Log in
E-mail
Password
Show password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

MMEX RESOURCES CORPORATION

(MMEX)
SummaryQuotesChartsNewsCompanyFinancials 
SummaryMost relevantAll NewsOther languagesPress ReleasesOfficial PublicationsSector news

MMEX RESOURCES : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

09/14/2021 | 01:08pm EDT

The following discussion and analysis constitute forward-looking statements for purposes of the Securities Act and the Exchange Act and as such involves known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. The words "expect", "estimate", "anticipate", "predict", "believes", "plan", "seek", "objective" and similar expressions are intended to identify forward-looking statements or elsewhere in this report. Important factors that could cause our actual results, performance or achievement to differ materially from our expectations are discussed in detail in Item 1 above. All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by such factors. We undertake no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Notwithstanding the foregoing, we are not entitled to rely on the safe harbor for forward looking statements under 27A of the Securities Act or 21E of the Exchange Act as long as our stock is classified as a penny stock within the meaning of Rule 3a51-1 of the Exchange Act. A penny stock is generally defined to be any equity security that has a market price (as defined in Rule 3a51-1) of less than $5.00 per share, subject to certain exceptions.

The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements, including the notes thereto.



Overview



Business Plan


MMEX Resources Corporation was formed as a Nevada corporation in 2005. The current management team lead an acquisition of the Company (then named Management Energy, Inc.) through a reverse merger completed in 2010 and thereafter changed the Company's name to MMEX Mining Corporation. In 2016, the Company changed its name to MMEX Resources Corporation to reflect the change in its business plan to an energy focus in the Americas.

The Company is a development-stage company focusing on the acquisition, development and financing of oil, gas, refining and infrastructure projects in Texas and South America, recently announcing it intends to develop solar energy to power multiple planned projects producing hydrogen and ultra-low sulfur fuels combined with carbon dioxide (CO2) capture in Texas.

Current Business Operations and Strategy

Since 2016, the focus of our business has been to build crude oil distillation units and refining facilities (CDUs) in the Permian Basin in West Texas. We revised our business plan in 2021 to move MMEX to clean energy use and production, leveraging our history, management and business relationships from the traditional energy sector. The focus of our business plan is to



    ·   Modify our planned CDU projects in Pecos County (West Texas) to produce
        potentially hydrogen and ultra-low sulfur fuel products combined with CO2
        capture.

    ·   Purchase additional acreage allowing us to develop additional megawatts of
        solar power for distribution to our projects in West Texas.





         26

  Table of Contents



Our immediate plans are to pursue the following three projects:

Project 1: A clean refining 10,000 barrel per day facility at our Pecos County site to produce 87° gasoline, ultra-low sulphur diesel and low-sulphur fuel oil, utilizing the Ultra Fuels concept.

Project 2: We have teamed with Black Tree Group to develop a "blue hydrogen" facility in Pecos County to produce hydrogen with carbon capture and storage employing steam methane reformer technology with the abundant natural gas supplies in the immediate area as the feedstock.

Project 3: A parallel "green hydrogen" plant in Pecos County, which plans to utilize the proprietary electrolizer technology of a major international technology partner.

We are in various stages of negotiations with major company off-takes that range from specialty air and gas companies to international trading companies. We would expect the sales of hydrogen by these companies will be to their customer base, which are more traditional chemical end uses. The proposed distribution network of liquid hydrogen from our planned projects will be by truck and rail.



Results of Operations



Revenues


We have not yet begun to generate revenues.

General and Administrative Expenses

Our general and administrative expenses increased to $442,507 for the three months ended July 31, 2021 from $183,325 for the three months ended July 31, 2020. The increase resulted from higher professional fee costs, which included increased costs for legal, public relations, and consulting services.



Project Costs


Our project costs decreased to $3,060 for the three months ended July 31, 2021 from $37,700 for the three months ended July 31, 2020. We expense the direct costs incurred on our projects, including acquisition of rights, planning, design and permitting. During the three months ended July 31, 2021 we entered into planning and design contracts for our project development, however, while the projects required deposits, they were not yet completed during the period, therefore amounts were recorded as prepaid expenses as of July 31, 2021, thus explaining the decrease in the expense in the current period. The levels of spending on our projects will vary from period to period based on availability of financing and will be expensed as projects are completed.

