UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended April 30, 2020
OR
[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 001-08266
U.S. GOLD CORP
(Exact Name of Registrant as Specified in its Charter)
Nevada
(State of other jurisdiction of
incorporation or organization)
1910 East Idaho Street, Suite 102-Box 604
Elko, NV
(Address of Principal Executive Offices)
22-1831409
(I.R.S. Employer
Identification No.)
89801
(Zip Code)
(800) 557-4550
(Registrant’s Telephone Number, including Area Code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of Each Class
Common Stock, $0.001 par value
Trading Symbol(s)
USAU
Name of Each Exchange on Which Registered
NASDAQ Capital Market
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. [X]
Indicate by check mark whether the Registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 (“Exchange Act”) during the
preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark whether the Registrant has submitted electronically on its corporate Web site, if any, every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X]
No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant’s
knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth
company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ]
Non-accelerated filer [X]
Accelerated filer [ ]
Smaller reporting company [X]
Emerging Growth Company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. [ ]
Indicate by check mark whether the Registrant is a shell company, as defined in Rule 12b-2 of the Exchange Act. Yes [ ] No [X]
As of October 31, 2019, the aggregate market value of the voting and non-voting shares of common stock of the registrant issued and outstanding on such date, excluding shares
held by affiliates of the registrant as a group, was $17,082,567. This figure is based on the closing sale price of $7.96 per share of the Registrant’s common stock on October 31,
2019.
Number of shares of Common Stock outstanding as of July 13, 2020: 2,919,867
U.S. GOLD CORP
INDEX
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Part I
Part II
Part III
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Directors, Executive Officers, and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions and Director Independence
Principal Accounting Fees and Services
Part IV
Item 15.
Exhibits and Financial Statement Schedules
Signatures
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Page
4
29
43
43
44
44
45
45
45
51
52
53
53
54
55
62
65
66
67
68
71
FORWARD-LOOKING STATEMENTS
Some information contained in or incorporated by reference into this Annual Report on Form 10-K may contain forward-looking statements within the meaning of the United
States Private Securities Litigation Reform Act of 1995. 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. These statements include, but are not
limited to, comments regarding:
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our plans to conduct geologic surveys and determine the scope of our drilling program during our fiscal year ended April 30, 2021,
the impact of COVID-19 on our business and exploration activities,
our ability to maintain compliance with the NASDAQ Capital Market’s (the “NASDAQ”) listing standards,
the conclusions of additional exploration programs and related studies,
expectations and the timing and budget for exploration and future exploration of our properties,
our planned expenditures during our fiscal year ended April 30, 2021 and future periods,
our estimates of the cost of future permitting changes and additional bonding requirements,
future exploration plans and expectations related to our properties,
our ability to fund our business with our current cash reserves based on our currently planned activities,
our expected cash needs and the availability and plans with respect to future financing,
statements concerning our financial condition,
our anticipation of future environmental and regulatory impacts,
our business and operating strategies, and
statements related to operating and legal risks.
We use the words “anticipate,” “continue,” “likely,” “estimate,” “expect,” “may,” “could,” “will,” “project,” “should,” “believe” and similar expressions to identify forward-
looking statements. Statements that contain these words discuss our future expectations and plans, or state other forward-looking information. Although we believe the
expectations and assumptions reflected in those forward-looking statements are reasonable, we cannot assure you that these expectations and assumptions will prove to be
correct. Our actual results could differ materially from those expressed or implied in these forward-looking statements as a result of various factors described in the Risk Factors
in Item 1A of this Annual Report.
Many of these factors are beyond our ability to control or predict. Although we believe that the expectations reflected in our forward-looking statements are based on reasonable
assumptions, such statements can only be based on facts and factors currently known to us. Consequently, forward-looking statements are inherently subject to risks and
uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that
could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the heading “Risk Factors” below, as well as
those discussed elsewhere in this Annual Report on Form 10-K. You should not unduly rely on any of our forward-looking statements. These statements speak only as of the
date of this Annual Report on Form 10-K. Except as required by law, we are not obligated to publicly release any revisions to these forward-looking statements to reflect future
events or developments. All subsequent written and oral forward-looking statements attributable to us and persons acting on our behalf are qualified in their entirety by the
cautionary statements contained in this section and elsewhere in this Annual Report on Form 10-K.
ADDITIONAL INFORMATION
Descriptions of agreements or other documents contained in this Annual Report on Form 10-K are intended as summaries and are not necessarily complete. Please refer to the
agreements or other documents filed or incorporated herein by reference as exhibits. Please see the exhibit index at the end of this report for a complete list of those exhibits.
We are required to comply with the United States Securities and Exchange Commission (“SEC”) Industry Guide 7 under the United States Securities Act of 1933, as amended
(the “Securities Act”), with respect to disclosures related to our mineral properties. The terms “mineralized material”, “mineralization” or similar terms as used in this Annual
Report on Form 10-K do not indicate “reserves” by SEC Industry Guide 7 standards. We cannot be certain that any part of mineralized material or mineralization will ever be
confirmed or converted into SEC Industry Guide 7 compliant “reserves”. Investors are cautioned not to assume that all or any part of the mineralized material will ever be
confirmed or converted into reserves or that mineralized material can be economically or legally extracted.
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Item 1. BUSINESS
Overview
PART I
U.S. Gold Corp., formerly known as Dataram Corporation (the “Company”), was incorporated under the laws of the State of Nevada and was originally incorporated in the State
of New Jersey in 1967. Effective June 26, 2017, the Company changed its legal name to U.S. Gold Corp. from Dataram Corporation. On May 23, 2017, the Company merged
with Gold King Corp. (“Gold King”), in a transaction treated as a reverse acquisition and recapitalization, and the business of Gold King became the business of the Company.
We are a gold and precious metals exploration company pursuing exploration opportunities primarily in Nevada and Wyoming.
We are an exploration company that owns certain mining leases and other mineral rights comprising the Copper King Project in Wyoming and the Keystone, Gold Bar North
and Maggie Creek Projects in Nevada. None of our properties contain any proven and probable reserves under SEC Industry Guide 7, and all of our activities on all of our
properties are exploratory in nature.
Effective as of 5:00 pm Eastern Time on March 19, 2020, the Company filed an amendment to the Articles of Incorporation to effect a reverse stock split of the issued and
outstanding shares of its common stock, par value $0.001 per share, at a ratio of one share for ten shares. All share and per share information in this Annual Report on Form 10-
K has been retroactively adjusted to reflect the reverse stock split.
Recent Developments
COVID-19 Developments
In December 2019, a novel strain of coronavirus, COVID-19, was reported to have surfaced in Wuhan, China and has reached multiple other countries, resulting in
government-imposed quarantines, travel restrictions and other public health safety measures in China and other countries. On March 12, 2020, the WHO declared COVID-19 to
be a global pandemic, and the COVID-19 pandemic has resulted in significant financial market volatility and uncertainty in recent months. A continuation or worsening of the
levels of market disruption and volatility seen in the recent past could have an adverse effect on the Company’s ability to access capital, on the Company’s business, results of
operations and financial condition, and on the market price of its common stock.
The Company, or its people, investors, contractors or stakeholders, has been prevented from free cross-border travel or normal attendance to activities in conducting its business
at trade shows, presentations, meetings or other activities meant to promote or execute its business strategy and transactions. The Company has been prevented from receiving
goods or services from contractors. Decisions beyond the Company’s control, such as canceled events, restricted travel, barriers to entry or other factors have affected or may
affect its ability to accomplish drilling programs, technical analysis of completed exploration actions, equity raising activities, and other needs that would normally be
accomplished without such limitations. Furthermore, the Company’s exploration activities rely heavily on outside contracts. The COVID-19 pandemic has caused disruptions in
travel and accessing our exploration properties with contractors. There can be no assurance travel and property access will resume in the near future.
Moreover, the COVID-19 pandemic has made and continues to make indeterminable adverse effects on general commercial activity and the world economy, and the Company’s
business and results of operations could be adversely affected to the extent that COVID-19 or any other epidemic harms the global economy generally.
The Company does not yet know the full extent of potential delays or impact on its business, its relationship with its business partners, or the global economy as a whole.
However, any one or a combination of these events could have an adverse effect on the Company’s other business operations.
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Corporate Organization Chart
The name, place of incorporation, continuance or organization and percent of equity securities that we own or control as of July 13, 2020 for each of our subsidiaries is set out
below.
Corporate Address
The current address, telephone number of our offices are:
U.S. Gold Corp.
1910 E. Idaho Street, Suite 102-Box 604
Elko, NV 89801
(800) 557-4550
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We make available, free of charge, on or through our website, at https://www.usgoldcorp.gold, our annual report on Form 10-K, our quarterly reports on Form 10-Q and our
current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the U.S. Securities Exchange Act of 1934, as amended, and
other information. Our website and the information contained therein or connected thereto are not intended to be, and are not, incorporated into this annual report on Form 10-K.
The SEC maintains an Internet website (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file
electronically with the SEC.
Employees
As of April 30, 2020, we had 3 full-time employees and no part-time employees. In addition, we use consultants with specific skills to assist with various aspects of our project
evaluation, due diligence, corporate governance and property management.
OUR MINERAL PROPERTIES AND PROJECTS
Copper King Project, Wyoming
The Copper King Project (the “Copper King Project”) consists of certain mining leases and other mineral rights comprising the Copper King gold and copper exploration project
located in the Silver Crown Mining District of southeast Wyoming.
Location and Access
The Copper King Project is located in southeastern Wyoming, approximately 32km west of the city of Cheyenne, on the southeastern margin of the Laramie Range. The
property covers about five square kilometers that include the S½ Section 25, NE¼ Section 35, and all of Section 36, T.14N., R.70W., Sixth Principal Meridian. Access to within
1.5km of the property is provided by paved and maintained gravel roads. An easement agreement providing access for exploration and other minimal impact activities has been
negotiated with Ferguson Ranch Inc. on the S½ Section 25, T14N, R70W, and the W½ Section 30, T14N, R69W. The fee for this easement is $10,000 per year, renewable each
year prior to July 11.
The Copper King property covers 453 contiguous hectares (approximately five square kilometers) that include the S½ of Section 25, NE¼ Section 35, and all of Section 36,
T.14N., R.70W. The project is entirely located on land owned and administered by the State of Wyoming. There are no federal lands within or adjoining the Copper King land
position. Curt Gowdy State Park lies northwest of the property, partially within Section 26. The state park’s southeastern boundary is approximately 300m northwest of the
property and approximately 900m northwest of the mineralized area. The Copper King property position consists of two State of Wyoming Metallic and Non-metallic Rocks
and Minerals Mining Leases.
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Figure 1 – Copper King Project Location and Boundaries
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Rights to the Copper King Project
Our rights to the Copper King Project arise under two State of Wyoming mineral leases:
1) State of Wyoming Mining Lease No. 0-40828
Township 14 North, Range 70 West, 6th P.M., Laramie County, Wyoming:
Section 36: All
2) State of Wyoming Mining Lease No. 0-40858
Township 14 North, Range 70 West, 6th P.M., Laramie County, Wyoming:
Section 25: S/2
Section 35: NE/4
Ownership of the mineral rights remains in the possession of the State of Wyoming as conveyed to the State by the United States, evidenced by 1942 patents for Section 36, and
1989 Order confirming title to Section 25 and 35. The State of Wyoming issued Mineral Leases for the mineral rights to Wyoming Gold Mining Company, Inc. (“Wyoming
Gold”) in 2013 and 2014.
Lease 0-40828 was renewed by Wyoming Gold in February 2013 for a second ten-year term and Lease 0-40858 was renewed by Wyoming Gold for its second ten-year term in
February 2014. Each lease requires an annual payment of $2.00 per acre. These leases were assigned to us on June 23, 2014.
