NORTHERN MINERALS & EXPLORATION LTD. - Quarter Report: 2019 April (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2019

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to ___________

Commission File Number 333-146934

NORTHERN MINERALS & EXPLORATION LTD.

(Exact name of registrant as specified in its charter)

Nevada		98-0557171
(State or other jurisdiction ofincorporation or organization)		(IRS EmployerIdentification No.)

10 West Broadway, Suite 700, Salt Lake City, UT Suite 700		84101
(Address of principal executive offices)		(Zip Code)

(801) 885-9260

(Registrant’s telephone number, including area code)

1889 FM 2088 Quitman, Texas, 75783

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐

Non-accelerated filer ☒

Emerging growth company ☐

Accelerated filer ☐

Smaller reporting company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. 54,603,485 common shares issued and outstanding as of June 19, 2019.

NORTHERN MINERALS & EXPLORATION LTD.

FORM 10-Q

For the Period ended April 30, 2019

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION	1

Item 1. Financial Statements	1

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	16

Item 3. Quantitative and Qualitative Disclosures About Market Risk	21

Item 4. Controls and Procedures	21

PART II – OTHER INFORMATION	22

Item 1. Legal Proceedings	22

Item 1A. Risk Factors	22

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	22

Item 3. Defaults Upon Senior Securities	22

Item 4. Mine Safety Disclosures	22

Item 5. Other Information	22

Item 6. Exhibits	22

SIGNATURES	23

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements

NORTHERN MINERALS & EXPLORATION LTD.

Condensed Consolidated Balance Sheets as of April 30, 2019 (Unaudited) and July 31, 2018 (Audited)	2

Condensed Consolidated Statements of Operations for the Three and Nine Months ended April 30, 2019 and 2018 (Unaudited)	3

Consolidated Statement of Changes in Stockholders’ Equity (Deficit) for the Nine Months ended April 30, 2019 and 2018 (Unaudited)	4

Condensed Consolidated Statements of Cash Flows for the Nine Months ended April 30, 2019 and 2018 (Unaudited)	5

Condensed Notes to Consolidated Financial Statements (Unaudited)	6

NORTHERN MINERALS & EXPLORATION LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

	April 30,	July 31,
	2019	2018
	(unaudited)	(audited)
ASSETS
Current Assets:
Cash	$63,733	$52,672
Prepaid expenses	-	3,500
Accounts receivable	4,812	3,229
Stock subscription receivable	-	20,000

Total Current Assets	68,545	79,401
Other Assets
Mineral rights and properties	30,065	30,065
Oil and gas properties	95,250	141,250
Total Other Assets	125,315	171,315

TOTAL ASSETS	$193,860	$250,716

LIABILITIES & STOCKHOLDERS’ DEFICIT

Current Liabilities:
Accounts payable	$70,407	$85,146
Accounts payable – related party	52,500	43,374
Accrued liabilities	682,152	327,580
Current portion of property option payable	-	116,000
Loans payable	114,990	110,990
Loans payable – related party	38,310	40,000
Total Current Liabilities	958,359	723,090

Convertible debt – long term	85,000	85,000

TOTAL LIABILITIES	1,043,359	808,090

Commitments and Contingencies	-	-

Stockholders’ Deficit:
Common stock, $0.001 par value, 75,000,000 shares authorized; 54,603,485 and 48,286,818 shares issued and outstanding, respectively	54,605	48,287
Common stock to be issued	20,000	50,000
Additional paid-in-capital	1,965,267	1,736,835
Accumulated deficit	(2,889,371)	(2,392,496)

Total Stockholders’ Deficit	(849,499)	(557,374)

TOTAL LIABILITIES & STOCKHOLDERS’ DEFICIT	$193,860	$250,716

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

NORTHERN MINERALS & EXPLORATION LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	For the Three Months Ended April 30,		For the Nine Months Ended April 30,
	2019	2018	2019	2018
Revenue	$13,056	$18,518	$30,137	$46,577
Distributions	2,865	21,891	18,350	49,650
Gross margin	10,191	(3,373)	11,787	(3,073)

Operating expenses:
Officer compensation	-	15,000	15,000	42,500
Director services	15,000	1,500	45,000	3,500
Consulting	5,000	10,500	15,000	68,500
Professional fees	7,734	23,025	32,984	42,650
Advertising and promotion	-	51,241	38,485	107,955
Mineral property expenditures	30,032	57,666	407,053	73,948
General and administrative	13,000	33,951	29,377	81,250
Total operating expenses	70,766	192,883	582,899	420,303
Loss from operations	(60,575)	(196,256)	(571,112)	(423,376)

Other income (expense):
Interest expense	(2,399)	(4,143)	(14,513)	(14,012)
Loss on disposal of mineral rights	-	-	(46,000)	-
Loss on conversion of debt	-	(6,000)	-	(6,000)
Other income	-	-	116,000	-
Gain on forgiveness of debt	-	-	18,750	4,120
Total other income (expense)	(2,399)	(10,143)	74,237	(15,892)

Loss before provision for income taxes	(62,974)	(206,399)	(496,875)	(439,268)
Provision for income taxes	-	-	-	-
Net Loss	$(62,974)	$(206,399)	$(496,875)	$(439,268)

Loss per share, basic and diluted	$(0.00)	$(0.00)	$(0.01)	$(0.01)

Weighted average shares outstanding, basic and diluted	52,923,710	42,736,031	49,893,144	39,210,382

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

NORTHERN MINERALS & EXPLORATION LTD.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE NINE MONTHS ENDED APRIL 30, 2019 AND 2018

(Unaudited)

