Company Quick10K Filing
Quick10K
Texas Mineral Resources
10-Q 2019-05-31 Quarter: 2019-05-31
10-Q 2019-02-28 Quarter: 2019-02-28
10-Q 2018-11-30 Quarter: 2018-11-30
10-K 2018-08-31 Annual: 2018-08-31
10-K 2018-08-31 Annual: 2018-08-31
10-Q 2018-05-31 Quarter: 2018-05-31
10-Q 2018-02-28 Quarter: 2018-02-28
10-Q 2017-11-30 Quarter: 2017-11-30
10-K 2017-08-31 Annual: 2017-08-31
10-Q 2017-05-31 Quarter: 2017-05-31
10-Q 2017-02-28 Quarter: 2017-02-28
10-Q 2016-11-30 Quarter: 2016-11-30
10-K 2016-08-31 Annual: 2016-08-31
10-Q 2016-05-31 Quarter: 2016-05-31
10-Q 2016-02-29 Quarter: 2016-02-29
10-Q 2015-11-30 Quarter: 2015-11-30
10-K 2015-08-31 Annual: 2015-08-31
10-Q 2015-05-31 Quarter: 2015-05-31
10-Q 2015-02-28 Quarter: 2015-02-28
10-Q 2014-11-30 Quarter: 2014-11-30
10-K 2014-08-31 Annual: 2014-08-31
10-Q 2014-05-31 Quarter: 2014-05-31
10-Q 2014-02-28 Quarter: 2014-02-28
10-Q 2013-11-30 Quarter: 2013-11-30
8-K 2019-08-01 Sale of Shares, Officers
PSX Phillips 66 38,890
NUAN Nuance Communications 5,170
AAT American Assets Trust 2,180
HTLD Heartland Express 1,600
TLND Talend 1,490
ELOX Eloxx Pharmaceuticals 426
MTEC MTech Acquisition 76
CUO Continental Materials 31
VYST VyStar 0
SXE Southcross Energy Partners 0
TMRC 2019-05-31
Item 1. Financial Statements (Unaudited)
Note 1 - Basis of Presentation
Note 2 - Mineral Properties
Note 3 - Notes Payable
Note 4 - Shareholders' Equity
Note 5 - Related Party Transactions
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosure
Item 5. Other Information
Item 6. Exhibits
EX-31.1 ex31-1.htm
EX-31.2 ex31-2.htm
EX-32.1 ex32-1.htm
EX-32.2 ex32-2.htm

Texas Mineral Resources Earnings 2019-05-31

TMRC 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 tmrc-10q_053119.htm QUARTERLY REPORT

 

 

 

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 May 31, 2019

 

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 number: 000-53482

 

TEXAS MINERAL RESOURCES CORP.
(Exact Name of Registrant as Specified in its Charter)
     
Delaware   87-0294969
(State of other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification No.)
     
516 South Spring Avenue    
Tyler, Texas   75702
(Address of Principal Executive Offices)   (Zip Code)
(915) 369-2133
(Registrant’s Telephone Number, including Area Code)
 
(Former Name, Former Address and Former Fiscal
Year, if Changed Since Last Report)

 

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 past 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 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, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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

 

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  ☒

Number of shares of issuer’s common stock outstanding at July 10, 2019: 46,686,252.

     
   
 

 

 

 

Table of Contents 

       
  Part I   Page
       
Item 1 Financial Statements (Unaudited)   3
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations   10
Item 3 Quantitative and Qualitative Disclosures About Market Risk   14
Item 4 Controls and Procedures   14
       
  Part II    
       
Item 1 Legal Proceedings   15
Item 1A. Risk Factors   15
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds   15
Item 3 Defaults upon Senior Securities   15
Item 4 Mine Safety Disclosures   15
Item 5 Other Information   15
Item 6 Exhibits   16
       
Signatures   17

 

 2 
 

 

Item 1. Financial Statements (Unaudited)

 

TEXAS MINERAL RESOURCES CORP
BALANCE SHEETS

(Unaudited)

    May 31, 2019  August 31, 2018
ASSETS       
        
CURRENT ASSETS       
Cash and cash equivalents   $18,987   $31,591 
Prepaid expenses and other current assets    6,000    3,333 
Total current assets    24,987    34,924 
            
Mineral properties, net    354,234    354,234 
Deposits    4,000    4,000 
            
TOTAL ASSETS   $383,221   $393,158 
            
LIABILITIES AND SHAREHOLDERS' EQUITY           
            
CURRENT LIABILITIES           
  Accounts payable and accrued liabilities   $1,500,874   $1,357,013 
  Advances due to - related party    415,415    421,415 
  Current portion of note payable    260,387    260,387 
  Total current liabilities    2,176,676    2,038,815 
   Total liabilities    2,176,676    2,038,815 
            
COMMITMENTS AND CONTINGENCIES           
            
SHAREHOLDERS' EQUITY           
Preferred stock, par value $0.001; 10,000,000 shares authorized, no shares issued
and outstanding as of May 31, 2019 and August 31, 2018, respectively
   —      —   
Common stock, par value $0.01; 100,000,000 shares authorized, 46,686,252 and 44,941,532 shares issued
and outstanding as of May 31, 2019 and August 31, 2018, respectively
   466,863    449,416 
   Additional paid-in capital    33,769,611    33,275,248 
   Accumulated deficit    (36,029,929)   (35,370,321)
   Total shareholders' equity    (1,793,455)   (1,645,657)
            
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $383,221   $393,158 

The accompanying notes are an integral part of these financial statements.

