MMEX Resources Corp 10-Q for FY2021 Q1

MMEX Resources Corp (MMEX)

10-Q 2020-09-21 For: 2020-07-31

Added on April 11, 2026

About this 10-Q

MMEX Resources Corp filed this 10-Q on September 21, 2020, covering the quarter ended July 31, 2020 (FY2021 Q1).

Headline figures

Quarter ended July 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $0; compared with $0 a year earlier
Net income: $403.52K; compared with a net loss of $736.95K a year earlier

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Nevada		26-1749145
(State or other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

3616 Far West Blvd. #117-321 Austin, Texas 78731		855-880-0400
(Address of principal executive offices, including zip code)		(Issuer’s telephone number, including area code)

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
(Do not check if a smaller reporting company)		Emerging growth company	☐

PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	36

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3.	Defaults Upon Senior Securities	38
Item 4.	Mine Safety Disclosures	38
Item 5.	Other Information	38
Item 6.	Exhibits	39

	July 31, 2020			April 30, 2020
Assets	(unaudited)

Current assets:
Cash	$	14,352		$	66,830
Prepaid expenses and other current assets		15,922			23,145
Total current assets		30,274			89,975

Property and equipment, net		498,326			507,044
Deposit		900			900

Total assets	$	529,500		$	597,919

Liabilities and Stockholders’ Deficit

Current liabilities:
Accounts payable	$	804,160		$	764,945
Accrued expenses		950,733			519,447
Accounts payable and accrued expenses – related parties		269,733			236,514
Note payable, currently in default		75,001			75,001
Convertible notes payable, currently in default, net of discount of $0 and $0 at July 31, 2020 and April 30, 2020, respectively		800,533			323,133
Convertible notes payable, net of discount of $62,673 and $140,941 at July 31, 2020 and April 30, 2020, respectively		1,223,107			1,587,239
Convertible notes payable – related parties, net of discount of $6,675 and $2,232 at July 31, 2020 and April 30, 2020, respectively		123,091			41,268
PPP loan payable		167,900			167,900
SBA express bridge loan payable		10,000			-
Derivative liabilities		1,426,683			2,607,433
Total current liabilities		5,850,941			6,322,880

Total liabilities		5,850,941			6,322,880

Commitments and contingencies

Stockholders’ deficit:
Common stock; $0.001 par value; 25,000,000,000 shares authorized, 13,352,828,472 shares issued and outstanding at July 31, 2020 and April 30, 2020		13,352,830			13,352,830
Preferred stock; $0.001 par value; 10,000,000 shares authorized, 1,000 Series A shares issued and outstanding		1			1
Additional paid-in capital		24,370,144			24,370,144
Non-controlling interest		9,871			9,871
Accumulated (deficit)		(43,054,287	)		(43,457,807	)
Total stockholders’ deficit		(5,321,441	)		(5,724,961	)

Total liabilities and stockholders’ deficit	$	529,500		$	597,919

	Three Months Ended July 31,
	2020			2019

Revenues	$	-		$	-

Operating expenses:
General and administrative expenses		183,325			246,107
Refinery start-up costs		37,700			51,400
Depreciation and amortization		8,718			8,587

Total operating expenses		229,743			306,094

Loss from operations		(229,743	)		(306,094	)

Other income (expense):
Interest expense		(554,089	)		(687,972	)
Gain on derivative liabilities		1,187,352			255,127
Gain on extinguishment of liabilities		-			1,992

Total other income (expense)		633,263			(430,853	)

Income (loss) before income taxes		403,520			(736,947	)
Provision for income taxes		-			-

Net income (loss)		403,520			(736,947	)

Non-controlling interest in income of consolidated subsidiaries		-			-

Net income (loss) attributable to the Company	$	403,520		$	(736,947	)

Net income (loss) per common share:
Basic	$	0.00		$	(0.01	)
Diluted	$	0.00		$	(0.01	)

Weighted average number of common shares outstanding:
Basic		13,352,828,472			111,310,436
Diluted		25,000,000,000			111,310,436

	Common Stock				Class A Preferred Stock				Additional Paid-in		Non-Controlling		Accumulated
	Shares		Amount		Shares		Amount		Capital		Interest		Deficit			Total

Balance, April 30, 2019		68,172,427	$	68,174		-	$	-	$	35,622,398	$	9,871	$	(39,064,118	)	$	(3,363,675	)

Shares issued for: Services		30,000		30		-		-		54		-		-			84
Accrued expenses		1,116,961		1,117		-		-		10,391		-		-			11,508
Conversion of convertible notes payable and accrued interest		320,978,367		320,978		-		-		47,954		-		-			368,932
Settlement of derivative liabilities		-		-		-		-		425,325		-		-			425,325
Net loss		-		-		-		-		-		-		(736,947	)		(736,947	)

Balance, July 31, 2019		390,297,755	$	390,299		-	$	-	$	36,106,122	$	9,871	$	(39,801,065	)	$	(3,294,773	)