Depreciation and Amortization Expense

Our depreciation and amortization expense results from the depreciation of land improvements and amortization of land easements and totaled to $8,718 for the three months ended July 31, 2021 and 2020, respectively.



Other Income (Expense)


Our interest expense includes interest accrued on debt, amortization of debt discount and penalties assessed on debt. Interest expense totaled $204,610 and $554,089 for the three months ended July 31, 2021 and 2020, respectively. The decrease in interest expense is due to a lower levels of new non-related party convertible debt in the current period, resulting in less amortization of debt discount to interest expense, less loan penalties incurred in the period, and reduced debt balances as a result of debt being paid off or converted into shares common stock.




         27

  Table of Contents



We reported gains on derivative liabilities of $3,010,042 and $1,187,352 for the three months ended July 31, 2021 and 2020, respectively. We had previously identified the variable conversion feature of certain convertible notes payable as derivatives. We estimated the fair value of the derivatives using multinomial lattice models that value the warrants based on a probability weighted cash flow model using projections of the various potential outcomes. These estimates are based on multiple inputs, including the market price of our stock, interest rates, our stock price volatility and management's estimates of various potential equity financing transactions. These inputs were subject to significant changes from period to period and to management's judgment; therefore, the estimated fair value of the derivative liabilities would fluctuate from period to period, and the fluctuation has been material. During the three months ended July 31, 2021 all derivative liabilities were written off the books, resulting in a larger gain in the current period than in the prior period.

We reported a loss on extinguishment of liabilities of $59,856 for the three months ended July 31, 2021, due to convertible notes being paid off during the period where the debt discount on the notes had to be recognized into earnings. We reported no gain or loss on extinguishment of liabilities for the three months ended July 31, 2021.



Net Income (Loss)


As a result of the above, we reported net income of $2,291,291 and $403,520 for the three months ended July 31, 2021 and 2020, respectively.

Non-Controlling Interest in Income of Consolidated Subsidiaries

Currently, we have no activity in our consolidated subsidiaries. Non-controlling interest in income of consolidated subsidiaries was $0 for all periods presented.

Net Income (Loss) Attributable to the Company

Because we had no non-controlling interest in income of consolidated subsidiaries, net income (loss) attributed to the Company was the same as net income (loss).

Liquidity and Capital Resources



Working Capital


As of July 31, 2021, we had current assets of $2,063,512, comprised of cash and prepaid expenses, and current liabilities of $3,558,629, resulting in a working capital deficit of $1,495,117. Included in our current liabilities as of July 31, 2021 are PPP Loans of $150,000, which we expect to be forgiven.




         28

  Table of Contents




Sources and Uses of Cash



Our sources and uses of cash for the three months ended July 31, 2021 and 2020
were as follows:



                                               2021           2020

Cash, beginning of period                   $   330,449     $  66,830

Net cash used in operating activities (826,842 ) (72,478 ) Net cash used in investing activities (245,397 )

           -

Net cash provided by financing activities 2,474,019 20,000

Cash, end of period                         $ 1,732,229     $  14,352



We used net cash of $826,842 in operating activities for the three months ended July 31, 2021 as a result of our net income of $2,291,291, non-cash expenses totaling $131,649, increases in accrued expenses of $38,798, and accounts payable and accrued expenses - related party of $20,490. This was offset by our non-cash gain of $3,010,042, increase in our prepaid expenses and other current assets of $293,390, and a decrease in accounts payable of $5,638.

We used net cash of $72,478 in operating activities for the three months ended July 31, 2020 as a result of our net income of $403,520, non-cash expenses totaling $124,146, decrease in prepaid expenses and other current assets of $7,223, and increases in accounts payable of $39,214, accrued expenses of $431,286 and accounts payable and accrued expenses - related party of $109,485, partially offset by non-cash gain of $1,187,352.

Net cash used in investing activities for the three months ended July 31, 2021 was $245,397, comprised of the purchase of land during the period. We had no net cash provided by or used in investing activities for the three months ended July 31, 2020.

Net cash provided by financing activities for the three months ended July 31, 2021 was $2,474,019, comprised of proceeds from notes payable of $200,000, proceeds from convertible notes payable of $78,500, and proceeds from the sale of our common stock of $3,000,000. This was offset by repayments of notes payable of $200,000, repayments of convertible notes payable of $255,331, and offering costs incurred of $349,150.