	Common	Common Stock	Additional Paid-In	Accumulated
	Stock	Amount	Capital	Deficit	Total
Balance, July 31, 2017	26,797,818	$26,798	$1,239,349	$(1,622,720)	$(356,573)
Common stock issued for cash	10,500,000	10,500	114,500	-	125,000
Net loss	-	-	-	(97,430)	(97,430)
October 31, 2017	37,297,818	37,298	1,353,849	(1,720,150)	(329,003)
Common stock issued for cash	4,200,000	4,201	163,798	-	167,999
Net loss	-	-	-	(135,439)	(135,439)
January 31, 2018	41,497,818	41,499	1,517,647	(1,855,589)	(296,443)
Common stock issued for cash	1,589,000	1,589	120,812	-	122,400
Common stock issued for debt	200,000	200	9,800	-	10,000
Net loss	-	-	-	(206,399)	(206,399)
April 30, 2018	43,286,818	$43,288	$1,648,259	$(2,061,988)	$(370,441)

	Common Stock	Common Stock Amount	Additional Paid-in Capital	Common Stock To Be Issued	Accumulated Deficit	Total
Balance, July 31, 2018	48,286,818	$48,287	$1,736,835	$50,000	$(2,392,496)	$(557,374)
Common stock issued for services	150,000	150	9,600	-	-	9,750
Common stock issued for cash	-	-	-	50,000	-	50,000
Net loss	-	-	-	-	(110,027)	(110,027)
October 31, 2018	48,436,818	48,437	1,746,435	100,000	(2,502,523)	(607,651)
Common stock issued for cash	-	-	-	50,000	-	50,000
Net loss	-	-	-	-	(323,874)	(323,874)
January 31, 2019	48,436,818	48,437	1,746,435	150,000	(2,826,397)	(881,525)
Common stock issued for cash	6,166,667	6,168	218,832	(130,000)	-	95,000
Net loss	-	-	-	-	(62,974)	(62,974)
April 30, 2019	54,603,485	$54,605	$1,965,267	$20,000	$(2,889,371)	$(849,499)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

NORTHERN MINERALS & EXPLORATION LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	For the Nine Months Ended April 30,
	2019	2018
Cash Flow from Operating Activities:
Net loss	$(496,875)	$(439,268)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock compensation expense	9,750	-
Loss on disposal of mineral rights	46,000	-
Gain on write-off of option payable	(116,000)	-
Loss on conversion of debt	-	6,000
Changes in Operating Assets and Liabilities:
Prepaid expenses	3,500	(3,500)
Accounts receivable	(1,583)	(1,570)
Accounts payables and accrued liabilities	339,833	90,928
Accounts payable – related party	9,126	-
Advances for well work	-
Stock subscription receivable	20,000	-
Net cash used in operating activities	(186,249)	(347,410)

Cash Flows from Investing Activities:
Cash paid for oil and gas properties	-	(72,322)
Net cash used in investing activities	-	(72,322)

Cash Flows from Financing Activities:
Proceeds from loan payable	9,000	25,000
Repayment of loan payable	(5,000)	-
Proceeds from loans payable – related party	54,180	-
Payments on loans payable – related party	(55,870)	-
Proceeds from the sale of common stock	195,000	415,400
Net cash provided by financing activities	197,310	440,400

Net increase in cash	11,061	20,668

Cash at beginning of the period	52,672	822
Cash at end of the period	$63,733	$21,490

Cash paid for:
Interest	$870	$-
Taxes	$-	$-
Supplemental disclosure of non-cash activity:
Common stock issued for debt	$-	$4,000

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Northern Minerals & Exploration Ltd.

Condensed Notes to Consolidated Financial Statements

April 30, 2019

(unaudited)

NOTE 1 – 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 approximately 61 acres on the Bacalar Lagoon on the Yucatan Peninsula. There was no activity from inception to date.

The Company is working on the following projects:

ENMEX Operations LLC – Wholly owned Subsidiary - Pemer Bacalar – Resort Development Project

During the quarter ended October 31, 2017, the Company entered into a Letter of Intent with Pemer Bacalar SAPI DE CV (“Pemer Bacalar”) on September 22, 2017 to examine the opportunity of acquiring ownership in approximately 61 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. On November 16, 2017, subsequent to the end of the quarter, the Company entered into a Memorandum of Understanding (“MOU”) 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. The amended MOU of April 13, 2018 expired on June 15, 2018; however. The Company entered into a preliminary joint venture agreement (the “Agreement”) on June 11, 2019 with a private Mexican entity to work together on the raising of capital funds necessary to build a 68 room Waterfront Hotel & Resort & 92 residential Jungle villas, Cenote Villas, 4 bars & restaurants, clubhouse, tennis, aquatic center, wellness center & etc on a beautiful property (the “Property”) situated on the Caribbean coast of the Yucatan Peninsula, in the State of Quintana Roo, Mexico. Under the terms of the Agreement Northern has the right to participate for a 20% interest in the Property. The Property consists of approximately 207.5 Acres +/- (84 Ha) and 3,444.8 ft (1050 meters) Lagoon front plus 1033.4 ft (315 meters) waterfront.

Coleman County, Texas – Three well rework/re-completion project

On October 14, 2014, we entered into an agreement to acquire the 206.5 acre J.E. Richey oil and gas lease. This lease area has six known productive formations. The existing three wells on the lease are fully equipped. Beginning in May 2015 we started conducting operations on the three wells to place them back into production. The rework/re-completion was completed on July 28, 2015 and production of oil and gas was established. Additional work was conducted on J. E. Richey lease during the fiscal year ended July 31, 2018. No additional work was performed during the nine months ended April 30, 2019. As of April 30, 2019, management determined that the $96,000 asset carried on the balance sheet was impaired resulting in a loss on impairment of $46,000.

Kathis Energy LLC – Wholly owned Subsidiary

The Company created a wholly owned subsidiary, Kathis Energy LLC (“Kathis”), on November 22, 2017 for the purpose of conducting oil and gas drilling programs in Texas. The Company agreed to assign to Kathis the Olson and Guy Ranch leases in exchange for $126,500. Both of these oil and gas leases have expired.

Jones County, Texas – Palo Pinto Reef project

During the fiscal year ended July 31, 2016 the Company acquired the Olson lease covering 160 acres in Jones County, Texas. This lease is 1.5 miles from the Strand Palo Pinto Reef Field which was discovered in 1940 and has produced 1,700,000 barrels of oil from 8 wells or 212,500 barrels of oil per well. The structure map on the Palo Pinto shows a large buildup in the Palo Pinto Reef across the southern portion of the lease. No work was performed during the nine months ended April 30, 2019. The lease expired in April 2019.

