2020
| NORTHERN MINERALS & EXPLORATION LTD. |
| (Exact name of registrant as specified in its charter) |
| Nevada | 98-0557171 | |
| (State or other jurisdiction | (IRS | |
| (Address of principal executive offices) | (Zip Code) |
| (Registrant’s telephone number, including area code) |
| (Former name, former address and former fiscal year, if changed since last report) |
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Large accelerated filer ☐ Non-accelerated filer ☒ Emerging growth company ☐ | Accelerated filer ☐ Smaller reporting company ☒ |
2020
i
PARTART I – FINANCIAL INFORMATION2 3 4 5 6
NORTHERN MINERALS & EXPLORATION LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
| January 31, | July 31, | |||||||
| 2019 | 2018 | |||||||
| (unaudited) | (audited) | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 47,821 | $ | 52,672 | ||||
| Prepaid expenses | - | 3,500 | ||||||
| Accounts receivable | - | 3,229 | ||||||
| Stock subscription receivable | - | 20,000 | ||||||
| Total Current Assets | 47,821 | 79,401 | ||||||
| Other Assets | ||||||||
| Mineral rights and properties | 30,065 | 30,065 | ||||||
| Oil and gas properties | 95,250 | 141,250 | ||||||
| Total Other Assets | 125,315 | 171,315 | ||||||
| TOTAL ASSETS | $ | 173,136 | $ | 250,716 | ||||
| LIABILITIES & STOCKHOLDERS’ DEFICIT | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 72,022 | $ | 85,146 | ||||
| Accounts payable – related party | 52,500 | 43,374 | ||||||
| Accrued liabilities | 686,939 | 327,580 | ||||||
| Current portion of property option payable | - | 116,000 | ||||||
| Loans payable | 119,990 | 110,990 | ||||||
| Loans payable – related party | 38,210 | 40,000 | ||||||
| Total Current Liabilities | 969,661 | 723,090 | ||||||
| Convertible debt – long term | 85,000 | 85,000 | ||||||
| TOTAL LIABILITIES | 1,054,661 | 808,090 | ||||||
| Commitments and Contingencies | - | - | ||||||
| Stockholders’ Deficit: | ||||||||
| Common stock, $0.001 par value, 75,000,000 shares authorized; 48,436,818 and 48,286,818 shares issued and outstanding, respectively | 48,437 | 48,287 | ||||||
| Common stock to be issued | 150,000 | 50,000 | ||||||
| Additional paid-in-capital | 1,746,435 | 1,736,835 | ||||||
| Accumulated deficit | (2,826,397 | ) | (2,392,496 | ) | ||||
| Total Stockholders’ Deficit | (881,525 | ) | (557,374 | ) | ||||
| TOTAL LIABILITIES & STOCKHOLDERS’ DEFICIT | $ | 173,136 | $ | 250,716 | ||||
2020 trivial and has not recorded an ARO liability. Standards Board (FASB) issued ASU 2014-09, Revenue from Contracts with Customers, to establish ASC Topic 606, (ASC 606). ASU 2014-09 supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition and most industry-specific guidance throughout the Industry Topics of the Codification. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance includes a five-step framework that requires an entity to: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when the entity satisfies a performance obligation. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. ASC 606 is immaterial to the Company. Pemer Bacalar – Resort Development Project conjunction with a Joint Venture Operating Agreement conduct feasibility studies, etc. As of July 31, 2019, there is $85,000 and $43,182 of principal and accrued interest, respectively, due on this loan. This note is currently in default. This note is currently in default. due on demand. this note. 2020, there is $1,512 of interest accrued on this note. to Ivan Webb, CEO, for consulting services. NOTE 5 for property information. 2019 respectively. We have temporarily decreased our spending in this area to conserve our available cash. office expense. 2020. Cash used for operating activities was $132,061 for the six months ended January 31, 2019. 2019. In the prior period we received $54,080 from loans from related parties, paid back $55,870 and sold common stock from cash proceeds of $120,000. 2020: This note is currently in default. This note is currently in default. ASSETS Current Assets: Cash Prepaid expenses Other receivable Total Current Assets Other Assets: Oil and gas properties Total Other Assets TOTAL ASSETS LIABILITIES & STOCKHOLDERS’ DEFICIT Current Liabilities: Accounts payable Accounts payable – related party Accrued liabilities Convertible debt Loans payable Loans payable – related party Total Current Liabilities TOTAL LIABILITIES Stockholders’ Deficit: Common stock to be issued Additional paid-in-capital Accumulated deficit Total Stockholders’ Deficit TOTAL LIABILITIES & STOCKHOLDERS’ DEFICIT 2NORTHERN MINERALS & EXPLORATION LTD.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(unaudited) For the Three Months Ended
January 31, For the Six Months Ended
January 31, 2019 2018 2019 2018 Revenue $ 6,219 $ 16,767 $ 17,081 $ 28,059 Distributions 6,332 14,720 15,485 27,759 Gross margin (113 ) 2,047 1,596 300 Operating expenses: Officer compensation - 15,000 15,000 27,500 Director services 15,000 1,500 30,000 2,000 Consulting - 40,500 10,000 58,000 Professional fees 23,500 10,060 25,250 19,625 Advertising and promotion - - 38,485 - Mineral property expenditures 361,048 10,100 377,021 12,849 General and administrative 8,316 61,761 16,377 107,446 Total operating expenses 407,864 138,921 512,133 227,420 Loss from operations (407,977 ) (136,874 ) (510,537 ) (227,120 ) Other income (expense): Interest expense (4,647 ) (2,685 ) (12,114 ) (9,869 ) Loss on disposal of mineral rights (46,000 ) - (46,000 ) - Other income 116,000 - 116,000 - Gain on forgiveness of debt 18,750 4,120 18,750 4,120 Total other income (expense) 84,103 1,435 76,636 (5,749 ) Loss before provision for income taxes (323,874 ) (135,439 ) (433,901 ) (232,869 ) Provision for income taxes - - - - Net Loss $ (323,874 ) $ (135,439 ) $ (433,901 ) $ (232,869 ) Loss per share, basic & diluted $ (0.01 ) $ (0.00 ) $ (0.01 ) $ (0.01 ) Weighted average shares outstanding, basic & diluted 48,436,818 40,526,079 48,435,196 37,360,318 Revenue, net Operating expenses: Officer compensation Consulting Consulting – related party Professional fees Advertising and promotion Mineral property expenditures General and administrative Total operating expenses Loss from operations Other income (expense): Interest expense Loss on disposal of mineral rights Other income Gain on forgiveness of debt Total other income (expense) Loss before provision for income taxes Net Loss Loss per share, basic & diluted Weighted average shares outstanding, basic & diluted NORTHERN MINERALS & EXPLORATION LTD.CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)FOR THE SIX MONTHS ENDED JANUARY 31, 2019 AND 2018(Unaudited) Common Stock Common Stock Amount Additional
Paid-In Capital Accumulated Deficit Total Balance, July 31, 2017 26,797,818 $ 26,798 $ 1,239,349 $ (1,622,720 ) $ (356,573 ) Common stock issued for cash 10,500,000 10,500 114,500 - 125,000 Net loss - - - (97,430 ) (97,430 ) October 31, 2017 37,297,818 37,298 1,353,849 (1,720,150 ) (329,003 ) Common stock issued for cash 4,200,000 4,201 163,798 - 167,999 Net loss - - - (135,439 ) (135,439 ) January 31, 2018 41,497,818 $ 41,499 $ 1,517,647 $ (1,855,589 ) $ (296,443 ) Common Stock Common Stock Amount Additional Paid-in Capital Common Stock To Be Issued Accumulated Deficit Total Balance, July 31, 2018 48,286,818 $ 48,287 $ 1,736,835 $ 50,000 $ (2,392,496 ) $ (557,374 ) Common stock issued for services 150,000 150 9,600 - - 9,750 Common stock issued for cash - - - 50,000 - 50,000 Net loss - - - - (110,027 ) (110,027 ) October 31, 2018 48,436,818 48,437 1,746,435 100,000 (2,502,523 ) (607,651 ) Common stock issued for cash - - - 50,000 - 50,000 Net loss - - - - (323,874 ) (323,874 ) January 31, 2019 48,436,818 $ 48,437 $ 1,746,435 $ 150,000 $ (2,826,397 ) $ (881,525 ) The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.NORTHERN MINERALS & EXPLORATION LTD.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited) Balance, July 31, 2018 Common stock issued for services Common stock issued for cash Net loss October 31, 2018 Common stock issued for cash Net loss January 31, 2019 For the Six Months Ended