Net cash provided by financing activities for the three months ended July 31, 2020 was $20,000, comprised of proceeds from convertible notes payable - related party of $10,000 and proceeds from an SBA express bridge loan of $10,000.



Going Concern Uncertainty


Our financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplate the realization of assets and liquidation of liabilities in the normal course of business. We have incurred continuous losses from operations, have an accumulated deficit of $65,693,402 and a total stockholders' deficit of $785,369 at July 31, 2021, and have reported negative cash flows from operations since inception. While we have received debt and equity funding during the period and have cash on hand of $1,732,229 at July 31, 2021, we still have a working capital deficit of $1,495,117. Therefore, there is a question of whether or not we have the cash resources to meet our operating commitments for the next twelve months and have, or will obtain, sufficient capital investments to implement our business plan. Finally, our ability to continue as a going concern must be considered in light of the problems, expenses and complications frequently encountered by entrance into established and emerging markets and the competitive environment in which we operate.

Since inception, our operations have primarily been funded through private debt and equity financing, and we expect to continue to seek additional funding through private or public equity and debt financing. Our ability to continue as a going concern is dependent on our ability to generate sufficient cash from operations to meet our cash needs and/or to raise funds to finance ongoing operations and repay debt. However, there can be no assurance that we will be successful in our efforts to raise additional debt or equity capital and/or that our cash generated by our operations will be adequate to meet our needs. These factors, among others, raise substantial doubt that we will be able to continue as a going concern for a reasonable period of time.




         29

  Table of Contents



The financial statements do not include any adjustments that might result from the outcome of any uncertainty as to the Company's ability to continue as a going concern. The financial statements also do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

Off-Balance Sheet Arrangements

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

Critical Accounting Policies

Our results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to inventories, investments, intangible assets, income taxes, financing operations, and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

For further information on our significant accounting policies see the notes to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended April 30, 2021 filed with the SEC and Note 2 to our condensed consolidated financial statements included in this quarterly report. There were no changes to our significant accounting policies during the three months ended July 31, 2021.

© Edgar Online, source Glimpses

All news about MMEX RESOURCES CORPORATION
10/05MMEX RESOURCES : Announces Chatsworth Securities as Financial Advisor for Clean Fuels Proj..
AQ
09/14MMEX RESOURCES : Management's Discussion and Analysis of Financial Condition and Results o..
AQ
08/31MMEX Resources Corp. Advances Sites for Hydrogen and Clean Energy Projects
GL
08/31MMEX Resources Corp. Advances Sites for Hydrogen and Clean Energy Projects
CI
08/24MMEX Resources Corp. Advances Planned Solar Powered Green Hydrogen Project In Pecos Cou..
GL
08/24MMEX Resources Corp. Advances Planned Solar Powered Green Hydrogen Project In Pecos Cou..
CI
07/29MMEX Resources Corp. Advances Plan for Green Energy
GL
07/29MMEX RESOURCES CORP : Management's Discussion and Analysis of Financial Condition and Resu..
AQ
07/29Mmex Resources Corporation Reports Earnings Results for the Full Year Ended April 30, 2..
CI
07/19MMEX RESOURCES : Announces $3.0 Million Registered Direct Offering (Form 8-K)
PU
More news
Financials (USD)
Sales 2021 - - -
Net income 2021 -24,5 M - -
Net Debt 2021 1,39 M - -
P/E ratio 2021 -1,12x
Yield 2021 -
Capitalization 9,27 M 9,27 M -
EV / Sales 2020 -
EV / Sales 2021 -
Nbr of Employees 2
Free-Float 84,3%
Chart MMEX RESOURCES CORPORATION
Duration : Period :
MMEX Resources Corporation Technical Analysis Chart | MarketScreener
Full-screen chart
Income Statement Evolution
Managers and Directors
Jack W. Hanks Chairman, President, Chief Executive Officer & CFO
Bruce N. Lemons Director
Sector and Competitors
1st jan.Capi. (M$)
MMEX RESOURCES CORPORATION-48.00%9
SAUDI ARABIAN OIL COMPANY6.86%1 993 020
ROYAL DUTCH SHELL PLC44.69%189 090
PETROCHINA COMPANY LIMITED65.00%159 144
TOTALENERGIES SE23.92%133 911
PUBLIC JOINT STOCK COMPANY GAZPROM71.59%123 960