Texas Mineral Resources (TMRC) 10-Q 14 Apr 15 2015 Q2 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	6 Months Ended
	Feb. 28, 2015	Apr. 13, 2015
Document And Entity Information
Entity Registrant Name	Texas Rare Earth Resources Corp.
Entity Central Index Key	1445942
Document Type	10-Q
Document Period End Date	28-Feb-15
Amendment Flag	FALSE
Current Fiscal Year End Date	-23
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		37,036,916
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2015

BALANCE_SHEETS_Unaudited

BALANCE SHEETS (Unaudited) (USD $)	Feb. 28, 2015	Aug. 31, 2014
CURRENT ASSETS
Cash and cash equivalents	$487,448	$387,841
Prepaid expenses and other current assets	17,475	44,641
Total current assets	504,923	432,482
Property and equipment, net	63,752	83,002
Mineral properties	1,738,446	1,718,286
Deposits	29,710	61,396
TOTAL ASSETS	2,336,831	2,295,166
CURRENT LIABILITIES
Accounts payable and accrued liabilities	385,750	155,123
Accounts payable - related party	40,834	8,390
Current portion of note payable	30,458	30,458
Total current liabilities	457,042	193,971
Note payable - net of current portion and discount	260,387	260,387
Total liabilities	717,429	454,358
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock, par value $0.001; 10,000,000 shares authorized, no shares issued and outstanding as of February 28, 2015 and August 31, 2014, respectively
Common stock, par value $0.01; 100,000,000 shares authorized, 41,368,016 and 37,036,916 shares issued and outstanding as of February 28, 2015 and August 31, 2014, respectively	413,681	370,370
Additional paid-in capital	32,028,628	30,769,086
Accumulated deficit	-30,822,907	-29,298,648
Total shareholders' equity	1,619,402	1,840,808
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$2,336,831	$2,295,166

BALANCE_SHEETS_Unaudited_Paren

BALANCE SHEETS (Unaudited) (Parenthetical) (USD $)	Feb. 28, 2015	Aug. 31, 2014
Statement of Financial Position [Abstract]
Preferred stock, par value	$0.00	$0.00
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$0.01	$0.01
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	41,368,016	37,036,916
Common stock, shares outstanding	41,368,016	37,036,916

STATEMENTS_OF_OPERATIONS_Unaud

STATEMENTS OF OPERATIONS (Unaudited) (USD $)	3 Months Ended		6 Months Ended
	Feb. 28, 2015	Feb. 28, 2014	Feb. 28, 2015	Feb. 28, 2014
OPERATING EXPENSES
Exploration costs	$521,883	$134,964	$587,957	$275,420
General and administrative expenses	621,586	863,180	929,305	1,426,482
Total operating expenses	1,143,469	998,144	1,517,262	1,701,902
LOSS FROM OPERATIONS	-1,143,469	-998,144	-1,517,262	-1,701,902
OTHER INCOME (EXPENSE)
Interest and other income	297	14,339	503	16,309
Interest and other expense	-3,750	-4,000	-7,500	-8,000
Total other income (expense)	-3,453	10,339	-6,997	8,309
NET LOSS	($1,146,922)	($987,805)	($1,524,259)	($1,693,593)
Net loss per share:
Basic and diluted net loss per share	($0.03)	($0.03)	($0.04)	($0.05)
Weighted average shares outstanding:
Basic and diluted	38,852,027	37,036,916	37,934,388	37,036,916

STATEMENTS_OF_CASH_FLOWS_Unaud

STATEMENTS OF CASH FLOWS (Unaudited) (USD $)	6 Months Ended
	Feb. 28, 2015	Feb. 28, 2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	($1,524,259)	($1,693,593)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense	19,250	38,339
Stock-based compensation	362,952	595,287
Changes in current assets and liabilities:
Prepaid expenses and other assets	58,852	63,578
Accounts payable and accrued expenses	230,627	-145,029
Accounts payable related party	32,444
Net cash used in operating activities	-820,134	-1,141,418
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in mineral properties	-20,160
Net cash used in investing activities	-20,160
CASH FLOWS FROM FINANCING ACTIVITIES
Cash from sale of common stock	939,901
Net cash provided by financing activities	939,901
NET CHANGE IN CASH AND CASH EQUIVALENTS	99,607	-1,141,418
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	387,841	2,374,017
CASH AND CASH EQUIVALENTS, END OF PERIOD	$487,448	$1,232,599

BASIS_OF_PRESENTATION

BASIS OF PRESENTATION	6 Months Ended
	Feb. 28, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
BASIS OF PRESENTATION	NOTE 1 – BASIS OF PRESENTATION
	The accompanying unaudited interim financial statements of Texas Rare Earth Resources Corp. (“we”, “us”, “our”, the “Corporation”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read  in conjunction with the audited financial statements and notes thereto contained in our annual report on Form 10-K, for the year ended August 31, 2014, dated November 11, 2014 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, 2014 as reported in our annual report on Form 10-K, have been omitted.
	The financial statements have been prepared on a going concern basis which assumes the Company will not be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future.  The Company has incurred losses since inception resulting in an accumulated deficit of $30,822,907 as of February 28, 2015 and further losses are anticipated in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern.  The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand and or private placement of common stock.

