UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
 
Form 10-K
 
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended July 31, 2021
 
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.)
 
881 West State Road, Pleasant Grove, UT
 
84062
(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) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 [X]
Emerging growth company [ ]
Accelerated filer [ ]
Smaller reporting company [X]
 
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
 
State the aggregate market value of the voting and non-voting common equity held by non-affiliates: $1,585,261 based on 26,421,012 non affiliate shares outstanding at $0.06 per share, which is the average closing price of the common shares as of the last business day of the registrant’s most recently completed second fiscal quarter.
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of October 25, 2021, the issuer had 81,052.338 common shares issued and outstanding.
 
 

 
 
 
NORTHERN MINERALS & EXPLORATION LTD.
 
FORM 10-K
 
For the Year ended July 31, 2021
 
TABLE OF CONTENTS
 
 
Page
  PART I  
 2
 
 
 
 5
 
 
 
 5
 
 
 
 5
 
 
 
 5
 
 
 
 5
 
 
 
 
 5
 
 
 
 6
 
 
 
 6
 
 
 
 8
 
 
 
 
 
 
 9
 
 
 
 9
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 16
Form 10-K Summary
 N/A
 
 
 
 
 
 

 
 
PART I
 
ITEM 1. DESCRIPTION OF BUSINESS
 
Forward-Looking Statements
 
Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements.” These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.
 
Our Corporate History and Background
 
We were incorporated on December 11, 2006 under the laws of the State of Nevada.
 
We were originally a company involved in the placing of strength testing amusement gaming machines called Boxers in venues such as bars, pubs and nightclubs in the Seattle area, in the State of Washington. We acquired one Boxer that had been placed in Lynnwood, Washington. However, the machine was de-commissioned as it needed material repairs. We were not able to secure sufficient capital for these repairs and our management decided to change our business focus to oil and gas and mineral exploration. 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.
 
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.
 
On November 22, 2017, the Company created a wholly owned subsidiary, Kathis Energy LLC (“Kathis”), a duly formed Limited Liability Company formed in the State of Texas, 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 duly formed Limited Partnership formed in the State of Texas, created for the purpose of raising funds from investors for its drilling projects. There was no activity with Kathis Energy, LLC during 2021 fiscal year.
 
On May 7, 2018, the Company created a wholly owned subsidiary, ENMEX Operations LLC (“ENMEX”), a duly formed Limited Liability Company in the State of Quintana Roo, Mexico for the purpose of conducting business in Mexico in prospective real estate development projects. There has been no activity from inception to date.
 
Current Business
 
Refer to NOTE 4 and NOTE 5 for property information.
 
Oil & Gas Sector
 
Competition
 
The petroleum industry is highly competitive. Many of the oil and gas exploration companies with whom we compete have greater financial and technical resources than we do. Accordingly, these competitors may be able to spend greater amounts on acquisitions of properties of merit and on exploration. In addition, they may be able to afford greater geological expertise in the targeting and exploration of resource properties. This competition could result in our competitors having resource properties of greater quality and interest to prospective investors who may finance additional exploration, and to senior exploration companies that may purchase resource properties or enter into joint venture agreements with junior exploration companies. This competition could adversely impact our ability to finance property acquisitions and further exploration.
 
 
2
 
 
We compete with other exploration and early stage operating companies for financing from a limited number of investors prepared to make investments in junior companies exploring for conventional and unconventional oil and gas resources. The presence of competing oil and gas exploration companies, both major and independent, may impact our ability to raise additional capital in order to fund our exploration programs if investors are of the view that investments in competitors are more attractive based on the merit of the properties under investigation, and the price of the investment offered to investors.
 
Governmental Regulation
 
Our business is affected by numerous laws and regulations, including energy, environmental, conservation, tax and other laws and regulations relating to the oil and natural gas industry. We have developed internal procedures and policies to ensure that our operations are conducted in full and substantial environmental regulatory compliance. 
 
Failure to comply with any laws and regulations may result in the assessment of administrative, civil and/or criminal penalties, the imposition of injunctive relief or both. Moreover, changes in any of these laws and regulations could have a material adverse effect on business. In view of the many uncertainties with respect to current and future laws and regulations, including their applicability to us, we cannot predict the overall effect of such laws and regulations on our future operations.
 
We believe that our operations comply in all material respects with applicable laws and regulations and that the existence and enforcement of such laws and regulations have no more restrictive an effect on our operations than on other similar companies in the oil and natural gas industry.
 
Pricing and Marketing of Natural Gas
 
In the US, historically, the sale of natural gas in interstate commerce has been regulated pursuant to the Natural Gas Act of 1938, or the NGA, the Natural Gas Policy Act of 1978, or the NGPA, and regulations promulgated thereunder by the Federal Energy Regulatory Commission, or the FERC. In 1989, Congress enacted the Natural Gas Wellhead Decontrol Act, or the Decontrol Act. The Decontrol Act removed all NGA and NGPA price and non-price controls affecting wellhead sales of natural gas effective January 1, 1993 and sales by producers of natural gas are uncontrolled and can be made at market prices. The natural gas industry historically has been heavily regulated and from time to time proposals are introduced by Congress and the FERC and judicial decisions are rendered that impact the conduct of business in the natural gas industry. We cannot assure you that the less stringent regulatory approach recently pursued by the FERC and Congress will continue.
 
Pricing and Marketing of Oil
 
In the US, sales of crude oil, condensate and natural gas liquids are not regulated and are made at negotiated prices. Effective January 1, 1995, the FERC implemented regulations establishing an indexing system for transportation rates for oil that allowed for an increase in the cost of transporting oil to the purchaser.
 
Environmental
 
Like the oil and natural gas industry in general, our properties are subject to extensive and changing federal, state and local laws and regulations designed to protect and preserve natural resources and the environment. The recent trend in environmental legislation and regulation in the oil and natural gas industry is generally toward stricter standards, and this trend is likely to continue. These laws and regulations often require a permit or other authorization before construction or drilling commences and for certain other activities; limit or prohibit access, especially in wilderness areas with endangered or threatened plant or animal species; impose restrictions on construction, drilling and other exploration and production activities; regulate air emissions, wastewater and other production and waste streams from our operations; impose substantial liabilities for pollution that may result from our operations; and require the reclamation of certain lands.
 
The permits required for many of our operations are subject to revocation, modification and renewal by issuing authorities. Governmental authorities have the power to enforce compliance with their regulations, and violations are subject to fines, compliance orders, and other enforcement actions. We are not aware of any material noncompliance with current applicable environmental laws and regulations, and we have no material commitments for capital expenditures to comply with existing environmental requirements, however, given the complex regulatory requirements applicable to our operations, and the rapidly changing nature of environmental laws in our industry, we cannot predict our future exposure concerning such matters, and our future costs to achieve compliance, or remedy potential violations, could be significant. Our operations require permits and are regulated under environmental laws, and current or future noncompliance with such laws, as well as changes to existing laws or interpretations thereof, could have a significant impact on us, as well as the oil and natural gas industry in general.
 
 
3
 
 
Waste Disposal and Contamination Issues
 
The federal Comprehensive Environmental Response, Compensation and Liability Act and comparable state laws may impose strict and joint and several liability on owners and operators of contaminated sites and on persons who disposed of or arranged for the disposal of hazardous substances found at such sites. Under these and other laws, the government, neighboring landowners and other third parties may recover the costs of responding to soil and groundwater contamination and threatened releases of hazardous substances, and seek recovery for related natural resources damages, personal injury and property damage. Some of our properties have been used for exploration and production activities for a number of years by third parties, and such properties could result in unknown cleanup liabilities for us.
 
