UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JanuaryJuly 31, 2022
☐ 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: 000-55831
MMEX RESOURCES |
(Exact name of Issuer as specified in its charter) |
Nevada |
| 26-1749145 |
(State or other Jurisdiction of Incorporation or Organization) |
|
Identification No.) |
|
|
|
3616 Far West Blvd. #117-321 Austin, Texas 78731 |
| 855-880-0400 |
(Address of principal executive offices, including zip code) |
| (Issuer’s telephone number, including area code) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the 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☒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 (§232.405 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, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated | ☐ | Smaller reporting company | ☒ |
(Do not check if a 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Applicable only to issuers involved in bankruptcy proceedings during the preceding five years:
Indicate by check mark whether the registrant filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐
Applicable only to corporate issuers:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of March 9,September 12, 2022, there were 19,595,36226,472,143 shares of common stock, $0.001 par value, issued and outstanding.
MMEX RESOURCES CORPORATION
TABLE OF CONTENTS
QUARTER ENDED JANUARYJULY 31, 2022
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3 | ||||
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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| 2 |
| Table of Contents |
PART I – FINANCIAL INFORMATION
ITEM 1. Financial Statements
The accompanying condensed consolidated financial statements of MMEX Resources Corporation and subsidiaries (the “Company”) are unaudited and have been prepared in accordance with generally accepted accounting principles for interim financial information and in accordance with the instructions for Form 10-Q. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements.
In the opinion of management, the condensed consolidated financial statements contain all material adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial condition, results of operations, and cash flows of the Company for the interim periods presented.
Operating results and cash flows for any interim period are not necessarily indicative of the results that may be expected for other interim periods or the full fiscal year. These condensed consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended April 30, 20212022 filed with the Securities and Exchange Commission (“SEC”).
The Company amended its articles of incorporation to provide for a 1 for 10,000 reverse stock split of its common shares, which was effective as of July 1, 2021. The Company has given retroactive effect to the reverse stock split for all periods presented in this report on Form 10-Q.
| 3 |
| Table of Contents |
MMEX RESOURCES CORPORATION
Condensed Consolidated Balance Sheets
|
| January 31, 2022 |
|
| April 30, 2021 |
| ||||||||||
|
| (unaudited) |
|
|
| July 31, 2022 |
|
| April 30, 2022 |
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Assets |
|
|
|
|
|
| (unaudited) |
|
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|
|
|
|
|
|
|
|
|
|
| ||||||
Current assets: |
|
|
|
|
|
|
|
|
|
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Cash |
| $ | 895,846 |
| $ | 330,449 |
|
| $ | 8,259 |
| $ | 136,867 |
| ||
Prepaid expenses and other current assets |
|
| 59,883 |
|
|
| 37,893 |
|
|
| 29,833 |
|
|
| 47,333 |
|
Total current assets |
| 955,729 |
| 368,342 |
|
| 38,092 |
| 184,200 |
| ||||||
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|
|
|
|
|
|
|
|
|
| ||||||
Property and equipment, net |
| 700,821 |
| 472,169 |
|
|
| 1,105,100 |
|
|
| 1,114,197 |
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Deposit |
|
| 900 |
|
|
| 900 |
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|
|
|
|
|
|
|
|
|
|
| ||||||
Total assets |
| $ | 1,657,450 |
|
| $ | 841,411 |
|
| $ | 1,143,192 |
|
| $ | 1,298,397 |
|
|
|
|
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Liabilities and Stockholders’ Deficit |
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Current liabilities: |
|
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|
|
|
|
|
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Accounts payable |
| $ | 565,790 |
| $ | 802,640 |
|
| $ | 662,928 |
| $ | 639,782 |
| ||
Accrued expenses |
| 848,432 |
| 807,349 |
|
| 864,191 |
| 851,275 |
| ||||||
Accounts payable and accrued expenses – related parties |
| 81,052 |
| 272,834 |
|
| 106,730 |
| 76,770 |
| ||||||
Note payable, currently in default |
| 75,001 |
| 75,001 |
|
| 75,001 |
| 75,001 |
| ||||||
Note payable |
| 775,000 |
| 775,000 |
|
| 920,952 |
| 904,452 |
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Convertible notes payable, currently in default, net of discount of $0 and $0 at January 31, 2022 and April 30, 2021, respectively |
| 75,000 |
| 235,775 |
| |||||||||||
Convertible notes payable, net of discount of $0 and $133,944 at January 31, 2022 and April 30, 2021, respectively |
| 290,000 |
| 398,056 |
| |||||||||||
Convertible notes payable – related parties, net of discount of $0 and $235at January 31, 2022 and April 30, 2021, respectively |
| 0 |
| 74,755 |
| |||||||||||
PPP loans payable |
| 0 |
| 150,000 |
| |||||||||||
SBA express bridge loan payable |
| 10,000 |
| 10,000 |
| |||||||||||
Derivative liabilities |
|
| 0 |
|
|
| 3,010,042 |
| ||||||||
Convertible notes payable, currently in default, net of discount of $0 and $0 at July 31, 2022 and April 30, 2022, respectively |
| 75,000 |
| 75,000 |
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Convertible notes payable, net of discount of $16,831 and $22,903 at July 31, 2022 and April 30, 2022, respectively |
|
| 453,169 |
|
|
| 432,097 |
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Total current liabilities |
|
| 2,720,275 |
|
|
| 6,611,452 |
|
|
| 3,157,971 |
|
|
| 3,054,377 |
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Total liabilities |
|
| 2,720,275 |
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|
| 6,611,452 |
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|
| 3,157,971 |
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|
| 3,054,377 |
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Commitments and contingencies |
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Stockholders’ deficit: |
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Common stock; $0.001 par value; 200,000,000 shares authorized, 19,095,362 and 3,251,641 shares issued and outstanding at January 31, 2022 and April 30, 2021, respectively |
| 19,095 |
| 3,252 |
| |||||||||||
Common stock; $0.001 par value; 200,000,000 shares authorized, 24,409,802 and 21,204,682 shares issued and outstanding at July 31, 2022 and April 30, 2022, respectively |
| 24,410 |
| 21,205 |
| |||||||||||
Preferred stock; $0.001 par value; 1,000,000 shares authorized: |
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1,000Series A preferred shares issued and outstanding at January 31, 2022 and April 30, 2021 |
| 1 |
| 1 |
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1,500and 0 Series B preferred shares issued and outstanding at January 31, 2022 and April 30, 2021, respectively |
| 2 |
| 0 |
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1,000 Series A preferred shares issued and outstanding at July 31, 2022 and April 30, 2022 |
| 1 |
| 1 |
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1,500 and 0 Series B preferred shares issued and outstanding at July 31, 2022 and April 30, 2022, respectively |
| 2 |
| 2 |
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Additional paid-in capital |
| 66,359,310 |
| 62,201,528 |
|
| 69,562,422 |
| 66,426,364 |
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Non-controlling interest |
| 9,871 |
| 9,871 |
|
| 9,871 |
| 9,871 |
| ||||||
Accumulated deficit |
|
| (67,451,104 | ) |
|
| (67,984,693 | ) |
|
| (71,611,485 | ) |
|
| (68,213,423 | ) |
Total stockholders’ deficit |
|
| (1,062,825 | ) |
|
| (5,770,041 | ) |
|
| (2,014,779 | ) |
|
| (1,755,980 | ) |
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Total liabilities and stockholders’ deficit |
| $ | 1,657,450 |
|
| $ | 841,411 |
|
| $ | 1,143,192 |
|
| $ | 1,298,397 |
|
See accompanying notes to condensed consolidated financial statements.
