Silver Bull Resources, Inc. — Annual Report 2020

Jan 29, 2021

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

SILVER BULL RESOURCES, INC.

(An Exploration Stage Company)

	PAGE NO.
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Financial Statements:
Consolidated Balance Sheets	F-3
Consolidated Statements of Operations and Comprehensive Loss	F-4
Consolidated Statements of Cash Flows	F-5 – F-6
Consolidated Statement of Changes in Stockholders' Equity	F-7
Notes to Consolidated Financial Statements	F-8 – F-23

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Silver Bull Resources, Inc.:

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Silver Bull Resources, Inc. (an exploration stage company) (the "Company") as of October 31, 2020 and 2019, and the related consolidated statements of operations and comprehensive loss, stockholders' equity, and cash flows for the years then ended, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of October 31, 2020 and 2019, and the results of its operations and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.

Going Concern Uncertainty

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations and has limited cash and cash equivalents at October 31, 2020, that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Smythe LLP

Smythe LLP, Chartered Professional Accountants

We have served as the Company's auditor since 2016.

Vancouver, Canada January 28, 2021

SILVER BULL RESOURCES, INC. (AN EXPLORATION STAGE COMPANY) CONSOLIDATED BALANCE SHEETS

	October 31,2020			October 31,2019
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	1,861,518	$	1,431,634
Value-added tax receivable, net of allowance for uncollectible taxes of $345,059 and $327,624,
respectively (Note 4)		219,804		255,847
Income tax receivables		580		784
Other receivables		14,387		8,543
Prepaid expenses and deposits		229,647		204,713
Loan receivable (Note 5)		360,050		—
Total Current Assets		2,685,986		1,901,521
Office and mining equipment, net (Note 6)		239,769		226,413
Property concessions (Note 7)		5,019,927		5,019,927
Goodwill (Note 8)		2,058,031		2,058,031
TOTAL ASSETS	$	10,003,713	$	9,205,892
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	499,057	$	328,943
Accrued liabilities and expenses		383,718		305,446
Income tax payable		5,000		1,825
Stock option liability (Note 11)		—		4,803
Total Current Liabilities		887,775		641,017
Loan payable (Note 9)		30,034		—
TOTAL LIABILITIES		917,809		641,017
COMMITMENTS AND CONTINGENCIES (Note 15)
STOCKHOLDERS' EQUITY (Notes 3, 10, 11 and 12)
Common stock, $0.01 par value; 37,500,000 shares authorized,
33,165,945 and 29,541,027 shares issued and outstanding, respectively*		2,399,518		2,363,282
Additional paid-in capital		138,613,286		135,902,944
Accumulated deficit		(132,019,148)		(129,793,599)
Other comprehensive income		92,248		92,248
Total Stockholders' Equity		9,085,904		8,564,875
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	10,003,713	$	9,205,892

*Shares outstanding for prior period have been restated for the one-for-eight reverse stock split.

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

SILVER BULL RESOURCES, INC. (AN EXPLORATION STAGE COMPANY) CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

	Years Ended October 31,
		2020		2019
REVENUES	$	—	$	—
EXPLORATION AND PROPERTY HOLDING COSTS
Exploration and property holding costs		645,701		2,508,602
Depreciation, asset and property concessions' impairment (Notes 6 and 7)		34,694		44,119
TOTAL EXPLORATION AND PROPERTY HOLDING COSTS		680,395		2,552,721
GENERAL AND ADMINISTRATIVE EXPENSES
Personnel		613,517		692,242
Office and administrative		316,930		446,853
Professional services		398,154		245,949
Directors' fees		144,310		201,073
Provision for uncollectible value-added taxes (Note 4)		49,619		222,130
TOTAL GENERAL AND ADMINISTRATIVE EXPENSES		1,522,530		1,808,247
LOSS FROM OPERATIONS		(2,202,925)		(4,360,968)
OTHER (EXPENSES) INCOME
Interest income		7,689		28,443
Foreign currency transaction loss		(22,371)		(15,214)
Change in fair value of stock option liability (Note 11)		—		21,105
Change in fair value of warrant derivative liability		—		393,374
TOTAL OTHER (EXPENSES) INCOME		(14,682)		427,708
LOSS BEFORE INCOME TAXES		(2,217,607)		(3,933,260)
INCOME TAX EXPENSE (Note 13)		7,942		5,309
NET AND COMPREHENSIVE LOSS	$	(2,225,549)	$	(3,938,569)
BASIC AND DILUTED NET LOSS PER COMMON SHARE*	$	(0.08)	$	(0.13)
BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING*		29,580,786		29,485,841

*Shares outstanding for prior period have been restated for the one-for-eight reverse stock split.

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

SILVER BULL RESOURCES, INC. (AN EXPLORATION STAGE COMPANY) CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years Ended October 31,
	2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$(2,225,549)	$	(3,938,569)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation, asset and property concessions' impairment	34,694		44,119
Provision for uncollectible value-added taxes	49,619		222,130
Foreign currency transaction loss	15,191		145
Change in fair value of warrant derivative liability	—		(393,374)
Change in fair value of stock option liability (Note 11)	—		(21,105)
Stock options issued for compensation (Note 11)	62,417		206,756
Changes in operating assets and liabilities:
Value-added tax receivable	(39,820)		(288,673)
Income tax receivables	123		(604)
Other receivables	(6,338)		3,641
Prepaid expenses and deposits	(25,419)		31,090
Accounts payable	120,273		71,476
Accrued liabilities and expenses	53,511		(143,286)
Income tax payable	3,175		(2,875)
Net cash used in operating activities	(1,958,123)		(4,209,129)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property concessions	—		(11,821)
Purchase of equipment	(48,050)		(57,224)
Loan receivable (Note 5)	(360,050)		—
Net cash used in investing activities	(408,100)		(69,045)
CASH FLOWS FROM FINANCING ACTIVITIES:
Property concessions funding (Note 3)	1,100,731		2,540,810
Proceeds from loan financing (Note 9)	29,531		—
Proceeds from issuance of common stock, net of offering costs (Note 10)	1,668,669		—
Proceeds from exercise of warrants, net of costs (Note 10)	—		142,876
Net cash provided by financing activities	2,798,931		2,683,686
Effect of exchange rates on cash and cash equivalents	(2,824)		283
Net increase (decrease) in cash and cash equivalents	429,884		(1,594,205)
Cash and cash equivalents beginning of year	1,431,634		3,025,839
Cash and cash equivalents end of year	$1,861,518	$	1,431,634

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

SILVER BULL RESOURCES, INC. (AN EXPLORATION STAGE COMPANY) CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

	Years Ended October 31,
	2020		2019
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Income taxes paid	$4,825	$	8,080
Interest paid	—		—
NON-CASH INVESTING AND FINANCIING ACTIVITIES:
Offering costs included in accounts payable and accrued liabilities	$90,042	$	—

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

SILVER BULL RESOURCES, INC. (AN EXPLORATION STAGE COMPANY) CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

		Common Stock
	Numberof Shares*	Amount	AdditionalPaid-inCapital	AccumulatedDeficit	OtherComprehensiveIncome	TotalStockholders'Equity
Balance, October 31, 2018				29,358,527 $2,348,682 $133,015,768 $ (125,855,030) $	92,248 $	9,601,668
Issuance of common stock as follows:
- Exercise of warrants at a price of $0.13 per share less costs of $210 (Note 10)	182,500	14,600	128,276	—	—	142,876
South32 option agreement (Note 3)	—	—	2,540,810	—	—	2,540,810
Reclassification to additional paid-in capital of stock option liability (Notes 3 and
11)	—	—	12,126	—	—	12,126
Reclassification of consultants' stock options to liability (Note 11)	—	—	(792)	—	—	(792)
Stock option activity as follows:
- Stock-based compensation for options issued to directors, officers, employees
and consultants (Note 11)	—	—	206,756	—	—	206,756
Net loss for the year ended October 31, 2019	—	—	—	(3,938,569)	—	(3,938,569)
Balance, October 31, 2019				29,541,027 $2,363,282 $135,902,944 $ (129,793,599) $	92,248 $	8,564,875

		Common Stock
	Numberof Shares*	Amount	AdditionalPaid-inCapital	AccumulatedDeficit	OtherComprehensiveIncome	TotalStockholders'Equity
Balance, October 31, 2019				29,541,027 $2,363,282 $135,902,944 $ (129,793,599) $	92,248 $	8,564,875
Issuance of common stock as follows:
- Fractional share adjustment (Note 10)	1,338	—	—	—	—	—
- for cash at a price of $0.47 per share with attached warrants, less offering costsof $124,456 (Note 10)	3,623,580	36,236	1,542,391	—	—	1,578,627
South32 option agreement (Note 3)	—	—	1,100,731	—	—	1,100,731
Reclassification to additional paid-in capital of stock option liability (Notes 3 and11)	—	—	4,803	—	—	4,803
Stock option activity as follows:
- Stock-based compensation for options issued to directors, officers, employeesand consultants (Note 11)	—	—	62,417	—	—	62,417
Net loss for the year ended October 31, 2020	—	—	—	(2,225,549)	—	(2,225,549)
Balance, October 31, 2020				33,165,945 $2,399,518 $138,613,286 $ (132,019,148) $	92,248 $	9,085,904

*Shares outstanding for prior periods have been restated for the one-for-eight reverse stock split.