Shackelford County, Texas – Guy Ranch Project

During the fiscal year ended July 31, 2016 the Company acquired 692-acres divided into two tracts Guy Ranch Lease in Shackelford County. The Guy Ranch lease is located in the southern part of Shackelford County. The Ranch has 32 wind turbines on it representing it is at a structurally higher elevation. The principal targets for this drilling prospect is the Patio (aka Palo Pinto Sand) and Morris Sands the area is also known to be productive from three other formations on the Guy Ranch acreage. This oil and gas lease expired on December 16, 2018. All associated expenditures have been fully expensed.

Riverside Prospects, Runnels County, Texas

On October 20, 2017 the Company entered into an exclusive option agreement with Murphree Oil Company to acquire drilling prospects on four leases in Runnels County near the City of Ballinger, known as the Riverside Prospects. During the quarter ended April 30, 2018, the Company, through its wholly owned subsidiary, Kathis Energy LLC, (“Kathis”) paid the lease bonuses for extending the oil and gas lease period on 548.76 acres covering the Riverside Prospects. This acreage consists of 4 leases in a well established area where oil and gas production was discovered during 1978 – 1983. On November 2, 2018 a fresh option agreement was entered into for the Riverside Leases. The Option Agreement expired on December 31, 2018.

89 Guy #4 Well – Cased Hole

On April 16, 2018, Kathis Energy acquired the 89 Guy Well #4 located on a 20-acre tract on the Guy Ranch property in Shackelford County, Texas. The well is an abandoned cased well that was drilled in October 2010 and completed in the Patio Sand at the interval of 3,144’ - 3,154’. The interval perforated (3,144 – 3,154’) is above the best productive part of the formation. No work was conducted during the nine months ended April 30, 2019.

McClure 2B Gas Well – Producing

On February 6, 2018 the Company acquired the McClure # 2B producing gas well on a 40-acre oil & gas lease located in Palo Pinto County near the Community of Graford, Texas. The McClure 2B well is completed in the Strawn in the interval 2,882’ to 2,940’ and has produced in excess of 70 million cubic feet of natural gas. No work was performed during the nine months ended April 30, 2019.

Carter & Foster Wells – Producing

During the fiscal year ended July 31, 2018 the Company acquired the Carter and Foster wells located west of the Community of Atwell, Texas in Callahan County. The Carter lease consists of 40 acres and has one well. The Foster lease has 10 acres around each well of the three wells, all of which are fully equipped with surface and subsurface equipment. All four wells are completed in the Palo Pinto Limestone formation at approximately 1,900 feet. No work was performed during the nine months ended April 30, 2019.

Reeves Lease – Acreage – Palo Pinto Reef Prospect

In August 2018 the Company paid for the geological prospecting fees for a Palo Pinto Reef prospect in Jones County. The Reeves lease covers 160 acres and is located near Noodle, Texas in Jones County. The projected depth of the Palo Pinto Reef is 4,300’. During the quarter the third party that paid for the lease agreed to return the lease bonus due to not being able to obtain all parties signatures for obtaining a lease. The Company is seeking to recover its geological fees paid in 2018.

Winnemucca Mountain Gold Property, Nevada

As previously announced, on September 14, 2012, we entered into an option agreement (as last amended on February 11, 2016) with AHL Holdings Ltd., and Golden Sands Exploration Inc., 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 Winnemucca Mountain property currently is comprised of 138 unpatented mining claims covering approximately 2700 acres.

On July 23, 2018, the Company entered into a New Option Agreement with AHL Holding Ltd & Golden Sands Exploration Inc. (“Optionors”). 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.

During the quarter ended April 30, 2019 the Company engaged an independent geologist to conduct geological studies to prepare a recommendation of a work program for the Winnemucca Property.

NOTE 2 – 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, 2019. 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, 2018.

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.

Reclassifications

Certain re-classifications have been made to the prior year financial information to conform to the presentation used in the unaudited financial statements for the nine months ended April 30, 2019.

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.

Revenues are earned from the J.E. Richey Lease both in selling oil and gas and from funds received for reworking the Concho Richey #1. We began earning revenues in Q1 of 2015 from the J.E. Richey Lease. Revenues resumed from the sale of oil and gas during the second quarter of the 2016/17 fiscal year.

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 applies the successful efforts method of accounting for oil and gas properties. The Company capitalizes asset acquisition costs of mineral rights and leases. Unproved oil and gas properties are periodically assessed to determine whether they have been impaired, and any impairment in value is charged to expense. The costs of proved properties will be depleted on an equivalent unit-of-production basis in which total proved reserves will be the base used to calculate depletion.

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. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period. The weighted average number of common shares outstanding and potentially outstanding common shares assumes that we incorporated as of the beginning of the first period presented.

As of April 30, 2019, and 2018, the Company had 4,736,271 and 3,575,913 potentially dilutive shares; however, the diluted loss per share is the same as the basic loss per share for the three and nine months ended April 30, 2019 and 2018, as the inclusion of any potential shares would have had an antidilutive effect due to our loss from operations.

Recently Issued Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

NOTE 3 – GOING CONCERN

The accompanying unaudited condensed consolidated 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 April 30, 2019, the Company has an accumulated deficit of $2,889,371. 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.

NOTE 4 – MINERAL RIGHTS AND PROPERTIES

Beauregard Parish, Louisiana - North High Prospect

On December 7, 2018, the Company entered into a Memorandum of Understanding with EnergyFunders, LLC to set forth the terms and conditions to jointly operate and pursue oil & gas projects. It was mutually agreed to create EF NMEX 18, LP, in order to jointly promote domestic oil and gas drilling projects. The first project in which EnergyFunders and NMEX will participate is the drilling of a seismic structure in the Beauregard Parish of Louisiana, known as the Northside High Prospect. The target depth is 7,300 feet to test the Cockfield (Yegua) Sand. Notable wells in the area have produced more than 200,000 barrels of oil from a single well. Drilling of this well is scheduled to begin during the summer of 2019. NMEX has agreed to provide certain completion costs to acquire up to 8% of the working interest in this well.

