The accompanying notes are an integral part of these financial statements.TEXAS MINERAL RESOURCES CORP.

STATEMENTS OF SHAREHOLDERS' EQUITY

For the Nine Months Ended May 31, 2021 and 2020

(Unaudited)

The accompanying notes are an integral part of these financial statements.TEXAS MINERAL RESOURCES CORP.

STATEMENTS OF CASHFLOWS

For the Nine Months Ended May 31, 2021 and 2020

(Unaudited)

Texas Mineral Resources Corp.

Notes to Interim Financial Statements

November 30, 2017May 31, 2021

(Unaudited)

NOTE 1 – BASIS OF PRESENTATIONGENERAL

Basis of Presentation

The accompanying unaudited interim financial statements of Texas Mineral Resources Corp. (“we”, “us”, “our”, the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in our annual report on Form 10-K, for the year ended August 31, 2017,2020, dated December 14, 2017November 30, 2020 as filed with the SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the interim financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year ended August 31, 20172020 as reported in our annual report on Form 10-K, have been omitted.

The financial statements have been prepared onGrant Income

Grants received from government and other agencies in advance of a going concern basis which assumes the Company will not be able to realize its assetsspecific project are deferred and discharge its liabilitiesrecognized as other income in the normal coursestatements of business for the foreseeable future. The Company has incurred losses since inception resulting in an accumulated deficit of approximately $34,748,000 as of November 30, 2017 and further losses are anticipated in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or to obtainperiod they are earned and the necessary financing to meet its obligationsrelated project costs are incurred. For the nine and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs overthree months ended May 31, 2021, the next twelve months with existing cash on handCompany recognized $150,000 and or private placement$0, respectively, of common stock.grant income which is presented in other income net of grant related expenses totaling $138,922 and $0, respectively.

On March 14, 2016,Recent Accounting Pronouncements

In August 2020, the Company filedFinancial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-06, Debt – Debit 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. This ASU simplifies accounting for convertible instruments by removing major separation models required under current U.S. GAAP. Consequently, more convertible debt instruments will be reported as a Certificatesingle liability instrument and more convertible preferred stock as a single equity instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. The ASU also simplifies the diluted earnings per share (“EPS”) calculation in certain areas. This ASU is effective for fiscal years beginning after December 15, 2023, with early adoption permitted. Management does not expect the adoption of Amendment with the Secretary of State of the State of Delawarethis standard to amend its Certificate of Incorporation to change the name of the Company from “Texas Rare Earth Resources Corp” to “Texas Mineral Resources Corp”. The amendment was effective at 9:00 am ESThave a significant impact on March 21, 2016. The Certificate of Amendment did not make any other amendments to the Company’s Certificatefinancial position, results of Incorporation.operations or cash flows.

Reclassification of prior year balances

Our financial statements during the period ended November 30, 2017 contain amounts that have been reclassified for presentation and comparability purposes. The amounts and content of these related account balances were not altered during the reclassification.

NOTE 2 – MINERAL PROPERTIES AND PARTICIPATION IN SUCH MINERAL PROPERTIES

September 2011 LeaseWe are a mining company and substantially all of our business consists of owning and holding a 20% membership interest (being a certificate of interest or participation) in Round Top Mountain Development Company, LLC, a Delaware limited liability company (“Round Top”), the entity that owns the mineral leases and mineral assets.

In August 2018, the Company and Morzev Pty. Ltd. (“Morzev”) entered into an agreement (the “2018 Option Agreement”) whereby Morzev was granted the exclusive right to earn and acquire a 70% interest in the Company’s Round Top Project (“Project” or “Round Top” or “Round Top Project”) by financing $10 million of expenditures in connection with the Project, increasable to an 80% interest for an additional $3 million payment to the Company. Morzev began operating as USA Rare Earth, LLC (“USARE”) and in May 2019 notified the Company that it was nominating USARE as the optionee under the terms of the 2018 Option Agreement. In August 2019, the Company and USARE entered into an amended and restated option agreement as further amended on June 29, 2020 (the “2019 Option Agreement” and collectively with the 2018 Option Agreement, the “Option Agreement”), whereby the Company restated its agreement to grant USARE the exclusive right to earn and acquire a 70% interest, increasable to an 80% interest, in the Round Top Project. The 2019 Option Agreement has substantially similar terms to the 2018 Option Agreement.

Texas Mineral Resources Corp.

Notes to Interim Financial Statements

May 31, 2021

(Unaudited)

NOTE 2 – MINERAL PROPERTIES AND PARTICIPATION IN SUCH MINERAL PROPERTIES (CONTINUED)

On September 2, 2011, weMay 17, 2021, and in accordance with the terms of the Option Agreement, the Company and USARE entered into a contribution agreement (“Contribution Agreement”) whereby the Company and USARE contributed assets to Round Top, a wholly-owned subsidiary of the Company, in exchange for their ownership interests in Round Top, of which the Company now owns membership interests equating to 20% of Round Top and USARE owns membership interests equating to 80% of Round Top. Concurrently therewith, the Company and USARE as the two members entered into a limited liability company agreement (“Operating Agreement”) governing the operations of Round Top which contains customary and industry standard terms as contemplated by the OptionAgreement. USARE will serve as manager of Round Top and Mr. Gorski, on behalf of the Company, will serve as one of the three members of the management committee.

In connection with USARE meeting its obligations to acquire a 70% interest in Round Top and exercising its right to an additional 10% interest, the Company received total consideration of approximately $3,728,000, consisting of the $3 million upon exercise of the option and an assumption of approximately $728,000 in advances from related parties, and derecognized 80% of the carrying amount of mineral properties, or approximately $402,000. The resulting gain on sale of interest in mineral properties in the amount of approximately $3,326,000 is included as its own line item in other income (expense).

Upon entry into the Contribution Agreement, the Company assigned the following contracts and assets to Round Top in exchange for its 20% membership interest in Round Top:

·the assignment and assumption agreement with respect to the mineral leases from the Company to Round Top; 

·the assignment and assumption agreement with respect to the surface lease from the Company to Round Top; 

·the assignment and assumption agreement with respect to the surface purchase option from the Company to Round Top;  

·the assignment and assumption agreement with respect to the water lease from the Company to Round Top; and 

·the bill of sale and assignment agreement of existing data and other relevant contracts and permits with respect to Round Top owned by the Company. 

and USARE assigned the following assets to Round Top (or the Company, as applicable) for its 80% membership interest in Round Top:

·cash to Round Top to continue to fund Round Top operations in the amount of approximately $3,761,750 comprising the balance of the $10 million required expenditure to earn a 70% interest in Round Top;  

·cash in the amount of $3 million to the Company upon exercise of the USARE option to acquire from the Company an additional 10% interest in Round Top, resulting in the aggregate ownership interest of 80% in Round Top; 

·bill of sale and assignment agreement of the Pilot Plant and other relevant contract and permits to Round Top; and 

·bill of sale and assignment agreement of existing data and intellectual property owned by USARE to Round Top. 

The Operating Agreement provides for the following:

Interests. Pursuant to the Operating Agreement, USARE owns membership interests equating to 80% of Round Top and the Company owns membership interests equating to 20% of Round Top. These ownership interests will be adjusted further under a variety of circumstances, including a decision by a member not to participate fully in a program and budget (“Budget”). USARE’s contribution of approximately $3,761,750 in cash to Round Top will be used first to fund operations pursuant to the initial Budget. Once that amount is exhausted, USARE and the Company will be obligated, subject to an election to dilute, to fund further expenditures in proportion to their respective ownership interests.

Texas Mineral Resources Corp.

Notes to Interim Financial Statements

May 31, 2021

(Unaudited)

NOTE 2 – MINERAL PROPERTIES AND PARTICIPATION IN SUCH MINERAL PROPERTIES (CONTINUED)

Cash Calls. USARE, as manager, will issue monthly cash calls pursuant to adopted Budgets. Both parties, as members, will have 10 days after receipt of such a billing to meet the cash call. Failure to meet a cash call results in dilution; provided that successive failures in the same budgetary period can result in accelerated dilution or a default loan at a default interest rate. If a member (the “Delinquent Member”) does not contribute all or any portion of any additional capital contribution that such member is required to contribute (the “Default Amount”), then the other member (the “Non-Defaulting Member”) may elect to contribute the Default Amount to Round Top, or not to contribute the Default Amount to Round Top and, in both cases, the interests of the members will be recalculated. If the default by the Delinquent Member is the second or any subsequent default during the period of any adopted Budget, the Non-Defaulting Member may elect to contribute the Default Amount to Round Top on behalf of the Delinquent Member and to reduce the ownership interest of the Delinquent Member by an amount (expressed as a percentage) equal to: (i) 150%; multiplied by the Default Amount; divided by (ii) the aggregate contributed capital of all members (determined after taking into account the contribution of the default Amount on behalf of the Delinquent Member). The interest of the Non-Defaulting Member will be increased by the reduction in the interest of the Delinquent Member.