| 4 |
| Table of Contents |
MMEX RESOURCES CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)
|
| Three Months Ended January 31, |
| Nine Months Ended January 31, |
|
| Three Months Ended July 31, |
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|
| 2022 |
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| 2021 |
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| 2022 |
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| 2021 |
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| 2022 |
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| 2021 |
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Revenues |
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | - |
|
| $ | - |
|
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Operating expenses: |
|
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|
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|
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|
|
|
| ||||||||||
General and administrative expenses |
| 274,407 |
| 190,681 |
| 991,407 |
| 553,356 |
|
| 803,858 |
| 442,507 |
| ||||||||||
Project costs |
| 369,950 |
| 38,700 |
| 1,379,676 |
| 128,385 |
|
| 4,357 |
| 3,060 |
| ||||||||||
Depreciation and amortization |
|
| 8,888 |
|
|
| 8,718 |
|
|
| 26,852 |
|
|
| 26,156 |
|
|
| 9,097 |
|
|
| 8,718 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Total operating expenses |
|
| 653,245 |
|
|
| 238,099 |
|
|
| 2,397,935 |
|
|
| 707,897 |
|
|
| 817,312 |
|
|
| 454,285 |
|
|
|
|
|
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|
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|
|
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| ||||||||||
Loss from operations |
|
| (653,245 | ) |
|
| (238,099 | ) |
|
| (2,397,935 | ) |
|
| (707,897 | ) |
|
| (817,312 | ) |
|
| (454,285 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
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Other income (expense): |
|
|
|
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|
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|
|
|
|
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| ||||||||||
Interest expense |
| (49,566 | ) |
| (206,522 | ) |
| (311,821 | ) |
| (931,665 | ) |
| (62,888 | ) |
| (204,610 | ) | ||||||
Gain (loss) on derivative liabilities |
| 0 |
| (69,837 | ) |
| 3,010,042 |
| 1,219,856 |
|
| - |
| 3,010,042 |
| |||||||||
Gain (loss) on extinguishment of liabilities |
|
| 96,993 |
|
|
| 0 |
|
|
| 233,303 |
|
|
| 0 |
|
|
| 16,540 |
|
|
| (59,856 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Total other income (expense) |
|
| 47,427 |
|
|
| (276,359 | ) |
|
| 2,931,524 |
|
|
| 288,191 |
|
|
| (46,348 | ) |
|
| 2,745,576 |
|
|
|
|
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|
|
|
|
|
|
| ||||||||||
Income (loss) before income taxes |
| (605,818 | ) |
| (514,458 | ) |
| 533,589 |
| (419,706 | ) |
| (863,660 | ) |
| 2,291,291 |
| |||||||
Provision for income taxes |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Net income (loss) |
| (605,818 | ) |
| (514,458 | ) |
| 533,589 |
| (419,706 | ) |
| (863,660 | ) |
| 2,291,291 |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Non-controlling interest in income of consolidated subsidiaries |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
| ||||||||
Deemed dividend |
|
| 2,534,402 |
|
|
| - |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
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| ||||||||||
Net income (loss) attributable to the Company |
| $ | (605,818 | ) |
| $ | (514,458 | ) |
| $ | 533,589 |
|
| $ | (419,706 | ) | ||||||||
Net income (loss) attributable to common shareholders |
| $ | (3,398,062 | ) |
| $ | 2,291,291 |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Net income (loss) per common share – basic |
| $ | (0.03 | ) |
| $ | (0.33 | ) |
| $ | 0.05 |
|
| $ | (0.30 | ) |
| $ | (0.15 | ) |
| $ | 0.69 |
|
Net income (loss) per common share – diluted |
| $ | (0.03 | ) |
| $ | (0.33 | ) |
| $ | 0.01 |
|
| $ | (0.30 | ) |
| $ | (0.15 | ) |
| $ | 0.13 |
|
Weighted average number of common shares outstanding - basic |
|
| 18,244,276 |
|
|
| 1,519,260 |
|
|
| 10,486,385 |
|
|
| 1,415,288 |
|
|
| 22,560,365 |
|
|
| 3,306,697 |
|
Weighted average number of common shares outstanding - diluted |
|
| 18,244,276 |
|
|
| 1,519,260 |
|
|
| 51,172,508 |
|
|
| 1,415,288 |
|
|
| 22,560,365 |
|
|
| 19,228,868 |
|
See accompanying notes to condensed consolidated financial statements.
| 5 |
| Table of Contents |
MMEX RESOURCES CORPORATION
Condensed Consolidated Statement of Stockholders’ Deficit
Three and Six Months Ended JanuaryJuly 31, 2021 (Unaudited)
|
| Common Stock |
|
| Class A Preferred Stock |
|
| Series B Preferred Stock |
|
| Additional Paid-in |
|
| Non-Controlling |
|
| Accumulated |
|
|
| ||||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Interest |
|
| Deficit |
|
| Total |
| ||||||||||
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Balance, April 30, 2020 (Audited) |
|
| 1,335,283 |
|
| $ | 1,335 |
|
|
| 1,000 |
|
| $ | 1 |
|
|
| - |
|
| $ | 0 |
|
| $ | 37,721,639 |
|
| $ | 9,871 |
|
| $ | (43,457,807 | ) |
| $ | (5,724,961 | ) |
Net loss |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 403,520 |
|
|
| 403,520 |
|
Balance, July 31, 2020 |
|
| 1,335,283 |
|
|
| 1,335 |
|
|
| 1,000 |
|
|
| 1 |
|
|
| - |
|
|
| 0 |
|
|
| 37,721,639 |
|
|
| 9,871 |
|
|
| (43,054,287 | ) |
|
| (5,321,441 | ) |
Shares issued for conversion of convertible notes payable and accrued interest |
|
| 85,828 |
|
|
| 86 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 56,594 |
|
|
| 0 |
|
|
| 0 |
|
|
| 56,680 |
|
Settlement of derivative liabilities |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 18,612 |
|
|
| 0 |
|
|
| 0 |
|
|
| 18,612 |
|
Net loss |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| (308,768 | ) |
|
| (308,768 | ) |
Balance, October 31, 2020 |
|
| 1,421,111 |
|
|
| 1,421 |
|
|
| 1,000 |
|
|
| 1 |
|
|
| - |
|
|
| 0 |
|
|
| 37,796,845 |
|
|
| 9,871 |
|
|
| (43,363,055 | ) |
|
| (5,554,917 | ) |
Shares issued for conversion of convertible notes payable and accrued interest |
|
| 323,824 |
|
|
| 324 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 196,147 |
|
|
| 0 |
|
|
| 0 |
|
|
| 196,471 |
|
Settlement of derivative liabilities |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 71,407 |
|
|
| 0 |
|
|
| 0 |
|
|
| 71,407 |
|
Net loss |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| (514,458 | ) |
|
| (514,458 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 31, 2021 |
|
| 1,744,935 |
|
| $ | 1,745 |
|
|
| 1,000 |
|
| $ | 1 |
|
|
| - |
|
| $ | 0 |
|
| $ | 38,064,399 |
|
| $ | 9,871 |
|
| $ | (43,877,513 | ) |
| $ | (5,801,497 | ) |
|
| Common Stock |
|
| Class A Preferred Stock |
|
| Series B Preferred Stock |
|
| Additional Paid-in |
|
| Non-Controlling |
|
| Accumulated |
|
|
| ||||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Interest |
|
| Deficit |
|
| Total |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Balance, April 30, 2021 |
|
| 3,251,641 |
|
| $ | 3,252 |
|
|
| 1,000 |
|
| $ | 1 |
|
|
| - |
|
| $ | - |
|
| $ | 62,201,528 |
|
| $ | 9,871 |
|
| $ | (67,984,693 | ) |
| $ | (5,770,041 | ) |
Shares issued with prefunded warrants for cash |
|
| 170,000 |
|
|
| 170 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,999,830 |
|
|
| - |
|
|
| - |
|
|
| 3,000,000 |
|
Shares issued for conversion of convertible notes payable and accrued interest |
|
| 11,814 |
|
|
| 11 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 42,520 |
|
|
| - |
|
|
| - |
|
|
| 42,531 |
|
Shares issued for reverse stock split |
|
| 17,754 |
|
|
| 18 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (18 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
Shares issued for the exercise of prefunded warrants |
|
| 250,000 |
|
|
| 250 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (250 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
Offering Costs |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (349,150 | ) |
|
| - |
|
|
| - |
|
|
| (349,150 | ) |
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,291,291 |
|
|
| 2,291,291 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, July 31, 2021 |
|
| 3,701,209 |
|
| $ | 3,701 |
|
|
| 1,000 |
|
| $ | 1 |
|
|
| - |
|
| $ | - |
|
| $ | 64,894,460 |
|
| $ | 9,871 |
|
| $ | (65,693,402 | ) |
| $ | (785,369 | ) |
See accompanying notes to condensed consolidated financial statements.
