DyTb, LLC 10-K/A, filed Dec 17, 2021
DyTb, LLC (TMRC)
About this 10-K/A
DyTb, LLC filed this 10-K/A on December 17, 2021, covering the fiscal year ended August 31, 2021.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
| ☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended August 31, 2021
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.) | |
| 539 El Paso Street | ||
| Sierra Blanca, Texas | 79851 | |
| (Address of Principal Executive Offices) | (Zip Code) |
(361) 790-5831
(Registrant’s Telephone Number, including Area Code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: Common Stock, par value $0.01
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ☐ No ☒
Indicate by checkmark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 (§ 229.405 of this chapter) 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, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “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 company |
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: As of February 28, 2021 the aggregate market value of the registrant’s voting and non-voting common equity held by non-affiliates of the registrant was $144,166,509 based upon the closing sale price of the common stock as reported by the OTC.QB. For purposes of this calculation, shares of common stock held by executive officers, directors and holders of greater than 10% of the registrant’s outstanding common stock are assumed to be affiliates of the registrant. This determination of affiliate status is not necessarily a conclusive determination for other purposes.
The number of shares of the Registrant’s common stock outstanding as of November 19, 2021 was 71,975,298.
EXPLANATORY NOTE
Texas Mineral Resources Corp. is filing this Amendment No. 1 to amend our Annual Report on Form 10–K for the year ended August 31, 2021, originally filed with the Securities and Exchange Commission on November 29, 2021, solely to include the Audit Opinion date which was inadvertently omitted from our original filing of our Annual Report on Form 10-K for the year ended August 31, 2021. Other than adding the date of November 29, 2021 to the audit opinion, there were no changes to the audited financial statements.
As required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended, new certifications by our principal executive officer and principal financial officer are being filed as exhibits to this Amendment. Except as expressly set forth in this Amendment, the Form 10-K has not been amended, updated or otherwise modified.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of
Texas Mineral Resources Corp.
Sierra Blanca, Texas
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Texas Mineral Resources Corp. (the Company) as of August 31, 2021 and 2020, and the related consolidated statements of operations, shareholders’ equity (deficit), and cash flows for each of the years in the two-year period ended August 31, 2021, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of August 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the two-year period ended August 31, 2021, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) represented especially challenging, subjective, or complex judgements. We determined that there are no critical audit matters.
/S/ HAM, LANGSTON & BREZINA, L.L.P.
We have served as the Company’s auditor since 2019.
Houston, Texas
November 29, 2021
F-1
Texas Mineral Resources Corp.
CONSOLIDATED BALANCE SHEETS
August 31, 2021 and 2020
| 2021 | 2020 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 5,106,653 | $ | 2,746,451 | ||||
| Prepaid expenses and other current assets | 73,029 | 183,199 | ||||||
| Total current assets | 5,179,682 | 2,929,650 | ||||||
| Property and equipment, net | 30,834 | — | ||||||
| Mineral properties, net | 181,755 | 354,234 | ||||||
| Deposit | 12,620 | 7,500 | ||||||
| TOTAL ASSETS | $ | 5,404,891 | $ | 3,291,384 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable and accrued liabilities | $ | 191,394 | $ | 502,427 | ||||
| Advances from related party | 10,000 | 591,401 | ||||||
| Total current liabilities | 201,394 | 1,093,828 | ||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| SHAREHOLDERS’ EQUITY | ||||||||
| Preferred stock, par value $0.001; 10,000,000 shares authorized, no shares issued and outstanding | — | — | ||||||
| Common stock, par value $0.01; 100,000,000 shares authorized, 71,934,065 and 71,323,278 shares issued and outstanding as of August 31, 2021 and 2020, respectively | 719,341 | 713,233 | ||||||
| Additional paid-in capital | 41,332,478 | 40,376,847 | ||||||
| Accumulated deficit | (36,848,322 | ) | (38,892,524 | ) | ||||
| Total shareholders’ equity | 5,203,497 | 2,197,556 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 5,404,891 | $ | 3,291,384 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
F-2
Texas Mineral Resources Corp.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended August 31, 2021 and 2020
| 2021 | 2020 | |||||||
| OPERATING EXPENSES | ||||||||
| Exploration costs | $ | 220,051 | $ | 18,181 | ||||
| General and administrative | 1,342,805 | 1,055,881 | ||||||
| Total operating expenses | 1,562,856 | 1,074,062 | ||||||
| LOSS FROM OPERATIONS | (1,562,856 | ) | (1,074,062 | ) | ||||
| OTHER INCOME (EXPENSE) | ||||||||
| Loss on settlement of accrued liabilities | — | (66,335 | ) | |||||
| Gain on sale of assets | 3,326,899 | — | ||||||
| Grant income, net of related expenses | 274,072 | — | ||||||
| Interest and other income | 6,088 | 6,582 | ||||||
| Interest and other expense | — | (7,014 | ) | |||||
| Total other income (expense) | 3,607,059 | (66,767 | ) | |||||
| NET INCOME (LOSS) | $ | 2,044,202 | $ | (1,140,829 | ) | |||
| Net income (loss) per common share | ||||||||
| Basic | $ | 0.03 | $ | (0.02 | ) | |||
| Diluted | $ | 0.03 | $ | (0.02 | ) | |||
| Weighted average shares outstanding | ||||||||
| Basic | 71,651,114 | 61,201,735 | ||||||
| Diluted | 72,862,214 | 61,201,735 | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-3
Texas Mineral Resources Corp.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended August 31, 2021 and 2020