The federal Resource Conservation and Recovery Act (the "RCRA") and comparable state statutes govern the management, storage, treatment and disposal of solid waste and hazardous waste and authorize imposition of substantial fines and penalties for noncompliance. Although RCRA classifies certain oil field wastes as "non-hazardous" (for example, the waters produced from hydraulic fracturing operations), such wastes could be reclassified as hazardous wastes in the future, thereby making them subject to more stringent handling and disposal requirements which could have a material impact on us.
 
Water Regulation
 
The federal Clean Water Act (the "CWA"), the federal Safe Drinking Water Act (the "SWDA") and analogous state laws restrict the discharge of wastewater and other pollutants into surface waters or underground wells and the construction of facilities in wetland areas without a permit. Federal regulations also require certain owners or operators of facilities that store or otherwise handle oil, such as us, to prepare and implement spill prevention, control countermeasure and response plans relating to the possible discharge of oil into surface waters. In addition, the Oil Pollution Act (the "OPA") contains numerous requirements relating to the prevention of and response to oil spills into waters of the United States. For onshore and offshore facilities that may affect waters of the United States, the OPA requires an operator to demonstrate financial responsibility. Regulations are currently being developed or considered under federal and state laws concerning oil pollution prevention and other matters that may impose additional regulatory burdens on us.
 
These and similar state laws also govern the management and disposal of produced waters from the extraction process. Currently, wastewater associated with oil and natural gas production is prohibited from being directly discharged to waterways and other waters of the U.S. While some of the wastewater is reused or re-injected, a significant amount still requires proper disposal. As a result, some wastewater is transported to third-party treatment plants. In October 2011, citing concerns that third-party treatment plants may not be properly equipped to handle wastewater from shale gas operations, the United States Environmental Protection Agency (the "EPA") announced that it will consider federal pre-treatment standards for these wastewaters. We cannot predict the EPA's future actions in this regard, but future regulation of our produced waters or other waste streams could have a material impact on us.
 
Air Emissions and Climate Change
 
The federal Clean Air Act ("CAA") imposes permit requirements and operational restrictions on certain sources of emissions used in our operations. In July 2011, the EPA published proposed New Source Performance Standards ("NSPS") and National Emissions Standards for Hazardous Air Pollutants ("NESHAPs") that would, if adopted, amend existing NSPS and NESHAP standards for oil and natural gas facilities and create new NSPS standards for oil and natural gas production, transmission and distribution facilities. Importantly, these standards would include standards for hydraulically fractured wells. The standards would apply to newly drilled and fractured wells as well as existing wells that are refractured. A court has directed the EPA to issue final rules by April 1, 2012. In a report issued in late 2011, the Shale Gas Production Subcommittee of the Department of Energy (the "DOE Shale Gas Subcommittee") called on the EPA to complete the rulemaking quickly and recommended expanding the shale gas emission sources to be covered by the new rules. The DOE Shale Gas Subcommittee also encouraged states to take similar action, and included several other recommendations for studying and reducing air emissions from shale gas production activities. Because the EPA's regulations have not yet been finalized, we cannot at this time predict the impact they may have on our financial condition or results of operation.
 
 
4
 
 
The issue of climate change has received increasing regulatory attention in recent years. The EPA has issued regulations governing carbon dioxide, methane and other greenhouse gas ("GHG") emissions citing its authority under the CAA Several of these regulations have been challenged in litigation that is currently pending before the federal D.C. Circuit Court of Appeals. In December 2011, the EPA issued amendments to a final rule issued in 2010 requiring reporting of GHG emissions from the oil and natural gas industry. Under this rule, we are obligated to report to the EPA certain GHG emissions from our operations. We do not expect that the costs of this new reporting will be material to us. In a late 2011 report, the DOE Shale Gas Subcommittee recommended that the EPA expand reporting requirements for GHG emissions from shale gas emission sources and include methane in reporting requirements. More generally, several proposals to regulate GHG emissions have been proposed in the U.S. Congress, and various states have taken steps to regulate GHG emissions. The adoption and implementation of regulations or legislation imposing restrictions or other regulatory obligations on emissions of GHGs from oil and natural gas operations could require us to obtain permits or allowances for our GHG emissions, install new pollution controls, increase our operational costs, limit our operations or adversely affect demand for the oil and natural gas produced from our lands.
 
Research and Development Expenditures
 
We have not incurred any research and development expenditures over the past two fiscal years.
 
Employees
 
As of July 31, 2021, we do not have any employees. Our three officers, Ivan Webb, Noel Schaefer and Rachel Boulds act as consultants.
 
We engage contractors from time to time to consult with us on specific corporate affairs or to perform specific tasks in connection with our exploration programs.
 
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. 
 
Item 1B. UNRESOLVED STAFF COMMENTS
 
None.
 
ITEM 2. PROPERTIES
 
Our principal executive offices are located at 881 West State Road, Pleasant Grove, UT.
 
ITEM 3. 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 4. MINE SAFETY DISCLOSURES
 
Not applicable.
 
PART II
 
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
 
Market Information
 
Our common stock is quoted under the symbol “NMEX” on the OTCPINK operated by the Financial Industry Regulatory Authority, Inc. (“FINRA”) and the OTCQB operated by OTC Markets Group, Inc.  Few market makers continue to participate in the OTCBB system because of high fees charged by FINRA.  The criteria for listing on either the OTCBB or OTCQB are similar and include that we remain current in our SEC reporting.
 
 
5
 
 
Our shares are subject to Section 15(g) and Rule 15g-9 of the Securities and Exchange Act, commonly referred to as the “penny stock” rule.  The rule defines penny stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. These rules may restrict the ability of broker-dealers to trade or maintain a market in our common stock and may affect the ability of shareholders to sell their shares.  Broker-dealers who sell penny stocks to persons other than established customers and accredited investors must make a special suitability determination for the purchase of the security. Accredited investors, in general, include individuals with assets in excess of $1,000,000 (not including their personal residence) or annual income exceeding $200,000 or $300,000 together with their spouse, and certain institutional investors. The rules require the broker-dealer to receive the purchaser’s written consent to the transaction prior to the purchase and require the broker-dealer to deliver a risk disclosure document relating to the penny stock prior to the first transaction. A broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, and current quotations for the security.  Finally, monthly statements must be sent to customers disclosing recent price information for the penny stocks.
 
 On October 11, 2021 there were approximately 81 holders of record of our common stock, although there may be other persons who are beneficial owners of our common stock held in street name. The transfer agent and registrar for our common stock is Issuer Direct Corporation, 1981 Murray Holiday Road, #100, Salt Lake City, UT 84117.
 
Dividend Policy
 
We have never paid any cash dividends and intend, for the foreseeable future, to retain any future earnings for the development of our business. Our Board of Directors will determine our future dividend policy on the basis of various factors, including our results of operations, financial condition, capital requirements and investment opportunities.
 
RECENT ISSUANCES OF UNREGISTERED SECURITIES
 
During the year ended July 31, 2021, the Company sold 2,667,200 shares of common stock at $0.03 per share for total cash proceeds of $50,000.
 
On July 31, 2021, the Company issued 250,000 shares of common stock in conversion of a $25,000 accounts payable. The shares were value at $0.04, the closing stock price on the date of grant. The Company recognized a $15,000 gain on the conversion.
 
During the year ended July 31, 2021, the Company sold 2,500,000 shares of common stock to Mr. Miranda at $0.02 per share for total cash proceeds of $50,000. Mr. Miranda purchased an additional 600,000 shares of common stock at $0.03 per shares for $18,000.
 