| 6 |
| Table of Contents |
MMEX RESOURCES CORPORATION
Condensed Consolidated Statement of Stockholders’ Deficit
Three and Six Months Ended JanuaryJuly 31, 2022 (Unaudited)
|
| Common Stock |
|
| Series A Preferred Stock |
|
| Series B Preferred Stock |
|
| Additional Paid-in |
|
| Non-Controlling |
|
| Accumulated |
|
|
| ||||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Interest |
|
| Deficit |
|
| Total |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Balance, April 30, 2021 (Audited) |
|
| 3,251,641 |
|
| $ | 3,252 |
|
|
| 1,000 |
|
| $ | 1 |
|
|
| - |
|
| $ | - |
|
| $ | 62,201,528 |
|
| $ | 9,871 |
|
| $ | (67,984,693 | ) |
| $ | (5,770,041 | ) |
Shares issued with prefunded warrants for cash |
|
| 170,000 |
|
|
| 170 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,999,830 |
|
|
| - |
|
|
| - |
|
|
| 3,000,000 |
|
Shares issued for conversion of convertible notes payable and accrued interest |
|
| 11,814 |
|
|
| 11 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| - |
|
|
| 42,520 |
|
|
| 0 |
|
|
| 0 |
|
|
| 42,531 |
|
Shares issued for reverse stock split |
|
| 17,754 |
|
|
| 18 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| (18 | ) |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
Shares issued for the exercise of prefunded warrants |
|
| 250,000 |
|
|
| 250 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| (250 | ) |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
Offering costs |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| (349,150 | ) |
|
| 0 |
|
|
| 0 |
|
|
| (349,150 | ) |
Net income |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 2,291,291 |
|
|
| 2,291,291 |
|
Balance, July 31, 2021 |
|
| 3,701,209 |
|
|
| 3,701 |
|
|
| 1,000 |
|
|
| 1 |
|
|
| - |
|
|
| 0 |
|
|
| 64,894,460 |
|
|
| 9,871 |
|
|
| (65,693,402 | ) |
|
| (785,369 | ) |
Shares issued for conversion of convertible notes payable and accrued interest |
|
| 6,421,929 |
|
|
| 6,422 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 105,484 |
|
|
| 0 |
|
|
| 0 |
|
|
| 111,906 |
|
Shares issued for conversion of related party convertible notes payable and accrued interest |
|
| 6,817,224 |
|
|
| 6,817 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 68,172 |
|
|
| 0 |
|
|
| 0 |
|
|
| 74,989 |
|
Shares issued for the exercise of prefunded warrants |
|
| 880,000 |
|
|
| 880 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| (880 | ) |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
Net (loss) |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| (196,134 | ) |
|
| (196,134 | ) |
Balance, October 31, 2021 |
|
| 17,820,362 |
|
|
| 17,820 |
|
|
| 1,000 |
|
|
| 1 |
|
|
| - |
|
|
| 0 |
|
|
| 65,067,236 |
|
|
| 9,871 |
|
|
| (66,845,286 | ) |
|
| (1,750,358 | ) |
Shares issued with warrants for cash |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 1,500 |
|
|
| 2 |
|
|
| 1,499,998 |
|
|
| 0 |
|
|
| 0 |
|
|
| 1,500,000 |
|
Shares issued for the exercise of prefunded warrants |
|
| 1,275,000 |
|
|
| 1,275 |
|
|
| - |
|
|
| 0 |
|
|
|
|
|
|
|
|
|
|
| (1,275 | ) |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
Offering costs |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
|
|
|
|
|
|
|
|
| (206,649 | ) |
|
| 0 |
|
|
| 0 |
|
|
| (206,649 | ) |
Net (loss) |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
|
|
|
|
|
|
|
|
| 0 |
|
|
| 0 |
|
|
| (605,818 | ) |
|
| (605,818 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 31, 2022 |
|
| 19,095,362 |
|
| $ | 19,095 |
|
|
| 1,000 |
|
| $ | 1 |
|
|
| 1,500 |
|
|
| 2 |
|
| $ | 66,359,310 |
|
| $ | 9,871 |
|
| $ | (67,451,104 | ) |
| $ | (1,062,825 | ) |
|
| Common Stock |
|
| Series A Preferred Stock |
|
| Series B Preferred Stock |
|
| Additional Paid-in |
|
| Non-Controlling |
|
| Accumulated |
|
|
| ||||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Interest |
|
| Deficit |
|
| Total |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Balance, April 30, 2022 |
|
| 21,204,682 |
|
| $ | 21,205 |
|
|
| 1,000 |
|
| $ | 1 |
|
|
| 1,500 |
|
| $ | 2 |
|
| $ | 66,426,364 |
|
| $ | 9,871 |
|
| $ | (68,213,423 | ) |
| $ | (1,755,980 | ) |
Shares issued for conversion of convertible notes payable and accrued interest |
|
| 710,802 |
|
|
| 711 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 108,966 |
|
|
| - |
|
|
| - |
|
|
| 109,677 |
|
Warrants issued as stock-based compensation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 495,000 |
|
|
| - |
|
|
| - |
|
|
| 495,000 |
|
Shares issued for the exercise of warrants |
|
| 2,494,318 |
|
|
| 2,494 |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
| (2,310 | ) |
|
| - |
|
|
| - |
|
|
| 184 |
|
Deemed dividend |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,534,402 |
|
|
| - |
|
|
| (2,534,402 | ) |
|
| - |
|
Net (loss) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
|
| (863,660 | ) |
|
| (863,660 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, July 31, 2022 |
|
| 24,409,802 |
|
| $ | 24,410 |
|
|
| 1,000 |
|
| $ | 1 |
|
|
| 1,500 |
|
|
| 2 |
|
| $ | 69,562,422 |
|
| $ | 9,871 |
|
| $ | (71,611,485 | ) |
| $ | (2,014,779 | ) |
See accompanying notes to condensed consolidated financial statements.
| 7 |
| Table of Contents |
MMEX RESOURCES CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
|
| Nine Months Ended January 31, |
|
| Three Months Ended July 31, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
| ||||||
Net income (loss) |
| $ | 533,589 |
| $ | (419,706 | ) |
| $ | (863,660 | ) |
| $ | 2,291,291 |
| |
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
|
|
|
|
|
|
|
|
|
| ||||||
Depreciation and amortization expense |
| 26,852 |
| 26,156 |
|
| 9,097 |
| 8,718 |
| ||||||
(Gain) loss on derivative liabilities |
| (3,010,042 | ) |
| (1,219,856 | ) |
| - |
| (3,010,042 | ) | |||||
Amortization of debt discount |
| 77,822 |
| 166,445 |
|
| 6,072 |
| 63,075 |
| ||||||
Interest expense added to convertible note payable principal |
| 0 |
| 115,000 |
| |||||||||||
Warrants issued as stock-based compensation |
| 495,000 |
| - |
| |||||||||||
Note recorded for loan penalties |
| 16,500 |
| - |
| |||||||||||
(Gain) loss on extinguishment of liabilities |
| (233,303 | ) |
| 0 |
|
| (16,540 | ) |
| 59,856 |
| ||||
(Increase) decrease in prepaid expenses and other current assets |
| (21,990 | ) |
| 23,145 |
|
| 17,500 |
| (293,390 | ) | |||||
Increase (decrease) in liabilities: |
|
|
|
|
|
|
|
|
|
| ||||||
Accounts payable |
| (190,268 | ) |
| 138,960 |
|
| 23,146 |
| (5,638 | ) | |||||
Accrued expenses |
| 62,653 |
| 620,805 |
|
| 49,317 |
| 38,798 |
| ||||||
Accounts payable and accrued expenses – related party |
|
| (191,782 | ) |
|
| 284,779 |
|
|
| 29,960 |
|
|
| 20,490 |
|
Net cash used in operating activities |
|
| (2,946,469 | ) |
|
| (264,272 | ) |
|
| (233,608 | ) |
|
| (826,842 | ) |
|
|
|
|
|
|
|
|
|
|
| ||||||
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
| ||||||
Purchase of property and equipment |
|
| (255,504 | ) |
|
| 0 |
|
|
| - |
|
|
| (245,397 | ) |
Net cash used in investing activities |
|
| (255,504 | ) |
|
| 0 |
|
|
| - |
|
|
| (245,397 | ) |
|
|
|
|
|
|
|
|
|
|
| ||||||
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
| ||||||
Proceeds from notes payable |
| 200,000 |
| 0 |
|
| - |
| 200,000 |
| ||||||
Proceeds from convertible notes payable |
| 78,500 |
| 75,000 |
|
| 105,000 |
| 78,500 |
| ||||||
Proceeds from convertible notes payable – related party |
| 0 |
| 20,000 |
| |||||||||||
Proceed from PPP loans |
| 0 |
| 150,000 |
| |||||||||||
Proceeds from SBA express bridge loan payable |
| 0 |
| 10,000 |
| |||||||||||
Repayments of notes payable |
| (200,000 | ) |
| 0 |
|
| - |
| (200,000 | ) | |||||
Repayments of convertible notes payable |
| (255,331 | ) |
| 0 |
|
| - |
| (255,331 | ) | |||||
Proceeds from the sale of common stock and prefunded warrants |
| 3,000,000 |
| 0 |
|
| - |
| 3,000,000 |
| ||||||
Proceeds from the sale of series B preferred stock and warrants |
| 1,500,000 |
| 0 |
|
| - |
| - |
| ||||||
Offering costs |
|
| (555,799 | ) |
|
| 0 |
|
|
| - |
|
|
| (349,150 | ) |
Net cash provided by financing activities |
|
| 3,767,370 |
|
|
| 255,000 |
|
|
| 105,000 |
|
|
| 2,474,019 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Net increase (decrease) in cash |
| 565,397 |
| (9,272 | ) |
| (128,608 | ) |
| 1,401,780 |
| |||||
Cash at the beginning of the period |
|
| 330,449 |
|
|
| 66,830 |
|
|
| 136,867 |
|
|
| 330,449 |
|
Cash at the end of the period |
| $ | 895,846 |
|
| $ | 57,558 |
|
| $ | 8,259 |
|
| $ | 1,732,229 |
|
Supplemental disclosure: |
|
|
|
|
| |||||||||||
Interest paid |
| $ | 131,374 |
| $ | 0 |
| |||||||||
Income taxes paid |
| $ | 0 |
| $ | 0 |
| |||||||||
Non-cash investing and financing activities: |
|
|
|
|
| |||||||||||
Common stock issued in conversion of debt |
| $ | 154,437 |
| $ | 56,680 |
| |||||||||
Common stock issued in conversion of related party debt |
| $ | 74,989 |
| $ | 0 |
| |||||||||
Settlement of derivative liabilities |
| $ | 0 |
| $ | 18,612 |
| |||||||||
Derivative liabilities for related party debt discount |
| $ | 0 |
| $ | 7,101 |
| |||||||||
Convertible notes payable – related party for accrued expenses |
| $ | 0 |
| $ | 76,266 |
| |||||||||
Reverse split |
| $ | 18 |
| $ | 0 |
| |||||||||
Exercise of prefunded warrants |
| $ | 2,405 |
| $ | 0 |
| |||||||||
Supplemental disclosure: |
|
|
|
|
|
| ||
Interest paid |
| $ | - |
|
| $ | 106,651 |
|
Income taxes paid |
| $ | - |
|
| $ | - |
|
Non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
Common stock issued in conversion of debt |
| $ | 109,677 |
|
| $ | 42,531 |
|
Exercise of warrants for an accrued liability |
| $ | 184 |
|
| $ | - |
|
Reverse split |
| $ | - |
|
| $ | 18 |
|
Exercise of prefunded warrants |
| $ | 2,494 |
|
| $ | 250 |
|
Deemed dividend |
| $ | 2,534,402 |
|
| $ | - |
|
See accompanying notes to condensed consolidated financial statements.
| 8 |
| Table of Contents |
MMEX RESOURCES CORPORATION
Notes to Condensed Consolidated Financial Statements
Nine Months Ended JanuaryJuly 31, 2022
(Unaudited)
NOTE 1 – BACKGROUND, ORGANIZATION AND BASIS OF PRESENTATION
MMEX Resources Corporation (the “Company” or “MMEX”) was formed as a Nevada corporation in 2005. The current management team lead an acquisition of the Company (then named Management Energy, Inc.) through a reverse merger completed on September 23, 2010 and changed the Company’s name to MMEX Mining Corporation on February 11, 2011 and to MMEX Resources Corporation on April 6, 2016.
