UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the transition period from             to

Commission file number: 000-53482

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 past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post 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 definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 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 ☒

Number of shares of issuer’s common stock outstanding at July 15, 2016: 44,665,516April 11, 2017: 44,941,532

Table of Contents

The accompanying notes are an integral part of these financial statements.

The accompanying notes are an integral part of these financial statements.

Texas Mineral Resources Corp

BALANCE SHEETS

(Unaudited)

The accompanying notes are an integral part of these financial statements.

TEXAS MINERAL RESOURCES CORP 

UNAUDITED STATEMENTS OF OPERATIONS

The accompanying notes are an integral part of these financial statements. 

TEXAS MINERAL RESOURCES CORP 

UNAUDITED STATEMENTS OF CASH FLOWS

The accompanying notes are an integral part of these financial statements.

Texas Mineral Resources CorpCorp.

(Formerly Texas Rare Earth Resources Corp)

Notes to Interim Financial Statements

May 31, 2016February 28, 2017

(Unaudited)

NOTE 1 – BASIS OF PRESENTATION

The accompanying unaudited interim financial statements of Texas Mineral Resources Corp. (“we”, “us”, “our”, the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in our annual report on Form 10-K, for the year ended August 31, 2015,2016, dated November 30, 2015December 14, 2016 as filed with the SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year ended August 31, 20152016 as reported in our annual report on Form 10-K, have been omitted.

The financial statements have been prepared on a going concern basis which assumes the Company will not be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred losses since inception resulting in an accumulated deficit of $32,256,056$32,754,092 as of May 31, 2016February 28, 2017 and further losses are anticipated in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand and or private placement of common stock.

On March 14, 2016, the Company filed a Certificate of Amendment with the Secretary of State of the State of Delaware to amend its Certificate of Incorporation to change the name of the Company from “Texas Rare Earth Resources Corp” to “Texas Mineral Resources Corp”. The amendment shall be effective at 9:00 am EST on March 21, 2016. The Certificate of Amendment did not make any other amendments to the Company’s Certificate of Incorporation.

Reclassifications

For comparability, certain prior period amounts have been reclassified, where appropriate, to conform to the financial statement presentation used in 2017. 

NOTE 2 – MINERAL PROPERTIES

September 2011 Lease

On September 2, 2011, we entered into a new mining lease with the Texas General Land Office covering Sections 7 and 18 of Township 7, Block 71 and Section 12 of Block 72, covering approximately 860 acres at Round Top Mountain in Hudspeth County, Texas. The mining lease issued by the Texas General Land Office gives us the right to explore, produce, develop, mine, extract, mill, remove, and market beryllium, uranium, rare earth elements, all other base and precious metals, industrial minerals and construction materials and all other minerals excluding oil, gas, coal, lignite, sulfur, salt, and potash. The term of the lease is nineteen years so long as minerals are produced in paying quantities.

Under the lease, we will pay the State of Texas a lease bonus of $142,518; $44,718 of which was paid upon the execution of the lease, and $97,800 which will be due when we submit a supplemental plan of operations to conduct mining. Upon the sale of minerals removed from Round Top, we will pay the State of Texas a $500,000 minimum advance royalty.

Thereafter, we will pay the State of Texas a production royalty equal to eight percent (8%) of the market value of uranium and other fissionable materials removed and sold from Round Top and six and one quarter percent (61/4%) of the market value of all other minerals removed and sold from Round Top.

Thereafter, assuming production of paying quantities has not been obtained, we may pay additional delay rental fees to extend the term of the lease for successive one (1) year periods pursuant to the following schedule:

NOTE 2 – MINERAL PROPERTIES (Continued)

In August 2015,2016, we paid a delay rental to the State of Texas in the amount of $67,077.

November 2011 Lease

On November 1, 2011, we entered into a mining lease with the State of Texas covering 90 acres, more or less, of land that we purchased in September 2011 near our Round Top site. The deed was recorded with Hudspeth County on September 16, 2011. Under the lease, we paid the State of Texas a lease bonus of $20,700 which was paid upon the execution of the lease. Upon the sale of minerals removed from Round Top, we will pay the State of Texas a $50,000 minimum advance royalty. Thereafter, we will pay the State of Texas a production royalty equal to eight percent (8%) of the market value of uranium and other fissionable materials removed and sold from Round Top and six and one quarter percent (6 1/4%) of the market value of all other minerals sold from Round Top.

If production of paying quantities of minerals has not been obtained on or before November 1, 2012, we may pay the State of Texas a delay rental to extend the term of the lease in an amount equal to $4,500.

Thereafter, assuming production of paying quantities has not been obtained, we may pay additional delay rental fees to extend the term of the lease for successive one (1) year periods pursuant to the following schedule:

In August 2015,October 2016, we paid a delay rental to the State of Texas of $6,750.