 3 
 

 

TEXAS MINERAL RESOURCES CORP
STATEMENTS OF OPERATIONS
(Unaudited)

 

  Nine Months Ended May 31,  Three Months Ended May 31,
  2019  2018  2019  2018
ORDINARY INCOME           
   Services & fee income $—     $—     $—     $—   
                    
Total ordinary income  —      —      —      —   
                    
OPERATING EXPENSES                   
   Exploration costs  48,437    13,042    18,328    792 
   General and administrative expenses  595,476    226,193    84,599    61,955 
                    
Total operating expenses  643,913    239,235    102,927    62,747 
                    
LOSS FROM OPERATIONS  (643,913)   (239,235)   (102,927)   (62,747)
                    
OTHER INCOME (EXPENSE)                   
Interest and other expense  (15,695)   (69,336)   (4,905)   (22,261)
Total other income (expense)  (15,695)   (69,336)   (4,905)   (22,261)
                    
NET LOSS $(659,608)  $(308,571)  $(107,832)  $(85,008)
                    
Net loss per share:                   
    Basic and diluted net loss per share $(0.01)  $(0.01)  $(0.00)  $(0.00)
                    
Weighted average shares outstanding:                   
        Basic and diluted  45,956,600    44,941,533    46,686,252    44,941,533 

 

 The accompanying notes are an integral part of these financial statements.

 

 4 
 

 

TEXAS MINERAL RESOURCES CORP
STATEMENTS OF CASH FLOWS
(Unaudited)

 

   Nine Months Ended May 31,
   2019  2018
CASH FLOWS FROM OPERATING ACTIVITIES      
Net loss  $(659,608)  $(308,571)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation expense   —      4,498 
Cashless compensation for related party advances   —      53,474 
Stock based compensation   380,210    12,051 
Changes in current assets and liabilities:          
Prepaid expenses and other assets   (2,667)   834 
Accounts payable and accrued expenses   143,861    166,340 
Net cash used in operating activities   (138,204)   (71,374)
           
CASH FLOWS FROM INVESTING ACTIVITIES          
Net cash used in investing activities   —      —   
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Proceeds from notes payable - related party   —      75,250 
Cash from sale of common stock   140,000    —   
Payment for cost of capital   (8,400)   —   
Payment on  Advances due to - related party   (6,000)   —   
    125,600    75,250 
NET CHANGE IN CASH AND CASH EQUIVALENTS   (12,604)   3,876 
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD   31,591    1,080 
CASH AND CASH EQUIVALENTS, END OF PERIOD  $18,987   $4,956 
           
           
SUPPLEMENTAL INFORMATION          
Interest paid  $—     $—   
Taxes paid  $—     $—   
           
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS:          
Warrants issued for services in connection with the sale of common stock.    $8,400   $—   

 

 The accompanying notes are an integral part of these financial statements.

 

 5 
 

 

Texas Mineral Resources Corp.

Notes to Interim Financial Statements

May 31, 2019

(Unaudited)

NOTE 1 – BASIS OF PRESENTATION

The accompanying unaudited interim financial statements of Texas Mineral Resources Corp. (“we”, “us”, “our”, the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in our annual report on Form 10-K/A, for the year ended August 31, 2018, dated December 14, 2018 as filed with the SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year ended August 31, 2018 as reported in our annual report on Form 10-K, have been omitted.

The financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred losses since inception resulting in an accumulated deficit of approximately $36,030,000 as of May 31, 2019 and further losses are anticipated in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand and or private placement of common stock.

On March 14, 2016, the Company filed a Certificate of Amendment with the Secretary of State of the State of Delaware to amend its Certificate of Incorporation to change the name of the Company from “Texas Rare Earth Resources Corp” to “Texas Mineral Resources Corp”. The amendment was effective at 9:00 am EST on March 21, 2016. The Certificate of Amendment did not make any other amendments to the Company’s Certificate of Incorporation.

NOTE 2 – MINERAL PROPERTIES

September 2011 Lease

On September 2, 2011, we entered into a new mining lease with the Texas General Land Office covering Sections 7 and 18 of Township 7, Block 71 and Section 12 of Block 72, covering approximately 860 acres at Round Top Mountain in Hudspeth County, Texas. The mining lease issued by the Texas General Land Office gives us the right to explore, produce, develop, mine, extract, mill, remove, and market beryllium, uranium, rare earth elements, all other base and precious metals, industrial minerals and construction materials and all other minerals excluding oil, gas, coal, lignite, sulfur, salt, and potash. The term of the lease is nineteen years so long as minerals are produced in paying quantities.

Under the lease, we will pay the State of Texas a lease bonus of $142,518; $44,718 of which was paid upon the execution of the lease, and $97,800 which will be due when we submit a supplemental plan of operations to conduct mining. Upon the sale of minerals removed from Round Top, we will pay the State of Texas a $500,000 minimum advance royalty.