| 2021 | 2020 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income (loss) | $ | 2,044,202 | $ | (1,140,829 | ) | |||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
| Depreciation and amortization expense | 4,072 | — | ||||||
| Stock based compensation | 880,439 | 232,386 | ||||||
| Loss on settlement of accrued liabilities | — | 66,335 | ||||||
| Gain on sale of mineral properties | (3,326,899 | ) | — | |||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other assets | 110,170 | (186,249 | ) | |||||
| Accounts payable and accrued liabilities | (311,033 | ) | (570,643 | ) | ||||
| Net cash used in operating activities | (599,049 | ) | (1,599,000 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Payments for deposits | (5,120 | ) | — | |||||
| Purchases of property and equipment | (34,906 | ) | — | |||||
| Purchases of mineral properties | (229,849 | ) | — | |||||
| Proceeds from sale of interest in mineral properties | 3,000,000 | — | ||||||
| Net cash provided by investing activities | 2,730,125 | — | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Payment on note payable | — | (123,542 | ) | |||||
| Advances from related party | 147,826 | 400,947 | ||||||
| Proceeds from sale of common stock, net | — | 280,000 | ||||||
| Payment from exercise of common stock options and warrants | 81,300 | 1,963,500 | ||||||
| Net cash provided by financing activities | 229,126 | 2,520,905 | ||||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | 2,360,202 | 921,905 | ||||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 2,746,451 | 1,824,546 | ||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 5,106,653 | $ | 2,746,451 | ||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION: | ||||||||
| Cash paid for interest expense | $ | — | $ | — | ||||
| Cash paid for income taxes | $ | — | $ | — | ||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
| Common stock issued as payment of accrued expenses | $ | 92,500 | $ | 45,000 | ||||
| Advances from related parties applied to consideration in sale of interest in mineral properties | $ | 729,227 | $ | — | ||||
The accompanying notes are an integral part of these consolidated financial statements.
F-4
Texas Mineral Resources Corp.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)
For the Years Ended August 31, 2021 and 2020
| Additional | ||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-in | Accumulated | |||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||
| Balance at August 31, 2019 | — | $ | — | 56,204,994 | $ | 562,050 | $ | 37,940,809 | $ | (37,751,695 | ) | $ | 751,164 | |||||||||||||||
| Common stock issued for services | — | — | 101,015 | 1,010 | 156,579 | — | 157,529 | |||||||||||||||||||||
| Common stock issued for cash | — | — | 800,000 | 8,000 | 272,000 | — | 280,000 | |||||||||||||||||||||
| Common stock issued to settle accrued compensation | — | — | 130,892 | 1,309 | 110,026 | — | 111,335 | |||||||||||||||||||||
| Options issued for services | — | — | — | — | 74,857 | — | 74,857 | |||||||||||||||||||||
| Common stock issued upon exercise of options and warrants | — | — | 5,620,000 | 56,200 | 1,907,300 | — | 1,963,500 | |||||||||||||||||||||
| Common stock issued upon cashless exercise of options and warrants | — | — | 8,466,377 | 84,664 | (84,664 | ) | — | — | ||||||||||||||||||||
| Net loss | — | — | — | — | — | (1,140,829 | ) | (1,140,829 | ) | |||||||||||||||||||
| Balance at August 31, 2020 | — | — | 71,323,278 | 713,233 | 40,376,847 | (38,892,524 | ) | 2,197,556 | ||||||||||||||||||||
| Stock based compensation | — | — | 83,345 | 834 | 787,105 | — | 787,939 | |||||||||||||||||||||
| Common stock issued as payment of accrued director’s fees | — | — | 61,936 | 619 | 91,881 | — | 92,500 | |||||||||||||||||||||
| Common stock issued upon exercise of options and warrants | — | — | 296,000 | 2,960 | 78,340 | — | 81,300 | |||||||||||||||||||||
| Common stock issued upon cashless exercise of options and warrants | — | — | 169,506 | 1,695 | (1,695 | ) | — | — | ||||||||||||||||||||
| Net loss | — | — | — | — | — | 2,044,202 | 2,044,202 | |||||||||||||||||||||
| Balance at August 31, 2021 | — | $ | — | 71,934,065 | $ | 719,341 | $ | 41,332,478 | $ | (36,848,322 | ) | $ | 5,203,497 | |||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-5
TEXAS MINERAL RESOURCES CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2021 AND 2020
NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS
Texas Mineral Resources Corp. (the “Company”) was incorporated in the State of Nevada in 1970 as Standard Silver Corporation. In 2010, the Company changed its name from “Standard Silver Corporation” to “Texas Rare Earth Resources Corp”. In 2012, the Company changed its state of incorporation from Nevada to Delaware under a plan of conversion dated August 24, 2012. In 2016, the Company changed its name to Texas Mineral Resources Corp.
We are a mining company engaged in the business of the acquisition, exploration and development of mineral properties. We currently own a 20% membership interest in Round Top Mountain Development Company, LLC (“Round Top”), a Delaware limited liability Company, which entity holds two mineral property leases with the GLO to explore and develop a 950-acre rare earths project located in Hudspeth County, Texas, known as the Round Top Project. The leases, originally signed with primary terms of approximately 19 and 18 years, each currently have remaining terms of approximately nine years and provisions for automatic renewal if Round Top is in production. Round Top also holds prospecting permits covering 9,345 acres adjacent to the Round Top Project. The strategy with Round Top is to develop a metallurgical process to concentrate or otherwise extract the metals from the Round Top Project’s rhyolite, conduct additional engineering, design, geotechnical work, and permitting necessary for a bankable feasibility study and then to extract mineral resources from the Round Top Project. The Round Top Project has not established as of the date hereof that any of the properties contain any probable mineral reserves or proven mineral reserves under Item 1300 of Regulation S-K (“Item 1300”).