January 31, 2019 2018 Cash Flow from Operating Activities: Net loss $ (433,901 ) $ (232,869 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock compensation expense 9,750 - Loss on disposal of mineral rights 46,000 - Gain on write-off of option payable (116,000 ) - Changes in Operating Assets and Liabilities: Prepaid expenses 3,500 (725 ) Accounts receivable 3,229 4,413 Accounts payables and accrued liabilities 346,235 (24,611 ) Accounts payable – related party 9,126 - Advances for well work - (31,783 ) Stock subscription receivable 20,000 - Net cash used in operating activities (112,061 ) (285,575 ) Cash Flows from Investing Activities: - - Cash Flows from Financing Activities: Proceeds from loan payable 9,000 25,000 Proceeds from loans payable – related party 54,080 - Payments on loans payable – related party (55,870 ) - Proceeds from the sale of common stock 100,000 293,000 Net cash provided by financing activities 107,210 318,000 Net increase (decrease) in cash (4,851 ) 32,425 Cash at beginning of the period 52,672 822 Cash at end of the period $ 47,821 $ 33,247 Cash paid for: Interest $ 870 $ - Taxes $ - $ - Balance, July 31, 2019 Common stock issued for cash Common stock issued for services Net loss October 31, 2019 Net loss January 31, 2020 Cash Flow from Operating Activities: Net loss Adjustments to reconcile net loss to net cash used in operating activities: Stock compensation expense Loss on disposal of mineral rights Gain on write-off of option payable Changes in Operating Assets and Liabilities: Prepaid expenses Accounts receivable Accounts payables and accrued liabilities Accounts payable – related party Net cash used in operating activities Cash Flows from Investing Activities: Cash Flows from Financing Activities: Proceeds from loan payable Proceeds from loans payable – related party Payments on loans payable – related party Stock subscription receivable Proceeds from the sale of common stock Net cash provided by financing activities Net decrease in cash Cash at beginning of the period Cash at end of the period Cash paid for: Interest Taxes Non-cash financing activity: Common stock to be issued Notes to Financial Statements2019–- ORGANIZATION AND BUSINESS OPERATIONSapproximatelythe 61 acres on the Bacalar Lagoon on the Yucatan Peninsula. There was no activity from inception to date.The Company is working on the following projects:ENMEX Operations LLC – Wholly owned Subsidiary - Pemer Bacalar – Resort Development ProjectDuring the quarter ended October 31, 2017, the Company entered into a Letter of Intent with Pemer Bacalar SAPI DE CV on September 22, 2017 to examine the opportunity of acquiring ownership in approximately 61 acres (“Property”) on a freshwater lagoon near the community of Bacalar, Mexico in the state of Quintana Roo for the purpose of entering into a joint venture for the potential development of the Property into a resort. On November 16, 2017, subsequent to the end of the quarter, the Company entered into a Memorandum of Understanding (“MOU”) in order to further conduct due diligence toward this potential project. An amended MOU was entered into on April 13, 2018 setting forth the conditions for entering into a definitive agreement with Pemer Bacalar. The amended MOU of April 13, 2018 expired on June 15, 2018; however, discussions have continued toward seeking a definitive agreement and also continued subsequent to January 31, 2019.Coleman County, Texas – Three well rework/re-completion projectOn October 14, 2014, we entered into an agreement to acquire the 206.5 acre J.E. Richey oil and gas lease. This lease area has six known productive formations. The existing three wells on the lease are fully equipped. Beginning in May 2015 we started conducting operations on the three wells to place them back into production. The rework/re-completion was completed on July 28, 2015 and production of oil and gas was established. Additional work was conducted on J. E. Richey lease during the fiscal year ended July 31, 2018.No additional work was performed during the six months endedJanuary 31, 2019. As of January 31, 2019, management determined that the $96,000 asset carried on the balance sheet was impaired resulting in a loss on impairment of$46,000.Kathis Energy LLC – Wholly owned SubsidiaryThe Company created a wholly owned subsidiary, Kathis Energy LLC (“Kathis”), on November 22, 2017 for the purpose of conducting oil and gas drilling programs in Texas. The Company agreed to assign to Kathis the Olson and Guy Ranch leases in exchange for $126,500.6Jones County, Texas – Palo Pinto Reef projectDuring the fiscal year ended July 31, 2016 the Company acquired the Olson lease covering 160 acres in Jones County, Texas. This lease is 1.5 miles from the Strand Palo Pinto Reef Field which was discovered in 1940 and has produced 1,700,000 barrels of oil from 8 wells or 212,500 barrels of oil per well. The structure map on the Palo Pinto shows a large buildup in the Palo Pinto Reef across the southern portion of the lease.No work was performed during the six months ended January 31, 2019.Shackelford County, Texas – Guy Ranch ProjectDuring the fiscal year ended July 31, 2016 the Company acquired 692-acres divided into two tracts Guy Ranch Lease in Shackelford County. The Guy Ranch lease is located in the southern part of Shackelford County. The Ranch has 32 wind turbines on it representing it is at a structurally higher elevation. The principal targets for this drilling prospect is the Patio (aka Palo Pinto Sand) and Morris Sands the area is also known to be productive from three other formations on the Guy Ranch acreage. This oil and gas lease expired on December 16, 2018. All associated expenditures have been fully expensed.Riverside Prospects, Runnels County, TexasOn October 20, 2017 the Company entered into an exclusive option agreement with Murphree Oil Company to acquire drilling prospects on four leases in Runnels County near the City of Ballinger, known as the Riverside Prospects. During the quarter ended April 30, 2018, the Company, through its wholly owned subsidiary, Kathis Energy LLC, (“Kathis”) paid the lease bonuses for extending the oil and gas lease period on 548.76 acres covering the Riverside Prospects. This acreage consists of 4 leases in a well established area where oil and gas production was discovered during 1978 – 1983. On November 2, 2018 a fresh option agreement was entered into for the Riverside Leases. The Option Agreement expired on December 31, 2018.89 Guy #4 Well – Cased HoleOn April 16, 2018, Kathis Energy acquired the 89 Guy Well #4 located on a 20-acre tract on the Guy Ranch property in Shackelford County, Texas. The well is an abandoned cased well that was drilled in October 2010 and completed in the Patio Sand at the interval of 3,144’ - 3,154’. The interval perforated (3,144 – 3,154’) is above the best productive part of the formation.No work was performed during the quarter ended January 31, 2019.Plans are being made to rework this well during April 2019.McClure 2B Gas Well – ProducingOn February 6, 2018 the Company acquired the McClure # 2B producing gas well on a 40-acre oil & gas lease located in Palo Pinto County near the Community of Graford, Texas. The McClure 2B well is completed in the Strawn in the interval 2,882’ to 2,940’ and has produced in excess of 70 million cubic feet of natural gas.No work was performed during the six months ended January 31, 2019.Carter & Foster Wells – ProducingDuring the fiscal year ended July 31, 2018 the Company acquired the Carter and Foster wells located west of the Community of Atwell, Texas in Callahan County. The Carter lease consists of 40 acres and has one well. The Foster lease has 10 acres around each well of the three wells, all of which are fully equipped with surface and subsurface equipment. All four wells are completed in the Palo Pinto Limestone formation at approximately 1,900 feet.No work was performed during the six months ended January 31, 2019.7Reeves Lease – Acreage – Palo Pinto Reef ProspectIn August 2018 the Company paid for the geological prospecting fees for a Palo Pinto Reef prospect in Jones County. The Reeves lease covers 160 acres and is located near Noodle, Texas in Jones County. The projected depth of the Palo Pinto Reef is 4,300’.No additional work was performed during the six months ended January 31, 2019. Subsequent to the end of the quarter the third party that paid for the lease agreed to return the lease bones due to not being able to obtain all parties signatures for obtaining a lease. The Company will be seeking to recover its geological fees paid in 2018.Winnemucca Mountain Gold Property, NevadaOn September 14, 2012, the Company entered into an option agreement (as amended and restated on November 15, 2012, February 1, 2013 and August 26, 2013) with AHL Holdings Ltd., a Nevada corporation, and Golden Sands Exploration Inc., a company incorporated under the laws of British Columbia, Canada, wherein the Company acquired an option to purchase a revised 80% interest in and to certain mining claims from AHL Holdings and Golden Sands, which claims form the Swordfish Property (“Winnemucca Mountain Property”) in Humboldt County, Nevada. This Winnemucca Mountain property at September 14, 2012 consisted of 208 unpatented mining claims covering an area of approximately 4,100 acres.No additional work was performed during the six months ended January 31, 2019.Effective July 30, 2014, the Company entered into amended and restated option agreement with AHL Holdings and Golden Sandsthat materially modifies and replaces the terms of the original option agreement (as amended last on August 26, 2013). The amended and restated option agreement dated July 30, 2014 was further amended by letter agreement on February 11, 2016. The aggregate cash fee payable to exercise the option was increased from $1,715,000 to $1,740,000 and the total number of common shares issuable to exercise the option has been increased from 100,000 to 3,850,000. Lastly, the amended and restated agreement provides that AHL Holdings may elect to receive shares of the Company’s common stock in lieu of any cash payments payable pursuant to the agreement at a 75% discount to the then current closing market price.In 2015 the Company failed to maintain in good standing all of the claims which