Recent Developments

AOS provides well servicing, workover and related transportation services to independent oil and natural gas producers in the northeast region of the United States. It also performs ongoing maintenance and major overhauls necessary to optimize the level of production from existing oil and natural gas wells and provides certain ancillary services during the drilling and completion of new wells. AOS offers its services in Ohio, Pennsylvania, New York, Virginia, Kentucky and West Virginia and also owns a fleet of well service equipment.

We originally acquired AOS from Clarence and Rebecca Smith on January 31, 2026 through a merger of our subsidiary, Trans Energy Acquisitions, with and into Arvilla, Inc., with Arvilla being the surviving entity. As consideration, we issued 1,185,024 shares of our common stock, of which 1,042,821 shares were issued to the Smiths, both of whom became directors of Trans Energy following the acquisition. AOS's operations were previously conducted as Arrow Oilfield Service Company, a division of Belden & Blake Corporation, a privately held company engaged in the exploration, development and production of oil and natural gas. In June 2004, the Smiths acquired Arrow Oilfield Services from Belden & Blake and created Arvilla Oilfield Services, LLC as the operating entity. Subsequently, the Smiths created Arvilla, Inc. that acquired all the membership interests of Arvilla Oilfield Services in order to facilitate its acquisition by Trans Energy.

As a result of consummating the definitive agreement, Clarence and Rebecca Smith returned to us 521,411 shares of their Trans Energy common stock. The Smiths have also conveyed to Trans Energy all of their interest in and to five oil and gas wells located in Tyler County, West Virginia. Assignments for the wells originally was to be held in escrow pending satisfaction by Trans Energy of two promissory notes in the aggregate amount of $763,000 payable to AOS and to Arvilla Pipeline Construction Co., Inc., a separate entity owned by Clarence and Rebecca Smith. However, pursuant to the First Amendment to Definitive Agreement, the parties agreed that the wells would be transferred at the closing and we agreed to pay AOS $176,239 on or before April 30, 2006, and pay Arvilla Pipeline $115,000 on or before April 30, 2006. To secure these payments by Trans Energy, Clarence and Rebecca Smith will hold a lien on a certain Lyon Leasehold Deed of Trust until the debt is satisfied. These notes have been paid and the lien released.

An additional term of the definitive agreement provided that each of Clarence and Rebecca Smith received bonuses equal to approximately $85,000. A further condition of the closing included the written consent for the sale of AOS from certain banks and lenders having the right to call a loan on the ownership transfer of AOS.

Upon execution of the definitive agreement, Clarence Smith resigned as our Chief Executive Officer, but remained on our board of directors until the closing. At the closing, both Clarence and Rebecca Smith resigned as directors of Trans Energy and Arvilla, Inc. Clarence and Rebecca Smith have also agreed not to sell an amount of their remaining Trans Energy common stock during each calendar quarter on or after March 22, 2006, in an aggregate amount greater that
(i) 50,000 shares (adjusted for stock splits or stock dividends; or (ii) one percent of the total outstanding shares of Trans Energy common stock on the date of any such sale.

Finally, the closing of the transaction was expressly conditioned on the receipt of a fairness opinion from a qualified independent party stating that the transactions contemplated by the definitive agreement are fair to Trans Energy and our stockholders. That opinion was issued and delivered to Trans Energy on March 31, 2006.

Sale of Wyoming Wells and Properties

In April 2006, we finalized a definitive Agreement for Sale of Oil and Gas Properties related to the sale of certain wells, overriding royalties and undeveloped acreage located in Campbell County, Wyoming. The assets have been sold at public auction through the Oil & Gas Asset Clearinghouse in Houston, Texas. The gross sales price for the properties is $1,003,000

The wells sold by us, all located in Campbell County, Wyoming, include the Pinion Fee #1, Sagebrush Federal #1, Sagebrush Federal #2, Sagebrush Federal #3 (injector), Boley #31-36 Sandbar, State #1-36 Sandbar and State #2-36 Sandbar. Also included in the sales were overriding royalties on two wells (Sagebrush Federal #1 and Sagebrush Federal #2) and Tract TR4-B, and 2,530 undeveloped acres, also located in Campbell County.

Results of Operations
     The  following  table  sets  forth  the  percentage  relationship  to total
revenues  of  principal  items  contained  in  our  consolidated  statements  of
operations  for the three month periods ended March 31, 2026 and 2005. It should
be noted that  percentages  discussed  throughout this analysis are stated on an
approximate basis.
                                                        Three Months Ended
                                                              March 31,
                                                       --------------------
                                                       2006            2005
                                                       ----            ----
                             (Unaudited)
            Total revenues........................      100 %           100 %
            Total costs and expenses..............      108             120
            Loss from operations..................       (8)            (20)
            Other income (expense)................       (2)             (5)
            Discontinued operations...............      (98)             16
            Net loss..............................     (108)             (9)

Total revenues from continuing operations for the three months ("first quarter") ended March 31, 2026 increased 128% compared to the first quarter of 2005, primarily due to the increase in energy prices and the gas distribution contracts the Company entered into in the summer of 2005. Our cost of oil and gas for the first quarter of 2006 also increased by $896,144 or 144% from the comparable 2005 period, because of the gas purchased to fulfill our distribution contracts.