March 2013 Lease

On March 6, 2013, we entered into a lease assignment (the “Lease Assignment Agreement”) with Southwest Range & Wildlife Foundation, Inc., a Texas non-profit corporation (the “Foundation”), pursuant to which the Foundation agreed to assign to us a surface lease identified with the State of Texas as Surface Lease SL20040002 (the “WestLease”), which covers 54,990.11 acres in Hudspeth County, Texas. In exchange for the West Lease, we agreed to: (i) pay the Foundation $500,000 in cash; (ii) issue 1,063,830 of our common shares, par value $0.01 (the “Common Shares”); and (iii) make ten (10) payments to the Foundation of $45,000 each. The first payment was made in June 2013, and the nine (9) subsequent payments due on or before June 1 of each of the following years, such payments to be used by the Foundation to support conservation efforts within the Rio Grande Basin. The Lease Assignment Agreement contains standard representations, warranties and covenants. The closing of the transaction contemplated by the Lease Assignment Agreement was completed on March 8, 2013. As of February 28, 2017 the fourth annual payment of $45,000 was not paid for the June 2016 payment; however, the Company has received a waiver until May 31, 2017 for payment.

October 2014 Surface Option

In October 2014, we executed an agreement with the Texas General Land Office securing the option to purchase the surface rights covering the potential Round Top project mine and plant areas, and separately a lease to develop the water necessary for the potential Round Top project mine operations.

The option to purchase the surface rights covers approximately 5,670 acres over the mining lease and the additional acreage adequate to site all potential heap leaching and processing operations as currently anticipated by the Company. We may exercise the option for all or part of the option acreage at any time during the sixteen yearsixteen-year primary term of the mineral lease. The option can be kept current by an annual payment of $10,000 due in October, which washas not been paid duringas of the nine months ended May 31, 2016.date of this filing. The purchase price will be the appraised value of the surface at the time of exercising the option.

The ground water lease secures our right to develop the ground water within a 13,120 acre lease area located approximately 4 miles from the Round Top deposit. The lease area contains five existing water wells. It is anticipated that all potential water needs for the Round Top project mine operations would be satisfied by the existing wells covered by this water lease. This lease has an annual minimum production payment of $5,000 prior to production of water for the operation due in October, which washas not been paid duringas of the nine months ended May 31, 2016.date of this filing. After initiation of production we will pay $0.95 per thousand gallons or $20,000 annually, whichever is greater. This lease remains effective as long as the mineral leaseWest Lease is in effect.

The Pagnotti Enterprises Inc. Memorandum of Understanding

On June 28, 2016 TMRC executed a Memorandum of understanding with Pagnotti Enterprises Inc. (“PEI”) of Wilkes Barre, Pennsylvania, owners of the Jeddo Coal Co., whereby under specified terms TMRC could lease one or more of Jeddo’s deposits located in the anthracite region of northeast Pennsylvania. Research by the Department of Energy (DOE) has shown that these coal deposits and the sandstones and siltstones immediately associated with them contain anomalously high values of rare earth and on particular interest, Scandium. The DOE research to date has indicated that the rare earth can be efficiently extracted from pulverized rock using ammonium sulfate as the lixiviant. TMRC is in the process of preparing an application for a federal grant to design and construct a continuous ion exchange/continuous ion chromatography (CIX/CIC) pilot plant to be delivered to a designated project area in the Appalachian cold province. TMRC and its co-applicants, K-Tech, Inventure Renewables, of Tuscaloosa, Alabama and Penn State University are proposing to plan, develop, design and install the CIX/CIC pilot plant at one of the Jeddo Coal properties. The timing of the award of this grant is currently uncertain. The application for this award is competitive and others are participating.

Under the terms of the Memorandum of Understanding (MOU) signed 28 June 2016, TMRC had a six months term to perform the necessary due diligence and to technically and economically evaluate the properties. Upon execution of the MOU TMRC and PEI will have six months to draft and execute a formal lease agreement containing all the standard terms of mining lease agreements. TMRC will be obligated to pay a $5,000 per month rental or a 12% royalty whichever is greater upon execution of the lease with PEI. TMRC has asked for and received an extension of the original six months due diligence period to the new due date of June 30, 2017.

NOTE 3 – NOTENOTES PAYABLE

In relation to the Foundation lease discussed in Note 2 the Company recorded a note payable for an amount for the initial $45,000 due upon signing of lease and the nine (9) future payments due of $45,000 which has been recorded at its present value discounted with an imputed interest rate of 5% for a total note payable of $364,852. In connection with the offering of Units, on December 7, 2015, we entered into a settlement agreement with Southwest Range & Wildlife Foundation. Southwest Range agreed to invest $10,000 of the amounts due and payable under the Lease Agreement into Units issued the Offering. In connection with the Settlement Agreement, we issued 50,000 Units to Southwest in exchange for the investment of $10,000 of the amounts due and payable under the Lease Agreement into Units issued in the Offering. The outstanding note payable due is $260,387 as of May 31, 2016.

