan. Effective December 31, 2019, the accrual of benefits for all participants in the Pension Plan and SERP was frozen and the plans were closed to new participants from that point forward. The following tables detail the changes in benefit obligations, fair values of plan assets and reconciliations of the funded status of the retirement plans: Pension Plan SERP September 30, 2025 2024 2025 2024 Change in Projected Benefit Obligation: Benefit obligation at beginning of year $ 8,195,000 $ 7,511,000 $ 1,974,000 $ 1,734,000 Interest cost 390,000 411,000 95,000 95,000 Actuarial (gain) loss (90,000) 520,000 (5,000) 149,000 Benefits paid (394,000) (247,000) (3,000) (4,000) Benefit obligation at end of year 8,101,000 8,195,000 2,061,000 1,974,000 Change in Plan Assets: Fair value of plan assets at beginning of year 13,094,000 11,982,000 Act …

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RELATED PARTY TRANSACTIONS Kaupulehu Developments is entitled to receive payments from the sales of lots and/or residential units by KD I and KD II. KD I and KD II are part of the Kukio Resort Land Development Partnerships in which Barnwell holds indirect 19.6% and 10.8% non-controlling ownership interests, respectively, accounted for under the equity method of investment. The percentage of sales payments are part of transactions which took place in 2004 and 2006 where Kaupulehu Developments sold its leasehold interests in Increment I and Increment II to KD I's and KD II's predecessors in interest, respectively, which was prior to Barnwells affiliation with KD I and KD II which commenced on November 27, 2013, the acquisition date of our ownership interest in the Kukio Resort Land Development Partnerships. Changes to the arrangement above, effective March 7, 2019, are discussed in Note 6. No lots were sold during the year ended September 30, 2025. During the year ended September 30, 2024, Barnwell received $500,000 in percentage of sales payments from KD I from the sale of the last two single-family lots within Increment I. On September 29, 2025, the Board approved and ratified a common stock grant to directors Kenneth Grossman and Joshua Horowitz for their services on behalf of the Company and the Board pertaining to the various legal actions between Ned L. Sherwood and certain of his affiliates and the Company and the 2025 shareholder proxy contest. Each director was granted …

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"REVENUE FROM CONTRACTS WITH CUSTOMERS Disaggregation of Revenue The following tables provide information about disaggregated revenue by revenue streams, reportable segments, geographical region, and timing of revenue recognition based upon continuing operations for the years ended September 30, 2025 and 2024. Year ended September 30, 2025 Oil and natural gas Land investment Other Total Revenue streams: Oil $ 10,476,000 $ $ $ 10,476,000 Natural gas 1,499,000 1,499,000 Natural gas liquids 1,588,000 1,588,000 Other 80,000 80,000 Total revenues before interest income $ 13,563,000 $ $ 80,000 $ 13,643,000 Geographical regions: United States $ 1,171,000 $ $ 1,000 $ 1,172,000 Canada 12,392,000 79,000 12,471,000 Total revenues before interest income $ 13,563,000 $ $ 80,000 $ 13,643,000 Timing of revenue recognition: Goods transferred at a point in time $ 13,563,000 $ $ 80,000 $ 13,643,000 Year ended September 30, 2024 Oil and natural gas Land investment Other Total Revenue streams: Oil $ 13,509,000 $ $ $ 13,509,000 Natural gas 2,007,000 2,007,000 Natural gas liquids 1,880,000 1,880,000 Contingent residual payments 500,000 500,000 Other 91,000 91,000 Total revenues before interest income $ 17,396,000 $ 500,000 $ 91,000 $ 17,987,000 Geographical regions: United States $ 2,303,000 $ 500,000 $ $ 2,803,000 Canada 15,093,000 91,000 15,184,000 Total revenues before interest income $ 17,396,000 $ 500,000 $ 91,000 $ 17,987,000 Timing of revenue recognition: Goods transferred at a point in tim …

