UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

 Washington, D.C. 20549

FORM 10-Q10-Q/A

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 30, 2019

OR

[   ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to       ______to ______

Commission file number: 000-53482

TEXAS MINERAL RESOURCES CORP.

(Exact Name of Registrant as Specified in its Charter)

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 ☒[X] 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 ☒[X] No ☐[  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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 ☒[X]

Number of shares of issuer’s common stock outstanding at January 16, 2018: 44,941,5339, 2020: 57,805,857.

EXPLANATORY NOTE

Texas Mineral Resources Corp. (“we”, “our” or “us”) is filing this Amendment No. 1 (this “Form 10–Q/A”) to amend our Quarterly Report on Form 10–Q for the quarter ended November 30, 2019, originally filed with the Securities and Exchange Commission (the “SEC”) on January 14, 2020, to amend and restate our financial statements and related footnote disclosures as of November 30, 2019. As a result, total liabilities at November 30, 2019 were increased by $51,486, net loss was reduced by $105,000 during the three months ended November 30, 2019, and total accumulated deficit at November 30, 2019 increased by $1,175,199.

Background of the Restatement

Effective February 6, 2020, LBB & Associates (“LBB”), the Company’s independent registered public accounting firm, was suspended by the SEC. As a result of this suspension, on March 2, 2020, LBB resigned as the independent registered public accounting firm of the Company.

On March 6, 2020, the Audit Committee of the Board of Directors of the Company appointed Ham, Langston and Brezina, L.L.P. (“HLB”) to serve as the Company’s independent registered public accounting firm for the fiscal year ended August 31, 2020. In addition, we received notification from the SEC that we may not include audit reports or consents issued by LBB in our filings with the SEC. The Audit Committee of the Board of Directors of the Company engaged HLB to re-audit the fiscal years ended August 31, 2019 and 2018.

In May 2020, our management and Board of Directors concluded that our previously issued financial statements and financial information relating to the fiscal year ended August 31, 2019, and quarter ended November 30, 2019, required adjustment.

Effect of the Restatement on Financial Statements

For a description of the effect of the restatement as of and for the quarter ended November 30, 2019, see “Note 2. Restatement”.

Our Principal Executive Officer and Principal Financial Officer are providing currently dated certifications in connection with this Quarterly Report on Form 10–Q/A. These certifications are filed as Exhibits 31.1, 31.2, 32.1 and 32.2.

Table of Contents

Texas Mineral Resources CorpCorp.

BALANCE SHEETS

(Unaudited)

Texas Mineral Resources Corp.

STATEMENTS OF OPERATIONS

For the Three Months Ended November 30, 2019 and 2018

(Unaudited)

Texas Mineral Resources Corp.

STATEMENTS OF CASH FLOWS

For the Three Months Ended November 30, 2019 and 2018

(Unaudited)

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

Texas Mineral Resources Corp.

STATEMENTS OF SHAREHOLDERS' EQUITY

For the Three Months Ended November 30, 2019 and 2018

(Unaudited)

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.

Notes to Interim Financial Statements

November 30, 20172019

(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,10-K/A, for the year ended August 31, 2017,2019, dated December 14, 2017June 3, 2020 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, 20172019 as reported in our annual report on Form 10-K,10-K/A, have been omitted.

NOTE 2 – RESTATEMENT

The financial statements haveaccompanying August 31, 2019 balance sheet has been prepared on a going concern basis which assumes the Company will not be ablerestated to realize its assets and discharge its liabilities in the normal course of businessproperly account for the foreseeable future. following:

Issuance of common stock for settlement of accrued compensation due employees, officers and directors 

Modification of debt to related parties to include issuance of warrants and a conversion option that triggered the debt to be accounted for using extinguishment accounting 

Issuance of common stock in connection with the modification of a long-term debt agreement with the Rio Grande Valley Foundation.  

The Company has incurred losses since inception resulting in an accumulated deficitfollowing summarizes the effects of approximately $34,748,000the adjustments on our previously issued August 31, 2019 balance sheet:

Texas Mineral Resources Corp.