The following production royalties must be paid to the State of Wyoming, although once the project is in operation, the Board of Land Commissioners has the authority to
reduce the royalty payable to the State:
FOB Mine Value per Ton
$00.00 to $50.00
$50.01 to $100.00
$100.01 to $150.00
$150.01 and up
Percentage Royalty
5%
7%
9%
10%
History of Prior Operations and Exploration on the Copper King Project
Limited exploration and mining were conducted on the Copper King property in the late 1880s and early 1900s. Approximately 300 tons of material was reported to have been
produced from a now inaccessible 160-foot-deep shaft with two levels of cross-cuts. A few small adits and prospect pits with no significant production are scattered throughout
the property.
Since 1938, at least nine historic (pre-Strathmore Minerals Corp.) drilling campaigns by at least seven companies plus the U.S. Bureau of Mines have been conducted at
Copper King. The current project database contains 91 drill holes totaling 37,500 feet that were drilled before Wyoming Gold acquired the property. All but six of the drill holes
are within the current resource area. Other work conducted at Copper King by previous companies has included ground and aeromagnetic surveys as well as induced
polarization surveys along with geochemical sampling, geologic mapping, and a number of metallurgical studies.
Wyoming Gold conducted an exploration drill program in 2007 and 2008. Thirty-five diamond core drill holes were completed for a total of 25,500 feet. The exploration permit,
360DN, has been terminated and the bond released. The focus of that work was to confirm and potentially expand the mineralized body outlined in the previous drill campaigns,
increase the geologic and geochemical database leading to the creation of the current geologic model and mineralization estimate, and to provide material for further
metallurgical testing. The Copper King historic assay database for some 120 holes contains 8,357 gold assays and 8,225 copper assays. At least 10 different organizations or
individuals conducted metallurgical studies on the gold-copper mineralization at the request of prior operators between 1973 and 2009. It was concluded that the process with
the highest potential to yield good extractions of gold and copper would likely be flotation, followed by cyanidation of the flotation tailings. Core is stored in two public storage
facilities; one is AAA in Cheyenne, Wyoming and the other is Absaroka in Dubois, Wyoming.
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Geological Summary of the Copper King Project
The Copper King Project is underlain by Proterozoic rocks that make up the southern end of the Precambrian core of the Laramie Range. Metavolcanic and metasedimentary
rocks of amphibolite-grade metamorphism are intruded by the 1.4-billion-year-old Sherman Granite and related felsic rocks. Within the project area, foliated granodiorite is
intruded by aplitic quartz monzonite dikes, thin mafic dikes and younger pegmatite dikes. Shear zones with cataclastic foliation striking N60°E to N60°W are found in the
southern part of the Silver Crown district, including at Copper King. The granodiorite typically shows potassium enrichment, particularly near contacts with quartz monzonite.
Copper and gold mineralization occur primarily in unfoliated to mylonitic granodiorite. The mineralization is associated with a N60°W-trending shear zone and disseminated
and stockwork gold-copper deposits in the intrusive rocks. Some authors have categorized it as a Proterozoic porphyry gold-copper deposit. Hydrothermal alteration is
overprinted on retrograde greenschist alteration and includes a central zone of silicification, followed outward by a narrow potassic zone, surrounded by propylitic alteration.
Higher-grade mineralization occurs within a central core of thin quartz veining and stockwork mineralization that is surrounded by a zone of lower-grade disseminated
mineralization. Disseminated sulfides and native copper with stockwork malachite and chrysocolla are present at the surface, and chalcopyrite, pyrite, minor bornite, primary
chalcocite, pyrrhotite, and native copper are present at depth. Gold occurs as free gold.
The Copper King exploration property contains oxide, mixed oxide-sulfide, and sulfide rock types. At the stated cutoff grade 0.015oz AuEq/ton, approximately 80% of the
resource is sulfide material with the remaining 20% split evenly between the oxide and mixed rock types. There is consistent distribution of gold and copper, albeit generally
low-grade, throughout this potential open-pit type deposit.
U.S Gold Corp. Copper King Exploration Activities
In 2017, we performed two geophysical surveys at Copper King. A district-wide ground magnetic survey was completed in June 2017 and an induced polarization study was
completed in October 2017. In addition, a complete compilation of the historic drilling database was done. The compilation was critical to verifying the northwest extension
target. After the detailed geophysical studies were completed and interpreted, we developed exploration drill targets. The exploration drill program was completed in the fall of
2017.
Preliminary Economic Assessment – Copper King Property, WY
A Preliminary Economic Assessment (“PEA”) for the historic Copper King deposit was updated by Mine Development Associates (MDA) and reported January 11, 2018. This
PEA was prepared in accordance with Canadian National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of
Mining, Metallurgy and Petroleum (the “CIM”) – CIM Definition Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as amended (the “CIM
Definition Standards”), which differ from SEC Industry Guide 7. This PEA is preliminary in nature and should not be considered to be a pre-feasibility or feasibility study, as
the economic and technical viability of the Copper King Project have not been demonstrated at this time. Therefore, there can be no certainty that the estimates contained in the
PEA will be realized. None of our properties contain any proven and probable reserves under SEC Industry Guide 7, and all of our activities on all of our properties are
exploratory in nature.
2017 Drill Results – Copper King Property, WY
On January 30, 2018, we announced the results of our 2017 exploration drill program at Copper King. Hole CK17-01rc was a western step out hole from the historic deposit.
The hole encountered mineralization of gold, copper, silver and zinc. Permitting and bonding for drilling at Copper King through a “Notification of Intent to Explore for
Noncoal Minerals” was approved by the State of Wyoming Department of Environmental Quality based in Cheyenne, Wyoming. Assay results and interval thicknesses obtained
in CK17-01rc were similar in value and character to assay intervals encountered in the Copper King deposit “main zone.” Assay results and characteristics of mineralization in
this hole indicated the presence of a heretofore previously undiscovered zone of significant mineralization on the Copper King project.
2018 Drill Results – Copper King Property, WY
In October 2018, we announced the results of our 2018 eight-hole reverse circulation exploration drill program at Copper King. The eight holes indicated that the Copper King
mineralization extended to the west, at least 200 meters, and maintains the historically measured and reported widths and depth to the deposit.
Drill Hole Analysis at Copper King Property, WY
On February 21, 2019, we announced that Datamine of Denver, CO, completed a comprehensive drill hole analysis of our Copper King gold-copper-silver-zinc deposit.
Datamine included all of the historic drilling database and the step-out drill programs conducted by us in 2017 and 2018.
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The Datamine study was designed to:
● Organize the entire drill hole database for three-dimensional modeling purposes to include all the potential economic metals, not just gold and copper as previously
modeled;
Provide detailed statistical analyses for informative and strategic interpretations;
Provide wireframe, closed, shapes and grade shells for the deposit; and
Provide indications, if any, for locations of additional discovery.
●
●
●
The Datamine updated exploration model that indicates that the deposit potentially remains open to the southwest and also to the southeast and appears to have a curved
configuration as opposed to a more confined, previous west-northwestward tabular configuration. The Datamine exploration model also illustrates various isoshells for gold,
copper, silver and zinc.
We plan to use this new digital exploration model to assist with a future potential exploration drilling program that we believe could provide an opportunity to discover
additional prospective ore extensions. We also plan to further explore for and characterize the high-grade target zones of mineralization within the deposit. We have reviewed
the conclusions from the Datamine exploration model and have developed additional exploration programs based upon the results. We are also re-examining all existing
regional exploration data for the purpose of identifying additional new target opportunities in the vicinity of Copper King.
For fiscal 2020, the majority of our efforts focused on advancing the Copper King project further towards an eventual production decision. This work of advancement will
continue in our fiscal 2021. Multiple outside contractors are being consulted with for additional metallurgical, environmental, baseline and hydrological studies.
On March 24, 2020 U.S. Gold Corp. announced that it had internally updated the economics of the Copper King deposit to reflect the recent rise in gold prices. Mine
Development Associates’ (MDA) Preliminary Economic Assessment (PEA), dated December 5, 2017 which was based upon $1275 gold and $2.80 copper prices.
Gold prices have risen substantially since the Copper King PEA was published. U.S. Gold Corp. used $1600 gold and $2.80 copper for its internally updated economic
calculation, which was completed in early March 2020. Highlights of the updated internal calculations show:
Investment Highlights based on the PEA
Cautionary Statement: The preparation of a PEA of necessity involves estimates of many variables, such as precious metal and commodity prices, extraction and production
costs, discount rates, inflation rates, assay rates, and many others. By their very nature, the results of a PEA are inherently estimations themselves. Due to the number of
estimates involved, and the resulting estimations of the PEA, we cannot assure that the numbers presented below would represent actual results.
● At $1,600 per ounce of gold and $2.80 per pound of copper, based on preliminary data, Copper King is projected to generate Pre-Tax Cash Flow of $510.54 million
●
●
The Net Present Value (NPV), based on preliminary data, at a 5% discount rate, is projected to be $321.6 million
The Pre-Tax Internal Rate of Return (IRR) based on preliminary data, is projected to be 52%
● At $1,600 per ounce of gold, Copper King deposit economics are 80% gold and 20% copper
Copper King Quality Control Procedures for Drilling, Sampling and Assaying
The Copper King PEA outlines the drilling procedures; sample preparation, analysis and security; and data verification for historic drilling at Copper King. MDA concludes
that “data verification procedures support the geological interpretations and confirm the database quality. Therefore, the Copper King database is adequate for estimating a
potential mineral resource.” We continue to apply industry standard practices for drilling and sampling at Copper King.
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Specifically, drilling carried out in 2017 and 2018 by AK Drilling of Butte, Montana using a reverse circulation (“RC”) drill rig, followed industry standards. RC cuttings were
run through a rotary splitter on the drill as drilling advanced, which is industry standard, and a representative sample collected from the discharge point of the splitter. Chip
samples were bagged and labeled by the drillers and then shipped to Bureau Veritas Mineral Laboratories (“BV Labs”) in Sparks, NV for analysis. BV Labs crushed, split and
pulverized 250g of rock to 200 mesh and fire assayed the samples. Assay certificates were received, analyzed, summarized and reported by our geologic team. As standard
practice, certified blanks and standards were inserted into the sample stream at the lab on regular intervals, by us and BV Labs. As assay results were received the analyzed assay
values for given blanks or standards were visually compared to the expected assay values, and if they fell within the expected range of deviation as provided by the blank-
standard provider, they were considered “passed” and the assay results can be relied upon. If the analyzed results did not fall within the expected range of deviation, the blank or
standard was considered “failed” and BV Labs was asked to re-run the blank or standard for gold fire-assay, along with the preceding two drill hole samples and the two
proceeding the failed blank or standard. When re-run assay results were received, they were compared with the original results and deemed acceptable or not. All results to date
have met our acceptability using the above-mentioned protocols.
Keystone Project, Cortez Trend, Nevada
Location
The Keystone Project consists of 650 unpatented lode mining claims situated in Eureka County, Nevada. The claims making up the Keystone Project are situated in Eureka
County, Nevada in Sections 2-4 and 9-11, Township 23 North, Range 48 East, and Sections 22-28, and 33-36 Township 24 North, all Range 48 East of the Mount Diablo
Meridian.
Figure 2 – Location of Keystone Project and Major Gold Trends in Nevada
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Figure 3 – Keystone Project Claim Boundaries
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The Keystone Project is accessible via dirt roads. Navigation through the interior of the project is by off-road vehicle.
Title and Ownership for Keystone Project
The Keystone Project consists of unpatented mining claims located on federal land administered by the U.S. Bureau of Land Management (“BLM”). An annual maintenance fee
of $165.00 per claim per year must be paid to the Nevada BLM by September 1 of each year, and failure to make the payment on time renders the claims void.