As of the date of this filing, we have not paid the fourth installment of our surface lease in the amount of $45,000 to the Southwest Wildlife Foundation. As a result the full amount of the note payable has been classified as currently due. The Company has received a waiver until May 31, 2017 for the June 2016 payment. The note payable balance as of February 28, 2017 and August 31, 2016 was $260,387. The Company has also accrued interest expense as of February 28, 2017 and August 31, 2016 of $22,500 and $18,750, respectively which is included in accrued liabilities.

On August 26, 2015 we issued promissory notes toJuly 1, 2016 the Company entered into two individualsloans for $40,000$2,500 each for total loan proceedsfrom two directors of $80,000,the Company. The loans are due on November 24, 2015 (due on demand upon default),July 1, 2017, non-interest bearing,accruing, and unsecured. As additional consideration for the loan,loans, we issued 80,0005,000 common stock purchase warrants to each individual. The warrants have an exercise price of $0.20$0.10 and term of five years. The promissory note hasloans have a relative fair value of $56,766$3,815 and the warrants hashave a relative fair value of $23,234$1,185 at the date of issuance determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 1.49%1.00% (ii) estimated volatility of 198%185% (iii) dividend yield of 0.00% and (iv) expected life of the warrants of five years. In connection with our offeringThe notes payable balance as of Units, on December 7, 2015,February 28, 2017 and August 31, 2016 was a total of $5,000.

On September 1, 2016, the Company entered into five loans totaling $71,500 from five directors of the Company. The loans were due March 1, 2017, are non-interest bearing, and unsecured. As of this filing the loans are in default and due upon demand. As additional consideration for the loans, we issued in total 147,000 common stock purchase warrants. The warrants have an exercise price of $0.10 and term of five years. The loans have a relative fair value of $57,414 and the warrants have a relative fair value of $14,086 at the date of issuance determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 1.180% (ii) estimated volatility of 245% (iii) dividend yield of 0.00% and (iv) expected life of the warrants of five years. The notes payable balance as of February 28, 2017 was $71,500.

On November 1, 2016 the Company entered into two separate note settlement agreementsloans for $4,000 and $1,000 from two directors of the Company. The loans are due April 30, 2017 and April 1, 2017, respectively, are non-interest bearing, and unsecured. As of this filing the loan with Leo E Mindel Non-GST Exempt Family Trusta April 1, 2017 due date is in default and Sunny Mindel (collectively,due upon demand. As additional consideration for the “Holders”), respectively (the “Note Settlement Agreements”). Pursuantloans, we issued 4,000 and 1,000 common stock purchase warrants to each individual. The warrants have an exercise price of $0.10 and term of five years. The loans have a relative fair value of $4,522 and the warrants have a relative fair value of $478 at the date of issuance determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 1.30% (ii) estimated volatility of 181% (iii) dividend yield of 0.00% and (iv) expected life of the warrants of five years. The notes payable balance as of February 28, 2017 and August 31, 2016 was $5,000 and $0, respectively.

On December 12, 2016, the Company entered into a loan for $15,000 a director of the Company. The loan is due June 12, 2017, is non-interest accruing, and unsecured. As additional consideration for the loans, we issued 45,000 common stock purchase warrants to the Note Settlement Agreements, each Holder agreed that in exchange for each $40,000 principal amount unsecured noteindividual. The warrants have an exercise price of $0.10 and term of five years. The loan has a relative fair value of $11,296 and the warrants have a relative fair value of $3,704 at the date of issuance determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 1.90% (ii) estimated volatility of 241% (iii) dividend yield of 0.00% and (iv) expected life of the warrants of five years. The notes payable balance as of February 28, 2017 and August 31, 2016 was $15,000 and $0, respectively.

On January 12, 2017 the Company entered into two loans totaling $20,000 from a director and an officer of the Company. The loans are due November 24, 2015 (eachJuly 12, 2017, are non-interest accruing, and unsecured. As additional consideration for the loans, we issued 40,000 common stock purchase warrants to each individual. The warrants have an exercise price of $0.10 and term of five years. The loans have a “Note”) held by each Holder, that each Holder would reinvest the amounts due and payable under the Notes into the Offeringrelative fair value of $13,542 and the amounts duewarrants have a relative fair value of $6,458 at the date of issuance determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 1.87% (ii) estimated volatility of 240% (iii) dividend yield of 0.00% and (iv) expected life of the warrants of five years. The notes payable thereunder would be settled by issuing Units. In connection withbalance as of February 28, 2017 and August 31, 2016 was $20,000 and $0, respectively.

The Company has recorded total discounts on the Offering andnotes payable in the Note Settlement Agreements, we issued 200,000 Units to each Holder foramount of $24,726. For the exchange and cancellationsix months ended February 28, 2017, amortization of each Note anddiscounts on the amounts due andnotes payable thereunder held by each Holder.totals $17,563. 

NOTE 4 – SHAREHOLDERS’ EQUITY

Capital Stock

Our authorized capital stock consists of 100,000,000 shares of common stock, with a par value of $0.01 per share, and 10,000,000 preferred shares with a par value of $0.001 per share.

