Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Oct. 31, 2020 | Dec. 14, 2020 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | NORTHERN MINERALS & EXPLORATION LTD. | |
Entity Central Index Key | 0001415744 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --07-31 | |
Document Type | 10-Q | |
Document Period End Date | Oct. 31, 2020 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Current Reporting Status | Yes | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 64,078,679 | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | NV | |
Entity File Number | 333-146934 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Oct. 31, 2020 | Jul. 31, 2020 |
Current Assets: | ||
Cash | $ 20,941 | $ 6,840 |
Accounts receivable | 1,146 | 1,146 |
Other receivable | 10,000 | 10,000 |
Total Current Assets | 32,087 | 17,986 |
Other Assets | ||
Oil and gas properties | 28,800 | 28,800 |
Total Other Assets | 28,800 | 28,800 |
TOTAL ASSETS | 60,887 | 46,786 |
Current Liabilities: | ||
Accounts payable | 89,268 | 89,037 |
Accounts payable - related party | 29,700 | 29,700 |
Accrued liabilities | 416,702 | 437,632 |
Convertible debt | 110,000 | 110,000 |
Loans payable | 104,000 | 109,000 |
Loans payable - related party | 23,210 | 23,210 |
Total Current Liabilities | 772,880 | 798,579 |
TOTAL LIABILITIES | 772,880 | 798,579 |
Commitments and Contingencies | ||
Stockholders' Deficit: | ||
Preferred stock, $0.001 par value, 50,000,000 shares authorized; no shares issued | 0 | 0 |
Common stock, $0.001 par value, 250,000,000 shares authorized; 64,078,679 and 63,078,479 shares issued and outstanding, respectively | 64,079 | 63,079 |
Common stock to be issued | 50,000 | 0 |
Additional paid-in-capital | 2,213,218 | 2,184,218 |
Accumulated deficit | (3,039,290) | (2,999,090) |
Total Stockholders' Deficit | (711,993) | (751,793) |
TOTAL LIABILITIES & STOCKHOLDERS' DEFICIT | $ 60,887 | $ 46,786 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Oct. 31, 2020 | Jul. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ .001 | $ 0.001 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ .001 | $ 0.001 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 64,078,679 | 63,078,479 |
Common stock, shares outstanding | 64,078,679 | 63,078,479 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Oct. 31, 2020 | Oct. 31, 2019 | |
Income Statement [Abstract] | ||
Revenue | $ 0 | $ 1,231 |
Operating expenses: | ||
Officer compensation | 6,600 | 0 |
Consulting - related party | 15,000 | 15,000 |
Professional fees | 33,500 | 17,660 |
Mineral property expenditures | 1,000 | 15,133 |
General and administrative | 5,121 | 5,114 |
Total operating expenses | 61,221 | 52,907 |
Loss from operations | (61,221) | (51,676) |
Other expense: | ||
Interest expense | (3,979) | (2,891) |
Other income | 25,000 | 0 |
Total other income (expense) | 21,021 | (2,891) |
Loss before provision for income taxes | (40,200) | (54,567) |
Provision for income taxes | 0 | 0 |
Net Loss | $ (40,200) | $ (54,567) |
Loss per share, basic and diluted | $ 0 | $ 0 |
Weighted average shares outstanding, basic and diluted | 63,955,466 | 56,240,528 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Stockholders' Equity (Deficit) (Unaudited) - USD ($) | Common Stock | Additional Paid-in Capital | Common Stock To Be Issued | Accumulated Deficit | Total |
Beginning balance, shares at Jul. 31, 2019 | 55,836,819 | ||||
Beginning balance at Jul. 31, 2019 | $ 55,837 | $ 2,024,035 | $ 44,925 | $ (2,964,073) | $ (839,276) |
Common stock issued for services, shares | 75,000 | ||||
Common stock issued for services | $ 75 | 3,750 | (3,825) | 0 | |
Common stock issued for cash, shares | 666,660 | ||||
Common stock issued for cash | $ 668 | 19,332 | 20,000 | ||
Net loss | (54,567) | (54,567) | |||
Ending balance, shares at Oct. 31, 2019 | 56,578,479 | ||||
Ending balance at Oct. 31, 2019 | $ 56,580 | 2,047,117 | 41,100 | (3,018,640) | (873,843) |
Beginning balance, shares at Jul. 31, 2020 | 63,078,479 | ||||
Beginning balance at Jul. 31, 2020 | $ 63,079 | 2,184,218 | 0 | (2,999,090) | (751,793) |
Common stock issued for cash, shares | 100,200 | ||||
Common stock issued for cash | $ 1,000 | 29,000 | 50,000 | 80,000 | |
Net loss | (40,200) | (40,200) | |||
Ending balance, shares at Oct. 31, 2020 | 64,078,679 | ||||
Ending balance at Oct. 31, 2020 | $ 64,079 | $ 2,213,218 | $ 50,000 | $ (3,039,290) | $ (711,993) |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Oct. 31, 2020 | Oct. 31, 2019 | |
Cash Flow from Operating Activities: | ||
Net loss | $ (40,200) | $ (54,567) |
Changes in Operating Assets and Liabilities: | ||
Prepaid expenses | 0 | 2,500 |
Accounts payables and accrued liabilities | (24,678) | (13,624) |
Accounts payable - related party | 3,979 | 3,500 |
Net cash used in operating activities | (60,899) | (62,191) |
Cash Flows from Investing Activities: | ||
Net cash used in investing activities | 0 | 0 |
Cash Flows from Financing Activities: | ||
Proceeds from loans payable | 0 | 75,000 |
Repayment of loan payable | (5,000) | 0 |
Proceeds from loans payable - related party | 0 | 10 |
Proceeds from the sale of common stock | 80,000 | 20,000 |
Net cash provided by financing activities | 75,000 | 95,010 |
Net increase in cash | 14,101 | 32,819 |
Cash at beginning of the period | 6,840 | 21,847 |
Cash at end of the period | 20,941 | 54,666 |
Cash paid for interest | 0 | 0 |
