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NORTHERN MINERALS & EXPLORATION LTD. Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q) – Marketscreener.com

Forward-Looking Statements
This report on Form 10-Q contains certain forward-looking statements. All statements other than statements of historical fact are “forward-looking statements” for purposes of these provisions, including any projections of earnings, revenues, or other financial items; any statements of the plans, strategies, and objectives of management for future operation; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; statements of belief; and any statement of assumptions underlying any of the foregoing. Such forward-looking statements are subject to inherent risks and uncertainties, and actual results could differ materially from those anticipated by the forward-looking statements.
These forward-looking statements involve significant risks and uncertainties, including, but not limited to, the following: competition, promotional costs and the risk of declining revenues. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of a number of factors. These forward-looking statements are made as of the date of this filing, and we assume no obligation to update such forward-looking statements. The following discusses our financial condition and results of operations based upon our unaudited financial statements which have been prepared in conformity with accounting principles generally accepted in the United States. It should be read in conjunction with our financial statements and the notes thereto included elsewhere herein.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
As used in this quarterly report, the terms “we”, “us”, “our” and “our company” mean Northern Minerals & Exploration Ltd., unless otherwise indicated.
We are an emerging natural resource company operating in oil and gas production in central Texas and exploration for gold and silver in northern Nevada.
Refer to NOTE 4 and NOTE 5 for property information.
Results of Operations for the Three Months Ended January 31, 2022 and 2021
Revenue
We had revenue for the three months ended January 31, 2022 of $0, compared to $400 for the three months ended January 31, 2021.
Officer compensation
Officer compensation was $6,600 and $6,600 for the three months ended January 31, 2022, and 2021, respectively. Officer compensation is paid to our CFO.
Consulting – related party
Consulting – related party services were $20,000 and $15,000 for the three months ended January 31, 2022, and 2021, respectively. Fees of $5,000 per month are paid to Noel Schaefer, Director, but are recorded as consulting fees. During the current period Mr. Schaefer was compensated an additional $5,000.
Professional fees
Professional fees were $5,945 and $6,250 for the three months ended January 31, 2022, and 2021, respectively, a decrease of $305 or 4.9%. Professional fees generally consist of legal, audit and accounting expense. The decrease can be attributed to a decrease in audit fees billed during the period.
General and administrative
General and administrative expense was $5,025 and $7,064 for the three months ended January 31, 2022, and 2021, respectively, a decrease of $2,039 or 28.9%. The decrease is mainly due to a decrease in transfer agent fees.
Interest expense
During the three months ended January 31, 2022, and 2021 we had interest expense of $10,392 and $3,979, respectively. The increase is due to additional interest charged on the debt assumed by Mr. Webb.
During the three months ended January 31, 2022, we recognized other income of $2,287 and a gain on forgiveness of debt of $17,167. During the three months ended January 31, 2021, we recognized a gain on forgiveness of debt of $23,616.
Net Loss
For the three months ended January 31, 2022, we had a net loss of $28,508 as compared to a net loss of $22,877 for the three months ended January 31, 2021, an increase of $5,631, or 24.6%.
Results of Operations for the Six Months Ended January 31, 2022 and 2021
Revenue
We had revenue for the six months ended January 31, 2022 of $0, compared to $400 for the six months ended January 31, 2021.
Officer compensation
Officer compensation was $13,200 and $13,200 for the six months ended January 31, 2022, and 2021, respectively. Officer compensation is paid to our CFO.
Consulting – related party
Consulting – related party services were $35,000 and $30,000 for the six months ended January 31, 2022, and 2021, respectively. Fees of $5,000 per month are paid to Noel Schaefer, Director, but are recorded as consulting fees. During the current period Mr. Schaefer was compensated an additional $5,000.
Professional fees
Professional fees were $25,395 and $39,750 for the six months ended January 31, 2022, and 2021, respectively, a decrease of $14,355 or 36.1%. Professional fees generally consist of legal, audit and accounting expense. The decrease can be attributed to a decrease in audit fees billed during the period.
Mineral property expenditures
Mineral property expenditures were $0 and $1,000 for the six months ended January 31, 2022, and 2020, respectively, a decrease of $1,000. 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 $15,472 and $12,185 for the six months ended January 31, 2022, and 2021, respectively, an increase of $3,287 or 27%. The increase is mainly due to an increase in transfer agent fees.
Interest expense
During the six months ended January 31, 2022, and 2021 we had interest expense of $12,376 and $7,958, respectively. The increase is due to additional interest charged on the debt assumed by Mr. Webb.
Other income
During the six months ended January 31, 2022, we recognized other income of $2,287 and a gain on forgiveness of debt of $17,167. During the six months ended January 31, 2021, we recognized a gain on forgiveness of debt of $23,616 and other income of $25,000 that was received as a one-time payment pursuant to the terms of a joint venture agreement the we entered into.
Net Loss
For the six months ended January 31, 2022, we had a net loss of $81,989 as compared to a net loss of $63,077 for the six months ended January 31, 2021, an increase of $18,912, or 29.9%.
Liquidity and Financial Condition
Operating Activities
Cash used by operating activities was $103,170 for the six months ended January 31, 2022. Cash used for operating activities was $109,170 for the six months ended January 31, 2021.
Net cash provided by financing activities was $155,551 for the six months ended January 31, 2022. We received $160,551 from the sale of our common stock and $5,000 from a loan payable, which was offset by repayment of $10,000. Net cash provided by financing activities was $125,000 for the six months ended January 31, 2021. In the prior period we repaid $5,000 of a loan payable and sold common stock from cash proceeds of $130,000.
We had the following loans outstanding as of January 31, 2022:
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 January 31, 2022, there is $15,000 and $5,625 of principal and accrued interest, respectively, due on this loan. As of July 31, 2021, there is $15,000 and $4,875 of principal and accrued interest, respectively, due on this loan. This loan is currently in default.
On June 11, 2020, a third party loaned the Company $14,000. 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, which was repaid during the six months ended January 31, 2022. The loan is unsecured, non-interest bearing and due on demand.
As of January 31, 2022, 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 $60,000. The loan is unsecured, bears interest at 8% per annum and matures on September 1, 2021. As of January 31, 2022, there is $11,165 of interest accrued on this note.
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.
Refer to Note 2 of our financial statements contained elsewhere in this Form 10-Q for a summary of our critical accounting policies and recently adopting and issued accounting standards.
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