The Company is a development-stage company focusing onSince 2021 MMEX has expanded its focus to the acquisition, development, financing, construction and financingoperation of oil, gas, refining andclean fuels infrastructure projects in Texas and South America, recently announcing it intends to develop solar energy to power multiple planned projects producing hydrogen and ultra-low sulfur fuels combined with carbon dioxide (CO2) capture in Texas.powered by renewable energy.
The accompanying condensed consolidated financial statements include the accounts of the following entities, all of which the Company maintains control through a majority ownership or through common ownership:
Name of Entity | % | Form of Entity | State of Incorporation | Relationship | |||||||
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MMEX Resources Corporation |
| - |
| Corporation |
| Nevada |
| Parent | |||
Pecos Clean Fuels & Transport (formerly Pecos Refining & Transport, LLC |
| 100% |
| LLC |
| Texas |
| Subsidiary | |||
MMEX Solar Resources, LLC |
| 100% |
| LLC |
| Texas |
| Subsidiary | |||
|
| 100% |
| LLC |
| Texas |
| Subsidiary | |||
| Hydrogen Global, LLC |
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| LLC |
| Texas |
| Subsidiary | |||||
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| 100% |
| LLC |
| Texas |
| Subsidiary |
_____________
[1] Pecos Refining & Transport, LLC was formed in June 2017 with the Company as its sole member. Effective September 22, 2021 Pecos Refining & Transport, LLC changed its name to Pecos Clean Fuels & Transport, LLC. Pecos owns the land on which the Company’s planned hydrogen projects are to be developed.
[2] This subsidiary is currently inactive.
[3] This entity was formed on September 21, 2021
All significant inter-company transactions have been eliminated in the preparation of the consolidated financial statements.
These condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management are necessary for a fair presentation of the information contained therein.
The Company has adopted a fiscal year end of April 30.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Our significant accounting policies are described in our Annual Report on Form 10-K for the year ended April 30, 20212022 filed with the SEC on July 29, 2021.15, 2022.
Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its aforementioned subsidiaries and entities under common ownership. All significant intercompany accounts and transactions have been eliminated in consolidation. The ownership interests in subsidiaries that are held by owners other than the Company are recorded as non-controlling interest and reported in our consolidated balance sheets within stockholders’ deficit. Losses attributed to the non-controlling interest and to the Company are reported separately in our consolidated statements of operations.
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Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent 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.
Property and equipment
Property and equipment is recorded at the lower of cost or estimated net recoverable amount, and is depreciated using the straight-line method over the estimated useful life of the related asset as follows:
Office furniture and equipment | 10 years |
Computer equipment and software | 5 years |
Land improvements | 15 years |
Land easements | 10 years |
The land easements owned by the Company have a legal life of 10 years.
Maintenance and repairs are charged to expense as incurred. Significant renewals and betterments will be capitalized. At the time of retirement or other disposition of equipment, the cost and accumulated depreciation will be removed from the accounts and the resulting gain or loss, if any, will be reflected in operations.
The Company will assess the recoverability of property and equipment by determining whether the depreciation and amortization of these assets over their remaining life can be recovered through projected undiscounted future cash flows. The amount of equipment impairment, if any, will be measured based on fair value and is charged to operations in the period in which such impairment is determined by management.
Derivative liabilities
TheIn a series of subscription agreements, the Company has issued warrants and stock options,in prior years that contained certain of which contain anti-dilution provisions that were previously identified as derivatives. In addition, the Company hashad previously identified the conversion feature of certain convertible notes payable and convertible preferred stock as derivatives. TheThrough April 30, 2021, the number of warrants or common shares to be issued under these agreements iswas indeterminate; therefore, through April 30, 2021 the Company concluded that the equity environment was tainted and all additional warrants, stock options and convertible debt were included in the value of the derivatives.derivative. During the nine monthsyear ended January 31,April 30, 2022 it was determined that the Company could increase their authorized common shares at any time, therefore the environment was no longer deemed to be tainted and all derivative liabilities were written off the books.
We estimate the fair value of the derivatives using multinomial lattice models that value the derivative liabilities based on a probability weighted cash flow model using projections of the various potential outcomes. These estimates are based on multiple inputs, including the market price of our stock, interest rates, our stock price volatility and management’s estimates of various potential equity financing transactions. These inputs are subject to significant changes from period to period and to management's judgment; therefore, the estimated fair value of the derivative liabilities will fluctuate from period to period, and the fluctuation may be material.
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Fair value of financial instruments
Under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures, and ASC 825, Financial Instruments, the FASB establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This Statement reaffirms that fair value is the relevant measurement attribute. The adoption of this standard did not have a material effect on the Company's consolidated financial statements as reflected herein. The carrying amounts of cash, prepaid expense and other current assets, accounts payable, accrued expenses and notes payable reported on the accompanying consolidated balance sheets are estimated by management to approximate fair value primarily due to the short-term nature of the instruments.
An entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value using a hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The hierarchy prioritized the inputs into three levels that may be used to measure fair value:
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in markets that are not active.
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
Our derivative liabilities are measured at fair value on a recurring basis and estimated as follows:
January 31, 2022 |
| Total |
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| Level 1 |
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| Level 2 |
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| Level 3 |
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Derivative liabilities |
| $ | 0 |
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| $ | 0 |
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| $ | 0 |
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| $ | 0 |
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April 30, 2021 |
| Total |
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| Level 1 |
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| Level 2 |
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| Level 3 |
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Derivative liabilities |
| $ | 3,010,042 |
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| $ | 0 |
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| $ | 0 |
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| $ | 3,010,042 |
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Revenue Recognition
The Company has adopted ASC 606, Revenue from Contracts with Customers, as amended, using the modified retrospective method, which requires the cumulative effect of adoption to be recognized as an adjustment to opening retained earnings in the period of adoption. To date, the Company has no operating revenues; therefore, there was no cumulative effect of adopting the new standard and no impact on our consolidated financial statements. The new standard provides a single comprehensive model to be used in the accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, including industry-specific guidance. The standard’s stated core principle 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. To achieve this core principle, ASC 606 includes provisions within a five-step model that includes identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations, and recognizing revenue when, or as, an entity satisfies a performance obligation.
Project costs
All project costs incurred, including acquisition of refinery rights, planning, design and permitting, have been recorded as project costs and expensed as incurred.
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Basic and diluted income (loss) per share
Basic net income or loss per share is calculated by dividing net income or loss (available to common stockholders) by the weighted average number of common shares outstanding for the period. Diluted income or loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock, such as stock options, warrants, convertible debt and convertible preferred stock, were exercised or converted into common stock. For the ninethree months ended JanuaryJuly 31, 2022 all potentially dilutive securities had an anti-dilutive effect and basic net loss per common share is the same as diluted net loss per share. For the three months ended July 31, 2021 the dilutive effect of options, warrants, and convertible notes payable was 40,686,123and 0, respectively.15,922,171.
Employee stock-basedStock-based compensation
Pursuant to FASB ASC 718, all share-based payments to employees, including grants of employee stock options, are recognized in the consolidated statement of operations based on their fair values. For the nine months ended January 31, 2022 and 2021, the Company had 0 stock-based compensation to employees.
Issuance of shares for non-cash consideration
The Company accounts for the issuance of equity instruments, including grants of stock options and warrants, to acquire goods and/or services based on the fair value of the goods and services or the fair value of the equity instrument at the time of issuance, whichever is more reliably determinable. The Company's accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of the standards issued by the FASB. The measurement date for the fair value of the equity instruments issued is determined as the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor's performance is complete. In the case of equity instruments issued for services to consultants,be performed over time, the fair value of the equity instrument is recognized over the termservice period. For the three months ended July 31, 2022 and 2021, the Company recorded stock-based compensation of the consulting agreement.
Reclassifications
Certain amounts in the consolidated financial statements for the prior-year period have been reclassified to conform with the current-year period presentation.$495,000 and $0, respectively.