NOTE 2 – SUMMARY OF ACCOUNTING POLICIES
Exploration-Stage Company
Since January 1, 2009, the Company has been classified as an “exploration stage” company for purposes of Item 1300 of the U.S. Securities and Exchange Commission (“SEC”). Under Item 1300, companies engaged in significant mining operations are classified into three categories, referred to as “stages” - exploration, development, and production. Exploration stage includes all companies that do not have established reserves in accordance with Item 1300. Such companies are deemed to be “in the search for mineral deposits.” Notwithstanding the nature and extent of development-type or production-type activities that have been undertaken or completed, a company cannot be classified as a development or production stage company unless it has established reserves in accordance with Item 1300.
Basis of Presentation
The Company’s financial records are maintained on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).
Principles of Consolidation
The consolidated financial statements include the accounts of Texas Mineral Resources Corp and its proportionate interest in the assets, liabilities, and operations of Round Top. All significant intercompany balances and transactions have been eliminated.
COVID-19 Risks and Uncertainties
In March 2020, the World Health Organization declared the novel strain of coronavirus, COVID-19, a global pandemic and recommended containment and mitigation measures worldwide. Although COVID-19 has not had a significant impact on the Company’s operating results in fiscal years 2021 and 2020, management continues to monitor its impact. The Company is unable to predict the future impact that COVID-19 will have on its future financial position and operating results due to numerous uncertainties, including the duration and severity of the outbreak.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents currently consist only of demand deposits at commercial banks. The Company maintains cash and cash equivalents at banks selected by management based upon their assessment of the financial stability of the institution. Balances periodically exceed the federal depository insurance limit; however, the Company has not experienced any losses on deposits.
F-6
TEXAS MINERAL RESOURCES CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2021 AND 2020
NOTE 2 – SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
Property and Equipment
Property and equipment consist primarily of vehicles, furniture and equipment, and are recorded at cost. Expenditures related to acquiring or extending the useful life of property and equipment are capitalized. Expenditures for repair and maintenance are charged to operations as incurred. Depreciation is computed using the straight-line method over an estimated useful life of 3-20 years.
Lease Deposits
From time to time, the Company makes deposits in anticipation of executing leases. The deposits are capitalized upon execution of the applicable agreements.
Long-lived Assets
The Company reviews the recoverability of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through operations. To determine if these costs are in excess of their recoverable amount, periodic evaluation of carrying value of capitalized costs and any related property and equipment costs are based upon expected future cash flows and/or estimated salvage value in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC 360”), Property, Plant and Equipment. The Company’s assets susceptible to impairment analysis are the mineral properties described in Note 5.
Revenue Recognition
The Company’s revenue recognition policies are established in accordance with the Revenue Recognition topics of ASC 606, and accordingly, revenue is recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.
Mineral Exploration and Development Costs
All exploration expenditures are expensed as incurred. Costs of acquisition and option costs of mineral rights are capitalized upon acquisition. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. If the Company does not continue with exploration after the completion of the feasibility study, the mineral rights will be expensed at that time. Costs of abandoned projects are charged to mining costs including related property and equipment costs. To determine if these costs are in excess of their recoverable amount, periodic evaluation of carrying value of capitalized costs and any related property and equipment costs are based upon expected future cash flows and/or estimated salvage value in accordance with ASC 360-10-35-15, Impairment or Disposal of Long-Lived Assets.
Share-based Payments
The Company estimates the fair value of share-based compensation using the Black-Scholes valuation model, in accordance with the provisions of ASC 718, Stock Compensation. Key inputs and assumptions used to estimate the fair value of stock options include the exercise price of the award, the expected option term, market price of the underlying common stock, volatility of the common stock, risk-free rate, and dividend yield. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by the option holders, and subsequent events are not indicative of the reasonableness of the original estimates of fair value.
F-7
TEXAS MINERAL RESOURCES CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2021 AND 2020
NOTE 2 – SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
Income Taxes
Income taxes are computed using the asset and liability method, in accordance with ASC 740, Income Taxes. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax basis of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.
The Company recognizes and measures a tax benefit from uncertain tax positions when it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The Company recognizes a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. The Company adjusts these liabilities when its judgement changes as a result of the evaluation of new information not previously available. Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the current estimate or future recognition of an unrecognized tax benefit. These differences will be reflected as increases or decreases to income tax expense in the period in which they are determined. The Company recognizes interest and penalties related to unrecognized tax positions within the income tax expense line in the statements of operations. Management believes the Company has no uncertain tax positions at August 31, 2021 and 2020.
Basic and Diluted Income (Loss) Per Share
The Company computes income (loss) per share in accordance with ASC 260, Earnings Per Share, which requires presentation of both basic and diluted earnings per share on the face of the Statements of Operations. Basic income (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding during the period, including stock options and warrants using the treasury method. Dilutive income (loss) per share excludes all potential common shares if their effect is anti-dilutive.