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

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

Silver Bull Resources, Inc. (the "Company") was incorporated in the State of Nevada on November 8, 1993 as the Cadgie Company for the purpose of acquiring and developing mineral properties. The Cadgie Company was a spin-off from its predecessor, Precious Metal Mines, Inc. On June 28, 1996, the Company's name was changed to Metalline Mining Company. On April 21, 2011, the Company's name was changed to Silver Bull Resources, Inc. The Company's fiscal year-end is October 31. The Company has not realized any revenues from its planned operations and is considered an exploration stage company. The Company has not established any reserves with respect to its exploration projects and may never enter into the development stage with respect to any of its projects.

The Company engages in the business of mineral exploration. The Company currently owns a number of property concessions in Mexico (collectively known as the "Sierra Mojada Property"). The Company conducts its operations in Mexico through its wholly-owned subsidiary corporations, Minera Metalin S.A. de C.V. ("Minera Metalin"), Contratistas de Sierra Mojada S.A. de C.V. ("Contratistas") and Minas de Coahuila SBR S.A. de C.V. ("Minas"). In addition, the Company has the option to acquire certain property concessions in Kazakhstan.

On April 16, 2010, Metalline Mining Delaware, Inc., a wholly-owned subsidiary of the Company incorporated in the State of Delaware, was merged with and into Dome Ventures Corporation ("Dome"), a Delaware corporation. As a result, Dome became a wholly-owned subsidiary of the Company. Dome has a wholly-owned subsidiary Dome Asia Inc. ("Dome Asia"), which is incorporated in the British Virgin Islands. Dome Asia has a wholly-owned subsidiary, Dome Minerals Nigeria Limited, incorporated in Nigeria.

On September 18, 2020, the Company completed a one-for-eight reverse stock split of its shares of common stock. All share and per share information in the consolidated financial statements, including references to the number of shares of common stock, stock options and warrants, prices of issued shares, exercise prices of stock options and warrants, and loss per share, have been adjusted to reflect the impact of the reverse stock split.

The Company's efforts and expenditures have been concentrated on the exploration of properties, principally in the Sierra Mojada Property located in Coahuila, Mexico. The Company has not determined whether its exploration properties contain ore reserves that are economically recoverable. The ultimate realization of the Company's investment in exploration properties is dependent upon the success of future property sales, the existence of economically recoverable reserves, and the ability of the Company to obtain financing or make other arrangements for exploration, development, and future profitable production activities. The ultimate realization of the Company's investment in exploration properties cannot be determined at this time.

Going Concern

Since its inception in November 1993, the Company has not generated revenue and has incurred an accumulated deficit of $132,019,148. Accordingly, the Company has not generated cash flows from operations, and since inception the Company has relied primarily upon proceeds from private placements and registered direct offerings of the Company's equity securities and warrant exercises as the primary sources of financing to fund the Company's operations. As of October 31, 2020, the Company had cash and cash equivalents of $1,861,518. Based on the Company's limited cash and cash equivalents, and history of losses, there is substantial doubt as to whether the Company's existing cash resources are sufficient to enable the Company to continue its operations for the next 12 months as a going concern. Management plans to pursue possible financing and strategic options including, but not limited to, obtaining additional equity financing. Management has successfully pursued these options previously and believes that they alleviate the substantial doubt that the Company can continue its operations for the next 12 months as a going concern. However, there is no assurance that the Company will be successful in pursuing these plans. The Company's limited ability to issue shares to raise capital without an increase in the number of authorized shares of common stock is discussed further in the "Risk Factors – Risks Related to our Business" section above.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies is presented to assist in understanding the consolidated financial statements. The consolidated financial statements and notes are representations of the Company's management, which is responsible for their integrity and objectivity.

Basis of Presentation

The Company's consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") using the accrual method of accounting, except for cash flow amounts.

All figures are in United States dollars unless otherwise noted.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, after elimination of intercompany accounts and transactions. The wholly owned subsidiaries of the Company are listed in Note 1 to the consolidated financial statements.

The Company consolidates entities in which it has a controlling financial interest based on either the variable interest entity (VIE) or voting interest model.

Under the VIE model, a VIE is a reporting entity that has (a) the power to direct the activities that most significantly impact the VIE's economic performance, and (b) the obligation to absorb losses of, or the right to receive benefits from, the VIE that could potentially be significant to the VIE. Currently, the Company manages the mineral exploration program in the property concessions in Mexico through its wholly-owned subsidiary corporations Minera Metalin and Contratistas.

The Company has determined Minera Metalin and Contratistas are variable interest entities and the Company is the primary beneficiary.

Use of Estimates

The preparation of these consolidated financial statements in conformity with GAAP requires management to make estimates based on assumptions about future events that affect the amounts reported in the consolidated financial statements and related notes to the consolidated financial statements. Actual results could differ from those estimates. Estimates and assumptions are reviewed on an ongoing basis based on historical experience and other factors that are considered to be relevant under the circumstances. Revisions to estimates and assumptions are accounted for prospectively.

Significant areas involving the use of estimates include determining the allowance for uncollectible taxes, evaluating recoverability of property concessions, evaluating impairment of long-lived assets, evaluating impairment of goodwill, establishing a valuation allowance on future use of deferred tax assets, calculating a valuation for stock option liability, calculating a valuation for warrant derivative liability and calculating stock-based compensation.

Cash and Cash Equivalents

Cash and cash equivalents include all highly-liquid investments with an original maturity of three months or less at the date of purchase.

Property Concessions

Property concession acquisition costs are capitalized when incurred and will be amortized using the units of production method following the commencement of production. If a property concession is subsequently abandoned or impaired, any capitalized costs will be expensed in the period of abandonment or impairment. To date, no property concessions have reached the production stage.

Acquisition costs include cash consideration and the fair market value of shares issued on the acquisition of property concessions.

Exploration Costs

Exploration costs incurred are expensed to the date of establishing that costs incurred are economically recoverable. Exploration expenditures incurred subsequent to the establishment of economic recoverability are capitalized and included in the carrying amount of the related property. To date, the Company has not established the economic recoverability of its exploration prospects; therefore, all exploration costs are being expensed.

Property and Equipment

Property and equipment are recorded at cost less accumulated depreciation and impairment losses. Assets under construction are depreciated when they are substantially complete and available for their intended use, over their estimated useful lives. Repairs and maintenance of property and equipment are expensed as incurred. Costs incurred to enhance the service potential of property and equipment are capitalized and depreciated over the remaining useful life of the improved asset. Property and equipment are depreciated using the straight-line method over the estimated useful lives of the related assets as follows:

• · Mining equipment five to 10 years
• · Vehicles four years
• · Building and structures 40 years
• · Computer equipment and software three years
• · Well equipment 10 to 40 years
• · Office equipment three to 10 years

Impairment of Long-Lived Assets

Management reviews and evaluates its long-lived assets for impairment when events and changes in circumstances indicate that the related carrying amounts of its assets may not be recoverable. Impairment is considered to exist if the future cash flows on an undiscounted basis are less than the carrying amount of the longlived asset. An impairment loss is measured and recorded based on the difference between book value and fair value of the asset group. In estimating future cash flows, assets are grouped at the lowest level for which there is identifiable cash flows that are largely independent of cash flows from other asset groups. In estimating future cash flows, the Company estimates the price that would be received to sell an asset group in an orderly transaction between market participants at the measurement date. Significant factors that impact this price include the price of silver and zinc, and general market conditions for exploration companies, among other factors.

Goodwill

Goodwill is the purchase premium after adjusting for the fair value of net assets acquired. The Company tests goodwill for impairment at the reporting unit level at least annually, or more frequently if events or changes in circumstances indicate that the assets may be impaired. Goodwill impairment tests require judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. The Company performs its annual goodwill impairment tests on April 30th of each fiscal year. During the year ended October 31, 2020, the Company determined that no impairment was required.

Income Taxes

The Tax Cuts and Jobs Act of 2017 (the "Tax Act") was signed into law on December 22, 2017. The law includes significant changes to the U.S. corporate income tax system, including a federal corporate rate reduction from 35% to 21%, limitations on the deductibility of interest expense and executive compensation, and the transition of U.S. international taxation from a worldwide tax system to a territorial tax system. The law did not have a material impact on the Company's financial position, results of operations or cash flows and disclosures.