MINERAL_PROPERTIES

MINERAL PROPERTIES	6 Months Ended
	Feb. 28, 2015
Mineral Industries Disclosures [Abstract]
MINERAL PROPERTIES	NOTE 2 – MINERAL PROPERTIES
	September 2011 Lease
	On September 2, 2011, we entered into a new mining lease with the Texas General Land Office covering Sections 7 and 18 of Township 7, Block 71 and Section 12 of Block 72, covering approximately 860 acres at Round Top Mountain in Hudspeth County, Texas.  The mining lease issued by the Texas General Land Office gives us the right to explore, produce, develop, mine, extract, mill, remove, and market beryllium, uranium, rare earth elements, all other base and precious metals, industrial minerals and construction materials and all other minerals excluding oil, gas, coal, lignite, sulfur, salt, and potash.  The term of the lease is nineteen years so long as minerals are produced in paying quantities.
	Under the lease, we will pay the State of Texas a lease bonus of $142,518; $44,718 of which was paid upon the execution of the lease, and $97,800 which will be due when we submit a supplemental plan of operations to conduct mining.  Upon the sale of minerals removed from Round Top, we will pay the State of Texas a $500,000 minimum advance royalty.
	Thereafter, we will pay the State of Texas a production royalty equal to eight percent (8%) of the market value of uranium and other fissionable materials removed and sold from Round Top and six and one quarter percent (61/4%) of the market value of all other minerals removed and sold from Round Top.
	Thereafter, assuming production of paying quantities has not been obtained, we may pay additional delay rental fees to extend the term of the lease for successive one (1) year periods pursuant to the following schedule:
		Per Acre Amount		Total Amount
	September 2, 2013 – 2014	$	50	$	44,718
	September 2, 2015 – 2019	$	75	$	67,077
	September 2, 2020 – 2024	$	150	$	134,155
	September 2, 2025 – 2029	$	200	$	178,873
	In August 2014, we paid a delay rental to the State of Texas in the amount of $44,718.
	November 2011 Lease
	On November 1, 2011, we entered into a mining lease with the State of Texas covering 90 acres, more or less, of land that we purchased in September 2011 near our Round Top site.  The deed was recorded with Hudspeth County on September 16, 2011. Under the lease, we paid the State of Texas a lease bonus of $20,700 which was paid upon the execution of the lease.  Upon the sale of minerals removed from Round Top, we will pay the State of Texas a $50,000 minimum advance royalty.  Thereafter, we will pay the State of Texas a production royalty equal to eight percent (8%) of the market value of uranium and other fissionable materials removed and sold from Round Top and six and one quarter percent (6 1/4%) of the market value of all other minerals sold from Round Top.
	If production of paying quantities of minerals has not been obtained on or before November 1, 2012, we may pay the State of Texas a delay rental to extend the term of the lease in an amount equal to $4,500.  Thereafter, assuming production of paying quantities has not been obtained, we may pay additional delay rental fees to extend the term of the lease for successive one (1) year periods pursuant to the following schedule:
		Per Acre Amount		Total Amount
	November 1, 2013-2014	$	50	$	4,500
	November 1, 2015 – 2019	$	75	$	6,750
	November 1, 2020 – 2024	$	150	$	13,500
	November 1, 2025 – 2029	$	200	$	18,000
	In August 2014, we paid a delay rental to the State of Texas of $4,500.
	On March 6, 2013, we entered into a lease assignment (the “Lease Assignment Agreement”) with Southwest Range & Wildlife Foundation, Inc., a Texas non-profit corporation  (the “Foundation”), pursuant to which the Foundation agreed to assign to us a surface lease identified with the State of Texas as Surface Lease SL20040002 (the “West Lease”), which covers 54,990.11 acres in Hudspeth County, Texas.  In exchange for the West Lease, we agreed to:  (i) pay the Foundation $500,000 in cash; (ii) issue 1,063,830 of our common shares, par value $0.01 (the “Common Shares”); and (iii) make ten (10) payments to the Foundation of $45,000 each.  The first payment was made in June 2013, and the nine (9) subsequent payments are due on or before June 1 of each of the following years.  Such payments are to be used by the Foundation to support conservation efforts within the Rio Grande Basin.  The Lease Assignment Agreement contains standard representations, warranties and covenants. The closing of the transaction contemplated by the Lease Assignment Agreement was completed on March 8, 2013.
	On October 29, 2014, we announced that we had executed agreements 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 was paid during the period. The purchase price will be the appraised value of the surface at the time of exercising the option.
	The ground water lease secures our right to develop the ground water within a 13,120 acre lease area located approximately 4 miles from the Round Top deposit. The lease area contains five existing water wells. It is anticipated that all potential water needs for the Round Top project mine operations would be satisfied by the existing wells covered by this water lease. This lease has an annual minimum production payment of $5,000 prior to production of water for the operation. 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.