Coleman County, Texas – J.E. Richey Lease

On October 14, 2014, the Company entered into a Terms of Farm-out Agreement with Copper Basin Oil & Gas Inc. to acquire a working interest in an oil and gas lease in the J.E. Richey lease, which had 3 fully equipped wells, production flow lines, injection flow line, Tank battery consisting of two 300 BBL tanks, one 210 BBL tank with two separators. The Company agreed to acquire a 75% working interest in the lease including the existing wells and equipment.

The total consideration that the Company must pay to acquire the 75% working interest is estimated at $336,000, which amount includes all work requirements, and common stock valued at $0.10 based upon our current share price of $0.11 as at October 14, 2014. The Net Revenue Interest is 56.25% and consists of approximately 206.5 acres, more or less, in Coleman County, Texas. This lease has no depth limit.

On March 20, 2015, the Company entered into a multi-well purchase and sale agreement with EF VC2, LLC to sell a 37.5% working interest (“WI”) in the 3 wells for total consideration of $180,000. Under the terms of the agreement both parties will receive a 50.0% of the WI revenue from these three wells until EF VC2 recaptures their investment of $180,000 (defined as “Payout”). After Payout EF VC2 will revert to a 37.5% of the WI revenue for the remaining life of the production from the three wells.

We were successful in the re-completion of the Concho Richey #1 well on the J.E. Richey Lease in the Gray formation in July 2015. The Concho Richey well came in with initial production rates of 65 barrels of oil per day and 100 MCF of gas per day. We hold a 25% 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 well was shut in due to a hole coming in to the casing which was repaired in the quarter ended October 31, 2016. No revenues were received during the quarter from the Concho Richey well, subsequently repairs were made to the well. Repairs made to the well to squeeze off the holes in the casing were successful. Revenues from the sale of oil and gas resumed during the year ended July 31, 2017. The Concho Richey #1 well is currently producing 5 barrels of oil and 31 MCF of gas per day.

During August 2017 further work was conducted on the J.E. Richey #1 well during August 2017, which determined the casing in this well was beyond being repaired. A decision was made to plug this well. The Richey #1 well was plugged on January 3, 2018.

Further work is planned during the next fiscal year on the J. E. Richey lease on well #3 in an effort to improve its production. No work was conducted on the J.E. Richey Lease during the nine months ended April 30, 2019.

Humbolt County, Nevada - Winnemucca Mountain Property

During the quarter ended April 30, 2019 the Company engaged an independent geologist to conduct geological studies to prepare a recommendation of a work program for the Winnemucca Property.

Jones County, Texas – Olson Lease

We had a 100% interest in the 160-acre oil and gas Olsen lease located in the north central part of Jones County, Texas. The principal target formation is the Palo Pinto Reef. The Palo Pinto Reef is a known productive formation in the area with a high yield of cumulative oil production. An example in the area is the Strand Oil Field which is a Palo Pinto Reef Oil Field. The field discovered in 1940, consists of only 8 wells on approximately 160 acres produced a total of 1,700,000 barrels of oil, an average of 212,500 barrels of oil per oil well. The 160 Olson Lease lies approximately 1.5 miles southeast of the Strand Palo Pinto Reef Oil Field. We hold 100% of the working interest in this lease. The lease expired on April 27, 2019. No work was conducted on the Olson lease during the quarter ended April 30, 2019. The Company had agreed to assign its interest and rights to the 160-acre Olson Lease to Kathis Energy LLC, a wholly owned subsidiary of the Company in exchange for a $60,500 loan.

Shackleford County, Texas – Guy Ranch Lease

During the fiscal year ended July 31, 2016 the Company acquired a 100% working interest in a 692-acre Guy Ranch Lease divided into two tracts. Tract 1 covers 480 acres and Tract 2 covers 212 acres. The Ranch has 32 wind turbines on it representing it is at a structurally higher elevation. The principal targets for this drilling prospect is the Patio (aka Palo Pinto Sand) and Morris Sands the area is also known to be productive from three other formations on the Guy Ranch acreage.

The first project on the Guy Ranch was to re-complete a cased well in the Morris formation that was reportedly untested. The structure of the deal was for a third party to pay 100% of the costs re-complete the cased well in the Morris formation allocating 20 acres out of the 450 acres in order to earn a 75% working interest in the cased well. All records filed with the Texas Railroad Commission supported that no attempt to produce from the Morris had been performed. However, it was subsequently found out that in fact an attempt was made to re-complete in Morris formation and such attempt was unsuccessful due to an over stimulation of the Morris with a large frac at high pumping rate. The well produced mostly water. The 20 acres around the well was not assumed by the Company or its third-party investors. The unused funds provided by the third party will be allocated to a new well on the Guy Ranch Lease with the third party being responsible for providing the balance of the funds to drill and complete a new well in order to earn 75% of the working interest.

During the fiscal year ended July 31, 2018 the Company agreed to convey the Guy Ranch lease to Kathis Energy LLC, its wholly owned subsidiary, for its drilling program for the consideration of $66,500.

In March 2018 Kathis Energy LLC, our wholly owned subsidiary, staked two drilling locations on the Guy Ranch and prepared one drilling location. This drilling location is a direct offset to a Patio Sand well that came in at 140 barrels per day. The Patio Sand is one of the main producing formations in the area generally averages between 25,000 and 75,000 barrels oil per well. The Morris Sand a notable gas producer is known to produce up to 1.4 BCF gas from one well and the Gardner is noted in this area to produce between 50,000 and 110,000 barrels per well. The Net Revenue Interest for the Guy Ranch lease is 75%. The Guy Ranch Lease expired on December 16, 2018.