In addition, the State of Nevada requires the claimant to file an Affidavit and Notice of Intent to Hold in the appropriate county by November 1 of each year. However, the
failure to timely record an Affidavit does not affect a forfeiture of the claims, as does the failure to pay the federal claim maintenance fees by September 1. Instead, in the event
of a conflict with a junior locator, the senior claimant must prove his intent to maintain the claims. This can generally be accomplished by producing a receipt showing payment
of the federal claim maintenance fees to the BLM.
The federal claim maintenance fees are prospective and are paid for the ensuing assessment year. For example, payments made in August 2019 relate to the 2019-2020
assessment year running from September 1, 2019 to September 1, 2020. By comparison, the Nevada filings are retrospective, describing the assessment year just ended or about
to end.
Congress has extended the claim maintenance requirements indefinitely. It will therefore be necessary for us to perform the following acts in order to maintain the claims in
2019-2020 and each year thereafter: (1) on or before September 1 of each year, we must pay a maintenance fee of $165.00 per claim to the Nevada BLM, and (2) on or before
November 1 of each year we must record an Affidavit and Notice of Intent to Hold in Eureka County.
We acquired the mining claims comprising the Keystone Project on May 27, 2016 from Nevada Gold Ventures, LLC and Americas Gold Exploration, Inc. (“Americas Gold”).
Some of the Keystone claims are subject to pre-existing net smelter royalty (“NSR”) obligations. In addition, Nevada Gold Ventures, LLC retained additional NSR rights of
0.5% with regard to certain claims and 3.5% with regard to certain other claims. The unpatented mining claims comprising the Keystone Project, with applicable NSR
obligations, are as follows:
1. Acquired 100% from Americas Gold; subject to a one percent (1%) NSR held by Wolfpack Gold Nevada Corp.; a two percent (2.0%) NSR with respect to precious
metals and one percent (1.0%) NSR with respect to all other metals and minerals held by Orion Royalty Company, LLC; and a one-half percent (0.5%) NSR to
Nevada Gold Ventures, LLC.
27 unpatented lode mining claims situated in Eureka County, Nevada, in Sections 33 and 34, Township 24 North, Range 48 East, and Sections 3, 4, 9, and 10,
Township 23 North, Range 48 East, Mount Diablo Base Line and Meridian.
2. Acquired 100% from Americas Gold; subject to a three and one-half percent (3.5%) NSR to Nevada Gold Ventures, LLC
13 unpatented lode mining claims situated in Eureka County, Nevada, in Sections 27, 28 and 35, Township 24 North, Range 48 East, and Sections 2 and 3,
Township 23 North, Range 48 East, Mount Diablo Base Line and Meridian.
3. Acquired 100% from Nevada Gold Ventures, LLC; subject to a three and one-half percent (3.5%) NSR to Nevada Gold Ventures, LLC
28 unpatented lode mining claims situated in Eureka County, Nevada, in Sections 2 & 11, Township 23 North, Range 48 East, Mount Diablo Base Line and
Meridian.
4. Acquired 50% from Nevada Gold Ventures, LLC, 50% from Americas Gold, subject to a three and one-half percent (3.5%) NSR to Nevada Gold Ventures, LLC
216 unpatented lode mining claims, alphabetically ordered, situated in Eureka County, Nevada, in Sections 22, 23, 24, 25, 26, 27, 28, 33, 34, 35 & 36,
Township 24 North, Range 48 East, Mount Diablo Base Line and Meridian.
13
Under the terms of the Purchase and Sale Agreement, we may buy down 1% of the NSR owed to Nevada Gold Ventures LLC at any time through the fifth anniversary of the
closing date for $2,000,000. In addition, we may buy down an additional 1% of the NSR owed to Nevada Gold Ventures, LLC anytime through the eighth anniversary of the
closing date for $5,000,000. At April 30, 2020, we have not bought down any portion of the NSR. The decision to make a buy down payment would be driven by our progress
in identifying an economic mineral resource, coupled with financial factors, such as available cash or an expressed interest by larger producing companies to enter into joint
ventures or development arrangements. We are not in a position to make such a buy down payment at this time.
History of Prior Operations and Exploration on the Keystone Project
No comprehensive, modern-era, model-driven exploration has ever been conducted on the Keystone Project. Newmont drilled 6 holes in the old base metal and silver Keystone
mine area in 1967 and encountered low grade (+/- 0.02 opt) gold intercepts. Chevron staked the property in 1981-1983 and drilled 27 shallow drill holes, continued by an
agreement with USMX that drilled an additional 19 shallow holes; significant amounts of low grade and anomalous gold were intersected, but results were considered
uneconomic, and the project was dropped. In 1988 and 1989, Phelps Dodge acquired a southern portion of the district and drilled 6 holes, one of which contained gold
mineralization in its total depth, and was subsequently deepened in 1990 resulting in over 200’ of low-grade gold mineralization. About this time Coral Resources acquired a
northern portion of the property and drilled 21 shallow holes to follow-up previous drill intercepts. 1995-1997, Golden Glacier, a junior company, acquired the north end of the
district, and Uranerz a portion of the southern area; 6 holes were drilled in the north and only 2 holes in the south, respectively. The entire district was dropped by all parties.
In 2004, with the discovery of Cortez Hills and escalating gold prices, Nevada Pacific Gold, Great American Minerals (Don McDowell), and Tone Resources (Dave
Mathewson) competed in claim staking the entire district. Subsequently, Don McDowell, founder of Great American Minerals approached Placer Dome (prior to Barrick
acquisition) who discovered Pipeline and Cortez Hills, and who correctly recognized the Keystone district potential. Placer Dome entered into separate joint venture agreements
with Nevada Pacific and Great American. The following year Barrick Gold bought Placer Dome and dropped all Placer Dome’s Nevada exploration projects and joint ventures,
including Keystone. In 2006, Nevada Pacific and Tone were purchased by McEwen Mining. McEwen Mining, drilled 35 holes mostly near the north end of the district;
targeting the range front pediment and the historic Keystone Mine. McEwen Mining dropped their Keystone claims and quit claimed them to Dave Mathewson and NV Gold
Ventures. NV Gold Ventures and American Gold staked their own additional claims in the district. This expanded group of claims was acquired in the original Keystone
Purchase Agreement. We have staked additional claims in the district, such as Potato Canyon, since acquiring the project.
Geological Potential of the Keystone Project
To date, a technical report has not been prepared on the Keystone Project. Keystone is positioned on the prolific Cortez gold trend, one of the world’s leading gold producing
regions. The Keystone Project is centered on a granitic intrusion that warped the local Paleozoic stratigraphy into a dome, allowing for exposure of highly favorable Devonian,
Carboniferous (Mississippian-Pennsylvania) and Permo-Triassic rocks including key likely host rocks for mineralization, the silty carbonate strata of the Horse Creek Formation
and the Wenban limestone, as well as possible sandy clastic units of the Diamond Peak Formation. The Horse Canyon and Wenban rocks are the primary host rocks at the
nearby Cortez Hills Mine and Gold Rush deposit currently operated by Barrick Gold.
Keystone Exploration Activities for the twelve months ended April 30, 2020
We engage in exploration activities throughout each fiscal period to advance our mineral properties.
Keystone Plan of Operations (POO) Approval and Fall 2018 Drill program
On September 7, 2018 the U.S. Federal Government’s Department of the Interior, BLM approved the previously filed Environmental Assessment (EA) and Plan of Operations
(POO) for our Keystone Project on Nevada’s Cortez Gold Trend. The POO was subject to additional oversight and approval from the Nevada Department of Environmental
Protection (NDEP), which was received at the end of October 2018. Exploration related disturbance and reclamation bonding is possible in multiple phases of up to 50 acres
each up to a total of 200 acres. On October 10, 2018, we received a letter from the BLM giving notice to proceed with our previously filed 2018 exploration plan. In September
2018, we advanced an additional reclamation bond payment of $319,553 for the first 50-acre disturbance. Total reclamation bond balance on the Keystone project total
$355,347. After receiving all final permits and sign offs for road work, drill pad and surface disturbance, in November 2018, we commenced our Autumn 2018 drilling program
at Keystone.
Master of Science Thesis – Keystone Property, NV
Gabriel E. Aliaga (“Gabriel”) is a Geology major at the University of Nevada, Reno, studying under Dr. Michael W. Ressel. Over the past two years, Gabriel worked on the
Keystone project under a sponsorship by us. Gabriel worked directly with Dave Mathewson, our former Vice President of Exploration, and Tom Chapin, Senior Consulting
Geologist.
14
Gabriel completed his Master of Science Thesis in Geology (“Master Thesis”) entitled, “Igneous Geology of the Keystone Window, Simpson Park Mountains, Eureka County,
Nevada: Age, Distribution Composition and Relationship to Carline-style Gold Mineralization”, dated December 2018.
Gabriel’s Master Thesis focused on the geology of the Keystone project. Before his work there was relatively little quality historical information data generated in the Keystone
district. Gabriel’s work increased our overall understanding of the geology and opportunity of the Keystone district and resulted in important understandings of the district
geology and age dating of the intrusives and associated hydrothermal gold systems at Keystone. It also provided some valuable timing information and mineral association
characterization ranging from skarn mineralization to the broad, pervasive, epithermal-style mineralization.
We believe we are exploring a complex early Tertiary gold system comparable in size and character to many of the known large gold systems. The multiple and clustered
intrusives and extrusives at Keystone range in composition from intermediate to very siliceous. All of the dates from numerous samples of these intrusive and extrusive rock
units are early Tertiary (Eocene) in age and range from about 36 to 34.5Ma (million years ago). Age dating of illite alteration of andesite dikes at Keystone, believed to be
associated with a major gold-epithermal event, provided dates of 35.71+/- 0.12Ma, and 35.54+/- 0.06Ma. These Keystone dates compare very closely with reported
mineralization-related age dates from the major Cortez Hills gold deposit to the north, ranging from 35.70 +/-0.14 to 35.31 +/-0.37Ma (Arbonies, DG, Creel, KD, and Jackson,
ML, 2010, Geological Society of Nevada Symposium Volume p.457).
In addition, Keystone has an important and large aeromagnetic expression of about 25sq km; this geophysical anomaly is comparable in size to those of the central and south
Carlin and Battle Mountain District aeromagnetic expressions. Our geologists believe the hydrothermal gold system at Keystone is roughly comparable in size to those within
the Twin Creeks, Battle Mountain, Carlin Trend, and Cortez Districts.
On July 8, 2019, U.S. Gold Corp. announced that two new technical updates for the Keystone Project have been uploaded to their website. An updated Keystone Technical
Presentation analysis is a follow up to the previous December 2017 Keystone Technical Presentation.
In addition, U.S. Gold Corp. announced it received an updated report from Thomas Chapin. Tom has been U.S. Gold Corp.’s Senior Consulting Geologist and has worked
diligently over the last 3 years mapping the entire Keystone district.
2019 Drill Program at Keystone Property, NV
On June 6, 2019, we announced the commencement of the 2019 drilling program at the Keystone Project. The program was designed to test several drill targets in areas
previously inaccessible with a drill because of permitting limitations and follow up on encouraging results from late 2018 drilling. Identification and qualification of these
targets has been in progress since the onset of the exploration program almost 4 years ago. This targeting effort has included iterative detailed gravity surveys, detailed
geological mapping and associated prospecting, rock sampling and detailed gridded soil surveys, in addition to prior scout hole drilling. 2016-2018 scout-type drill holes,
comprised of 34 individual holes drilled from 15 total drill sites, have importantly added to the knowledge of, and geological understandings of the permissive lithologies and
favorable stratigraphy of the project. Scout drilling encountered thick sections of permissive host rocks, including Comus, Horse Canyon, Wenban, and Roberts Mountains
Formations (similar host rock packages to the sizeable deposits at the north of the Cortez Trend), hosting anomalous to multiple gram gold intervals associated with very
anomalous and thick intervals of pathfinder metals. The 2019 drilling program provided a first test to some of the most compelling targets on the Keystone project.