Management. A management committee will make the major decisions of Round Top, such as approval of Budgets, and the manager will implement such decisions. The management committee consists of three representatives of the members, with two being appointed by USARE and one by the Company (initially being Dan Gorski). The representatives vote the ownership percentage interests of their appointing member.

Management Committee Meetings. Meetings will be held every three months unless otherwise agreed. For matters before the management committee that require a vote, voting is by simple majority except for certain “major decisions” that require a unanimous vote. So long as the Company maintains a 15% or greater ownership interest, the nine decisions identified in the bullet points below require unanimous approval. If the Company’s ownership interest falls below 15%, the number of unanimous decisions is reduced to five (being the first five bullet points below). If the Company is acquired by a REE mining company or sells its ownership interest to a REE mining company, in each case who elects a majority of the Company’s board, this unanimous approval requirement can be suspended by USARE, at its option. The major decisions requiring unanimous approval, as set forth above, are:

·approval of an amendment to any Budget that causes the Budget to increase by 15% or more, except for emergencies;  

·other than purchase money security interests or other security interests in Round Top equipment to finance the acquisition or lease of Round Top equipment used in operations, the consummation of a project financing or the incurrence by Round Top of any indebtedness for borrowed money that requires the guarantee by any member of any obligations of Round Top; 

·substitution of a member under certain circumstances and dissolution of Round Top; 

·the issuance of an ownership interest or other equity interest in Round Top, or the admission of any person as a new miningmember of Round Top, other than in connection with the exercise of a right of first offer by a member; 

·the redemption of all or any portion of an ownership interest, except for limited circumstances provided for in the Operating Agreement; 

·a decision to grant authorization for Round Top to file a petition for relief under any chapter of the United States Bankruptcy Code, to consent to such relief in any involuntary petition filed against Round Top by any third party, or to admit in writing any insolvency of Round Top or inability to pay its debts as they become due, or to consent to any receivership of Round Top;  

·acquisition or disposition of significant mineral rights, other real property or water rights outside of the area of interest as set forth in the Operating Agreement or outside of the ordinary course of business; 

·the merger of Round Top into or with any other entity; and 

·the sale of all or substantially all of Round Top’s assets. 

Texas Mineral Resources Corp.

Notes to Interim Financial Statements

May 31, 2021

(Unaudited)

NOTE 2 – MINERAL PROPERTIES AND PARTICIPATION IN SUCH MINERAL PROPERTIES (CONTINUED)

Manager. The manager will manage, direct and control operations in accordance with Budgets, will prepare and present to the management committee proposed Budgets, and will generally oversee and implement all of the day to day activities of Round Top. The manager will conduct necessary equipment and materials procurement and property and equipment maintenance activities, with all operations to be conducted in accordance with adopted Budgets. Before completion of the initial Budget, the manager will propose the next Budget. The Company will have the ability to accept, comment on and propose rejection of the proposed Budget and the manager is obligated to negotiate with the Company in good faith to develop an acceptable Budget. Voting for the adoption of such next proposed program and Budget will be by a simple majority vote.

Each member has the right to elect not to contribute fully or not to contribute at all to an adopted Budget. If a member does not contribute fully or at all, the other member has the right to make up some or all of the shortfall. In either case, the ownership interests of the members are recalculated and the non-contributing member is “diluted” on a straight-line basis. The same process is applied if the manager proposes to amend an adopted Budget by more than 15% and the proposal is approved.

Distributions. Cash in excess of authorized reserves will be distributed to the members on a periodic basis as determined by the management committee. No member will have the right to demand distributions in kind. Round Top will be required to make tax distributions to each member. USARE will have the right to purchase products at fair value or to market and sell products to third parties. If, during any period, products have been produced by Round Top and are available for sale but are not sold and a cash call or cash calls are made, then USARE is obligated to fund the monthly cash call or monthly cash calls on behalf of the Company, at no cost

or expense to the Company, and the monthly cash call or monthly cash calls will be recovered by USARE solely out of the Company’s proportional interest in such products when sold.

Involuntary Resignation – Elimination of Interest. If a member’s ownership interest is reduced through dilution to less than 5%, the member will be deemed to have resigned from Round Top and will relinquish its ownership interest to Round Top, in exchange for the right to receive 5% of net proceeds, if any, from the sale of products by Round Top.

August 2010 Mineral Lease

On August 17, 2010, the Company executed a mineral lease with the Texas General Land Office covering Sections 7 and 18 of Township 7, Block 71 and Section 12 of Block 72, covering approximately 860 acres at Round Top Mountain in Hudspeth County, Texas. The miningmineral lease issued by the Texas General Land Office gives usthe Company the right to explore, produce, develop, mine, extract, mill, remove, and market beryllium, uranium, rare earth elements, all other base and precious metals, industrial minerals and construction materials and all other minerals excluding oil, gas, coal, lignite, sulfur, salt, and potash. The term of the lease is nineteen years so long as minerals are produced in paying quantities.

Under the terms of the mineral lease, wethe Company will pay the State of Texas a total lease bonus of $142,518;$142,518. The Company paid $44,718 of which was paid upon the execution of the lease and will pay the remaining $97,800 which will be due when we submitupon submission of a supplemental plan of operations to conduct mining. Upon the sale of any minerals removed from Round Top, wethe Company will pay the State of Texas a $500,000 minimum advance royalty.

Thereafter, we will pay the State of Texas a production royalty equal to eight percent (8%) of the market value of uranium and other fissionable materials removed and sold from Round Top and six and one quarter percent (61/4%) of the market value of all other minerals removed and sold from Round Top.

Assuming production ofif paying quantities has not been obtained, we may pay additional delay rental fees to extend the term of the lease for successive one (1) year periods pursuant to the following schedule:

NOTE 2 – MINERAL PROPERTIES (Continued)

In August 2017, we paid a delay rental to the State of Texas in the amount of $67,077.

November 2011 Lease

On November 1, 2011, we entered into a mining lease with the State of Texas covering 90 acres, more or less, of land that we purchased in September 2011 near our Round Top site. The deed was recorded with Hudspeth County on September 16, 2011. Under the lease, we paid the State of Texas a lease bonus of $20,700 which was paid upon the execution of the lease. Upon the sale of minerals removed from Round Top, we will payare obtained, the State of Texas a $50,000 minimum advance royalty. Thereafter, weCompany will pay the State of Texas a production royalty equal to eight percent (8%) of the market value of uranium and other fissionable materials removed and sold from Round Top and six and one quarter percent (6 1/4%) of the market value of all other minerals removed and sold. If paying quantities have not been obtained, the Company may pay additional delay rental fees to extend the term of the lease for successive one (1) year periods pursuant to the following schedule: 

In August 2020, the Company paid a delay rental to the State of Texas in the amount of $134,155.

Texas Mineral Resources Corp.

Notes to Interim Financial Statements

May 31, 2021

(Unaudited)

NOTE 2 – MINERAL PROPERTIES AND PARTICIPATION IN SUCH MINERAL PROPERTIES (CONTINUED)

November 2011 Mineral Lease

On November 1, 2011, the Company executed a mineral lease with the State of Texas covering approximately 90 acres of land that is adjacent to the August 2010 Lease. Under the lease, the Company paid the State of Texas a lease bonus of $20,700 upon the execution of the lease. Upon the sale of minerals removed from Round Top, the Company will pay the State of Texas a $50,000 minimum advance royalty.

Thereafter, if paying quantities of minerals are obtained, the Company will pay the State of Texas a production royalty equal to eight percent (8%) of the market value of uranium and other fissionable materials removed and sold from Round Top.

Assuming productionTop and six and one quarter percent (6 1/4%) of the market value of all other minerals. If paying quantities hashave not been obtained, wethe Company may pay additional delay rental fees to extend the term of the lease for successive one (1) year periods pursuant to the following schedule:

In October 2017, weAugust 2020, the Company paid a delay rental to the State of Texas of $6,750.$13,500.