All shares of common stock have equal voting rights and, when validly issued and outstanding, are entitled to one non-cumulative vote per share in all matters to be voted upon by shareholders. The shares of common stock have no pre-emptive, subscription, conversion or redemption rights and may be issued only as fully paid and non-assessable shares. Holders of the common stock are entitled to equal ratable rights to dividends and distributions with respect to the common stock, as may be declared by our Board of Directors (our “Board”) out of funds legally available. In the event of a liquidation, dissolution or winding up of the affairs of the Corporation, the holders of common stock are entitled to share ratably in all assets remaining available for distribution to them after payment or provision for all liabilities and any preferential liquidation rights of any preferred stock then outstanding.

On December 7, 2015, we closed a private placement of the Company’s units with 11 accredited investors for aggregate gross proceeds to the Company of approximately $659,500. Each Unit issued in the Offering consists of: (i) one share of common stock of the Company, par value $0.01 per share and (ii) two common stock purchase warrants. Each Warrant entitles the holder thereof to purchase one Common Share at a price of $0.35 per Warrant Share until December 7, 2020. The common stock have a relative fair value of $224,595 and the warrants have a relative fair value of $434,905 at the date of issuance determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 1.59-1.70 (ii) estimated volatility of 191% (iii) dividend yield of 0.00% and (iv) expected life of the options of five years.

In connection with the Offering, we entered into Subscription Agreements by and between us and each Subscriber in which we issued to the Subscribers an aggregate of 3,297,500 Units at a per Unit purchase price of $0.20. Pursuant to the Subscription Agreement, we agreed to use our reasonable commercial efforts to prepare and file with the United States Securities and Exchange Commission within sixty (60) calendar days from the closing of the Offering a registration statement to cover the resale, from time to time, of the Common Shares and the Warrant Shares issuable upon the exercise of the Warrants.

The sale and issuance of the Units, the Common Shares, the Warrants and the Warrant Shares issuable upon the conversion or exercise therein were issued or will be issued pursuant to the exemption from registration under the U.S. Securities Act of 1933, as amended, in reliance on Section 4(a)(2) thereof and Rule 506 of Regulation D promulgated thereunder as a transaction by an issuer not involving a public offering, in which the investors are accredited and have acquired the securities for investment purposes only and not with a view to or for sale in connection with any distribution thereof. Such securities may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

From September 2015 through May 2016 the Board approved a total grant of 90,000 options to a consultant to the Company. The options are exercisable at $0.30 per share for a period of five years. All options vest immediately. With respect to these options, the Black-Scholes pricing model was used to estimate the fair value of the 90,000 options issued during the period to this advisor, using the assumptions of a risk free interest rate of 1.22% to 1.78%, dividend yield of 0%, volatility of 421% to 427%, and an expected life of 5 years. These options were expensed immediately in the amount of approximately $15,000.

We have recognized stock compensation expense of $106,785 for 1,425,000 stock options issued in prior year to members of the board. The remaining expense to be recognized is $0.

During the ninesix months ended May 31, 2016 the CompanyFebruary 28, 2017, we recognized $184,409$12,285 in stock compensation expense to be issued in commonfor 60,000 stock for services to a Consultant. The shares have not beenoptions issued to date.

During the nine months ended May 31, 2016, the Company recognized $62,500 in stock compensation expense to be issued in common stockan outside consultant for services to a consultant. The shares have not been issued to date.services.

We have 44,665,516 shares of our common stock outstanding as of May 31, 2016.

NOTE 5 – RELATED PARTY TRANSACTIONS

The Company had accounts payable to related parties in the approximate amount of $274,755$447,000 and $350,000 at MayFebruary 28, 2017 and August 31, 2016.2016, respectively.

The Company rents office space on a month to month basis of $1,600 from a director. This space is currently subleased to a tenant.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

In this Quarterly Report on Form 10-Q, unless the context requires otherwise, references to “Texas Mineral Resources Corp,” “the Company” “we,” “our” or “us” refer to Texas Mineral Resources Corp.You should read the following discussion and analysis of

our financial condition and results of operations together with our financial statements and related notes appearing elsewhere in this quarterly report. This Quarterly Report on Form 10-Q may also contain statistical data and estimates we obtained from industry publications and reports generated by third parties. Although we believe that the publications and reports are reliable, we have not independently verified their data.

Forward-Looking Statements

This Quarterly Report on Form 10-Q and the exhibits attached hereto contain “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 (collectively, “forward-looking statements”). Such forward-looking statements concern our anticipated results and developments in our operations in future periods, planned exploration and development of our properties, plans related to our business and other matters that may occur in the future. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as “expects” or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “estimates” or “intends”, or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q, include, but are not limited to:

Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation:

This list is not exhaustive of the factors that may affect our forward-looking statements. Some of the important risks and uncertainties that could affect forward-looking statements are described further under the section heading “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report and “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended August 31, 2015,2016, filed with the SEC on November 30, 2015.December 14, 2016. Although we have attempted to identify important factors that could cause actual results to differ materially from those described in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Except as required by law, we disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.Wequalify all the forward-looking statements contained in this Quarterly Report by the foregoing cautionary statements.