Thereafter, we will pay the State of Texas a production royalty equal to eight percent (8%) of the market value of uranium and other fissionable materials removed and sold from Round Top and six and one quarter percent (6 1/4%) of the market value of all other minerals removed and sold from Round Top.

Thereafter, assuming production of paying quantities has not been obtained, we may pay additional delay rental fees to extend the term of the lease for successive one (1) year periods pursuant to the following schedule: 

   Per Acre
Amount
  Total
Amount
September 2, 2015 – 2019  $75   $67,077 
September 2, 2020 – 2024  $150   $134,155 
September 2, 2025 – 2029  $200   $178,873 

 

In August 2018, we paid a delay rental to the State of Texas in the amount of $67,077. The Companies next payment is due on or before September 2, 2019.

 6 
 

 

November 2011 Lease

On November 1, 2011, we entered into a mining lease with the State of Texas covering 90 acres, more or less, of land that is adjacent to the land we purchased in September 2011 near our Round Top site. The deed was recorded with Hudspeth County on September 16, 2011. Under the lease, we paid the State of Texas a lease bonus of $20,700 which was paid upon the execution of the lease. Upon the sale of minerals removed from Round Top, we will pay the State of Texas a $50,000 minimum advance royalty. Thereafter, we will pay the State of Texas a production royalty equal to eight percent (8%) of the market value of uranium and other fissionable materials removed and sold from Round Top and six and one quarter percent (6 1/4%) of the market value of all other minerals sold from Round Top.

 

Thereafter, assuming production of paying quantities has not been obtained, we may pay additional delay rental fees to extend the term of the lease for successive one (1) year periods pursuant to the following schedule:

 

   Per Acre
Amount
  Total
Amount
November 1, 2015 – 2019  $75   $6,750 
November 1, 2020 – 2024  $150   $13,500 
November 1, 2025 – 2029  $200   $18,000 

 

In October 2018, we paid a delay rental to the State of Texas of $6,750. The Companies next payment is due on or before November 1, 2019.

March 2013 Lease

On March 6, 2013, we purchased the surface lease at the Round Top Project, known as the West Lease, from the Southwest Wildlife and Range Foundation, since renamed the Rio Grande Foundation for $500,000 cash and 1,063,830 shares of our common stock. We also agreed to support the Foundation through an annual payment of $45,000 for ten years to support conservation efforts within the Rio Grande Basin and in particular engaging in stewardship of Lake Amistad, a large and well-known fishing lake near Del Rio, Texas. The West Lease comprises approximately 54,990 acres. Most importantly, the purchase of the surface lease gave us unrestricted surface access for the potential development and mining of our Round Top Project.

October 2014 Surface Option and Water Lease

 

On October 29, 2014, we announced that we had executed agreements with the Texas General Land Office securing the option to purchase the surface rights covering the potential Round Top project mine and plant areas and, separately, a lease to develop the water necessary for the potential Round Top project mine operations. The option to purchase the surface rights covers approximately 5,670 acres over the mining lease and the additional acreage adequate to site all potential heap leaching and processing operations as currently anticipated by the Company. We may exercise the option for all or part of the option acreage at any time during the sixteen year primary term of the mineral lease. The option can be kept current by an annual payment of $10,000. The purchase price will be the appraised value of the surface at the time of exercising the option. The annual payments for the fiscal year ending August 31, 2018 and 2017 have not been made as of the date of this filing.

The ground water lease secures our right to develop the ground water within a 13,120 acre lease area located approximately 4 miles from the Round Top deposit. The lease area contains five existing water wells. It is anticipated that all potential water needs for the Round Top project mine operations would be satisfied by the existing wells covered by this water lease. This lease has an annual minimum production payment of $5,000 prior to production of water for the operation. After initiation of production we will pay $0.95 per thousand gallons or $20,000 annually, whichever is greater. This lease remains effective as long as the mineral lease is in effect. The minimum production payment for the fiscal years ending August 31, 2018 and 2017 have been made as of the date of this filing.

 7 
 

 

Northeast Pennsylvania REE and Scandium Project

On June 28, 2016 TMRC executed a Memorandum of understanding with Pagnotti Enterprises Inc. of Wilkes Barre, Pennsylvania, owners of the Jeddo Coal Co., whereby under specified terms TMRC could lease one or more of Jeddo’s deposits located in the anthracite region of northeast Pennsylvania. Research by the Department of Energy (DOE) has shown that these coal deposits and the sandstones and siltstones immediately associated with them contain anomalously high values of rare earth and of particular interest, Scandium. The DOE research to date has indicated that the rare earth can be efficiently extracted from pulverized rock using ammonium sulfate as the lixiviant. TMRC is in the process of preparing an application for a federal grant to design and construct a continuous ion exchange/continuous ion chromatography (CIX/CIC) pilot plant to be delivered to a designated project area in the Appalachian cold province. TMRC and its co-applicants, K-Tech, Inventure Renewables, of Tuscaloosa, Alabama and Penn State University are proposing to plan, develop, design and install the CIX/CIC pilot plant at one of the Jeddo Coal properties. The grant was awarded in March 2017 to a consortium consisting of Inventure Renewables, Penn State, K-Tech and TMRC with Inventure being the principal investigator in the consortium. Funding began in September 2017.