March 2013 Surface Lease

On March 6, 2013, wethe Company purchased the surface lease at the Round Top Project, known as the West Lease, from the Southwest Wildlife and Range Foundation (the “Foundation”)(since renamed the Rio Grande Foundation) for $500,000 cash and 1,063,830 shares of our common stock. Westock valued at $500,000. The Company also agreed to support the Foundation through an annual payment of $45,000 for ten years to support conservation efforts within the Rio Grande Basin, and in particular engaging in stewardship ofparticularly Lake Amistad, a large and well-known fishing lake near Del Rio, Texas. In connection with the January 2019 settlement with the Foundation, the balance was paid off as of August, 2020. The West Lease comprises approximately 54,990 acres. Most importantly, the purchase of the surface lease gave usprovides the Company unrestricted surface access for the potential development and mining of ourthe Round Top Project. As of the date of this filing the $45,000 payments due in June 2016 and 2017 have not been paid; consequently, we have expensed the value of the West Lease during fiscal 2017. We fully intend to continue with the evaluation of the mineral potential of the property, to ultimately mine the property, and to bring the lease current when funds are available. Expensing the value of the West Lease does not restrict our access to the mineral leases.

October 2014 Surface Option and Water Lease

InOn October 29, 2014, we executed an agreementthe Company announced the execution of agreements with the Texas General Land Office securing the option to purchase the surface rights covering the potential Round Top project mine and plant areas and, separately, a lease to develop the water necessary for the potential Round Top project minemining operations.

The option to purchase the surface rights covers approximately 5,670 acres over the mining lease and the additional acreage adequate to site all potential heap leaching and processing operations as currently anticipated by the Company. WeThe Company may exercise the option for all or part of the option acreage at any time during the sixteen yearremaining sixteen-year primary term of the mineral lease. The option can be kept current by anmaintained through annual paymentpayments of $10,000, which has not been paid as of the date of this filing.$10,000. The purchase price will be the appraised value of the surface at the time of exercisingoption exercise. All annual payments have been made as of the option.date of this filing.

The ground water lease secures ourthe right to develop the ground water within a 13,120 acre13,120-acre lease area located approximately 4 miles from the Round Top deposit. The lease area contains five existing water wells. It is anticipated that all potential water needs for the Round Top project mine operations would be satisfied by the existing wells covered by this water lease. This lease hasterms include an annual minimum production payment of $5,000 prior to production of water for the operation, which has not been paid as of the date of this filing.operation. After initiation of production, wethe Company will pay $0.95 per thousand gallons or $20,000 annually, whichever is greater. This lease remains effective asin effect so long as the mineral lease is in effect.

The Pagnotti Enterprises Inc. Memorandum of Understanding

On June 28, 2016 TMRC executed a Memorandum of understanding with Pagnotti Enterprises Inc. (“PEI”) of Wilkes Barre, Pennsylvania, owners of the Jeddo Coal Co., whereby under specified terms TMRC could lease one or more of Jeddo’s deposits located in the anthracite region of northeast Pennsylvania. Research by the Department of Energy (DOE) has shown that these coal deposits and the sandstones and siltstones immediately associated with them contain anomalously high values of rare earth and on particular interest, Scandium. The DOE research to date has indicated that the rare earth can be efficiently extracted from pulverized rock using ammonium sulfate as the lixiviant. TMRC is in the process of preparing an applicationminimum production payment for a federal grant to design and construct a continuous ion exchange/continuous ion chromatography (CIX/CIC) pilot plant to be delivered to a designated project area in the Appalachian coal province. TMRC and its co-applicants, K-Tech, Inventure Renewables, of Tuscaloosa, Alabama and Penn State University are proposing to plan, develop, design and install the CIX/CIC pilot plant at one of the Jeddo Coal properties. The grant was awarded in March 2017 to the consortium consisting of Inventure Renewables, Penn State, K-Tech and TMRC with Inventure being the principal investigator in the consortium. Funding began in September 2017.

Under the terms of the Memorandum of Understanding (MOU) signed 28 June 2016, TMRC had a six-month term to perform the necessary due diligence and to technically and economically evaluate the properties. Upon execution of the MOU TMRC and PEI had six months to draft and execute a formal lease agreement containing all the standard terms of mining lease agreements. Upon execution of a lease, TMRC will be obligated to pay a $5,000 per month rental or a 12% royalty whichever is greater. As of the date of this filing, no lease hasfiscal years have been executed.

NOTE 3 – NOTES PAYABLE

As part of our surface lease with the Rio Grande Foundation (formerly referred to as the Southwest Wildlife Foundation), the Company recorded a note payable for an amount for the initial $45,000 due upon signing of lease and the nine (9) future payments due of $45,000 which has been recorded at its present value discounted with an imputed interest rate of 5% for a total note payable of $364,852. As of the date of this filing, we have not paid the June 2016 or 2017 installment of our surface lease, in the amount of $45,000 each, to the Southwest Wildlife Foundation. As a result, the full amount of the note payable has been classified as currently due. The note payable balance as of November 30, 2017 $260,000. The Company has also accrued interest expense as of November 30, 2017 of $37,500. This unpaid interest is included in accrued liabilities.

The Foundation has not given notice of default or made any demand for payment as of the date of this filing. However, based upon the Company being in default on the Note Payable there is no guarantee that the Foundation will allow the Company to bring the lease payments current without requiring the Company to provided additional consideration to the Foundation. Consequently, since the Company cannot be guaranteed the ability to utilize the lease due to its current default status, the Company has written off the value of this lease ($1,394,852) as of August 31, 2017. The Company intends to continue with the evaluation of the mineral potential of the property, to ultimately mine the property, and to bring this note payable and its accrued interest current when the funds are available.

Related Party Notes Payable and AdvancesAssignment of Leases to Round Top

On July 1, 2016In May 2021, these leases, including the Company received two loans for $2,500 each from two directors of the Company. The loans are non-interest accruing, unsecuredrights and due upon demand. As additional consideration for the loans, we issued 5,000 common stock purchase warrantspayment obligations, were assigned to each individual. The warrants have an exercise price of $0.10 and term of five years. The warrants had a fair value of $1,185 at the date of issuance determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 1.00% (ii) estimated volatility of 185% (iii) dividend yield of 0.00% and (iv) expected life of the warrants of five years. The notes payable balance as of August 31, 2017 and August 31, 2016 was a total of $5,000. The value of the warrants was expensed as interest expense at the time of issuance due to no stated term on the advances.Round Top.

On September 1, 2016, the Company entered into five loans totaling $71,500 from five directors of the Company. The loans were due March 1, 2017, are non-interest bearing, and unsecured. As of this filing the loans are in default and due upon demand. As additional consideration for the loans, we issued in total 147,000 common stock purchase warrants. The warrants have an exercise price of $0.10 and term of five years. The loans have a relative fair value of $57,414 and the warrants have a relative fair value of $14,086 at the date of issuance determined using the Black-Scholes option-pricing model. The assumptions used

Texas Mineral Resources Corp.

Notes to calculate the fair market value are as follows: (i) risk-free interest rate of 1.180% (ii) estimated volatility of 245% (iii) dividend yield of 0.00% and (iv) expected life of the warrants of five years. The notes payable balance as of August 31, 2017 and August 31, 2016 was $71,500. The value of the warrant was amortized to interest expense over the term of the note payable.Interim Financial Statements

On November 1, 2016 the Company entered into two loans for $4,000 and $1,000 from two directors of the Company. The loans are non-interest bearing, unsecured and due upon demand. As additional consideration for the loans, we issued 8,000 and 2,000 common stock purchase warrants to each individual. The warrants have an exercise price of $0.10 and term of five years. The warrants had a fair value of $1,057 at the date of issuance determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 1.30% (ii) estimated volatility of 181% (iii) dividend yield of 0.00% and (iv) expected life of the warrants of five years. The notes payable balance as of August 31, 2017 was $5,000. The value of the warrants was expensed as interest expense at the time of issuance due to no stated term on the advance.

On December 12, 2016, the Company entered into a loan for $15,000 a director of the Company. The loan is due June 12, 2017, is non-interest accruing, and unsecured. As of this filing the loan is in default and due upon demand. As additional consideration for the loan, we issued 60,000 common stock purchase warrants to the individual. The warrants have an exercise price of $0.10 and term of five years. The loan has a relative fair value of $10,437 and the warrants have a relative fair value of $4,563 at the date of issuance determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 1.90% (ii) estimated volatility of 241% (iii) dividend yield of 0.00% and (iv) expected life of the warrants of five years. The notes payable balance as of August 31, 2017 was $15,000. The value of the warrant was amortized to interest expense over the term of the note payable.

On January 12, 2017 the Company entered into two loans totaling $20,000 from a director and an officer of the Company. The loans are due July 12, 2017, are non-interest accruing, and unsecured. As of this filing the loans are in default and due upon demand. As additional consideration for the loans, we issued 40,000 common stock purchase warrants to each individual. The warrants have an exercise price of $0.10 and term of five years. The loans have a relative fair value of $13,542 and the warrants have a relative fair value of $6,458 at the date of issuance determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 1.87% (ii) estimated volatility of 240% (iii) dividend yield of 0.00% and (iv) expected life of the warrants of five years. The notes payable balance as of August 31, 2017 was $20,000. The value of the warrant was amortized to interest expense over the term of the note payable.