NOTE_PAYABLE

NOTE PAYABLE	6 Months Ended
	Feb. 28, 2015
Debt Disclosure [Abstract]
NOTE PAYABLE	NOTE 3 – NOTE PAYABLE
	In relation to the Foundation lease discussed in Note 2 the Company recorded a note payable for an amount for the initial $45,000 due upon signing of lease and the nine (9) future payments due of $45,000 which has been recorded at its present value discounted with an imputed interest rate of 5% for a total note payable of $364,852. At February 28, 2015 the current portion due is $30,458 and long-term portion due is $260,387. The Company has also accrued interest expense of $15,250 as of February 28, 2015 which is included in accounts payable and accrued liabilities.
	Future maturities
	Year	Principle amount due
	2015	30,458
	2016	31,981
	2017	33,580
	2018	35,259
	2019 thereafter	159,567
	Total	$290,845
	In May 2015 we will pay the third installment of our surface lease in the amount of $45,000 to the Southwest Wildlife Foundation.

SHAREHOLDERS_EQUITY

SHAREHOLDERS' EQUITY	6 Months Ended
	Feb. 28, 2015
Equity [Abstract]
SHAREHOLDERS' EQUITY	NOTE 4 – SHAREHOLDERS’ EQUITY
	Capital Stock
	Our authorized capital stock consists of 100,000,000 shares of common stock, with a par value of $0.01 per share, and 10,000,000 preferred shares with a par value of $0.001 per share.
	All shares of common stock have equal voting rights and, when validly issued and outstanding, are entitled to one non-cumulative vote per share in all matters to be voted upon by shareholders.  The shares of common stock have no pre-emptive, subscription, conversion or redemption rights and may be issued only as fully paid and non-assessable shares. Holders of the common stock are entitled to equal ratable rights to dividends and distributions with respect to the common stock, as may be declared by our Board of Directors (our “Board”) out of funds legally available.  In the event of a liquidation, dissolution or winding up of the affairs of the Corporation, the holders of common stock are entitled to share ratably in all assets remaining available for distribution  to them after payment or provision for all liabilities and any preferential liquidation rights of any preferred stock then outstanding.
	On September 30, 2014, October 31, 2014, November 30, 2014, December 31, 2014, January 31, 2015, and February 28, 2015, the Board approved a total grant of 60,000 options to a consultant to the Company. The options are exercisable at $0.30 per share for a period of five years. All options vest immediately. With respect to these options, the Black-Scholes pricing model was used to estimate the fair value of the 60,000 options issued during the period to this advisor, using the assumptions of a risk free interest rate of 1.49% to 1.78%, dividend yield of 0%, volatility of 451% to 457%, and an expected life of 5 years. These options were expensed immediately in the amount of approximately $25,000.
	On December 30, 2014, we appointed Mr. Eric Noyrez to serve as a member of our Board of Directors. Mr. Noyrez was granted 400,000 options to purchase shares of our common stock, vesting immediately with a term of 5 years and at an exercise price of $0.21. The Black-Scholes pricing model was used to estimate the fair value of the 400,000 options issued during the period to these consultants, using the assumptions of a risk free interest rate of 1.68%, dividend yield of 0%, volatility of 198%, and an expected life of 5 years. These options are valued at approximately $81,819 and expensed immediately.
	On January 21, 2015 we completed our previously announced rights offering. We raised approximately $940,000 in aggregate gross proceeds, before expenses, through shareholder subscriptions for 4,272,275 Units including the exercise of over-subscription rights. Each Unit consisting of one share of the Company’s common stock, one five year non-transferable Class A warrant exercisable for one share of the Company’s common stock at $0.35 per share and one five-year non-transferable Class B warrant exercisable for one share of the Company’s common stock at $0.50 per share.
	The purpose of the rights offering was to raise capital that will be used for the Round Top hydrometallurgy plan and to address its general corporate and administrative expenses.
	On February 13, 2015, the Compensation Committee of the Board approved a grant of 5,000 options to a consultant of the Company. The options are exercisable at $0.20 per shares for a period of five years. All options vest immediately. With respect to these options, the Black-Scholes pricing model was used to estimate the fair value of the 5,000 options issued during the period to the consultant, using the assumptions of a risk free interest rate of 2.88%, dividend yield of 0%, volatility of 848.37%, and an expected life of 5 years. These options were expensed immediately in the amount of approximately $1,000.
	On February 19, 2015, the Compensation Committee of the Board approved a total grant of 800,000 options to certain members of our Board of Directors. The options are exercisable at $0.22 per share for a period of ten years. All options vest immediately. With respect to these options, the Black-Scholes pricing model was used to estimate the fair value of the 800,000 options issued during the period to the Board members, using the assumptions of a risk free interest rate of 2.88%, dividend yield of 0%, volatility of 848.37%, and an expected life of 10 years. These options were expensed immediately in the amount of approximately $176,000.
	On February 26, 2015 all members of the Board of Directors were offered shares of the Company’s common stock at a 20% discount in lieu of cash compensation owed to them for Board services.  Three members of the Board of Directors elected to receive approximately 59,000 shares of the Company’s common stock in lieu of cash compensation totaling $10,000.
	During the period, the Company recognized stock compensation expense of approximately $71,000 for 1,425,000 stock options issued to Board members in prior year for services vesting over one to three years. As of period end, there remains approximately $204,000 of stock compensation expense to be recognized.
	We currently have 41,368,016 shares of our common stock outstanding.