form the Winnemucca Mountain Property whereby 70 unpatented mining claims were forfeited. The Company is obligated to pay the costs and cause to be re-acquired and recorded in the name of AHL Holdings the area of the property that was previously held by the 70 unpatented claims. No work was conducted on the property during the fiscal year. The Company was given a default notice by the Optionors on May 30, 2017, whereby the Company lost the right to earn an interest in the Winnemucca Mountain Property.As part of the Company’s outstanding obligations under the Option Agreement the Company conducted a geophysical survey on the Winnemucca Property in January 2018 at a cost of $35,100.On July 23, 2018, the Company entered into a New Option Agreement with AHL Holding Ltd & Golden Sands Exploration Inc. (“Optionors”). This agreement provided for the payment of $25,000 and the issuance of 3,000,000 shares of the Company’s common stock and work commitments. The Company issued the shares and made the initial payment of $25,000 per the agreement on July 31, 2018. The second payment of $25,000 per the terms of the agreement was to be paid when it was due on August 31, 2018. The Company is in default of the terms of the July 23, 2018 agreement. The Company at the time of this filing is in discussions to seek a mutual agreement and or settlement with the Optionors to proceed forward with the Winnemucca Property.The Company has firm cash commitments of $149,000 and firm exploration commitments of $200,000 pursuant to the July 23, 2018 agreement. The total of $349,000 is included in accrued liabilities on the condensed consolidated balance sheet.–- SIGNIFICANT ACCOUNTING POLICIES2019.2020. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended July 31, 2018.2019.ReclassificationsCertain re-classifications have been madeprior year financial information to conform to the presentation used in the unaudited financial statementsshort maturities for the six months endedinstruments held. The Company had no cash equivalents as of January 31, 2020 and July 31, 2019.Company'sCompany’s performance obligations are transferred to customers at a point in time, typically upon delivery.Revenues are earned the J.E. Richey Lease both in selling oil and gas and from funds received for reworking the Concho Richey #1. We began earning revenues in Q1 of 2015sales from the J.E.J. E Richey Lease. Revenues resumed from the sale of oil and gas during the second quarter of the 2016/17 fiscal year.Long-Livedlease located in Coleman County, Texas. Revenue is recognized upon delivery.9appliesfollows the successful efforts method of accounting for its oil and gas properties. The Company capitalizes assetUnder this method of accounting, all property acquisition costs and costs of mineral rightsexploratory and leases. Unproved oil and gas propertiesdevelopment wells are periodically assessed to determinecapitalized when incurred, pending determination of whether they have been impaired, and any impairment in value isthe well found proved reserves. If an exploratory well does not find proved reserves, the costs of drilling the well are charged to expense. The costs of development wells are capitalized whether those wells are successful or unsuccessful. Other exploration costs, including certain geological and geophysical expenses and delay rentals for oil and gas leases, are charged to expense as incurred. Maintenance and repairs are charged to expense, and renewals and betterments are capitalized to the appropriate property and equipment accounts. Depletion and amortization of oil and gas properties are computed on a well-by-well basis using the units-of-production method. Although the Company has recognized minimal levels of production and revenue, none of its property have proved reserves. Therefore, the Company’s properties are designated as unproved properties.willif the properties are subsequently determined to be productive and are assigned proved reserves. Proceeds from sales of partial interest in unproved leases are accounted for as a recovery of cost without recognizing any gain until all cost is recovered. Unproved properties are assessed periodically for impairment based on remaining lease terms, drilling results, reservoir performance, commodity price outlooks or future plans to develop acreage.anthe equivalent unit-of-production basis in which totalmethod based upon estimates of proved reserves willoil and natural gas reserves. The liability is periodically adjusted to reflect (1) new liabilities incurred, (2) liabilities settled during the period, (3) accretion expense and (4) revisions to estimated future cash flow requirements. To date, the Company has very few operating wells. Currently, the Company has one working well. Because there is only one active well on the Ritchie Lease, the Company estimates the asset retirement obligation to be the base used to calculate depletion.weighted average numbershares consisted of common shares outstanding and potentially outstanding common shares assumes that we incorporated aswarrants from convertible debt of 1,645,122 and 822,561, respectively, and an additional 1,215,000 warrants. For the beginning of the first period presented.As of six months ended January 31, 2019 and 2018,, the Company had 4,855,182 and 3,488,238of potentially dilutive shares; however, theshares. The shares consisted of common shares and warrants from convertible debt of 1,560,121 and 780,061, respectively, and an additional 2,515,000 warrants Te diluted loss per share is the same as the basic loss per share for the three and six months ended January 31, 20192020 and 2018,2019, as the inclusion of any potential shares would have had an antidilutive effect due to our loss from operations.Issuedadopted accounting pronouncementsPronouncementsimplemented allelected to apply the modified retrospective method. Accordingly, the new accounting pronouncements that arerevenue standard is applied prospectively in effect. These pronouncements did not have any material impact on the Company’s financial statements unless otherwise disclosed,from August 1, 2019 forward and reported financial information for historical comparable periods will not be revised and will continue to be reported under the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a materialstandards in effect during those historical periods. The impact on its financial position or results of operations.–- GOING CONCERN unaudited condensed consolidated financial statements are prepared and presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Accordingly, they do not include any adjustments relating to the realization of the carrying value of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Since inception to January 31, 2019,2020, the Company has an accumulated deficit of $2,826,397.$3,059,751. The Company intends to fund operations through equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the next twelve months. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.1045 – MINERAL RIGHTS AND PROPERTIESBeauregard Parish, LouisianaNorth High ProspectDecember 7, 2018,September 22, 2017 the Company entered into a Letter of Intent with Pemer Bacalar SAPI DE CV to examine the opportunity of acquiring ownership in approximately 80 acres (“Property”) on a freshwater lagoon near the community of Bacalar, Mexico in the state of Quintana Roo for the purpose of entering into a joint venture for the potential development of the Property into a resort. This was followed up with a Memorandum of Understanding with EnergyFunders, LLC to set forth the terms and conditions to jointly operate and pursue oil & gas projects. It was mutually agreed to create EF NMEX 18, LP, (“MOU”) on November 16, 2017 in order to jointly promote domestic oil and gas drilling projects. The first project in which EnergyFunders and NMEX will participate isfurther conduct due diligence toward this potential project. An amended MOU was entered into on April 13, 2018 setting forth the drilling ofconditions for entering into a seismic structure in the Beauregard Parish of Louisiana, known as the Northside High Prospect. The target depth is 7,300 feet to test the Cockfield (Yegua) Sand. Notable wells in the area have produced more than 200,000 barrels of oil from a single well. Drilling of this well is scheduled to begin in May 2019. NMEX has agreed to provide certain completion costsdefinitive agreement with Pemer Bacalar to acquire up to 8%51% of the working interestProperty. These conditions included obtaining an independent appraisal of the Property and develop a business plan in this well.Coleman County, Texas – J.E. Richey LeaseOctober 14, 2014, the CompanyJune 11, 2019 a new agreement was entered into regarding this property to incorporate certain requirements including, but not limited to, finalizing the acquisition of additional acreage and obtaining permits as well as formalize a Terms of Farm-out Agreement with Copper Basin Oil & Gas Inc.plan to acquire a working interest in an oil and gas lease in the J.E. Richey lease, which had 3 fully equipped wells, production flow lines, injection flow line, Tank battery consisting of two 300 BBL tanks, one 