The Company follows the asset and liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are determined based on temporary differences between the tax basis and accounting basis of the assets and liabilities measured using tax rates enacted at the balance sheet date. The Company recognizes the tax benefit from uncertain tax positions only if it is at least "more likely than not" that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement with the taxing authorities. This accounting standard also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods and disclosure.

A valuation allowance is recorded against deferred tax assets if management does not believe that the Company has met the "more likely than not" standard imposed by this guidance to allow recognition of such an asset. Management recorded a full valuation allowance at October 31, 2020 and 2019 against the deferred tax assets as it determined that future realization would not meet the "more likely than not" criteria.

Warrant Derivative Liability

The Company classifies warrants with a Canadian Dollar ("$CDN") exercise price on its consolidated balance sheets as a derivative liability that is fair valued at each reporting period subsequent to the initial issuance as the functional currency of Silver Bull is the U.S. dollar and the exercise price of the warrants is the $CDN. The Company has used the Black-Scholes pricing model to fair value the warrants that do not have an acceleration feature and has used the Monte Carlo valuation model to fair value the warrants that do have an acceleration feature. Determining the appropriate fair-value model and calculating the fair value of warrants requires considerable judgment. Any change in the estimates used may cause the value to be higher or lower than that reported. The estimated volatility of the Company's common stock at the date of issuance, and at each subsequent reporting period, is based on the historical volatility adjusted to reflect the implicit discount to historical volatilities observed in the prices of traded warrants. The risk-free interest rate is based on rates published by the government for bonds with a maturity similar to the expected remaining life of the warrants at the valuation date. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend yield is expected to be none as the Company has not paid dividend nor does the Company anticipate paying any dividend in the foreseeable future.

The derivatives warrants are not traded in an active market and the fair value is determined using valuation techniques. The estimates may be significantly different from those recorded in the consolidated financial statements because of the use of judgment and the inherent uncertainty in estimating the fair value of these instruments that are not quoted in an active market. All changes in the fair value are recorded in the consolidated statement of operations and comprehensive loss each reporting period.

Stock-Based Compensation

The Company uses the Black-Scholes pricing model as a method for determining the estimated fair value for all stock options awarded to employees, officers, directors and consultants. The expected term of the options is based upon an evaluation of historical and expected future exercise behavior. The risk-free interest rate is based on rates published by the government for bonds with a maturity similar to the expected remaining life of the options at the valuation date. Volatility is determined based upon historical volatility of the Company's stock and adjusted if future volatility is expected to vary from historical experience. The dividend yield is assumed to be none as the Company has not paid dividends nor does the Company anticipate paying any dividends in the foreseeable future. The Company uses the graded vesting attribution method to recognize compensation costs over the requisite service period. Stock options granted to consultants when the exercise price is in $CDN are classified as stock option liability on the Company's consolidated balance sheets upon vesting.

The Company classifies cumulative compensation cost associated with options on subsidiary equity as additional paid-in capital until exercise.

Loss per Share

Basic loss per share includes no dilution and is computed by dividing net loss available to common shareholders by the weighted average common shares outstanding for the period. Diluted loss per share reflects the potential dilution of securities that could share in the earnings of an entity similar to fully diluted loss per share. Although there were stock options and warrants in the aggregate of 3,855,539 shares and 4,019,039 shares outstanding at October 31, 2020 and 2019, respectively, they were not included in the calculation of loss per share because they would have been considered anti-dilutive.

Foreign Currency Translation

During the years ended October 31, 2020 and 2019, the functional currency of Silver Bull Resources, Inc. and its subsidiaries was the U.S. dollar.

During the years ended October 31, 2020 and 2019, the Company's Mexican operations' monetary assets and liabilities with foreign source currencies were translated into U.S. dollars at the period-end exchange rate and non-monetary assets and liabilities with foreign source currencies were translated using the historical exchange rate. The Company's Mexican operations' revenue and expenses were translated at the average exchange rate during the period except for depreciation of office and mining equipment, costs of office and mining equipment sold and impairment of property concessions, all of which are translated using the historical exchange rate. Foreign currency translation gains and losses of the Company's Mexican operations are included in the consolidated statement of operations.

Accounting for Loss Contingencies and Legal Costs

From time to time, the Company is named as a defendant in legal actions arising from its normal business activities. The Company records an accrual for the estimated loss from a loss contingency when information available prior to issuance of its financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. Disclosure of a loss contingency is made by the Company if there is at least a reasonable possibility that a loss has been incurred, and either an accrual has not been made or an exposure to loss exists in excess of the amount accrued. In cases where only disclosure of the loss contingency is required, either the estimated loss or a range of estimated loss is disclosed or it is stated that an estimate cannot be made. Legal costs incurred in connection with loss contingencies are considered period costs and accordingly are expensed in the period services are provided.

Recent Accounting Pronouncements Adopted in the Year

On November 1, 2019, the Company adopted the Financial Accounting Standards Board's (the "FASB's") Accounting Standards Update ("ASU") 2018-07, "Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting", which became effective for fiscal years beginning after December 15, 2018. ASU 2018-07 simplifies the accounting for nonemployee share-based payments, aligning it more closely with the accounting for employee awards. Under the adoption provisions, equity-classified awards for which a measurement date had already been established as of the adoption date, including the Company's South32 Option Agreement (Note 3), are unaffected by ASU 2018-07. As a result of this adoption, during the year ended October 31, 2020, the Company reclassified $4,803 from stock option liability to additional paid-in capital (Note 11).

On November 1, 2019, the Company adopted the FASB's ASU 2016-02, "Leases (Topic 842)," together with subsequent amendments, which became effective for fiscal years beginning after December 15, 2018. The new standard requires a lessee to recognize on its balance sheet, a liability to make lease payments (the lease liability) and the right-of-use ("ROU") asset representing the right to the underlying asset for the lease term and allows companies to elect to apply the standard at the effective date. The Company elected the package of practical expedients permitted under the transition guidance, which applies to expired or existing leases and allows the Company not to reassess whether a contract contains a lease, the lease classification, and any initial direct costs incurred.

The Company also elected a number of optional practical expedients including the following:

• the short-term lease recognition exemption whereby ROU assets and lease liabilities will not be recognized for leasing arrangements with terms less than one year;
• the land easements practical expedient whereby existing land easements are not reassessed under the new standard;
• the hindsight practical expedient when determining lease term at transition; and
• the practical expedient not to apply lease accounting to the intangible right to explore for those natural resources, and rights to use the land in which those natural resources are contained.

The adoption of this update did not have an impact on the Company's financial position, results of operations or cash flows and disclosures.

Recent Accounting Pronouncements Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12, "Income Taxes - Simplifying the Accounting for Income Taxes (Topic 740)," which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and clarifies and amends existing guidance to improve consistent application. ASU 2019-12 will be effective for interim and annual periods beginning after December 15, 2020. Early adoption is permitted. At this time, the Company does not expect this standard to affect the Company's financial position, results of operations or cash flows and disclosures.

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force) and the SEC did not or are not expected to have a material impact on the Company's present or future consolidated financial statements.

NOTE 3 – SOUTH32 OPTION AGREEMENT

On June 1, 2018, the Company and its subsidiaries Minera Metalin and Contratistas entered into an earn-in option agreement (the "South32 Option Agreement") with South32 International Investment Holdings Pty Ltd ("South32"), a wholly-owned subsidiary of South32 Limited (ASX/JSE/LSE: S32), whereby South32 is able to obtain an option to purchase 70% of the shares of Minera Metalin and Contratistas (the "South32 Option"). Minera Metalin owns the Sierra Mojada Property located in Coahuila, Mexico (the "Sierra Mojada Project"), and Contratistas supplies labor for the Sierra Mojada Project. Under the South32 Option Agreement, South32 earns into the South32 Option by funding a collaborative exploration program on the Sierra Mojada Project. Upon the terms and subject to the conditions set forth in the South32 Option Agreement, in order for South32 to earn and maintain its four-year option, South32 must have contributed to Minera Metalin for exploration of the Sierra Mojada Project at least $3 million by the end of Year 1, $6 million by the end of Year 2, $8 million by the end of Year 3 and $10 million by the end of Year 4 (the "Initial Funding"). Funding is made on a quarterly basis based on the subsequent quarter's exploration budget. South32 may exercise the South32 Option by contributing $100 million to Minera Metalin (the "Subscription Payment"), less the amount of Initial Funding previously contributed by South32. The issuance of shares upon notice of exercise of the South32 Option by South32 is subject to antitrust approval by the Mexican government. If the full amount of the Subscription Payment is advanced by South32 and the South32 Option becomes exercisable and is exercised, the Company and South32 will be obligated to contribute funding to Minera Metalin on a 30/70 pro rata basis. If South32 elects not to continue with the South32 Option during the four-year option period, the Sierra Mojada Project will remain 100% owned by the Company. The exploration program will be initially managed by the Company, with South32 being able to approve the exploration program funded by it. The Company received funding of $3,144,163 from South32 for Year 1 of the South32 Option Agreement. In April 2019, the Company received a notice from South32 to maintain the South32 Option Agreement for Year 2 by providing cumulative funding of $6 million by the end of such period. As of October 31, 2020, the Company had received funding of $1,420,161, which included a $319,430 received during the year ended October 31, 2019, from South32 for Year 2 of the South32 Option Agreement, the time period for which has been extended by an event of force majeure described in more detail below. In November 2020, the Company received a payment of $60,286 for the extended Year 2 time period. If the South32 Option Agreement is terminated by South32 without cause or if South32 is unable to obtain antitrust authorization from the Mexican government, the Company is under no obligation to reimburse South32 for amounts contributed under the South32 Option Agreement.