The following table sets forth the computation of basic and dilutive weighted average shares for the years ended August 31, 2021 and 2020:
| 2021 | 2020 | |||||||
| Weighted average basic shares | 71,651,114 | 61,201,735 | ||||||
| Dilutive securities: | ||||||||
| Stock options and warrants | 1,211,100 | — | ||||||
| Weighted average dilutive shares | 72,862,214 | 61,201,735 | ||||||
At August 31, 2020, options and warrants to purchase 5,081,538 shares of common stock were outstanding but not included in the computation of dilutive earnings per share, because these options and warrants were antidilutive.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
F-8
TEXAS MINERAL RESOURCES CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2021 AND 2020
NOTE 2 – SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
Fair Value Measurements
The Company accounts for assets and liabilities measured at fair value in accordance with ASC 820, Fair Value Measurements and Disclosures. ASC 820 emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified with Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).The three levels of inputs used to measure fair value are as follows:
| ● | Level 1: Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities traded in active markets. |
| ● | Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. |
| ● | Level 3: Inputs that are generally unobservable. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. |
The Company’s financial instruments consist principally of cash and accounts payable and accrued liabilities. The carrying amounts of such financial instruments in the accompanying financial statements approximate their fair values due to their relatively short-term nature. It is management’s opinion that the Company is not exposed to any significant currency or credit risks arising from these financial instruments.
Recent Accounting Pronouncements
In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. This ASU eliminates, modifies and adds disclosure requirements for fair value measurements. The amendments in this ASU are effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. The Company adopted this ASU effective September 1, 2020 and it did not have a significant impact on its financial statements and related disclosures.
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which supersedes the guidance in former ASC 840, Leases. The new standard, as amended by subsequent ASUs on the Topic, requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. For the Company, this standard was effective for the annual and interim reporting periods beginning after September 1, 2019. Its adoption did not have a significant impact on its financial statements and related disclosures.
The FASB issued ASU No. 2018-10 “Codification Improvements to Topic 842, Leases” and ASU No. 2018-11 “Leases (Topic 842) Targeted Improvements” in July 2018. ASU 2018-10 provides certain amendments that affect narrow aspects of the guidance issued in ASU 2016-02. ASU 2018-11 provides an optional transition method allowing entities to apply the new lease standard at the adoption date with a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption (modified retrospective approach) as opposed to restating prior period financial statements. The Company elected to adopt the standard on September 1, 2019. Its adoption did not have a significant impact on its financial statements and related disclosures.
NOTE 3 – JOINT VENTURE ARRANGEMENTS
In August 2018, the Company and Morzev Pty. Ltd. (“Morzev”) entered into an agreement (the “2018 Option Agreement”) whereby Morzev was granted the exclusive right to earn and acquire a 70% interest in the Company’s Round Top Project (“Project” or “Round Top” or “Round Top Project”) by financing $10 million of expenditures in connection with the Project, increasable to an 80% interest for an additional $3 million payment to the Company. Morzev began operating as USA Rare Earth, LLC (“USARE”) and in May 2019 notified the Company that it was nominating USARE as the optionee under the terms of the 2018 Option Agreement. In August 2019, the Company and USARE entered into an amended and restated option agreement as further amended on June 29, 2020 (the “2019 Option Agreement” and collectively with the 2018 Option Agreement, the “Option Agreement”), whereby the Company restated its agreement to grant USARE the exclusive right to earn and acquire a 70% interest, increasable to an 80% interest, in the Round Top Project. The 2019 Option Agreement has substantially similar terms to the 2018 Option Agreement.
F-9
TEXAS MINERAL RESOURCES CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2021 AND 2020
NOTE 3 – JOINT VENTURE ARRANGEMENTS (CONTINUED)
On May 17, 2021, and in accordance with the terms of the Option Agreement, the Company and USARE entered into a contribution agreement (“Contribution Agreement”) whereby the Company and USARE contributed assets to Round Top, a wholly-owned subsidiary of the Company, in exchange for their ownership interests in Round Top, of which the Company now owns membership interests equating to 20% of Round Top and USARE owns membership interests equating to 80% of Round Top. Concurrently therewith, the Company and USARE as the two members entered into a limited liability company agreement (“Operating Agreement”) governing the operations of Round Top which contains customary and industry standard terms as contemplated by the Option Agreement. USARE will serve as manager of Round Top and Mr. Gorski, on behalf of the Company, will serve as one of the three members of the management committee.
In connection with USARE meeting its obligations to acquire a 70% interest in Round Top and exercising its right to an additional 10% interest, the Company received total consideration of approximately $3,728,000, consisting of the $3 million upon exercise of the option and approximately $728,000 in previous advances to the Company by USARE, and derecognized 80% of the carrying amount of mineral properties, or approximately $402,000. The resulting gain on sale of interest in mineral properties in the amount of approximately $3,326,000 is included as its own line item in other income (expense).
Upon entry into the Contribution Agreement, the Company assigned the following contracts and assets to Round Top in exchange for its 20% membership interest in Round Top:
| ● | the assignment and assumption agreement with respect to the mineral leases from the Company to Round Top; |
| ● | the assignment and assumption agreement with respect to the surface lease from the Company to Round Top; |
| ● | the assignment and assumption agreement with respect to the surface purchase option from the Company to Round Top; |
| ● | the assignment and assumption agreement with respect to the water lease from the Company to Round Top; and |
| ● | the bill of sale and assignment agreement of existing data with respect to Round Top owned by the Company. |
and USARE assigned the following assets to Round Top (or the Company, as applicable) for its 80% membership interest in Round Top:
| ● | cash to Round Top to continue to fund Round Top operations in the amount of approximately $3,761,750 comprising the balance of the $10 million required expenditure to earn a 70% interest in Round Top; |
| ● | cash in the amount of $3 million to the Company upon exercise of the USARE option to acquire from the Company an additional 10% interest in Round Top, resulting in the aggregate ownership interest of 80% in Round Top; |
| ● | bill of sale and assignment agreement of the Pilot Plant to Round Top; |
| ● | the assignment and assumption regarding relevant contracts and permits with respect to Round Top; and |
| ● | bill of sale and assignment agreement of existing data and intellectual property owned by USARE to Round Top. |
The Company accounts for its interest in Round Top using the proportionate consolidation method, which is an exception available to entities in the extractive industries, thereby recognizing its pro-rate share of the assets, liabilities, and operations of Round Top in the appropriate classifications in the financial statements. Subsequent to the sale of an undivided 80% interest in Round Top, there was no significant activity in Round Top requiring recognition in the financial statements.