210 BBL tank with two separators. The Company agreed to acquire a 75% working interest in the lease including the existing wells and equipment.The total consideration that the Company must pay to acquire the 75% working interest is estimated at $336,000, which amount includes all work requirements, and common stock valued at $0.10 based upon our current share price of $0.11 as at October 14, 2014. The Net Revenue Interest is 56.25% and consists of approximately 206.5 acres, more or less, in Coleman County, Texas. This lease has no depth limit.20, 2015,13, 2018 a payment of $20,266 was paid toward the Company entered into a multi-well purchase and sale agreement with EF VC2, LLCarchitectural drawings prepared by Callikson. No additional funds have been provided to sell a 37.5% working interest (“WI”) inthis project since the 3 wells for total consideration of $180,000. Under the termssigning of the agreement both parties will receive a 50.0% of the WI revenue from these three wells until EF VC2 recaptures their investment of $180,000 (defined as “Payout”). After Payout EF VC2 will revert to a 37.5% of the WI revenue for the remaining life of the production from the three wells.We were successful in the re-completion of the Concho Richey #1 wellMOU on the J.E. Richey Lease in the Gray formation in July 2015. The Concho Richey well came in with initial production rates of 65 barrels of oil per day and 100 MCF of gas per day. We hold a 25% working interest in one producing well (“Concho Richey #1”) on the lease and a 100% working interest in the remainder of the 206-acre J. E Richey Lease.The Concho Richey well was shut in due to a hole coming in to the casing which was repaired in the quarter ended October 31, 2016. No revenues were received during the quarter from the Concho Richey well, subsequently repairs were made to the well. Repairs made to the well to squeeze off the holes in the casing were successful. Revenues from the sale of oil and gas resumed during the year ended July 31, 2017. The Concho Richey #1 well is currently producing 5 barrels of oil and 31 MCF of gas per day.During August 2017 further work was conducted on the J.E. Richey #1 well during August 2017, which determined the casing in this well was beyond being repaired. A decision was made to plug this well. The Richey #1 well was plugged on January 3, 2018.Further work is planned during the next fiscal year on the J. E. Richey lease on well #3 in an effort to improve its production. No work was conducted on the J.E. Richey Lease during thesix monthsended January 31, 2019.Humbolt County, Nevada - Winnemucca Mountain PropertyOn September 14, 2012, the Company entered into an option agreement (as amended and restated on November 15, 2012, February 1, 2013 and August 26, 2013) with AHL Holdings Ltd., a Nevada corporation, and Golden Sands Exploration Inc., a company incorporated under the laws of British Columbia, Canada, wherein the Company acquired an option to purchase a revised 80% interest in and to certain mining claims from AHL Holdings and Golden Sands, which claims form the Swordfish Property (“Winnemucca Mountain Property”) in Humboldt County, Nevada. This Winnemucca Mountain property at September 14, 2012 consisted of 208 unpatented mining claims covering an area of approximately 4,100 acres.Effective July 30, 2014, the Company entered into amended and restated option agreement with AHL Holdings and Golden Sandsthat materially modifies and replaces the terms of the original option agreement (as amended last on August 26, 2013). The amended and restated option agreement dated July 30, 2014 was further amended by letter agreement on FebruaryJune 11, 2016. The aggregate cash fee payable to exercise the option was increased from $1,715,000 to $1,740,000 and the total number of common shares issuable to exercise the option has been increased from 100,000 to 3,850,000. Lastly, the amended and restated agreement provides that AHL Holdings may elect to receive shares of the Company’s common stock in lieu of any cash payments payable pursuant to the agreement at a 75% discount to the then current closing market price.2019.In 2015 the Company failed to maintain in good standing all of the claims which form the Winnemucca Mountain Property whereby 70 unpatented mining claims were forfeited. The Company is obligated to pay the costs and cause to be re-acquired and recorded in the name of AHL Holdings the area of the property that was previously held by the 70 unpatented claims. No work was conducted on the property during the six monthsended January 31, 2019.Nevada. Nevada (“Property”). This property currently is comprised of 138 unpatented mining claims covering approximately 2,700 acres.May 30, 2017 the Company was given notice of default by the optionors whereby the Company lost the right to earn an interest in the property.At present the Company is in discussions with optionors to renegotiate the agreement.Although we are in such discussions, there are no assurances that acceptable terms can be reached with the optionors, AHL Holdings Ltd and Golden Sands Exploration Inc. Due to the notice of default the Company determined this property to be fully impaired. As a result of writing off the asset and liability associated with this property the Company recognized a $342,157 loss on impairment.As part of the Company’s outstanding obligations under the Option Agreement, the Company conducted a geophysical survey on the Winnemucca Property in January 2018 at a cost of $35,100.On July 23, 2018,March 25, 2019 the Company entered into a New Option Agreement with AHL Holding Ltd & Golden Sands Exploration Inc. (“Optionors”). This agreement provided for the payment of $25,000Optionors. As stated in the New Option Agreement the Company has agreed to certain terms and conditions to have the right to earn an 80% interest in the Property, these terms include cash payments, issuance of 3,000,000common shares of the Company’s common stockCompany and certain work commitments.Company issued the shares and made the initial payment of $25,000Company’s firm commitments per the March 25, 2019 option agreement ontotal $381,770 of which cash paymentstotal $181,770 and a firm work commitment of $200,000. These cash payments include payments for rentals payable to BLM and also for the staking of new claims adjoining the existing claims. The work commitment is to be conducted prior to December 31, 2020. As ofJanuary 31, 2020and July 31, 2018. The second payment of $25,000 per the terms of the agreement was to be paid when it was due on August 31, 2018. The Company is in default of the terms of the July 23, 2018 agreement. The Company at the time of this filing is hopeful to seek a mutual agreement and or settlement with the Optionors to proceed forward with the Winnemucca Property.No assurances can be given that the discussions currently underway will result in the Company being able to enter into a new agreement on acceptable terms with the Optionors. The Company has firm cash commitments of $149,000 and firm exploration commitments of $200,000 pursuant to the July 23, 2018 agreement.The total of $349,000 is included in accrued liabilities on the condensed consolidated balance sheet.No work was conducted on the Winnemucca Property during the quarter ended January 31, 2019.Jones County, Texas – Olson LeaseWe have a 100% interest in the 160-acre oil and gas Olsen lease located in the north central part of Jones County, Texas. The principal target formation is the Palo Pinto Reef. The Palo Pinto Reef is a known productive formation in the area with a high yield of cumulative oil production. An example in the area is the Strand Oil Field which is a Palo Pinto Reef Oil Field. The field discovered in 1940, consists of only 8 wells on approximately 160 acres produced a total of 1,700,000 barrels of oil, an average of 212,500 barrels of oil per oil well. The 160 Olson Lease lies approximately 1.5 miles southeast of the Strand Palo Pinto Reef Oil Field. We hold 100% of the working interest in this lease. The lease expires on April 27, 2019. No work was conducted on the Olson lease during the quarter ended January 31, 2019. The Company had agreed to assign its interest and rights to the 160-acre Olson Lease to Kathis Energy LLC, a wholly owned subsidiary of the Company in exchange for a $60,500 loan.Shackleford County, Texas – Guy Ranch LeaseDuring the fiscal year ended July 31, 2016 the Company acquired a 100% working interest in a 692-acre Guy Ranch Lease divided into two tracts. Tract 1 covers 480 acres and Tract 2 covers 212 acres. The Ranch has 32 wind turbines on it representing it is at a structurally higher elevation. The principal targets for this drilling prospect is the Patio (aka Palo Pinto Sand) and Morris Sands the area is also known to be productive from three other formations on the Guy Ranch acreage.The first project on the Guy Ranch was to re-complete a cased well in the Morris formation that was reportedly untested. The structure of the deal was for a third party to pay 100% of the costs re-complete the cased well in the Morris formation allocating 20 acres out of the 450 acres in order to earn a 75% working