Other than as disclosed above, we did not sell any equity securities which were not registered under the Securities Act during the year ended July 31, 2021 that were not otherwise disclosed on our quarterly reports on Form 10-Q or our current reports on Form 8-K filed during the year ended July 31, 2021.
 
ISSUER REPURCHASES OF EQUITY SECURITIES
 
None
 
ITEM 6. SELECTED FINANCIAL DATA
 
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
 
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
Results of Operations for the Years Ended July 31, 2021 and 2020
 
Revenue
Revenues of oil and gas for the years ended July 31, 2021 and 2020 were $0 and $2,949, respectively, a decrease of $2,949. 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.
 
 
6
 
 
Officer compensation
Officer compensation was $26,400 and $6,600 for the years ended July 31, 2021 and 2020, respectively, an increase of $19,800. 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 $60,000 for the years ended July 31, 2021 and 2020. Fees are paid to Noel Schaefer, Director, but are billed as consulting fees.
 
Consulting expense
Consulting fees were $8,000 and $12,700 for the years ended July 31, 2021 and 2020, respectively, a decrease of $4,700, or 37%. When needed the Company hires experts in the mining, oil and gas industries to assist with its current projects.
 
Professional fees
Professional fees were $49,566 and $53,523 for the years ended July 31, 2021 and 2020, respectively, a decrease of $3,957, or 7%. Professional fees generally consist of legal, audit and accounting expense. The decrease can be attributed to a decrease in accounting fees that was offset with an increase in audit fees.
 
Mineral property expenditures
Mineral property expenditures were $1,000 and $35,669 for the years ended July 31, 2021 and 2020, respectively, a decrease of $34,669, or 97%. 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 $32,944 and $22,384 for the years ended July 31, 2021 and 2020, respectively, an increase of $10,560.
 
Other expense
During the year ended July 31, 2021 we had total other expense of $65,058 compared to $152,910 in the prior year. During the current year we incurred interest expense of $93,017, which included a $72,631 expense for the issuance of warrnates on a loan conversion , a loss on the impairment of oil rights of $28,800 and a loss on debt conversion of $6,857, which was offset with a gain on forgiveness of debt of $38,616, and other income of $25,000. During the prior year we incurred interest expense of $14,795, which was offset with a gain on forgiveness of debt of $167,705.
 
Net Loss
For the year ended July 31, 2021, we had a net loss of $242,968 as compared to a net loss of $35,017 for year ended July 31, 2020. Our net loss in the current year increased mainly due to the expense incurred for the issuance of warrants.
 
Liquidity and Financial Condition
 
Operating Activities
Cash used by operating activities was $168,873 for the year ended July 31, 2021. Cash used for operating activities was $204,007 for the year ended July 31, 2020.
 
Investing Activities
We used $0 for investing activities for the year ended July 31, 2021 and 2020.
 
Financing Activities
Net cash provided by financing activities was $163,000 for year ended July 31, 2021 compared to $189,000for the year ended July 31, 2020. During the year ended July 31, 2021, we received $163,000 from the sale of common stock. During the year ended July 31, 2020, we received $100,000 from the sale of common stock and $89,000 from loan proceeds.
 
We had the following loans outstanding as of July 31, 2021:
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, 2021 and 2020, there is $5,769 and $4,257, respectively, of accrued interest due on this loan. This loan was converted to shares of common stock in September 2021.
 
 
7
 
 
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, 2021, there is $15,000 and $4,875 of principal and accrued interest, respectively, due on this loan. As of July 30, 2020, there is $15,000 and $3,375 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. On September 9, 2020, the Company repaid $5,000 on this loan. On March 3, 2021, the party loaned another $5,000 to the Company. The loan is unsecured, non-interest bearing and due on demand.
 
As of April 30, 2021, 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, 2021, there is $2,232 of interest accrued on this note. This loan was converted to shares of common stock in September 2021.
 
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, 2021, there is $8,745 of interest accrued on this note.
 
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.
 
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
Smaller reporting companies are not required to provide the information required by this Item.
 
8
 
 
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
 
 
 
 
NORTHERN MINERALS & EXPLORATION LTD.
 
CONSOLIDATED FINANCIAL STATEMENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
F-1
 
 
 
 
 
 
 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 
 
 
F-2
 
 
 
  
 
NORTHERN MINERALS & EXPLORATION LTD.
CONSOLIDATED BALANCE SHEETS
 
 
 
 
 
July 31,
 
 
July 31,
 
 
 
2021
 
 
2020
 
ASSETS
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
Cash
 $967 
 $6,840 
Accounts receivable
  - 
  1,146 
Other receivable
  - 
  10,000 
Total Current Assets
  967 
  17,986 
 
    
    
Other Assets:
    
    
Oil and gas properties
  - 
  28,800 
Total Other Assets
  967 
  28,800 
 
    
    
TOTAL ASSETS
 $967 
 $46,786 
 
    
    
LIABILITIES & STOCKHOLDERS’ DEFICIT
    
    
 
    
    
Current Liabilities:
    
    
Accounts payable
 $56,936 
 $89,037 
Accounts payable – related party
  34,700 
  29,700 
Accrued liabilities
  348,344 
  437,632 
Convertible debt
  25,000 
  110,000 
Loans payable
  109,000 
  109,000 
Loans payable – related party
  23,210 
  23,210 
Total Current Liabilities
  597,190 
  798,579 
 
    
    
TOTAL LIABILITIES
  597,190 
  798,579 
 
    
    
Commitments and Contingencies
  - 
  - 
 
    
    
Stockholders’ Deficit:
    
    
Preferred stock, $0.001 par value, 50,000,000 shares authorized; no shares issued
  - 
  - 
Common stock, $0.001 par value, 250,000,000 shares authorized; 77,818,338 shares issued, 72,818,338 shares outstanding as of July 31, 2021; 63,078,479 shares issued and outstanding as of July 31, 2020
  72,819 
  63,079 
Common stock to be issued
  18,000 
  - 
Additional paid-in-capital
  2,555,016 
  2,184,218 
Accumulated deficit
  (3,242,058)
  (2,999,090)
 
    
    
Total Stockholders’ Deficit
  (596,223)
  (751,793)
 
    
    
TOTAL LIABILITIES & STOCKHOLDERS’ DEFICIT
 $967 
 $46,786 
 
 
 
 
The accompanying notes are an integral part of these consolidated financial statements.
 
 
F-3
 
 
NORTHERN MINERALS & EXPLORATION LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
 
 
 
 
 
For the Years EndedJuly 31,
 
 
 
2021
 
 
2020
 
 
 
 
 
 
 
 
Revenue
 $- 
 $2,949 
 
    
    
Operating expenses:
    
    
    Officer compensation
  26,400 
  6,600 
    Consulting – related party
  60,000 
  60,000 
    Consulting
  8,000 
  12,700 
    Professional fees
  49,566 
  53,523 
    Mineral property expenditures
  1,000 
  35,669 
    General and administrative expenses
  32,944 
  22,384 
Total operating expenses
  177,910 
  190,876 
Loss from operations
  (177,910)
  (187,927)
 
    
    
Other income (expense):
    
    
    Interest expense
  (93,017)
  (14,795)
    Other income
  25,000 
  - 
    Gain on forgiveness of debt
  38,616 
  - 
    Loss on impairment of oil rights
  (28,800)
  - 
    Gain on the assignment of property interests
  - 
  167,705 
    Loss on conversion of debt
  (6,857)
  - 
Total other (expense) income
  (65,058)
  152,910 
 
    
    
Loss before provision for income taxes
  (242,968)
  (35,017)
Provision for income taxes
  - 
  - 
Net Loss
 $(242,968)
 $(35,017)
 
    
    
Net loss per share from operations, basic and diluted
 $(0.00)
  (0.01)
 
    
    
Weighted average number of common shares outstanding, basic and diluted
  68,102,636 
  58,125,466 
 
The accompanying notes are an integral part of these consolidated financial statements.
 