F-10
TEXAS MINERAL RESOURCES CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2021 AND 2020
NOTE 4 – PROPERTY AND EQUIPMENT, NET
Property and equipment consist of office furniture, equipment and vehicles. Property and equipment are depreciated using the straight-line method over their estimated useful life of 3-20 years. Following is an analysis of property and equipment at August 31, 2021 and 2020:
| 2021 | 2020 | |||||||
| Furniture and office equipment | $ | 75,606 | $ | 75,606 | ||||
| Vehicles | 124,092 | 89,185 | ||||||
| Computers and software | 48,711 | 48,711 | ||||||
| Field equipment | 71,396 | 71,396 | ||||||
| Total cost basis | 319,805 | 284,898 | ||||||
| Less: accumulated depreciation | (288,970 | ) | (284,898 | ) | ||||
| Property and equipment, net | $ | 30,834 | $ | — | ||||
Depreciation expense for the years ending August 31, 2021 and 2020 was $4,072 and $-0-, respectively.
NOTE 5 – MINERAL PROPERTIES
August 2010 Lease
On August 17, 2010, the Company executed 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 the Company the right to explore, produce, develop, mine, extract, mill, remove, and market 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 terms of the lease, the Company will pay the State of Texas a total lease bonus of $142,518. The Company paid $44,718 upon the execution of the lease, and will pay the remaining $97,800 upon submission of a supplemental plan of operations to conduct mining. Upon sale of any minerals removed from Round Top, the Company will pay the State of Texas a $500,000 minimum advance royalty. Thereafter, if paying quantities of minerals are obtained, the Company 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. If paying quantities have not been obtained, the Company 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, 2020 – 2024 | $ | 150 | $ | 134,155 | |||||
| September 2, 2025 – 2029 | 200 | 178,873 | |||||||
In August 2021, our joint venture partner paid the State of Texas a delay rental to extend the term of the lease in an amount equal to $134,155.
November 2011 Lease
On November 1, 2011, the Company executed a mining lease with the State of Texas covering approximately 90 acres of land that is adjacent to the August 2010 Lease. Under the lease, the Company paid the State of Texas a lease bonus of $20,700 upon the execution of the lease. Upon the sale of minerals removed from Round Top, the Company will pay the State of Texas a $50,000 minimum advance royalty.
F-11
TEXAS MINERAL RESOURCES CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2021 AND 2020
NOTE 5 – MINERAL PROPERTIES (CONTINUED)
Thereafter, if paying quantities of minerals are obtained, the Company 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. If paying quantities have not been obtained, the Company 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, 2020 – 2024 | $ | 150 | $ | 13,500 | |||||
| November 1, 2025 – 2029 | 200 | 18,000 | |||||||
In August 2021, our joint venture partner paid the State of Texas a delay rental to extend the term of the lease in an amount equal to $13,500.
March 2013 Lease
On March 6, 2013, the Company 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 common stock valued at $500,000. The Company 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, particularly 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 provides the Company unrestricted surface access for the potential development and mining of the Round Top Project.
October 2014 Surface Option and Water Lease
On October 29, 2014, the Company announced the execution of 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. The Company 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 maintained through annual payments of $10,000. The purchase price will be the appraised value of the surface at the time of option exercise. All annual payments have been made as of the date of this filing.
The ground water lease secures the 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 terms include an annual minimum production payment of $5,000 prior to production of water for the operation. After initiation of production the Company will pay $0.95 per thousand gallons or $20,000 annually, whichever is greater. This lease remains in effect so long as the mineral lease is in effect. The minimum production payment for all fiscal years have been made as of the date of this filing.
NOTE 6 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities at August 31, 2021 and 2020, consist of the following:
| 2021 | 2020 | |||||||
| Accounts payable – trade | $ | 175,328 | $ | 113,251 | ||||
| Accrued payroll and related expenses | 16,049 | 382,853 | ||||||
| Other | 17 | 6,323 | ||||||
| Total accounts payable and accrued liabilities | $ | 191,394 | $ | 502,427 | ||||
F-12
TEXAS MINERAL RESOURCES CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2021 AND 2020
NOTE 7 – NOTES PAYABLE
In relation to the Foundation lease discussed in Note 5, the Company recorded a note payable for an amount for the initial $45,000 due upon signing of the lease and the nine (9) future payments due of $45,000. As of September 1, 2019, the balance of the note payable was $123,542. During the year ended August 31, 2020, the balance of the note payable was paid in-full.
Related Party Advances
On January 12, 2017 the Company entered into loan agreements totaling $10,000 from an officer of the Company. The loans include a stated due date of July 12, 2017, are non-interest accruing, and unsecured. The notes payable balance at September 1, 2019 was $4,000 and the notes were paid in full during the year ended August 31, 2020.
During the years ended August 31, 2021 and 2020, USARE, the Company’s joint venture partner, provided cash advances of $147,826 and $400,947, respectively, to pay certain deferred lease rental costs and amounts due under the Rio Grande Foundation note discussed above. These advances are uncollateralized and are non-interest-bearing. The cumulative balance of advances from USARE on May 17, 2021 totaling $728,227 was applied as consideration for the sale of 80% interest in Round Top as further discussed in Note 3, Joint Venture Arrangements.