Cash paid for taxes | $ 0 | $ 0 |
Organization and Business Opera
Organization and Business Operations | 3 Months Ended |
Oct. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Business Operations | Northern Minerals & Exploration Ltd. (the “Company”) is an emerging natural resource company operating in oil and gas production in central Texas and exploration for gold and silver in northern Nevada. The Company was incorporated in Nevada on December 11, 2006 under the name Punchline Entertainment, Inc. On August 22, 2012, the Company’s board of directors approved an agreement and plan of merger to effect a name change of the Company from Punchline Entertainment, Inc. to Punchline Resources Ltd. On July 12, 2013, the stockholders approved an amendment to change the name of the Company from Punchline Resources Ltd. to Northern Mineral & Exploration Ltd. FINRA approved the name change on August 13, 2013. On November 22, 2017, the Company created a wholly owned subsidiary, Kathis Energy LLC (“Kathis”) for the purpose of conducting oil and gas drilling programs in Texas. On December 14, 2017, Kathis Energy, LLC and other Limited Partners, created Kathis Energy Fund 1, LP, a limited partnership created for raising investor funds. On May 7, 2018, the Company created ENMEX LLC, a wholly owned subsidiary in Mexico, for the purposes of managing and operating its investments in Mexico including but not limited to the Joint Venture opportunity being negotiated with Pemer Bacalar on the 61 acres on the Bacalar Lagoon on the Yucatan Peninsula. There was no activity from inception to date. |
Significant Accounting Policies
Significant Accounting Policies | 3 Months Ended |
Oct. 31, 2020 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Basis of presentation The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The accompanying unaudited condensed financial statements reflect all adjustments, consisting of only normal recurring items, which, in the opinion of management, are necessary for a fair statement of the results of operations for the periods shown and are not necessarily indicative of the results to be expected for the full year ending July 31, 2021. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended July 31, 2020. Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates. Cash and Cash Equivalents The Company considers all cash accounts, which are not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less as cash and cash equivalents. The carrying amount of financial instruments included in cash and cash equivalents approximates fair value because of the short maturities for the instruments held. The Company had no cash equivalents as of October 31, 2020 and July 31, 2020. Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Kathis Energy LLC, Kathis Energy Fund 1, LLP and Enmex Operations LLC. All financial information has been prepared in conformity with accounting principles generally accepted in the United States of America. All significant intercompany transactions and balances have been eliminated. Revenue Recognition Revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration that an entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company’s performance obligations are transferred to customers at a point in time, typically upon delivery. The Company receives its revenue from oil and gas sales from the J. E Richey lease located in Coleman County, Texas. Revenue is recognized upon delivery. Long Lived Assets Property consists of mineral rights purchases as stipulated by underlying agreements and payments made for oil and gas exploration rights. Our company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. When we determine that the carrying value of long-lived assets may not be recoverable based upon the existence of one or more indicators of impairment and the carrying value of the asset cannot be recovered from projected undiscounted cash flows, we record an impairment charge. Our company measures any impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent in the current business model. Significant management judgment is required in determining whether an indicator of impairment exists and in projecting cash flows. Mineral Property Acquisition and Exploration Costs Mineral property acquisition and exploration costs are expensed as incurred until such time as economic reserves are quantified. Cost of lease, exploration, carrying and retaining unproven mineral lease properties are expensed as incurred. We have chosen to expense all mineral exploration costs as incurred given that it is still in the exploration stage. Once our company has identified proven and probable reserves in its investigation of its properties and upon development of a plan for operating a mine, it would enter the development stage and capitalize future costs until production is established. When a property reaches the production stage, the related capitalized costs will be amortized over the estimated life of the probable-proven reserves. When our company has capitalized mineral properties, these properties will be periodically assessed for impairment of value and any diminution in value. Oil and Gas Properties The Company follows the successful efforts method of accounting for its oil and gas properties. Under this method of accounting, all property acquisition costs and costs of exploratory and