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SEGMENT AND GEOGRAPHIC INFORMATION As disclosed in Note 3 Discontinued Operations, on March 14, 2025, the Company completed the sale of Water Resources, which represented the Companys contract drilling segment. The financial results of the Companys contract drilling business has been presented as discontinued operations and therefore is excluded from segment reporting. Accordingly, Barnwells continuing operations include the following two principal business segments: Oil and Natural Gas Segment - Barnwell engages in oil and natural gas development, production, acquisitions and sales in Canada and in the U.S. Land Investment Segment - Barnwell owns leasehold land interests in Hawaii. The Companys Chief Operating Decision Maker is the Chief Executive Officer, who utilizes segment revenues and expenses and segment operating profit or loss to assess performance and allocate resources to each segment. General and administrative expenses are reviewed on a consolidated basis. The following table presents certain financial information related to Barnwells reporting segments. All revenues reported are from external customers with no intersegment sales or transfers. Year ended September 30, 2025 2024 Revenues: Oil and natural gas $ 13,563,000 $ 17,396,000 Land investment 500,000 Other 80,000 91,000 Total before interest income 13,643,000 17,987,000 Interest income 54,000 88,000 Total revenues $ 13,697,000 $ 18,075,000 Cost and expenses: Oil and natural gas $ 8,966,000 $ 9,849,000 Deple …

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business Barnwells continuing operations is engaged in the following lines of business: 1) acquiring, developing, producing and selling oil and natural gas in Canada and the U.S. and 2) leasehold land interests in Hawaii. Principles of Consolidation The consolidated financial statements include the accounts of Barnwell Industries, Inc. and all majority-owned subsidiaries (collectively referred to herein as Barnwell, we, our, us, or the Company), including a 77.6%-owned land investment general partnership (Kaupulehu Developments) and a 75%-owned land investment partnership (KD Kona). All significant intercompany accounts and transactions have been eliminated. Undivided interests in oil and natural gas exploration and production joint ventures are consolidated on a proportionate basis. Barnwells investments in both unconsolidated entities in which a significant, but less than controlling, interest is held and in VIEs in which the Company is not deemed to be the primary beneficiary are accounted for by the equity method. Use of Estimates in the Preparation of Consolidated Financial Statements The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management of Barnwell to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Actual results could differ significantly from …

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STOCKHOLDERS' EQUITY Share-based Payment Arrangements 2018 Equity Incentive Plan The stockholder-approved 2018 Equity Incentive Plan is administered by the Compensation Committee of the Board of Directors and provides for the issuance of incentive stock options, nonstatutory stock options, stock options with stock appreciation rights, restricted stock, restricted stock units and performance units, qualified performance-based awards, and stock grants to employees, consultants and non-employee members of the Board of Directors. 1,600,000 shares of Barnwell common stock have been reserved for issuance and as of September 30, 2025, a total of 751,724 shares remain available for grant. Barnwell currently has a policy of issuing new shares to satisfy share option exercises when the optionee requests shares. In October 2025, the Board of Directors of the Company granted a total of 133,335 restricted stock units to the independent directors of the Board as partial payment of director fees for their service as members of the Board. The restricted stock units vest ratably over a three-year period, subject to the directors continued service through the applicable vesting date. On October 27, 2025, Barnwell Industries, Inc. appointed Philip Patman, Jr. as the Companys Executive Vice President Finance and in connection with Mr. Patmans appointment, the Company entered into an executive employment agreement with Mr. Patman, dated, and effective, as of October 27, 2025 (the Employment Agree …

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SUBSEQUENT EVENTS Share-based Payment Arrangements In October 2025, the Board of Directors of the Company granted a total of 133,335 restricted stock units to the independent directors of the Board as partial payment of director fees for their service as members of the Board. The restricted stock units vest ratably over a three-year period, subject to the directors continued service through the applicable vesting date. On October 27, 2025, Barnwell Industries, Inc. appointed Philip Patman, Jr. as the Companys Executive Vice President Finance and in connection with Mr. Patmans appointment, the Company entered into an executive employment agreement with Mr. Patman, dated, and effective, as of October 27, 2025 (the Employment Agreement). Pursuant to the terms of the Employment Agreement, on October 27, 2025, Mr. Patman received the following awards which were issued pursuant to the Companys Amended and Restated 2018 Equity Incentive Plan, as amended from time to time: a stock award of 83,207 shares of the Companys common stock; a restricted stock unit award for 83,208 shares of the Companys common stock (the Initial RSU Award); and an incentive stock option to purchase 185,000 shares of the Companys common stock (the Initial Stock Option and, together with the Initial RSU Award, the Initial Equity Awards). Both Initial Equity Awards vest according to the following schedule: 34% of the total on October 27, 2026; 33% of the total on October 27, 2027; and 33% of the total on Octobe …

SubsequentEventsTextBlock · excerpt; the full note is in the filing