MMEX Resources Corp 10-Q for FY2020 Q3

MMEX Resources Corp (MMEX)

10-Q 2020-04-30 For: 2020-01-31

Added on April 11, 2026

About this 10-Q

MMEX Resources Corp filed this 10-Q on April 30, 2020, covering the quarter ended January 31, 2020 (FY2020 Q3).

Headline figures

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

Net loss: $1.28M; compared with a net loss of $1.38M 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	x
(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	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	38

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3.	Defaults Upon Senior Securities	41
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	41
Item 6.	Exhibits	41

	January 31. 2020			April 30, 2019

Assets	(Unaudited)

Current assets:
Cash	$	1,545		$	55,188
Prepaid expenses and other current assets		5,549			38,949
Total current assets		7,094			94,137

Property and equipment, net		515,764			531,167
Deposit		900			900

Total assets	$	523,758		$	626,204

Liabilities and Stockholders’ Deficit

Current liabilities:
Accounts payable	$	865,276		$	706,192
Accrued expenses		425,530			307,078
Accounts payable and accrued expenses – related party		110,440			41,036
Note payable, currently in default		75,001			75,001
Convertible notes payable, currently in default, net of discount of $0 and $0 at January 31, 2020 and April 30, 2019, respectively		219,093			75,000
Convertible notes payable, net of discount of $86,612 and $869,433 at January 31, 2020 and April 30, 2019, respectively		1,444,908			783,836
Convertible notes payable – related party, net of discount of $0 at January 31, 2020		38,500			-
Derivative liabilities		2,052,420			1,825,596
Total current liabilities		5,231,168			3,813,739

Long-term liabilities:
Convertible notes payable, net of discount of $0 and $263,960 at January 31, 2020 and April 30, 2019, respectively		-			176,140

Total liabilities		5,231,168			3,989,879

Commitments and contingencies

Stockholders’ deficit:
Common stock; $0.001 par value; 25,000,000,000 shares authorized, 13,352,828,472 and 68,172,427 shares issued and outstanding at January 31, 2020 and April 30, 2019, respectively		13,352,830			68,174
Preferred stock; $0.001 par value; 10,000,000 shares authorized, 1,000 Series A shares issued and outstanding		1			-
Additional paid-in capital		24,360,260			35,622,398
Non-controlling interest		9,871			9,871
Accumulated deficit		(42,430,372	)		(39,064,118	)
Total stockholders’ deficit		(4,707,410	)		(3,363,675	)

Total liabilities and stockholders’ deficit	$	523,758		$	626,204

	Three Months Ended January 31,						Nine Months Ended January 31,
	2020			2019			2020			2019

Revenues	$	-		$	-		$	-		$	-

Operating expenses:
General and administrative expenses		191,236			351,222			736,655			1,100,753
Refinery start-up costs		43,467			156,124			182,406			472,769
Depreciation and amortization		8,718			571			25,943			1,715

Total operating expenses		243,421			507,917			945,004			1,575,237

Loss from operations		(243,421	)		(507,917	)		(945,004	)		(1,575,237	)

Other income (expense):
Interest expense		(245,823	)		(441,447	)		(1,468,027	)		(1,496,557	)
Loss on derivative liabilities		(800,734	)		(490,980	)		(961,778	)		(486,069	)
Gain on extinguishment of liabilities		6,563			4,584			8,555			13,500
Gain on conversion of debt		-			51,060			-			41,198

Total other expense		(1,039,994	)		(876,783	)		(2,421,250	)		(1,927,928	)

Loss before income taxes		(1,283,415	)		(1,384,700	)		(3,366,254	)		(3,503,165	)
Provision for income taxes		-			-			-			-

Net loss		(1,283,415	)		(1,384,700	)		(3,366,254	)		(3,503,165	)

Non-controlling interest in income of consolidated subsidiaries		-			-			-			-

Net loss attributable to the Company	$	(1,283,415	)	$	(1,384,700	)	$	(3,366,254	)	$	(3,503,165	)

Net loss per common share – basic and diluted	$	(0.00	)	$	(0.04	)	$	(0.00	)	$	(0.13	)

Weighted average number of common shares outstanding – basic and diluted		11,619,713,601			31,613,339			4,496,124,028			27,124,887

	Common Stock				Series 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	)

Common shares issued for: Services		30,000		30		-		-		54			-		-			84
Accrued expenses		169,913,936		169,914		-		-		(122,969	)		-		-			46,945
Conversion of convertible notes payable		6,678,348,473		6,678,348		-		-		(5,866,672	)		-		-			811,676
Conversion of related party convertible notes payable		6,436,363,636		6,436,364		-		-		(6,082,364	)		-		-			354,000
Preferred shares issued to related party for services		-		-		1,000		1		23,899			-		-			23,900
Settlement of derivative liabilities		-		-		-		-		785,914			-		-			785,914
Net loss		-		-		-		-		-			-		(3,366,254	)		(3,366,254	)

Balance, January 31, 2020		13,352,828,472	$	13,352,830		1,000	$	1	$	24,360,260		$	9,871	$	(42,430,372	)	$	(4,707,410	)