 
F-4
 
 
NORTHERN MINERALS & EXPLORATION LTD.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (Deficit)
FOR THE YEARS ENDED JULY 31, 2021 AND 2020
 
 
 
 
 
Common
 
 
Common Stock
 
 
Additional Paid-in
 
 
Common Stock To
 
 
Accumulated
 
 
 
 
 
 
Stock
 
 
Amount
 
 
Capital
 
 
be Issued
 
 
Deficit
 
 
Total
 
Balance, July 31, 2019
  55,836,819 
 $55,837 
 $2,024,035 
 $44,925 
 $(2,964,073)
 $(839,276)
Common stock issued
  1,075,000 
  1,075 
  43,850 
  (44,925)
  - 
  - 
Common stock issued for cash – related party
  5,500,000 
  5,500 
  74,500 
  - 
  - 
  80,000 
Common stock issued for cash
  666,660 
  667 
  19,333 
  - 
  - 
  20,000 
Forgiveness of related party debt
  - 
  - 
  22,500 
  - 
  - 
  22,500 
Net loss for the year ended July 31, 2020
  - 
  - 
  - 
  - 
  (35,017)
  (35,017)
Balance, July 31, 2020
  63,078,479 
  63,079 
  2,184,218 
  - 
  (2,999,090)
  (751,793)
Common stock issued for cash
  2,667,200 
  2,667 
  77,333 
  - 
  - 
  80,000 
Common stock issued for cash – related party
  3,000,000 
  3,000 
  62,000 
  18,000 
  - 
  83,000 
Common stock issued for conversion of debt
  4,072,659 
  4,073 
  231,465 
  - 
  - 
  235,538 
Net loss for the year ended July 31, 2021
  - 
  - 
  - 
  - 
  (242,968)
  (242,968)
Balance, July 31, 2021
  72,818,338 
 $72,819 
 $2,555,016 
 $18,000 
 $(3,242,058)
 $(596,223)
 
 
 
 
The accompanying notes are an integral part of these consolidated financial statements.
 
 
F-5
 
 
 
NORTHERN MINERALS & EXPLORATION LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
  
 
 
For the Years Ended
July 31,
 
 
 
2021
 
 
2020
 
Cash Flows from Operating Activities:
 
 
 
 
 
 
Net loss
 $(242,968)
 $(35,017)
Adjustments to reconcile net loss to net cash used in Operating activities:
    
    
     Gain on the assignment of property interests
  - 
  (167,705)
Gain on forgiveness of debt
  (38,616)
  - 
Loss on conversion of debt
  6,857 
  - 
Loss on disposal of oil rights
  28,800 
  - 
Cost of borrowing
  72,631 
  - 
 Changes in Operating Assets and Liabilities:
    
    
Prepaid expenses
  - 
  5,000 
Accounts receivable
  1,146 
  (1,146)
Other receivable
  10,000 
  - 
Accounts payables and accrued liabilities
  (39,345)
  (22,135)
Accounts payable – related party
  27,236 
  2,200 
Accrued interest
  12,244 
  14,796 
Net cash used in operating activities
  (168,873)
  (204,007)
 
    
    
Cash Flows used in Investing Activities:
  - 
  - 
 
    
    
Cash Flows from Financing Activities:
    
    
Proceeds from loan payable
  5,000 
  89,000 
Repayment of loan payable
  (5,000)
  - 
Proceeds from the sale of common stock
  163,000 
  100,000 
Net cash provided by financing activities
  163,000 
  189,000 
 
    
    
Net decrease in cash
  (5,873)
  (15,007)
 
    
    
Cash at beginning of the year
  6,840 
  21,847 
Cash at end of the year
 $967 
 $6,840 
 
    
    
Cash paid during the period for:
    
    
Interest
 $- 
 $- 
Taxes
 $- 
 $- 
 
    
    
Supplemental disclosure of non-cash activity:
    
    
Forgiveness of related party debt
 $- 
 $22,500 
Conversion of debt
 $166,580 
 $- 
 
The accompanying notes are an integral part of these consolidated financial statements.
 
 
F-6
 
 
 
Northern Minerals & Exploration Ltd.
Notes to Consolidated Financial Statements
July 31, 2021
 
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 the 61 acres on the Bacalar Lagoon on the Yucatan Peninsula. There was no activity from inception to date.
 
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
 
Basis of presentation
The accounting and reporting policies of the Company conform to U.S. generally accepted accounting principles (US GAAP).
 
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.
 
Cash and Cash Equivalents
The Company considers all cash accounts, which are not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less as cash and cash equivalents. The carrying amount of financial instruments included in cash and cash equivalents approximates fair value because of the short maturities for the instruments held. The Company had no cash equivalents as of July 31, 2021 and 2020.
 
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.
 
 
F-7
 
 
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.
 
Accounts Receivable
Revenues that have been recognized but not yet received are recorded as accounts receivable. Losses on receivables will be recognized when it is more likely than not that a receivable will not be collected. An allowance for estimated uncollectible amounts will be recognized to reduce the amount of receivables to its net realizable value. The allowance for uncollectible amounts is evaluated quarterly.
 
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 follows the successful efforts method of accounting for its oil and gas properties. Under this method of accounting, all property acquisition costs and costs of exploratory and development wells are capitalized when incurred, pending determination of whether the well found proved reserves. If an exploratory well does not find proved reserves, the costs of drilling the well are charged to expense. The costs of development wells are capitalized whether those wells are successful or unsuccessful. Other exploration costs, including certain geological and geophysical expenses and delay rentals for oil and gas leases, are charged to expense as incurred. Maintenance and repairs are charged to expense, and renewals and betterments are capitalized to the appropriate property and equipment accounts. Depletion and amortization of oil and gas properties are computed on a well-by-well basis using the units-of-production method. Although the Company has recognized minimal levels of production and revenue, none of its property have proved reserves. Therefore, the Company’s properties are designated as unproved properties.
 
Unproved property costs are not subject to amortization and consist primarily of leasehold costs related to unproved areas. Unproved property costs are transferred to proved properties if the properties are subsequently determined to be productive and are assigned proved reserves. Proceeds from sales of partial interest in unproved leases are accounted for as a recovery of cost without recognizing any gain until all cost is recovered. Unproved properties are assessed periodically for impairment based on remaining lease terms, drilling results, reservoir performance, commodity price outlooks or future plans to develop acreage.
 
Asset Retirement Obligation
Accounting Standards Codification (“ASC”) Topic 410, Asset Retirement and Environmental Obligations (“ASC 410”) requires an entity to recognize the fair value of a liability for an asset retirement obligation in the period in which it is incurred. The net estimated costs are discounted to present values using credit-adjusted, risk-free rate over the estimated economic life of the oil and gas properties. Such costs are capitalized as part of the related asset. The asset is depleted on the equivalent unit-of-production method based upon estimates of proved oil and natural gas reserves. The liability is periodically adjusted to reflect (1) new liabilities incurred, (2) liabilities settled during the period, (3) accretion expense and (4) revisions to estimated future cash flow requirements. To date, the Company has very few operating wells. Currently, the Company has one working well. Because there is only one active well on the Ritchie Lease with a 24% working interest, the Company estimates the asset retirement obligation to be trivial and has not recorded an ARO liability.
 