Upon exercise of the South32 Option, Minera Metalin and Contratistas are required to issue common shares to South32. Pursuant to the South32 Option Agreement, following exercise and until a decision has been made by the board of directors of Minera Metalin to develop and construct a mine on the Sierra Mojada Project, each shareholder holding greater than or equal to 10% of the shares may withdraw as an owner in exchange for a 2% net smelter royalty on products produced and sold from the Sierra Mojada Project. Any shareholder whose holdings are reduced to less than 10% must surrender its interest in exchange for a 2% net smelter royalty.

The Company has determined that Minera Metalin and Contratistas are variable interest entities and that the South32 Option Agreement has not resulted in the transfer of control of the Sierra Mojada Project to South32. The Company has also determined that the South32 Option Agreement represents non-employee sharebased compensation associated with the collaborative exploration program undertaken by the parties. The compensation cost is expensed when the associated exploration activity occurs. The share-based payments have been classified as equity instruments and valued based on the fair value of the cash consideration received, as it is more reliably measurable than the fair value of the equity interest. If the South32 Option is exercised and shares are issued prior to a decision to develop a mine, such shares would be classified as temporary equity as they would be contingently redeemable in exchange for a net smelter royalty under circumstances that are not wholly in control of the Company or South32 and are not currently probable.

No portion of the equity value has been classified as temporary equity as the South32 Option has no intrinsic value.

On October 11, 2019, the Company and its subsidiary Minera Metalin issued a notice of force majeure to South32 pursuant to the South32 Option Agreement. Due to a blockade by a cooperative of local miners called Sociedad Cooperativa de Exploración Minera Mineros Norteños, S.C.L. ("Mineros Norteños"), the Company has temporarily halted all work on the Sierra Mojada Property. The notice of force majeure was issued because of the blockade's impact on the ability of the Company and its subsidiary Minera Metalin to perform their obligations under the South32 Option Agreement. Pursuant to the South32 Option Agreement, any time period provided for in the South32 Option Agreement will generally be extended by a period equal to the period of delay caused by the event of force majeure. As of January 28, 2021, the blockade by Mineros Norteños at, on and around the Sierra Mojada Property is ongoing.

The combined carrying amount of the assets and liabilities of Minera Metalin and Contratistas (consolidated with their wholly-owned subsidiary) are as follows at October 31, 2020:

Assets:	Mexico
Cash and cash equivalents	$9,000
Value-added tax receivable, net	220,000
Other receivables	4,000
Income tax receivable	1,000
Prepaid expenses and deposits	100,000
Office and mining equipment, net	192,000
Property concessions	5,020,000
Total assets	$5,546,000
Liabilities:
Accounts payable	51,000
Accrued liabilities and expenses	187,000
Payable to Silver Bull Resources, Inc. to be converted to equity upon exercise of the South 32 Option	3,621,000
Total liabilities	$3,859,000
Net advances and investment in the Company's Mexican subsidiaries	$1,687,000

In addition, at October 31, 2020, Silver Bull Resources, Inc. held $nil of cash received from South32, which is to be contributed to the capital of the Mexican subsidiaries as required for exploration. Cash received from South32 is required to be used to further exploration at the Sierra Mojada Property.

The Company's maximum exposure to loss at October 31, 2020 is $5,308,000, which includes the carrying value of the VIEs' net assets, excluding the payable to Silver Bull Resources, Inc.

NOTE 4 – VALUE-ADDED TAX RECEIVABLE

Value-added tax ("VAT") receivable relates to VAT paid in Mexico. The Company estimates net VAT of $219,804 will be received within 12 months of the balance sheet date. The allowance for uncollectible VAT was estimated by management based upon a number of factors, including the length of time the returns have been outstanding, responses received from tax authorities, general economic conditions in Mexico and estimated net recovery after commissions.

A summary of the changes in the allowance for uncollectible VAT for the fiscal years ended October 31, 2020 and 2019 is as follows:

Allowance for uncollectible VAT – October 31, 2018	$98,414
Provision for uncollectible VAT	222,130
Foreign currency translation adjustment	7,080
Allowance for uncollectible VAT – October 31, 2019	327,624
Provision for uncollectible VAT	49,619
Foreign currency translation adjustment	(32,184)
Allowance for uncollectible VAT – October 31, 2020	$345,059

NOTE 5 – LOAN RECEIVABLE

On August 24, 2020, the Company loaned $360,000 to Ekidos Minerals LLP, an unrelated third-party Kazakh entity, relating to the acquisition of mineral property concessions in Kazakhstan. The loan is interest free and is to be repaid on January 31, 2021.

NOTE 6 – OFFICE AND MINING EQUIPMENT

The following is a summary of the Company's office and mining equipment at October 31, 2020 and October 31, 2019:

	October 31,2020		October 31,2019
Mining equipment	$444,202	$	396,152
Vehicles	92,873		92,873
Buildings and structures	185,724		185,724
Computer equipment and software	74,236		74,236
Well equipment	39,637		39,637
Office equipment	47,597		47,597
	884,269		836,219
Less: Accumulated depreciation	(644,500)		(609,806)
Office and mining equipment, net	$239,769	$	226,413

NOTE 7 – PROPERTY CONCESSIONS

The following is a summary of the Company's property concessions in Sierra Mojada, Mexico as at October 31, 2020 and 2019:

Property Concessions – October 31, 2018	$5,019,927
Acquisitions	11,821
Impairment	(11,821)
Property Concessions – October 31, 2020 and 2019	$5,019,927

NOTE 8 – GOODWILL

Goodwill represents the excess, at the date of acquisition, of the purchase price of the business acquired over the fair value of the net tangible and intangible assets acquired. On April 30, 2020, the Company elected to perform a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. Based on this assessment, management determined it is not more likely than not that the fair value of the reporting unit is less than its carrying amount.

The following is a summary of the Company's goodwill balance as at October 31, 2020 and 2019:

Goodwill – October 31, 2020 and 2019	$2,058,031

NOTE 9 – LOAN PAYABLE

In June 2020, the Company received $29,531 ($CDN 40,000) in the form of a Canada Emergency Business Account ("CEBA") loan. CEBA is part of the economic assistance program launched by the Government of Canada to ensure that businesses have access to capital during the COVID-19 pandemic that can only be used to pay non-deferrable operating expenses. During the period from receipt of the CEBA loan to December 31, 2022 (the "Initial Term"), no interest will be charged on the principal amount outstanding. If at least $CDN 30,000 is repaid on or before the end of the Initial Term, the remaining $CDN 10,000 of principal will be forgiven pursuant to the terms of the CEBA loan. During the period from January 1, 2023 to December 31, 2025 (the "Extended Term"), if any portion of the loan remains outstanding, interest will be payable monthly at a rate of 5% per annum on the outstanding principal balance. The balance of the CEBA loan is fully repayable on or before the end of the Extended Term, if not repaid on or before the end of the Initial Term.

Loan payable – October 31, 2019	$—
Loan payable received – June 2020	29,531
Foreign currency translation adjustment	503
Loan payable – October 31, 2020	$30,034

NOTE 10 – COMMON STOCK

On September 18, 2020, the Company completed a one-for-eight reverse stock split of its shares of common stock. As a result of the reverse stock split, every eight pre-split shares of issued and outstanding common stock of the Company were combined and reclassified into one post-split share of common stock of the Company. No fractional shares were issued in connection with the reverse stock split. Any fractional share that otherwise would have been issued as a result of the reverse stock split was rounded up to the nearest whole share. In connection with the reverse stock split, the 300,000,000 pre-split authorized shares of common stock were proportionately reduced to 37,500,000 post-split authorized shares of Company common stock. The $0.01 par value per share of common stock and other terms of the common stock were not affected by the reverse stock split.