interest in the cased well. All records filed with the Texas Railroad Commission supported that no attempt to produce from the Morris had been performed. However, it was subsequently found out that in fact an attempt was made to re-complete in Morris formation and such attempt was unsuccessful due to an over stimulation of the Morris with a large frac at high pumping rate. The well produced mostly water. The 20 acres around the well was not assumed by the Company or its third party investors. The unused funds provided by the third party will be allocated to a new well on the Guy Ranch Lease with the third party being responsible for providing the balance of the funds to drill and complete a new well in order to earn 75% of the working interest.During the fiscal year ended July 31, 2018 the Company agreed to convey the Guy Ranch lease to Kathis Energy LLC, its wholly owned subsidiary, for its drilling program for the consideration of $66,500.In March 2018 Kathis Energy LLC, our wholly owned subsidiary, staked two drilling locations on the Guy Ranch and prepared one drilling location. This drilling location is a direct offset to a Patio Sand well that came in at 140 barrels per day. The Patio Sand is one of the main producing formations in the area generally averages between 25,000 and 75,000 barrels oil per well. The Morris Sand a notable gas producer is known to produce up to 1.4 BCF gas from one well and the Gardner is noted in this area to produce between 50,000 and 110,000 barrels per well. The Net Revenue Interest for the Guy Ranch lease is 75%. The Guy Ranch Lease expired on December 16, 2018.Shackelford County, Texas 89 Guy #4 Well – Cased WellThe 89 Guy Well #4 is located on the Guy Ranch property in Shackelford County. The well is an abandoned cased well that was drilled in October 2010 and completed in the Patio Sand at the interval of 3,144’ - 3,154’. This interval produced 2 barrels of oil and 20 thousand cubic feet of natural gas from a 100 sac gel frac. The interval perforated (3,144 – 3,154’) is above the best productive part of the formation. The cased well was purchased from the mineral owner through an independent geologist followed by an application to the Texas Railroad Commission to assume liability of the case well. The application is still pending approval.Kathis Energy has a 80% net revenue interest in the 20 acre lease with the cased well and owns 100% of the working interest. Kathis has until April 17, 2019, to bring the well back into production. Kathis paid $22,500 for the cased well. No work was conducted on the Guy Ranch cased well 89 Guy #4 during the quarter ended January 31, 2019, however, plans include to rework the well before the lease expires in April 2019.Palo Pinto County, Texas - McClure 2B – Gas WellOn February 6, 2018 the Company acquired the McClure # 2B producing gas well on a 40 -acre oil & gas lease located in Palo Pinto County near the Community of Graford, Texas. The McClure 2B well was drilled in 2006 to a total depth of 4,739’ and was re-completed in the Strawn formation in January 2011. The McClure 2B gas well is among a large number of gas wells that are producing in the area from the Strawn formation.The location of the McClure 2B gas well is 1 mile southwest of the Community of Graford, Texas in Palo Pinto County on a 40 acre tract. The lease is off a main county road and the lease road can have washouts depending on the amount of rain as the McClure 2B gas well is on top of a hill. There are two natural gas lines 1) high pressure and the 2) is low pressure.The Company paid $25,000 for this gas well. The Net Revenue Interest for the McClure lease is 75% and the lease is held by existing production. The Company entered into an agreement with a third party to acquire and rework/re-complete the well in one or more of the other intervals in the Strawn formation in the well. As of the date of this report no work has been conducted toward the reworking/re-completing in this well. Upon the third party recovering its investment the Company will receive 40% of the Net Revenue Interest. No work was conducted on the McClure 2B, gas well, during the quarter ended January 31, 201913Callahan County, Texas Carter & Foster Wells – Producing:History and Background:The wells on the Carter and Foster leases were drilled in 1992-93. Most of the wells were treated with 5,000 gallons of 21% acid and yielded initial rates of production of 40 barrels of oil per day then gradually declined to 3 barrels per day by the end of the first year. The wells now are 25 plus years old and are producing 90% or better oil cut in the fluid being produced. The production is very nominal at the present time however no secondary acid stimulation has been conducted since they were originally brought into production in the early 1990s. All four wells on the Carter and Foster leases are fully equipped and have their own production facilities and have electricity to each of the wells. These wells are marginal producing oil wells producing approximately 20 barrels per month with little to no formation water. The objective is to conduct a large multiple stage acid job on three of the four wells to significantly enhance daily production rates.The Carter and Foster wells are located west of the Community of Atwell, Texas in Callahan County. The Carter lease consists of 40 acres and has one well. The Foster lease has 10 acres around each well of the three wells, all of which are fully equipped with surface and subsurface equipment. The Carter and Foster have good access to an all-weather county road and the lease roads provide good access to each well.The Net Revenue Interest for the Carter lease is 75% and the lease is held by existing production. The Net Revenue Interest for the Foster lease is 60% and the lease is held by existing production. The Company entered into an agreement with a third party to acquire and rework Palo Pinto formation by conducting the multiple staged acid jobs on three wells. During the year the Company has placed new electric motors on all four wells, changed out the down hole pumpsaccounted for $354,000 and placed the wells into production. As of the date of this report the Company has not conduced the multiple staged acid job on any of the three wells. Upon the third party recovering$381,770, respectively, in its investment the Company will receive 40% of the Net Revenue Interest. The Carter and Foster leases/wells were acquired from an Officer of the Company for total consideration of $1.00. No work was conducted on the Carter/Foster leases during the quarter ended January 31, 2019Reeves Lease – Palo Pinto Reef – Jones County, TexasThe Company has paid for the geological prospecting fees for a Palo Pinto Reef prospect in Jones County. The Reeves lease covers 160 acres and is located near Noodle, Texas in Jones County. The projected depth of the Palo Pinto Reef is 4,300’accrued liabilities (Note 7). Excellent well control by 6 Strawn wells provides evidence of a Palo Pinto Reef showing a structure 48’ high to other wells. The nearest Palo Pinto Reef well to the Reeves Lease made more than 150,000 barrels from one well.The lease bonus money of $28,000 was provided by a third party for a two-year lease and the Company paid the geological prospect fee of $10,000. It was verbally understood between the Company and third party to promote this drilling prospect seeking to retain a carried interest plus recoup the lease and prospect monies.The Net Revenue of the lease is 80%. The lease term is 2 years. Plans are to deliver a 75% net revenue lease to a drilling partner retaining an overriding royalty and a carried working interest in the drilling in the well. Subsequent to the quarter ended January 31, 2019, it was discovered that not all of the minerals were leased resulting in the lease not being available for transfer to a drilling partner. Lease bonus money and geological fees paid are being recaptured by both the Company and the third party during the third quarter.Riverside Prospects, Runnels County, TexasOn October 20, 2017 the Company entered into an exclusive option agreement with Murphree Oil Company to acquire drilling prospects on four leases in Runnels County near the City of Ballinger, known as the Riverside Prospects. During the quarter ended April 30, 2018, the Company, through its wholly owned subsidiary, Kathis Energy LLC, (“Kathis”) paid the lease bonuses for extending the oil and gas lease period on 548.76 acres covering the Riverside Prospects. On November 2, 2018 a fresh option agreement was entered into for the Riverside Leases. This acreage consists of 4 leases in a well established area where oil and gas production was discovered during 1978 – 1983. The option expired on December 31, 2018.All associated expenditures have been fully expensed.5 –7 - ACCRUED LIABILITIESAccrued liabilities consist of $349,000 for firm commitments on theWinnemucca Property, $42,936 of accrued interest, $27,599 of accrued distribution and royalty payments, $170,517 of monies received in advance for well work to be performed and the acquisition of additional oil and gas properties and $95,000 of investment funds to be used for the development of future properties. The Company has partnered with others whereby they provide all or a portion of the working capital for either well work to be completed on existing properties or towards the acquisition of new properties. As of January 31, 2020 and July 31, 2019, the Company has unused funds it has received of $65,879 and $65,879, respectively, which are included in accrued liabilities. General accrual Interest Distributions and royalty Advances for well work Winnemucca Property Investment funds to be used for the development of future properties 6 –8 - CONVERTIBLE DEBT2019,2020, there iswas $85,000 and $39,810$46,610 of principal and accrued interest, respectively, due on this loan.