Notes to Interim Financial Statements

February 29, 2020

(Unaudited)

NOTE 2 – RESTATEMENT (CONTINUED)

The following summarizes the effects of the adjustments on our previously issued unaudited balance sheet as of November 30, 20172019:

Texas Mineral Resources Corp.

Notes to Interim Financial Statements

February 29, 2020

(Unaudited)

NOTE 2 – RESTATEMENT (CONTINUED)

The following summarizes the effects of the adjustments on our previously issued unaudited statement of operations for the three months ended November 30, 2018:

(a)To reclassify accrued interest improperly included in accrued liabilities rather than as a reduction in discount on the note. 

(b)To properly recognize amounts received from a related party (joint venture partner) as a related party advance rather than as a reduction of expenses because it was received outside of the joint venture arrangement and further losses are anticipatednot subject to a separate agreement. 

(c)To properly recognize: 1) the discount on the note payable shown in (a) above, 2) a $105,000 payment on the note made in common stock of the Company in connection with the extinguishment of the note and 3) an increase in the developmentdiscount of its business raising substantial doubt about the Company’s ability to continue$28,968 as a going concern. The abilityresult of the modification. 

(d)To properly recognize the changes to continue as a going concern is dependent uponpaid in capital related to: 1) settlement of accrued compensation to officers, directors and employees based on the Company generating profitable operations inestimated fair value of the future and/or to obtaincommon stock issued at 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 overdate the next twelve months with existing cashsettlements were negotiated rather than the balance of the liability, 2) extinguishment of related party debt based on hand and or private placementthe estimated fair value 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 Incorporationstock and common stock warrants issued to change the nameterms of the Company from “Texas Rare Earth Resources Corp”related party debt to “Texas Mineral Resources Corp”. The amendment was effective at 9:00 am EST on March 21, 2016. The Certificateinclude a conversion feature, waive existing defaults and facilitate the conversion of Amendment did not make any other amendmentsthe debt to equity. 

(e)To properly recognize a decrease of $105,000 for the issuance of common stock to the Company’s CertificateRio Grande Valley Foundation that was improperly recorded as consulting fees but have been recognized as a component of Incorporation.a debt modification transaction that reduced the amount due under the note. 

Reclassification of prior year balances

Our financial statements duringThe accompanying cash flow statement for the periodthree months ended November 30, 2017 contain amounts that have2019 has been reclassifiedrestated to properly reflect payments on our outstanding note payable as a financing activity, whereas previously it was reflected in operating activities under changes in accounts payable and accrued expenses. The above adjustments had no impact on total cash flows from operating activities, investing activities or financing activities for presentation and comparability purposes. The amounts and content of these related account balances were not altered during the reclassification.three months ended November 30, 2018.

Texas Mineral Resources Corp.

Notes to Interim Financial Statements

February 29, 2020

(Unaudited)

NOTE 23 – 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.

AssumingThereafter, 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 2017,2019, 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 approximately 90 acres more or less, of land that is adjacent to the land 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.

AssumingThereafter, 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 October 2017,August 2019, we paid a delay rental to the State of Texas of $6,750.

Texas Mineral Resources Corp.

Notes to Interim Financial Statements

November 30, 2019

(Unaudited)

NOTE 3 – MINERAL PROPERTIES (CONTINUED)

March 2013 Lease

On March 6, 2013, we purchased the surface lease at the Round Top Project, known as the West Lease, from the Southwest Wildlife and Range Foundation, (the “Foundation”)since renamed the Rio Grande Foundation for $500,000 cash and 1,063,830 shares of our common stock. We also agreed to support the Foundation through an annual payment of $45,000 for ten years to support conservation efforts within the Rio Grande Basin and in particular engaging in stewardship of Lake Amistad, a large and well-known fishing lake near Del Rio, Texas. The West Lease comprises approximately 54,990 acres. Most importantly, the purchase of the surface lease gave us unrestricted surface access for the potential development and mining of our Round Top Project. As ofThrough our JV partner, we are currently paying $13,235 monthly until the date of this filingbalance owed to the $45,000 payments due in June 2016 and 2017 have notFoundation has been paid; consequently, we have expensed the value of the West Lease during fiscal 2017.fully paid. We fully intend to continue with the evaluation of the mineral potential of the property, to ultimately mine the property, and to bring the lease current when funds are available. Expensing the value of the West Lease does not restrict our access to the mineral leases.