	Common Stock				Series A Preferred Stock				Additional Paid-in		Non-Controlling		Accumulated
	Shares		Amount		Shares		Amount		Capital		Interest		Deficit			Total

Balance, April 30, 2020		13,352,828,472	$	13,352,830		1,000	$	1	$	24,370,144	$	9,871	$	(43,457,807	)	$	(5,724,961	)

Net income		-		-		-		-		-		-		403,520			403,520

Balance, July 31, 2020		13,352,828,472	$	13,352,830		1,000	$	1	$	24,370,144	$	9,871	$	(43,054,287	)	$	(5,321,441	)

Supplemental disclosure:
Interest paid	$	-	$	10,402
Income taxes paid		-		-
Non-cash investing and financing activities:
Derivative liabilities for related party debt discount		6,602		-
Convertible notes payable – related party for accrued expenses		76,266		-
Common stock issued in conversion of debt		-		368,932
Common stock issued for accrued expenses		-		13,500
Settlement of derivative liabilities		-		425,325
Derivative liabilities for debt discount		-		46,812
Related party gain on common shares issued for services		-		2,491

Name of Entity	%			Form of Entity	State of Incorporation	Relationship

MMEX Resources Corporation (“MMEX”)		-		Corporation	Nevada	Parent
Pecos Refining & Transport, LLC (“Pecos Refining”)		100	%	Corporation	Texas	Subsidiary
Armadillo Holdings Group Corp. (“AHGC”)		100	%	Corporation	British Virgin Isles	Subsidiary
Armadillo Mining Corp. (“AMC”)		98.6	%	Corporation	British Virgin Isles	Subsidiary

Office furniture and equipment	10 years
Computer equipment and software	5 years
Refinery land improvements	15 years
Refinery land easements	10 years

July 31, 2020	Total		Level 1		Level 2		Level 3

Derivative liabilities	$	1,426,683	$	-	$	-	$	1,426,683

April 30, 2020	Total		Level 1		Level 2		Level 3

Derivative liabilities	$	2,607,433	$	-	$	-	$	2,607,433

	July 31, 2020			April 30, 2020

Office furniture and equipment	$	13,864		$	13,864
Computer equipment and software		10,962			10,962
Refinery land		67,088			67,088
Refinery land improvements		452,005			452,005
Refinery land easements		37,015			37,015
		580,934			580,934
Less accumulated depreciation and amortization		(82,608	)		(73,890	)

	$	498,326		$	507,044

	July 31, 2020		April 30, 2020

Accrued payroll	$	30,090	$	30,090
Accrued consulting		18,000		24,000
Accrued interest and penalties		840,102		402,126
Other		62,541		63,231

	$	950,733	$	519,447

	July 31, 2020		April 30, 2020

Note payable to an unrelated party, matured March 18, 2014, with interest at 10%	$	75,001	$	75,001

	$	75,001	$	75,001

	July 31, 2020		April 30, 2020
Note payable to an accredited investor, maturing November 20, 2020, with interest at 18%, convertible into common shares of the Company at a defined variable exercise price.	$	24,700	$	24,700
Note payable to an accredited investor, maturing November 20, 2020, with interest at 18%, convertible into common shares of the Company at a defined variable exercise price.		70,000		70,000
Original issue discount convertible debenture to an accredited investor, maturing November 20, 2020, with interest at 18%, convertible into common shares of the Company at a defined variable exercise price.		600,000		600,000
Note payable to an accredited investor issued for extension fees, maturing November 20, 2020 with interest at 18%, convertible into common shares of the Company at a defined variable exercise price.		200,000		200,000
Note payable to an accredited investor issued for extension fees, maturing November 20, 2020 with interest at 18%, convertible into common shares of the Company at a defined variable exercise price.		90,000		90,000
Note payable to an accredited investor, maturing May 7, 2020, with interest at 12%, convertible into common shares of the Company at a defined variable exercise price (in default as of July 31, 2020)		-		35,900
Note payable to an accredited investor, maturing November 20, 2020, with interest at 18%, convertible into common shares of the Company at a defined variable exercise price		110,000		110,000
Note payable to an accredited investor, maturing May 7, 2020, with interest at 10%, convertible into common shares of the Company at a defined variable exercise price (in default as of July 31, 2020)		-		100,000
Note payable to an accredited investor, maturing June 19, 2020, with interest at 10%, convertible into common shares of the Company at a defined variable exercise price (in default as of July 31, 2020)		-		250,000
Note payable to an accredited investor, maturing June 25, 2020, with interest at 9%, convertible into common shares of the Company at a defined variable exercise price (in default as of July 31, 2020)		-		56,500
Note payable to an accredited investor, maturing September 4, 2020, with interest at 9%, convertible into common shares of the Company at a defined variable exercise price		56,500		56,500
Note payable to an individual, maturing December 27, 2020, with interest at 5%, convertible into common shares of the Company at a defined variable exercise price		10,000		10,000