Recently Issued Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. Under current GAAP, there are five accounting models for convertible debt instruments. ASU 2020-06 removes from U.S. GAAP the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, after adopting the ASU’s guidance, entities will not separately present in equity an embedded conversion feature in such debt. Instead, they will account for a convertible debt instrument wholly as debt, and for convertible preferred stock wholly as preferred stock (i.e., as a single unit of account), unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC 815 or (2) a convertible debt instrument was issued at a substantial premium. Additionally, for convertible debt instruments with substantial premiums accounted for as paid-in capital, the FASB decided to add disclosures about (1) the fair value amount and the level of fair value hierarchy of the entire instrument for public business entities and (2) the premium amount recorded as paid-in capital. ASU 2020-06 will be effective for public business entities that meet the definition of a Securities and Exchange Commission (SEC) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is currently evaluating the potential impact of the adoption of this accounting pronouncement to its consolidated financial statements.
Although there are several otherhas reviewed all new accounting pronouncements issued or proposed by the FASB which the Company has adopted or will adopt, as applicable, the Companyand does not believe any of thesethe accounting pronouncements has had, or will have, a material impact on its consolidated financial position or results of operations.
NOTE 3 – GOING CONCERN
Our consolidated financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplate the realization of assets and liquidation of liabilities in the normal course of business. We have incurred continuous losses from operations, have an accumulated deficit, of $67,451,104 and a total stockholders’ deficit of $1,062,825 at January 31, 2022, and have reported negative cash flows from operations since inception. WhileAdditionally, we have received debt and equity funding during the period and have cash on hand of $895,846 at January 31, 2022, we still have a working capital deficit, of $1,764,546, therefore there is a question of whether or not we have the cash resources to meet our operating commitments for the next twelve months and have, or will obtain, sufficient capital investments to implement our business plan. Finally, ourOur ability to continue as a going concern must be considered in light of the problems, expenses and complications frequently encountered by entrance into established and emerging markets and the competitive environment in which we operate.
Since inception, our operations have primarily been funded through private debt and equity financing, and we expect to continue to seek additional funding through private or public equity and debt financing. Our ability to continue as a going concern is dependent on our ability to generate sufficient cash from operations to meet our cash needs and/or to raise funds to finance ongoing operations and repay debt. However, there can be no assurance that we will be successful in our efforts to raise additional debt or equity capital and/or that our cash generated by our operationsamounts will be adequate to meet our needs. These factors, among others, raise substantial doubt that we will be able to continue as a going concern for a reasonable period of time.
The consolidated financial statements do not include any adjustments that might result from the outcome of any uncertainty as to the Company's ability to continue as a going concern. The consolidated financial statements also do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
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NOTE 4 – RELATED PARTY TRANSACTIONS
Accounts Payable and Accrued Expenses – Related Parties
Accounts payable and accrued expenses to related parties, consisting primarily of consulting fees and expense reimbursements payable, totaled $81,052$106,730 and $272,834as$76,770 as of JanuaryJuly 31, 2022 and April 30, 2021,2022, respectively.
Effective July 1, 2019, we entered into a consulting agreement with Maple Resources Corporation (“Maple Resources”), a related party controlled by our President and CEO, that provides for payment of consulting fees and expense reimbursement related to business development, financing and other corporate activities. Effective January 1, 2020, the Maple Resources consulting agreement was amended to provide for monthly consulting fees of $17,897and effective March 1, 2021 the Maple Resources consulting agreement was amended to provideprovided for monthly consulting fees of $20,000. During the ninethree months ended JanuaryJuly 31, 2022, and 2021, we incurred consulting fees and expense reimbursement to Maple Resources totaling $180,800and $161,073, respectively. During the nine months ended January 31, 2022$60,000 and we made payments to Maple Resources of $185,899.$60,000.
In addition, the consulting agreement provides for the issuance to Maple Resources of shares of our common stock each month with a value of $5,000, with the number of shares issued based on the average closing price of the stock during the prior month. In September 2021During the three months ended July 31, 2022 we made a payment of $110,000 to payrecorded $15,000 for theaccrued consulting fees accrued through August 2021 under the consulting agreement, therefore $25,000was still owed as of January 31, 2022.and we issued no shares for payment.
Amounts included in accounts payable and accrued expenses – related parties due to Maple Resources totaled $45,000($25,000$55,000 ($35,000 payable in stock) and $118,540($90,000payable$40,000 ($20,000 payable in stock) as of JanuaryJuly 31, 2022 and April 30, 2021, respectively, which was inclusive of accrued interest due under the convertible notes described below.2022, respectively.
Effective October 1, 2018, we entered into a consulting agreement with Leslie Doheny-Hanks, the wife of our President and CEO, to issue shares of our common stock each month with a value of $2,500, with the number of shares issued based on the average closing price of the stock during the prior month. The related party consultant provides certain administrative and accounting services and is reimbursed for expenses paid on behalf of the Company. During the ninethree months ended JanuaryJuly 31, 2022 we recorded $22,500for$7,500 for the amount payable in stock under the consulting agreement and recorded expense reimbursements owed to Mrs. Hanks of $22,862. In September 2021$14,236. During the three months ended July 31, 2022 we made a payment of $55,000to pay for the consulting fees accrued through August 2021 under the consulting agreement and made repayments of $39,374for$14,300 to Mrs. Hanks for reimbursable expenses. Amounts included in accounts payable and accrued expenses – related parties due to Mrs. Hanks totaled $14,046($12,500$24,700 ($17,500 payable in stock) and $63,058$17,264 ($45,00010,000 payable in stock) as of JanuaryJuly 31, 2022 and April 30, 2021,2022, respectively.
Effective February 1, 2021 the Company entered into consulting agreements with three children of our President and CEO. The consulting agreementsCEO, which were extended by amendmentsamended as of December 31, 2021 to continue on a month to monthmonth-to-month basis. During the ninethree months ended JanuaryJuly 31, 2022 we incurred $87,215for$26,491 for fees and expense reimbursements to the children and paid $169,215.$26,467. Amounts included in accounts payable and accrued expenses – related parties due to the children totaled $8,500and $90,500as$8,524 and $8,500 as of JanuaryJuly 31, 2022 and April 30, 2021,2022, respectively.
Effective September 1, 2021, we entered into a consulting agreement with BNL Family Trust, a related party to Bruce Lemons, Director, to issue shares of our common stock each month with a value of $2,500, with the number of shares issued based on the average closing price of the stock during the prior month. During the ninethree months ended JanuaryJuly 31, 2022 we recorded $12,500$7,500 for the amount payable in stock under the consulting agreement and made no payments, therefore the $12,500 waspayments. Amounts included in accounts payable and accrued expenses – related parties due to BNL Family Trust totaled $18,506 ($17,500 payable in stock) and $11,006 ($10,000 payable in stock) as of JanuaryJuly 31, 2022.2022 and April 30, 2022, respectively.
Convertible NotesAccounts Payable and Accrued Expenses – Related Parties
Convertible notes payable – related parties consist ofDuring the following:
|
| January 31, 2022 |
|
| April 30, 2021 |
| ||
Convertible note payable with Maple Resources Corporation, matured December 27, 2020, with interest at 5%, convertible into common shares of the Company [1] |
| $ | 0 |
|
| $ | 7,033 |
|
Convertible note payable with BNL Family Trust, matured December 27, 2020, with interest at 5%, convertible into common shares of the Company [2] |
|
| 0 |
|
|
| 10,691 |
|
Convertible note payable with Maple Resources Corporation, matured February 12, 2021, with interest at 5%, convertible into common shares of the Company [3] |
|
| 0 |
|
|
| 5,000 |
|
Convertible note payable with Maple Resources Corporation, matured March 2, 2021, with interest at 5%, convertible into common shares of the Company [4] |
|
| 0 |
|
|
| 800 |
|
Convertible note payable with Maple Resources Corporation, matured May 12, 2021, with interest at 5%, convertible into common shares of the Company [5] |
|
| 0 |
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| 41,466 |
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Convertible note payable with Maple Resources Corporation, matured July 31, 2021, with interest at 5%, convertible into common shares of the Company [6] |
|
| 0 |
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| 10,000 |
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| 0 |
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| 74,990 |
|
Less discount |
|
| 0 |
|
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| (235 | ) |
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Total |
| $ | 0 |
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| $ | 74,755 |
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__________
[1] This convertible note was entered into on December 27, 2019 in exchange for cash of $5,500and financing fees of $5,500and was convertible into common shares ofthree months ended July 31, 2022 the Company at a conversion price equalgranted 3,000,000 warrants each to 110% ofMaple Resources and BNL Family Trust, therefore recognized $330,000 in stock based compensation based on the lowest price at which the shares of common stock were issued by the Company during the twenty prior trading days, including the day upon which a notice of conversion is received by the Company. At inception the Company identified the conversion feature of the convertible note as a derivative and estimated thegrant date fair value of the derivative using a multinomial lattice model simulation and assuming the existence of a tainted equity environment (see Note 10)8). On the effective date of the convertible note, the related party lender simultaneously submitted a notice to convert the total note principal into 1,000,000 shares of the Company’s common stock. The conversions were not completed, and the shares were not issued, due to a lack of sufficient shares of common stock at the time the conversion was requested. During the year ended April 30, 2021 shares became available to affect a partial conversion, therefore 360,682common shares were issued to extinguish $3,967 of the principal balance. During the six months ended October 31, 2021 the Company issued 639,318shares of common stock to extinguish the full principal balance of $7,033and paid $853 in cash to extinguish all of the accrued interest due under the note. The Company continued to accrue interest on the convertible note until the debt was paid in full, therefore they recorded interest expense of $135 during the nine months ended January 31, 2022. As of January 31, 2022 and April 30, 2021 accrued interest on the convertible note was $0 and $718, respectively.