Under the terms of the Memorandum of Understanding (MOU) signed 28 June 2016, TMRC had a six month term to perform the necessary due diligence and to technically and economically evaluate the properties. Upon execution of the MOU TMRC and PEI had six months to draft and execute a formal lease agreement containing all the standard terms of mining lease agreements. Upon execution of a lease, TMRC will be obligated to pay a $5,000 per month rental or a 12% royalty whichever is greater. As of the date of this filing, no lease has been executed. This MOU has now lapsed and would have to be renegotiated if the Company were to continue this project.

NOTE 3 – NOTES PAYABLE

On January 17, 2019 TMRC executed a Settlement Agreement with the Rio Grande Foundation regarding payment of accounts due. In consideration of a payment of $10,000, the balance of $125,000 plus the 2019 payment due June 1, 2019 and the 2020 payment of $45,000, aggregating $215,000, are being paid in 16 monthly payments of $13,437.50 beginning March 1 2019. As of May 31, 2019, the Company has not made the consideration payment of $10,000 to allow the Company to begin payments of $13,437.50 on June 1, 2019. The loan is outstanding as of the date of this filing.

 

NOTE 4 – SHAREHOLDERS’ EQUITY

Capital Stock

Our authorized capital stock consists of 100,000,000 shares of common stock, with a par value of $0.01 per share, and 10,000,000 preferred shares with a par value of $0.001 per share.

All shares of common stock have equal voting rights and, when validly issued and outstanding, are entitled to one non-cumulative vote per share in all matters to be voted upon by shareholders. The shares of common stock have no pre-emptive, subscription, conversion or redemption rights and may be issued only as fully paid and non-assessable shares. Holders of the common stock are entitled to equal ratable rights to dividends and distributions with respect to the common stock, as may be declared by our Board of Directors (our “Board”) out of funds legally available. In the event of a liquidation, dissolution or winding up of the affairs of the Corporation, the holders of common stock are entitled to share ratably in all assets remaining available for distribution to them after payment or provision for all liabilities and any preferential liquidation rights of any preferred stock then outstanding.

On October 17, 2018, we issued 500,000 common shares valued at $105,000 to the director of the Rio Grande Foundation as consideration for not placing us in default on the note payable to the Foundation as described in Note 3 of these financial statements.

On October 25, 2018, the Board of Directors Compensation Committee granted a total of 1,300,000 cashless options to members of the Board of Directors. The options are exercisable at $0.20 per share for a period of ten years. All options vest immediately. With respect to these options, the Black-Scholes pricing model was used to estimate the fair value of the 1,300,000 options issued during the period to the Board members, using the assumptions of a risk free interest rate of 2.88%, dividend yield of 0%, volatility of 695.77%, and an expected life of 10 years. These options were expensed immediately in the amount of $256,637.

 8 
 

 

On August 28, 2018 TMRC executed a Joint Venture agreement with Morzev PTY LTD (“Morzev”), doing business as USA Rare Earth, to develop the Round Top Deposit. Terms of the agreement call for USA Rare Earth to expend up to $10 million to produce a bankable feasibility study. The funds will be allocated in two tranches, the first of $2.5 Million to optimize and finalize the metallurgical processing and the remaining $7.5 million to complete the engineering, design, geotechnical work, and permitting necessary for a bankable feasibility study. USA Rare Earth will earn 70% of the property upon production of the feasibility study and has the option of purchasing another 10% for $3 million at the completion of the feasibility study. In the event Morzev, exercises its Option to acquire an additional 10% of the Round Top project from the Company for $3,000,000, Cove Capital will receive 6% cash of the gross proceeds and 6% in warrants. On November 13, 2018, Morzev funded an initial amount of $140,000 for 646,054 common shares to TMRC as consideration for the agreement and paid $8,400 to the broker.

In the event Morzev exercises its Option to acquire an additional 10% of the Round Top Project, the Company will pay its broker $180,000 and warrants for $180,000.

During the nine months ended May 31, 2019, we recognized approximately $18,573 in stock compensation expense for 90,000 stock options issued to outside consultants for services.

We had 46,686,252 shares of our common stock outstanding as of May 31, 2019.

At May 31, 2019, the total issued and outstanding number of options and warrants are 7,735,000 and 16,826,210.

NOTE 5 – RELATED PARTY TRANSACTIONS

The Company has received advances from certain Directors and Officers. The advances totaled $415,415 as of May 31, 2019. 

 

 9 
 

 

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

In this Quarterly Report on Form 10-Q, unless the context requires otherwise, references to “Texas Mineral Resources Corp,” “the Company” “we,” “our” or “us” refer to Texas Mineral Resources Corp. You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes appearing elsewhere in this quarterly report. This Quarterly Report on Form 10-Q may also contain statistical data and estimates we obtained from industry publications and reports generated by third parties. Although we believe that the publications and reports are reliable, we have not independently verified their data.