RELATED_PARTY_TRANSACTIONS

RELATED PARTY TRANSACTIONS	6 Months Ended
	Feb. 28, 2015
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS	NOTE 5 – RELATED PARTY TRANSACTIONS
	The Company rents office space on a month to month basis of $1,600 from a director.

MINERAL_PROPERTIES_Tables

MINERAL PROPERTIES (Tables)	6 Months Ended
	Feb. 28, 2015
Mineral Industries Disclosures [Abstract]
Schedule of future minimum lease payments for mineral properties leased	Thereafter, assuming production of paying quantities has not been obtained, we may pay additional delay rental fees to extend the term of the lease for successive one (1) year periods pursuant to the following schedule:
		Per Acre Amount		Total Amount
	September 2, 2013 – 2014	$	50	$	44,718
	September 2, 2015 – 2019	$	75	$	67,077
	September 2, 2020 – 2024	$	150	$	134,155
	September 2, 2025 – 2029	$	200	$	178,873
	Thereafter, assuming production of paying quantities has not been obtained, we may pay additional delay rental fees to extend the term of the lease for successive one (1) year periods pursuant to the following schedule:
		Per Acre Amount		Total Amount
	November 1, 2013-2014	$	50	$	4,500
	November 1, 2015 – 2019	$	75	$	6,750
	November 1, 2020 – 2024	$	150	$	13,500
	November 1, 2025 – 2029	$	200	$	18,000

NOTE_PAYABLE_Tables

NOTE PAYABLE (Tables)	6 Months Ended
	Feb. 28, 2015
Debt Disclosure [Abstract]
Schedule of future maturities of debt
	Future maturities
	Year	Principle amount due
	2015	30,458
	2016	31,981
	2017	33,580
	2018	35,259
	2019 thereafter	159,567
	Total	$290,845