October 2014 Surface Option and Water Lease

InOn October 29, 2014, we announced that we had executed an agreementagreements 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 year primary term of the mineral lease. The option can be kept current by an annual payment of $10,000, which has not been paid as of the date of this filing.$10,000. The purchase price will be the appraised value of the surface at the time of exercising the option. All annual payments have been made as of the date of this filing.

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, which has not been paid as of the date of this filing.operation. 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 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 applicationminimum production payment 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 coal 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 grant was awarded in March 2017 to the consortium consisting of Inventure Renewables, Penn State, K-Tech and TMRC with Inventure being the principal investigator in the consortium. Funding began in September 2017.

Under the terms of the Memorandum of Understanding (MOU) signed 28 June 2016, TMRC had a six-month term to perform the necessary due diligence and to technically and economically evaluate the properties. Upon execution of the MOU TMRC and PEI had six months to draft and execute a formal lease agreement containing all the standard terms of mining lease agreements. Upon execution of a lease, TMRC will be obligated to pay a $5,000 per month rental or a 12% royalty whichever is greater. Asfiscal years have been made as of the date of this filing, no lease has been executed.

NOTE 3 – NOTES PAYABLEfiling.

As part of our surfaceNOTE 4 – NOTE PAYABLE

In relation to the Foundation lease with the Rio Grande Foundation (formerly referred to as the Southwest Wildlife Foundation),discussed in Note 3 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. As of the date of this filing, we have not paid the June 2016 or 2017 installment of our surface lease, in the amount of $45,000 each, to the Southwest Wildlife Foundation. As a result, the full amount of the note payable has been classified as currently due. The note payable balance as of November 30, 2017 $260,000. The Company has also accrued interest expensemade payments of approximately $100,000 and was unable to pay as agreed and in January 2019 entered into a settlement agreement with the Foundation and agreed to pay $225,000 in monthly installments of November 30, 2017 of $37,500. This unpaid interest is includedapproximately $13,000, with the final payment to occur in accrued liabilities.July 2020.

The Foundation has not given notice of default or made any demand for payment asCompany recognized accretion of the date of this filing. However, based upon the Company being in default on the Note Payable there is no guarantee that the Foundation will allow the Company to bring the lease payments current without requiring the Company to provided additional consideration to the Foundation. Consequently, since the Company cannot be guaranteed the ability to utilize the lease due to its current default status, the Company has written off the value of this lease ($1,394,852) as of August 31, 2017. The Company intends to continue with the evaluation of the mineral potential of the property, to ultimately mine the property, and to bring this note payable and its accrued interest current when the funds are available.

Related Party Notes Payable and Advances

On July 1, 2016 the Company received two loans for $2,500 each from two directors of the Company. The loans are non-interest accruing, unsecured and due upon demand. As additional consideration for the loans, we issued 5,000 common stock purchase warrants to each individual. The warrants have an exercise price of $0.10 and term of five years. The warrants had a fair value of $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 1.00% (ii) estimated volatility of 185% (iii) dividend yield of 0.00% and (iv) expected life of the warrants of five years. The notes payable balance as of August 31, 2017 and August 31, 2016 was a total of $5,000. The value of the warrants was expensed asdiscount through interest expense at the time of issuance due to no stated term on the advances.

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,$3,507 and unsecured. As of this filing the loans are in default and due upon demand. As additional consideration$5,575 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 August 31, 2017 and August 31, 2016 was $71,500. The value of the warrant was amortized to interest expense over the term of the note payable.

On November 1, 2016 the Company entered into two loans for $4,000 and $1,000 from two directors of the Company. The loans are non-interest bearing, unsecured and due upon demand. As additional consideration for the loans, we issued 8,000 and 2,000 common stock purchase warrants to each individual. The warrants have an exercise price of $0.10 and term of five years. The warrants had a fair value of $1,057 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 August 31, 2017 was $5,000. The value of the warrants was expensed as interest expense at the time of issuance due to no stated term on the advance.

