Results of Operations for the Years Ended July 31, 2019 and 2018



The following summary of our results of operations should be read in conjunction
with our financial statements for the yearended July 31, 2019, which are
included herein.


                                      For the Years EndedJuly 31,


                                      2019           2018

Revenue, net                           $14,273        $(946)

  Officer compensation                 16,000         56,500
  Consulting - related party           57,500         26,500
  Consulting                           11,325         91,000
  Professional fees                    37,984         57,050
  Advertising and promotion            38,485         123,352
  Development property expenditures    -              20,266
  Mineral property expenditures        355,442        269,703

General and administrative expenses 50,102 105,415 Total operating expenses

               566,838        749,786

Other income (expense):


  Interest expense                     (17,980)       (17,164)

Loss on disposal of mineral rights (100,772) -


  Loss on conversion of debt           -              (6,000)

Gain on forgiveness of debt 99,740 4,120 Total other income (expense)

           (19,012)       (19,044)

Net Loss                               $(571,577)     $(769,776)



Revenue

Revenues of oil and gas for the years ended July 31, 2019 and 2018 were $14,273 and negative $946, respectively, an increase of $15,219. 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 increase in revenue is due to lower production as well as lower oil and gas prices. Distributions are paid or accrued in the quarter in which the revenue for those distributions is earned. Distributions are paid to the joint venture partners in the J.E. Richey Lease. In the prior year we paid additional distributions that were due which resulted in our negative revenue.

Officer compensation Officer compensation was $16,000 and $56,500 for the years ended July 31, 2019 and 2018, respectively, a decrease of $40,500, or 72%. The decrease is due to no longer paying salary to the CEO after October 31, 2018.

Consulting - related party Consulting - related party services were $57,500 and $26,500 for the years ended July 31, 2019 and 2018, respectively, an increase of $31,000, or 117%. Fees are paid to Noel Schaefer, Director, but are billed as consulting fees. During the current year this fee was increased to $5,000 per month as Mr. Schaefer, has increased his time spent on the Company over the past several months.



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Consulting expense Consulting fees were $11,325 and $91,000 for the years ended July 31, 2019 and 2018, respectively, a decrease of $79,675, or 88%. When needed the Company hires experts in the mining, oil and gas industries to assist with its current projects. The decrease in consulting fees in the current year can be attributed to a decrease in expenditures while the Company pursues additional funding.

Professional fees Professional fees were $37,984 and $57,050 for the years ended July 31, 2019 and 2018, respectively, a decrease of $19,066, or 33%. Professional fees generally consist of legal, audit and accounting expense. The decrease can be attributed to a decrease in accounting fees billed during the year.

Advertising and promotion Advertising and promotion expense were $38,485 and $123,352 for the years ended July 31, 2019 and 2018, respectively, a decrease of $84,867, or 69%. We have temporarily decreased our spending in this area to conserve our available cash.

Development property expenditures Development property expenditures were $0 and $20,266 for the years ended July 31, 2019 and 2018, respectively. We did not pursue this development property in the current year.

Mineral property expenditures Mineral property expenditures were $355,442 and $269,703 for the years ended July 31, 2019 and 2018, respectively, an increase of $85,739, or 31.7%. Expenditures include lease payments for the working interest in the mineral properties and rework expense. The increase in mainly due to the funds used towards the development of the Winnemucca property.

General and administrative General and administrative expense was $50,102 and $105,415 for the year ended July 31, 2019 and 2018, respectively, a decrease of $55,313, or 52%. The decrease can be largely attributed to a decrease in Bureau Land Management ("BLM") annual rentals and associated fees as well as to a decrease in travel expense and public relation expenditures.

Other expense During the year ended July 31, 2019 we had total other expense of $19,012 compared to $19,044 in the prior year. During the current year we incurred interest expense of $17,980, and a loss on disposal of mineral rights of $100,772, offset with a gain on forgiveness of debt of $99,740. During the year ended July 31, 2018 we had total other expense of $19,044. During the prior year we incurred interest expense of $17,164, and a loss on conversion of debt $6,000, offset with a gain on forgiveness of debt of $4,120.

Net Loss For the year ended July 31, 2019, we had a net loss of $571,577 as compared to a net loss of $769,776 for year ended July 31, 2018. Our net loss was lower in the current period primarily due to our decrease in operating expenses.