Overview

We are a mining company engaged in the business of the acquisition, exploration and, if warranted, development of mineral properties. We currently hold two nineteen year leases, executed in September 2011 and November 2011, to explore and develop a 950 acre rare earths project located in Hudspeth County, Texas known as the Round Top Project and prospecting permits covering an adjacent 9,345 acres. Our principal focus will be on developing a metallurgical process to concentrate or otherwise extract the metals from the Round Top rhyolite, although we will continue to examine other opportunities in the region as they develop. We currently have limited operations and have not established that any of our projects or properties contain any Proven or Probable Reserves under SEC Industry Guide 7. Our operations are exploratory in nature.

We currently do not have any producing properties and consequently, we have no current operating income or cash flow and have not generated any revenues. Further exploration will be required before a final evaluation as to the economic and practical feasibility of any of our properties is determined.

On December 23, 2013, we published a revised version of the June 2012 Preliminary Economic Assessment (the “Revised PEA”) on the Round Top Project based on a 20,000 tonne per day heap leach operation using a conventional element separation plant. The mineralized material estimate was recalculated to include uranium, niobium, tantalum and tin. The revised PEA assesses the potential economic viability of the simplified and “scaled down” operation which we believe is a much better fit with the present rare earth market.

On September 8, 2014, we announced that we had completed an internal analysis suggesting that there is a reasonable possibility to adapt a lower volume staged growth approach to development of our Round Top project. The analysis indicated that an operation designed to produce a selected group of separated REE products in the range of 350-450 tonnes per year range, could potentially yield favorable mine economics. The goal of the proposed staged approach would be to increase mining rates if and when our products gained acceptability. The analysis suggested that capital needs in the Revised PEA could be proportionally reduced in relation to the lower volume initial stage. Work evaluatingWe are currently conducting a reduced scale operation continues, however, the current depressed state of rare earth mineral prices has negatively affected the economics of such a downscaled operation.

Bench scale development of continuous ion exchange/continuous ion chromatography has progressed to the point that we are confident that this process is versatile, effective and economically viable for the separation and purificationmore detailed analysis of the rare earth elements. Work continuesrelative capital expenses and contingent upon arrangingoperating expenses requirements of a scaled down processing plant with both solvent extraction and ion exchange processes under evaluation. We believe the requisite financing, the next phase will be to construct and operatelower capital requirements of a pilot plant.staged startup could offset any marginal increase in unit operating costs.

Also because of the present state of the rare earth industry, we are placing a high priority on the evaluation of processing and marketing the co-products, lithium, potassium, magnesium, iron and aluminum sulfates.

Our current management and Board are stockholder-centric, and receive either no cash compensation or much less than previous management. We will require definitive scientific documentation, rigorous economic studies, consideration of a wide range of alternatives and meticulous oversight of any cash outlays of stockholder funds.

On March 14, 2016, the Company filed a Certificate of Amendment with the Secretary of State of the State of Delaware to amend its Certificate of Incorporation to change the name of the Company from “Texas Rare Earth Resources Corp.” to “Texas Mineral Resources Corp.”. The amendment shall be effective 9:00 am EST on March 21, 2016. The Certificate of Amendment did not make any other amendments to the Company’s Certificate of Incorporation.

Current Plan of Operations

Continued Work Program on Round Top Project

Metallurgical research done leading to the publication of our Revised PEA of December 2013 has shown the possibility of heap leaching at the Round Top Project. This first step of “dissolving” the REE bearing mineral is the critical factor in the determination to develop REE projects. The type of solvent, its strength and other conditioning necessary to render the elements soluble is, in our opinion, what most affects the ultimate feasibility of a project. TMRC has been able to extract a high percentage of the REE and other elements from the mineralized rock at the Round Top Project, and test work to date also indicates it can be done easily and at projected low operating costs.

In late 2014, we addressed and completed the ion exchange purification of the pregnant leach solution part of Stage 1 as outlined in our Annual Report on Form 10-K as filed on November 30, 2015. This was to demonstrate process to remove the rare earth elements from an impure, relatively high flow rate pregnant leach solution (LLS) and produce a solution with a high concentration of rare earth, low impurities and low flow rate feedstock to be fed to the final element separation plant. As announced on December 9, 2014, we have, at bench scale, employing ion exchange been able to process a low grade solution containing approximately 30 to 1 impurities over rare earth elements and produce a feed stock solution with approximately .5 to 1 impurities to rare earth elements.

Our Stage 1 bench scale testing to produce separate high purity individual rare earth elements is in progress at this time.

This will be followed by Stage 2 which will be pilot plant scale testing to define the operating parameters, capital costs and operating cost of the removal of the rare earth from the pls and the process to produce the high purity separated rare earth products for sale. Stage 2 will also design the process to separate and purify such by-product and potential by-products as uranium and thorium.