Shackelford County, Texas 89 Guy #4 Well – Cased Well

The 89 Guy Well #4 is located on the Guy Ranch property in Shackelford County. The well is an abandoned cased well that was drilled in October 2010 and completed in the Patio Sand at the interval of 3,144’ - 3,154’. This interval produced 2 barrels of oil and 20 thousand cubic feet of natural gas from a 100 sac gel frac. The interval perforated (3,144 – 3,154’) is above the best productive part of the formation. The cased well was purchased from the mineral owner through an independent geologist followed by an application to the Texas Railroad Commission to assume liability of the case well. The application is still pending approval.

Kathis Energy has a 80% net revenue interest in the 20 acre lease with the cased well and owns 100% of the working interest. Kathis has until April 17, 2019 to bring the well back into production. Kathis paid $22,500 for the cased well. No work was conducted on the Guy Ranch cased well 89 Guy #4 during the nine months ended ended April 30, 2019.

Palo Pinto County, Texas - McClure 2B – Gas Well

On February 6, 2018 the Company acquired the McClure # 2B producing gas well on a 40 -acre oil & gas lease located in Palo Pinto County near the Community of Graford, Texas. The McClure 2B well was drilled in 2006 to a total depth of 4,739’ and was re-completed in the Strawn formation in January 2011. The McClure 2B gas well is among a large number of gas wells that are producing in the area from the Strawn formation.

The location of the McClure 2B gas well is 1 mile southwest of the Community of Graford, Texas in Palo Pinto County on a 40 acre tract. The lease is off a main county road and the lease road can have washouts depending on the amount of rain as the McClure 2B gas well is on top of a hill. There are two natural gas lines 1) high pressure and the 2) is low pressure.

The Company paid $25,000 for this gas well. The Net Revenue Interest for the McClure lease is 75% and the lease is held by existing production. The Company entered into an agreement with a third party to acquire and rework/re-complete the well in one or more of the other intervals in the Strawn formation in the well. As of the date of this report no work has been conducted toward the reworking/re-completing in this well. Upon the third party recovering its investment the Company will receive 40% of the Net Revenue Interest. No work was conducted on the McClure 2B, gas well, during the nine months ended April 30, 2019.

Callahan County, Texas Carter & Foster Wells – Producing:

History and Background:

The wells on the Carter and Foster leases were drilled in 1992-93. Most of the wells were treated with 5,000 gallons of 21% acid and yielded initial rates of production of 40 barrels of oil per day then gradually declined to 3 barrels per day by the end of the first year. The wells now are 25 plus years old and are producing 90% or better oil cut in the fluid being produced. The production is very nominal at the present time however no secondary acid stimulation has been conducted since they were originally brought into production in the early 1990s. All four wells on the Carter and Foster leases are fully equipped and have their own production facilities and have electricity to each of the wells. These wells are marginal producing oil wells producing approximately 20 barrels per month with little to no formation water. The objective is to conduct a large multiple stage acid job on three of the four wells to significantly enhance daily production rates.

The Carter and Foster wells are located west of the Community of Atwell, Texas in Callahan County. The Carter lease consists of 40 acres and has one well. The Foster lease has 10 acres around each well of the three wells, all of which are fully equipped with surface and subsurface equipment. The Carter and Foster have good access to an all-weather county road and the lease roads provide good access to each well.

The Net Revenue Interest for the Carter lease is 75% and the lease is held by existing production. The Net Revenue Interest for the Foster lease is 60% and the lease is held by existing production. The Company entered into an agreement with a third party to acquire and rework Palo Pinto formation by conducting the multiple staged acid jobs on three wells. During the year the Company has placed new electric motors on all four wells, changed out the down hole pumps and placed the wells into production. As of the date of this report the Company has not conduced the multiple staged acid job on any of the three wells. Upon the third party recovering its investment the Company will receive 40% of the Net Revenue Interest. The Carter and Foster leases/wells were acquired from an Officer of the Company for total consideration of $1.00. No work was conducted on the Carter/Foster leases during the nine months ended April 30, 2019.

Reeves Lease – Palo Pinto Reef – Jones County, Texas

The Company has paid for the geological prospecting fees for a Palo Pinto Reef prospect in Jones County. The Reeves lease covers 160 acres and is located near Noodle, Texas in Jones County. The projected depth of the Palo Pinto Reef is 4,300’. Excellent well control by 6 Strawn wells provides evidence of a Palo Pinto Reef showing a structure 48’ high to other wells. The nearest Palo Pinto Reef well to the Reeves Lease made more than 150,000 barrels from one well.

The lease bonus money of $28,000 was provided by a third party for a two-year lease and the Company paid the geological prospect fee of $10,000. It was verbally understood between the Company and third party to promote this drilling prospect seeking to retain a carried interest plus recoup the lease and prospect monies.

The Net Revenue of the lease is 80%. The lease term is 2 years. Plans are to deliver a 75% net revenue lease to a drilling partner retaining an overriding royalty and a carried working interest in the drilling in the well. During the quarter ended April 30, 2019, it was discovered that not all of the minerals were leased resulting in the lease not being available for transfer to a drilling partner. Lease bonus money and geological fees paid are being recaptured by both the Company and the third party during the third quarter.

Riverside Prospects, Runnels County, Texas

On October 20, 2017 the Company entered into an exclusive option agreement with Murphree Oil Company to acquire drilling prospects on four leases in Runnels County near the City of Ballinger, known as the Riverside Prospects. During the quarter ended April 30, 2018, the Company, through its wholly owned subsidiary, Kathis Energy LLC, (“Kathis”) paid the lease bonuses for extending the oil and gas lease period on 548.76 acres covering the Riverside Prospects. On November 2, 2018 a fresh option agreement was entered into for the Riverside Leases. This acreage consists of 4 leases in a well established area where oil and gas production was discovered during 1978 – 1983. The option expired on December 31, 2018. All associated expenditures have been fully expensed.