Forward-Looking Statements

This Quarterly Report on Form 10-Q and the exhibits attached hereto contain “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 (collectively, “forward-looking statements”). Such forward-looking statements concern our anticipated results and developments in our operations in future periods, planned exploration and development of our properties, plans related to our business and other matters that may occur in the future. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as “expects” or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “estimates” or “intends”, or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q, include, but are not limited to:

 

  the progress, potential and uncertainties of our 2018-2019 rare-earth exploration plans at our Round Top project in Hudspeth County, Texas (the “Round Top Project”);
  timing for a completed feasibility study for our Round Top Project;
  the success of getting the necessary permits for future drill programs and future project development;
  expectations regarding our ability to raise capital and to continue our exploration plans on our properties;
  plans regarding anticipated expenditures at the Round Top Project; and
  plans outlined under the section heading “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Plan of Operation”.

 

Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation:

 

  risks associated with our history of losses and need for additional financing;
  risks associated with our limited operating history;
  risks associated with our properties all being in the exploration stage;
  risks associated with our lack of history in producing metals from our properties;
  risks associated with our need for additional financing to develop a producing mine, if warranted;
  risks associated with our exploration activities not being commercially successful;
  risks associated with increased costs affecting our financial condition;
  risks associated with a shortage of equipment and supplies adversely affecting our ability to operate;

 

  risks associated with mining and mineral exploration being inherently dangerous;
  risks associated with mineralization estimates;
  risks associated with changes in mineralization estimates affecting the economic viability of our properties;
  risks associated with uninsured risks;
  risks associated with mineral operations being subject to market forces beyond our control;
  risks associated with fluctuations in commodity prices;
  risks associated with permitting, licenses and approval processes;
  risks associated with the governmental and environmental regulations;
  risks associated with future legislation regarding the mining industry and climate change;
  risks associated with potential environmental lawsuits;
  risks associated with our land reclamation requirements;
  risks associated with rare earth and beryllium mining presenting potential health risks;
  risks related to title in our properties
  risks related to competition in the mining and rare earth elements industries;
  risks related to economic conditions;
  risks related to our ability to manage growth;
  risks related to the potential difficulty of attracting and retaining qualified personnel;
  risks related to our dependence on key personnel;
  risks related to our United States Securities and Exchange Commission (the “SEC”) filing history; and
  risks related to our securities.
  risks of being unable to successfully negotiate the Round Top and Hudspeth County leases.

 

 10 
 

 

This list is not exhaustive of the factors that may affect our forward-looking statements. Some of the important risks and uncertainties that could affect forward-looking statements are described further under the section heading “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report and “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended August 31, 2018, filed with the SEC on December 14, 2018. Although we have attempted to identify important factors that could cause actual results to differ materially from those described in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Except as required by law, we disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. We qualify all the forward-looking statements contained in this Quarterly Report by the foregoing cautionary statements.

Overview

We are a mining company engaged in the business of the acquisition, exploration and, if warranted, development of mineral properties. We currently hold two nineteen year leases, executed in September 2011 and November 2011, to explore and develop a 950 acre rare earths project located in Hudspeth County, Texas known as the Round Top Project and prospecting permits covering an adjacent 9,345 acres. Our principal focus will be on developing a metallurgical process to concentrate or otherwise extract the metals from the Round Top rhyolite, although we will continue to examine other opportunities in the region as they develop. We currently have limited operations and have not established that any of our projects or properties contain any Proven or Probable Reserves under SEC Industry Guide 7. Our operations are exploratory in nature.

We currently do not have any producing properties and consequently, we have no current operating income or cash flow and have not generated any revenues. Further exploration will be required before a final evaluation as to the economic and practical feasibility of any of our properties is determined.

On December 23, 2013, we published a revised version of the June 2012 Preliminary Economic Assessment (the “Revised PEA”) on the Round Top Project based on a 20,000 tonne per day heap leach operation using a conventional element separation plant. The mineralized material estimate was recalculated to include uranium, niobium, tantalum and tin. The revised PEA assesses the potential economic viability of the simplified and “scaled down” operation which we believe is a much better fit with the present rare earth market.

On September 8, 2014, we announced that we had completed an internal analysis suggesting that there is a reasonable possibility to adapt a lower volume staged growth approach to development of our Round Top project. The analysis indicated that an operation designed to produce a selected group of separated REE products in the range of 350-450 tonnes per year range, could potentially yield favorable mine economics. The goal of the proposed staged approach would be to increase mining rates if and when our products gained acceptability. The analysis suggested that capital needs in the Revised PEA could be proportionally reduced in relation to the lower volume initial stage. We are currently conducting a more detailed analysis of the relative capital expenses and operating expenses requirements of a scaled down processing plant with both solvent extraction and ion exchange processes under evaluation. We believe the lower capital requirements of a staged startup could offset any marginal increase in unit operating costs.

Our current management and Board are stockholder-centric, and receive either no cash compensation or much less than previous management. We will require definitive scientific documentation, rigorous economic studies, consideration of a wide range of alternatives and meticulous oversight of any cash outlays of stockholder funds.

Current Plan of Operations

Continued Work Program on Round Top Project

See “Properties – Current and Planned Metallurgical Activities” for a description of our current work activities and budget for the Round Top Project.