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 of this filing the loan is in default and due upon demand. As additional consideration for the loan, we issued 60,000 common stock purchase warrants to the individual. The warrants have an exercise price of $0.10 and term of five years. The loan has a relative fair value of $10,437 and the warrants have a relative fair value of $4,563 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 August 31, 2017 was $15,000. The value of the warrant was amortized to interest expense over the term of the note payable.

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 July 12, 2017, are non-interest accruing, and unsecured. As of this filing the loans are in default and due upon demand. 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 relative fair value of $13,542 and the warrants 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 balance as of August 31, 2017 was $20,000. The value of the warrant was amortized to interest expense over the term of the note payable.

During the three months ended May 31, 2017 the Company entered into eight loans totaling $47,500 from two directors of the Company. The loans are non-interest accruing, unsecured and due upon demand. As additional consideration for the loans, we issued in total 190,000 common stock purchase warrants. The warrants have an exercise price of $0.17 - $0.21 and a term of five years. The warrants had a fair value of $39,557 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 1.75% (ii) estimated volatility of 234% (iii) dividend yield of 0.00% and (iv) expected life of the warrants of five years. The notes payable balance as of August 31, 2017 was $47,500. The value of the warrants was expensed as interest expense at the time of issuance due to no stated term on the advance.

During the three months ended August 31, 2017 the Company entered into seven loans totaling $82,165 from two directors of the Company. The loans are non-interest accruing, unsecured and due upon demand. As additional consideration for the loans, we issued in total 328,660 common stock purchase warrants. The warrants have an exercise price of $0.20 - $0.23 and a term of five years. The warrants have a fair value of $65,137 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 1.75% (ii) estimated volatility of 169% (iii) dividend yield of 0.00% and (iv) expected life of the warrants of five years. The notes payable balance as of August 31, 2017 was $82,165. The value of the warrants was expensed as interest expense at the time of issuance due to no stated term on the advance.

During the three months ended November 30, 20172019 and 2018, respectively. As of November 30, 2019, the Company received two advances totaling $16,750 from a director and an officer of the Company. The loans are non-interest accruing, unsecured and due upon demand. As additional consideration for the loans, we issued a total of 67,000 common stock purchase warrants. The warrants have an exercise price of $0.21 - 0.22 and a term of five years. The warrants have a fair value of $12,518 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 2.88% (ii) estimated volatility of 122% (iii) dividend yield of 0.00% and (iv) expected life of the warrants of five years. The note payable balance as of November 30, 2017 was $16,750. The value of the warrants was expensed as interest expense at the time of issuance due to no stated term on the advance.is $89,240.

NOTE 45 – 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.

During the three months ended

Texas Mineral Resources Corp.

Notes to Interim Financial Statements

November 30, 2017,2019

(Unaudited)

NOTE 5 – SHAREHOLDERS’ EQUITY (CONTINUED)

On September 16, 2019, the holder of 10,000 of our Common Stock Warrants converted these warrants into 10,000 shares of our Common Stock.

On October 29, 2019, we issued 13,514 shares of our Common Stock to a new Advisory Board Member and recognized $3,474 in stock based compensation expense for 30,000 stock options issued to outside consultants for services and $12,518 in interest expense for warrants issued to a director and an officer for advances to us.of $5,000.

We had 44,941,53356,228,508 shares of our common stock outstanding as of November 30, 2017.2019.

NOTE 5 – RELATED PARTY TRANSACTIONS

The Company has received advances from certain Directors and Officers. The advances totaled approximately $263,000 as of November 30, 2017.

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

NOTE 6 – SUBSEQUENT EVENTS

In December 2017 certain members2019, outstanding derivative securities entitling the holders to purchase an aggregate of 1,370,000 shares of common stock were exercised on a cashless basis, resulting in net issuances of an aggregate of 1,017,074 shares of common stock.

In December 2019, we announced the extension of the expiration date of the Class A and Class B warrants to December 7, 2020. As of January 14, 2020, there are issued and outstanding Class A warrants to purchase an aggregate of 2,998,868 shares of Company common stock at an exercise price of $0.35 per share, and Class B warrants to purchase an aggregate of 3,100,775 shares of Company common stock at an exercise price of $0.50 per share.