$2,001$3,501 and $2,367, respectively, of accrued interest due on this loan.79 – COMMON STOCKDuringLOANS PAYABLEyear ended Company executed a promissory note for $15,000 with a third party. The note matures in two years and interest is set at $3,000 for the full two years. As ofJanuary 31, 2020andJuly 31, 2018,2019, there is $15,000 and $2,625 and $15,000 and $1,875 of principal and accrued interest, respectively, due on this loan. This loan is currently in default.sold 16,559,000 shares of common stock for total cash proceeds of $219,475; $20,000 of which had not yet been received as of July 31, 2018.owed $5,000 and $5,000, respectively, to a third party. The $20,000 was received in the quarter ended October 31, 2018. In addition, 1,000,000 shares of those sold were not issued as of July 31, 2018loan is unsecured, non-interest bearing and have therefore been credited to common stock to be issued. The 1,000,000 shares were issued in February 2019.2019,2020, a third party loaned the Company issued 150,000 shares$15,000. The loan is unsecured, bears interest at 8% per annum and matures on September 1, 2021. As of common stock to two individuals as consideration for their support with the Richey #2A project. The shares were valued at $0.065 per share, the closing priceJanuary 31, 2020, there is $424 of interest accrued on the date of grant, for total non-cash expense of $9,750.2019,2020, a third party loaned the Company sold 1,000,000 Units of its common stock for total cash proceeds of $50,000. Each Unit consists of one common share$60,000. The loan is unsecured, bears interest at 8% per annum and one-half share purchase warrant exercisable for 2 years. Each whole share purchase warrant has an exercise price of $0.15 per common share.matures on September 1, 2021. As of January 31, 2019, the shares have not yet been issued by the transfer agent and have therefore been credited to common stock to be issued. The 1,000,000 shares were issued in February 2019.2019,2020, the Company sold 1,666,667666,660 shares of common stock at $0.03 per share for total cash proceeds of $50,000. As of January 31, 2019, the shares have not yet been issued by the transfer agent and have therefore been credited to common stock to be issued. The 1,666,667 shares were issued in February 2019.$20,000.NOTE 8 – WARRANTSWarrants have been issued in conjunction with common stock issuances. During the year ended July 31, 2018, the Company sold 2,730,000 Units of its common stock for total cash proceeds of $136,500. 2019,2020, the Company sold 1,000,000 Unitsissued 75,000 shares of its common stock for total cash proceeds of $50,000. Each Unit consists of one common share and one-half share purchase warrant exercisable for 2 years. Each whole share purchase warrant has an exercise price of $0.15 per common share. The warrants were evaluated for purposes of classification between liability and equity. The warrants do not contain features that would requirehad been shown in equity as a liability classification and are therefore considered equity. The Black Scholes pricing model was used to estimate the fair value of the Warrants issued with the following inputs:Warrants 500,000 Exercise Price $ 0.15 Term 2 years Volatility 323 % Risk Free Interest Rate 2.61 % Fair Value $ 25,205 Using the fair value calculation, the relative fair value between the common stock and the warrants was calculated to determine the warrants recorded equity amountpayable as of $25,205, accounted for in additional paid in capital.Activity for the six months ended January 31, 2019 and the year ended July 31, 2018 is as follows: Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Contract Term Outstanding at July 31, 2017 150,000 $ 0.10 1.50 Granted 1,865,000 0.15 1.47 Expired - - - Exercised - - - Exercisable at July 31, 2018 2,015,000 $ 0.15 1.47 Granted 500,000 0.15 2.0 Expired - - - Exercised - - Exercisable at January 31, 2019 2,515,000 0.15 1.07 Exercisable at July 31, 2018 Granted Expired Exercised Exercisable at July 31, 2019 Granted Expired Exercised 9 –12 - RELATED PARTY TRANSACTIONSOn April 16, 2017, the Company executed a promissory note for $15,000 with a shareholder. The note matures in two years and interest is set at $3,000 for the full two years. $13,500$22,500 and $1,125 of principal and accrued interest,$22,500, respectively, credited to accounts payable for amounts due on this loan.20192020 and for the year ended July 31, 2018,2019, total payments of $7,500$30,000 and $56,500,$30,000, respectively, were made to an officerNoel Schaefer, a Director of the Company, for consulting services.For the six months ended As of January 31, 20192020 and for the year ended July 31, 2018, total payments of $22,5002019, there is $27,500 and $26,500,$27,500, respectively, were madecredited to directors of the Company for consulting services.On July 31, 2018, Winona Webb, the wife of Ivan Webb, CEO, loaned the Company $25,000 for general operating expenses. This loan was repaid on August 2, 2018 with an additional $5,000 for interest and a loan fee. On August 3, 2018, Mrs. Webb loaned the Company $30,000 which was repaid on August 21, 2018. accounts payable.Mrs. Webbthe wife of the CEO for $6,800. The loan iswas to be repaid by December 15, 2018, with an additional $680 to cover interest and fees. On October 10, 2018, the Company executed aanother loan agreement with Mrs. Webb for $15,000. The loan iswas to be repaid by December 15, 2018, with an additional $1,500 to cover interest and fees. As of January 31, 2019,2020, the Company owes Mrs. Webb $20,930 and $2,180 of principal and interest, respectively.1610 –13 - SUBSEQUENT EVENTSstatementstatements were available to be issued, and has determined that no material subsequent events exist other thenthan the following.2019,2020, the Company sold 2,500,000 shares of common stock for total cash proceeds of $75,000.Subsequent$50,000.January 31, 2019, the Company’s transfer agent issued 3,666,667,its Articles of Incorporation in which it increased its authorized capital stock to 250,000,000 shares of common stock, that were credited to commonpar value $0.001 and 50,000,000 shares of preferred stock, to be issued.Subsequent to January 31, 2019, the Company entered into a Memorandum of Understanding with Labrador Capital SAPI de CV (“Labrador”) to seek to enter into a Joint Venture Agreement for the acquisition and development of real estate projects in the Puerto Morelos area on the Yucatan Peninsula of Mexico.Labrador has several projects identified in the Puerto Morelos area and wants to take advantage of this specific market conditions. Labrador desires to further develop projects in the Puerto Morelos area and is seeking investors. Victor Miranda is a principle owner of Labrador. Victor Miranda serves as the Company’s Chief Financial Officer. Labrador is also a significant shareholder of the CompanyItem 2. Management'sManagement's Discussion and Analysis of Financial Condition and Results of OperationsWe were incorporated in Nevada on December 11, 2006 under the name Punchline Entertainment, Inc. On August 22, 2012, the Company’s board of directors approved an agreement and plan of merger to effect a name change of the Company from Punchline Entertainment, Inc. to Punchline Resources Ltd. On July 12, 2013, the stockholders approved an amendment to change the name of the Company from Punchline Resources Ltd. to Northern Mineral & Exploration Ltd.- Mineral Rights and Properties.20192020 and 2018 Three Months Ended