The Company's outstanding shares of common stock and shares underlying the Company's options and warrants entitling the holders to purchase shares of common stock have been adjusted as a result of the reverse stock split, as required by the terms of these securities. In addition, the number of shares reserved for issuance under the Company existing 2019 Stock Option and Stock Bonus Plan were reduced proportionately based on the split ratio.

The current financial statements as well as prior period financial statements have been retroactively adjusted to reflect the impact of the reverse stock split.

On October 27, 2020, the Company completed the initial tranche of a two-tranche private placement (the "Private Placement") for 3,623,580 units (each, a "Unit") at a purchase price of $0.47 per Unit for gross proceeds of $1,703,083. Each Unit consists of one share of the Company's common stock and one half of one transferable common stock purchase warrant (each whole warrant, a "Warrant"). Each Warrant entitles the holder thereof to acquire one share of common stock at a price of $0.59 until October 27, 2025. The Company paid a 4% finder's fee totaling $26,000 to an agent with respect to certain purchasers who were introduced by the agent. The Company incurred other offering costs associated with the initial tranche of the Private Placement of $98,456. Subscribers of the initial tranche of the Private Placement included management and directors for a total 840,000 units and gross proceeds of $394,800.

No options to acquire shares of common stock were exercised during the year ended October 31, 2020.

$$ F-15 $$

On March 6, 2019, 57,500 warrants to acquire 57,500 shares of common stock were exercised at an exercise price of $CDN 1.04 per share of common stock for aggregate gross proceeds of $44,560 ($CDN 59,800).

On February 21, 2019, 75,000 warrants to acquire 75,000 shares of common stock were exercised at an exercise price of $CDN 1.04 per share of common stock for aggregate gross proceeds of $59,109 ($CDN 78,000).

On January 30, 2019, 50,000 warrants to acquire 50,000 shares of common stock were exercised at an exercise price of $CDN 1.04 per share of common stock for aggregate gross proceeds of $39,418 ($CDN 52,000).

The Company incurred costs of $210 related to warrant exercises in the year ended October 31, 2019.

NOTE 11 – STOCK OPTIONS

The Company has one stock option plan under which equity securities are authorized for issuance to officers, directors, employees and consultants: the 2019 Stock Option and Stock Bonus Plan (the "2019 Plan"). Under the 2019 Plan, the lesser of (i) 3,750,000 shares or (ii) 10% of the total shares outstanding are reserved for issuance upon the exercise of options or the grant of stock bonuses.

The term of the Company's 2010 Stock Option and Stock Bonus Plan, as amended, expired on or around December 22, 2019.

Options are typically granted with an exercise price equal to the closing market price of the Company's stock at the date of grant, have a graded vesting schedule over approximately one to two years and have a contractual term of five years.

No options were granted or exercised during the year ended October 31, 2020 and October 31, 2019.

The following is a summary of stock option activity for the fiscal years ended October 31, 2020 and 2019:

Options	Shares	Weighted AverageWeighted AverageRemaining ContractualExercise PriceLife (Years)		Aggregate IntrinsicValue
Outstanding at October 31,2018	2,368,750	$0.88	3.48	$	429,158
Expired	(325,000)	1.92
Outstanding at October 31,2019	2,043,750	0.72	2.83		46,448
Outstanding at October 31,2020	2,043,750	0.72	1.83		53,546
Exercisable at October 31,2020	2,043,750	$0.72	1.83	$	53,546

The Company recognized stock-based compensation costs for stock options of $62,417 and $206,756 for the fiscal years ended October 31, 2020 and 2019, respectively. As of October 31, 2020, there remains $nil of total unrecognized compensation expense, which is expected to be recognized over a weighted average period of nil years.

Summarized information about stock options outstanding and exercisable at October 31, 2020 is as follows:

Options Outstanding						Options Exercisable
	Exercise Price	NumberOutstanding	WeightedAverageRemainingContractualLife (Years)	WeightedAverageExercise Price	NumberExercisable	WeightedAverageExercise Price
$	0.45	509,375	0.31	$0.45	509,375	$0.45
	0.75	509,375	1.43	0.75	509,375	0.75
	0.78	943,750	2.88	0.78	943,750	0.78
	1.29	43,750	2.30	1.29	43,750	1.29
	1.53	37,500	0.76	1.53	37,500	1.53
$	0.45 – 1.53	2,043,750	1.83	$0.72	2,043,750	$0.72

Stock options granted to consultants with a $CDN exercise price were previously classified as a stock option liability on the Company's consolidated balance sheets upon vesting. During the year ended October 31, 2020, the stock option liability was reclassified to additional paid-in capital upon adoption of ASU 2018- 07, "Compensation - Stock Compensation (Topic 718)." The following is a summary of the Company's stock option liability at October 31, 2020 and October 31, 2019:

Stock option liability at October 31, 2018	$25,116
Reclassification from additional paid-in capital	792
Change in fair value of stock option liability	(21,105)
Stock option liability at October 31, 2019	$4,803
Reclassification from additional paid-in capital	(4,803)
Stock option liability at October 31, 2020	$—

NOTE 12 – WARRANTS

A summary of warrant activity for the fiscal years ended October 31, 2020 and 2019 is as follows:

Warrants	Shares	WeightedAverageExercise Price	WeightedAverageRemainingContractualLife (Years)	AggregateIntrinsic Value
Outstanding at October 31, 2018	4,537,530	$1.04	1.16	$254,068
Exercised	(182,500)	0.80
Expired	(2,379,741)	0.80
Outstanding and exercisable at October 31, 2019	1,975,289	$1.28	0.75	$—
Issued in the initial tranche of the Private Placement (Note 10)	1,811,789	0.59
Expired	(1,975,289)	1.28
Outstanding and exercisable at October 31, 2020	1,811,789	$0.59	4.99	$18,118

During the year ended October 31, 2020, the Company issued 1,811,789 warrants with an exercise price of $0.59 in connection with the Private Placement.

No warrants were exercised during the year ended October 31, 2020.

Warrants exercised during the years ended October 31, 2019 are discussed in Note 10.

The warrants exercised during the years end October 31, 2019 had an intrinsic value of $12,126.

Summarized information about warrants outstanding and exercisable at October 31, 2020 is as follows:

Warrants Outstanding and Exercisable
		Weighted Average
	Number	Remaining Contractual Life	Weighted Average Exercise
Exercise Price	Outstanding	(Years)	Price
$0.59	1,811,789	4.99	$0.59

NOTE 13 – TAX REFORM AND INCOME TAXES

Provision for Taxes

The Tax Act was signed into law on December 22, 2017. The law includes significant changes to the U.S. corporate income tax system, including a federal corporate rate reduction from 35% to 21%, limitations on the deductibility of interest expense and executive compensation, and the transition of U.S. international taxation from a worldwide tax system to a territorial tax system. The Tax Act required the Company to use a statutory tax rate of 21% for the year ended October 31, 2020 and 2019.

The Company files a United States federal income tax return and a Canadian branch return on a fiscal year-end basis and files Mexican income tax returns for its three Mexican subsidiaries on a calendar year-end basis. The Company and two of its wholly-owned subsidiaries, Minera Metalin and Minas, have not generated taxable income since inception. Contratistas, another wholly-owned Mexican subsidiary, has historically generated taxable income based upon intercompany fees billed to Minera Metalin on the services it provides.

On April 16, 2010, a wholly-owned subsidiary of the Company was merged with and into Dome, resulting in Dome becoming a wholly-owned subsidiary of the Company. Dome, a Delaware corporation, files a tax return in the United States as part of the Company's consolidated tax return.

The components of loss before income taxes were as follows:

	For the year ended	October 31,
	2020		2019
United States	$(1,695,000)	$	(1,155,000)
Foreign	(523,000)		(2,778,000)
Loss before income taxes	$(2,218,000)	$	(3,933,000)

The components of the provision for income taxes are as follows:

2020	2019
$7,942	$5,309
—	—
$7,942	$5,309
	For the year endedOctober 31,

The Company's provision for income taxes for the fiscal year ended October 31, 2020 consisted of a tax expense of $7,942 related to a provision for income taxes for the Silver Bull and Dome Canadian branch return for the fiscal year ended October 31, 2020.