development wells are capitalized when incurred, pending determination of whether the well found proved reserves. If an exploratory well does not find proved reserves, the costs of drilling the well are charged to expense. The costs of development wells are capitalized whether those wells are successful or unsuccessful. Other exploration costs, including certain geological and geophysical expenses and delay rentals for oil and gas leases, are charged to expense as incurred. Maintenance and repairs are charged to expense, and renewals and betterments are capitalized to the appropriate property and equipment accounts. Depletion and amortization of oil and gas properties are computed on a well-by-well basis using the units-of-production method. Although the Company has recognized minimal levels of production and revenue, none of its property have proved reserves. Therefore, the Company’s properties are designated as unproved properties. Unproved property costs are not subject to amortization and consist primarily of leasehold costs related to unproved areas. Unproved property costs are transferred to proved properties if the properties are subsequently determined to be productive and are assigned proved reserves. Proceeds from sales of partial interest in unproved leases are accounted for as a recovery of cost without recognizing any gain until all cost is recovered. Unproved properties are assessed periodically for impairment based on remaining lease terms, drilling results, reservoir performance, commodity price outlooks or future plans to develop acreage. Asset Retirement Obligation Accounting Standards Codification (“ASC”) Topic 410, Asset Retirement and Environmental Obligations (“ASC 410”) requires an entity to recognize the fair value of a liability for an asset retirement obligation in the period in which it is incurred. The net estimated costs are discounted to present values using credit-adjusted, risk-free rate over the estimated economic life of the oil and gas properties. Such costs are capitalized as part of the related asset. The asset is depleted on the equivalent unit-of-production method based upon estimates of proved oil and natural gas reserves. The liability is periodically adjusted to reflect (1) new liabilities incurred, (2) liabilities settled during the period, (3) accretion expense and (4) revisions to estimated future cash flow requirements. To date, the Company has very few operating wells. Currently, the Company has one working well. Because there is only one active well on the Ritchie Lease, the Company estimates the asset retirement obligation to be trivial and has not recorded an ARO liability. Basic and Diluted Earnings Per Share Net income (loss) per common share is computed pursuant to ASC 260-10-45, Earnings per Share—Overall—Other Presentation Matters For the three months ended October 31, 2020, the Company had 2,564,365 of potentially dilutive shares. The shares consisted of common shares and warrants from convertible debt of 1,709,397 and 854,968, respectively. For the year ended July 31, 2019, the Company had 4,768,408 of potentially dilutive shares. The shares consisted of common shares and warrants from convertible debt of 1,602,272 and 801,136, respectively, and an additional 2,365,000 warrants. The diluted loss per share is the same as the basic loss per share for the three months ended October 31, 2020 and 2019, as the inclusion of any potential shares would have had an antidilutive effect due to our loss from operations. Recently adopted accounting pronouncements In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, and also issued subsequent amendments to the initial guidance, ASU 2018-19, ASU 2019-04, ASU 2019-05, and ASU 2019-11 (collectively, Topic 326), to introduce a new impairment model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses (CECL). Under Topic 326, an entity is required to estimate CECL on available-for-sale (AFS) debt securities only when the fair value is below the amortized cost of the asset and is no longer based on an impairment being “other-than-temporary”. Topic 326 also requires the impairment calculation on an individual security level and requires an entity use present value of cash flows when estimating the CECL. The credit-related losses are required to be recognized through earnings and non-credit related losses are reported in other comprehensive income. In April 2019, the FASB further clarified the scope of Topic 326 and addressed issues related to accrued interest receivable balances, recoveries, variable interest rates and prepayment. The new guidance will require modified retrospective application to all outstanding instruments, with a cumulative effect adjustment recorded to opening retained earnings as of the beginning of the first period in which the guidance becomes effective. In August 2018, the FASB issued ASU 2018-13 to improve the effectiveness of disclosures about fair value measurements required under ASC 820. The ASU modifies the disclosure objective paragraphs of ASC 820 to eliminate (1) “at a minimum” from the phrase “an entity shall disclose at a minimum” and (2) other similar “open ended” disclosure requirements to promote the appropriate exercise of discretion by entities. The disclosure objective added in ASC 820-10-50-1C states: The objective of the disclosure requirements in this Subtopic is to provide users of financial statements with information about assets and liabilities measured at fair value in the statement of financial position or disclosed in the notes to financial statements: a) the valuation techniques and inputs that a reporting entity uses to arrive at its measures of fair value, including judgments and assumptions that the entity makes, b) the uncertainty in the fair value measurements as of the reporting date, and c) how changes in fair value measurements affect an entity’s performance and cash flows. The new ASU is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. There was no material impact as a result of the adoption of this standard. |