 
F-8
 
 
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.
 
For the year ended July 31, 2021, the Company had 1,911,330 of potentially dilutive shares from warrants. For the year ended July 31, 2020, the Company had 3,031,958 of potentially dilutive shares. The shares consisted of common shares and warrants from convertible debt of 1,687,972 and 843,986, respectively, and an additional 500,000 warrants. The diluted loss per share is the same as the basic loss per share for the years ended July 31, 2021 and 2020, as the inclusion of any potential shares would have had an antidilutive effect due to our loss from operations.
 
Recently issued accounting pronouncements
In November 2019, the FASB issued ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivative and Hedging (Topic 815), and Leases (Topic 842).  This new guidance became effective for us on January 1, 2020. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.
 
On January 1, 2020 the Company adopted ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The ASU eliminates Step 2 of the goodwill impairment test and the qualitative assessment for any reporting unit with a zero or negative carrying amount. The ASU also requires an entity to disclose the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount. The adoption did not have an impact on the Company’s consolidated financial statements.
 
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)—Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock. For convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital, the embedded conversion features no longer are separated from the host contract. ASU 2020-06 also removes certain conditions that should be considered in the derivatives scope exception evaluation under Subtopic 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, and clarify the scope and certain requirements under Subtopic 815-40. In addition, ASU 2020-06 improves the guidance related to the disclosures and earnings-per-share (EPS) for convertible instruments and contract in entity’s own equity. ASU 2020-06 is effective for public business entities that meet the definition of a Securities and Exchange Commission (SEC) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Board specified that an entity should adopt the guidance as of the beginning of its annual fiscal year. The Company is currently evaluation the impact this ASU will have on its consolidated financial statements.
 
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 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 July 31, 2021, the Company has an accumulated deficit of $3,242,058. 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.
 
 
F-9
 
 
NOTE 4 - OIL AND GAS PROPERTIES
 
Active Projects:
 
The Company currently has one active lease. We hold a 24% 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 Richey #1 well was plugged on January 3, 2018. As of July 31, 2021, management determined that the asset carried on the balance sheet was fully impaired resulting in a loss on impairment of $28,800 for the year ended July 31, 2021.
 
NOTE 5 – WINNEMUCCA MOUNTAIN PROPERTY
 
On September 14, 2012, we entered into an option agreement with AHL Holdings Ltd., and Golden Sands Exploration Inc. (“Optionors”), 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 property currently is comprised of 138 unpatented mining claims covering approximately 2,700 acres.
 
On July 23, 2018, the Company entered into a New Option Agreement with the Optioners. 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.
 
The Company’s firm commitments per the March 25, 2019 option agreement total $381,770 of which cash payments total $181,770 and a firm work commitment of $200,000. These commitments include payments for rentals payable to BLM and also for the staking of new claims adjoining the existing claims. The work commitment was to be conducted prior to December 31, 2020. As of July 31, 2021 and 2020, the Company has accounted for $285,453 and $334,000, respectively, in its accrued liabilities.
 
The Company has received notice, effective October 27, 2020, that its Option Agreement to earn an interest in the Winnemucca Mountain Gold Property has been terminated for being in default of certain terms and conditions of the Agreement. Management is in discussions with the principals of the Winnemucca property to resolve any outstanding obligations.
 
During the year ended July 31, 2021, the Company received notice of the current amount due resulting in the reduction of the liability to $285,453. As a result, the Company recognized a gain on debt forgiveness of $23,616.
 
The Company does not fully agree with the amount due and is working to resolve the issue.
 
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 matured on March 26, 2020. As of July 31, 2020, there was $85,000 and $50,908 of principal and accrued interest, respectively, due on this loan. On July 31, 2021, the Note holder converted this note in full into 3,822,659 shares of common stock and 1,911,330 warrants. The shares were value at $0.04. The Company recognized a loss on the conversion of $6,857.
 
 
F-10
 
 
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, 2021 and 2020, there is $5,769 and $4,257, respectively, of accrued interest due on this loan. This note is currently in default.
 
NOTE 7 – LOANS PAYABLE
 
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, 2021, there is $15,000 and $4,875 of principal and accrued interest, respectively, due on this loan. As of July 30, 2020, there is $15,000 and $3,375 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. On September 9, 2020, the Company repaid $5,000 on this loan. On March 3, 2021, the party loaned another $5,000 to the Company. The loan is unsecured, non-interest bearing and due on demand.
 
As of April 30, 2021, 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, 2021, there is $2,232 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, 2021, there is $8,745 of interest accrued on this note.
 
NOTE 8 - COMMON STOCK
 
On June 4, 2020, the Company filed a Certificate of Amendment to its Articles of Incorporation in which it increased its authorized capital stock to 250,000,000 shares of common stock, par value $0.001 and 50,000,000 shares of preferred stock, par value $0.001.
 
During the year ended July 31, 2020, the Company sold 666,660 shares of common stock at $0.03 per share for total cash proceeds of $20,000.
 
During the year ended July 31, 2020, the Company sold 2,500,000 shares of common stock at $0.02 per share for total cash proceeds of $50,000.
 
On May 5, 2021, the Company issued 5,000,000 shares of common stock to Foster S Zeiders, per the terms of the agreement with Calihoma Partners LLC (Note 10). The shares are being held by the transfer agent and are disclosed as issued but not outstanding.
 
During the year ended July 31, 2020, the Company sold 3,000,000 shares of common stock at $0.01 per share for total cash proceeds of $30,000.
 
During the year ended July 31, 2021, the Company sold 2,667,200 shares of common stock at $0.03 per share for total cash proceeds of $50,000.
 
On July 31, 2021, the Company issued 250,000 shares of common stock in conversion of a $25,000 accounts payable. The shares were value at $0.04, the closing stock price on the date of grant. The Company recognized a $15,000 gain on the conversion.
 
As discussed in Note 6 a note holder converted his note in full into 3,822,659 shares of common stock.
 
Refer to Note 11 for stock issued to related parties.
 
 
F-11
 
 
NOTE 9 – WARRANTS
 
The Company issued 1,911,330 warrants as part of a debt conversion (Note 6). 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 $72,631 of the Warrants with the following inputs: stock price of $0.04, exercise price of $0.08, 2-year term, volatility of 313%, and a risk free rate of 0.19.
 
  
 
 
Number of Warrants
 
 
Weighted Average Exercise Price
 
 
Weighted Average Remaining Contract Term
 
Exercisable at July 31, 2019
  2,365,000 
 $0.15 
 $.65 
Granted
  - 
  - 
  - 
Expired
  (1,865,000)
  0.15 
  - 
Exercised
  - 
  - 
  - 
Exercisable at July 31, 2020
  500,000 
  0.15 
  .27 
Granted
  1,911,330 
  .08 
  2 
Expired
  (500,000)
  0.15 
  - 
Exercised
  - 
  - 
  - 
Exercisable at July 31, 2021
  1,911,330 
 $0.15 
  2 
 
NOTE 10 - COMMITTEMENTS AND CONTINGENCIES
 
On April 13, 2021, the Company entered into an agreement with Foster S. Zeiders, one of the owners of the Calihoma Partners LLC (“Fosters’). Per the terms of the agreement Foster is willing to transfer to NMEX Natural Gas LLC, (a subsidiary of the Company still to be created), all of his interest, including but not limited to a 35% back-in after payout interest in Calihoma Partners LLC which has 60% ownership in West Lenapah Project including the assets and project definition as described in the agreement. Foster hereby agrees to transfer one hundred (100%) percent of his membership interests in Calihoma Partners LLC, in exchange for 5,000,000 shares of common stock to be issued to him and an additional 5,000,000 shares to be issued pursuant to a specified timeframe.
 