In March 2020, the World Health Organization designated the new coronavirus (“COVID-19”) as a global pandemic. Federal, state and local governments have mandated orders to slow the transmission of the virus, including but not limited to shelter-in-place orders, quarantines, restrictions on travel, and work restrictions that prohibit many employees from going to work. Uncertainty with respect to the economic effects of the pandemic has resulted in significant volatility in the financial markets.

The restrictions put in place by federal, state and local governments could delay our Board lentexploration and development plans related to the company $14,000 with no stated termRound Top Project. We continue to move forward on the advancesproject in an effort to obtain a bank feasibility study; however, restrictions on the number of personnel that can gather in a single location and no interest. The Board members werework restrictions on vendor businesses may delay aspects of the project until such restrictions are lifted. Furthermore, the impact of the pandemic on the global economy could also issued 56,000 warrants that will be valued during our second fiscal quarter ending February 28, 2018 usingnegatively impact the Black-Scholes model.availability and cost of future borrowings should the need arise.

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:

the progress, potential and uncertainties of our 2018-2019 rare-earth exploration plans at our Round Top project in Hudspeth County, Texas (the “Round Top Project”); 

timing for a completed feasibility study for our Round Top Project; 

the success of getting the necessary permits for future drill programs and future project development; 

expectations regarding our ability to raise capital and to continue our exploration plans on our properties; 

plans regarding anticipated expenditures at the Round Top Project; and 

plans outlined under the section heading “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Plan of Operation”. 

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:

risks associated with our history of losses and need for additional financing; 

risks associated with our limited operating history; 

risks associated with our properties all being in the exploration stage; 

risks associated with our lack of history in producing metals from our properties; 

risks associated with our need for additional financing to develop a producing mine, if warranted; 

risks associated with our exploration activities not being commercially successful; 

risks associated with increased costs affecting our financial condition; 

risks associated with a shortage of equipment and supplies adversely affecting our ability to operate; 

risks associated with mining and mineral exploration being inherently dangerous; 

risks associated with mineralization estimates; 

risks associated with changes in mineralization estimates affecting the economic viability of our properties; 

risks associated with uninsured risks; 

risks associated with mineral operations being subject to market forces beyond our control; 

risks associated with fluctuations in commodity prices; 

risks associated with permitting, licenses and approval processes; 

risks associated with the governmental and environmental regulations; 

risks associated with future legislation regarding the mining industry and climate change; 

risks associated with potential environmental lawsuits; 

risks associated with our land reclamation requirements; 

risks associated with rare earth and beryllium mining presenting potential health risks; 

risks related to title in our properties 

risks related to competition in the mining and rare earth elements industries; 

risks related to economic conditions; 

risks related to our ability to manage growth; 

risks related to the potential difficulty of attracting and retaining qualified personnel; 

risks related to our dependence on key personnel; 

risks related to our United States Securities and Exchange Commission (the “SEC”) filing history; and 

risks related to our securities. 

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, 2017,2018, filed with the SEC on December 14, 2017.2018. 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.We qualify 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 yeareleven-year leases with the GLO, executed in September 2011 and November 2011, respectively, to explore and develop a 950 acre rare earths project located in Hudspeth County, Texas, known as the Round Top Project andProject. We also have prospecting permits covering an9,345 acres adjacent 9,345 acres.to the Round Top Project. Our principal focus will bein conjunction with our joint venture partner, USA Rare Earth, is on developing a metallurgical process to concentrate or otherwise extract the metals from the Round Top Project’s rhyolite, although we will continueand to examine other opportunities in the region as they develop.conduct additional engineering, design, geotechnical work and permitting necessary for a bankable feasibility study. 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.

WeRare earth elements are a group of chemically similar elements that usually are found together in nature – they are referred to as the “lanthanide series.” These individual elements have a variety of characteristics that are critical in a wide range of technologies, products, and applications and are critical inputs in existing and emerging applications. Without these elements, multiple high-tech technologies would not be possible. These technologies include:

Cell phones,  

Computer and television screens, 

Battery operated vehicles, 

Clean energy technologies, such as hybrid and electric vehicles and wind power turbines,  

Fiber optics, lasers and hard disk drives, 

Numerous defense applications, such as guidance and control systems and global positioning systems, 

Advanced water treatment technology for use in industrial, military and  

Outdoor recreation applications 

Because of these applications, global demand for REE is projected to steadily increase due to continuing growth in existing applications and increased innovation and development of new end uses. Interest in developing resources domestically has become a strategic necessity as there is limited production of these elements outside of China. Our ability to raise additional funds in order to complete our plan of exploration and, if warranted, development at the Round Top Project may be impacted by future prices for REEs.