NOTE 5 – ACCRUED LIABILITIES

Accrued liabilities consist of $349,000 for firm commitments on the Winnemucca Property, $45,335 of accrued interest, $20,413 of accrued distribution and royalty payments, $172,404 of monies received in advance for well work to be performed and the acquisition of additional oil and gas properties and $95,000 of investment funds to be used for the development of future properties. The Company has partnered with others whereby they provide all or a portion of the working capital for either well to be completed on existing properties or towards the acquisition of new properties.

NOTE 6 – 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 April 30, 2019, there is $85,000 and $41,468 of principal and accrued interest, respectively, due on this loan.

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 April 30, 2019, there is $25,000 and $2,367 of principal and accrued interest due on this loan, respectively. This loan is due on October 20, 2019.

NOTE 7 – COMMON STOCK

During the year ended July 31, 2018, the Company sold 16,559,000 shares of common stock for total cash proceeds of $219,475; $20,000 of which had not yet been received as of July 31, 2018. The $20,000 was received in the quarter ended October 31, 2018. In addition, 1,000,000 shares of those sold were not issued as of July 31, 2018 and have therefore been credited to common stock to be issued. The 1,000,000 shares were issued in February 2019.

During the nine months ended April 30, 2019, the Company issued 150,000 shares of common stock to two individuals as consideration for their support with the Richey #2A project. The shares were valued at $0.065 per share, the closing price on the date of grant, for total non-cash expense of $9,750.

During the nine months ended April 30, 2019, the Company sold 1,000,000 Units of its common stock for total cash proceeds of $50,000. Each Unit consists of one common share and one-half share purchase warrant exercisable for 2 years. Each whole share purchase warrant has an exercise price of $0.15 per common share.

During the nine months ended April 30, 2019, the Company sold 4,166,667 shares of common stock for total cash proceeds of $145,000. As of April 30, 2019, 400,000 shares have not yet been issued by the transfer agent and have therefore been credited to common stock to be issued.

NOTE 8 – WARRANTS

Warrants have been issued in conjunction with common stock issuances. During the year ended July 31, 2018, the Company sold 2,730,000 Units of its common stock for total cash proceeds of $136,500. During the nine months ended April 30, 2019, the Company sold 1,000,000 Units of its common stock for total cash proceeds of $50,000. Each Unit consists of one common share and one-half share purchase warrant exercisable for 2 years. Each whole share purchase warrant has an exercise price of $0.15 per common share. The warrants were evaluated for purposes of classification between liability and equity. The warrants do not contain features that would require a liability classification and are therefore considered equity. The Black Scholes pricing model was used to estimate the fair value of the Warrants issued with the following inputs:

Warrants	500,000
Exercise Price	$0.15
Term	2 years
Volatility	323%
Risk Free Interest Rate	2.61%
Fair Value	$25,205

Using the fair value calculation, the relative fair value between the common stock and the warrants was calculated to determine the warrants recorded equity amount of $25,205, accounted for in additional paid in capital.

Activity for the nine months ended April 30, 2019 and the year ended July 31, 2018 is as follows:

	Number of Warrants	Weighted Average Exercise Price	Weighted Average Remaining Contract Term
Outstanding at July 31, 2017	150,000	$0.10	1.50
Granted	1,865,000	0.15	1.47
Expired	-	-	-
Exercised	-	-	-
Exercisable at July 31, 2018	2,015,000	$0.15	1.47
Granted	500,000	0.15	1.28
Expired	(150,000)	-	-
Exercised	-	-
Exercisable at April 30, 2019	2,365,000	0.15	.90

NOTE 9 – RELATED PARTY TRANSACTIONS

On April 16, 2017, the Company executed a promissory note for $15,000 with a shareholder. The note matures in two years and interest is set at $3,000 for the full two years. As of April 30, 2019, there is $13,500 and $1,125 of principal and accrued interest, respectively, due on this loan.

For the nine months ended April 30, 2019 and for the year ended July 31, 2018, total payments of $7,500 and $56,500, respectively were made to an officer of the Company for consulting services. As of April 30, 2019, there is $22,500 credited to accounts payable.

For the nine months ended April 30, 2019 and for the year ended July 31, 2018, total payments of $45,000 and $26,500, respectively were made to directors of the Company for consulting services. As of April 30, 2019, there is $30,000 credited to accounts payable.

On July 31, 2018, Winona Webb, the wife of Ivan Webb, CEO, loaned the Company $25,000 for general operating expenses. This loan was repaid on August 2, 2018 with an additional $5,000 for interest and a loan fee. On August 3, 2018, Mrs. Webb loaned the Company $30,000 which was repaid on August 21, 2018. On September 25, 2018, the Company executed a loan agreement with Mrs. Webb for $6,800. The loan is to be repaid by December 15, 2018, with an additional $680 to cover interest and fees. On October 10, 2018, the Company executed a loan agreement with Mrs. Webb 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 April 30, 2019, the Company owes Mrs. Webb $20,930 and $2,180 of principal and interest, respectively.

NOTE 10 – 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 statement were available to be issued, and has determined that no material subsequent events exist other then the following.

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This report on Form 10-Q contains certain forward-looking statements. All statements other than statements of historical fact are “forward-looking statements” for purposes of these provisions, including any projections of earnings, revenues, or other financial items; any statements of the plans, strategies, and objectives of management for future operation; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; statements of belief; and any statement of assumptions underlying any of the foregoing. Such forward-looking statements are subject to inherent risks and uncertainties, and actual results could differ materially from those anticipated by the forward-looking statements.

These forward-looking statements involve significant risks and uncertainties, including, but not limited to, the following: competition, promotional costs and the risk of declining revenues. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of a number of factors. These forward-looking statements are made as of the date of this filing, and we assume no obligation to update such forward-looking statements. The following discusses our financial condition and results of operations based upon our unaudited financial statements which have been prepared in conformity with accounting principles generally accepted in the United States. It should be read in conjunction with our financial statements and the notes thereto included elsewhere herein.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

As used in this quarterly report, the terms “we”, “us”, “our” and “our company” mean Northern Minerals & Exploration Ltd., unless otherwise indicated.

General Overview

We are an emerging natural resource company operating in oil and gas production in central Texas and exploration for gold and silver in northern Nevada.