The reconciliation of the provision for income taxes computed at the U.S. statutory rate to the provision for income tax as shown in the statement of operations and comprehensive loss is as follows:

	For the year endedOctober 31,
	2020		2019
Income tax benefit calculated at U.S. federal income tax rate	$(466,000)	$	(826,000)
Differences arising from:
Other permanent differences	116,000		81,000
Differences due to foreign income tax rates	(47,000)		(244,000)
Adjustment to prior year taxes	(22,000)		(28,000)
Inflation adjustment foreign net operating loss	(174,000)		(258,000)
Foreign currency fluctuations	638,000		(344,000)
Decrease in valuation allowance	(565,000)		(403,000)
Net operation loss carry forwards expiration - United States	159,000		154,000
Net capital loss carry forwards expiration - United States	62,000		—
Net operation loss carry forwards expiration - Mexico	307,000		1,873,000
Net income tax provision	$8,000	$	5,000

The components of the deferred tax assets at October 31, 2020 and 2019 were as follows:

	October 31,
	2020		2019
Deferred tax assets:
Net operating loss carry forwards – U.S.	$7,502,000	$	7,359,000
Net capital loss carry forwards – U.S.	—		62,000
Net operating loss carry forwards – Mexico	6,080,000		6,656,000
Stock-based compensation – U.S.	8,000		8,000
Exploration costs	777,000		830,000
Other – United States	19,000		30,000
Other – Mexico	23,000		29,000
Total net deferred tax assets	14,409,000		14,974,000
Less: valuation allowance	(14,409,000)		(14,974,000)
Net deferred tax asset	$—	$	—

At October 31, 2020, the Company has U.S. net operating loss carry-forwards of approximately $31 million that expire in the years 2021 through 2037 and $4 million which will be carried forward indefinitely. The Company has approximately $20 million of net operating loss carry-forwards in Mexico that expire in the years 2021 through 2030.

The valuation allowance for deferred tax assets of $14.4 and $15.0 million at October 31, 2020 and 2019, respectively, relates principally to the uncertainty of the utilization of certain deferred tax assets, primarily net operating loss carry forwards in various tax jurisdictions. The Company continually assesses both positive and negative evidence to determine whether it is more likely than not that the deferred tax assets can be realized prior to their expiration. Based on the Company's assessment, it has determined that the deferred tax assets are not currently realizable.

Net Operating Loss Carry Forward Limitation

The Tax Reform Act of 1986 contains provisions that limit the utilization of net operating loss and tax credit carry forwards if there has been a change in ownership as described in Section 382 of the Internal Revenue Code. As a result of the Dome merger in April 2010, substantial changes in the Company's ownership have occurred that may limit or reduce the amount of net operating loss carry forwards that the Company could utilize in the future to offset taxable income. The Company has not completed a detailed Section 382 study at this time to determine what impact, if any, that ownership change may have had on its operating loss carry forwards. In each period since its inception, the Company has recorded a valuation allowance for the full amount of its deferred tax assets, as the realization of the deferred tax asset is uncertain. As a result, the Company has not recognized any federal or state income tax benefit in its consolidated statement of operations and comprehensive loss.

Accounting for Uncertainty in Income Taxes

During the fiscal years ended October 31, 2020 and 2019, the Company has not identified any unrecognized tax benefits or had any additions or reductions in tax positions and therefore a reconciliation of the beginning and ending amount of unrecognized tax benefits is not presented.

The Company does not have any unrecognized tax benefits as of October 31, 2020, and accordingly the Company's effective tax rate will not be materially affected by unrecognized tax benefits.

The following tax years remain open to examination by the Company's principal tax jurisdictions:

United States:	2016 and all following years
Mexico:	2015 and all following years
Canada:	2016 and all following years

The Company has not identified any uncertain tax position for which it is reasonably possible that the total amount of unrecognized tax benefit will significantly increase or decrease within the next 12 months.

The Company's policy is to classify tax related interest and penalties as income tax expense. There is no interest or penalties estimated on the underpayment of income taxes as a result of unrecognized tax benefits.

NOTE 14 – FINANCIAL INSTRUMENTS

Fair Value Measurements

All financial assets and financial liabilities are recorded at fair value on initial recognition. Transaction costs are expensed when they are incurred, unless they are directly attributable to the acquisition of financial assets or the assumption of liabilities carried at amortized cost, in which case the transaction costs adjust the carrying amount.

The three levels of the fair value hierarchy are as follows:

• Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
• Level 2 Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and
• Level 3 Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

Under fair value accounting, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company's financial instruments consist of cash and cash equivalents, accounts payable, stock option liability and warrant derivative liability.

The carrying amounts of cash and cash equivalents and accounts payable approximate fair value at October 31, 2020 and 2019 due to the short maturities of these financial instruments.

Derivative liability

The Company classified warrants with a $CDN exercise price as a derivative liability, which was fair valued at each reporting period subsequent to the initial issuance as the functional currency of Silver Bull is the U.S. dollar. The Company used the Black-Scholes pricing model to determine the fair value of these warrants. Determining the appropriate fair-value model and calculating the fair value of warrants requires considerable judgment. The estimated volatility of the Company's common stock at the date of issuance, and at each subsequent reporting period, was based on the historical volatility adjusted to reflect the implicit discount to historical volatilities observed in the prices of traded warrants. The risk-free interest rate was based on rates published by the government for bonds with a maturity similar to the expected remaining life of the warrants at the valuation date. The expected life of the warrants was assumed to be equivalent to their remaining contractual term. The dividend yield was expected to be none as the Company has not paid dividends nor does the Company anticipate paying a dividend in the foreseeable future. All changes in fair value were recorded in the interim Condensed Consolidated Statements of Operations and Comprehensive Loss each reporting period. As of October 31, 2020, the warrants with a $CDN exercise price had been exercised or had expired.

The Company reclassified stock options granted to consultants with a $CDN exercise price on its consolidated balance sheets upon vesting as a stock option liability that is fair valued at each reporting period subsequent to reclassification as the functional currency of Silver Bull is the U.S. dollar. The Company has used the Black-Scholes pricing model to fair value these stock options. Determining the appropriate fair-value model and calculating the fair value of these stock options requires considerable judgment. Any change in the estimates used may cause the value to be higher or lower than that reported. The estimated volatility of the Company's common stock at the date of reclassification, and at each subsequent reporting period, is based on the historical volatility of the Company's common stock and adjusted if future volatility is expected to vary from historical experience. The risk-free interest rate is based on rates published by the government for bonds with a maturity similar to the expected remaining life of the options at the valuation date. The expected life of the options is based upon historical and expected future exercise behavior. The dividend yield is expected to be none as the Company has not paid dividends nor does the Company anticipate paying any dividend in the foreseeable future. During the year ended October 31, 2020, the Company adopted ASU 2018-07, "Compensation - Stock Compensation (Topic 718)," which resulted in a reclassification of the remaining carrying value from stock liability to additional paid-in capital.

Credit Risk

Credit risk is the risk that the counterparty to a financial instrument will cause a financial loss for the Company by failing to discharge its obligations. To mitigate exposure to credit risk on financial assets, the Company has established policies to ensure liquidity of funds and ensure that counterparties demonstrate minimum acceptable credit worthiness.

The Company maintains its U.S. dollar and $CDN cash and cash equivalents in bank and demand deposit accounts with major financial institutions with high credit standings. Cash deposits held in Canada are insured by the Canada Deposit Insurance Corporation ("CDIC") for up to $CDN 100,000. Certain Canadian bank accounts held by the Company exceed these federally insured limits or are uninsured as they related to U.S. dollar deposits held in Canadian financial institutions. As of October 31, 2020 and 2019, the Company's cash and cash equivalent balances held in Canadian financial institutions included $1,793,270 and $1,296,115, respectively, which was not insured by the CDIC. The Company has not experienced any losses on such accounts and management believes that using major financial institutions with high credit ratings mitigates the credit risk in cash and cash equivalents.

The Company also maintains cash in bank accounts in Mexico. These accounts are denominated in the local currency and are considered uninsured. As of October 31, 2020 and 2019, the U.S. dollar equivalent balance for these accounts was $8,739 and $62,024, respectively.

Interest Rate Risk

The Company holds substantially all of the Company's cash and cash equivalents in bank and demand deposit accounts with major financial institutions. The interest rates received on these balances may fluctuate with changes in economic conditions. Based on the average cash and cash equivalent balances during the fiscal year ended October 31, 2020, a 1% decrease in interest rates would have resulted in a reduction in interest income for the period of approximately $5,969.

Foreign Currency Exchange Risk

The Company is not subject to any material market risk related to foreign currency exchange rate fluctuations.

NOTE 15 – COMMITMENTS AND CONTINGENCIES

Compliance with Environmental Regulations

The Company's exploration activities are subject to laws and regulations controlling not only the exploration and mining of mineral properties, but also the effect of such activities on the environment. Compliance with such laws and regulations may necessitate additional capital outlays or affect the economics of a project, and cause changes or delays in the Company's activities.

Property Concessions Mexico

To properly maintain property concessions in Mexico, the Company is required to pay a semi-annual fee to the Mexican government and complete annual assessment work.