Supplemental disclosure:
Interest paid	$	10,402	$	104,990
Income taxes paid		-		-
Non-cash investing and financing activities:
Common stock issued in conversion of debt		811,676		1,724,513
Common stock issued in conversion of related party debt		354,000		-
Common stock issued for accrued expenses		46,945		5,000
Settlement of derivative liabilities		785,914		103,319
Derivative liabilities for debt discount		46,812		1,382,595
Derivative liabilities for related party debt discount		4,148		-
Convertible notes payable for accrued expenses		10,000		-
Convertible notes payable – related party for accrued expenses		20,000		-
Increase in common stock for reverse stock split rounding		-		1

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

January 31, 2020	Total		Level 1		Level 2		Level 3

Derivative liabilities	$	2,052,420	$	-	$	-	$	2,052,420

April 30, 2019	Total		Level 1		Level 2		Level 3

Derivative liabilities	$	1,825,596	$	-	$	-	$	1,825,596

	January 31, 2020			April 30, 2019

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			441,465
Refinery land easements		37,015			37,015
		580,934			570,394
Less accumulated depreciation and amortization		(65,170	)		(39,227	)

	$	515,764		$	531,167

	January 31, 2020		April 30, 2019

Accrued payroll	$	30,090	$	30,090
Accrued consulting		12,000		4,500
Accrued interest		320,447		209,947
Other		62,993		62,541

	$	425,530	$	307,078

	January 31, 2020		April 30, 2019

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

	$	75,001	$	75,001

	January 31, 2020		April 30, 2019
Note payable to an accredited investor, maturing November 20, 2020, with interest at 10%, convertible into common shares of the Company at a defined variable exercise price	$	24,700	$	110,000
Note payable to an accredited investor, maturing November 20, 2020, with interest at 10%, 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 10%, convertible into common shares of the Company at a defined variable exercise price		600,000		600,000
Note payable to an accredited investor, maturing January 11, 2020, with interest at 10%, convertible into common shares of the Company at a defined variable exercise price. In default at January 31, 2020.		-		120,000
Note payable to an accredited investor, maturing January 17, 2020, with interest at 12%, convertible into common shares of the Company at a defined variable exercise price. In default at January 31, 2020		-		125,000
Note payable to an accredited investor, maturing January 24, 2020, with interest at 10%, convertible into common shares of the Company at a defined variable exercise price. In default at January 31, 2020				55,000
Note payable to an accredited investor, maturing January 31, 2020, with interest at 10%, convertible into common shares of the Company at a defined variable exercise price		91,331		125,000
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		35,900		-
Note payable to an accredited investor, maturing November 20, 2020, with interest at 10%, convertible into common shares of the Company at a defined variable exercise price		110,000		110,000
Note payable to an accredited investor, maturing February 27, 2020, with interest at 10%, convertible into common shares of the Company at a defined variable exercise price		2,009		55,000
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		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		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		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		-
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		-

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			-
Advance dated October 16, 2018, maturing October 16, 2020		123,200			-
Note payable to an accredited investor, maturing January 4, 2020, with interest at 9%, convertible into common shares of the Company at a defined variable exercise price, converted in full into shares of common stock		-			136,000
Note payable to an accredited investor, maturing February 27, 2020, with interest at 10%, convertible into common shares of the Company at a defined variable exercise price, paid in full in June 2019		-			100,000
Note payable to an accredited investor, maturing September 21, 2019, with interest at 8%, converted in full into shares of common stock		-			47,269
Total		1,531,520			1,653,269
Less discount		(86,612	)		(869,433	)

Net	$	1,444,908		$	783,836

Related Party	Maturity Date	Consideration	Amount
Maple Resources Corporation (“Maple”)	December 27, 2020	Cash of $5,500 and Financing Fees of $5,500	$	11,000
BNL Family Trust (“BNL”)	December 27, 2020	Cash		11,000
Shareholder and consultant	December 27, 2020	Accrued Consulting Fees		10,000
Shareholder and consultant	January 22, 2021	Cash		6,500

Total				38,500
Less discount				-

Net			$	38,500

	Options and			Convertible
	Warrants			Notes			Total

Balance, April 30, 2019	$	18,063		$	1,807,533		$	1,825,596
New issuances of options, warrants and debt		-			50,960			50,960
Debt conversions and repayments		-			(785,914	)		(785,914	)
Change in fair value of derivative liabilities		(10,174	)		971,952			961,778

Balance, January 20, 2020	$	7,889		$	2,044,531		$	2,052,420

	•	Stock prices on all measurement dates were based on the fair market value
	•	Risk-free interest rate of 1.51% - 2.35%
	•	The probability of future financing was estimated at 100%
	•	Computed volatility ranging from 215% to 628%

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

Outstanding, April 30, 2019		1,789,293	$	1.00		2.91
Granted		444,248,462	$	1.00
Canceled / Expired		-
Exercised		-

Outstanding, January 31, 2020		446,037,755	$	1.00		2.16

	2020			2019

Cash, beginning of period	$	55,188		$	304,173
Net cash used in operating activities		(626,903	)		(1,438,895	)
Net cash used in investing activities		(10,540	)		(266,818	)
Net cash provided by financing activities		583,800			1,563,280

Cash, end of period	$	1,545		$	161,740

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

	4.	As of January 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: April 30, 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: April 30, 2020	By:	/s/ Jack W. Hanks
		Jack W. Hanks
		Chief Executive Officer and Chief Financial Officer