Salaries and wages increased 20% for the first quarter of 2006 compared to the 2005 period, due to raises given to our management employees. Depreciation, depletion and amortization and accretion expense increased 35% due to an impairment of mineral properties recorded in the first quarter of 2006 of $40,697. Selling, general and administrative expenses increased $4,661 or 4% in the first quarter of 2006 from the first quarter of 2005 due to raises given to management.

Our loss from operations for the first quarter of 2006 was $141,433 compared to a loss of $151,063 for the first quarter of 2005. The improvement is related to the increase in oil and gas prices. We realized total other expenses of $31,370 during the first quarter of 2006 compared to total other expenses of $37,408 for the first quarter of 2005. The first quarter of 2006 results were due to interest expense of $31,370.

We recorded a loss of $1,682,306 on the disposition of Arvilla in the first quarter of 2006. Our statement of operations for the first quarter of 2005 was restated to reflect the operations of Arvilla as discontinued.

Our net loss for the first quarter of 2006 was $1,855,109 compared to $66,488 for the first quarter of 2005.

For the remainder of fiscal year 2006, management expects selling, general and administrative expenses to remain at approximately the same rate as the first quarter of 2006. The cost of oil and gas produced is expected to fluctuate with the amount produced and with prices of oil and gas, and management anticipates that revenues are likely to increase during the remainder of 2006.

Liquidity and Capital Resources

Historically, we have satisfied our working capital needs with operating revenues and from borrowed funds. At March 31, 2006, we had a working capital deficit of $3,254,250 compared to a deficit of $3,012,700 at December 31, 2005. This 8% increase in working capital deficit is primarily attributed to the net loss in the first quarter of 2006.

During the first quarter of 2006, operating activities provided net cash of $37,102 compared to net cash used of $195,553 for the first quarter of 2005. These results are primarily attributed to the reduction in accounts receivable and an increase in current liabilities.

Net cash used by investing activities for the first quarter of 2006 was $18,705 for the purchase of well equipment, compared to $211,150 provided primarily from the acquisition of a subsidiary during the first quarter of 2005.

During the first quarter of 2006, we used net cash in financing activities of $12,983 in the repayment of notes payable compared to net cash provided by notes payable of $68,945 in the first quarter of 2005. Our cash was used to repay related and unrelated notes payable.

We anticipate meeting our working capital needs during the remainder of the current fiscal year with revenues from our ongoing operations, particularly from our wells in Wetzel County, West Virginia and new third party natural gas wells drilled in West Virginia, which gas goes into our 6-inch pipeline. In the event revenues are not sufficient to meet our working capital needs, we will explore the possibility of additional funding from either the sale of debt or equity securities. There can be no assurance such funding will be available to us or, if available, it will be on acceptable or favorable terms.

As of March 31, 2006, we had total assets of $3,974,997 and total stockholders' deficit of $1,827,303, compared to total assets of $10,934,424 and total stockholders' equity of $497,076 at December 31, 2005. The decrease was due to the disposition of Arvilla.

Because we have incurred significant cumulative operating losses through March 31, 2026 and have a working capital deficit at March 31, 2026 of $3,254,250, there exists substantial doubt about our ability to continue as a going concern. Historically, our revenues have not been sufficient to cover operating costs. However, we may potentially need to rely on proceeds from sale of common stock, debt or equity financing, and increased operating revenues from new developments to allow us to continue as a going concern. There can be no assurance that we can or will be able to complete any debt or equity financing.

We included a footnote to our financial statements for the period ended December 31, 2025 stating that because of our continued losses, working capital deficit, and need for additional funding, there is substantial doubt as to whether we can continue as a going concern.

Inflation

In the opinion of our management, inflation has not had a material effect on our operations.

Forward-looking and Cautionary Statements

This report includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements may relate to such matters as anticipated financial performance, future revenues or earnings, business prospects, projected ventures, new products and services, anticipated market performance and similar matters. When used in this report, the words "may," "will," "expect," "anticipate," "continue," "estimate," "project," "intend," and similar expressions are intended to identify forward-looking statements regarding events, conditions, and financial trends that may affect our future plans of operations, business strategy, operating results, and financial position. We caution readers that a variety of factors could cause our actual results to differ materially from the anticipated results or other matters expressed in forward-looking statements. These risks and uncertainties, many of which are beyond our control, include:

* the sufficiency of existing capital resources and our ability to raise additional capital to fund cash requirements for future operations;

* uncertainties involved in the rate of growth of our business and acceptance of any products or services;

* volatility of the stock market, particularly within the energy sector; and

* general economic conditions.

Although we believe the expectations reflected in these forward-looking statements are reasonable, such expectations cannot guarantee future results, levels of activity, performance or achievements.