Stage 3 will be the engineering and design work necessary to bring the processing plant to full feasibility with completed engineering, design, tables of organization and equipment and the required permitting and regulatory approvals.

Following our recent financing in December 2015, we are working on completing Stage 1 and advancing Stage 2 however we currently do not have sufficient funds to complete Stage 2 pilot plant scale testing and will need to raise additional financing to fund our ongoing operations and future exploration activities. See “Liquidity and Capital Resources” below.

See “Properties – Current and Planned Metallurgical Activities” in our Annual Report as filed with the SEC on November 30, 2015 for a more detailed description of our current work activities and budget for the Round Top Project.

Exploration Potential of the Round Top Property

Although we have no plans in the next 24 months to conduct more physical exploration, we do believe, as stated in our 2010 presentations, that there are untested exploration targets present. They are:

We believe that using the existing data we can improve our understanding of the exploration potential of the area without resorting to such expensive techniques such as drilling.

Actively Seeking Project Partners

In addition to pursuing the exploration of our Round Top Project, we are actively seeking industry partners to assist the Company in financing the exploration and, if warranted, development of the Round Top Project. While we do not currently have any agreements and do not anticipate any agreements in the near future, we are actively engaged in pursuing partners for the Round Top Project for a range of participation, including but not limited to, joint-venture arrangements, project sale, significant investment in the Company, back-end processing and product sales arrangements and other financing arrangements to assist in the Round Top Project.

Recent Corporate Developments

Annual MeetingDevelopment of Stockholdersthe Northeastern Pennsylvania Scandium Project.

On February 24, 2016, we held our annual general meeting of stockholders at the offices Sanders-Wingo Advertising, 201 North Kansas, 9^th Floor Conference Room, El Paso, Texas 79901at 9:30 a.m. local time. Stockholders representing 26,838,362 shares or 60.16%

Development of the shares of common stock authorized to vote (44,606,691) were present in person or by proxy, representing a quorum for the purposesScandium potential of the annual general meeting.Pagnotti Enterprises Inc. properties is proceeding along two paths. One is the application to the DOE for a Federal Grant. The complete results of our annual meeting were filed on a Current Report on Form 8-K on March 1, 2016.

On February 24, 2016, in connection with the appointment of Mr. Wm. Chris Mathers as the Chief Financial Officerother is to seek private financing of the Company, Mr. G. Mike McDonald retired as Chief Financial Officerproject. These two strategies are not mutually exclusive but also hold the option of developing two or more of the Company.deposits simultaneously.

On February 29, 2016, Mr. Jack Lifton resigned from the Board of Directors of Texas Mineral Resources Corp. for personal reasons. Mr. Lifton’s resignation was not the result of any disagreement with the Company regarding the Company’s operations, policies or practices. The Company would like to thank Mr. Lifton for his service.

Name Change

On March 21, 2016, we changed our name from “Texas Rare Earth Resources Corp.” to “Texas Mineral Resources Corp.”. In connection with the name change we filed a certificate of amendment to our certificate of incorporation with the Secretary of State of the State of Delaware. Management believes the name change reflects thte broadening of the Company’s strategic focus on other minerals in addition to rare earth minerals, inlcuding lithium, potassium, magnesium, iron and aluminum sulfates.

Liquidity and Capital Resources

As of May 31, 2016,February 28, 2017, we had a working capital deficit of approximately $697,000$1,135,000 and a cash balance of approximately $12,500.$1,200. We will need to raise additional funding to implement our business strategy

We currently need to raise additional capital. During our fiscal year ending August 31, 2016,2017, we have minimized spending for metallurgical testing and flow sheer development, additional geologic and resource modeling and compliance costs associated with state governmental agencies and appropriate staff and consulting expenses until such time we raise additional capital or secure a strategic partner. The timing of these expenditures is dependent upon a number of factors, including the availability of third party contractors.

During the current fiscal year ending August 31, 2016 and 2017, we had planned to complete Stage 1of our metallurgical activities as discussed in the section heading “ITEM 2. PROPERTIES” of our Annual Report on Form 10-K as filed with the SEC on November 30, 2015.December 14, 2016. Our budget for the metallurgical component of Stage 1 activity is approximately $241,000. To date we have expended approximately $134,000 of the budgeted amount on the Stage 1 metallurgical activities. Stage 1 is not yet complete.

The audit opinion and notes that accompany our financial statements for the year ended August 31, 2015,2016, disclose a ‘going concern’ qualification to our ability to continue in business. The accompanying financial statements have been prepared under the assumption that we will continue as a going concern. We are an exploration stage company and we have incurred losses since our inception. We do not have sufficient cash to fund normal operations and meet debt obligations for the next 12 months without deferring payment on certain current liabilities and raising additional funds. We believe that the going concern condition cannot be removed with confidence until the Company has entered into a business climate where funding of its activities is more assured.