Going Concern
Going Concern | 3 Months Ended |
Oct. 31, 2020 | |
Going Concern [Abstract] | |
Going Concern | The accompanying financial statements are prepared and presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Accordingly, they do not include any adjustments relating to the realization of the carrying value of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Since inception to October 31, 2020, the Company has an accumulated deficit of $3,039,290. The Company intends to fund operations through equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the next twelve months. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. On January 30, 2020, the World Health Organization declared the coronavirus outbreak a "Public Health Emergency of International Concern" and on March 10, 2020, declared it to be a pandemic. Actions taken around the world to help mitigate the spread of the coronavirus include restrictions on travel, and quarantines in certain areas, and forced closures for certain types of public places and businesses. The coronavirus and actions taken to mitigate it have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries, including the geographical area in which the Company plan to operates. While it is unknown how long these conditions will last and what the complete financial effect will be to the company, to date, the Company has experienced a decline in revenue due to the decreasing price of oil. |
Oil And Gas Properties
Oil And Gas Properties | 3 Months Ended |
Oct. 31, 2020 | |
Oil and Gas Property [Abstract] | |
Oil and Gas Properties | Active Projects: The Company currently has one active lease. We hold a 24% working interest in one producing well (“Concho Richey #1”) on the lease and a 100% working interest in the remainder of the 206-acre J. E Richey Lease. The Concho Richey #1 well is currently producing 2.8 barrels of oil and 16 MCF of gas per day. The Company received no revenue during the quarter ended October 31, 2020. The Richey #1 well was plugged on January 3, 2018. As of July 31, 2019, management determined that the $50,000 asset carried on the balance sheet was impaired resulting in a loss on impairment of $21,200 lowering the value of the investment in the Richey lease to $28,800. No additional impairment was recognized in the fiscal year 2020. |
Mineral Rights and Properties
Mineral Rights and Properties | 3 Months Ended |
Oct. 31, 2020 | |
Extractive Industries [Abstract] | |
Mineral Rights and Properties | ENMEX Operations LLC – Wholly owned Subsidiary - Pemer Bacalar – Resort Development Project On September 22, 2017 the Company entered into a Letter of Intent with Pemer Bacalar SAPI DE CV to examine the opportunity of acquiring ownership in approximately 80 acres (“Property”) on a freshwater lagoon near the community of Bacalar, Mexico in the state of Quintana Roo for the purpose of entering into a joint venture for the potential development of the Property into a resort. in order to further conduct due diligence toward this potential project. An amended MOU was entered into on April 13, 2018 setting forth the conditions for entering into a definitive agreement with Pemer Bacalar to acquire 51% of the Property. These conditions included obtaining an independent appraisal of the Property and develop a business plan in conjunction with a Joint Venture Operating Agreement |
Winnemucca Mountain Property
Winnemucca Mountain Property | 3 Months Ended |
Oct. 31, 2020 | |
Extractive Industries [Abstract] | |
Winnemucca Mountain Property | As previously announced, on September 14, 2012, we entered into an option agreement with AHL Holdings Ltd., and Golden Sands Exploration Inc. (“Optionors”), wherein we acquired an option to purchase an 80% interest in and to certain mining claims, which claims form the Winnemucca Mountain Property in Humboldt County, Nevada (“Property”). This property currently is comprised of 138 unpatented mining claims covering approximately 2,700 acres. On July 23, 2018, the Company entered into a New Option Agreement with the Optioners. This agreement provided for the payment of $25,000 and the issuance of 3,000,000 shares of the Company’s common stock and work commitments. The Company issued the shares and made the initial payment of $25,000 per the terms of the July 31, 2018 agreement. The second payment of $25,000 per the terms of the agreement was not paid when it became due on August 31, 2018 causing the Company to default on the terms of the July 23, 2018 agreement. On March 25, 2019 the Company entered into a New Option Agreement with the Optionors. As stated in the New Option Agreement the Company has agreed to certain terms and conditions to have the right to earn