On November 12, 2019, U.S. Gold Corp. announced results of its 2019 drilling program and receipt of all the drill-hole assay results from the 20 square mile Keystone project,
in Nevada’s Cortez Trend. This program was comprised of six reverse circulation target assessment holes, and one core hole to follow up on the encouraging results from last
year in hole Key18-09rc. The seven holes comprise a total of 13,177 feet (4,016 m), testing specific drill targets within four target areas, including the Sophia, Tip Top, Sophia
South and Nina Skarn target areas (see the map below).
15
16
Five of the seven holes intersected significant gold assays, highlighted by Key19-05rc, the first ever drill-hole test of the Nina Skarn target, a +700m long coincident gold-
bismuth-tellurium rock and soil anomaly defined by surface sampling in 2018. Key19-05rc encountered two thick intervals of strong, mostly oxide gold mineralization: 67.06m
of 0.194 gpt from 12.2m and 76.2m of 0.224 gpt from 150.9m (see the photo below).
Of note, anomalous gold mineralization is present throughout the entire thickness of skarn altered Upper and Lower Plate rocks drilled, from surface to 414.5m. Cyanide
solubility assays were run on selected intervals and demonstrate as much as 90% of the contained gold is cyanide soluble within one hour, suggesting this style of mineralization
is amenable to cyanide extraction. Detailed intercepts for Key19-05rc are given below in Table 1. The entire assay sequence of the hole, including visual metallurgical and
cyanide soluble characteristics, is attached below to better illustrate grade continuity (see link below: Figure 4: Key19-05rc Gold Assays and Metallurgical Characteristics),
along with a cross section of the drill-hole (see link below: Figure 5: Key19-05rc Cross-section). True thicknesses are unknown at this time.
The potential to expand upon mineralization encountered in Key19-05rc along the +700m Nina Skarn anomaly is good, with overall additional potential for 2km strike-length
along the Walti stock contact. To the north of Nina Skarn, near the old Keystone mine, rock chip samples of skarn with +27 gpt Au assays are present, and to the south of
Key19-05rc, 6m of 1.13 gpt Au was encountered last year in Key18-09rc, hosted in Comus skarn. See the attached figure below, which illustrates these points and surface Au-
Bi-Te anomalies relative to Key19-05rc (Figure 6. Gold Skarn Potential Areas of Keystone).
Key19-05rc
From (m)
12.2
12.2
36.6
150.9
150.9
182.9
187.5
Including
and
including
and
including
To (m)
77.7
19.8
65.5
225.6
175.3
207.3
198.1
Length (m)
Au intercept (gpt)
67.06
9.14
30.48
76.2
25.91
25.91
12.2
0.194
0.333
0.273
0.224
0.167
0.408
0.706
Table 1. Key19-05rc Gold Intercepts
17
Figure 4. Key19-05rc Gold Assays and Metallurgical Characteristics
18
19
20
21
Figure 5. Key19-05rc Cross Section
22
Figure 6. Gold Skarn Potential Areas of Keystone
Nearly all of the holes drilled in Phase One encountered moderate to thick intervals of anomalous gold with moderate to locally very strongly associated pathfinder metals,
within both Carlin-style and skarn style mineralization. Essentially all significant gold intercepts are hosted in one or more of several previously defined prospective Upper Plate
and Lower Plate host rock environments, where favorable structures are also present. These host areas include: Lower Valmy-Comus units, along the Roberts Mountains Thrust
(Upper Plate-Lower Plate contact), Devonian Horse Canyon-Wenban contact, and Wenban Unit 5. Holes that intersected significant gold assay intervals greater than 0.300 gpt
are provided in Table 2 below, along with visual metallurgical characteristics.
23
Table of Intercepts for 2019 Keystone Core-RC drilling Au >0.300 gpt
Hole No.
To ft
Key19-01c
Key19-02rc
From m
From ft
To m
1317
305
355
735
1775
300
300
825
40
120
135
155
195
565
615
730
1090
1200
1395
1410
1420
1321.9
315
360
740
1780
305
315
830
45
125
140
175
205
570
655
735
1095
1205
1400
1415
1425
401.4
93.0
108.2
224.0
541.0
91.4
91.4
251.5
12.2
36.6
41.1
47.2
59.4
172.2
187.5
222.5
332.2
365.8
425.2
429.8
432.8
402.9
96.0
109.7
225.6
542.5
93.0
96.0
253.0
13.7
38.1
42.7
53.3
62.5
173.7
199.6
224.0
333.8
367.3
426.7
431.3
434.3
Length ft
4.9
10
5
5
5
5
15
5
5
5
5
20
10
5
40
5
5
5
5
5
5
Length m
1.5
3.0
1.5
1.5
1.5
1.5
4.6
1.5
1.5
1.5
1.5
6.1
3.0
1.5
12.2
1.5
1.5
1.5
1.5
1.5
1.5
Au opt
0.062
0.015
0.012
0.016
0.010
0.041
0.028
0.017
0.040
0.011
0.010
0.013
0.012
0.009
0.021
0.023
0.023
0.010
0.010
0.009
0.009
Ag opt
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Au gpt
2.112
0.530
0.397
0.538
0.327
1.411
0.954
0.576
1.361
0.392
0.336
0.456
0.412
0.316
0.706
0.773
0.780
0.347
0.327
0.304
0.312
Ag gpt
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Notes
oxide
mixed
mixed
oxide
sulfide
oxide
oxide
sulfide
oxide
oxide
oxide
oxide
sulfide
oxide
oxide
oxide
oxide
oxide
sulfide
sulfide
sulfide
Key19-03rc
within
Key19-05rc
Key19-06rc
U.S. Gold Corp. continues to analyze the 2019 Keystone drilling results in context with all of the prior drilling, geophysical surveys, mapping and geochemistry. 2020 Keystone
exploration plans are being developed.
Table 2. Keystone 2019 Phase One Significant Gold Intercepts
Quality Control Procedures for Keystone
We apply industry standard practice to quality control of drilling, sampling and assaying. Drilling at Keystone was carried out in 2019 by Envirotech Drilling LLC of
Winnemucca, NV using a reverse circulation drill rig. RC cuttings were run through a rotary splitter on the drill as drilling advanced, which is industry standard, and a
representative sample collected from the discharge point of the splitter. Chip samples were bagged and labeled by the drillers and then picked up from the site by a Bureau
Veritas Minerals Laboratories Technician and taken to their Elko prep facility. Samples were prepped in Elko and then the pulps were shipped by BV to their lab in Sparks, NV
for analysis. BV Labs crushed, split and pulverized 250g of rock to 200 mesh and fire assayed the samples. Assay certificates were received, analyzed, summarized and reported
by our geologic team. As standard practice, certified blanks and standards were inserted into the sample stream at the lab on regular intervals, by us and BV. As assay results
were received the analyzed assay values for given blanks or standards were visually compared to the expected assay values, and if they fell within the expected range of
deviation as provided by the blank-standard provider, they were considered “passed” and the assay results can be relied upon. If the analyzed results did not fall within the
expected range of deviation, the blank or standard was considered “failed” and BV was asked to re-run the blank or standard for gold fire-assay, along with the preceding two
drill hole samples and the two proceeding the failed blank or standard. When re-run assay results were received, they were compared with the original results and deemed
acceptable or not. All results to date have met our acceptability using the above-mentioned protocols.
Gold Bar North Project, Cortez Trend, Nevada
In August 2017, we closed on a transaction under a purchase and sale agreement executed in June 2017 with Nevada Gold Ventures LLC, pursuant to which we purchased all
right, title and interest in the Gold Bar North Property, a gold exploration project located in Eureka County, Nevada. The purchase price for the Gold Bar North Property was: (a)
cash payment in the amount of $20,479 which was paid in August 2017 and (b) 1,500 shares of our common stock which were issued in August 2017. Gold Bar North consists
of 49 unpatented lode mining claims situated in Eureka County, Nevada. We do not consider the Gold Bar North Property as a material property and are currently focusing the
majority of our limited resources on exploration activities at the Copper King, Keystone and Maggie Creek properties.
24
Figure 7 – Gold Bar North Project Claim Boundaries
25
Maggie Creek Project, Nevada
On September 10, 2019, the Company, 2637262 Ontario Inc., a corporation incorporated under the laws of the Providence of Ontario (“NumberCo”) and all of the shareholders
of the NumberCo (the “NumberCo Shareholders”), entered into the Share Exchange Agreement, dated September 10, 2019 (the “Agreement”), pursuant to which, among other
things, the Company agreed to issue to the NumberCo Shareholders 200,000 shares of the Company’s common stock in exchange for all of the issued and outstanding shares of
NumberCo, with NumberCo becoming a wholly owned subsidiary of the Company (see Note 1).
NumberCo owns all of the issued and outstanding shares of Orevada Metals Inc. (“Orevada”), a corporation under the laws of the state of Nevada. At the time of acquisition, the
Company acquired from NumberCo cash of $159,063, and assumed liabilities consisting of accounts payable totaling $125,670. As a result, the Company acquired Orevada’s
right to an option agreement dated in February 2019 (the “Option Agreement”). The Option Agreement grants Orevada the exclusive right and option to earn-in and acquire up to
50% undivided interest in a property called Maggie Creek, located in Eureka County, Nevada by completing a $4.5 million in exploration and development expenditures
(“Initial Earn-in”) and payment to Renaissance Exploration, Inc. (“Renaissance”), the grantor, of $250,000. Orevada may elect within 60 days after making the $250,000
payment, to increase its interest by an additional 20% (total interest of 70%) by producing a feasibility study by the end of the ninth year of the Option Agreement. One of the
directors of the Company, Mr. Tim Janke, is also a director of Renaissance, a company which is not under common control.
Figure 8 – Location of Maggie Creek Project and Major Gold Trends in Nevada
26
History of Prior Operations and Exploration on the Maggie Creek Project
The Maggie Creek claims have been subjected to multiple exploration programs between 1974 and 2000, including geologic mapping, geochemical and geophysical surveys,
and much shallow drilling. Parties who worked on the project include: USGS-Radtke, Campbell Trust, Amselco, Freeport, Western States, Getty Oil, Cordex, USMX, Fischer
Watt, Barrick, Newmont and Teck. Of the 241 holes drilled historically, only 22 are deeper than 1,000 feet. Since 2000, Timberline Resources, Renaissance Gold and Orevada
Metals held the property, completed limited data review and compilation, but completed no drilling or field work.
Figure 9 – Maggie Creek Project Claim Boundaries
27
Geological Potential of the Maggie Creek Project
Maggie Creek is located along the eastern side of the Carlin gold belt, directly northeast of Newmont Mining’s Gold Quarry mine. Mineralized northeast trending faults from
Gold Quarry project onto the Maggie Creek claims, at surface and below the post-mineral Carlin Formation. The Gold Quarry mine is localized at the intersection of the
northeast faults (Chukar-Alunite-Gold Quarry fault zone) with the west-northwest trending Good Hope fault. Good Hope parallel, gold bearing west-northwest trending faults
have been mapped on the Maggie Creek claims (Cress fault), some of which contain gold bearing, altered felsic dikes which have been poorly mapped to date. Northeast and
west-northwest fault zone intersection zones in the Maggie Creek claims are most prospective for ore deposition.
Favorable Roberts Mountains Formation carbonate rocks exposed at surface consist of thrust slices. At drillable depth, below the thrusts, in-place Lower Plate Rodeo Creek,
Popovich, Roberts Mountains and Hanson Creek rocks are present. Detailed structural mapping where exposures allow will help define targets within these deeper units. Much
of the gold encountered in drilling to date is likely an expression of system at depth.
U.S Gold Corp. Maggie Creek Exploration Activities
To date, we have completed limited work on the Maggie Creek project. Work has included historic data review and compilation, historic data field and paper verification, initial
drill hole targeting and field visits. A detailed gravity survey was completed in late April 2020, which supports some historic geologic mapping. Historic drill collar location and
surface mapping-sampling activities are ongoing. Surface mapping activities are focused on identifying gold bearing structural zones, dikes and their intersection zones.