MINERAL_PROPERTIES_Details_Nar

MINERAL PROPERTIES (Details Narrative) (USD $)	6 Months Ended	0 Months Ended	1 Months Ended	0 Months Ended		1 Months Ended
	Feb. 28, 2015	Sep. 02, 2011	Aug. 31, 2014	Nov. 01, 2011	Mar. 06, 2013	Nov. 30, 2014	Oct. 29, 2014
		acre		acre	acre		acre
Common stock, par value	$0.01		$0.01
Number of subsequent payments	9
Texas General Land Office - Hudspeth County, TX [Member] | September 2011 - Mining Lease [Member]
Lease acreage		860
Lease bonus		$142,518
Lease bonus paid		44,718
Lease bonus due upon filing of supplemental plan of operations to conduct mining		97,800
Minimum advance royalty due upon sale of minerals		500,000
Production royalty of market value of uranium and fissionable materials		8.00%
Production royalty of market value of other minerals		6.25%
Delay rental paid			44,718
State of Texas - Hudspeth County, TX [Member] | November 2011 Mining Lease [Member]
Lease acreage				90
Lease bonus paid				20,700
Minimum advance royalty due upon sale of minerals				50,000
Production royalty of market value of uranium and fissionable materials				8.00%
Production royalty of market value of other minerals				6.25%
Delay rental paid			4,500
Southwest Range and Wildlife Foundation, Inc. [Member] | Surface Lease [Member]
Lease acreage					54,990.11
Cash paid for lease assignment					500,000
Shares issued for lease					1,063,830
Common stock, par value					$0.01
Periodic payment					45,000
Number of payments					10
Number of subsequent payments					9
Texas General Land Office | Option to Purchase Surface Rights [Member]
Lease acreage							5,670
Annual payment to retain option to purchase surface rights						10,000
Texas General Land Office | Ground Water Lease [Member]
Lease acreage							13,120
Distance from deposit							4
Annual minimum production payment						5,000
Annual production payment						$20,000
Production payment per gallon							0.95

MINERAL_PROPERTIES_Details

MINERAL PROPERTIES (Details) (USD $)	Feb. 28, 2015
September 2011 - Mining Lease [Member]
Total amount
Amount 2013-2014	$44,718
Amount 2015-2019	67,077
Amount 2020-2024	134,155
Amount 2025-2029	178,873
Per Acre Amount
Amount 2013-2014 per acre	50
Amount 2015-2019 per acre	75
Amount 2020-2024 per acre	150
Amount 2025-2029 per acre	200
November 2011 Mining Lease [Member]
Total amount
Amount 2013-2014	4,500
Amount 2015-2019	6,750
Amount 2020-2024	13,500
Amount 2025-2029	$18,000
Per Acre Amount
Amount 2013-2014 per acre	50
Amount 2015-2019 per acre	75
Amount 2020-2024 per acre	150
Amount 2025-2029 per acre	200

NOTE_PAYABLE_Details_Narrative

NOTE PAYABLE (Details Narrative) (USD $)	1 Months Ended	6 Months Ended
	31-May-15	Feb. 28, 2015
Debt Disclosure [Abstract]
Note payable face amount		$45,000
Periodic payment paid	45,000
Number of subsequent payments		9
Interest rate		5.00%
Total note payable		364,852
Accrued interest expense		$15,250

NOTE_PAYABLE_Details

NOTE PAYABLE (Details) (USD $)	Feb. 28, 2015
Future maturities, fiscal year:
2015	$30,458
2016	31,981
2017	33,580
2018	35,259
2019 thereafter	159,567
Total	$290,845

SHAREHOLDERS_EQUITY_Details_Na

SHAREHOLDERS' EQUITY (Details Narrative) (USD $)	6 Months Ended	0 Months Ended
	Feb. 28, 2015	Feb. 26, 2015	Feb. 19, 2015	Feb. 13, 2015	Dec. 30, 2014	Jan. 21, 2015	Feb. 28, 2014
Warrants Class A [Member]
Exercise price of options granted	$0.35
Common Stock Class B
Exercise price of options granted	$0.50
Common Stock
Common Stock Subscriptions						$940,000
Common Stock Subscriptions, shares						4,272,275
Stock Options [Member] | Board of Director Members [Member]
Options granted			800,000	5,000	400,000
Exercise price of options granted		$0.20	$0.20	$0.20	$0.21
Term of the options			10 years
Total value of options to be expensed	214,000		176,000		81,819
Expected dividend yield					0.00%
Risk-free interest rate			2.88%	2.88%	1.68%
Expected volatility			848.37%	848.37%	198.00%
Expected life				5 years
Stock based compensation		10,000
Stock Options [Member] | Consultant [Member]
Options granted	60,000
Exercise price of options granted	$0.30
Term of the options	5 years
Vesting terms	Vest immediately
Total value of options to be expensed							25,000
Fair value estimation method	Black-Scholes Pricing Model
Expected dividend yield	0.00%
Expected life	5 years
Stock based compensation	$12,000
Stock Options [Member] | Consultant [Member] | Lower Range [Member]
Risk-free interest rate	1.49%
Expected volatility	456.00%
Stock Options [Member] | Consultant [Member] | Upper Range [Member]
Risk-free interest rate	1.78%
Expected volatility	457.00%

RELATED_PARTY_TRANSACTIONS_Det

RELATED PARTY TRANSACTIONS (Details Narrative) (USD $)	6 Months Ended
	Feb. 28, 2015
Related Party Transactions [Abstract]
Monthly rent paid to director	$1,600