an 80% interest in the Property, these terms include cash payments, issuance of common shares of the Company and work commitments. The Company’s firm commitments per the March 25, 2019 option agreement total $381,770 of which cash payments total $181,770 and a firm work commitment of $200,000. These cash payments include payments for rentals payable to BLM and also for the staking of new claims adjoining the existing claims. The work commitment is to be conducted prior to December 31, 2020. As of October 31, 2020 and July 31, 2020, the Company has accounted for $309,069 and $334,000, respectively, in its accrued liabilities (Note 7). The Company has received notice, effective October 27, 2020, that its Option Agreement to earn an interest in the Winnemucca Mountain Gold Property has been terminated for being in default of certain terms and conditions of the Agreement. Management is in discussions with the principals of the Winnemucca property to resolve any outstanding obligations. |
Accrued Liabilities
Accrued Liabilities | 3 Months Ended |
Oct. 31, 2020 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | The Company has partnered with others whereby they provide all or a portion of the working capital for either well work to be completed on existing properties or towards the acquisition of new properties. As of October 31, 2020 and July 31, 2020, the Company has unused funds it has received of $23,175 and $23,175, respectively. Accrued liabilities are as follows: October 31, 2020 July 31, 2020 General accrual $ 2,466 $ 2,444 Interest $ 66,576 $ 62,597 Distributions and royalty $ 15,416 $ 15,416 Advances for well work $ 23,175 $ 23,175 Winnemucca Property $ 309,069 $ 334,000 $ 416,702 $ 437,632 |
Convertible Debt
Convertible Debt | 3 Months Ended |
Oct. 31, 2020 | |
Debt Disclosure [Abstract] | |
Convertible Debt | On August 22, 2013 the Company entered into a $50,000 Convertible Loan Agreement with an un-related party. The Loan and interest are convertible into Units at $0.08 per Unit with each Unit consisting of one common share of the Company and ½ warrant with each full warrant exercisable for one year to purchase one common share at $0.30 per share. On July 10, 2014, a further $35,000 was received from the same unrelated party under the same terms. On July 31, 2018, this Note was amended whereby the principal and interest are now convertible into Units at $0.04 per Unit with each Unit consisting of one common share of the Company and ½ warrant with each full warrant exercisable for one year to purchase one common share at $0.08 per share. The Loan shall bear interest at the rate of Eight Percent (8%) per annum and matures on March 26, 2020. As of October 31, 2020, there is $85,000 and $51,752 of principal and accrued interest, respectively, due on this loan. As of July 31, 2020, there was $85,000 and $50,038 of principal and accrued interest, respectively, due on this loan. This note is currently in default. On October 20, 2017, the Company executed a convertible promissory note for $25,000 with a third party. The note accrues interest at 6%, matures in two years and is convertible into shares of common stock at maturity, at a minimum of $0.10 per share, at the option of the holder. As of October 31, 2020 and July 31, 2020, there is $4,635 and $4,257, respectively, of accrued interest due on this loan. This note is currently in default. |
Loans Payable
Loans Payable | 3 Months Ended |
Oct. 31, 2020 | |
Loans Payable [Abstract] | |
Loans Payable | On April 16, 2017, the Company executed a promissory note for $15,000 with a third party. The note matures in two years and interest is set at $3,000 for the full two years. As of October 31, 2020, there is $15,000 and $3,750 of principal and accrued interest, respectively, due on this loan. As of July 31, 2019, there is $15,000 and $1,875 of principal and accrued interest, respectively, due on this loan. This loan is currently in default. On June 11, 2020, a third party loaned the Company $14,000. On September 9, 2020, the Company repaid $5,000 on this loan. The loan is unsecured, non-interest bearing and due on demand. As of October 31, 2020, the Company owed $5,000 to a third party. The loan is unsecured, non-interest bearing and due on demand. During the year ended July 31, 2020, a third party loaned the Company $15,000. The loan is unsecured, bears interest at 8% per annum and matures on September 1, 2021. As of October 31, 2020, there is $1,325 of interest accrued on this note. During the year ended July 31, 2020, a third party loaned the Company $60,000. The loan is unsecured, bears interest at 8% per annum and matures on September 1, 2021. As of October 31, 2020, there is $5,116 of interest accrued on this note. |
Common Stock
Common Stock | 3 Months Ended |
Oct. 31, 2020 | |
Equity [Abstract] | |
Common Stock | On June 4, 2020, the Company filed a Certificate of Amendment to its Articles of Incorporation in which it increased its authorized capital stock to 250,000,000 shares of common stock, par value $0.001 and 50,000,000 shares of preferred stock, par value $0.001. During the three months ended October 31, 2020, the Company sold 1,000,200 shares of common stock at $0.03 per share for total cash proceeds of $80,000. As of October 31, 2020, 1,666,667 shares, for a total of $50,000, had not yet been issued and have been credited to common stock to be issued. |