During the three months ended May 31, 2017 the Company entered into eight loans totaling $47,500 from two directors of the Company. The loans are non-interest accruing, unsecured and due upon demand. As additional consideration for the loans, we issued in total 190,000 common stock purchase warrants. The warrants have an exercise price of $0.17 - $0.21 and a term of five years. The warrants had a fair value of $39,557 at the date of issuance determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 1.75% (ii) estimated volatility of 234% (iii) dividend yield of 0.00% and (iv) expected life of the warrants of five years. The notes payable balance as of August 31, 2017 was $47,500. The value of the warrants was expensed as interest expense at the time of issuance due to no stated term on the advance.2021

(Unaudited)

During the three months ended August 31, 2017 the Company entered into seven loans totaling $82,165 from two directors of the Company. The loans are non-interest accruing, unsecured and due upon demand. As additional consideration for the loans, we issued in total 328,660 common stock purchase warrants. The warrants have an exercise price of $0.20 - $0.23 and a term of five years. The warrants have a fair value of $65,137 at the date of issuance determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 1.75% (ii) estimated volatility of 169% (iii) dividend yield of 0.00% and (iv) expected life of the warrants of five years. The notes payable balance as of August 31, 2017 was $82,165. The value of the warrants was expensed as interest expense at the time of issuance due to no stated term on the advance.

During the three months ended November 30, 2017 the Company received two advances totaling $16,750 from a director and an officer of the Company. The loans are non-interest accruing, unsecured and due upon demand. As additional consideration for the loans, we issued a total of 67,000 common stock purchase warrants. The warrants have an exercise price of $0.21 - 0.22 and a term of five years. The warrants have a fair value of $12,518 at the date of issuance determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 2.88% (ii) estimated volatility of 122% (iii) dividend yield of 0.00% and (iv) expected life of the warrants of five years. The note payable balance as of November 30, 2017 was $16,750. The value of the warrants was expensed as interest expense at the time of issuance due to no stated term on the advance.

NOTE 43 – SHAREHOLDERS’ EQUITY

Capital Stock

Our authorized capital stock consists of 100,000,000 shares of common stock, with a par value of $0.01 per share, and 10,000,000 preferred shares with a par value of $0.001 per share.

All shares of common stock have equal voting rights and, when validly issued and outstanding, are entitled to one non-cumulative vote per share in all matters to be voted upon by shareholders. The shares of common stock have no pre-emptive, subscription, conversion or redemption rights and may be issued only as fully paid and non-assessable shares. Holders of the common stock are entitled to equal ratable rights to dividends and distributions with respect to the common stock, as may be declared by our Board of Directors (our “Board”) out of funds legally available. In the event of a liquidation, dissolution or winding up of the affairs of the Corporation,Company, the holders of common stock are entitled to share ratably in all assets remaining available for distribution to them after payment or provision for all

liabilities and any preferential liquidation rights of any preferred stock then outstanding.

In January 2020, the Company entered into three separate consulting agreements for total consideration of 699,999 shares of common stock (233,333 per agreement). The common stock underlying the agreements had a total value of $448,000, based on the $0.64 quoted market price of the common stock on the date the consulting agreements were reached. The right to receive the common stock is subject to ratable vesting over a 24-month period and at May 31, 2021, 495,833 shares had vested and 87,501 had been issued. The Company recognized approximately $168,000 and $56,000 of compensation expense under these consulting agreements during the nine and three months ended May 31, 2021 and included the expense in general and administrative expenses. The consultants have requested that the Company hold the remaining shares issuable under the consulting agreements in trust to allow the consultants to request their shares as they vest.

In October 2020, the Company issued 61,936 shares of common stock to Directors as payment for accrued fees totaling $92,500 earned in June through August 2020. During the quarter ended November 30, 2020, the Company recognized stock compensation and a corresponding charge to additional paid-in capital in the amount of $52,899 for director’s fees earned during the quarter. The Company issued the related 40,042 shares of common stock in December 2020.

During the quarter ended November 30, 2020, the Company granted a total of 53,500 stock options with a fair value of $81,468 on the date of grant to a consultant. The fair value of the options was determined using the Black-Scholes option-pricing model. The weighted average assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 0.28% (ii) estimated volatility of 208.05% (iii) dividend yield of 0.00% and (iv) expected life of all options of 4.6 years. The Company recognized the full $81,468 as compensation expense during the three months ended November 30, 2020.

During the three months ended November 30, 2017, we2020, the holders of 70,000 common stock warrants with an exercise price of $0.35 per share, exercised such warrants for total consideration of $24,500. The shares of common stock underlying the warrants were issued to the holders in December 2020.

During the three months ended February 28, 2021, the Company recognized $3,474 in stock compensation expenseand a corresponding charge to additional paid-in capital in the amount of $41,500 for 30,000director’s fees earned during the quarter. The Company issued the related 13,266 shares of common stock in April 2021.

In December 2020, the Company issued 33,064 shares of common stock to a consultant under a cashless option exercise.

In January 2021, the Company issued 136,442 shares of common stock to a former director under a cashless warrant exercise.

During the quarter ended February 28, 2021, the Company granted a total of 53,500 stock options issued to outside consultants for services and $12,518 in interest expense for warrants issuedwith a fair value of $106,821 on the date of grant to a directorconsultant. The fair value of the options was determined using the Black-Scholes option-pricing model. The weighted average assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 0.28% (ii) estimated volatility of 205.28% (iii) dividend yield of 0.00% and an officer for advances to us.(iv) expected life of all options of 4 years. The Company recognized the full $106,821 as compensation expense during the three months ended February 28, 2021.

WeIn April 2021, 120,000 common stock options were exercised by a consultant at an exercise price of $0.30 per option for cash totaling $36,000.

Texas Mineral Resources Corp.

Notes to Interim Financial Statements

May 31, 2021

(Unaudited)

NOTE 3 – SHAREHOLDERS’ EQUITY (CONTINUED)

In May 2021, 100,000 common stock options and 4,000 common stock warrants were exercised by an investor at exercise prices ranging from $0.10 - $0.20 per option/warrant for cash totaling $20,800.

During the quarter ended May 31, 2021, the Company granted a total of 43,500 stock options with a fair value of $105,918 on the date of grant to a consultant. The fair value of the options was determined using the Black-Scholes option-pricing model. The weighted average assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 0.28% (ii) estimated volatility of 208.05% (iii) dividend yield of 0.00% and (iv) expected life of all options of 4 years. The Company recognized the full $105,918 as compensation expense during the three months ended May 31, 2021.

During the three months ended May 31, 2021, the Company recognized stock compensation and a corresponding charge to additional paid-in capital in the amount of $49,500 for director’s fees earned during the quarter. The Company issued the related 30,037shares of common stock in June 2021.

The Company had 44,941,53371,904,028 shares of our common stock outstanding as of November 30, 2017.May 31, 2021.

NOTE 54 – RELATED PARTY TRANSACTIONSEARNINGS (LOSS) PER SHARE

The Company has received advances from certain DirectorsBasic and Officers. The advances totaled approximately $263,000diluted earnings per share for the nine and three months ended May 31, 2021 were calculated as of November 30, 2017.follows:

The Company rents office space on a month to month basis of $1,600

For the nine and three months ended May 31, 2020, all potential shares were anti-dilutive and thus excluded from a former director. This space is currently subleased to a tenant.the diluted loss per share calculation.

NOTE 65 – SUBSEQUENT EVENTS

In December 2017 certain members of our Board lent the company $14,000 with no stated term on the advances and no interest. The Board members were also issued 56,000 warrants that will be valued during our second fiscal quarter ending February 28, 2018 using the Black-Scholes model.None.

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

In this Quarterly Report on Form 10-Q, unless the context requires otherwise, references to “Texas Mineral Resources Corp,” “the Company” “we,” “our” or “us” refer to Texas Mineral Resources Corp.You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes appearing elsewhere in this quarterly report. This Quarterly Report on Form 10-Q may also contain statistical data and estimates we obtained from industry publications and reports generated by third parties. Although we believe that the publications and reports are reliable, we have not independently verified their data.

