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;

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?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, 2018, filed with the SEC on December 14, 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 development of mineral properties. We currently hold two eleven-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. We also have prospecting permits covering 9,345 acres adjacent to the Round Top Project. Our principal focus in 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, and to 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 Guide 7.


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Rare 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.

Liquidity and Capital Resources

As of November 30, 2019, our accumulated deficit was approximately $37.8 million and our cash position was approximately $1.3 million. We had a working capital surplus of approximately $308,000. We, nor our joint venture partner, have not commenced commercial production on any of our mineral properties. We have no revenues from operations and anticipate we will have no operating revenues until we place one or more of our properties into production. All properties are in the exploration stage.

Other than the financial commitment with USA Rare Earth to fund operations to earn a 70% interest in the Round Top Project, we currently do not have funds to pursue exploration or development work on the Round Top Project, which means that we will be required to raise additional capital on best efforts terms if USA Rare Earth ceases funding, or find alternative means to finance the Round Top Project continued exploration activities, if warranted. Subsequent to the funding of the USA Rare Earth amount, we will need to raise a significant amount of additional capital to exploit the 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 in the Round Top Project and/or (ii) curtailment or cessation of our operations. This includes our leases over claims covering the 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 result in the curtailment or cessation of our business operations.


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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, 2019 and November 30, 2018





General & Revenue

We had no operating revenues during the three months ended November 30, 2019 and November 30, 2018. We are not currently profitable. As a result of ongoing operating losses, we had an accumulated deficit of approximately $37.8 million as of November 30, 2019.

Operating expenses and resulting losses from Operations.

We accrued lease expenses payable to the GLO for the three months ended November 30, 2019 and November 30, 2018, in the amount of approximately $1,000 and $7,000, respectively. These lease payments are due each September and November.

Our general and administrative expenses for the three months ended November 30, 2019 and November 30, 2018, respectively, were approximately $89,000 and $338,000. For the three months ended November 30, 2019 and 2018, this amount included approximately $5,000 and $260,000, respectively, in stock-based compensation to Directors and outside consultants. The remaining expenditures 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, 2019 and 2018, we recorded interest expense of approximately $4,000 and $6,000, respectively.

We had losses from operations for the three months ended November 30, 2019 and November 30, 2018 totaling approximately $90,000 and $344,000, respectively.

We had net losses for the three months ended November 30, 2019 and November 30, 2018 totaling approximately $94,000 and $350,000, respectively.

Off-Balance Sheet Arrangements

For the three months ended November 30, 2019 and 2018, we have off-balance sheet arrangements for annual payments in relation to the mineral leases as disclosed in Note 2 of the unaudited financial 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.


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