Warrants
Warrants | 3 Months Ended |
Oct. 31, 2020 | |
Warrants [Abstract] | |
Warrants | Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Contract Term Exercisable at July 31, 2019 2,365,000 $ 0.15 $ .65 Granted - - - Expired (1,865,000 ) 0.15 - Exercised - - - Exercisable at July 31, 2020 500,000 0.15 .27 Granted - - - Expired (500,000 ) 0.15 - Exercised - - - Exercisable at October 31, 2020 - $ - - |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Oct. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | For the three months ended October 31, 2020 and 2019, total payments of $15,000 and $15,000, respectively, were made to Noel Schaefer, a Director of the Company, for consulting services. As of October 31, 2020, and July 31, 2020 there is $27,500 and $27,500 credited to accounts payable. As of October 31, 2020 and July 31, 2020, there is $2,200 and $2,200, respectively, credited to accounts payable for amounts due to Rachel Boulds, CFO, for consulting services. On September 25, 2018, the Company executed a loan agreement with the wife of the CEO for $6,800. The loan was to be repaid by December 15, 2018, with an additional $680 to cover interest and fees. On October 10, 2018, the Company executed another loan agreement for $15,000. The loan was to be repaid by December 15, 2018, with an additional $1,500 to cover interest and fees. As of October 31, 2020, the Company owes $23,210 on this loan. This loan is in default. Victor Miranda, a Director of the Company is also President and owner of Labrador Capital SAPI DE CV (“Labrador”), a major shareholder of the Company owning 8.8% of its issued and outstanding shares. The Company has entered into a Memorandum of Understanding with Labrador to jointly pursue developing real estate projects in Mexico. As of the date of this report no projects have been identified to jointly pursue. In the event of a decision to go forward with Labrador, Victor Miranda will abstain from voting to avoid any conflict of interest. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Oct. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855, from the balance sheet date through the date the financial statements were available to be issued, and has determined that no material subsequent events exist. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 3 Months Ended |
Oct. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The accompanying unaudited condensed financial statements reflect all adjustments, consisting of only normal recurring items, which, in the opinion of management, are necessary for a fair statement of the results of operations for the periods shown and are not necessarily indicative of the results to be expected for the full year ending July 31, 2021. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended July 31, 2020. |
Use of Estimates | The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates. |
Cash and Cash Equivalents | The Company considers all cash accounts, which are not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less as cash and cash equivalents. The carrying amount of financial instruments included in cash and cash equivalents approximates fair value because of the short maturities for the instruments held. The Company had no cash equivalents as of October 31, 2020 and July 31, 2020. |
Principles of Consolidation | The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Kathis Energy LLC, Kathis Energy Fund 1, LLP and Enmex Operations LLC. All financial information has been prepared in conformity with accounting principles generally accepted in the United States of America. All significant intercompany transactions and balances have been eliminated. |
Revenue Recognition | Revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration that an entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company’s performance obligations are transferred to customers at a point in time, typically upon delivery. The Company receives its revenue from oil and gas sales from the J. E Richey lease located in Coleman County, Texas. Revenue is recognized upon delivery. |
Long Lived Assets | Property consists of mineral rights purchases as stipulated by underlying agreements and payments made for oil and gas exploration rights. Our company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. When we determine that the carrying value of long-lived assets may not be recoverable based upon the existence of one or more indicators of impairment and the carrying value of the asset cannot be recovered from projected undiscounted cash flows, we record an impairment charge. Our company measures any impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent in the current business model. Significant management judgment is required in determining whether an indicator of impairment exists and in projecting cash flows. |
Mineral Property Acquisition and Exploration Costs | Mineral property acquisition and exploration costs are expensed as incurred until such time as economic reserves are quantified. Cost of lease, exploration, carrying and retaining unproven mineral lease properties are expensed as incurred. We have chosen to expense all mineral exploration costs as incurred given that it is still in the exploration stage. Once our company has identified proven and probable reserves in its investigation of its properties and upon development of a plan for operating a mine, it would enter the development stage and capitalize future costs until production is established. When a property reaches the production stage, the related capitalized costs will be amortized over the estimated life of the probable-proven reserves. When our company has capitalized mineral properties, these properties will be periodically assessed for impairment of value and any diminution in value. |