Quality Control Procedures for Maggie Creek
We have not completed any exploration activities to date on the Maggie Creek project that require a QA/QC program, such as drilling. However, such activities will likely occur
in the future and will utilize similar QA/QC procedures detailed in the Keystone project section.
Competition
We do not compete directly with anyone for the exploration or removal of minerals from our property as we hold all interest and rights to the claims. Readily available
commodities markets exist in the U.S. and around the world for the sale of minerals. Therefore, we will likely be able to sell minerals that we are able to recover. We will be
subject to competition and unforeseen limited sources of supplies in the industry in the event spot shortages arise for supplies such as explosives or large equipment tires, and
certain equipment such as bulldozers and excavators and services, such as contract drilling that we will need to conduct exploration. If we are unsuccessful in securing the
products, equipment and services we need, we may have to suspend our exploration plans until we are able to secure them.
Compliance with Government Regulation
We will be required to comply with all regulations, rules and directives of governmental authorities and agencies applicable to the exploration of minerals in the United States
generally. We will also be subject to the regulations of the BLM with respect to mining claims on federal lands.
28
Future exploration drilling on any of our properties that consist of BLM land will require us to either file a Notice of Intent (NOI) or a Plan of Operations with the BLM,
depending upon the amount of new surface disturbance that is planned. A Notice of Intent is required for planned surface activities that anticipate less than 5.0 acres of surface
disturbance, and usually can be obtained within a 30 to 60-day time period.
Environmental Permitting Requirements
Various levels of governmental controls and regulations address, among other things, the environmental impact of mineral mining and exploration operations and establish
requirements for reclamation of mineral mining and exploration properties after exploration operations have ceased. With respect to the regulation of mineral mining and
exploration, legislation and regulations in various jurisdictions establish performance standards, air and water quality emission limits and other design or operational
requirements for various aspects of the operations, including health and safety standards. Legislation and regulations also establish requirements for reclamation and
rehabilitation of mining properties following the cessation of operations and may require that some former mining properties be managed for long periods of time after mining
activities have ceased.
Our activities are subject to various levels of federal and state laws and regulations relating to protection of the environment, including requirements for closure and reclamation
of mineral exploration properties. Some of the laws and regulations include the Clean Air Act, the Clean Water Act, the Comprehensive Environmental Response,
Compensation and Liability Act (“CERCLA”), the Emergency Planning and Community Right-to-Know Act, the Endangered Species Act, the Federal Land Policy and
Management Act, the National Environmental Policy Act, the Resource Conservation and Recovery Act, and related state laws in Nevada. Additionally, much of our property is
subject to the federal General Mining Law of 1872, which regulates how mining claims on federal lands are located and maintained.
The State of Nevada, where we focus our mineral exploration efforts, requires mining projects to obtain a Nevada State Reclamation Permit pursuant to the Mined Land
Reclamation Act (the “Nevada MLR Act”), which establishes reclamation and financial assurance requirements for all mining operations in the state. New and expanding
facilities are required to provide a reclamation plan and financial assurance to ensure that the reclamation plan is implemented upon completion of operations. The Nevada
MLR Act also requires reclamation plans and permits for exploration projects that will result in more than five acres of surface disturbance on private lands.
Item 1A. RISK FACTORS
We will require significant additional capital to fund our business plan.
We will be required to expend significant funds to determine if any proven and probable mineral reserves might exist at our properties, to continue exploration and if warranted,
develop our existing exploration properties and to identify and acquire additional properties to diversify our properties portfolio. We have spent and will be required to continue
to expend significant amounts of capital for drilling, geological and geochemical analysis, assaying and feasibility studies with regard to the results of our exploration. We may
not benefit from some of these investments if we are unable to identify any commercially exploitable mineralized material.
Our ability to obtain necessary funding for these purposes, in turn, depends upon a number of factors, including the status of the national and worldwide economy and the price
of gold. Capital markets worldwide have been adversely affected by substantial losses by financial institutions, caused by investments in asset-backed securities. We may not be
successful in obtaining the required financing or, if we can obtain such financing, such financing may not be on terms that are favorable to us. Failure to obtain such additional
financing could result in delay or indefinite postponement of further exploration operations and the possible partial or total loss of our potential interest in our properties.
29
We have a limited operating history on which to base an evaluation of our business and prospects.
Since our inception we have had no revenue from operations. We have no history of producing metals from any of our exploration properties. Our properties are exploration
stage properties. Advancing properties from the exploration stage requires significant capital and time, and successful commercial production from a property, if any, will be
subject to completing feasibility studies, permitting and construction of the potential mine, processing plants, roads, and other related works and infrastructure. As a result, we
are subject to all of the risks associated with developing and establishing new mining operations and business enterprises including:
●
●
●
●
●
●
●
●
●
completion of feasibility studies to verify potential reserves and commercial viability, including the ability to find sufficient gold mineral reserves to support a
commercial mining operation;
the timing and cost, which can be considerable, of further exploration, preparing feasibility studies, permitting and construction of infrastructure, mining and processing
facilities;
the availability and costs of drill equipment, exploration personnel, skilled labor and mining and processing equipment, if required;
the availability and cost of appropriate smelting and/or refining arrangements, if required;
compliance with environmental and other governmental approval and permit requirements;
the availability of funds to finance exploration activities, as warranted;
potential opposition from non-governmental organizations, environmental groups, local groups or local inhabitants which may delay or prevent exploration activities;
potential increases in exploration, construction and operating costs due to changes in the cost of fuel, power, materials and supplies; and
potential shortages of mineral processing, construction and other facilities related supplies.
The costs, timing and complexities of exploration activities may be increased by the location of our properties and demand by other mineral exploration and mining companies.
It is common in exploration programs to experience unexpected problems and delays during drill programs and, if ever commenced, development, construction and mine start-
up. Accordingly, our activities may not ever result in profitable mining operations and we may not succeed in establishing mining operations or profitably producing metals at
any of our properties.
We have a history of losses and expect to continue to incur losses in the future.
We have incurred losses since inception, have negative cash flow from operating activities and expect to continue to incur losses in the future. We incurred the following losses
from continuing operations during each of the following periods of approximately:
●
●
$5,249,000 for the year ended April 30, 2020; and
$8,047,000 for the year ended April 30, 2019.
We expect to continue to incur losses unless and until such time as one of our properties enters into commercial production and generate sufficient revenues to fund continuing
operations. We recognize that if we are unable to generate significant revenues from future potential mining operations and dispositions of our properties, we will not be able to
earn profits or continue operations. At this early stage of our operation, we also expect to face the risks, uncertainties, expenses and difficulties frequently encountered by
companies at the start up stage of their business development. We cannot be sure that we will be successful in addressing these risks and uncertainties and our failure to do so
could have a materially adverse effect on our financial condition.
We have sustained significant operating losses and need to obtain additional financing to continue the activities we undertake to make a substantial discovery or enter into
production. These conditions raise substantial doubt about our ability to continue as a going concern.
Exploring for gold is an inherently speculative business.
Natural resource exploration and exploring for gold in particular is a business that by its nature is very speculative. There is a strong possibility that we will not discover gold or
any other resources which can be mined or extracted at a profit. Although the Copper King Project has a known historical gold deposit, the deposit may not be of the quality or
size necessary for us to make a profit from actually mining it. Few properties that are explored are ultimately developed into producing mines. Unusual or unexpected
geological formations, geological formation pressures, fires, power outages, labor disruptions, flooding, explosions, cave-ins, landslides and the inability to obtain suitable or
adequate machinery, equipment or labor are just some of the many risks involved in mineral exploration programs and the subsequent expansion of potential gold deposits.
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Our directors and executive officers lack significant experience or technical training in exploring for precious and base metal deposits and in developing mines.
Most of our directors and executive officers lack significant experience or technical training in exploring for precious and base metal deposits and in developing mines.
Accordingly, although our Project Geologist has significant experience with early stage gold and base metal exploration, our management may not be fully aware of many of
the other specific requirements related to working within this industry. Their decisions and choices may not take into account standard engineering or managerial approaches
that mineral exploration companies commonly use. Consequently, our future exploration operations, potential earnings, and ultimate financial success could suffer irreparable
harm due to some of our management’s lack of experience in the mining industry.
We will need to obtain additional financing to fund our Copper King, Keystone, Gold Bar North and Maggie Creek exploration programs.
We do not have sufficient capital to fund our future exploration programs for the Copper King Project, the Keystone Project, the Gold Bar North Project or the Maggie Creek
Project as they are currently planned or to fund the acquisition and exploration of new properties. We will require additional funding to continue our planned future exploration
programs. Management estimates that we will require up to $3,500,000 in order to fund our Fiscal Year 2021 combined planned exploration programs. Our inability to raise
additional funds on a timely basis could prevent us from achieving our business objectives and could have a negative impact on our business, financial condition, results of
operations and the value of our securities.
We do not know if our properties contain any gold or other minerals that can be mined at a profit.
Although the properties on which we have the right to explore for gold are known to have historic deposits of gold, there can be no assurance such deposits can be mined at a
profit. Whether a gold deposit can be mined at a profit depends upon many factors. Some but not all of these factors include: the particular attributes of the deposit, such as size,
grade and proximity to infrastructure; operating costs and capital expenditures required to start mining a deposit; the availability and cost of financing; the price of gold, which
is highly volatile and cyclical; and government regulations, including regulations relating to prices, taxes, royalties, land use, importing and exporting of minerals and
environmental protection.
All our projects are in the exploration stage.
Copper King does not have any mineral reserve estimation in accordance with SEC Industry Guide 7. There are currently no estimates of gold mineralization at the Keystone
Property, Gold Bar North Property or Maggie Creek Property available in historical data obtained during the property purchases. There is no assurance that we can establish the
existence of any mineral reserves on Copper King, Keystone or Maggie Creek in commercially exploitable quantities. Until we can do so, we cannot earn any revenues from the
properties and if we do not do so we will lose all of the funds that we expend on exploration. If we do not discover any mineral reserves in a commercially exploitable quantity,
the exploration component of our business could fail.
We have not established that our Copper King, Keystone Property, Gold Bar North Property or Maggie Creek Property contains any mineral reserve according to recognized
reserve guidelines, nor can there be any assurance that we will be able to do so. A mineral reserve is defined by the SEC in its Industry Guide 7 as that part of a mineral deposit,
which could be economically and legally extracted or produced at the time of the reserve determination. The probability of an individual prospect ever having a “reserve” that
meets the requirements of the SEC’s Industry Guide 7 is extremely remote; in all probability our mineral properties do not contain any “reserves” and any funds that we spend
on exploration could be lost. Even if we do eventually discover a mineral reserve on our properties, there can be no assurance that they can be developed into producing mines
and extract those minerals. Mineral exploration involves a high degree of risk and few mineral properties which are explored are ultimately developed into producing mines.
The commercial viability of an established mineral deposit will depend on a number of factors including, by way of example, the size, grade and other attributes of the mineral
deposit, the proximity of the mineral deposit to infrastructure such as a smelter, roads and a point for shipping, government regulation and market prices. Most of these factors
will be beyond our control, and any of them could increase costs and make extraction of any identified mineral deposit unprofitable.
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We do not have proven or probable reserves, and there is no assurance that the quantities of precious metals we might produce in the future will be sufficient to recover our
investment and operating costs.