During the initial period of this Agreement if either party hereto for reasonable cause determines that membership interests in Calihoma Partners LLC should no longer be held by NMEX Natural Gas LLC. Foster shall exchange his shares in Northern for the membership interests in NMEX Natural Gas LLC, and Northern will convey such membership interests to Foster in exchange for his stock in Northern, and NMEX Natural Gas LLC shall become wholly owned by Foster. Foster shall serve as Manager of NMEX Natural Gas LLC until Northern determines to convey the interests in Calihoma Partners or one year whichever is shorter. As of July 31, 2021, the initial 5,000,000 shares of common stock have been issued but are being held by the transfer agent pending final confirmation that the agreement is finalized.
 
NOTE 11 - RELATED PARTY TRANSACTIONS
 
For the years ended July 31, 2021 and 2020, total payments of $60,000 and $60,000, respectively, were made to Noel Schaefer, a Director of the Company, for consulting services. As of July 31, 2021, and July 31, 2020 there is $32,500 and $27,500 credited to accounts payable.
 
As of July 31, 2021 and July 31, 2020, there is $2,200 and $2,200, respectively, credited to accounts payable for amounts due to Rachel Boulds, CFO, for consulting services.
 
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, 2021, the Company owes $23,210 on this loan. This loan is in default.
 
 
F-12
 
 
Victor Miranda, a Director of the Company is also President and owner of Labrador Capital SAPI DE CV (“Labrador”), a major shareholder of the Company owning 8.8% of its issued and outstanding shares. The Company has entered into a Memorandum of Understanding with Labrador to jointly pursue developing real estate projects in Mexico.  As of the date of this report no projects have been identified to jointly pursue.  In the event of a decision to go forward with Labrador, Victor Miranda will abstain from voting to avoid any conflict of interest.
During the year ended July 31, 2021, the Company sold 2,500,000 shares of common stock to Mr. Miranda at $0.02 per share for total cash proceeds of $50,000. Mr. Miranda purchased an additional 600,000 shares of common stock at $0.03 per shares for $18,000. The 600,000 shares have not been issued by the transfer agent as of July 31, 2021, so are disclosed as common stock to be issued.
 
NOTE 12 - INCOME TAX
 
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The U.S. federal income tax rate of 21% is being used for 2017 due to the new tax law recently enacted.
 
The provision for Federal income tax consists of the following July 31:
 
 
 
2021
 
 
2020
 
Federal income tax benefit attributable to:
 
 
 
 
 
 
Current Operations
 $231,000 
 $9,100 
Other nondeductible expenses
  194,600 
  - 
Less: valuation allowance
  (425,600)
  (9,100)
Net provision for Federal income taxes
 $- 
 $- 
 
The cumulative tax effect at the expected rate of 21% of significant items comprising our net deferred tax amount is as follows:
 
 
 
2021
 
 
2020
 
Deferred tax asset attributable to:
 
 
 
 
 
 
Net operating loss carryover
 $250,700 
 $964,100 
Less: valuation allowance
  (250,700)
  (964,100))
Net deferred tax asset
 $- 
 $- 
 
At July 31, 2021, the Company had net operating loss carry forwards of approximately $964,100 that maybe offset against future taxable income.  No tax benefit has been reported in the July 31, 2021 or 2020 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount. 
 
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cut and Jobs Act (the “Tax Act”). The Tax Act establishes new tax laws that affects 2018 and future years, including a reduction in the U.S. federal corporate income tax rate to 21% effective January 1, 2018. For certain deferred tax assets and deferred tax liabilities.
 
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years.
 
ASC Topic 740 provides guidance on the accounting for uncertainty in income taxes recognized in a company’s financial statements. Topic 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.
 
F-13
 
 
 
The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operations in the provision for income taxes. As of July 31, 2021, the Company had no accrued interest or penalties related to uncertain tax positions. The Company is subject to examination by the various taxing authorities beginning with the tax year ended December 31, 2017 (or the tax year ended December 31, 2003 if the Company were to utilize its NOLs)
 
NOTE 13 - 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 statements were available to be issued, and has determined that no material subsequent events exist other than the following.
 
Subsequent to July 31, 2021, the Company issued the 600,000 due to Mr. Miranda. In addition, Mr. Miranda purchased as an additional 2,100,000 shares for $63,000.
 
Subsequent to July 31, 2021, the Company sold 50,000 shares of common stock for total proceeds of $5,000.
 
Subsequent to July 31, 2021, note holders converted $48,400 into 484,000 shares of common stock.
 
 
F-14
 
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
 
None
 
ITEM 9A. CONTROLS AND PROCEDURES
 
Management’s Report Disclosure Controls and Procedures
  
We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)).  Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were ineffective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the required time periods specified in the Commission’s rules and forms and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
 
Our principal executive officer and principal financial officer, do not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud.  A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs.  Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. During the fourth quarter of the fiscal year ended July 31, 2020, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation and due to the identified material weaknesses discussed below, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were ineffective as of the end of the period covered by this report.
 
To address the material weaknesses, we performed additional analysis and other post-closing procedures in an effort to ensure our financial statements included in this annual report have been prepared in accordance with generally accepted accounting principles.  Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented. 
 
Management’s Report on Internal Control over Financial Reporting
 
Internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) is a process designed by, or under the supervision of, our principal executive and principal financial officers, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The management is responsible for establishing and maintaining adequate internal control over our financial reporting. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting using the Internal Control – Integrated Framework (2013) developed by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our internal control over financial reporting was not effective as of July 31, 2021.
  
We are aware of the following material weaknesses in internal control that could adversely affect the Company’s ability to record, process, summarize and report financial data:
 
 
●
Due to our size and limited resources, we currently do not employ the appropriate accounting personnel to ensure (a) we maintain proper segregation of duties, (b) that all transactions are entered timely and accurately, and (c) we properly account for complex or unusual transactions
  
 
●
Due to our size and limited resources, we have not properly documented a complete assessment of the effectiveness of the design and operation of our internal control over financial reporting.
 
 
9
 
 
 Inherent limitations on effectiveness of controls
 
Internal control over financial reporting has inherent limitations, which include but is not limited to the use of independent professionals for advice and guidance, interpretation of existing and/or changing rules and principles, segregation of management duties, scale of organization, and personnel factors. Internal control over financial reporting is a process, which involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements on a timely basis, however these inherent limitations are known features of the financial reporting process and it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
Changes in Internal Control over Financial Reporting
 
There have been no changes in our internal controls over financial reporting that occurred during the fourth quarter of the fiscal year ended July 31, 2021, that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.
 
ITEM 9B. OTHER INFORMATION
 
None
 
PART III
 
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 
All directors of our company hold office until the next annual meeting of the security holders or until their successors have been elected and qualified. The officers of our company are appointed by our board of directors and hold office until their death, resignation or removal from office. Our directors and executive officers, their ages, positions held, and duration as such, are as follows:
 
Name
 
Age
 
Position with the Company
 
Date Appointed
Noel Schaefer
 
66
 
Chief Operating Officer, Secretary & Director
 
July 6, 2018
Victor Miranda
 
38
 
Director
 
July 6, 2018
Ivan Webb
 
70
 
President & Chief Executive Officer
 
 July 6, 2018
Rachel Boulds
 
51
 
Chief Financial Officer
 
February 7, 2020
 
 
BUSINESS EXPERIENCE
 
The following is a brief account of the education and business experience during at least the past five years of each director, executive officer and key employee of our company, indicating the person’s principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out.
  