[2] This convertible note was entered into on December 27, 2019 in exchange for cash of $11,000and was convertible into common shares of the Company at a conversion price equal to 110% of the lowest price at which the shares of common stock were issued by the Company during the twenty prior trading days, including the day upon which a notice of conversion is received by the Company. At inception the Company identified the conversion feature of the convertible note as a derivative and estimated the fair value of the derivative using a multinomial lattice model simulation and assuming the existence of a tainted equity environment (see Note 10). On the effective date of the convertible note, the related party lender simultaneously submitted a notice to convert the total note principal into 1,000,000shares of the Company’s common stock. The conversions were not completed, and the shares were not issued, due to a lack of sufficient shares of common stock at the time the conversion was requested. During the year ended April 30, 2021 shares became available to affect a partial conversion, therefore 28,094common shares were issued to extinguish $309 of the principal balance. During the six months ended October 31, 2021 the Company issued 971,906shares of common stock to extinguish the full principal balance of $10,691. The Company continued to accrue interest on the convertible note until the debt was paid in full, therefore they recorded interest expense of $269 during the nine months ended January 31, 2022. As of January 31, 2022 and April 30, 2021 accrued interest on the convertible note was $1,006and $737, respectively.
[3] This convertible note was entered into on February 12, 2020 in exchange for cash of $5,000 and was convertible into common shares of the Company at a conversion price equal to 110% of the lowest price at which the shares of common stock were issued by the Company during the twenty prior trading days, including the day upon which a notice of conversion is received by the Company. At inception the Company identified the conversion feature of the convertible note as a derivative and estimated the fair value of the derivative using a multinomial lattice model simulation and assuming the existence of a tainted equity environment (see Note 10). On the effective date of the convertible note, the related party lender simultaneously submitted a notice to convert the total note principal into 454,545shares of the Company’s common stock. The conversions were not completed, and the shares were not issued, due to a lack of sufficient shares of common stock at the time the conversion was requested. During the six months ended October 31, 2021 the Company issued 454,545shares of common stock to extinguish the full principal balance of $5,000and paid $399 in cash to extinguish all of the accrued interest due under the note. The Company continued to accrue interest on the convertible note until the debt was paid in full, therefore they recorded interest expense of $96 during the nine months ended January 31, 2022. As of January 31, 2022 and April 30, 2021 accrued interest on the convertible note was $0 and $303, respectively.
[4] This convertible note was entered into on March 2, 2020 in exchange for cash of $800 and was convertible into common shares of the Company at a conversion price equal to 110% of the lowest price at which the shares of common stock were issued by the Company during the twenty prior trading days, including the day upon which a notice of conversion is received by the Company. At inception the Company identified the conversion feature of the convertible note as a derivative and estimated the fair value of the derivative using a multinomial lattice model simulation and assuming the existence of a tainted equity environment (see Note 10). On the effective date of the convertible note, the related party lender simultaneously submitted a notice to convert the total note principal into72,727shares of the Company’s common stock. The conversions were not completed, and the shares were not issued, due to a lack of sufficient shares of common stock at the time the conversion was requested. During the nine months ended January 31, 2022 the Company issued 72,727shares of common stock to extinguish the full principal balance of $800 and paid $55 in cash to extinguish all of the accrued interest due under the note. The Company continued to accrue interest on the convertible note until the debt was paid in full, therefore they recorded interest expense of $15 during the nine months ended January 31, 2022. As of January 31, 2022 and April 30, 2021 accrued interest on the convertible note was $0 and $40, respectively.
[5] This convertible note was entered into on May 12, 2020 in exchange for accrued consulting fees worth $41,466 and was convertible into common shares of the Company at a conversion price equal to 110% of the lowest price at which the shares of common stock were issued by the Company during the twenty prior trading days, including the day upon which a notice of conversion is received by the Company. At inception the Company identified the conversion feature of the convertible note as a derivative and estimated the fair value of the derivative using a multinomial lattice model simulation and assuming the existence of a tainted equity environment (see Note 10). On the effective date of the convertible note, the related party lender simultaneously submitted a notice to convert the total note principal into 3,769,636shares of the Company’s common stock. The conversions were not completed, and the shares were not issued, due to a lack of sufficient shares of common stock at the time the conversion was requested. During the nine months ended January 31, 2022 the Company issued 3,769,636shares of common stock to extinguish the full principal balance of $41,466and paid $2,800 in cash to extinguish all of the accrued interest due under the note. The Company continued to accrue interest on the convertible note until the debt was paid in full, therefore they recorded interest expense of $795 during the nine months ended January 31, 2022. As of January 31, 2022 and April 30, 2021 accrued interest on the convertible note was $0 and $2,005, respectively.
[6] This convertible note was entered into on July 31, 2020 in exchange for cash of $10,000 and was convertible into common shares of the Company at a conversion price equal to 110% of the lowest price at which the shares of common stock were issued by the Company during the twenty prior trading days, including the day upon which a notice of conversion is received by the Company. At inception the Company identified the conversion feature of the convertible note as a derivative and estimated the fair value of the derivative using a multinomial lattice model simulation and assuming the existence of a tainted equity environment (see Note 10). On the effective date of the convertible note, the related party lender simultaneously submitted a notice to convert the total note principal into 909,091shares of the Company’s common stock. The conversions were not completed, and the shares were not issued, due to a lack of sufficient shares of common stock at the time the conversion was requested. During the nine months ended January 31, 2022 the Company issued 909,091shares of common stock to extinguish the full principal balance of $10,000and paid $566 in cash to extinguish all of the accrued interest due under the note. The Company continued to accrue interest on the convertible note until the debt was paid in full, therefore they recorded interest expense of $192 during the nine months ended January 31, 2022. As of January 31, 2022 and April 30, 2021 accrued interest on the convertible note was $0 and $374, respectively.
Other Contractual Agreements
Maple Resources granted BNL Family Trust (“BNL”), a related party to Mr. Lemons, an option to purchase 1,000,000 shares of common stock from Maple Resources at a price of $0.20per share. The option expires in March 2022. Beneficial ownership of Messrs. Hanks and. Lemons give effect to the exercise of such option.
| Table of Contents |
NOTE 5 – PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at:
|
| January 31, 2022 |
|
| April 30, 2021 |
| ||
|
|
|
|
|
|
| ||
Office furniture and equipment |
| $ | 13,864 |
|
| $ | 13,864 |
|
Computer equipment and software |
|
| 10,962 |
|
|
| 10,962 |
|
Refinery land |
|
| 312,485 |
|
|
| 67,088 |
|
Refinery land improvements |
|
| 462,112 |
|
|
| 452,005 |
|
Refinery land easements |
|
| 37,015 |
|
|
| 37,015 |
|
|
|
| 836,438 |
|
|
| 580,934 |
|
Less accumulated depreciation and amortization |
|
| (135,617 | ) |
|
| (108,765 | ) |
|
|
|
|
|
|
|
|
|
|
| $ | 700,821 |
|
| $ | 472,169 |
|
On May 20, 2021, we entered into a Purchase and Sale Agreement to acquire 323.841 acres of land in, or near, Pecos County, Texas, which closed on July 27, 2021. We paid a total of $245,397 for the acquisition.
|
| July 31, 2022 |
|
| April 30, 2022 |
| ||
|
|
|
|
|
|
| ||
Office furniture and equipment |
| $ | 13,864 |
|
| $ | 13,864 |
|
Computer equipment and software |
|
| 6,555 |
|
|
| 17,517 |
|
Refinery land |
|
| 721,828 |
|
|
| 721,828 |
|
Refinery land improvements |
|
| 468,426 |
|
|
| 468,615 |
|
Refinery land easements |
|
| 37,015 |
|
|
| 37,015 |
|
|
|
| 1,247,688 |
|
|
| 1,258,839 |
|
Less accumulated depreciation and amortization |
|
| (142,588 | ) |
|
| (144,642 | ) |
|
|
|
|
|
|
|
|
|
|
| $ | 1,105,100 |
|
| $ | 1,114,197 |
|
Depreciation and amortization expense totaled $26,852$9,097 and $26,156$8,718 for the ninethree months ended JanuaryJuly 31, 2022 and 2021, respectively.