We were 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.

Current Business

Refer to NOTE 4 - Mineral Rights and Properties.

Results of Operations

Results of Operations for the Three Months Ended April 30, 2019 and 2018

	For the Three Months Ended April 30,
	2019	2018
Revenue	$13,056	$18,518
Distributions	2,865	21,891
Gross margin	10,191	(3,373)

Officer compensation	-	15,000
Director services	15,000	1,500
Consulting	5,000	10,500
Professional fees	7,734	23,025
Advertising and promotion	-	51,241
Mineral property expenditures	30,032	57,666
General and administrative	13,000	33,951
Total operating expenses	70,766	192,883

Interest expense	(2,399)	(4,143)
Loss on conversion of debt	-	(6,000)
Net Loss	$(62,974)	$(206,399)

Revenue

Revenues of oil and gas for the three months ended April 30, 2019 and 2018 were $13,056 and $18,518, respectively, a decrease of $5,462 or 29.5%. Revenues are earned from the J.E. Richey Lease both in selling oil and gas and from funds received for reworking the Concho Richey #1. The decrease in revenue is due to lower oil and gas prices.

Distributions

During the three months ended April 30, 2019, we accrued and/or paid distributions of $2,865 compared to $21,891 for the three months ended April 30, 2018. Distributions are paid or accrued in the quarter in which the revenue for those distributions is earned. Distributions are paid to the joint venture partners in the J.E. Richey Lease. The decrease in distributions is due to the Company no longer paying distribution revenue to one of its working interest partners.

Officer compensation

Officer compensation was $0 and $15,000 for the three months ended April 30, 2019 and 2018, respectively. No compensation was accrued or paid to the CEO in the current period.

Director services

A director was paid for services in the amount of $15,000 and $1,500 for the three months ended April 30, 2019 and 2018, respectively, an increase of $13,500. Fees are paid to our directors are billed as consulting fees. During the current period this fee was increased to $5,000 per month as Mr. Schaefer, Director, has increased his time spent on the Company over the past several months.

Consulting

Consulting fees were $5,000 and $10,500 for the three months ended April 30, 2019 and 2018, respectively. When needed the Company hires experts in the mining, oil and gas industries to assist with its current projects. The decrease in consulting fees in the current period can be attributed to a decrease in expenditures while the Company pursues additional funding.

Professional fees

Professional fees were $7,734 and $23,025 for the three months ended April 30, 2019 and 2018, respectively, a decrease of $15,291 or 66.4%. Professional fees generally consist of legal, audit and accounting expense. The decrease can be attributed to a decrease in audit and accounting fees billed during the period.

Advertising and promotion

Advertising and promotion expenses were $0 and $51,241 for the three months ended April 30, 2019 and 2018, respectively. We have temporarily decreased our spending in this area to conserve our available cash.

Mineral property expenditures

Mineral property expenditures were $30,032 and $57,666 for the three months ended April 30, 2019 or 2018, respectively, a decrease of $27,634, or 47.9%.

General and administrative

General and administrative expense was $13,000 and $33,951 for the three months ended April 30, 2019 or 2018, respectively, a decrease of $20,951. The decrease can be largely attributed to a decrease in Bureau Land Management (“BLM”) annual rentals and associated fees.

Interest expense

During the three months ended April 30, 2019 or 2018 we had interest expense of $2,399 and $4,143, respectively, a decrease of $1,744 or 42%. In the prior year we incurred an additional interest charge on one of our short term loans increasing the expense for that period.

Net Loss

For the three months ended April 30, 2019, we had a net loss of $62,974 as compared to a net loss of $206,399 for the three months ended April 30, 2018. Our net loss is lower in the current period due to a decrease in some of our operating expenses as discussed above.

Results of Operations for the Nine Months Ended April 30, 2019 and 2018

	For the Nine Months Ended April 30,
	2019	2018
Revenue	$30,137	$46,577
Distributions	18,350	49,650
Gross margin	11,787	(3,073)

Officer compensation	15,000	42,500
Director services	45,000	3,500
Consulting	15,000	68,500
Professional fees	32,984	42,650
Advertising and promotion	38,485	107,955
Mineral property expenditures	407,053	73,948
General and administrative	29,377	81,250
Total operating expenses	582,899	420,303

Interest expense	(14,513)	(14,012)
Loss on disposal of mineral rights	(46,000)	-
Loss on conversion of debt	-	(6,000)
Other income	116,000	-
Gain on forgiveness of debt	18,750	4,120
Net Loss	$(496,875)	$(439,268)

Revenue

Revenues of oil and gas for the nine months ended April 30, 2019 and 2018 were $30,137 and $46,577, respectively, a decrease of $16,440 or 35.3%. Revenues are earned from the J.E. Richey Lease both in selling oil and gas and from funds received for reworking the Concho Richey #1. The decrease in revenue is due to lower oil and gas prices.

Distributions

During the nine months ended April 30, 2019, we accrued and/or paid distributions of $18,350 compared to $49,650 for the nine months ended April 30, 2018. Distributions are paid or accrued in the quarter in which the revenue for those distributions is earned. Distributions are paid to the joint venture partners in the J.E. Richey Lease. The decrease in distributions is due to the Company no longer paying distribution revenue to one of its working interest partners.

Officer compensation

Officer compensation was $15,000 and $42,500 for the nine months ended April 30, 2019 and 2018, respectively. No compensation was accrued or paid to the CEO for the six months ended April 30, 2019.

Director services

A director was paid for services in the amount of $45,000 and $3,500 for the nine months ended April 30, 2019 and 2018, respectively, an increase of $41,500. Fees are paid to our directors but are billed as consulting fees. During the current period this fee was increased to $5,000 per month as Mr. Schaefer, Director has increased his time spent on the Company over the past several months.

Consulting

Consulting fees were $15,000 and $68,500 for the nine months ended April 30, 2019 and 2018, respectively. When needed the Company hires experts in the mining, oil and gas industries to assist with its current projects. The decrease in consulting fees in the current period can be attributed to a decrease in expenditures while the Company pursues additional funding.