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Exploration Potential of the Round Top Property

Although we have no plans in the next 24 months to conduct more physical exploration, we do believe that there are untested exploration targets present. They are:

 

1. Uranium-beryllium mineralization at the lower contact of the rhyolite and the underlying sedimentary rock. This class of mineralization was the target of the successful exploration program conducted in the late 1980’s by Cabot Corporation and Cyprus Exploration. It appears to be structurally controlled and associated with a later phase of hydrothermal or gas phase deposition that occurred sometime after the emplacement of the rhyolite. This fluorite-beryllium replacement mineralization in what is termed the West Side Fault under the north side of Round Top was the topic of a 1988 in-house feasibility study by Cyprus Minerals to historical standards (not NI 43-101 compliant under today’s Canadian regulations, not an SEC Industry Guide 7 compliant feasibility study) to produce beryllium. This zone is the location of the intact decline and lateral mine workings developed by Cyprus Minerals in 1988-89. Sampling and analysis by TMRC indicates the presence of uranium mineralization occurring adjacent to and likely associated with these beryllium bearing structures. This “Contact Zone” mineralization is not restricted to Round Top and is present under the Sierra Blanca rhyolite and there is some evidence in drill holes on Little Blanca that this style of mineralization may also be present there.
2. Uranium-beryllium-rare earth and other rare metals hosted as structurally controlled fluorite replacements in the limestones at depth below the known deposits. Geologic and geochemical conditions are thought to be conducive for the emplacement of replacement type deposits within the same fault zones that hosted the known beryllium-uranium deposits at depth where favorable host limestones are present. We believe that careful compilation and analysis of existing surface geologic mapping and of the drill data may better define these targets.

 

We believe that using the existing data we can improve our understanding of the exploration potential of the area without resorting to such expensive techniques such as drilling.

Actively Seeking Project Partners

In addition to pursuing the exploration of our Round Top Project, we are actively seeking industry partners to assist the Company in financing the exploration and, if warranted, development of the Round Top Project. While we do not currently have any agreements and do not anticipate any agreements in the near future, we are actively engaged in pursuing partners for the Round Top Project for a range of participation, including but not limited to, joint-venture arrangements, project sale, significant investment in the Company, back-end processing and product sales arrangements and other financing arrangements to assist in the Round Top Project.

Operation and support of the DoE Grant.

Phase 1 of the DoE Grand have been successfully concluded. Subsequent to the completion of Phase 1, the grant with the DoE was not renewed.

Operation of American Minerals Reclamation

Absent the securing of feasibility financing for Round Top, the remainder of TMRC plans to actively pursue the development of American Minerals Reclamation (AMR). We have set no geographical limitations on this project but we are currently basing our efforts in the Pennsylvania coal producing region because of the excellent opportunities present there and existence of the network of people and institutions that have been developed during the grant application process.

Recent Corporate Developments

On August 28, 2018 TMRC executed a Joint Venture agreement with Morzev PTY LTD (“Morzev”), doing business as USA Rare Earth, to develop the Round Top Deposit. Terms of the agreement call for USA Rare Earth to expend up to $10 million to produce a bankable feasibility study. The funds will be allocated in two tranches, the first of $2.5 Million to optimize and finalize the metallurgical processing and the remaining $7.5 million to complete the engineering, design, geotechnical work, and permitting necessary for a bankable feasibility study. USA Rare Earth will earn 70% of the property upon production of the feasibility study and has the option of purchasing another 10% for $3 million at the completion of the feasibility study. On November 13, 2018, Morzev funded an initial amount of $140,000 for 646,054 common shares to TMRC as consideration for the agreement. The 646,054 shares of common stock were issued on January 23, 2019.

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Liquidity and Capital Resources

As of May 31, 2019, we had a working capital deficit of approximately $2,152,000. We currently have negative working capital and will need to raise additional funding to implement our business strategy.

During the fiscal year ending August 31, 2018, we completed Stage 1 of our metallurgical activities as discussed in the section heading “ITEM 2. PROPERTIES” of the Annual Report filed with the SEC on December 14, 2018. Our budget for this stage of activity was approximately $134,502. To date we have expended approximately that amount on Stage 1 which is now complete. Estimated cost of Stage 2 is $2,015,454, $336,454 of which has been spent; this phase, called milestone 1, of Stage 2 has been modified and augmented by the Defense Logistical Agency. There is no guarantee that we will be able to raise the working capital necessary for balance of Stage 2 activities. After completion of Stage 1, we will use any remaining available capital to begin work on Stage 2 of our metallurgical activities.

The audit opinion and notes that accompany our financial statements for the year ended August 31, 2018, disclose a ‘going concern’ qualification to our ability to continue in business. The accompanying financial statements have been prepared under the assumption that we will continue as a going concern. We are an exploration stage company and we have incurred losses since our inception. We do not have sufficient cash to fund normal operations and meet debt obligations for the next 12 months without deferring payment on certain current liabilities and raising additional funds. We believe that the going concern condition cannot be removed with confidence until the Company has entered into a business climate where funding of its activities is more assured.

We currently do not have funds to pursue exploration or development work on any of our properties, which means that we will be required to raise additional capital, enter into joint venture relationships, or find alternative means to finance our properties in order to place them into commercial production, if warranted, or evaluate the possibility of selling one or more of our projects or the Company in its entirety. Failure to obtain sufficient financing may result in the delay or indefinite postponement of exploration and, if warranted, development or production on one or more of our properties and any properties we may acquire in the future or even a loss of property interests. This includes our leases over claims covering the principal deposits on our properties, which may expire unless we expend minimum levels of expenditures over the terms of such leases. We cannot be certain that additional capital or other types of financing will be available if needed or that, if available, the terms of such financing will be favorable or acceptable to us. Our ability to arrange additional financing in the future will depend, in part, on the prevailing capital market conditions as well as our business performance. 