Oil and Gas Properties | The Company follows the successful efforts method of accounting for its oil and gas properties. Under this method of accounting, all property acquisition costs and costs of exploratory and development wells are capitalized when incurred, pending determination of whether the well found proved reserves. If an exploratory well does not find proved reserves, the costs of drilling the well are charged to expense. The costs of development wells are capitalized whether those wells are successful or unsuccessful. Other exploration costs, including certain geological and geophysical expenses and delay rentals for oil and gas leases, are charged to expense as incurred. Maintenance and repairs are charged to expense, and renewals and betterments are capitalized to the appropriate property and equipment accounts. Depletion and amortization of oil and gas properties are computed on a well-by-well basis using the units-of-production method. Although the Company has recognized minimal levels of production and revenue, none of its property have proved reserves. Therefore, the Company’s properties are designated as unproved properties. Unproved property costs are not subject to amortization and consist primarily of leasehold costs related to unproved areas. Unproved property costs are transferred to proved properties if the properties are subsequently determined to be productive and are assigned proved reserves. Proceeds from sales of partial interest in unproved leases are accounted for as a recovery of cost without recognizing any gain until all cost is recovered. Unproved properties are assessed periodically for impairment based on remaining lease terms, drilling results, reservoir performance, commodity price outlooks or future plans to develop acreage. |
Asset Retirement Obligation | Accounting Standards Codification (“ASC”) Topic 410, Asset Retirement and Environmental Obligations (“ASC 410”) requires an entity to recognize the fair value of a liability for an asset retirement obligation in the period in which it is incurred. The net estimated costs are discounted to present values using credit-adjusted, risk-free rate over the estimated economic life of the oil and gas properties. Such costs are capitalized as part of the related asset. The asset is depleted on the equivalent unit-of-production method based upon estimates of proved oil and natural gas reserves. The liability is periodically adjusted to reflect (1) new liabilities incurred, (2) liabilities settled during the period, (3) accretion expense and (4) revisions to estimated future cash flow requirements. To date, the Company has very few operating wells. Currently, the Company has one working well. Because there is only one active well on the Ritchie Lease, the Company estimates the asset retirement obligation to be trivial and has not recorded an ARO liability. |
Basic and Diluted Earnings Per Share | Net income (loss) per common share is computed pursuant to ASC 260-10-45, Earnings per Share—Overall—Other Presentation Matters For the three months ended October 31, 2020, the Company had 2,564,365 of potentially dilutive shares. The shares consisted of common shares and warrants from convertible debt of 1,709,397 and 854,968, respectively. For the year ended July 31, 2019, the Company had 4,768,408 of potentially dilutive shares. The shares consisted of common shares and warrants from convertible debt of 1,602,272 and 801,136, respectively, and an additional 2,365,000 warrants. The diluted loss per share is the same as the basic loss per share for the three months ended October 31, 2020 and 2019, as the inclusion of any potential shares would have had an antidilutive effect due to our loss from operations. |
Recently Issued Accounting Pronouncements | In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, and also issued subsequent amendments to the initial guidance, ASU 2018-19, ASU 2019-04, ASU 2019-05, and ASU 2019-11 (collectively, Topic 326), to introduce a new impairment model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses (CECL). Under Topic 326, an entity is required to estimate CECL on available-for-sale (AFS) debt securities only when the fair value is below the amortized cost of the asset and is no longer based on an impairment being “other-than-temporary”. Topic 326 also requires the impairment calculation on an individual security level and requires an entity use present value of cash flows when estimating the CECL. The credit-related losses are required to be recognized through earnings and non-credit related losses are reported in other comprehensive income. In April 2019, the FASB further clarified the scope of Topic 326 and addressed issues related to accrued interest receivable balances, recoveries, variable interest rates and prepayment. The new guidance will require modified retrospective application to all outstanding instruments, with a cumulative effect adjustment