NOTE 6 – ACCRUED EXPENSES
Accrued expenses consisted of the following at:
|
| January 31, 2022 |
|
| April 30, 2021 |
|
| July 31, 2022 |
|
| April 30, 2022 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||||
Accrued payroll |
| $ | 30,090 |
| $ | 30,090 |
|
| $ | 30,090 |
| $ | 30,090 |
| ||
Accrued consulting |
| 18,000 |
| 60,000 |
|
| 21,000 |
| 12,000 |
| ||||||
Accrued interest and penalties |
| 706,168 |
| 623,085 |
|
| 718,927 |
| 714,827 |
| ||||||
Other |
|
| 94,174 |
|
|
| 94,174 |
|
|
| 94,174 |
|
|
| 94,358 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
| $ | 848,432 |
|
| $ | 807,349 |
|
| $ | 864,191 |
|
| $ | 851,275 |
|
| 14 |
| Table of Contents |
NOTE 7 – NOTES PAYABLE
Note Payable, Currently in Default
Note payable, currently in default, consists of the following at:
|
| January 31, 2022 |
|
| April 30, 2021 |
| ||
|
|
|
|
|
|
| ||
Note payable to an unrelated party, matured March 18, 2014, with interest at 10% |
| $ | 75,001 |
|
| $ | 75,001 |
|
|
|
|
|
|
|
|
|
|
|
| $ | 75,001 |
|
| $ | 75,001 |
|
|
| July 31, 2022 |
|
| April 30, 2022 |
| ||
|
|
|
|
|
|
| ||
Note payable to an unrelated party, matured March 18, 2014, with interest at 10% |
| $ | 75,001 |
|
| $ | 75,001 |
|
|
|
|
|
|
|
|
|
|
|
| $ | 75,001 |
|
| $ | 75,001 |
|
Notes Payable
Notes payable consist of the following at:
|
| January 31, 2022 |
|
| April 30, 2021 |
| ||
Note payable to an unrelated party with an issue date of February 22, 2021 with interest at 10% [1] $250,000 draw on March 5, 2021 |
| $ | 250,000 |
|
| $ | 250,000 |
|
$200,000 draw on March 26, 2021 |
|
| 200,000 |
|
|
| 200,000 |
|
Note payable to an unrelated party with an issue date of March 8, 2021 with interest at 10% [2] |
|
| 75,000 |
|
|
| 75,000 |
|
Note payable to an unrelated party with an issue date of March 11, 2021 with interest at 10% [3] |
|
| 250,000 |
|
|
| 250,000 |
|
|
|
|
|
|
|
|
|
|
Total |
| $ | 775,000 |
|
| $ | 775,000 |
|
_____________
[1] Effective February 22, 2021 the Company entered into a promissory note with GS Capital Partners, LLC, with a principal amount of $1,000,000, which is subject to drawdown requests by the Company. The maturity date of the note is the earlier of (i) December 31, 2021 or (ii) the consummation by the Company of an equity or equity-based financing providing net proceeds to the Company sufficient to retire the outstanding indebtedness under the note. The note has an interest rate of ten percent per annum from the date of each drawdown. On June 21, 2021 the Company received $200,000 from a draw on the note, however, repaid the amount in full on July 20, 2021.
[2] Effective March 8, 2021 the Company entered into a promissory note with JSJ Investments, Inc with a principal amount of $75,000. The maturity date of the note is March 8, 2022 and the note has an interest rate of 10% per annum from the date of funding. This note was paid in full in February 2022, see Note 13.
[3] Effective March 11, 2021 the Company entered into a promissory note with Vista Capital Investments, Inc with a principal amount of $250,000. The maturity date of the note is March 11, 2022 and the note has an interest rate of 10% per annum from the date of funding. This note was partially repaid in February 2022, see Note 13.
|
| July 31, 2022 |
|
| April 30, 2022 |
| ||
Note payable to an unrelated party with an issue date of February 22, 2021 with interest at 10% [1] |
|
|
|
|
|
| ||
$250,000 draw on March 5, 2021 |
| $ | 250,000 |
|
| $ | 250,000 |
|
$200,000 draw on March 26, 2021 |
|
| 200,000 |
|
|
| 200,000 |
|
$50,000 draw on April 13, 2022 |
|
| 50,000 |
|
|
| 50,000 |
|
Note payable to an unrelated party with an issue date of March 11, 2021 with interest at 10% [2] |
|
| 136,952 |
|
|
| 136,952 |
|
Note payable to an unrelated party with an issue date of February 28, 2022 with interest at 10% [3] |
|
| 102,500 |
|
|
| 102,500 |
|
Note payable to an unrelated party with an issue date of March 3, 2022 with interest at 5% [4] |
|
| 181,500 |
|
|
| 165,000 |
|
|
|
|
|
|
|
|
|
|
Total |
| $ | 920,952 |
|
| $ | 904,452 |
|
[1] | Effective February 22, 2021 the Company entered into a promissory note with GS Capital Partners, LLC, with a principal amount of $1,000,000, which is subject to drawdown requests by the Company. The maturity date of the note is the earlier of (i) December 31, 2021 or (ii) the consummation by the Company of an equity or equity-based financing providing net proceeds to the Company sufficient to retire the outstanding indebtedness under the note. On December 30, 2021 the Company entered into amendment to the notes to extend the maturity date to March 31, 2022 and on April 12, 2022 the Company entered into an amendment to the notes to extend the maturity date to March 31, 2023. The note has an interest rate of 10% per annum from the date of each drawdown. | |
[2] | Effective March 11, 2021 the Company entered into a promissory note with Vista Capital Investments, Inc with a principal amount of $250,000. The maturity date of the note is March 11, 2022 which was amended on February 23, 2021 to extend the due date to December 31, 2021. The note has an interest rate of 10% per annum from the date of funding. On February 23, 2022 the Company made a payment of $113,048 to pay down the note principal. | |
[3] | Effective February 28, 2022 the Company entered into a promissory note with Oscar and Ilda Gonzales with a principal amount of $102,500. The maturity date of the note is February 28, 2026 and repayments on the note are to begin on March 1, 2023 in the amount of $3,309 per month. The note has an interest rate of 10% per annum. | |
[4] | Effective March 3, 2022 the Company entered into a promissory note with Sabby Volatility Warrant Master Fund with a principal amount of $165,000 in full satisfaction of all liquidated damages pursuant to a registration rights agreement dated December 22, 2021. The maturity date of the note is the earlier of February 28, 2023 or the date MMEX receives at least $6 million of proceeds from an equity or equity-based financing. In accordance with the terms of the note, if the note was not paid in full prior to June 22, 2022, the principal amount of the note was to increase to $181,500. Accordingly, during the three months ended July 31, 2022 we recognized $16,500 in interest expense to increase the principal balance. |
| 15 |
| Table of Contents |
Convertible Note Payable, Currently in Default
Convertible notes payable, currently in default, consist of the following at:
|
| January 31, 2022 |
|
| April 30, 2021 |
| ||
Note payable to an unrelated party, matured December 31, 2010, with interest at 10%, convertible into common shares of the Company [1] |
| $ | 50,000 |
|
| $ | 50,000 |
|
Note payable to an unrelated party, matured January 27, 2012, with interest at 25%, convertible into common shares of the Company [2] |
|
| 25,000 |
|
|
| 25,000 |
|
Note payable to an accredited investor, maturing January 31, 2020, with interest at 10%, convertible into common shares of the Company at a defined variable exercise price [3] |
|
| 0 |
|
|
| 91,331 |
|
Note payable to an individual, maturing December 27, 2020, with interest at 5%, convertible into common shares of the Company at a defined variable exercise price [4] |
|
| 0 |
|
|
| 10,000 |
|
Note payable to an individual, maturing December 27, 2020, with interest at 5%, convertible into common shares of the Company at a defined variable exercise price [5] |
|
| 0 |
|
|
| 9,719 |
|
Note payable to an individual, maturing January 22, 2021, with interest at 5%, convertible into common shares of the Company at a defined variable exercise price [6] |
|
| 0 |
|
|
| 6,500 |
|
Note payable to an individual, maturing May 14, 2021, with interest at 5%, convertible into common shares of the Company at a defined variable exercise price [7] |
|
| 0 |
|
|
| 34,000 |
|
Note payable to an individual, maturing September 9, 2021, with interest at 5%, convertible into common shares of the Company at a defined variable exercise price [8] |
|
| 0 |
|
|
| 9,225 |
|
|
|
|
|
|
|
|
|
|
|
|
| 75,000 |
|
|
| 235,775 |
|
Less discount |
|
| 0 |
|
|
| 0 |
|
|
|
|
|
|
|
|
|
|
Total |
| $ | 75,000 |
|
| $ | 235,775 |
|
____________
[1] On March 8, 2010, the Company closed a note purchase agreement with an accredited investor pursuant to which the Company sold a $50,000 convertible note in a private placement transaction. In the transaction, the Company received proceeds of $35,000 and the investor also paid $15,000 of consulting expense on behalf of the Company. The convertible note was due and payable on December 31, 2010 with an interest rate of 10% per annum. The note is convertible at the option of the holder into our common stock at a fixed conversion price of $3.70, subject to adjustment for stock splits and combinations.
|
| July 31, 2022 |
|
| April 30, 2022 |
| ||
Note payable to an unrelated party, matured December 31, 2010, with interest at 10%, convertible into common shares of the Company [1] |
| $ | 50,000 |
|
| $ | 50,000 |
|
Note payable to an unrelated party, matured January 27, 2012, with interest at 25%, convertible into common shares of the Company [2] |
|
| 25,000 |
|
|
| 25,000 |
|
|
|
|
|
|
|
|
|
|
|
|
| 75,000 |
|
|
| 75,000 |
|
Less discount |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
Total |
| $ | 75,000 |
|
| $ | 75,000 |
|
[1] | On March 8, 2010, the Company closed a note purchase agreement with an accredited investor pursuant to which the Company sold a $50,000 convertible note in a private placement transaction. In the transaction, the Company received proceeds of $35,000 and the investor also paid $15,000 of consulting expense on behalf of the Company. The convertible note was due and payable on December 31, 2010 with an interest rate of 10% per annum. The note is convertible at the option of the holder into our common stock at a fixed conversion price of $3.70, subject to adjustment for stock splits and combinations. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
[2] |
Convertible Notes Payable
Current convertible notes payable consisted of the following at:
NOTE
Authorized Shares
Common Stock
During the During the three months ended July 31, 2021, the Company issued a total of 449,568 shares of its common stock: 170,000 shares (plus 3,580,000 prefunded warrants and 2,575,500 warrants, see Warrants below) for cash of $3,000,000;
Series A Preferred Stock
The Series A preferred stock has no redemption, conversion or dividend rights; however, the holders of the Series A preferred stock, voting separately as a class,
During the
Series B Preferred Stock
The Series B preferred stock has a stated value equal to $1,000, has no redemption or voting rights, and are entitled to receive dividends on preferred stock equal, on an as-of-converted-to-common-stock basis, to and in the same form as the dividends paid on shares of the common stock. The Series B preferred stock is convertible, at the option of the holder, into the number of shares of common stock determined by dividing the stated value of such share of Preferred Stock by the initial Conversion Price of $0.10,
During the Warrants A summary of warrant activity during the three months ended July 31, 2022 is presented below:
Combined with the
NOTE
Legal
In the ordinary course of business, we may be, or have been, involved in legal proceedings from time to time. During the
NOTE
In accordance with ASC 855-10, there have been no subsequent events that are required to be reported through the filing date of these consolidated financial statements other than those stated below.