Royalty

The Company has agreed to pay a 2% net smelter return royalty on certain property concessions within the Sierra Mojada Property based on the revenue generated from production. Total payments under this royalty are limited to $6.875 million (the "Royalty"). To date, no royalties have been paid.

Litigation and Claims

On May 20, 2014, Mineros Norteños filed an action in the Local First Civil Court in the District of Morelos, State of Chihuahua, Mexico, against the Company's subsidiary, Minera Metalin, claiming that Minera Metalin breached an agreement regarding the development of the Sierra Mojada Property. Mineros Norteños sought payment of the Royalty, including interest at a rate of 6% per annum since August 30, 2004, even though no revenue has been produced from the applicable mining concessions. It also sought payment of wages to the cooperative's members since August 30, 2004, even though none of the individuals were hired or performed work for Minera Metalin under this agreement and Minera Metalin did not commit to hiring them. On January 19, 2015, the case was moved to the Third District Court (of federal jurisdiction). On October 4, 2017, the court ruled that Mineros Norteños was time barred from bringing the case. On October 19, 2017, Mineros Norteños appealed this ruling. On July 31, 2019, the Federal Appeals Court upheld the original ruling. This ruling was subsequently challenged by Mineros Norteños and on January 24, 2020, the Federal Circuit Court ruled that the Federal Appeals Court must consider additional factors in its ruling. In March 2020, the Federal Appeals Court upheld the original ruling after considering these additional factors. In August 2020, Mineros Norteños appealed this ruling, which appeal the Company timely responded and objected to on October 5, 2020. The Company and the Company's Mexican legal counsel believe that it is unlikely that the court's ruling will be overturned. The Company has not accrued any amounts in its consolidated financial statements with respect to this claim.

From time to time, the Company is involved in other disputes, claims, proceedings and legal actions arising in the ordinary course of business. The Company intends to vigorously defend all claims against the Company, and pursue its full legal rights in cases where the Company has been harmed. Although the ultimate outcome of these proceedings cannot be accurately predicted due to the inherent uncertainty of litigation, in the opinion of management, based upon current information, no other currently pending or overtly threatened proceeding is expected to have a material adverse effect on the Company's business, financial condition or results of operations.

COVID-19

Global outbreaks of contagious diseases, including the December 2019 outbreak of a novel strain of coronavirus (COVID-19), have the potential to significantly and adversely impact our operations and business. On March 11, 2020, the World Health Organization recognized COVID-19 as a global pandemic. Pandemics or disease outbreaks such as the currently ongoing COVID-19 outbreak may have a variety of adverse effects on our business, including by depressing commodity prices and the market value of our securities and limiting the ability of our management to meet with potential financing sources. The spread of COVID-19 has had, and continues to have, a negative impact on the financial markets, which may impact our ability to obtain additional financing in the near term. A prolonged downturn in the financial markets could have an adverse effect on our business, results of operations and ability to raise capital.

NOTE 16 – SEGMENT INFORMATION

The Company operates in a single reportable segment: the exploration of mineral property interests. The Company has mineral property interests in Sierra Mojada, Mexico.

Geographic information is approximately as follows:

	For the Year Ended	October 31,
	2020		2019
Net loss
Mexico	$(552,000)	$	(2,784,000)
Canada	(1,465,000)		(1,155,000)
Other	(209,000)		—
Net Loss	$(2,226,000)	$	(3,939,000)

The following table details allocation of assets included in the accompanying consolidated balance sheets at October 31, 2020:

	Canada	Mexico	Total
Cash and cash equivalents	$1,853,000	$9,000	$1,862,000
Value-added tax receivable, net	—	220,000	220,000
Other receivables	10,000	4,000	14,000
Prepaid expenses and deposits	130,000	100,000	230,000
Loan receivable	360,000	—	360,000
Office and mining equipment, net	48,000	192,000	240,000
Property concessions	—	5,020,000	5,020,000
Goodwill	—	2,058,000	2,058,000
	$2,401,000	$7,603,000	$10,004,000

The following table details the allocation of assets included in the accompanying consolidated balance sheet at October 31, 2019:

	Canada	Mexico	Total
Cash and cash equivalents	$1,370,000	$62,000	$1,432,000
Value-added tax receivable, net	—	256,000	256,000
Other receivables	4,000	5,000	9,000
Prepaid expenses and deposits	103,000	102,000	205,000
Office and mining equipment, net	—	226,000	226,000
Property concessions	—	5,020,000	5,020,000
Goodwill	—	2,058,000	2,058,000
	$1,477,000	$7,729,000	$9,206,000

The Company has significant assets in Coahuila, Mexico. Although Mexico is generally considered economically stable, it is always possible that unanticipated events in Mexico could disrupt the Company's operations. The Mexican government does not require foreign entities to maintain cash reserves in Mexico.

The following table details the allocation of exploration and property holding costs for the exploration properties:

For the Year EndedOctober 31,
2020		2019
$(477,000)	$	(2,553,000)
(203,000)		—
$(680,000)	$	(2,553,000)

NOTE 17 – SUBSEQUENT EVENTS

On November 9, 2020, the Company completed the second and final tranche of the Private Placement for 319,000 Units for gross proceeds of $149,930. The Company incurred other offering costs associated with the second and final tranche of the Private Placement of $152. Subscribers of the second and final tranche of the Private Placement included management for a total 319,000 units and gross proceeds of $149,930.

On December 21, 2020, the Company loaned an additional $400,000 to Ekidos Minerals LLP relating to the acquisition of mineral property concessions in Kazakhstan. This loan is interest free and is to be repaid by June 30, 2021.

On August 12, 2020, the Company entered into the Beskauga Option Agreement (the "Beskauga Option Agreement") with Copperbelt AG ("Copperbelt") pursuant to which it has the exclusive right and option to acquire Copperbelt's right, title and 100% interest in the Beskauga property located in Kazakhstan. Upon execution of the Beskauga Option Agreement, the Company paid Copperbelt $30,000. Upon completion of the Company's due diligence on January 26, 2021, the Beskauga Option Agreement was finalized and the Company paid Copperbelt $40,000.

As per the Beskauga Option Agreement, to maintain the effectiveness of the option, the Company must incur the following exploration expenditures:

Date	Amount (USD $)
Within 1 year from Closing Date	$2 million
Within 2 years from Closing Date	$3 million
Within 3 years from Closing Date	$5 million
Within 4 years from Closing Date	$5 million

The Beskauga Option Agreement also provides that subject to its terms and conditions, after the Company has incurred the above noted exploration expenditures, it may exercise the option and acquire the Beskauga property by paying Copperbelt up to $15,000,000.

DESCRIPTION OF CAPITAL STOCK

The following is a description of each class of securities of Silver Bull Resources, Inc. ("Silver Bull" or the "Company") that is registered under Section 12 of the Securities Exchange Act of 1934, as amended, and does not purport to be complete. For a complete description of the terms and provisions of such securities, refer to the Company's restated articles of incorporation, as amended, and the Company's bylaws, which are incorporated herein by reference to Exhibit 3.1.1 to the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC") on January 14, 2011, Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the SEC on April 26, 2011, Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the SEC on September 18, 2020, and Exhibit 3.1.2 to the Company's Annual Report on Form 10-K filed with the SEC on January 14, 2011, respectively. This summary is qualified in its entirety by reference to these documents.

Common Stock

Silver Bull's restated articles of incorporation, as amended, authorize Silver Bull to issue 37,500,000 shares of common stock, $0.01 par value per share. As of January 28, 2021, 33,484,945 shares of Silver Bull common stock were issued and outstanding. The rights of the holders of Silver Bull common stock are governed by Chapter 78 of the Nevada Revised Statutes, Silver Bull's articles of incorporation and Silver Bull's bylaws.

Dividend Rights

Holders of Silver Bull common stock will be entitled to receive dividends when, as and if declared by the Company's board of directors, and out of funds legally available for their payment. At the present time, the Company does not anticipate paying dividends, cash or otherwise, on Silver Bull common stock in the foreseeable future. Future dividends will depend on the Company's earnings, if any, the Company's financial requirements and other factors.

Redemption Rights

Silver Bull common stock is not redeemable or convertible.

Voting Rights

Each holder of Silver Bull common stock is entitled to one vote per share, and all voting rights are vested in the holders of shares of Silver Bull common stock. Holders of shares of common stock will have noncumulative voting rights, which means that the holders of more than 50% of the shares voting for the election of directors will be able to elect 100% of the directors, and the holders of the remaining shares voting for the election of directors will not be able to elect any directors.

Election of Directors

The Company's directors are elected by a majority vote in a meeting at which a quorum is present. A director candidate that receives a majority of the votes in favor of such candidate will be elected to serve on the Company's board of directors.