Results of Operations

Nine months ended May 31, 2019 and May 31, 2018

General & Revenue 

We had no operating revenues during the nine months ended May 31, 2019 and May 31, 2018. We are not currently profitable. As a result of ongoing operating losses, we had an accumulated deficit of approximately $36.0 million as of May 31, 2019.

Operating expenses and resulting losses from Operations.

We incurred exploration costs for the nine months ended May 31, 2019 and May 31, 2018, in the amount of approximately $48,000 and $13,000, respectively. Expenditures for the nine months ended May 31, 2019 and May 31, 2018 were primarily for lease payments to the GLO and property taxes for our Round Top project.

Our general and administrative expenses for the nine months ended May 31, 2019 and May 31, 2018, respectively, were approximately $595,000 and $226,000, respectively. For the nine months ended May 31, 2019, this amount included approximately $380,000 in stock-based compensation to directors and a consultant. The remaining expenditures totaling approximately $215,000, were primarily for payroll and related taxes and benefits, professional fees and other general and administrative expenses necessary for our operations. 

We had losses from operations for the nine months ended May 31, 2019 and May 31, 2018 totaling approximately $644,000 and $239,000, respectively, and net losses for the nine months ended May 31, 2019 and May 31, 2018 totaling approximately $660,000 and $309,000, respectively. For the nine months ended May 31, 2019 we recorded approximately $16,000 for finance charges. For the nine months ended May 31, 2018, the Company has recorded approximately $69,000 for interest on various notes and finance charges. 

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Three months ended May 31, 2019 and May 31, 2018

General & Revenue

We had no operating revenues during the three months ended May 31, 2019 and May 31, 2018. We are not currently profitable. As a result of ongoing operating losses, we had an accumulated deficit of approximately $36 million as of May 31, 2019.

Operating expenses and resulting losses from Operations.

We incurred exploration costs for the three months ended May 31, 2019 and May 31, 2018, in the amount of approximately $18,000 and $1,000, respectively, primarily for the amortization of lease payments to the GLO and property taxes for our Round Top project.

Our general and administrative expenses for the three months ended May 31, 2019 and May 31, 2018, respectively, were approximately $85,000 and $62,000. For the three months ended May 31, 2019, this amount included approximately $8,600 in stock-based compensation to an outside consultant. The remaining expenditures totaling approximately $76,000 for the three months ended May 31, 2019 and $61,000 of expenditures for the three months ended May 31, 2018 were primarily for payroll and related taxes and benefits, professional fees and other general and administrative expenses necessary for our operations.

For the three months ended May 31, 2019 and May 31, 2018 we recorded interest expense of approximately $5,000 and $22,000, respectively, for interest on various notes and finance charges.

We had losses from operations for the three months ended May 31, 2019 and May 31, 2018 totaling approximately $103,000 and $63,000, respectively.

We had net losses for the three months ended May 31, 2019 and May 31, 2018 totaling approximately $108,000 and $85,000, respectively. 

Off-Balance Sheet Arrangements

We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, and results of operations, liquidity or capital resources.

Critical Accounting Estimates

Management’s discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with GAAP. Preparation of financial statements requires management to make assumptions, estimates and judgments that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and the related disclosures of contingencies. Management bases its estimates on various assumptions and historical experience, which are believed to be reasonable; however, due to the inherent nature of estimates, actual results may differ significantly due to changed conditions or assumptions. On a regular basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are fairly presented in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material. Management believes that the following critical accounting estimates and judgments have a significant impact on our financial statements: Valuation of options granted to Directors, Officers and consultants using the Black-Scholes model.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

 

At the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation was carried out under the supervision of and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operations of our disclosure controls and procedures (as defined in Rule 13a – 15(e) and Rule 15d – 15(e) under the Exchange Act).  Based on that evaluation the CEO and CFO have concluded that as of the end of the period covered by this Quarterly Report, our disclosure controls and procedures were effective in ensuring that: (i) information required to be disclosed by us in our reports that we file or submit to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and (ii) material information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow for accurate and timely decisions regarding required disclosure.

 

Changes in Internal Control over Financial Reporting

 

There were no changes to our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially effect, our internal controls over financial reporting. 

 

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PART II.  OTHER INFORMATION

Item 1. Legal Proceedings 

None.

Item 1A. Risk Factors

There have been no material changes from the risk factors as previously disclosed in our Form 10-K for the year ended August 31, 2018 as filed with the SEC on December 14, 2018.

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

Except as set forth below, all unregistered sales of equity securities during the period covered by this Quarterly Report were previously disclosed in our current reports on Form 8-K or quarterly reports on Form 10-Q.