Forward-Looking Statements

This Quarterly Report on Form 10-Q and the exhibits attached hereto contain “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 (collectively, “forward-looking statements”). Such forward-looking statements concern our anticipated results and developments in our operations in future periods, planned exploration and development of our properties, plans related to our business and other matters that may occur in the future. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as “expects” or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “estimates” or “intends”, or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q, include, but are not limited to:

·the progress, potential and uncertainties of the 2020-2021 rare-earth exploration plans at our Round Top Project (as defined below); 

·timing for a completed feasibility study for our Round Top Project; 

·the success of getting the necessary permits for future drill programs and future project development at the Round Top Project; 

·expectations regarding our ability to raise capital and to continue our funding obligations pursuant to Budgets (as defined below); and 

·plans regarding anticipated expenditures at the Round Top Project; 

Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation:

·risks associated with our history of losses and need for additional financing; 

·risks associated with the Round Top Project mineral properties all being in the exploration stage; 

·risks associated with our lack of history in producing metals from the Round Top Project mineral properties;  

·risks associated with inability to fund our proportionate expenditures in the Round Top Project; 

·risks associated with unknown capital requirements of the Round Top Project; 

·risks associated with our exploration activities not being commercially successful; 

·risks associated with increased costs affecting our financial condition; 

·risks associated with a shortage of equipment and supplies adversely affecting Round Top’s ability to operate; 

·risks associated with mining and mineral exploration being inherently dangerous; 

·risks associated with uninsured risks; 

·risks associated with mineral operations being subject to market forces beyond our control; 

·risks associated with fluctuations in commodity prices; 

·risks associated with permitting, licenses and approval processes; 

·risks associated with the governmental and environmental regulations; 

·risks associated with future legislation regarding the mining industry and climate change; 

·risks associated with potential environmental lawsuits; 

·risks associated with our land reclamation requirements; 

·risks associated with rare earth and beryllium mining presenting potential health risks; 

·risks related to title to the Round Top properties; 

·risks related to competition in the mining and rare earth elements industries; 

·risks related to economic conditions; 

·risks related to our ability to manage growth; 

·risks related to the potential difficulty of attracting and retaining qualified personnel; 

·risks related to our dependence on key personnel; 

·risks related to our SEC filing history; and 

·risks related to our securities. 

This list is not exhaustive of the factors that may affect our forward-looking statements. Some of the important risks and uncertainties that could affect forward-looking statements are described further under the section heading “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report and “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended August 31, 2017,2020, filed with the SEC on December 14, 2017.November 30, 2020. Although we have attempted to identify important factors that could cause actual results to differ materially from those described in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Except as required by law, we disclaim any obligation to subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.We qualify all the forward-looking statements contained in this Quarterly Report by the foregoing cautionary statements.

Overview

We are a mining company engagedand substantially all of our business consists of owning and holding a 20% membership interest (being a certificate of interest or participation) in Round Top Mountain Development Company, LLC (“Round Top”), the entity that owns the mineral leases and mineral assets.

In August 2018, the Company and Morzev Pty. Ltd. (“Morzev”) entered into an agreement (the “2018 Option Agreement”) whereby Morzev was granted the exclusive right to earn and acquire a 70% interest in the businessCompany’s Round Top Project (“Project” or “Round Top” or “Round Top Project”) by financing $10 million of expenditures in connection with the Project, increasable to an 80% interest for an additional $3 million payment to the Company. Morzev began operating as USA Rare Earth, LLC (“USARE”) and in May 2019 notified the Company that it was nominating USARE as the optionee under the terms of the 2018 Option Agreement. In August 2019, the Company and USARE entered into an amended and restated option agreement as further amended on June 29, 2020 (the “2019 Option Agreement” and collectively with the 2018 Option Agreement, the “Option Agreement”), whereby the Company restated its agreement to grant USARE the exclusive right to earn and acquire a 70% interest, increasable to an 80% interest, in the Round Top Project. The 2019 Option Agreement has substantially similar terms to the 2018 Option Agreement.

On May 17, 2021, and in accordance with the terms of the Option Agreement, the Company and USARE entered into a contribution agreement (“Contribution Agreement”) whereby the Company and USARE contributed assets to Round Top, a wholly-owned subsidiary of the Company, in exchange for their ownership interests in Round Top, of which the Company now owns membership interests equating to 20% of Round Top and USARE owns membership interests equating to 80% of Round Top. Concurrently therewith, the Company and USARE as the two members entered into a limited liability company agreement (“Operating Agreement”) governing the operations of Round Top which contains customary and industry standard terms as contemplated by the Option Agreement. USARE will serve as manager of Round Top and Mr. Gorski, on behalf of the Company, will serve as one of the three members of the management committee.

Upon entry into the Contribution Agreement, the Company assigned the following contracts and assets to Round Top in exchange for its 20% membership interest in Round Top:

·the assignment and assumption agreement with respect to the mineral leases from the Company to Round Top; 

·the assignment and assumption agreement with respect to the surface lease from the Company to Round Top; 

·the assignment and assumption agreement with respect to the surface purchase option from the Company to Round Top;  

·the assignment and assumption agreement with respect to the water lease from the Company to Round Top; and 

·the bill of sale and assignment agreement of existing data and other relevant contracts and permits with respect to Round Top owned by the Company. 

and USARE assigned the following assets to Round Top (or the Company, as applicable) for its 80% membership interest in Round Top:

·cash to Round Top to continue to fund Round Top operations in the amount of approximately $3,761,750 comprising the balance of the $10 million required expenditure to earn a 70% interest in Round Top;  

·cash in the amount of $3 million to the Company upon exercise of the USARE option to acquire from the Company an additional 10% interest in Round Top, resulting in the aggregate ownership interest of 80% in Round Top; 

·bill of sale and assignment agreement of the Pilot Plant and other relevant contracts and permits to Round Top; and 

·bill of sale and assignment agreement of existing data and intellectual property owned by USARE to Round Top. 

The Operating Agreement provides for the following:

Interests. Pursuant to the Operating Agreement, USARE owns membership interests equating to 80% of Round Top and the Company owns membership interests equating to 20% of Round Top. These ownership interests will be adjusted further under a variety of circumstances, including a decision by a member not to participate fully in a program and budget (“Budget”). USARE’s contribution of approximately $3,761,750 in cash to Round Top will be used first to fund operations pursuant to the initial Budget. Once that amount is exhausted, USARE and the Company will be obligated, subject to an election to dilute, to fund further expenditures in proportion to their respective ownership interests. It is expected that the Company will fund up to $3 million during the next 12 months pursuant to the initial Budget.

Cash Calls. USARE, as manager, will issue monthly cash calls pursuant to adopted Budgets. Both parties, as members, will have 10 days after receipt of such a billing to meet the cash call. Failure to meet a cash call results in dilution; provided that successive failures in the same budgetary period can result in accelerated dilution or a default loan at a default interest rate. If a member (the “Delinquent Member”) does not contribute all or any portion of any additional capital contribution that such member is required to contribute (the “Default Amount”), then the other member (the “Non-Defaulting Member”) may elect to contribute the Default Amount to Round Top, or not to contribute the Default Amount to Round Top and, in both cases, the interests of the members will be recalculated. If the default by the Delinquent Member is the second or any subsequent default during the period of any adopted Budget, the Non-Defaulting Member may elect to contribute the Default Amount to Round Top on behalf of the Delinquent Member and to reduce the ownership interest of the Delinquent Member by an amount (expressed as a percentage) equal to: (i) 150%; multiplied by the Default Amount; divided by (ii) the aggregate contributed capital of all members (determined after taking into account the contribution of the Default Amount on behalf of the Delinquent Member). The interest of the Non-Defaulting Member will be increased by the reduction in the interest of the Delinquent Member.

Management. A management committee will make the major decisions of Round Top, such as approval of Budgets, and the manager will implement such decisions. The management committee consists of three representatives of the members, with two being appointed by USARE and one by the Company (initially being Dan Gorski). The representatives vote the ownership percentage interests of their appointing member.

Management Committee Meetings. Meetings will be held every three months unless otherwise agreed. For matters before the management committee that require a vote, voting is by simple majority except for certain “major decisions” that require a unanimous vote. So long as the Company maintains a 15% or greater ownership interest, the nine decisions identified in the bullet points below require unanimous approval. If the Company’s ownership interest falls below 15%, the number of unanimous decisions is reduced to five (being the first five bullet points below). If the Company is acquired by a REE mining company or sells its ownership interest to a REE mining company, in each case who elects a majority of the Company’s board, this unanimous approval requirement can be suspended by USARE, at its option. The major decisions requiring unanimous approval, as set forth above, are:

·approval of an amendment to any Budget that causes the Budget to increase by 15% or more, except for emergencies;  

·other than purchase money security interests or other security interests in Round Top equipment to finance the acquisition explorationor lease of Round Top equipment used in operations, the consummation of a project financing or the incurrence by Round Top of any indebtedness for borrowed money that requires the guarantee by any member of any obligations of Round Top; 

·substitution of a member under certain circumstances and dissolution of Round Top; 

·the issuance of an ownership interest or other equity interest in Round Top, or the admission of any person as a new member of Round Top, other than in connection with the exercise of a right of first offer by a member; 

·the redemption of all or any portion of an ownership interest, except for limited circumstances provided for in the Operating Agreement; 

·a decision to grant authorization for Round Top to file a petition for relief under any chapter of the United States Bankruptcy Code, to consent to such relief in any involuntary petition filed against Round Top by any third party, or to admit in writing any insolvency of Round Top or inability to pay its debts as they become due, or to consent to any receivership of Round Top;  

·acquisition or disposition of significant mineral rights, other real property or water rights outside of the area of interest as set forth in the Operating Agreement or outside of the ordinary course of business; 

·the merger of Round Top into or with any other entity; and 

·the sale of all or substantially all of Round Top’s assets. 