We do not have proven or probable reserves. Substantial expenditures are required to acquire existing gold properties with established reserves or to establish proven or
probable reserves through drilling, analysis and engineering. Any sums expended for additional drilling, analysis and engineering may not establish proven or probable reserves
on our properties. We drill in connection with our mineral exploration and not with the purpose of establishing proven and probable reserves. There is a great degree of
uncertainty attributable to the calculation of any mineralized material, particularly where there has not been significant drilling, mining and processing. Until the mineralized
material located on our properties is actually mined and processed, the quantity and quality of the mineralized material must be considered as an estimate only. In addition, the
estimated value of such mineralized material (regardless of the quantity) will vary depending on metal prices. Any material change in the estimated value of mineralized
material may negatively affect the economic viability of our properties. In addition, there can be no assurance that we will achieve the same recoveries of metals contained in
the mineralized material as in small-scale laboratory tests or that we will be able to duplicate such results in larger scale tests under on-site conditions or during potential
production. There can be no assurance that our exploration activities will result in the discovery of sufficient quantities of mineralized material to recover our investment and
operating costs.
We have no history of producing metals from our current mineral properties and there can be no assurance that we will successfully establish mining operations or
profitably produce precious metals.
We have no history of producing metals from our current exploration properties. We do not produce gold and do not currently generate operating earnings. While we seek to
advance our projects and properties through exploration, such efforts will be subject to all of the risks associated with establishing new future potential mining operations and
business enterprises, including:
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the timing and cost, which are considerable, of the construction of mining and processing facilities;
the ability to find sufficient gold reserves to support a profitable mining operation;
the availability and costs of skilled labor and mining equipment;
compliance with environmental and other governmental approval and permit requirements;
the availability of funds to finance exploration activities;
potential opposition from non-governmental organizations, environmental groups, local groups or local inhabitants that may delay or prevent exploration activities; and
potential increases in construction and operating costs due to changes in the cost of labor, fuel, power, materials and supplies.
It is common in new mining operations to experience unexpected problems and delays during exploration activities. In addition, our management will need to be expanded. This
could result in delays in the commencement of potential mineral production and increased costs of production. Accordingly, we cannot assure you that our activities will result
in any profitable mining operations or that we will ever successfully establish mining operations.
Estimates of mineral resources are subject to evaluation uncertainties that could result in project failure.
Our exploration and future potential mining operations, if any, are and would be faced with risks associated with being able to accurately predict the quantity and quality of
mineral resources/reserves within the earth using statistical sampling techniques. Estimates of mineral resource/reserve on our properties would be made using samples obtained
from appropriately placed trenches, test pits and underground workings and intelligently designed drilling. There is an inherent variability of assays between check and
duplicate samples taken adjacent to each other and between sampling points that cannot be reasonably eliminated. Additionally, there also may be unknown geologic details
that have not been identified or correctly appreciated at the current level of accumulated knowledge about our properties. This could result in uncertainties that cannot be
reasonably eliminated from the process of estimating potential mineral resources/reserves. If these estimates were to prove to be unreliable, we could implement an exploitation
plan that may not lead to any commercially viable operations in the future.
Any material changes in mineral resource/reserve estimates and grades of mineralization will affect the economic viability of placing a property into production and a
property’s return on capital.
As we have not completed feasibility studies on our Copper King, Keystone, Gold Bar North and Maggie Creek Properties and have not commenced actual production. Future
potential mineral resource estimates may require adjustments or downward revisions. In addition, the grade ultimately mined, if any, may differ from that indicated by our
preliminary economic assessment and drill results. Minerals recovered in small scale tests may not be duplicated in large scale tests under on-site conditions or in production
scale.
Extended declines in market prices for gold or copper may render portions of our potential mineralization uneconomic and result in reduced reported mineralization or adversely
affect any future potential commercial viability determinations we may reach. Any material reductions in estimates of mineralization, or of our ability to extract this
mineralization, could have a material adverse effect on our share price and the value of our Properties.
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We may not be able to obtain all required permits and licenses to place any of our properties into future potential production.
Our current and future operations, including additional exploration activities, require permits from governmental authorities and such operations are and will be governed by
laws and regulations governing prospecting, exploration, taxes, labor standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine
safety and other matters. Companies engaged in mineral property exploration generally experience increased costs, and delays in exploration and other schedules as a result of
the need to comply with applicable laws, regulations and permits. We cannot predict if all permits which we may require for continued exploration, will be obtainable on
reasonable terms, if at all. Costs related to applying for and obtaining permits and licenses may be prohibitive and could delay our planned exploration activities. Failure to
comply with applicable laws, regulations and permitting requirements may result in enforcement actions, including orders issued by regulatory or judicial authorities causing
exploration operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions.
Parties engaged in exploration operations may be required to compensate those suffering loss or damage by reason of the exploration activities and may have civil or criminal
fines or penalties imposed for violations of applicable laws or regulations. Amendments to current laws, regulations and permits governing operations and activities of
exploration companies, or more stringent implementation thereof, could have a material adverse impact on our operations and cause increases in capital expenditures or
production costs or reduction in levels of exploration activities at our properties or require abandonment or delays in future activities.
We are subject to significant governmental regulations, which affect our operations and costs of conducting our business.
Our current and future operations are and will be governed by laws and regulations, including:
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laws and regulations governing mineral concession acquisition, prospecting, and exploration;
laws and regulations related to exports, taxes and fees;
labor standards and regulations related to occupational health and mine safety; and
environmental standards and regulations related to waste disposal, toxic substances, land use and environmental protection.
Companies engaged in exploration activities often experience increased costs and delays in exploration and other schedules as a result of the need to comply with applicable
laws, regulations and permits. Failure to comply with applicable laws, regulations and permits may result in enforcement actions, including the forfeiture of mineral claims or
other mineral tenures, orders issued by regulatory or judicial authorities requiring operations to cease or be curtailed, and may include corrective measures requiring capital
expenditures, installation of additional equipment or costly remedial actions. We may be required to compensate those suffering loss or damage by reason of our mineral
exploration activities and may have civil or criminal fines or penalties imposed for violations of such laws, regulations and permits. Existing and possible future laws,
regulations and permits governing operations and activities of exploration companies, or more stringent implementation, could have a material adverse impact on our business
and cause increases in capital expenditures or require abandonment or delays in exploration.
Our business is subject to extensive environmental regulations that may make exploring, or related activities prohibitively expensive, and which may change at any time.
All of our operations are subject to extensive environmental regulations that can substantially delay exploration and make exploration expensive or prohibit it altogether. We
may be subject to potential liabilities associated with the pollution of the environment and the disposal of waste products that may occur as the result of exploring and other
related activities on our properties. We may have to pay to remedy environmental pollution, which may reduce the amount of money that we have available to use for
exploration, or other activities, and adversely affect our financial position. If we are unable to fully remedy an environmental problem, we might be required to suspend
exploration operations or to enter into interim compliance measures pending the completion of the required remedy. We have not purchased insurance for potential
environmental risks (including potential liability for pollution or other hazards associated with the disposal of waste products from our exploration activities) and such insurance
may not be available to us on reasonable terms or at a reasonable price. All of our exploration will be subject to regulation under one or more local, state and federal
environmental impact analyses and public review processes. It is possible that future changes in applicable laws, regulations and permits or changes in their enforcement or
regulatory interpretation could have significant impact on some portion of our business, which may require our business to be economically re-evaluated from time to time.
These risks include, but are not limited to, the risk that regulatory authorities may increase bonding requirements beyond our financial capability. Inasmuch as posting of
bonding in accordance with regulatory determinations is a condition to the right to operate under specific federal and state exploration operating permits, increases in bonding
requirements could prevent operations even if we are in full compliance with all substantive environmental laws.
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Regulations and pending legislation governing issues involving climate change could result in increased operating costs, which could have a material adverse effect on our
business.
A number of governments or governmental bodies have introduced or are contemplating regulatory changes in response to various climate change interest groups and the
potential impact of climate change. Legislation and increased regulation regarding climate change could impose significant costs on us, our venture partners and our suppliers,
including costs related to increased energy requirements, capital equipment, environmental monitoring and reporting and other costs to comply with such regulations. Any
adopted future climate change regulations could also negatively impact our ability to compete with companies situated in areas not subject to such limitations. Given the
emotion, political significance and uncertainty around the impact of climate change and how it should be dealt with, we cannot predict how legislation and regulation will affect
our financial condition, operating performance and ability to compete. Furthermore, even without such regulation, increased awareness and any adverse publicity in the global
marketplace about potential impacts on climate change by us or other companies in our industry could harm our reputation. The potential physical impacts of climate change on
our operations are highly uncertain and would be particular to the geographic circumstances in areas in which we operate. These may include changes in rainfall and storm
patterns and intensities, water shortages, changing sea levels and changing temperatures. These impacts may adversely impact the cost, production and financial performance of
our operations.
We may be denied the government licenses and permits which we need to explore on our properties. In the event that we discover commercially exploitable deposits, we
may be denied the additional government licenses and permits which we will need to mine our properties.
Exploration activities usually require the granting of permits from various governmental agencies. For example, exploration drilling on unpatented mineral claims requires a
permit to be obtained from the United States BLM, which may take several months or longer to grant the requested permit. Depending on the size, location and scope of the
exploration program, additional permits may also be required before exploration activities can be undertaken. Prehistoric or Native American graveyards, threatened or
endangered species, archeological sites or the possibility thereof, difficult access, excessive dust and important nearby water resources may all result in the need for additional
permits before exploration activities can commence. As with all permitting processes, there is the risk that unexpected delays and excessive costs may be experienced in
obtaining required permits. The needed permits may not be granted at all. Delays in or our inability to obtain necessary permits will result in unanticipated costs, which may
result in serious adverse effects upon our business.
The values of our properties are subject to volatility in the price of gold and any other deposits we may seek or locate.
Our ability to obtain additional and continuing funding, and our profitability in the event we commence future mining operations or sell the rights to mine, will be significantly
affected by changes in the market price of gold. Gold prices fluctuate widely and are affected by numerous factors, all of which are beyond our control. Some of these factors
include the sale or purchase of gold by central banks and financial institutions; interest rates; currency exchange rates; inflation or deflation; fluctuation in the value of the
United States dollar and other currencies; speculation; global and regional supply and demand, including investment, industrial and jewelry demand; and the political and
economic conditions of major gold or other mineral producing countries throughout the world, such as Russia and South Africa. The price of gold or other minerals have
fluctuated widely in recent years, and a decline in the price of gold could cause a significant decrease in the value of our properties, limit our ability to raise money, and render
continued exploration activities of our properties impracticable. If that happens, then we could lose our rights to our properties and be compelled to sell some or all of these
rights. Additionally, the future progression of our properties beyond the exploration stage is heavily dependent upon the level of gold prices remaining sufficiently high to make
the continuation of our properties economically viable. You may lose your investment if the price of gold decreases. The greater the decrease in the price of gold, the more likely
it is that you will lose money.
Our property titles may be challenged, and we are not insured against any challenges, impairments or defects to our mineral claims or property titles.
Our unpatented Keystone claims were created and maintained in accordance with the federal General Mining Law of 1872. Unpatented claims are unique U.S. property interests
and are generally considered to be subject to greater title risk than other real property interests because the validity of unpatented claims is often uncertain. This uncertainty
arises, in part, out of the complex federal and state laws and regulations under the General Mining Law. We have obtained a title report on our Keystone claims but cannot be
certain that all defects or conflicts with our title to those claims have been identified. Further, we have not obtained title insurance regarding our purchase and ownership of the
Keystone claims. Defending any challenges to our property titles may be costly and may divert funds that could otherwise be used for exploration activities and other purposes.
In addition, unpatented claims are always subject to possible challenges by third parties or contests by the federal government, which, if successful, may prevent us from
exploiting our discovery of commercially extractable gold. Challenges to our title may increase its costs of operation or limit our ability to explore on certain portions of our
properties. We are not insured against challenges, impairments or defects to our property titles, nor do we intend to carry extensive title insurance in the future.
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The value of our properties and any other projects we may seek or locate is subject to volatility in the price of gold.