 

Date  Description  Number  Purchaser  Proceeds ($)  Consideration  Exemption (B)
March 2019  Common Stock Purchase Options  10,000(A)  Consultant  (1)  Advisory Services  Sec. 4(a)(2)
April 2019  Common Stock Purchase Options  10,000(A)  Consultant  (2)  Advisory Services  Sec. 4(a)(2)
May 2019  Common Stock Purchase Options  10,000(A)  Consultant  (3)  Advisory Services  Sec. 4(a)(2)

 

(A)

Common Stock Purchase Options were issued pursuant to a consulting agreement. Options vested immediately. Each option is exercisable for a 5-year term at an exercise price of $0.30. The options were issued outside of the Company’s 2008 Stock Incentive Plan.

 

(B) With respect to sales designated by “Sec. 4(a)(2),” these shares were issued pursuant to the exemption from registration contained in to Section 4(a)(2) of the Securities Act as privately negotiated, isolated, non-recurring transactions not involving any public offer or solicitation. Each purchaser represented that such purchaser’s intention to acquire the shares for investment only and not with a view toward distribution. None of the securities were sold through an underwriter and accordingly, there were no underwriting discounts or commissions involved.
   
(1) The Company granted this individual 10,000, 5-year common stock options at an exercise price of $0.03 per share. The Black-Scholes pricing model was used to estimate the fair value of the 10,000 options issued during the period, using the assumptions of a risk free interest rate of 2.5%, dividend yield of 0%, volatility of 216%, and an expected life of five years. The options have a fair value of approximately $1,964 and have not been exercised.
   
(2) The Company granted this individual 10,000, 5-year common stock options at an exercise price of $0.03 per share. The Black-Scholes pricing model was used to estimate the fair value of the 10,000 options issued during the period, using the assumptions of a risk free interest rate of 2.5%, dividend yield of 0%, volatility of 215%, and an expected life of five years. The options have a fair value of approximately $2,161 and have not been exercised.
   
(3) The Company granted this individual 10,000, 5-year common stock options at an exercise price of $0.03 per share. The Black-Scholes pricing model was used to estimate the fair value of the 10,000 options issued during the period, using the assumptions of a risk free interest rate of 2.5%, dividend yield of 0%, volatility of 215%, and an expected life of five years. The options have a fair value of approximately $4,445 and have not been exercised

 

We did not repurchase any of our securities during the quarter covered by this report.

 

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosure

Pursuant to Section 1503(a) of the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act (The “Dodd-Frank Act”), issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States are required to disclose in their periodic reports filed with the SEC information regarding specified health and safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities. During the quarter ended February 28, 2019, our U.S. exploration properties were not subject to regulation by the Federal Mine Safety and Health Administration under the Federal Mine Safety and Health Act of 1977.

Item 5. Other Information

None.

 

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Item 6. Exhibits

 

Exhibit
Number
  Description
     
2.1   Plan of Conversion, dated August 24, 2012, incorporated by reference to Exhibit 2.1 of our Form 8-K filed with the SEC on August 29, 2012.
3.1   Delaware Certificate of Conversion, incorporated by reference to Exhibit 3.1 of our Form 8-K filed with the SEC on August 29, 2012.
3.2   Delaware Certificate of Incorporation, incorporated by reference to Exhibit 3.2 of our Form 8-K filed with the SEC on August 29, 2012.
3.3   Delaware Bylaws, incorporated by reference to Exhibit 3.3 of our Form 8-K filed with the SEC on August 29, 2012.
3.4   Certificate of Amendment to the Company’s Certificate of Incorporation, incorporated by reference to Exhibit 3.1 of our Form 8-K filed with the SEC on March 18, 2016.
4.1   Form of Common Stock Certificate, incorporated by reference to Exhibit 4.1 of our Form 10-K for the period ended August 31, 2009 filed with the SEC on February 8, 2011.
4.2   Form of Rights Certificate, incorporated by reference to Exhibit 4.2 of our Form S-1/A filed with the SEC on December 10, 2014.
4.3   Form of Warrant Indenture, incorporated by reference to Exhibit 4.3 of our Form S-1/A filed with the SEC on December 10, 2014.
4.4   Form of Class A Warrant, included as Schedule A in Exhibit 4.3.
4.5   Form of Class B Warrant, included as Schedule B in Exhibit 4.3.
4.6   Form of Private Placement Warrant, incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K as filed with the Commission on December 11, 2015.
31.1(1)   Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a).
31.2(1)   Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a).
32.1(1)   Certification of Chief Executive Officer Pursuant to Section 18 U.S.C. Section 1350, adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2(1)   Certification of Chief Financial Officer Pursuant to Section 18 U.S.C. Section 1350, adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS(1)    XBRL Instance Document
101.SCH(1)   XBRL Taxonomy Extension — Schema
101.CAL(1)    XBRL Taxonomy Extension — Calculations
101.DEF(1)    XBRL Taxonomy Extension — Definitions
101.LAB(1)    XBRL Taxonomy Extension — Labels
101.PRE(1)   XBRL Taxonomy Extension — Presentations

 

(1)    Submitted Electronically Herewith.

 

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SIGNATURES

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

TEXAS MINERAL RESOURCES CORP.

 

Date: July 15, 2019  
   
/s/ Daniel E. Gorski  
Daniel E. Gorski, duly authorized officer  
Chief Executive Officer and Principal  
Executive Officer  
   
Date: July 15, 2019  
   
/s/ Wm Chris Mathers  
Wm Chris Mathers, Chief Financial Officer and  
Principal Financial and Accounting Officer  

 

 

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