January 31, 2019 2018 Revenue $ 6,219 $ 16,767 Distributions 6,332 14,720 Gross Margin (113 ) 2,047 Officer compensation - 15,000 Director services 15,000 1,500 Consulting - 40,500 Professional fees 23,500 10,060 Advertising and promotion - - Mineral property expenditures 361,048 10,100 General and administrative 8,316 61,761 Total operating expense (407,864 ) (138,921 ) Interest expense (4,647 ) (2,685 ) Loss on disposal of mineral rights (46,000 ) - Other income 116,000 - Gain on forgiveness of debt 18,750 4,120 Net Loss $ (323,874 ) $ (135,439 ) 2018 were $6,219 and $16,767,a net negative ($113), respectively, a decreasean increase of $10,548 or 62.9%.$231. Revenues are earned primarily from the J.E. Richey Lease both in sellingfrom the sale of oil and gas and from funds received for reworkingare recorded net of any distributions paid. In the Concho Richey #1. During the first quarter there were no oil or gas sales, resultingprior period we had to pay out additional back owed distributions which resulted in the decrease in revenue for the period.DistributionsDuring the three months ended January 31, 2019, we accrued and/or paid distributions of $6,332 compared to $14,720 for the three months ended January 31, 2018. Distributions are paid or accrued in the quarter in which the revenue for those distributions is earned. Distributions are paid to the joint venture partners in the J.E. Richey Lease.Officer compensationOfficer compensation was $0negative net revenue.2018,$23,500 for the three months ended January 31, 2020 and 2019, respectively, an increase of $17,230 or 73%. Professional fees generally consist of legal, audit and accounting expense. The increase can primarily be attributed to an increase in audit fees billed during the period.Director servicesA director was paid for services in the amount of $15,000 and $1,500 for the three months ended January 31, 2019 and 2018, respectively, an increase of $13,500. Fees are paid to our directors are billed as consulting fees. During the current period this fee was increased to $5,000 per month as Mr. Schaefer, Director, has increased his time spent on the Company over the past several months.$40,500$10,000 for the threesix months ended January 31, 2020 and 2019, and 2018, respectively. When needed the Company hires experts in the mining, oil and gas industries to assist with its current projects. The decrease in consulting fees in the current period can be attributed to a decrease in expenditures while the Company pursues additional funding.Professional feesProfessional fees$23,500$30,000 and $10,060$30,000 for the threesix months ended January 31, 2020 and 2019, respectively. Fees at $5,000 per month are paid to Noel Schaefer, Director, but are billed as consulting fees.2018,$25,250 for the six months ended January 31, 2020 and 2019, respectively, an increasea decrease of $13,440$1,320 or 133.5%5.2%. Professional fees generally consist of legal, audit and accounting expense. The increase can be attributed to an increase in audit and accounting fees billed during the period.There was no advertisingincurredwere $0 and $38,485 for the threesix months ended January 31, 2020 and 2019, or 2018.$361,048$27,169 and $10,100$377,021 for the threesix months ended January 31, 2020 and 2019, or 2018, respectively. Therespectively, an increase is primarily due to an accrual of $349,852. In the prior period we accrued for $349,000 forof firm commitments associated with the Winnemucca property.The Company has firm cash commitments of $149,000 and firm exploration commitments of $200,000 pursuant to the July 23, 2018 agreement.$8,316$9,088 and $61,761$16,377 for the threesix months ended January 31, 2020 and 2019, or 2018, respectively, a decrease of $53,445.$7,289 or 44.5%. The decrease can be largely attributed to a decrease in BLM rentalstravel and associated fees.threesix months ended January 31, 2020 and 2019 or 2018 we had interest expense of $4,647$6,870 and $2,685,$12,144, respectively, a decrease of $5,244 or 43,3%. In the prior year we incurred an increaseadditional interest charge on one of $1,962 or 73%. The increase is in conjunction with a higher loan payable balance.Other income (expense)Duringour short-term loans increasing the threeexpense for that period.2019, we recognized other income of $116,000 from the write off of an option payable that had expired in a prior period, a loss of $46,000 as a result of the impairment to our J.E. Richey Lease in Coleman County, Texas and a gain on forgiveness of debt of $18,750 received from one of our vendors.Net LossFor the three months ended January 31, 2019,2020, we had a net loss of $323,874$95,678 as compared to a net loss of $135,439 for the three months ended January 31, 2018. Our net loss was higher in the current period primarily due to an increase in mineral property expenditures, including $349,000 accrued for firm commitments associated with the Winnemucca property.The Company has firm cash commitments of $149,000 and firm exploration commitments of $200,000 pursuant to the July 23, 2018 agreement.Results of Operations for the Six Months Ended January 31, 2019 and 2018 Six Months Ended
January 31, 2019 2018 Revenue $ 17,081 $ 28,059 Distributions 15,485 27,759 Gross Margin 1,596 300 Officer compensation 15,000 27,500 Director services 30,000 2,000 Consulting 10,000 58,000 Professional fees 25,250 19,625 Advertising and promotion 38,485 - Mineral property expenditures 377,021 12,849 General and administrative 16,377 107,446 Total operating expense (512,133 ) (227,420 ) Interest expense (12,114 ) (9,869 ) Loss on disposal of mineral rights (46,000 ) - Other income 116,000 - Gain on forgiveness of debt 18,750 4,120 Net Loss $ (433,901 ) $ (232,869 ) 20RevenueRevenues of oil and gas for the six months ended January 31, 2019 and 2018 were $17,081 and $28,059, respectively, a decrease of $10,978 or 39.1%. Revenues are earned from the J.E. Richey Lease both in selling oil and gas and from funds received for reworking the Concho Richey #1. During the first quarter there were no oil or gas sales, resulting in the decrease in revenue for the period.DistributionsDuring the six months ended January 31, 2019, we accrued and/or paid distributions of $15,485 compared to $27,759 for the six months ended January 31, 2018. Distributions are paid or accrued in the quarter in which the revenue for those distributions is earned. Distributions are paid to the joint venture partners in the J.E. Richey Lease.Officer compensationOfficer compensation was $15,000 and $27,500 for the six months ended January 31, 2019 and 2018, respectively. No compensation was accrued or paid to the CEO for the three months ended January 31, 2019.Director servicesA director was paid for services in the amount of $30,000 and $2,000 for the six months ended January 31, 2019 and 2018, respectively, an increase of $28,000. Fees are paid to our directors but are billed as consulting fees. During the current period this fee was increased to $5,000 per month as Mr. Schaefer, Director has increased his time spent on the Company over the past several months.ConsultingConsulting fees were $10,000 and $58,000 for the six months ended January 31, 2019 and 2018, respectively. When needed the Company hires experts in the mining, oil and gas industries to assist with its current projects. The decrease in consulting fees in the current period can be attributed to a decrease in expenditures while the Company pursues additional funding.Professional feesProfessional fees were $25,250 and $19,625 for the six months ended January 31, 2019 and 2018, respectively, an increase of $5,625 or 28.6%. Professional fees generally consist of legal, audit and accounting expense. The increase can be attributed to an increase in audit and accounting fees billed during the period.Advertising and promotionAdvertising and promotion expenses were $38,485 and $0, for the six months ended January 31, 2019 and 2018, respectively. Advertising and promotion expense has increased with the increased availability of funds to use to promote the company’s current mining activities.Mineral property expendituresMineral property expenditures were $377,021 and $12,849 for the six months ended January 31, 2019 and 2018, respectively, an increase of $13,224. The increase is primarily due to an accrual of $349,000 for firm commitments associated with the Winnemucca property.The Company has firm cash commitments of $149,000 and firm exploration commitments of $200,000 pursuant to the July 23, 2018 agreement.General and administrativeGeneral and administrative expense was $16,377 and $107,446 for the six months ended January 31, 2019 or 2018, respectively, a decrease of $91,069. The decrease can be largely attributed to a decrease in BLM rentals and associated fees.Interest expenseDuring the six months ended January 31, 2019 or 2018 we had interest expense of $12,114 and $9,869, respectively, an increase of $2,245 or 22.7%. The increase is in conjunction with a higher loan payable balance.Other income (expense)During the six months ended January 31, 2019, we recognized other income of $116,000 from the write off of an option payable that had expired in a prior period, a loss of $46,000 as a result of the impairment to our J.E. Richey Lease in Coleman County, Texas and a gain on forgiveness of debt of $18,750 received from one of our vendors.Net LossFor the six months ended January 31, 2019, we had a net loss of $433,901 as compared to a net loss of $232,869 for the six months ended January 31, 2018. Our net loss was higher in the current period primarily due to an increase in mineral property expenditures, including $349,000 accrued for firm commitments associated with the Winnemucca property.The Company has firm cash commitments of $149,000 and firm exploration commitments of $200,000 pursuant to the July 23, 2018 agreement.Liquidity and Financial ConditionOperating ActivitiesCash used by operating activities was $112,061 for the six months ended January 31, 2019. Our net loss is lower in the current period due to a decrease in some of our operating expenses as discussed above.forby operating activities was $285,575$108,840 for the six months ended January 31, 2018.