As of August 31, 2020, the Company had a $1,000 non-interest-bearing advance from a stockholder.
NOTE 8 – INCOME TAXES
The following table sets forth a reconciliation of the federal income tax benefit to the United States federal statutory rate of 21% for the years ended August 31, 2021 and 2020:
| 2021 | 2020 | |||||||
| Income tax (expense) benefit at 21% statutory rate | $ | (429,282 | ) | $ | 239,574 | |||
| Stock-based compensation | (184,893 | ) | (72,181 | ) | ||||
| Non-deductible loss on settlement of accrued compensation | — | (12,548 | ) | |||||
| Decrease (increase) in valuation allowance | 614,175 | (154,845 | ) | |||||
| $ | — | $ | — | |||||
The tax effects of the temporary differences between reportable financial statement income and taxable income are recognized as a deferred tax asset and liability. Significant components of the deferred tax assets are set out below along with a valuation allowance to reduce the net deferred tax asset to zero.
Management has established a valuation allowance because, based on an analysis of the tax benefits underlying deferred tax assets, it is unable to establish that it is more-likely-than-not that a tax benefit will be realized. Significant components of deferred tax asset at August 31, 2021 and 2020 are as follows:
| 2021 | 2020 | |||||||
| Net operating loss carryforward | $ | 4,341,024 | $ | 3,238,098 | ||||
| Difference in property and equipment basis | 474,558 | 2,191,659 | ||||||
| Accrued liabilities | — | — | ||||||
| Less valuation allowance | (4,815,582 | ) | (5,429,757 | ) | ||||
| Net deferred tax asset | $ | — | $ | — | ||||
As a result of a change in control effective in April 2007, net operating losses prior to that date may be partially or entirely unavailable under tax law, to offset future income and; accordingly, these net operating losses are excluded from deferred tax assets.
The net operating loss carryforward in the approximate amount of $15,989,000 will begin to expire in 2022. The Company files income tax returns in the United States and in one state jurisdiction. With few exceptions, the Company is no longer subject to United States federal income tax examinations for fiscal years ending before 2011 and no longer subject to state tax examinations for years before 2010.
F-13
TEXAS MINERAL RESOURCES CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2021 AND 2020
NOTE 9 – SHAREHOLDERS’ EQUITY
The Company’s 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. 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 common stock are entitled to equal ratable rights to dividends and distributions with respect to the common stock, as may be declared by the Company’s Board of Directors (the “Board”) out of funds legally available. In the event of a liquidation, dissolution or winding up of the affairs of the Company, 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.
Following is an analysis of common stock issuances during the years ended August 31, 2021 and 2020:
August 31, 2021
In October 2020, the Company issued 61,936 shares of common stock to Directors as payment for accrued fees totaling $92,500 earned in June through August 2020.
During the year ended August 31, 2021, the Company issued 83,345 shares of common stock valued at $142,500, as payment for directors’ fees. In addition, the Company recognized stock compensation and a corresponding charge to additional paid-in capital in the amount of $47,500 for directors’ fees earned during the quarter ended August 31, 2021. The Company issued the related 41,233 shares of common stock in October 2021.
During the year ended August 31, 2021, the holders of 76,000 common stock warrants and 220,000 common stock options were exercised for total cash consideration of $81,300. The exercise price of the common stock warrants ranged from $0.10 to $0.35 per share and the exercise price of the common stock options ranged from $0.20 to $0.45 per share.
During the year ended August 31, 2021, a total of 200,000 common stock options were exercised on a cashless basis into 169,506 shares of common stock. The common stock options had exercise prices ranging from $0.22 to $0.45.
August 31, 2020
During the year ended August 31, 2020, the Company issued 800,000 shares of common stock to investors for total consideration of $280,000.
During the year ended August 31, 2020, the holder of 70,000 common stock options with an exercise price of $0.30 per share, exercised such options for total consideration of $21,000. In addition, a total of 3,420,000 common stock options were exercised on a cashless basis into 2,813,310 shares of common stock. The common stock options had exercise prices ranging from $0.19 to $0.45 per share.
During the year ended August 31, 2020, the holders of 5,550,000 common stock warrants with an exercise price of $0.35 per share, exercised such options for total consideration of $1,942,500. In addition, a total of 7,631,702 common stock warrants were exercised on a cashless basis into 5,653,067 shares of common stock. The common stock warrants had exercise prices ranging from $0.10 to $0.50 per share.
In October 2019, the Company issued 13,514 shares of common stock to a new Advisory Board Member and recognized compensation expense of $5,000 based on the $0.37 quoted market price of the common stock on the date of issuance.
In January 2020, the Company issued 130,892 shares of common stock issued to settle $45,000 in accrued compensation to an ex-employee. The common stock was valued at $111,335, based on the $0.85 quoted market price of the common stock on the date the settlement was reached. A loss on settlement of $66,335, representing the difference between the carrying amount of the liability and the fair value of the stock issued, was recognized as a result of this transaction.
F-14
TEXAS MINERAL RESOURCES CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2021 AND 2020
NOTE 9 – SHAREHOLDERS’ EQUITY (CONTINUED)
In January 2020, the Company entered into three separate consulting agreements for total consideration of 699,999 shares of common stock (233,333 per agreement). The common stock underlying the agreements had a total value of $448,000, based on the $0.64 quoted market price of the common stock on the date the consulting agreements were reached. The right to receive the common stock is subject to ratable vesting over a 24-month period and at August 31, 2021, 483,333 shares had vested and 87,501 had been issued. The Company recognized $224,000 and $152,529 of compensation expense under these consulting agreements during the years ended August 31, 2021 and 2020, respectively, and included the expense in general and administrative expenses. The consultants have requested that the Company hold the remaining shares issuable under the consulting agreements in trust to allow the consultants to request their shares as they vest.