We currently do not have funds to pursue exploration or development work on any of our properties, which means that we will be required to raise additional capital, enter into joint venture relationships, or find alternative means to finance our properties in order to place them into commercial production, if warranted, or evaluate the possibility of selling one or more of our projects or the Company in its entirety. Failure to obtain sufficient financing may result in the delay or indefinite postponement of exploration and, if warranted, development or production on one or more of our properties and any properties we may acquire in the future or even a loss of property interests. This includes our leases over claims covering the principal deposits on our properties, which may expire unless we expend minimum levels of expenditures over the terms of such leases. We cannot be certain that additional capital or other types of financing will be available if needed or that, if available, the terms of such financing will be favorable or acceptable to us. Our ability to arrange additional financing in the future will depend, in part, on the prevailing capital market conditions as well as our business performance.

Results of Operations

Nine

Six months ended May 31,February 28, 2017 and February 29, 2016 and May 31, 2015

General & Revenue

We had no operating revenues during the ninesix months ended May 31, 2016February 28, 2017 and May 31, 2015.February 29, 2016. We are not currently profitable. As a result of ongoing operating losses, we had an accumulated deficit of approximately $32.3$32.8 million as of May 31, 2016.February 28, 2017.

Operating expenses and resulting losses from Operations.

We incurred exploration costs for the ninesix months ended May 31,February 28, 2017 and February 29, 2016, and May 31, 2015, in the amount of approximately $228,000$9,000 and $462,000,$134,000, respectively. The amount of exploration expense for May 31,February 29, 2016 was offset by a grant in the amount of $110,000.$90,000. Thus, the amount of net exploration expenses recorded on the ninesix months ended May 31,February 29, 2016 unaudited statement of operations totaled $118,000.$44,000. Expenditures for the ninesix months ended May 31,February 28, 2017 and February 29, 2016 and May 31, 2015 were primarily for metallurgical testing and related laboratory fees for our Round Top project.

Our general and administrative expenses for the ninesix months ended May 31,February 28, 2017 and February 29, 2016, and May 31, 2015, respectively, were approximately $850,000$223,000 and $1,244,000.$617,000, respectively. For the ninesix months ended May 31,February 28, 2017 and February 29, 2016, this amount included approximately $184,000$12,000 and $135,000, respectively, in stock-based compensation to directors, an officer and consultants. The remaining expenditures totaling approximately $666,000$211,000 and $482,000, respectively, were primarily for payroll and related taxes and benefits, professional fees and other general and administrative expenses necessary for our operations.

For

We had losses from operations for the ninesix months ended May 31, 2015,February 28, 2017 and February 29, 2016 totaling approximately $232,500 and $661,000, respectively, and net losses for the six months ended February 28, 2017 and February 29, 2016 totaling approximately $257,000 and $661,000, respectively. The Company has recorded $17,563 of amortization of discounts on notes payable for the six months ended February 28, 2017.

Three months ended February 28, 2017 and February 29, 2016

General & Revenue

We had no operating revenues during the three months ended February 28, 2017 and February 29, 2016. We are not currently profitable. As a result of ongoing operating losses, we had an accumulated deficit of approximately $32.8 million as of February 28, 2017.

We incurred exploration costs for the three months ended February 28, 2017 and February 29, 2016, in the amount of approximately $6,000 and $84,000, respectively. The amount of exploration expense for February 29, 2016 was offset by a grant in the amount of $45,000. Thus, the amount of net exploration expenses recorded on the three months February 29, 2016 unaudited statement of operations totaled $39,000. Expenditures for the three months ended February 28, 2017 and February 29, 2016 were primarily for metallurgical testing and related laboratory fees for our Round Top project. 

Our general and administrative expenses for the three months ended February 28, 2017 and February 29, 2016 were approximately $104,000 and $344,000. For the three months ended February 28, 2017 and February 29, 2016, this amount included approximately $400,000$0 and $87,000, respectively, in stock-based compensation to directors, an officer and consultants. The remaining expenditures totaling approximately $844,000$104,000 and $257,000 were primarily for payroll and related taxes and benefits, professional fees and other general and administrative expenses necessary for our operations.

We had losses from operations for the nine months ended May 31, 2016 and May 31, 2015 totaling approximately $968,000 and $1,705,000, respectively, and net losses for the nine months ended May 31, 2016 and May 31, 2015 totaling approximately $973,000 and $1,712,000, respectively.

Three months ended May 31, 2016 and May 31, 2015

General & Revenue

We had no operating revenues during the three months ended May 31, 2016 and May 31, 2015. We are not currently profitable. As a result of ongoing operating losses, we had an accumulated deficit of approximately $32.3 million as of May 31, 2016.

We incurred exploration costs for the three months ended May 31, 2016 and May 31, 2015, in the amount of approximately $94,000 and $0, respectively. The amount of exploration expense for May 31, 2016 was offset by a grant in the amount of $20,000. Thus, the amount of net exploration expenses recorded on the three months May 31 2016 unaudited statement of operations totaled $74,000. Expenditures for the three months ended May 31, 2016 and May 31, 2015 were primarily for metallurgical testing and related laboratory fees for our Round Top project.