As discussed in the filing of our Form 10-K dated August 31, 2019, our Joint Venture partner, USA Rare Earth is currently funding and engaging in the advancement of the Round Top Project, towards obtaining a definitive banking feasibility study per its agreement. Our financial obligation is currently for the Company’s general and administrative expenses.

Since we are currently in the exploration stage with our Joint Venture partner, 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. We are currently conducting a more detailed analysis of the relative capital expenses and operating expenses requirements of a scaled down processing plant with both solvent extraction and ion exchange processes under evaluation. We believe the lower capital requirements of a staged startup could offset any marginal increase in unit operating costs.

Our current management and Board are stockholder-centric, and receive either no cash compensation or compensation that has been accrued. 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.

Current Plan of Operations

Continued Work Program on Round Top Project

See “Properties – Current and Planned Metallurgical Activities” for a 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.

Operation and support of the DoE Grant.

Approximately 25% of TMRC’ efforts will be allocated to completing its share of the Phase 1 of the DoE grant. Our role in this grant is to acquire the samples, evaluate the primary and alternate sites, conduct the economic evaluation and co-ordinate the project.

Operation of American Minerals Reclamation

Absent the securing of feasibility financing for Round Top, the remainder of TMRC plans to actively pursue the development of American Minerals Reclamation (AMR). We have set no geographical limitations on this project but we are currently basing our efforts in the Pennsylvania coal producing region because of the excellent opportunities present there and existence of the network of people and institutions that have been developed during the grant application process.

Liquidity and Capital Resources

As of November 30, 2017, we2019, our accumulated deficit was approximately $37.8 million and our cash position was approximately $1.3 million. We had a working capital deficitsurplus of approximately $1,601,000.$308,000. We, currentlynor our joint venture partner, have not commenced commercial production on any of our mineral properties. We have no working capitalrevenues from operations and anticipate we will need to raise additional funding to implementhave no operating revenues until we place one or more of our business strategy.properties into production. All properties are in the exploration stage.

DuringOther than the fiscal year ended August 31, 2017, we completed Stage 1of our metallurgical activities as discussedfinancial commitment with USA Rare Earth to fund operations to earn a 70% interest in the section heading “ITEM 2. PROPERTIES” of this Annual Report. Our budget for this stage of activity was approximately $134,502. To dateRound Top Project, we have expended approximately that amount on Stage 1 which is now complete. Estimated cost of Stage 2 is $2,015,454, $336,454 of which has been spent; this phase, called milestone 1, of Stage 2 has been modified and augmented by the Defense Logistical Agency. There is no guarantee that we will be able to raise the working capital necessary for balance of Stage 2 activities. After completion of Stage 1, we will use any remaining available capital to begin work on Stage 2 of our metallurgical activities.

The audit opinion and notes that accompany our financial statements for the year ended August 31, 2017, 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,the Round Top Project, which means that we will be required to raise additional capital enter into joint venture relationships,on best efforts terms if USA Rare Earth ceases funding, or find alternative means to finance our properties in orderthe Round Top Project continued exploration activities, if warranted. Subsequent to place them into commercial production, if warranted, or evaluate the possibilityfunding of selling one or morethe USA Rare Earth amount, we will need to raise a significant amount of our projects oradditional capital to exploit the Company in its entirety.Round Top Project. Failure to obtain required and sufficient financing may result in the (i) delay or indefinite postponement of exploration and, if warranted, development or production on one in the Round Top Project and/or more(ii) curtailment or cessation of our properties and any properties we may acquire in the future or even a loss of property interests.operations. 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.Round Top Project. 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 is dependent upon third parties. Failure of obtaining the required capital will depend,result in part, on the prevailing capital market conditions as well ascurtailment or cessation of our business performance.operations.