Noel Schaefer, Director, Secretary & Chief Operations Officer, (“COO”) has served in a variety of executive and director positions in his 30 plus year career with both domestic and international companies. His emphasis has been with startups by setting up market profiles, developing strategic market placement and refining corporate objectives. Mr. Schaefer has successfully helped to raise funds from both the public and private sectors. He has worked extensively in Far East and Latin America with a particular focus on Mexico. He holds a Bachelor of Science degree from Brigham Young University with an emphasis in Marketing and Finance.
 
Victor Miranda, Director, is the CEO of an insurance broker firm, passionate about ventures developing USA/MEXICO cross border opportunities. He has 15 years of hands on experience in the sales management for the financial sector, with particular focus on developing a savers culture through employee benefits, and 7 years developing successful real estate development projects in Quintana Roo. Quintana Roo is the State in Mexico where the Pemer Bacalar property is located.
 
 
10
 
 
 
Ivan Webb, Chief Executive Officer, is a seasoned and successful entrepreneur, with over 35 years of experience in the oil and gas industry internationally and in the United States. He is experienced with acquiring oil and gas concessions and leases, drilling of new wells and reworking/ re-completing existing wells, production management, working with service companies and regulatory compliance. Internationally, he has successfully leased more than 18,000,000 acres. Domestically he has been involved with the acquisition and or management of more than 250 wells in Kansas, Oklahoma and Texas.
 
Mr. Webb has also over 30 years of experience in managing or assisting public companies in both the US and Canada with regulatory compliance. His public company experience includes assisting companies with initial public offerings, reverse mergers, obtaining listings, and assisting with ongoing regulatory compliance.
 
Rachel Boulds, Chief Financial Officer of the Company. Ms. Boulds currently works for the Company on a part-time basis while also operating her sole accounting practice which she has led since 2009 and which provides all aspects of consulting and accounting services to clients, including the preparation of full disclosure financial statements for public companies to comply with GAAP and SEC requirements. Ms. Boulds also currently provides outsourced chief financial officer services for two other companies. From August 2004 through July 2009, she was employed as a Senior Auditor for HJ & Associates, LLC, where she performed audits and reviews of public and private companies, including the preparation of financial statements to comply with GAAP and SEC requirements. From 2003 through 2004, Ms. Boulds was employed as a Senior Auditor at Mohler, Nixon and Williams. From September 2001 through July 2003, Ms. Boulds worked as an ABAS Associate for PriceWaterhouseCoopers. From April 2000 through February 2001, Ms. Boulds was employed as an e-commerce Accountant for the Walt Disney Group’s GO.com. Ms. Boulds earned a B.S. in Accounting from San Jose University in 2001 and is licensed as a CPA in the state of Utah.
 
Family Relationships
 
There are no family relationships among any of our officers or directors.
 
Involvement in Certain Legal Proceedings
 
To the best of our knowledge, none of our directors or executive officers has, during the past ten years:
 
 
1.
been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences);
 
 
2.
had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;
 
 
3.
been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;
 
 
4.
been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
 
 
5.
been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
 
 
6.
been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26)), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29)), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
 
 
11
 
 
Code of Ethics
 
The Company has not yet adopted a Code of Ethics.
 
ITEM 11. EXECUTIVE COMPENSATION
 
The particulars of the compensation paid to the following persons:
 
 
●
our principal executive officer;
 
 
●
each of our two most highly compensated executive officers who were serving as executive officers at the end of the years ended July 31, 2021 and 2020; and
 
 
SUMMARY COMPENSATION TABLE
Name and Principal Position
 
Year
 
Salary ($)
 
Bonus ($)
 
Stock Awards ($)
 
Option Awards ($)
 
Non- Equity Incentive Plan Compensa- tion ($)
 
Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)
 
All Other Compensa- tion ($)
 
Total ($
Howard Siegel(1)
President & Director
 
2020
 
$0
 
N/A
 
N/A
 
N/A
 
N/A
 
N/A
 
N/A
 
$0
Noel Schaefer(2)
Chief Operating Officer & Director
 
2021
2020
 
$60,000
$60,000
 
N/A
N/A
 
N/A
N/A
 
N/A
N/A
 
N/A
N/A
 
N/A
N/A
 
N/A
N/A
 
$60,000
$60,000
Victor Miranda (3)
Director
 
2021
2020
 
N/A
N/A
 
N/A
N/A
 
N/A
N/A
 
N/A
N/A
 
N/A
N/A
 
N/A
N/A
 
N/A
N/A
 
NA
NA
Ivan Webb(4)
Chief Executive Officer & Director
 
2021
2020
 
$0
$0
 
N/A
N/A
 
N/A
N/A
 
N/A
N/A
 
N/A
N/A
 
N/A
N/A
 
N/A
N/A
 
$0
$0
Rachel Boulds (5)
Chief Financial Officer
 
2021
2020
 
$26,400
$8,800
 
N/A
N/A
 
N/A
N/A
 
N/A
N/A
 
N/A
N/A
 
N/A
N/A
 
N/A
N/A
 
$26,400
$8,800
 
(1)
Howard Siegel was appointed as a director on April 23, 2014 and appointed as president, chief financial officer, chief executive officer and treasurer on April 24, 2014. On July 6, 2018 he resigned as chief financial officer and chief executive officer and treasurer. Mr. Siegel died in August 2020.
(2)
Noel Schaefer was appointed Chief Operating Officer on July 6, 2018.
(3)
Victor Miranda was Chief Financial Officer from July 6, 2018 until February 7, 2020.
(4)
Ivan Webb was appointed Vice President on March 16, 2015 and on July 6, 2018 was appointed Chief Executive Officer
(5)
Rachel Boulds was appointed Chief Financial Officer on February 7, 2020.
 
Other than as set out below, there are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. Our directors and executive officers may receive share options at the discretion of our board of directors in the future. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that share options may be granted at the discretion of our board of directors.
  
Stock Option Grants
 
We have not granted any stock options to the executive officers since our inception.
 
Outstanding Equity Awards at Fiscal Year End
 
For the year ended July 31, 2021, no director or executive officer has received compensation from us pursuant to any compensatory or benefit plan. There is no plan or understanding, express or implied, to pay any compensation to any director or executive officer pursuant to any compensatory or benefit plan.
 
12
 
 
Compensation of Directors
 
No member of our Board of Directors received any compensation for his services as a director during the year ended July 31, 2021 and 20220.
  
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
 
The following table sets forth, as of October 10, 2021, certain information with respect to the beneficial ownership of our common shares by each shareholder known by us to be the beneficial owner of more than 5% of our common shares, as well as by each of our current directors and executive officers as a group. Each person has sole voting and investment power with respect to the shares of common stock, except as otherwise indicated. Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated.
 
Name and Address of Beneficial Owner
 
Title of Class
 
Amount and Nature of Beneficial Ownership(1)
 
Percent of Class(2)
 
Ivan Webb, Chief Executive Officer
 
Common stock
 
 90,000
 
 
.11
%
Noel Schaefer, Chief Operating Officer, Secretary & Director
 
Common stock
 
2,000,000
 
2.8
%
Victor Miranda, Director
 
Common stock
 
11,200,000
 
13.9
%
Rachel Boulds, CFO
 
Common stock
 
-
 
-
 
All officers and director as a group (4 persons)
 
Common stock
 
13,290,000
 
16.81
%
 
 
 
 
 
 
 
 
Labrador Capital SAPI CV (3)
 
 
 
5,000,000
 
6.2
%
Starcom SA DE CV
 
Common stock
 
 
5,000,000
 
 
6.2
%
All others as a group (3 persons)
 
 
 
 
10,000,000
 
 
12.6
%
 
(1)
Beneficial Ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Each of the beneficial owners listed above has direct ownership of and sole voting power and investment power with respect to the shares of our common stock.
 