recorded to opening retained earnings as of the beginning of the first period in which the guidance becomes effective. In August 2018, the FASB issued ASU 2018-13 to improve the effectiveness of disclosures about fair value measurements required under ASC 820. The ASU modifies the disclosure objective paragraphs of ASC 820 to eliminate (1) “at a minimum” from the phrase “an entity shall disclose at a minimum” and (2) other similar “open ended” disclosure requirements to promote the appropriate exercise of discretion by entities. The disclosure objective added in ASC 820-10-50-1C states: The objective of the disclosure requirements in this Subtopic is to provide users of financial statements with information about assets and liabilities measured at fair value in the statement of financial position or disclosed in the notes to financial statements: a) the valuation techniques and inputs that a reporting entity uses to arrive at its measures of fair value, including judgments and assumptions that the entity makes, b) the uncertainty in the fair value measurements as of the reporting date, and c) how changes in fair value measurements affect an entity’s performance and cash flows. The new ASU is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. There was no material impact as a result of the adoption of this standard. |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 3 Months Ended |
Oct. 31, 2020 | |
Payables and Accruals [Abstract] | |
Accrued liabilities | October 31, 2020 July 31, 2020 General accrual $ 2,466 $ 2,444 Interest $ 66,576 $ 62,597 Distributions and royalty $ 15,416 $ 15,416 Advances for well work $ 23,175 $ 23,175 Winnemucca Property $ 309,069 $ 334,000 $ 416,702 $ 437,632 |
Warrants (Tables)
Warrants (Tables) | 3 Months Ended |
Oct. 31, 2020 | |
Warrants [Abstract] | |
Schedule of warrants activity | Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Contract Term Exercisable at July 31, 2019 2,365,000 $ 0.15 $ .65 Granted - - - Expired (1,865,000 ) 0.15 - Exercised - - - Exercisable at July 31, 2020 500,000 0.15 .27 Granted - - - Expired (500,000 ) 0.15 - Exercised - - - Exercisable at October 31, 2020 - $ - - |
Significant Accounting Polici_3
Significant Accounting Policies (Details Narrative) - shares | 3 Months Ended | |
Oct. 31, 2020 | Oct. 31, 2019 | |
Accounting Policies [Abstract] | ||
Potentially dilutive shares | 2,564,365 | 4,768,408 |
Going Concern (Details Narrativ
Going Concern (Details Narrative) - USD ($) | Oct. 31, 2020 | Jul. 31, 2020 |
Going Concern [Abstract] | ||
Accumulated deficit | $ (3,039,290) | $ (2,999,090) |
Winnemucca Mountain Property (D
Winnemucca Mountain Property (Details Narrative) - USD ($) | Oct. 31, 2020 | Jul. 31, 2020 |
Extractive Industries [Abstract] | ||
Winnemucca accrued liabilities | $ 309,069 | $ 334,000 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) | Oct. 31, 2020 | Jul. 31, 2020 |
Accrued liabilities | $ 416,702 | $ 437,632 |
General Accrual | ||
Accrued liabilities | 2,466 | 2,444 |
Interest | ||
Accrued liabilities | 66,576 | 62,597 |
Distributions and Royalty | ||
Accrued liabilities | 15,416 | 15,416 |
Advances for Well Work | ||
Accrued liabilities | 23,175 | 23,175 |
Winnemucca Property | ||
Accrued liabilities | $ 309,069 | $ 334,000 |
Accrued Liabilities (Details Na
Accrued Liabilities (Details Narrative) - USD ($) | Oct. 31, 2020 | Jul. 31, 2020 |
Payables and Accruals [Abstract] | ||
Unused funds | $ 23,175 | $ 23,175 |
Convertible Debt (Details Narra
Convertible Debt (Details Narrative) - USD ($) | 3 Months Ended | |
Oct. 31, 2020 | Jul. 31, 2020 | |
Loan 1 | ||
Interest rate | 8.00% | |
Maturity date | Mar. 26, 2020 | |
Principal amount | $ 85,000 | $ 85,000 |
Accrued interest | $ 51,752 | 50,038 |
Loan 2 | ||
Interest rate | 6.00% | |
Maturity date | Oct. 20, 2019 | |
Principal amount | $ 4,635 | 4,635 |
Accrued interest | $ 4,257 | $ 4,257 |
Loans Payable (Details Narrativ
Loans Payable (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Oct. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2020 | |
Owed to third party | $ 5,000 | $ 0 | |
Loan 1 | |||
Loan | 15,000 | $ 15,000 | |
Interest accrued | 3,750 | $ 1,875 | |
Loan 2 | |||
Interest accrued | 1,325 | ||
Loan 3 | |||
Interest accrued | $ 5,116 |
Warrants (Details)
Warrants (Details) - $ / shares | 3 Months Ended | 12 Months Ended |
Oct. 31, 2020 | Jul. 31, 2020 | |
Warrants [Abstract] | ||
Number of warrants, outstanding | 500,000 | 2,365,000 |
Number of warrants, granted | 0 | 0 |
Number of warrants, expired | (500,000) | (1,865,000) |
Number of warrants, exercised | 0 | 0 |
Number of warrants, exercisable | 0 | 500,000 |
Weighted average exercise price, outstanding | $ .15 | $ .15 |
Weighted average exercise price, granted | .00 | .00 |
Weighted average exercise price, expired | .15 | .15 |
Weighted average exercise price, exercised | .00 | .00 |
Weighted average exercise price, exercisable | $ .00 | $ .15 |
Weighted average remaining contract term, outstanding | 3 months 7 days | 7 months 24 days |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | ||
Oct. 31, 2020 | Oct. 31, 2019 | Jul. 31, 2020 | |
Accounts payable | $ 29,700 | $ 29,700 | |
Director | |||
Payments made to related party | 15,000 | $ 15,000 | |
Accounts payable | 27,500 | 27,500 | |
CFO | |||
Accounts payable | 2,200 | $ 2,200 | |
Other | |||
Principal amount | $ 23,210 |