Manager. The manager will manage, direct and control operations in accordance with Budgets, will prepare and present to the management committee proposed Budgets, and will generally oversee and implement all of the day to day activities of Round Top. The manager will conduct necessary equipment and materials procurement and property and equipment maintenance activities, with all operations to be conducted in accordance with adopted Budgets. Before completion of the initial Budget, the manager will propose the next Budget. The Company will have the ability to accept, comment on and propose rejection of the proposed Budget and the manager is obligated to negotiate with the Company in good faith to develop an acceptable Budget. Voting for the adoption of such next proposed program and Budget will be by a simple majority vote.

Each member has the right to elect not to contribute fully or not to contribute at all to an adopted Budget. If a member does not contribute fully or at all, the other member has the right to make up some or all of the shortfall. In either case, the ownership interests of the members are recalculated and the non-contributing member is “diluted” on a straight-line basis. The same process is applied if warranted, developmentthe manager proposes to amend an adopted Budget by more than 15% and the proposal is approved.

Reports. The manager shall provide to the management committee periodic reports, including statements of accounts reflecting in detail the charges and credits to the business account during the preceding month, quarterly progress reports that include statements of expenditures and comparisons of such expenditures to the adopted Budget, summaries of data, and a final report after completion of a Budget.

Distributions. Cash in excess of authorized reserves will be distributed to the members on a periodic basis as determined by the management committee. No member will have the right to demand distributions in kind. Round Top will be required to make tax distributions to each member. USARE will have the right to purchase products at fair value or to market and sell products to third parties. If, during any period, products have been produced by Round Top and are available for sale but are not sold and a cash call or cash calls are made, then USARE is obligated to fund the monthly cash call or monthly cash calls on behalf of the Company, at no cost or expense to the Company, and the monthly cash call or monthly cash calls will be recovered by USARE solely out of the Company’s proportional interest in such products when sold.

Permitted Transfers. Certain transfers are permitted under the Operating Agreement, including transfers to affiliates or through certain mergers or other forms of business reorganization. A member may also encumber its ownership interest provided that if the ownership interest is foreclosed upon, the other member has a pre-emptive right to acquire such ownership interest at the foreclosure sale. If the transfer is a “permitted transfer,” the transferee if automatically admitted as a member; otherwise unless the other member agrees, the transferee is only an economic interest holder with no voting or other rights held by a member.

Right of First Offer. If a member desires to transfer all or a portion of its ownership interest to a third party (other than a permitted transfer), it may do that without the consent of the other member so long as it gives the other member the first right to purchase its ownership interest on the same terms. If the other member does not elect to purchase the ownership interest on such terms, the member may sell its ownership interest on such terms and the transfer will be a permitted transfer.

Drag-Along Right. If USARE accepts a bona fide offer to purchase its entire ownership interest and all other rights under the Operating Agreement from an unrelated third party, the Company will then be obligated to sell its entire ownership interest and all other rights under the Operating Agreement to the unrelated third party on the same terms and conditions as are accepted by USARE.

Involuntary Resignation – Elimination of Interest. If a member’s ownership interest is reduced through dilution to less than 5%, the member will be deemed to have resigned from Round Top and will relinquish its ownership interest to Round Top, in exchange for the right to receive 5% of net proceeds, if any, from the sale of products by Round Top.

General

Round Top currently holds two mineral properties. We currently hold two nineteen year leases executedwith the GLO expiring in September 2011 and November 2011,2029 to explore and develop a 950 acre rare earths project located in Hudspeth County, Texas, known as the Round Top Project and prospecting permits covering an adjacent 9,345 acres. Our principal focus will be on developing a metallurgical process to concentrate or otherwise extract the metals from the Round Top rhyolite, although we will continue to examine other opportunities in the region as they develop.Project. We currently have limited operations and have not established that Round Top contains any of our projects or properties contain any Proven or Probable Reservesmineral reserves under Regulation S-K, Item 1300, Disclosure by Registrant Engaged in Mining Operations (formerly referred to as SEC Industry Guide 7. Our operations are exploratory in nature.7).

We currently doRare earth elements are a group of chemically similar elements that usually are found together in nature – they are referred to as the “lanthanide series.” These individual elements have a variety of characteristics that are critical in a wide range of technologies, products, and applications and are critical inputs in existing and emerging applications. Without these elements, multiple high-tech technologies would not have any producing properties and consequently, we have no current operating income or cash flow and have not generated any revenues. Further exploration will be required before a final evaluation as to the economic and practical feasibility of any of our properties is determined.possible. These technologies include:

On December 23, 2013, we published·Cell phones,  

·Computer and television screens, 

·Battery operated vehicles, 

·Clean energy technologies, such as hybrid and electric vehicles and wind power turbines,  

·Fiber optics, lasers and hard disk drives, 

·Numerous defense applications, such as guidance and control systems and global positioning systems, 

·Advanced water treatment technology for use in industrial, military and  

·Outdoor recreation applications 

Because of these applications, global demand for REE is projected to steadily increase due to continuing growth in existing applications and increased innovation and development of new end uses. Interest in developing resources domestically has become a revised versionstrategic necessity as there is limited production of the June 2012 Preliminary Economic Assessment (the “Revised PEA”) onthese elements outside of China. Our ability to raise additional funds to continue to fund our participation interest in the Round Top Project based onmay be impacted by future prices for REEs.

As a 20,000 tonne per day heap leach operation using a conventional element separation plant. The mineralized material estimate was recalculatedpart of our ongoing operations, we will occasionally investigate new mining opportunities. We may also incur expenses associated with our investigations. These costs are expensed as incurred until such time when we have agreements in place to include uranium, niobium, tantalum and tin. The revised PEA assesses the potential economic viabilitypurchase such mining rights.

Investment Company Act Exclusion

Section 3(a)(9) of the simplified and “scaled down” operation which we believeInvestment Company Act of 1940, as amended (“1940 Act”), provides that a company “substantially all of whose business consists of owning or holding oil, gas, or other mineral royalties or leases, or fractional interests therein, or certificates of interest or participation in or investment contracts relative to such royalties, leases, or fractional interests” is a much better fit withnot an investment company within the present rare earth market.meaning of the 1940 Act. The Company has determined that this exemption applies to it giving consideration to the following four factors:

·whether the exempted activity constitutes “substantially all” of our business; 

On September 8, 2014, we announced that we had completed an internal analysis suggesting that there is a reasonable possibility to adapt a lower volume staged growth approach to development·The Company has owned mineral leases since 2010, all of our Round Top project. The analysis indicated that an operation designedbusiness to produce a selected groupdate has been comprised of separated REE productsowning and developing the mineral leases and, after the May 2021 “farm-down” of its 100% interest in the rangemineral leases, all of 350-450 tonnes per year range, could potentially yield favorable mine economics.our business continues to be comprised of owning and holding a certificate of interest and a participation in the mineral leases owned by Round Top. The goalCompany’s mineral assets historically, as well as the value of the proposed staged approach would be to increase mining rates ifcertificate of interest at May 31, 2021, have been booked at cost in accordance with GAAP. We have an accumulated deficit of approximately $36.79 million at May 31, 2021 as a result of owning and when our products gained acceptability. The analysis suggested that capital needs in the Revised PEA could be proportionally reduced in relation to the lower volume initial stage. We are currently conducting a more detailed analysis of the relative capital expenses and operating expenses requirements of a scaled down processing plant with both solvent extraction and ion exchange processes under evaluation. We believe the lower capital requirements of a staged startup could offset any marginal increase in unit operating costs.

Our current management and Board are stockholder-centric, and receive either no cash compensation or compensation that has been accrued. We will require definitive scientific documentation, rigorous economic studies, consideration of a wide range of alternatives and meticulous oversight of any cash outlays of stockholder funds.

Current Plan of Operations

Continued Work Program on Round Top Project

See “Properties – Current and Planned Metallurgical Activities” for a description of our current work activities and budget for the Round Top Project.