On
On
Subsequent to
ITEM 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis constitute forward-looking statements for purposes of the Securities Act and the Exchange Act and as such involves known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. The words "expect", "estimate", "anticipate", "predict", "believes", "plan", "seek", "objective" and similar expressions are intended to identify forward-looking statements or elsewhere in this report. Important factors that could cause our actual results, performance or achievement to differ materially from our expectations are discussed in detail in Item 1 above. All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by such factors. We undertake no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Notwithstanding the foregoing, we are not entitled to rely on the safe harbor for forward looking statements under 27A of the Securities Act or 21E of the Exchange Act as long as our stock is classified as a penny stock within the meaning of Rule 3a51-1 of the Exchange Act. A penny stock is generally defined to be any equity security that has a market price (as defined in Rule 3a51-1) of less than $5.00 per share, subject to certain exceptions.
The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements, including the notes thereto.
Overview
Company Information and Business Plan
MMEX Resources Corporation (“MMEX”) was formed as a Nevada corporation in 2005. The current management team lead an acquisition of the Company (then named Management Energy, Inc.) through a reverse merger completed in 2010 and thereafter changed the Company’s name to MMEX Mining Corporation. MMEX is focused on the development, financing, construction and operation of clean fuels infrastructure projects powered by renewable energy. We have formed two operating sub-divisions of the Company
Our Clean Energy Global, LLC
Project 1: Pecos Clean Fuels & Transport, LLC -Ultra Clean Fuels Refining-Pecos County, Texas We have teamed with Polaris Engineering to develop an ultra-clean transportation fuel, up to 11,600 barrel per day feedrate crude oil refining facility at our Pecos County, Texas site to produce 87° gasoline, ultra-low sulphur diesel and low-sulphur fuel oil, utilizing the Polaris Ultra
Project 2: Arroyo Cabral, Cordoba Province Argentina Solar Power Project. The Company along with its international partners have Hydrogen Global, LLC
Project 3: This planned project to utilize the proprietary
Project 4: Hydrogen Global- Tierra del Fuego Province Argentina-Green Hydrogen Project
Project 5: Hydrogen Global- Tangier Morocco- Green Hydrogen Project The Company has identified sea-based land assets in Tangier Morocco and is in negotiations for the supply of 160MWe of certified renewable power with local utility. The Company has international partners with local prescence in Morocco. Tangier has developed what is now the largest trading hub in Africa with ten major ports (https://www.marineinsight.com/know-more/10-major-ports-in-morocco/) including multi-modal deep seaports, multiple free-zones areas with substantial tax and trade incentives and it is located 15km from Europe ports (Spain and Gibraltar). Tangier and the neighboring coastal area benefit from some of the best wind conditions in the world, which can also be associated with solar power generation. The Kingdom of Morocco is strongly pushing the use of renewable energy and has recently issued a Green Hydrogen regulatory framework. The principal off-take markets are the shipping and terminal companies present in Project 6: Hydrogen Global- Southern Coast of The Company has entered advanced discussions with Peru’s principal electric power distribution company to develop potentially a Green Hydrogen project to produce up to 55 tons per day of hydrogen, requiring 160 MWe of constant and certified renewable power load. The Company plans to use its Siemens Energy Electrolyzer FEED template and adapt it for Peru. The Peru distribution company will also provide the land area as part of the transaction – approximately 5 hectares, by the sea to facilitate exports of green Hydrogen/Ammonia/Methanol to Asia and the U.S. West Coast. Peru’s mining industry with its use of heavy extraction and transportation equipment has significant market potential for the Company's hydrogen production. Project 7: Hydrogen Global- Pecos County, Texas-Blue Hydrogen Project The Company is in planning discussions with a super major oil company Completion of these projects is dependent upon our obtaining the necessary capital for planning, construction and start-up costs. There is no assurance that such financing can be obtained on favorable terms.
Results of Operations
Revenues
We have not yet begun to generate revenues.
General and Administrative Expenses
Our general and administrative expenses increased to
Project Costs
Depreciation and Amortization Expense
Our depreciation and amortization expense results from the depreciation of land improvements and amortization of land easements and totaled to
Other Income (Expense)
Our interest expense includes interest accrued on debt, amortization of debt discount and penalties assessed on debt. Interest expense totaled
We reported gains
We reported a net gain (loss) on extinguishment of liabilities of
Net Income (Loss)
As a result of the above, we reported net income (loss) of
Net Income (Loss) Attributable to the
Liquidity and Capital Resources
Working Capital
As of
Sources and Uses of Cash
Our sources and uses of cash for the
We used net cash of
We used net cash of $826,842 in operating activities for the three months ended July 31, 2021 as a result of our net income of
Net cash used in investing activities for the
Net cash provided by financing activities for the Net cash provided by financing activities for the three months ended July 31, 2021 was $2,474,019, comprised of proceeds from notes payable of $200,000, proceeds from convertible notes payable of $78,500, and proceeds from the sale of our common stock of
Going Concern Uncertainty
Our financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplate the realization of assets and liquidation of liabilities in the normal course of business. We have incurred continuous losses from operations, have an accumulated deficit,
Since inception, our operations have primarily been funded through private debt and equity financing, and we expect to continue to seek additional funding through private or public equity and debt financing. Our ability to continue as a going concern is dependent on our ability to generate sufficient cash from operations to meet our cash needs and/or to raise funds to finance ongoing operations and repay debt. However, there can be no assurance that we will be successful in our efforts to raise additional debt or equity capital and/or that our cash generated by our operations will be adequate to meet our needs. These factors, among others, raise substantial doubt that we will be able to continue as a going concern for a reasonable period of time.
The financial statements do not include any adjustments that might result from the outcome of any uncertainty as to the Company's ability to continue as a going concern. The financial statements also do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Critical Accounting Policies
Our results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to inventories, investments, intangible assets, income taxes, financing operations, and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
For further information on our significant accounting policies see the notes to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended April 30,
ITEM 3 Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company, we are not required to provide the information required by this Item.
ITEM 4 Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined) in Exchange Act Rules 13a – 15(c) and 15d – 15(e). Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were
Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act, as amended. Our management assessed the effectiveness of our internal control over financial reporting as of
(b) Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
ITEM 1 Legal Proceedings
None.
ITEM 1A Risk Factors
Not applicable.
ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds
On July 15, 2022 the Company issued 9,000,000 Series E warrants that were assigned a fair market value of $495,000. On July 21, 2022 the Company issued 648,818 shares of its common stock for the cashless exercise of 650,000 Series B warrants. On August 15, 2022 the Company entered into a Securities Purchase Agreement and convertible note payable with Diagonal Lending, LLC with a principal amount of $78,750. On August 16, 2022 the Company issued 973,073 shares of its common stock for the cashless exercise of 975,000 Series B warrants. On August 27, 2022 the Company approved the issuance of 91,414 shares of common stock to BNL Family Trust, an entity related to a director, as repayment of $1,006 worth of accrued interest. On August 31, 2022 the Company issued
ITEM 3 Defaults Upon Senior Securities
There is no information required to be disclosed by this Item.
ITEM 4 Mine Safety Disclosures
There is no information required to be disclosed by this Item.
ITEM 5 Other Information
There is no information required to be disclosed by this Item.
ITEM 6 Exhibits
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101.INS |
| Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). |
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101.SCH |
| Inline XBRL Taxonomy Extension Schema Document. |
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101.CAL |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
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101.DEF |
| Inline XBRL Taxonomy Extension Definition Linkbase Document. |
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101.LAB |
| Inline XBRL Taxonomy Extension Label Linkbase Document. |
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101.PRE |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
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104 |
| Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
___________
* | Filed herewith. |
** | Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Act of 1934 and otherwise are not subject to liability. |
| Table of Contents |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| MMEX Resources Corporation |
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Dated: | By: | /s/ Jack W. Hanks |
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| Chief Executive Officer (Principal Executive Officer), President and Chief Financial Officer (Principal Financial and Accounting Officer) |
|