Note payable to an accredited investor, maturing two years from each advance, with an original issue discount equal to 10% and a one-time interest charge of 12% added to principal, convertible into common shares of the Company at a defined variable exercise price – See discussion under Long-Term Convertible Notes Payable below:
Advance dated September 13, 2018, maturing September 13, 2020		1,380			1,380
Advance dated October 16, 2018, maturing October 16, 2020		123,200			123,200
Total		1,285,780			1,728,180
Less discount		(62,673	)		(140,941	)

Net	$	1,223,107		$	1,587,239

			Balance
Related Party	Maturity Date	Consideration	July 31, 2020			April 30, 2020
Maple Resources Corporation	December 27, 2020	Cash of $5,500 and Financing Fees of $5,500	$	11,000		$	11,000
BNL Family Trust	December 27, 2020	Cash		11,000			11,000
Shareholder and consultant	December 27, 2020	Accrued Consulting Fees		10,000			10,000
Shareholder and consultant	January 22, 2021	Cash		6,500			6,500
Maple Resources Corporation	February 12, 2021	Cash		5,000			5,000
Maple Resources Corporation	March 2, 2021	Cash		800			-
Maple Resources Corporation	May 12, 2021	Accrued Consulting Fees		41,466			-
Shareholder and consultant	May 14, 2021	Accrued Consulting Fees		34,000			-
Maple Resources Corporation	July 31, 2021	Cash		10,000			-

Total				129,766			43,500
Less discount				(6,675	)		(2,232	)

Net			$	123,091		$	41,268

	Options and			Convertible
	Warrants			Notes			Total

Balance, April 30, 2020	$	15		$	2,607,418		$	2,607,433
New issuances of options, warrants and debt		-			6,602			6,602
Change in fair value of derivative liabilities		(13	)		(1,187,339	)		(1,187,352	)

Balance, July 31, 2020	$	2		$	1,426,681		$	1,426,683

	·	Stock prices on all measurement dates were based on the fair market value
	·	Risk-free interest rate of 0.07% - 0.11%
	·	The probability of future financing was estimated at 100%
	·	Computed volatility ranging from 1,546.4 to 1,524.8%

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)

Outstanding, April 30, 2020		446,037,755	$	1.00		1.91
Granted		-
Canceled / Expired		-
Exercised		-

Outstanding, July 31, 2020		446,037,755	$	1.00		1.66

	♦	The addition of a 2nd CDU at our present site Pecos County Texas site and potentially a 3rd CDU at another location
	♦	Adding a Crude by Rail transportation and export component
	♦	Adding a Hydrotreater as separate component to produce transportation grade diesel
	♦	Development of a Terminal and Storage facility on the Texas Gulf Coast
	♦	Organization of a Trading Company for exporting physical petroleum products to Latin American markets
	♦	Associated gas and gas liquids treating
	♦	Development of a Solar Project to power the Projects by solar energy
	♦	Acquisition of an existing refinery in the Louisiana Gulf Coast-Mississippi River area

	2020			2019

Cash, beginning of period	$	66,830		$	55,188
Net cash used in operating activities		(72,478	)		(314,882	)
Net cash used in investing activities		-			(2,463	)
Net cash provided by financing activities		20,000			265,300

Cash, end of period	$	14,352		$	3,143

	1.	As of July 31, 2020, we did not maintain effective controls over the control environment. Specifically, the Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-B. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.

	2.	As of July 31, 2020, we did not maintain effective controls over financial statement disclosure. Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Accordingly, management has determined that this control deficiency constitutes a material weakness.

	3.	As of July 31, 2020, we did not establish a formal written policy for the approval, identification and authorization of related party transactions.

	4.	As of July 31, 2020, we had no full-time employees with the requisite expertise in the key functional areas of finance and accounting. As a result, there is a lack of proper segregation of duties necessary to ensure that all transactions are accounted for accurately and in a timely manner.

31.1*		Certification by Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a)

32.1*		Certification by Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS**		XBRL Instance Document

101.SCH**		XBRL Taxonomy Extension Schema Document

101.CAL**		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF**		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB**		XBRL Taxonomy Extension Label Linkbase Document

101.PRE**		XBRL Taxonomy Extension Presentation Linkbase Document

	MMEX Resources Corporation

Dated: September 21, 2020	By:	/s/ Jack W. Hanks
		Chief Executive Officer (Principal
		Executive Officer), President and
		Chief Financial Officer (Principal
		Financial and Accounting Officer)

1.	I have reviewed this Quarterly Report on Form 10-Q of MMEX Resources Corporation.;

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(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exhibit 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

	(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.

Dated: September 21, 2020	By:	/s/ Jack W. Hanks
		Jack W. Hanks
		Chief Executive Officer and Chief Financial Officer

	(1)	The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and

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