Options
The following table sets forth certain information as of August 31, 2021 and 2020 concerning common stock that may be issued upon the exercise of options not covered by the Amended 2008 Plan and pursuant to purchases of stock under the Amended 2008 Plan (All options are fully vested and exercisable at August 31, 2021 and 2020):
| Weighted | ||||||||||||||||
| Average | ||||||||||||||||
| Weighted | Remaining | |||||||||||||||
| Average | Contractual | Aggregate | ||||||||||||||
| Shares |
Exercise Price |
Life (In Years) |
Intrinsic Value |
|||||||||||||
| Outstanding, vested and exercisable at August 31, 2019 | 5,710,000 | $ | 0.28 | 5.41 | $ | 571,000 | ||||||||||
| Options granted | 43,500 | 0.60 | — | — | ||||||||||||
| Options exercised | (3,490,000 | ) | 0.25 | — | — | |||||||||||
| Options cancelled/forfeited/expired | (500,000 | ) | 0.23 | — | — | |||||||||||
| Outstanding, vested and exercisable at August 31, 2020 | 1,763,500 | 0.35 | 3.45 | $ | 2,028,025 | |||||||||||
| Options granted | 174,000 | 0.60 | — | — | ||||||||||||
| Options exercised | (420,000 | ) | 0.28 | — | — | |||||||||||
| Options cancelled/forfeited/expired | (40,000 | ) | 0.30 | — | — | |||||||||||
| Outstanding, vested and exercisable at August 31, 2021 | 1,477,500 | $ | 0.40 | 2.68 | $ | 1,523,430 | ||||||||||
Amended 2008 Stock Option Plan
In September 2008, the Board adopted the 2008 Stock Option Plan (the “2008 Plan”), which was approved by the Company’s shareholders and provided 2,000,000 shares available for grant. In 2011, 2012, and 2016, the Board adopted amendments to the 2008 Plan, approved by the shareholders, that increased the shares available for issuance under the 2008 Plan by a total of 7,000,000 shares (as amended, the “Amended 2008 Plan”). Accordingly, at August 31, 2021 and 2020, 9,000,000 shares were designated for issuance under the 2008 Plan, as amended. At August 31, 2021, a total of 5,765,000 shares of common stock remained available for future grants under the Amended 2008 Plan.
During the year ended August 31, 2021, the Company granted a total of 174,000 stock options, with a fair value of $353,497 on the date of grant, to a consultant. The fair value of the options was determined using the Black-Scholes option-pricing model. The weighted average assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 0.27% (ii) estimated volatility of 205.58% (iii) dividend yield of 0.00% and (iv) expected life of all options of 5 years. The Company recognized the full $353,497 as compensation expense during the year ended August 31, 2021.
During the year ended August 31, 2020, the Company granted a total of 43,500 stock options with a fair value of approximately $75,000 on the date of grant to a consultant. The fair value of the options was determined using the Black-Scholes option-pricing model. The weighted average assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 0.29% (ii) estimated volatility of 209.79% (iii) dividend yield of 0.00% and (iv) expected life of all options of 5 years.
F-15
TEXAS MINERAL RESOURCES CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2021 AND 2020
NOTE 9 – SHAREHOLDERS’ EQUITY (CONTINUED)
Warrants
Warrant activity for the years ended August 31, 2021 and 2020 was as follows:
| Weighted | ||||||||||||||||
| Average | ||||||||||||||||
| Weighted | Remaining | |||||||||||||||
| Average | Contractual | Aggregate | ||||||||||||||
| Shares |
Exercise Price |
Life (In Years) |
Intrinsic Value |
|||||||||||||
| Outstanding and exercisable at August 31, 2019 | 16,499,740 | $ | 0.36 | 1.16 | $ | 3,501,332 | ||||||||||
| Warrants exercised | (13,181,702 | ) | 0.34 | — | — | |||||||||||
| Outstanding and exercisable at August 31, 2020 | 3,318,038 | 0.40 | 0.28 | $ | 3,649,842 | |||||||||||
| Warrants granted | 10,000 | 0.10 | ||||||||||||||
| Warrants exercised | (76,000 | ) | 0.33 | |||||||||||||
| Warrants cancelled/forfeited/expired | (3,218,038 | ) | 0.10 | — | — | |||||||||||
| Outstanding and exercisable at August 31, 2021 | 34,000 | $ | 0.10 | 1.2 | $ | 45,660 | ||||||||||
In December 2019, the Company extended the expiration date of the Class A and Class B warrants to December 7, 2020. At August 31, 2020, there are issued and outstanding Class A warrants to purchase an aggregate of 1,114,412 shares of Company common stock at an exercise price of $0.35 per share, and Class B warrants to purchase an aggregate of 1,128,626 shares of Company common stock at an exercise price of $0.50 per share. At August 31, 2021 there are no Class A or Class B warrants outstanding.
During the year ended August 31, 2021, the Company granted a total of 10,000 stock warrants, with a fair value of $20,442 on the date of grant, to a consultant. The fair value of the options was determined using the Black-Scholes option-pricing model. The weighted average assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 0.27% (ii) estimated volatility of 205.58% (iii) dividend yield of 0.00% and (iv) expected life of all options of 3 years. The Company recognized the full $20,442 as compensation expense during the year ended August 31, 2021.
NOTE 10 – RELATED PARTY TRANSACTIONS
The Company issued 4,432,529 common shares to various directors upon conversion of plan options and warrants in June and July 2020.