Exploration Potential of the Round Top Property

Although we have no plans in the next 24 months to conduct more physical exploration, we do believe, as stated in our 2010 presentations, that there are untested exploration targets present. They are:

We believe that using the existing data we can improve our understanding of the exploration potential of the area without resorting to such expensive techniques such as drilling.

Actively Seeking Project Partners

In addition to pursuing the exploration of our Round Top Project, we are actively seeking industry partners to assist the Company in financing the exploration and, if warranted, development ofdeveloping the Round Top Project. While we do not currently have any agreementsOur Board of Directors has authorized and do not anticipate any agreementsinstructed us to (i) invest approximately $3 million of our current cash during the next 12 months to meet our Round Top budgeted cash calls pursuant to the initial Budget adopted by the Company and USARE in the nearOperating Agreement, as well as to (ii) fund future budgets to be adopted by the management committee of Round Top to the extent of available working capital. 

·whether we own or trade in the mineral leases; 

·The Company has owned the mineral leases, which are activelynow owned by Round Top, since 2010 and neither the Company nor Round Top is in the business of dealing or trading in the mineral leases. 

·what qualifies as an eligible asset for purposes of the exception; and 

·The statute specifically references mineral leases and our mineral leases were owned by the Company and are now owned by Round Top. In accordance with Regulation S-K Items 1200 and 1300 (that replaced SEC Industry Guide 7) that govern disclosure for oil and gas registrants as well as disclosure by registrants engaged in pursuing partnersmining operations, respectively, the definition of mineral resource in Item 1300 is “a concentration or occurrence of material of economic interest in or on the Earth’s crust.” Our rare earth elements and minerals underlying the mineral leases meet that definition, as well as does coal, silver, gold and other material mined for economic value by registrants involved in mining operations. The SEC staff has recognized that an excepted entity can also engage in related business activities such as exploring, developing, and operating the eligible assets.  

·what qualifies as a “certificate of interest or participation in” or an “investment contract relative to” the eligible assets. 

·The statute allows a Company to own a “certificate of interest” or “participation in” the mineral leases. The SEC staff has advised that limited partnership interests and/or similar securities issued by entities that themselves own the leases constitute “certificate of interest or participation in or investment contracts” related to such leases. The Company’s 20% membership interest in Round Top Project forconstitutes a range“certificate of participation, including but not limited to, joint-venture arrangements, project sale, significant investment ininterest” and a “participation in” the Company, back-end processing and product sales arrangements and other financing arrangements to assist in themineral leases that are owned by Round Top Project.Top.  

Operation and supportThe Company intends to continue to conduct its business operations in order to continue to be excluded from the definition of an “investment company” under the DoE Grant.1940 Act.

Approximately 25% of TMRC’ efforts will be allocated to completing its share of the Phase 1 of the DoE grant. Our role in this grant is to acquire the samples, evaluate the primary and alternate sites, conduct the economic evaluation and co-ordinate the project.

Operation of American Minerals Reclamation

Absent the securing of feasibility financing for Round Top, the remainder of TMRC plans to actively pursue the development of American Minerals Reclamation (AMR). We have set no geographical limitations on this project but we are currently basing our efforts in the Pennsylvania coal producing region because of the excellent opportunities present there and existence of the network of people and institutions that have been developed during the grant application process.

Liquidity and Capital Resources

As of November 30, 2017, weMay 31, 2021, our accumulated deficit was approximately $36.79 million and our cash position was approximately $4,909,000. We had a working capital deficitsurplus of approximately $1,601,000.$4,872,000. We currently have noplan to fund approximately $3 million of this working capital and will need to raise additional funding to implement our business strategy.

During the fiscal year ended August 31, 2017, we completed Stage 1of our metallurgical activities as discussed in the section heading “ITEM 2. PROPERTIES” of this Annual Report. Our budget for this stage of activity was approximately $134,502. To date we have expended approximately that amount on Stage 1 which is now complete. Estimated cost of Stage 2 is $2,015,454, $336,454 of which has been spent; this phase, called milestone 1, of Stage 2 has been modified and augmented by the Defense Logistical Agency. There is no guarantee that we will be able to raise the working capital necessary for balance of Stage 2 activities. After completion of Stage 1, we will use any remaining available capital to begin work on Stage 2 of our metallurgical activities.

The audit opinion and notes that accompany our financial statements for the year ended August 31, 2017, disclose a ‘going concern’ qualification to our ability to continue in business. The accompanying financial statements have been prepared under the assumption that we will continue as a going concern. We are an exploration stage company and we have incurred losses since our inception. We do not have sufficient cash to fund normal operations and meet debt obligations forwithin the next 12 months without deferring payment on certain current liabilities and raising additional funds. We believe thatper the going concern condition cannot be removedinitial Budget in connection with confidence until the CompanyRound Top Project. Round Top has entered into a business climate where funding of its activities is more assured.

We currently do not have funds to pursue exploration or development workcommenced commercial production on any of our properties, which means thatits mineral properties. We have no revenues from operations and anticipate we will be required to raise additional capital, enterhave no operating revenues until Round Top is placed into joint venture relationships, or find alternative means to finance our properties in order to place them into commercial production, if warranted, or evaluateat all. All Round Top properties are in the possibility of selling one or more of our projects or the Company in its entirety. exploration stage.

Failure to obtain required and sufficient Round Top financing may result in the (i) delay or indefinite postponement of exploration and, if warranted, development or production on one in the Round Top Project, and/or more(ii) curtailment or cessation of our properties and any properties we may acquireRound Top. We will need to raise additional capital in the future to fund our proportionate participation in the Round Top Project or even a loss of property interests. This includes our leases over claims coveringremaining 20% interest in the principal deposits on our properties, which may expire unless we expend minimum levels of expenditures over the terms of such leases.Round Top project will be diluted. We cannot be certain that additional capital or other types of financing will be available if needed or that, if available, the terms of such financing will be favorable or acceptable to us. Our ability to arrange additional financing in the future is dependent upon third parties. Failure of obtaining the required capital will depend,result in part, on the prevailing capital market conditions as well assignificant reduction of our business performance.ownership interest in the Round Top Project, provided that if our ownership interest in Round Top is reduced to less than 5%, our interest will be converted to a right to receive 5% of the net proceeds, if any, from the sale of products by Round Top.

Results of Operations

ThreeNine months ended November 30, 2017May 31, 2021 and November 30, 2016May 31, 2020

General & Revenue

We had no operating revenues during the threenine months ended November 30, 2017May 31, 2021 and November 30, 2016.May 31, 2020. We are not currently profitable. As a result of ongoing operating losses, we had an accumulated deficit of approximately $34.7$36.79 million as of November 30, 2017.May 31, 2021.

Operating expenses, loss from operations, other income (expenses) and resulting losses from Operationsnet income (loss).

We incurred exploration costs for the threenine months ended November 30, 2017May 31, 2021 and November 30, 2016,May 31, 2020, in the amount of approximately $6,750$160,000 and $3,250,$75,000, respectively. Expenditures during the nine months ended May 31, 2021 were primarily for permits, fees and contractors. Currently, expenditures for metallurgical activities are funded by our joint venture partner, USARE.

Our general and administrative expenses for the threenine months ended November 30, 2017May 31, 2021 and November 30, 2016,May 31, 2020, respectively, were approximately $91,000$1,080,000 and $120,000.$543,000. For the threenine months ended November 30, 2017,May 31, 2021 and 2020, this amount included approximately $3,400$606,000 and $98,000, respectively, in stock-based compensation to anDirectors and outside consultant.consultants. The remaining expenditures totaling approximately $87,700 were primarily for payroll, professional and related taxes and benefits, professionalconsulting fees and other general and administrative expenses necessary for our operations.

In June 2020, TMRC led a consortium that included Penn State University and applied for a Department of Energy grant to evaluate the economic potential of rare earth elements associated with Appalachian coal deposits. The consortium was awarded the first phase of this grant in September 2020 as were twelve other recipients. Work consisted of a conceptual study in the identification of a resource, developing the physical metallurgy to concentrate the rare earth minerals and then separating and refining both the rare earth elements as well as various other elements. The final report was delivered to the Department of Energy in December 2020. The Department of Energy has recently notified the consortium that it has been selected for the second phase of the grant, subject to final funding approval.For the nine months ended May 31, 2021, we received $150,000 from the Department of Energy relating to this grant and incurred approximately $139,000 in grant related expenses.

In May 2021, USARE met its obligations under the Option Agreement and acquired a 70% interest in Round Top. In addition, USARE exercised its option to acquire an additional 10% interest in Round Top for $3 million. In connection with this transaction, the Company received total consideration of approximately $3,728,000, consisting of the $3 million upon exercise of the option and an assumption of approximately $728,000 in advances from related parties, and derecognized 80% of the carrying amount of mineral properties, or approximately $402,000. The resulting gain on sale of interest in mineral properties in the amount of approximately $3,326,000 is included as its own line item in other income (expense).

