Results of Operations for the Years Ended July 31, 2020 and 2019

Revenue

Revenues of oil and gas for the years ended July 31, 2020 and 2019 were $2,949 and $14,273, respectively, a decrease of $11,324 or 79.3%. Revenues are earned primarily from the J.E. Richey Lease from the sale of oil and gas and are recorded net of any distributions paid. The decrease in revenue is due to lower production as well as lower oil and gas prices.

Officer compensation Officer compensation was $6,600 and $16,000 for the years ended July 31, 2020 and 2019, respectively, a decrease of $9,400, or 58.8%. We began to incur monthly compensation expense for our new CFO in April 2020 and no compensation has been accrued or paid to the CEO in the current period.

Consulting - related party Consulting - related party services were $60,000 and $57,500 for the years ended July 31, 2020 and 2019, respectively, an increase of $2,500, or 4.3%. Fees are paid to Noel Schaefer, Director, but are billed as consulting fees.

Consulting expense Consulting fees were $12,700 and $11,325 for the years ended July 31, 2020 and 2019, respectively, an increase of $1,375, or 12.1%. When needed the Company hires experts in the mining, oil and gas industries to assist with its current projects.

Professional fees Professional fees were $53,523 and $37,984 for the years ended July 31, 2020 and 2019, respectively, an increase of $15,539, or 40.9%. Professional fees generally consist of legal, audit and accounting expense. The increase can be attributed to an increase in audit fees.

Advertising and promotion Advertising and promotion expense were $0 and $38,485 for the years ended July 31, 2020 and 2019, respectively, a decrease of $38,485. We have temporarily decreased our spending in this area to conserve our available cash.

Mineral property expenditures Mineral property expenditures were $35,669 and $355,442 for the years ended July 31, 2020 and 2019, respectively, a decrease of $319,773, or 90%. Expenditures include lease payments for the working interest in the mineral properties and rework expense. The decrease in in the current period can be attributed to a decrease in expenditures while the Company pursues additional funding.

General and administrative General and administrative expense was $22,384 and $50,102 for the years ended July 31, 2020 and 2019, respectively, a decrease of $27,718, or 55.3%. The decrease can be attributed to a decrease in travel and office expense.

Other expense During the year ended July 31, 2020 we had total other income of $152,910 compared to an expense of $19,012 in the prior year. During the current year we incurred interest expense of $14,795, which was offset with a gain on forgiveness of debt of $167,705. During the year ended July 31, 2019 we incurred interest expense of $17,980, a loss on disposal of mineral rights of $100,772, offset with a gain on forgiveness of debt of $99,740.

Net Loss For the year ended July 31, 2020, we had a net loss of $35,017 as compared to a net loss of $571,577 for year ended July 31, 2019. Our net loss was lower in the current period primarily due to our other income and a decrease in in our mineral property expenditures.




                                       17

Liquidity and Financial Condition

Operating Activities Cash used by operating activities was $204,007 for the year ended July 31, 2020. Cash used for operating activities was $244,035 for the year ended July 31, 2019.

Investing Activities We used $0 for investing activities for the year ended July 31, 2020 compared to $20,000 used in year ended July 31, 2019.

Financing Activities Net cash provided by financing activities was $189,000 foryear ended July 31, 2020 compared to $233,210 for the year ended July 31, 2019. During the year ended July 31, 2020, we received $100,000 from the sale of common stock and $89,000 from loan proceeds. During the year ended July 31, 2019, we received $220,000 from the sale of common stock, $69,180 from related party loans, $55,970 of which was repaid and received $9,000 from loans payable, of which we repaid $9,000.

We had the following loans outstanding as of July 31, 2020:

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 July 31, 2020, there is $85,000 and $58,038 of principal and accrued interest, respectively, due on this loan. As of July 31, 2019, there was $85,000 and $43,182 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 July 31, 2020 and 2019, there is $4,527 and $2,367, respectively, of accrued interest due on this loan.

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 July 31, 2020, there is $15,000 and $3,375 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. The loan is unsecured, non-interest bearing and due on demand.

As of July 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 July 31, 2020, there is $1,022 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 July 31, 2020, there is $3,906 of interest accrued on this note.

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 July 31, 2020, the Company owes $23,110 on this loan. This loan is in default.

We will require additional funds to fund our budgeted expenses over the next twelve months. These funds may be raised through equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of our shares. There is still no assurance that we will be able to maintain operations at a level sufficient for an investor to obtain a return on his investment in our common stock. Further, we may continue to be unprofitable. We need to raise additional funds in the immediate future in order to proceed with our budgeted expenses.

Off-Balance Sheet Arrangements

We have no 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 is material to stockholders.

Critical Accounting Policies

Refer to Note 2 of our financial statements contained elsewhere in this Form 10-K for a summary of our critical accounting policies and recently adopting and issued accounting standards.

© Edgar Online, source Glimpses