In February 2016, the Company's board of directors adopted a majority voting policy stipulating that stockholders shall be entitled to vote in favor of, or withhold from voting for, each individual director nominee at a stockholders' meeting. If the number of shares "withheld" for any nominee exceeds the number of shares voted "for" such nominee, then, notwithstanding that such director was duly elected as a matter of corporate law, he or she shall tender his or her written resignation to the chair of the board. The Corporate Governance and Nominating Committee will consider such offer of resignation and will make a recommendation to the board of directors concerning the acceptance or rejection of the resignation after considering, among other things, the stated reasons, if any, why certain stockholders "withheld" votes for the director, the qualifications of the director and whether the director's resignation from the board would be in the best interests of the Company. The board of directors must take formal action on the Corporate Governance and Nominating Committee's recommendation within 90 days and announce its decision by a press release. According to the majority voting policy, the affected director cannot participate in the deliberations of the Corporate Governance and Nominating Committee or the board of directors regarding his or her resignation. The majority voting policy applies only in circumstances involving an uncontested election of directors, meaning an election in which the number of nominees is equal to the number of directors to be elected.

Liquidation Rights

In the event of the Company's voluntary or involuntary liquidation, dissolution or winding up, the holders of Silver Bull common stock will be entitled to share equally in any of Silver Bull's assets available for distribution after the payment in full of all debts and distributions.

No Preemptive or Similar Rights

Under Nevada law, a stockholder of a corporation does not have a preemptive right to acquire the corporation's unissued shares unless there is a provision to the contrary in the articles of incorporation. The Company's articles of incorporation do not provide the Company's stockholders with any preemptive or similar rights.

Transfer Agent

The transfer agent and registrar for Silver Bull common stock is Equiniti Trust Company, located at 1110 Centre Pointe Curve, Suite 101, Mendota Heights, Minnesota 55120-4100.

Warrants

As of January 28, 2021, the Company had issued and outstanding warrants to purchase 1,971,289 shares of common stock as follows:

• · Warrants to purchase 1,811,789 shares at $0.59 per share, exercisable on October 27, 2020 and expiring on October 27, 2025; and
• · Warrants to purchase 159,500 shares at $0.59 per share, exercisable on November 9, 2020 and expiring on November 9, 2025.

The number of shares of Silver Bull common stock to be received upon the exercise of each warrant may be adjusted from time to time upon the occurrence of certain events, including but not limited to (i) a declaration of a dividend or other distribution in respect of Silver Bull common stock; (ii) a subdivision, redivision or change to the outstanding shares of Silver Bull common stock into a greater number of shares of Silver Bull common stock; (iii) a reduction, combination or consolidation of Silver Bull common stock into a lesser number of shares of Silver Bull common stock; (iv) a rights offering to subscribe for or purchase Silver Bull common stock or securities convertible into or exchangeable for Silver Bull common stock; and (v) a reorganization, reclassification, consolidation, amalgamation, arrangement or merger of the Company with or into any other corporation or entity, or a sale, lease, exchange or transfer of substantially all of the undertaking of assets of the Company, or similar event.

Anti-Takeover Provisions in the Company's Articles of Incorporation and Bylaws

The Company's articles of incorporation and bylaws also contain provisions that the Company describes in the following paragraphs, which may delay, defer, discourage, or prevent a change in control of the Company, the removal of the Company's existing management or directors, or an offer by a potential acquirer to the Company's stockholders, including an offer by a potential acquirer at a price higher than the market price for the stockholders' shares.

Among other things, Silver Bull's articles of incorporation and bylaws:

• · provide that vacancies on the board of directors may be filled by the vote of a two-thirds (2/3) majority of the directors then in office or in the case of a vacancy by resignation or death, by the majority of directors then in office;

• · establish advance notice procedures with regard to stockholder proposals relating to the nomination of candidates for election as directors or new business to be brought before meetings of the Company's stockholders. These procedures provide that notice of stockholder proposals must be timely given in writing to the Company's corporate secretary prior to the meeting at which the action is to be taken. Generally, to be timely, notice must be received at the Company's principal executive offices not less than 120 days prior to the first anniversary of the prior year's annual meeting (or, in the case of a special meeting, a reasonable time before the Company begins to print and send its proxy materials). The Company's bylaws specify the information that must be included in a stockholder's notice. These requirements may prevent stockholders from bringing matters before the stockholders at an annual or special meeting;

• · provide that stockholders may not act by written consent in lieu of a meeting;

• · provide that stockholders are not permitted to call special meetings of stockholders. Only the board of directors, by a two-thirds (2/3) majority vote, and the Company's president are permitted to call a special meeting of stockholders; and

• · provide that the Company's board of directors, by a two-thirds (2/3) majority vote, may amend or repeal the Company's bylaws without further stockholder approval unless otherwise required by law, and provide that a stockholder amendment to the bylaws requires a favorable vote of sixty-six and two-thirds percent (66 2/3%) of the Company's outstanding voting shares then entitled to vote at an election of directors.

SUBSIDIARIES OF THE REGISTRANT

Silver Bull Resources, Inc. (the "Company") currently conduct its operations through subsidiaries. The names and ownership structure of our subsidiaries as of January 28, 2021 are set forth in the chart below:

	Jurisdiction of Incorporation or
Name	Organization	Ownership Percentage
Metalline, Inc. ("Metalline")	Colorado, USA	100% by Silver Bull
Contratistas de Sierra Mojada S.A. de C.V.	Mexico	98% by Silver Bull and 2% by Metalline (1)
("Contratistas")
Minera Metalin S.A. de C.V. ("Minera Metalin")	Mexico	99.998% by Silver Bull and 0.002% by Metalline (1)
Minas de Coahuila SBR S.A. de C.V.	Mexico	99.998% by Minera Metalin and 0.002% by Contratistas
Dome Ventures Corporation ("Dome")	Delaware, USA	100% by Silver Bull
Dome Asia Inc.	British Virgin Islands	100% by Dome
Dome Minerals Nigeria Limited	Nigeria	99.99% by Dome Asia Inc.

(1) Pursuant to that certain earn-in South32 option agreement (the "South32 Option Agreement"), dated June 1, 2018, and amended effective as of March 20, 2019, among the Company, Minera Metalin, Contratistas, and South32 International Investment Holdings Pty Ltd ("South32"), a wholly owned subsidiary of South32 Limited (ASX/JSE/LSE: S32), South32 is able to obtain an option to purchase 70% of the equity of Minera Metalin and Contratistas (the "Option"), and oversee the mineral exploration of Minera Metalin's Sierra Mojada property located in Coahuila, Mexico (the "Sierra Mojada Project"). The South32 Option Agreement provides that, upon the terms and subject to the conditions set forth in the South32 Option Agreement, in order for South32 to maintain its Option, South32 must contribute to Minera Metalin a minimum of $10 million in tranches over the first four years of the Option for the Sierra Mojada Project funding (the "Initial Funding"). South32 may exercise the Option at any time by contributing $100 million to Minera Metalin (the "Subscription Payment"), less the amount of Initial Funding previously contributed by South32. Once the full amount of the Subscription Payment is advanced by South32 and the Option is exercised, the Company and South32 will be obligated to contribute funding to Minera Metalin on a 30/70 pro rata basis. If South32 elects not to continue with the Sierra Mojada Project during the four-year option period, the Sierra Mojada Project will remain 100% owned by the Company. The exploration program will be initially managed by the Company.

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-1 (File Nos. 333-214228, 333-221459, and 333-227465), as amended, and Form S-8 (File Nos. 333-171723, 333-180142, 333-214229, 333-221460, and 333-232627) of Silver Bull Resources, Inc. of our report dated January 28, 2021 relating to the audit of the consolidated financial statements, which appears in this Annual Report on Form 10-K for the year ended October 31, 2020.

/s/ Smythe LLP Smythe LLP Chartered Professional Accountants

Vancouver, Canada January 28, 2021

CONSENT OF ARCHER, CATHRO & ASSOCIATES (1981) LIMITED

We hereby consent to the incorporation by reference of any mineralized material and other analyses performed by us in our capacity as an independent consultant to Silver Bull Resources, Inc. (the "Company"), which are set forth in the Company's Annual Report on Form 10-K for the year ended October 31, 2020, in the Company's Registration Statements on Form S-1 (File Nos. 333-214228, 333-221459. and 333-227465), as amended, and Form S-8 (File Nos. 333- 171723, 333-180142, 333-214229, 333-221460, and 333-232627), or in any prospectuses or amendments or supplements thereto. We also consent to the reference to us under the heading "Experts" in such Registration Statements and any related amendments or prospectuses.

ARCHER, CATHRO & ASSOCIATES (1981) LIMITED

Date: January 28, 2021 By: /s/ Matthew Dumala

Name: Matthew Dumala, P.Eng.

Title: Partner and Senior Engineer