Our ability to obtain additional and continuing funding, and our profitability if and when we potentially commence future mining or sell our rights to mine, will be
significantly affected by changes in the market price of gold and other mineral deposits. Gold and other minerals prices fluctuate widely and are affected by numerous factors,
all of which are beyond our control. The price of gold may be influenced by:
● fluctuation in the supply of, demand and market price for gold;
● mining activities of our competitors;
● sale or purchase of gold by central banks and for investment purposes by individuals and financial institutions;
● interest rates;
● currency exchange rates;
● inflation or deflation;
● fluctuation in the value of the United States dollar and other currencies;
● global and regional supply and demand, including investment, industrial and jewelry demand; and
● political and economic conditions of major gold or other mineral-producing countries.
The price of gold and other minerals have fluctuated widely in recent years, and a decline in the price of gold or other minerals could cause a significant decrease in the value of
our property, limit our ability to raise money, and render continued exploration of our property impracticable. If that happens, then we could lose our rights to our property or be
compelled to sell some or all of these rights. Additionally, the future progression of our properties beyond the exploration stage is heavily dependent upon gold prices remaining
sufficiently high to make the continuation of our property economically viable.
Possible amendments to the General Mining Law and other regulations could make it more difficult or impossible for us to execute our business plan.
In recent years, the U.S. Congress has considered a number of proposed amendments to the General Mining Law, as well as legislation that would make comprehensive
changes to the law. Although no such comprehensive legislation has been adopted to date, there can be no assurance that such legislation will not be adopted in the future. If
adopted, such legislation, if it includes concepts that have been part of previous legislative proposals, could, among other things, (i) limit on the number of millsites that a
claimant may use, (ii) impose time limits on the effectiveness of plans of operation that may not coincide with mine life, (iii) impose more stringent environmental compliance
and reclamation requirements on activities on unpatented mining claims and millsites, (iv) establish a mechanism that would allow states, localities and Native American tribes
to petition for the withdrawal of identified tracts of federal land from the operation of the General Mining Law, (v) allow for administrative determinations that mining would
not be allowed in situations where undue degradation of the federal lands in question could not be prevented, (vi) impose royalties on gold and other mineral production from
unpatented mining claims or impose fees on production from patented mining claims, and (vii) impose a fee on the amount of material displaced at a mine. Further, such
legislation, if enacted, could have an adverse impact on earnings from our exploration operations, could reduce future estimates of any reserves we may establish and could
curtail our future exploration activity on our unpatented claims.
Our ability to conduct exploration, and related activities may also be impacted by administrative actions taken by federal agencies.
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Our activities are subject to environmental laws and regulations that may increase our costs of doing business and restrict our operations.
All phases of our operations are subject to environmental regulation in the jurisdictions in which we operate. Environmental legislation is evolving in a manner which may
require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened
degree of responsibility for companies and their officers, directors and employees. These laws address emissions into the air, discharges into water, management of waste,
management of hazardous substances, protection of natural resources, antiquities and endangered species and reclamation of lands disturbed by mining operations. Compliance
with environmental laws and regulations and future changes in these laws and regulations may require significant capital outlays and may cause material changes or delays in
our operations and future activities. It is possible that future changes in these laws or regulations could have a significant adverse impact on our properties or some portion of
our business, causing us to re-evaluate those activities at that time.
CERCLA: In 2009, the U.S. Environmental Protection Agency (“EPA”) announced that it would develop financial assurance requirements under CERCLA Section 108(b) for
the hard rock mining industry. On January 29, 2016, the U.S. District Court for the District of Columbia issued an order requiring that if the EPA intended to prepare such
regulations, it had to do so by December 1, 2016. The EPA did comply with that order by issuing draft proposed regulations on December 1, 2016. The EPA subsequently
issued its proposed rule on January 11, 2017. Under the proposed rule, owners and operators of facilities subject to the rule have been required, among other things, to (i) notify
the EPA that they are subject to the rule; (ii) calculate a level of financial responsibility for their facility using a formula provided in the rule; (iii) obtain a financial
responsibility instrument, or qualify to self-assure, for the amount of financial responsibility; (iv) demonstrate that they had obtained such evidence of financial responsibility;
and (v) update and maintain financial responsibility until the EPA released the owner or operator from the CERCLA Section 108(b) regulations. As drafted, those additional
financial assurance obligations could have been in addition to the reclamation bonds and other financial assurances we have and would be required to have in place under
current federal and state laws. If such requirements had been retained in the final rule, they could have required significant additional expenditures on financial assurance, which
could have had a material adverse effect on our future business operations.
However, after an extended public comment period, the EPA decided on December 1, 2017 not to adopt the proposed rule, and not to impose additional financial assurance
obligations on the hard rock mining industry. It is possible that one or more non-governmental organizations will file lawsuits challenging that decision.
Clean Air Act: The Clean Air Act, as amended, restricts the emission of air pollutants from many sources, including mining and processing activities. Our mining operations
may produce air emissions, including fugitive dust and other air pollutants from stationary equipment, storage facilities and the use of mobile sources such as trucks and heavy
construction equipment, which are subject to review, monitoring and/or control requirements under the Clean Air Act and state air quality laws. New facilities may be required
to obtain permits before work can begin, and existing facilities may be required to incur capital costs in order to remain in compliance. In addition, permitting rules may impose
limitations on our production levels or result in additional capital expenditures in order to comply with the rules.
NEPA: The National Environmental Policy Act (“NEPA”) requires federal agencies to integrate environmental considerations into their decision-making processes by
evaluating the environmental impacts of their proposed actions, including issuance of permits to mining facilities, and assessing alternatives to those actions. If a proposed
action could significantly affect the environment, the agency must prepare a detailed statement known as an EIS. The United States Environmental Protection Agency (“EPA”),
other federal agencies, and any interested third parties will review and comment on the scoping of the EIS and the adequacy of and findings set forth in the draft and final EIS.
This process can cause delays in issuance of required permits or result in changes to a project to mitigate its potential environmental impacts, which can in turn impact the
economic feasibility of a proposed project.
CWA: The Clean Water Act (“CWA”), and comparable state statutes, impose restrictions and controls on the discharge of pollutants into waters of the United States. The
discharge of pollutants into regulated waters is prohibited, except in accordance with the terms of a permit issued by the EPA or an analogous state agency. The CWA regulates
storm water mining facilities and requires a storm water discharge permit for certain activities. Such a permit requires the regulated facility to monitor and sample storm water
run-off from its operations. The CWA and regulations implemented thereunder also prohibit discharges of dredged and fill material in wetlands and other waters of the United
States unless authorized by an appropriately issued permit. The CWA and comparable state statutes provide for civil, criminal and administrative penalties for unauthorized
discharges of pollutants and impose liability on parties responsible for those discharges for the costs of cleaning up any environmental damage caused by the release and for
natural resource damages resulting from the release.
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SDWA: The Safe Drinking Water Act (“SDWA”) and the Underground Injection Control (“UIC”) program promulgated thereunder, regulate the drilling and operation of
subsurface injection wells. The EPA directly administers the UIC program in some states and in others the responsibility for the program has been delegated to the state. The
program requires that a permit be obtained before drilling a disposal or injection well. Violation of these regulations and/or contamination of groundwater by mining related
activities may result in fines, penalties, and remediation costs, among other sanctions and liabilities under the SWDA and state laws. In addition, third party claims may be filed
by landowners and other parties claiming damages for alternative water supplies, property damages, and bodily injury.
Nevada Laws: At the state level, mining operations in Nevada are also regulated by the Nevada Department of Conservation and Natural Resources, Division of Environmental
Protection. Nevada state law requires mine operators to hold Nevada Water Pollution Control Permits, which dictate operating controls and closure and post-closure
requirements directed at protecting surface and ground water. In addition, operators are required to hold Nevada Reclamation Permits. These permits mandate concurrent and
post-mining reclamation of mines and require the posting of reclamation bonds sufficient to guarantee the cost of mine reclamation. We have set up a provision for our
reclamation bond at the Pan Mine. Compliance with this and other federal and state regulations could result in delays in beginning or expanding operations, incurring additional
costs for investigation or cleanup of hazardous substances, payment of penalties for non-compliance or discharge of pollutants, and post-mining closure, reclamation and
bonding, all of which could have an adverse impact on our financial performance and results of operations.
Other Nevada regulations govern operating and design standards for the construction and operation of any source of air contamination and landfill operations. Any changes to
these laws and regulations could have an adverse impact on our financial performance and results of operations by, for example, requiring changes to operating constraints,
technical criteria, fees or surety requirements.
Market forces or unforeseen developments may prevent us from obtaining the supplies and equipment necessary to explore for gold and other minerals.
Gold exploration, and mineral exploration in general, is a very competitive business. Competitive demands for contractors and unforeseen shortages of supplies and/or
equipment could result in the disruption of our planned exploration activities. Current demand for exploration drilling services, equipment and supplies is robust and could result
in suitable equipment and skilled manpower being unavailable at scheduled times for our exploration program. Fuel prices are extremely volatile as well. We will attempt to
locate suitable equipment, materials, manpower and fuel if sufficient funds are available. If we cannot find the equipment and supplies needed for our various exploration
programs, we may have to suspend some or all of them until equipment, supplies, funds and/or skilled manpower become available. Any such disruption in our activities may
adversely affect our exploration activities and financial condition.
We may not be able to maintain the infrastructure necessary to conduct exploration activities.
Our exploration activities depend upon adequate infrastructure. Reliable roads, bridges, power sources and water supply are important factors which affect capital and operating
costs. Unusual or infrequent weather phenomena, sabotage, government or other interference in the maintenance or provision of such infrastructure could adversely affect our
exploration activities and financial condition.
We compete against larger and more experienced companies.
The mining industry is intensely competitive. Many large mining companies are primarily producers of precious or base metals and may become interested in the types of
deposits and exploration projects on which we are focused, which include gold, silver and other precious metals deposits or polymetallic deposits containing significant
quantities of base metals, including copper. Many of these companies have greater financial resources, experience and technical capabilities than we do. We may encounter
increasing competition from other mining companies in our efforts to acquire mineral properties and hire experienced mining professionals. Increased competition in our
business could adversely affect our ability to attract necessary capital funding or acquire suitable mining properties or prospects for mineral exploration in the future.
We rely on contractors to conduct a significant portion of our exploration operations.
A significant portion of our exploration operations are currently conducted in whole or in part by contractors. As a result, our exploration operations are subject to a number of
risks, some of which are outside our control, including:
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negotiating agreements with contractors on acceptable terms;
the inability to replace a contractor and its operating equipment in the event that either party terminates the agreement;
reduced control over those aspects of operations which are the responsibility of the contractor;
failure of a contractor to perform under its agreement;
interruption of exploration operations or increased costs in the event that a contractor ceases its business due to insolvency or other unforeseen events;
failure of a contractor to comply with applicable legal and regulatory requirements, to the extent it is responsible for such compliance; and
problems of a contractor with managing its workforce, labor unrest or other employment issues.
In addition, we may incur liability to third parties as a result of the actions of our contractors. The occurrence of one or more of these risks could adversely affect our results of
operations and financial position.
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Our exploration activities may be adversely affected by the local climate or seismic events, which could prevent us from gaining access to our property year-round.
Earthquakes, heavy rains, snowstorms, and floods could result in serious damage to or the destruction of facilities, equipment or means of access to our property, or may
otherwise prevent us from conducting exploration activities on our property. There may be short periods of time when the unpaved portion of the access road is impassible in
the event of extreme weather conditions or unusually muddy conditions. During these periods, it may be difficult or impossible for us to access our property, make repairs, or
otherwise conduct exploration activities on them.
We may be unable to secure surface access or to purchase required surface rights.