 
(2)
A total of 79,218,338 shares of our common stock are considered to be outstanding pursuant to SEC Rule 13d-3(d)(1) as of October 10, 2021. For each beneficial owner above, any options exercisable within 60 days have been included in the denominator.
 
(3)  
Victor Miranda is the president of Labrador Capital SAPI CV which is the holder of 5,000,000 shares of the Company’s common stock.     
 

  
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
 
Except as disclosed herein, no director, executive officer, shareholder holding at least 5% of shares of our common stock, or any family member thereof, had any material interest, direct or indirect, in any transaction, or proposed transaction since the year ended July 31, 2021, in which the amount involved in the transaction exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at the year-end for the last three completed fiscal years.
 
For the years ended July 31, 2021 and 2020, total payments of $60,000 and $60,000, respectively, were made to Noel Schaefer, a Director of the Company, for consulting services. As of July 31, 2021, and July 31, 2020 there is $32,500 and $27,500 credited to accounts payable.
 
As of July 31, 2021 and July 31, 2020, there is $2,200 and $2,200, respectively, credited to accounts payable for amounts due to Rachel Boulds, CFO, for consulting services.
 
 
13
 
 
 
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, 2021, the Company owes $23,210 on this loan. This loan is in default.
 
Victor Miranda, a Director of the Company is also President and owner of Labrador Capital SAPI DE CV (“Labrador”), a major shareholder of the Company owning 8.8% of its issued and outstanding shares. The Company has entered into a Memorandum of Understanding with Labrador to jointly pursue developing real estate projects in Mexico.  As of the date of this report no projects have been identified to jointly pursue.  In the event of a decision to go forward with Labrador, Victor Miranda will abstain from voting to avoid any conflict of interest.
 
During the year ended July 31, 2021, the Company sold 2,500,000 shares of common stock to Mr. Miranda at $0.02 per share for total cash proceeds of $50,000. Mr. Miranda purchased an additional 600,000 shares of common stock at $0.03 per shares for $18,000.
 
Director Independence
 
We currently act with two directors, Noel Schaefer and Victor Miranda. We have determined that we do not have an “independent director” as defined in NASDAQ Marketplace Rule 4200(a)(15).
 
We do not have a standing audit, compensation or nominating committee, but our directors and officer act in such capacities. We believe that our sole director is capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. Our sole director does not believe that it is necessary to have an audit committee because we believe that the functions of an audit committee can be adequately performed by the sole director. In addition, we believe that retaining an independent director who would qualify as an “audit committee financial expert” would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development.
 
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
 
The aggregate fees billed for the most recently completed fiscal year ended July 31, 2021 and for the fiscal year ended July 31, 2020 for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the financial statements included in our quarterly reports on Form 10-Q and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:
 
 
 
Year Ended
 
 
 
July 31, 2021
 
 
July 31, 2020
 
Audit Fees
 $43,000 
 $25,000 
Audit Related Fees
  - 
  - 
Tax Fees
  - 
  - 
All Other Fees
  - 
  - 
Total
 $43,000 
 $25,000 
 
Our board of directors pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by the board of directors either before or after the respective services were rendered.
 
Our board of directors has considered the nature and amount of fees billed by our independent auditors and believes that the provision of services for activities unrelated to the audit is compatible with maintaining our independent auditors’ independence.
 
14
 
 
 
PART IV
 
ITEM 15. EXHIBITS
 
 
 
Exhibit Number
 
Exhibit Description
 
 
 
 
Section 302 Certification under Sarbanes-Oxley Act of 2002.
 
Section 302 Certification under Sarbanes-Oxley Act of 2002.
 
Section 906 Certification under Sarbanes-Oxley Act of 2002.
 
 
 
(101)
 
Interactive Data File (Form 10-K for the Year Ended July 31, 2021)
101.INS
 
Inline XBRL Instance Document
101.SCH
 
Inline XBRL Taxonomy Extension Schema Document.
101.CAL
 
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF
 
Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB
 
Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE
 
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
 
 
 
 
 
 
15
 
 
SIGNATURES
 
Pursuant to the requirements of the Securities 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:  October 29, 2021
/s/ Ivan Webb
 
Ivan Webb
 
Chief Executive Officer
 
 
 
/s/ Noel Schaefer
 
Noel Schaefer
 
Chief Operating Officer & Director
 
 
 
/s/ Victor Miranda
 
Victor Miranda
 
Director
 
 
 
/s/ Rachel Boulds
 
Rachel Boulds
 
Chief Financial Officer
 
  
 
 
  16

 
 
 
 
 
 
 
 
 
 
 
EXHIBIT 31.1
 
Certification of Chief Financial Officer Pursuant to
 
Section 302 of the Sarbanes-Oxley Act of 2002-Rule 13a-14(a)/15d –14(a)
 
I, Rachel Boulds, certify that:
 
1.
I have reviewed this Annual Report on Form 10-K for the year ended July 31, 2021 for Northern Minerals & Exploration Ltd. (the “registrant”);
 
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
 
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
 
 
b)
Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
 
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
 
d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
 
 
a)
All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
 
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
 
/s/ Rachel Boulds
 
Rachel Boulds
Chief Financial Officer
 
Date: October 29, 2021
 
 
 
 
 
 
EXHIBIT 31.2
 
Certification of Chief Executive Officer Pursuant to
 
Section 302 of the Sarbanes-Oxley Act of 2002-Rule 13a-14(a)/15d –14(a)
 
I, Ivan Webb, certify that:
 
1.
I have reviewed this Annual Report on Form 10-K for the year ended July 31, 2021 for Northern Minerals & Exploration Ltd. (the “registrant”);
 
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
 
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
 
 
b)
Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
 
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
 
d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
 
 
a)
All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
 
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
 
/s/ Ivan Webb
 
Ivan Webb
Chief Executive Officer
 
Date: October 29, 2021
 
 
 
 
 
 
EXHIBIT 32.1
 
Certification of Periodic Financial Reports
Pursuant to 18 U.S.C. Section 1350
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
The undersigned hereby certify that they are the duly appointed and acting Chief Executive Officer and Chief Financial Officer of Northern Minerals & Exploration Ltd., and hereby further certify as follows:
 
 
1.
The annual report containing financial statements to which this certificate is an exhibit fully complies with the requirements of Section 13(a) or 15 (d) of the Securities Exchange Act of 1934.
 
 
2.
The information contained in the annual report to which this certificate is an exhibit fairly presents, in all material respects, the financial condition and results of operations of the Corporation.
 
In witness whereof, the undersigned have executed and delivered this certificate as of the date set forth opposite their signatures below.
 
 
 
 
 
 
 
 
 
 
 
 
Date: October 29, 2021
 
 
 
 
 
/s/ Ivan Webb
 
 
 
 
 
 
Ivan Webb
 
 
 
 
 
 
Chief Executive Officer
 
 
 
 
 
 
 
 
 
 
 
 
Date: October 29, 2021
 
 
 
 
 
/s/ Rachel Boulds
 
 
 
 
 
 
Rachel Boulds
 
 
 
 
 
 
Chief Financial Officer