For the nine months ended May 31, 2021, we earned approximately $4,000 in interest income from depository accounts. For the nine months ended May 31, 2020 we settled an outstanding payable of $45,000 for a past employee’s compensation, in exchange for 130,892 shares of our common stock valued at approximately $111,000 on the settlement date, resulting in a loss on settlement of approximately $66,000.

We had losses from operations for the nine months ended May 31, 2021 and May 31, 2020 totaling approximately $1,240,000 and $618,000, respectively.

We had net income for the nine months ended May 31, 2021 totaling approximately $2,102,105 and a net loss for the nine months ended May 31, 2020 totaling approximately $694,000.

Three months ended May 31, 2021 and May 31, 2020

General & Revenue

We had no operating revenues during the three months ended May 31, 2021 and May 31, 2020. We are not currently profitable. As a result of ongoing operating losses, we had an accumulated deficit of approximately $36.79 million as of May 31, 2021.

Operating expenses, loss from operations, other income (expenses) and resulting net income (loss).

We incurred exploration costs for the three months ended May 31, 2021 and May 31, 2020, in the amount of approximately $63,000 and $69,000, respectively. Expenditures during the three months ended May 31, 2021 were primarily for permits, fees and contractors. Currently expenditures for metallurgical activities are funded by our joint venture partner, USARE.

Our general and administrative expenses for the three months ended November 30, 2016May 31, 2021 and May 31, 2020, respectively, were approximately $345,000 and $227,000. For the three months ended May 31, 2021 and 2020, this amount included approximately $12,000$211,000 and $56,000, respectively, in stock-based compensation to anDirectors and outside consultant.consultants. The remaining expenditures totaling approximately $107,000 were primarily for payroll, professional and related taxes and benefits, professionalconsulting fees and other general and administrative expenses necessary for our operations.

In May 2021, USARE met its obligations under the Option Agreement and acquired a 70% interest in Round Top. In addition, USARE exercised its option to acquire an additional 10% interest in Round Top for $3 million. In connection with this transaction, the Company received total consideration of approximately $3,728,000, consisting of the $3 million upon exercise of the option and an assumption of approximately $728,000 in advances from related parties, and derecognized 80% of the carrying amount of mineral properties, or approximately $402,000. The resulting gain on sale of interest in mineral properties in the amount of approximately $3,326,000 is included as its own line item in other income (expense).

For the three months ended November 30, 2017 and November 30, 2016May 31, 2021, we recorded interest expense ofearned approximately $18,500 and $5,200, respectively. For the three months ended November 30, 2017, this amount included approximately $12,500$700 in interest expense related to warrants issued with advancesincome from certain officers and directors.depository accounts.

We had losses from operations for the three months ended November 30, 2017May 31, 2021 and November 30, 2016May 31, 2020 totaling approximately $98,000$408,000 and $123,000,$296,000, respectively.

We had net lossesincome for the three months ended November 30, 2017 and November 30, 2016May 31, 2021 totaling approximately $116,000$2,919,000 and $128,000, respectively.a net loss for the three months ended May 31, 2020 totaling approximately $299,000.

Off-Balance Sheet Arrangements

For the nine and three months ended May 31, 2021 and 2020, we have off-balance sheet arrangements for annual payments in relation to the mineral leases as disclosed in Note 2 of the unaudited notes to interim financial statements.

Off-Balance Sheet Arrangements

We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, and results of operations, liquidity or capital resources.

Critical Accounting Estimates

Management’s discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with GAAP. Preparation of financial statements requires management to make assumptions, estimates and judgments that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and the related disclosures of contingencies. Management bases its estimates on various assumptions and historical experience, which are believed to be reasonable; however, due to the inherent nature of estimates, actual results may differ significantly due to changed conditions or assumptions. On a regular basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are fairly presented in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material. Management believes that the following critical accounting estimates and judgments have a significant impact on our financial statements; Valuation of options granted to Directors, Officers and consultants using the Black-Scholes model.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

At the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation was carried out under the supervision of and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operations of our disclosure controls and procedures (as defined in Rule 13a – 15(e) and Rule 15d – 15(e) under the Exchange Act). Based on that evaluation, and in light of the material weakness existing in our internal controls over financial reporting as of August 31, 2020 (as described in greater detail in our annual report on From 10-K for the year ended August 31, 2020), the CEO and CFO have concluded that as of the end of the period covered by this Quarterly Report, our disclosure controls and procedures were not effective in ensuringproviding reasonable assurance that: (i) information required to be disclosed by us in our reports that we file or submit to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and (ii) material information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow for accurate and timely decisions regarding required disclosure.

Management determined that our disclosure controls and procedures were not effective during the period covered by this report because during the period the Company held its annual meeting of stockholders on February 24, 2016, but failed to include in its proxy statement for the meeting prepared under Regulation 14A of the Securites Exchange Act of 1934, as amended (the “Exchange Act”), an advisory vote to approve the compensation of our named executive officers as was required under Rule 14a-21(a) under the Exchange Act. The omission was inadvertent and the Company intends to include the advisory vote to approve the compensation of its named executive officers in its proxy statement under Regulation 14A for its next annual meeting of stockholders to be held in early 2018. The Company is implementing additional internal procedures, to ensure that all requirements, including the requirements of Rule 14a-21, are met in future filings.

Changes in Internal Control over Financial Reporting

There were no changes to our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially effect, our internal controls over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings 

None.

Item 1A. Risk Factors

Except as set forth below, thereThere have been no material changes from the risk factors as previously disclosed in our Form 10-K for the year ended August 31, 20172020 as filed with the SEC on December 14, 2017.November 30, 2020.

We have not sought an advisory stockholder vote to approve the compensation of our named executive officers.

Rule 14a-21 under the Exchange Act requires us to seek a separate stockholder advisory vote at our annual meeting at which directors are elected to approve the compensation of our named executive officers, not less frequently than once every three years (say-on-pay vote). At our annual meeting in February of 2016, we did not submit to our stockholders a say-on-pay vote to approve an advisory resolution regarding our compensation program for our named executive officers. Consequently, the Board of Directors has not considered the outcome of our say-on-pay vote results when determining future compensation policies and pay levels for our named executive officers. At our 2017 annual meeting of stockholders, we will be asking our stockholders to vote on a proposal to approve an advisory resolution regarding our compensation program for our named executive officers. Following such annual meeting, the Board of Directors will consider the outcome of our say-on-pay vote results when determining future compensation policies and pay levels for our named executive officers, and will report on the results of the say-on-pay vote as required by applicable SEC rules. In our quarterly report on Form 10-Q for the quarter ended February 29, 2016, we disclosed that our disclosure controls and procedures did not lead to our identification of the requirement to provide this advisory say-on-pay vote, and we are adjusting our disclosure controls and procedures processes accordingly.

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

Except as set forth below, all unregistered sales of equity securities during the period covered by this Quarterly Report were previously disclosed in our current reports on Form 8-K or quarterly reports on Form 10-Q.

With respect to sales designated by “Sec. 4(a)(2),” these shares were issued pursuant to the exemption from registration contained in to Section 4(a)(2) of the Securities Act as privately negotiated, isolated, non-recurring transactions not involving any public offer or solicitation. Each purchaser represented that such purchaser’s intention to acquire the shares for investment only and not with a view toward distribution. None of the securities were sold through an underwriter and accordingly, there were no underwriting discounts or commissions involved.

We did not repurchase any of our securities during the quarter covered by this report.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosure

Pursuant to Section 1503(a) of the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act (The “Dodd-Frank Act”), issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States are required to disclose in their periodic reports filed with the SEC information regarding specified health and safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities. During the quarter ended November 30, 2016,February 28, 2021, our U.S. exploration properties were not subject to regulation by the Federal Mine Safety and Health Administration under theFederal Mine Safety and Health Act of 1977.

Item 5. Other Information

None.

Item 6. Exhibits

The following exhibits are attached hereto or are incorporated by reference:

*Management contract or compensatory plan or arrangement. 

(1)Submitted Electronically Herewith. Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) Balance Sheets at May 31, 2021 and August 31, 2020; (ii) Statements of Operations for the nine and three months ended May 31, 2021 and May 31, 2020; (iii) Statements of Cash Flows for the nine months ended May 31, 2021 and May 31, 2020; (iv) Statements of Shareholders’ Equity for the nine months ended May 31, 2021 and May 31, 2020; and (v) Notes to Financial Statements. 

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.

TEXAS MINERAL RESOURCES CORP.