Professional fees

Professional fees were $32,984 and $42,650 for the nine months ended April 30, 2019 and 2018, respectively, a decrease of $9,666 or 22.7%. Professional fees generally consist of legal, audit and accounting expense. The decrease can be attributed to a decrease in legal and accounting fees billed during the period.

Advertising and promotion

Advertising and promotion expenses were $38,485 and $107,955, for the nine months ended April 30, 2019 and 2018, respectively. Advertising and promotion expense has temporarily decreased to conserve our available cash.

Mineral property expenditures

Mineral property expenditures were $407,053 and $73,948 for the nine months ended April 30, 2019 and 2018, respectively. The increase is primarily due to an accrual of $349,000 for firm commitments associated with the Winnemucca property. The Company has firm cash commitments of $149,000 and firm exploration commitments of $200,000 pursuant to the July 23, 2018 agreement.

General and administrative

General and administrative expense was $29,377 and $81,250 for the nine months ended April 30, 2019 or 2018, respectively, a decrease of $51,873. The decrease can be largely attributed to a decrease in BLM rentals and associated fees.

Interest expense

During the nine months ended April 30, 2019 or 2018 we had interest expense of $14,513 and $14,012, respectively, an increase of $501 or 3.6%. The increase is in conjunction with a higher loan payable balance.

Other income (expense)

During the nine months ended April 30, 2019, we recognized other income of $116,000 from the write off of an option payable that had expired in a prior period, a loss of $46,000 as a result of the impairment to our J.E. Richey Lease in Coleman County, Texas and a gain on forgiveness of debt of $18,750 received from one of our vendors.

Net Loss

For the nine months ended April 30, 2019, we had a net loss of $496,875 as compared to a net loss of $439,268 for the nine months ended April 30, 2018. Our net loss was higher in the current period primarily due to an increase in mineral property expenditures, including $349,000 accrued for firm commitments associated with the Winnemucca property. The Company has firm cash commitments of $149,000 and firm exploration commitments of $200,000 pursuant to the July 23, 2018 agreement.

Liquidity and Financial Condition

Operating Activities

Cash used by operating activities was $186,249 for the nine months ended April 30, 2019. Cash used for operating activities was $347,410 for the nine months ended April 30, 2018.

Financing Activities

Net cash provided by financing activities was $197,310 for the nine months ended April 30, 2019 compared to $440,400 from the sale of common stock and loans for the nine months ended April 30, 2018.

We had the following loans outstanding as of April 30, 2019:

On April 16, 2017, the Company executed a promissory note for $15,000 with a related party. The note matures in two years and interest is set at $3,000 for the full two years. As of April 30, 2019, there is $15,000 and $1,125 of principal and accrued interest, respectively, due on this loan.

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

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Note 2 to the Financial Statements describes the significant accounting policies and methods used in the preparation of the Financial Statements. Estimates are used for, but not limited to, contingencies and taxes. Actual results could differ materially from those estimates. The following critical accounting policies are impacted significantly by judgments, assumptions, and estimates used in the preparation of the Financial Statements.

We are subject to various loss contingencies arising in the ordinary course of business. We consider the likelihood of loss or impairment of an asset or the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss in determining loss contingencies. An estimated loss contingency is accrued when management concludes that it is probable that an asset has been impaired, or a liability has been incurred and the amount of the loss can be reasonably estimated. We regularly evaluate current information available to us to determine whether such accruals should be adjusted.

We recognize deferred tax assets (future tax benefits) and liabilities for the expected future tax consequences of temporary differences between the book carrying amounts and the tax basis of assets and liabilities. The deferred tax assets and liabilities represent the expected future tax return consequences of those differences, which are expected to be either deductible or taxable when the assets and liabilities are recovered or settled. Future tax benefits have been fully offset by a 100% valuation allowance as management is unable to determine that it is more likely than not that this deferred tax asset will be realized.

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, ASC 606 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.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this Item.

Item 4.

Controls and Procedures

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principal accounting officer), as appropriate to allow timely decisions regarding required disclosure.

We carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principal accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures as of quarter covered by this report. Based on the evaluation of these disclosure controls and procedures the chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principal accounting officer) concluded that our disclosure controls and procedures were not effective.

Changes in Internal Controls

During the quarter covered by this report there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1.

Legal Proceedings

We know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our company.

Item 1A.

Risk Factors

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this Item. For a full list of our Risk Factors refer to our Form 10-K filed on November 13, 2018.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

During the nine months ended April 30, 2019, the Company sold 6,166,667 shares of common stock for total cash proceeds of $195,000.

Item 3.

Defaults Upon Senior Securities

None.

Item 4.

Mine Safety Disclosures

Not applicable.

Item 5.

Other Information

None.

Item 6.

Exhibits

Exhibit Number		Exhibit Description

(3)		Articles and Bylaws
3.1		Amendment to Articles of Incorporation (Incorporated by reference to our Current Report on Form 8-K filed on August 12, 2013)
31.1*		Section 302 Certification under Sarbanes-Oxley Act of 2002.
31.2*		Section 302 Certification under Sarbanes-Oxley Act of 2002.
32.1*		Section 906 Certification under Sarbanes-Oxley Act of 2002.
(101)**		Interactive Data File (Form 10-Q for the three Months Ended October 31, 2018)
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document.
101.CAL		XBRL Taxonomy Extension Calculation Link base Document.
101.DEF		XBRL Taxonomy Extension Definition Link base Document.
101.LAB		XBRL Taxonomy Extension Label Link base Document.
101.PRE		XBRL Taxonomy Extension Presentation Link base Document.

(a) Filed herewith.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	NORTHERN MINERALS & EXPLORATION LTD.
	(Registrant)

Dated: June 19, 2019	/s/ Ivan Webb
	Ivan Webb
	Chief Executive Officer

	/s/ Noel Schaefer
	Noel Schaefer
	Chief Operating Officer and Director

	/s/ Victor Miranda
	Victor Miranda
	Chief Financial Officer and Director