Liquidity and Financial Condition

Operating Activities Cash used by operating activities was $284,035 for the year ended July 31, 2019. Cash used for operating activities was $323,875 for the year ended July 31, 2018.

Investing Activities We used $20,000 for investing activities for the year ended July 31, 2019 compared to net cash used of $45,250 used in year ended July 31, 2018.

Financing Activities Net cash provided by financing activities was $233,210 foryear ended July 31, 2019 compared to $420,975 year ended July 31, 2018. During the year ended July 31, 2019, we received $220,000 from the sale of common stock, $69,180 from related party loans, $55,970 of which was repaid and received $9,000 from loans payable, of which we repaid $9,000. During the year ended July 31, 2018, we received $355,975 from the sale of common stock and $65,000 in other advances.

We had the following loans outstanding as of July 31, 2019:




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On August 22, 2013 the Company entered into a $50,000 Convertible Loan Agreement with an un-related party. The Loan and interest are convertible into Units at $0.08 per Unit with each Unit consisting of one common share of the Company and ½ warrant with each full warrant exercisable for one year to purchase one common share at $0.30 per share. On July 10, 2014, a further $35,000 was received from the same unrelated party under the same terms. On July 31, 2018, this Note was amended whereby the principal and interest are now convertible into Units at $0.04 per Unit with each Unit consisting of one common share of the Company and ½ warrant with each full warrant exercisable for one year to purchase one common share at $0.08 per share. The Loan shall bear interest at the rate of Eight Percent (8%) per annum and matures on March 26, 2020. As of July 31, 2019, there is $85,000 and $43,182 of principal and accrued interest, respectively, due on this loan.

On April 16, 2017, the Company executed a promissory note for $15,000 with a third party. The note matures in two years and interest is set at $3,000 for the full two years. As of July 31, 2019, there is $15,000 and $1,875 of principal and accrued interest, respectively, due on this loan. This loan is currently in default.

On 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, 2019, there is $25,000 and $2,367 of principal and accrued interest due on this loan, respectively. This loan is due on October 20, 2019. No shares have been issued for conversion of this loan.

On July 31, 2018, the wife the CEO, loaned the Company $25,000 for general operating expenses. This loan was repaid on August 2, 2018 with an additional $5,000 for interest and a loan fee. On August 3, 2018, Mrs. Webb loaned the Company $30,000 which was repaid on August 21, 2018. On September 25, 2018, the Company executed a loan agreement with Mrs. Webb for $6,800. The loan is to be repaid by December 15, 2018, with an additional $680 to cover interest and fees. On October 10, 2018, the Company executed a loan agreement with Mrs. Webb for $15,000. The loan was to be repaid by December 15, 2018, with an additional $1,500 to cover interest and fees. As of July 31, 2019, the Company owes Mrs. Webb $20,930 and $2,180 of principal and interest, respectively. Amounts due on these loans are currently in default.

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

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Critical Accounting Policies

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

Recently Issued accounting pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize lease assets and lease liabilities on the balance sheet and requires expanded disclosures about leasing arrangements. The new standard supersedes the present U.S. GAAP standard on leases and requires substantially all leases to be reported on the balance sheet as right-of-use assets and lease obligations. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. The Company has evaluated the impact of this accounting standard update and noted that it has had no material impact.

Topic 606, Revenue from Contracts with Customers, of the Financial Accounting Standards Board's (FASB) Accounting Standards Codification (ASC). The guidance in ASC 606 was originally issued by the FASB in May 2014 in Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606). Since then, the FASB has issued several ASUs that have revised or clarified the guidance in ASC 606. The Company has evaluated the impact of this accounting standard update and noted that it has had no material impact.




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In January 2017, the Financial Accounting Standards Board ("FASB") issued an Accounting Standards Update ("ASU") 2017-01, Business Combinations (Topic 805) Clarifying the Definition of a Business. The amendments in this update clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The guidance is effective for interim and annual periods beginning after December 15, 2017 and should be applied prospectively on or after the effective date. The Company is in the process of evaluating the impact of this accounting standard update.

On June 20, 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 is intended to reduce cost and complexity and to improve financial reporting for share-based payments to nonemployees (for example, service providers, external legal counsel, suppliers, etc.). Under the new standard, companies will no longer be required to value non-employee awards differently from employee awards. Meaning that companies will value all equity classified awards at their grant-date under ASC718 and forgo revaluing the award after this date. The Company has chosen to early adopt this standard.

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.

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