As of January 14, 2020, we have warrants outstanding to purchase an aggregate of 12,694,643 shares of Company common stock held by investors at exercise prices between $.35 per share and $.50 per share, all of which expire in December 2020. Of these securities: (i) warrants to purchase an aggregate of 6,595,000 shares of Company common stock were privately placed and are exercisable for cash at $.35 per share and there is no effective resale registration statement registering the resale of the underlying shares of common stock upon exercise of these warrants; and (ii) Class A warrants to purchase an aggregate of 2,998,868 shares of Company common stock at an exercise price of $0.35 per share and Class B warrants to purchase an aggregate of 3,100,775 shares of Company common stock at an exercise price of $0.50 per share were issued pursuant to a registration statement and as there is no effective registration statement registering the issuance of the shares of Company common stock upon exercise of the Class A warrants and Class B warrants, holders may exercise for cash if an exemption is available from the registration requirements or on a net exercise basis, with the Company having a redemption right as set forth in the indenture.

Results of Operations

Three months ended November 30, 20172019 and November 30, 20162018

General & Revenue

We had no operating revenues during the three months ended November 30, 20172019 and November 30, 2016.2018. We are not currently profitable. As a result of ongoing operating losses, we had an accumulated deficit of approximately $34.7$37.8 million as of November 30, 2017.2019.

Operating expenses and resulting losses from Operations.

We incurred exploration costsaccrued lease expenses payable to the GLO for the three months ended November 30, 20172019 and November 30, 2016,2018, in the amount of approximately $6,750$1,000 and $3,250,$7,000, respectively. These lease payments are due each September and November.

Our general and administrative expenses for the three months ended November 30, 20172019 and November 30, 2016,2018, respectively, were approximately $91,000$89,000 and $120,000.$338,000. For the three months ended November 30, 2017,2019 and 2018, this amount included approximately $3,400$5,000 and $260,000, respectively, in stock-based compensation to anDirectors and outside consultant.consultants. The remaining expenditures totaling approximately $87,700 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 November 30, 2016 included approximately $12,000 in stock-based compensation to an outside consultant. The remaining expenditures totaling approximately $107,000 were primarily for payroll and related taxes and benefits, professional fees and other general and administrative expenses necessary for our operations.

For the three months ended November 30, 20172019 and November 30, 20162018, we recorded interest expense of approximately $18,500$4,000 and $5,200,$6,000, respectively. For the three months ended November 30, 2017, this amount included approximately $12,500 in interest expense related to warrants issued with advances from certain officers and directors.

We had losses from operations for the three months ended November 30, 20172019 and November 30, 20162018 totaling approximately $98,000$90,000 and $123,000,$344,000, respectively.

We had net losses for the three months ended November 30, 20172019 and November 30, 20162018 totaling approximately $116,000$94,000 and $128,000,$350,000, respectively.

Off-Balance Sheet Arrangements

We do notFor the three months ended November 30, 2019 and 2018, we have any off balanceoff-balance sheet arrangements that are reasonably likelyfor annual payments in relation to have a current or future effect on ourthe mineral leases as disclosed in Note 2 of the unaudited financial condition, revenues, and results of operations, liquidity or capital resources.statements.

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, and in light of the material weakness existing in our internal controls over financial reporting as of August 31, 2019 (as described in greater detail in our annual report on Form 10-K/A for the year ended August 31, 2019), 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 ensuringproviding reasonable assurance 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 2018. 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, thereThere have been no material changes from the risk factors as previously disclosed in our Form 10-K10-K/A for the year ended August 31, 20172019 as filed with the SEC on December 14, 2017.June 3, 2020.

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.

With respect to sales designated by “Sec. 4(a)(2),” these shares were issued pursuant to the exemption from registration contained in to Section 4(a)(2) of the Securities Act as privately negotiated, isolated, non-recurring transactions not involving any public offer or solicitation. Each purchaser represented that such purchaser’s intention to acquire the shares for investment only and not with a view toward distribution. None of the securities were sold through an underwriter and accordingly, there were no underwriting discounts or commissions involved.

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, 2016,2018, 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

The following exhibits are attached hereto or are incorporated by reference:

(1)    Submitted Electronically Herewith.

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.