NOTE 11 – SUBSEQUENT EVENTS
In October 2021, we issued 41,233 shares of common stock to our Directors for accrued Director fees earned in June through August 2021. These shares were valued at the closing price at the end of August at a discount of 20%. The discounted price per share was $1.15.
On November 8, 2021, the Company entered into a mineral exploration and option agreement with Santa Fe Gold Corporation (“Santa Fe”). Under the agreement, the Company and Santa Fe will pursue, negotiate and subsequently enter into a joint venture agreement with Santa Fe to jointly explore and develop a target silver property which has been selected by the Company among patented and unpatented mining claims held by Santa Fe within the Black Hawk Mining District in Grant County, New Mexico. Completion of a joint venture agreement is subject to the successful outcome of a multi-phase exploration plan leading to a bankable feasibility study to be undertaken in the near future by the Company. Under the terms of the joint venture agreement, the Company would be the project operator and initially own 50.5% of the joint venture while Santa Fe would initially own 49.5%. Additional terms of the joint venture are to be negotiated between the Company and Santa Fe.
F-16
TEXAS MINERAL RESOURCES CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2021 AND 2020
NOTE 11 – SUBSEQUENT EVENTS (CONTINUED)
Under terms of the agreement, the Company plans to conduct a district-wide evaluation among the patented and unpatented claims held by Santa Fe, consisting of geologic mapping, sampling, trenching, radiometric surveying, geophysics, drilling and/or other methods as warranted. Based on the district-wide evaluation, the Company will designate one 80-acre tract as the “project area” and commence detailed exploration work. The property covered in the agreement is approximately 1,300 acres and covers approximately 75% of the known mining district. The area to be studied also includes a two-mile radius “area of interest.” The agreement also provides the Company with the option to include in the “project area” properties within the “area of interest”. The term of the option is for so long as the Company continues to conduct exploration activities in the Project Area and can be exercised on 60 days notice to Santa Fe.
Additionally, on November 8, 2021, the Company entered into a financing and purchase option agreement with Greentech Minerals Holdings, Inc. (“Greentech”). Under the agreement, Greentech is responsible for funding initial exploration activities and the bankable feasibility study, estimated to cost approximately $6.5 million, for the Santa Fe project exploration. It is contemplated that the bankable feasibility study will be designed to proceed in five tranches, each based on the success of the previous. It is estimated that completion of all tranches, if successful, would take twelve to fifteen months, depending on variables such as data analysis, weather and permitting.
Upon successful completion of the study, Greentech will be entitled to received 20% of the Company’s initial equity in the proposed joint venture with Santa Fe, equal to approximately 10.1% of the total equity of the joint venture. In addition, assuming Greentech exercises its option to participate in funding the Santa Fe project capital expenditures, currently anticipated to be approximately $15 million, it will be entitled to receive another 20% of the Company’s initial equity in the future joint venture, equal to approximately an additional 10.1%. In total, Greentech, in exchange for its funding, has the ability to earn at least 20.2% of the potential joint venture with Santa Fe assuming successful completion of the overall first project.
17
EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES
The following is a list of all exhibits filed as a part of this Annual Report on Form 10-K/A:
| Exhibit No. | Description | |
| 31.1 | Section 302 Certification | |
| 31.2 | Section 302 Certification | |
| 32.1 | Section 906 Certification | |
| 32.2 | Section 906 Certification | |
Pursuant to the requirements of Section 13 or 15(d) 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.
| /s/ Daniel E Gorski | |
| Daniel E Gorski, Chief Executive Officer |
DATED: December 17, 2021
| /s/ Wm Chris Mathers | |
| Wm Chris Mathers, Chief Financial Officer |
DATED: December 17, 2021
Texas Mineral Resources Corp. 10-K/A
Exhibit 31.1. Certification by Chief Executive Officer
I, Daniel E Gorski, certify that:
| 1. | I have reviewed this Annual Report on Form 10-K/A of Texas Mineral Resources Corp; |
| 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 Exchange 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 |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| 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. |
Date: December 17, 2021
| /s/ Daniel E Gorski |
| Daniel E Gorski, Chief Executive Officer |
Texas Mineral Resources Corp. 10-K/A
Exhibit 31.2. Certification by Chief Financial Officer
I, Wm Chris Mathers, certify that:
| 1. | I have reviewed this Annual Report on Form 10-K/A of Texas Mineral Resources Corp; |
| 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 Exchange 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 |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| 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. |
Date: December 17, 2021
| /s/ Wm Chris Mathers |
| Wm Chris Mathers, Chief Financial Officer |
Texas Mineral Resources Corp. 10-K/A
Exhibit 32.1. Section 1350 Certification by Chief Executive Officer
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Texas Mineral Resources Corp (the “Company”) on Form 10-K/A for the period ended August 31, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Daniel E Gorski, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| /s/ Daniel E Gorski |
| Daniel E Gorski, Chief Executive Officer |
December 17, 2021
The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Section 1350 of Chapter 63 of Title 18 of the United States Code) and is not being filed as part of the Report or as a separate disclosure document
Texas Mineral Resources Corp. 10-K/A
Exhibit 32.2. Section 1350 Certification by Chief Financial Officer
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Texas Mineral Resources Corp (the “Company”) on Form 10-K/A for the period ended August 31, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Wm Chris Mathers, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| /s/ Wm Chris Mathers |
| Wm Chris Mathers, Chief Financial Officer |
December 17, 2021
The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Section 1350 of Chapter 63 of Title 18 of the United States Code) and is not being filed as part of the Report or as a separate disclosure document