Our general and administrative expenses for the three months ended May 31, 2016 and May 31, 215 were approximately $233,000 and $314,000, respectively. For the three months ended May 31, 2016, this amount included approximately $140,000 in stock-based compensation to directors and consultants. The remaining expenditures totaling approximately $93,000 were primarily for payroll and related taxes and benefits, professional fees and other general and administrative expenses necessary for our operations.

Our general and administrative expenses for the three months ended May 31, 2015 were approximately $314,000.  This amount included approximately $37,000 in stock-based compensation to directors and consultants.  The remaining expenditures totaling approximately $277,000 were primarily for payroll and related taxes and benefits, professional fees and other general and administrative expenses necessary for our operations.

We had losses from operations for the three months ended May 31,February 28, 2017 and February 29, 2016 and May 31, 2015 totaling approximately $307,000$110,000 and $188,000,$383,000, respectively, and net losses for the three months ended May 31,February 28, 2017 and February 29, 2016 and May 31, 2015 totaling approximately $312,000$129,000 and $188,000,$379,000, respectively.

Off-Balance Sheet Arrangements

We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, and results of operations, liquidity or capital resources.

Critical Accounting Estimates

Management’s discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with GAAP. Preparation of financial statements requires management to make assumptions, estimates and judgments that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and the related disclosures of contingencies. Management bases its estimates on various assumptions and historical experience, which are believed to be reasonable; however, due to the inherent nature of estimates, actual results may differ significantly due to changed conditions or assumptions. On a regular basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are fairly presented in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material. Management believes that the following critical accounting estimates and judgments have a significant impact on our financial statements; Valuation of options granted to Directors, Officers and consultants using the Black-Scholes model.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

At the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation was carried out under the supervision of and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operations of our disclosure controls and procedures (as defined in Rule 13a – 15(e) and Rule 15d – 15(e) under the Exchange Act). Based on that evaluation the CEO and CFO have concluded that as of the end of the period covered by this Quarterly Report, our disclosure controls and procedures were not effective in ensuring that: (i) information required to be disclosed by us in our reports that we file or submit to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and (ii) material information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow for accurate and timely decisions regarding required disclosure.

Management determined that our disclosure controls and procedures were not effective during the period covered by this report because during the period the Company held its annual meeting of stockholders on February 24, 2016, but failed to include in its proxy statement for the meeting prepared under Regulation 14A of the Securites Exchange Act of 1934, as amended (the “Exchange Act”), an advisory vote to approve the compensation of our named executive officers as was required under Rule 14a-21(a) under the Exchange Act. The omission was inadvertent and the Company intends to include the advisory vote to approve the compensation of its named executive officers in its proxy statement under Regulation 14A for its next annual meeting of stockholders to be held in early 2017. The Company is implementing additional internal procedures, to ensure that all requirements, including the requirements of Rule 14a-21, are met in future filings.

Changes in Internal Control over Financial Reporting

There were no changes to our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially effect, our internal controls over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

Except as set forth below, there have been no material changes from the risk factors as previously disclosed in our Form 10-K for the year ended August 31, 20152016 as filed with the SEC on November 30, 2015.December 14, 2016.

We have not sought an advisory stockholder vote to approve the compensation of our named executive officers.

Rule 14a-21 under the Exchange Act requires us to seek a separate stockholder advisory vote at our annual meeting at which directors are elected to approve the compensation of our named executive officers, not less frequently than once every three years (say-on-pay vote). At our annual meeting in February of 2016, we did not submit to our stockholders a say-on-pay vote to approve an advisory resolution regarding our compensation program for our named executive officers. Consequently, the Board of Directors has not considered the outcome of our say-on-pay vote results when determining future compensation policies and pay levels for our named executive officers. At our 2017 annual meeting of stockholders, we will be asking our stockholders to vote on a proposal to approve an advisory resolution regarding our compensation program for our named executive officers. Following such annual meeting, the Board of Directors will consider the outcome of our say-on-pay vote results when determining future compensation policies and pay levels for our named executive officers, and will report on the results of the say-on-pay vote as required by applicable SEC rules. In our quarterly report on Form 10-Q for the quarter ended February 29, 2016, we disclosed that our disclosure controls and procedures did not lead to our identification of the requirement to provide this advisory say-on-pay vote, and we are adjusting our disclosure controls and procedures processes accordingly.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Except as set forth below, all unregistered sales of equity securities during the period covered by this Quarterly Report were previously disclosed in our current reports on Form 8-K or quarterly reports on Form 10-Q.

We did not repurchase any of our securities during the quarter covered by this report.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosure

Pursuant to Section 1503(a) of the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act (The “Dodd-Frank Act”), issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States are required to disclose in their periodic reports filed with the SEC information regarding specified health and safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities. During the quarter ended November 30, 2013,2016, our U.S. exploration properties were not subject to regulation by the Federal Mine Safety and Health Administration under theFederal Mine Safety and Health Act of 1977.

Item 5. Other Information

None.

Item 6. Exhibits

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.

TEXAS MINERAL RESOURCES CORP.