$107,210$95,022 for the six months ended January 31, 2019 compared to $318,0002020. We received $75,000 from loans payable and $20,000 from the sale of our common stock and loansstock. Net cash provided by financing activities was $127,210 for the six months ended January 31, 2018.2019:2019,2020, there iswas $85,000 and $39,810$46,610 of principal and accrued interest, respectively, due on this loan.On April 16, 2017, the Company executed a promissory note for $15,000 with a related party. The note matures in two years and interest is set at $3,000 for the full two years. As of JanuaryJuly 31, 2019, there is $15,000$85,000 and $1,125$43,182 of principal and accrued interest, respectively, due on this loan.$2,001$3,501 and $2,367, respectively, of accrued interest due on this loan.July 31, 2018, Winona Webb, the wife of Ivan Webb, CEO, loaned the Company $25,000 for general operating expenses. This loan was repaid on August 2, 2018 with an additional $5,000 for interest and a loan fee. On August 3, 2018, Mrs. Webb loaned the Company $30,000 which was repaid on August 21, 2018. On September 25, 2018,April 16, 2017, the Company executed a promissory note for $15,000 with a third party. The note matures in two years and interest is set at $3,000 for the full two years. As ofJanuary 31, 2020andJuly 31, 2019, there is $15,000 and $2,625 and $15,000 and $1,875 of principal and accrued interest, respectively, due on this loan. This loan agreement with Mrs. Webb for $6,800.is currently in default.to be repaid by December 15, 2018, with an additional $680 to cover interestunsecured, non-interest bearing and fees. On October 10, 2018,due on demand.Company executedsix months ended January 31, 2020, a loan agreement with Mrs. Webb forthird party loaned the Company $15,000. The loan is to be repaid by December 15, 2018, with an additional $1,500 to coverunsecured, bears interest at 8% per annum and fees.matures on September 1, 2021. As of January 31, 2019,2020, there is $424 of interest accrued on this note.owes Mrs. Webb $20,930$60,000. The loan is unsecured, bears interest at 8% per annum and $2,180matures on September 1, 2021. As of principal andJanuary 31, 2020, there is $1,512 of interest respectively.accrued on this note.The preparationconformity with accounting principles generally accepted in the United Statesthis Form 10-Q for a summary of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Note 2 to the Financial Statements describes the significantour critical accounting policies and methods used in the preparation of the Financial Statements. Estimates are used for, but not limited to, contingenciesrecently adopting and taxes. Actual results could differ materially from those estimates. The following criticalissued accounting policies are impacted significantly by judgments, assumptions, and estimates used in the preparation of the Financial Statements.We are subject to various loss contingencies arising in the ordinary course of business. We consider the likelihood of loss or impairment of an asset or the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss in determining loss contingencies. An estimated loss contingency is accrued when management concludes that it is probable that an asset has been impaired, or a liability has been incurred and the amount of the loss can be reasonably estimated. We regularly evaluate current information available to us to determine whether such accruals should be adjusted. We recognize deferred tax assets (future tax benefits) and liabilities for the expected future tax consequences of temporary differences between the book carrying amounts and the tax basis of assets and liabilities. The deferred tax assets and liabilities represent the expected future tax return consequences of those differences, which are expected to be either deductible or taxable when the assets and liabilities are recovered or settled. Future tax benefits have been fully offset by a 100% valuation allowance as management is unable to determine that it is more likely than not that this deferred tax asset will be realized.Revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration that an entity expects to receive in exchange for those goods or services. In addition, ASC 606 requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company's performance obligations are transferred to customers at a point in time, typically upon delivery.Revenues are earned from the J.E. Richey Lease both in selling oil and gas and from funds received for reworking the Concho Richey #1. We began earning revenues in Q1 of 2015 from the J.E. Richey Lease. Revenues resumed from the sale of oil and gas during the second quarter of the 2016/17 fiscal year.Property consists of mineral rights purchases as stipulated by underlying agreements and payments made for oil and gas exploration rights. Our company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. When we determine that the carrying value of long-lived assets may not be recoverable based upon the existence of one or more indicators of impairment and the carrying value of the asset cannot be recovered from projected undiscounted cash flows, we record an impairment charge. Our company measures any impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent in the current business model. Significant management judgment is required in determining whether an indicator of impairment exists and in projecting cash flows.Mineral property acquisition and exploration costs are expensed as incurred until such time as economic reserves are quantified. Cost of lease, exploration, carrying and retaining unproven mineral lease properties are expensed as incurred. We have chosen to expense all mineral exploration costs as incurred given that it is still in the exploration stage. Once our company has identified proven and probable reserves in its investigation of its properties and upon development of a plan for operating a mine, it would enter the development stage and capitalize future costs until production is established. When a property reaches the production stage, the related capitalized costs will be amortized over the estimated life of the probable-proven reserves. When our company has capitalized mineral properties, these properties will be periodically assessed for impairment of value and any diminution in value. To date, our company has not established the commercial feasibility of any exploration prospects; therefore, all costs are to be expensed.The Company applies the successful efforts method of accounting for oil and gas properties. The Company capitalizes asset acquisition costs of mineral rights and leases. Unproved oil and gas properties are periodically assessed to determine whether they have been impaired, and any impairment in value is charged to expense. The costs of proved properties will be depleted on an equivalent unit-of-production basis in which total proved reserves will be the base used to calculate depletion.Item 3. QuantitativeQuantitative and Qualitative Disclosures About Market RiskItem 4. ControlsControls and ProceduresPARTART II – OTHER INFORMATIONItem 1. LegalLegal ProceedingsItem 1A. RiskRisk FactorsNovember 13, 2018.June 4, 2020.Item 2. UnregisteredUnregistered Sales of Equity Securities and Use of ProceedsDuring the Six months ended January 31, 2019, the Company sold 1,000,000 Units of its common stock for total cash proceeds of $50,000. Each Unit consists of one common share and one-half share purchase warrant exercisable for 2 years. Each whole share purchase warrant has an exercise price of $0.15 per common share.2019,2020, the Company sold 1,666,667666,660 shares of common stock for total cash proceeds of $50,000.Subsequent to$20,000.2019,2020, the Company sold 2,500,000issued 75,000 shares of common stock for total cash proceedsthat had been shown in equity as a common stock payable as of $75,000.July 31, 2019.Item 3. DefaultsDefaults Upon Senior SecuritiesItem 4. MineMine Safety DisclosuresItem 5. OtherOther InformationItem 6. ExhibitsExhibitsExhibit Number Exhibit Description (3) Articles and Bylaws3.1Amendment to Articles of Incorporation (Incorporated by reference to our Current Report on Form 8-K filed on August 12, 2013)(31)302 Certification31.1*Section 302 Certification under Sarbanes-Oxley Act of 2002. Section 302 Certification under Sarbanes-Oxley Act of 2002. (32) 906 Certification32.1*Section 906 Certification under Sarbanes-Oxley Act of 2002. (101)** Interactive Data File (Form 10-Q for the three Months Ended October 31, 2018)101.INS XBRL Instance Document 101.SCH XBRL Taxonomy Extension Schema Document. 101.CAL XBRL Taxonomy Extension Calculation Link base Document. 101.DEF XBRL Taxonomy Extension Definition Link base Document. 101.LAB XBRL Taxonomy Extension Label Link base Document. 101.PRE XBRL Taxonomy Extension Presentation Link base Document. * NORTHERN MINERALS & EXPLORATION LTD. (Registrant) Dated: March 22, 2019July 9, 2020 Ivan Webb Chief Executive Officer Noel Schaefer Chief Operating Officer and Director Victor MirandaRachel Boulds Victor MirandaRachel Boulds Chief Financial Officer and Victor Miranda Director 27