Although we acquire the rights to some or all of the minerals in the ground subject to the mineral tenures that it acquires, or has a right to acquire, in most cases it does not
thereby acquire any rights to, or ownership of, the surface to the areas covered by such mineral tenures. In such cases, applicable mining laws usually provide for rights of
access to the surface for the purpose of carrying on exploration activities, however, the enforcement of such rights through the courts can be costly and time consuming. It is
necessary to negotiate surface access or to purchase the surface rights if long-term access is required. There can be no guarantee that, despite having the right at law to access
the surface and carry on exploration activities, we will be able to negotiate satisfactory agreements with any such existing landowners/occupiers for such access or purchase of
such surface rights, and therefore we may be unable to carry out planned exploration activities. In addition, in circumstances where such access is denied, or no agreement can
be reached, we may need to rely on the assistance of local officials or the courts in such jurisdiction the outcomes of which cannot be predicted with any certainty. Our inability
to secure surface access or purchase required surface rights could materially and adversely affect our timing, cost or overall ability to develop any potential mineral deposits we
may locate.
Joint ventures and other partnerships may expose us to risks.
We may enter into future joint ventures or partnership arrangements with other parties in relation to the exploration, of a certain portion of the Copper King, Keystone, Gold Bar
North and Maggie Creek Properties in which we have an interest. Joint ventures can often require unanimous approval of the parties to the joint venture or their representatives
for certain fundamental decisions such as an increase or reduction of registered capital, merger, division, dissolution, amendments of consenting documents, and the pledge of
joint venture assets, which means that each joint venture party may have a veto right with respect to such decisions which could lead to a deadlock in the operations of the joint
venture. Further, we may be unable to exert control over strategic decisions made in respect of such properties. Any failure of such other companies to meet their obligations to
us or to third parties, or any disputes with respect to the parties’ respective rights and obligations, could have a material adverse effect on the joint ventures or their properties
and therefore could have a material adverse effect on our results of operations, financial performance, cash flows and the price of the Common Shares.
Our rights in certain mineral properties require us to perform contractual work commitments to retain our interest in those properties.
Pursuant to the Option Agreement, we have an exclusive right and option to earn-in and acquire up to 50% undivided interest in Maggie Creek, subject to work commitment
expenditures which require us to perform exploration and development expenditures of $4.5 million plus make a payment of $250,000 to Renaissance. We may elect within 60
days after making the $250,000 payment, to increase our interest by an additional 20% by producing a feasibility study by the end of the ninth year of the Option Agreement.
There is no assurance that we may achieve the work commitment expenditure and the payment of $250,000 to Renaissance. If we do not meet the contractual work
commitments and payment, we could lose the option and our rights to the property. Furthermore, we may not elect to increase our interest within 60 days after the $250,000
payment or we may fail to produce a feasibility study by the ninth year of the Option Agreement.
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We may pursue acquisitions, divestitures, business combinations or other transactions with other companies, involving our properties or new properties, which could harm
our operating results, may disrupt our business and could result in unanticipated accounting charges.
Acquisitions of other companies or new properties, divestitures, business combinations or other transactions with other companies may create additional, material risks for our
business that could cause our results to differ materially and adversely from our expected or projected results. Such risk factors include the effects of possible disruption to the
exploration activities and mine planning, loss of value associated with our properties, mismanagement of project development, additional risk and liability, indemnification
obligations, sales of assets at unfavorable prices, failure to sell non-core assets at all, poor execution of the plans for such transactions, permit requirements, debt incurred or
capital stock issued to enter into such transactions, the impact of any such transactions on our financial results, negative stakeholder reaction to any such transaction and our
ability to successfully integrate an acquired company’s operations with our operations. If the purchase price of any acquired businesses exceeds the current fair values of the net
tangible assets of such acquired businesses, we would be required to record material amounts of goodwill or other intangible assets, which could result in significant impairment
and amortization expense in future periods. These charges, in addition to the results of operations of such acquired businesses and potential restructuring costs associated with
an acquisition, could have a material adverse effect on our business, financial condition and results of operations. We cannot forecast the number, timing or size of future
transactions, or the effect that any such transactions might have on our operating or financial results. Furthermore, potential transactions, whether or not consummated, will
divert our management’s attention and may require considerable cash outlays at the expense of our existing operations. In addition, to complete future transactions, we may
issue equity securities, incur debt, assume contingent liabilities or have amortization expenses and write-downs of acquired assets, which could adversely affect our
profitability.
We may experience difficulty attracting and retaining qualified management to meet the needs of our anticipated growth, and the failure to manage our growth effectively
could have a material adverse effect on our business and financial condition.
We are dependent on a relatively small number of key employees, including our President and Chief Executive Officer, our Chief Operating Officer and our Project Geologist.
The loss of any officer could have an adverse effect on us. We have no life insurance on any individual, and we may be unable to hire a suitable replacement for them on
favorable terms, should that become necessary.
We may have exposure to greater than anticipated tax liabilities.
Our future income taxes could be adversely affected by earnings being lower than anticipated in jurisdictions that have lower statutory tax rates and higher than anticipated in
jurisdictions that have higher statutory tax rates, changes in the valuation of our deferred tax assets or liabilities, or changes in tax laws, regulations, or accounting principles, as
well as certain discrete items. We are subject to review or audit by tax authorities. As a result, we may in the future receive assessments in multiple jurisdictions on various tax-
related assertions. Any adverse outcome of such a review or audit could have a negative effect on our operating results and financial condition. In addition, the determination of
our provision for income taxes and other tax liabilities requires significant judgment, and there could be situations where the ultimate tax determination is uncertain. Although
we believe our estimates are reasonable, the ultimate tax outcome may differ from the amounts recorded in our financial statements and may materially affect our financial
results in the period or periods for which such determination is made.
Our activities may be adversely affected by unforeseeable and unquantifiable health risks, such as Coronavirus, whether those effects are local, nationwide or global.
Matters outside our control may prevent us from executing on our exploration programs, limit travel of Company representatives, adversely affect the health and welfare
of Company personnel or prevent important vendors and contractors from performing normal and contracted activities.
In December 2019, a novel strain of coronavirus, COVID-19, was reported to have surfaced in Wuhan, China and has reached multiple other countries, resulting in
government-imposed quarantines, travel restrictions and other public health safety measures in China and other countries. On March 12, 2020, the WHO declared COVID-19 to
be a global pandemic.
The risks to the Company related to contagious disease, or policies implemented by governments to protect against the spread of a disease, are unforeseeable and unquantifiable
by us. We, or our people, investors, contractors or stakeholders, may be prevented from free cross-border travel or normal attendance to activities in conducting Company
business at trade shows, presentations, meetings or other activities meant to promote or execute our business strategy and transactions. We may be prevented from receiving
goods or services from contractors. Decisions beyond our control, such as canceled events, restricted travel, barriers to entry or other factors may affect our ability to
accomplish drilling programs, technical analysis of completed exploration actions, equity raising activities, and other needs that would normally be accomplished without such
limitations.
We use a variety of outsourced contractors to execute our exploration programs. Drilling contractors need to be able to access our projects and insure social distancing
recommended safety standards. Although all of our projects are located in remote areas and sparsely populated, there can be no assurances that contractors will be able to safely
execute their programs until the COVID-19 pandemic fully passes. There is still uncertainty and lack of clarity with regards to travel restrictions and future State openings in
Wyoming and Nevada. We continue to monitor the overall situation closely, with safety of our employees and contractors our top priority. There are no assurances that any
exploration activities can take place in 2020.
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The COVID-19 pandemic has brought tremendous uncertainty to the global financial markets. As an exploration company with no revenues, we are reliant on constantly raising
additional capital to fund our operations. A continuation or worsening of the levels of market disruption and volatility seen in the recent past could have an adverse effect on our
ability to access capital, on our business, results of operations and financial condition, and on the market price of our common stock. There are no assurances we will be able to
raise additional capital on favorable terms in the foreseeable future.
The COVID-19 pandemic can cause potential disruptions with several of our outsourced consultants and professionals which we reply on to execute our business. Our
outsourced accountants, financial advisors, auditors, legal counsel, employees and Board have all experienced disruptions due to travel restrictions. This has the potential to
cause delays to current and future financial filings. The Company has taken steps to mitigate the potential risks to suppliers and employees posed by the spread of COVID-19.
The Company has implemented work from home policies where appropriate. The Company will continue to monitor developments affecting both their workforce and
contractors, and will take additional precautions that management determines are necessary in order to mitigate the impacts.
In addition, the economic disruptions caused by COVID-19 could also adversely impact the impairment risks for certain long-lived assets and equity method investments. We
evaluated these impairment considerations and determined that no such impairments occurred as of April 30, 2020.
As of April 30, 2020, our net working capital is approximately $3.0 million. To the extent that future access to the capital markets or the cost of funding is adversely affected by
COVID-19, we may need to consider alternative sources of funding for operations and working capital, which may adversely impact future results of operations, financial
condition, and cash flows.
In April 2020, President Trump signed into law legislation referred to as the “Coronavirus Aid, Relief, and Economic Security Act” (the “CARES Act”). The CARES Act
includes tax relief provisions such as: (a) an Alternative Minimum Tax (AMT) Credit Refund, (b) a 5-year net operating losses (NOL) carryback from years 2018-2020 and (c)
delayed payment of employer payroll taxes. As of April 30, 2020, U.S. Gold has approximately $24.2 million in NOL’s, which may not be carried back to prior years to
generate tax refunds, since no tax has been paid in those years by the Company. Consequently, the CARES Act legislation did not have an impact on our income tax accounts.
Risks Related to Ownership of Our Common Stock
If we fail to establish and maintain an effective system of internal control, we may not be able to report our financial results accurately or to prevent fraud. Any inability to
report and file our financial results accurately and timely could harm our reputation and adversely impact the trading price of our common stock and our ability to file
registration statements pursuant to registration rights agreements and other commitments.
Effective internal control is necessary for us to provide reliable financial reports and prevent fraud. If we cannot provide reliable financial reports or prevent fraud, we may not
be able to manage our business as effectively as we would if an effective control environment existed, and our business and reputation with investors may be harmed. As a
result of our small size, any current internal control deficiencies may adversely affect our financial condition, results of operation and access to capital. As of April 30, 2020,
management has concluded that our internal controls over financial reporting were not effective.
Public company compliance may make it more difficult to attract and retain officers and directors.
The Sarbanes-Oxley Act and rules implemented by the SEC have required changes in corporate governance practices of public companies. As a public company, we expect
these rules and regulations to further increase our compliance costs and to make certain activities more time consuming and costly. As a public company, we also expect that
these rules and regulations may make it more difficult and expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy
limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified persons to
serve on our board of directors or as executive officers, and to maintain insurance at reasonable rates, or at all.
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Our stock price may be volatile.
The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control,
including the following:
● results of our operations and exploration efforts;
● fluctuation in the supply of, demand and market price for gold;
● our ability to obtain working capital financing;
● additions or departures of key personnel;
● limited “public float” in the hands of a small number of persons whose sales or lack of sales could result in positive or negative pricing pressure on the market price for our
common stock;
● our ability to execute our business plan;
● sales of our common stock and decline in demand for our common stock;
● regulatory developments;
● economic and other external factors;
● investor perception of our industry or our prospects; and
● period-to-period fluctuations in our financial results.
In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular
companies. These market fluctuations may also materially and adversely affect the market price of our common stock. As a result, you may be unable to resell your shares of
our common stock at a desired price.
Volatility in the price of our common stock may subject us to securities litigation.
As discussed above, the market for our common stock is characterized by significant price volatility when compared to seasoned issuers, and we expect that our share price will
continue to be more volatile than a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company
following periods of volatility in the market price of its securities. We may in the future be the target of similar litigation. Securities litigation could result in substantial costs
and liabilities and could divert management’s attention and resources.
There is currently a limited trading market for our common stock and we cannot ensure that one will ever develop or be sustained.
Although our common stock is currently quoted on NASDAQ, there is limited trading activity. We can give no assurance that an active market will develop, or if developed,
that it will be sustained. If an investor acquires shares of our common stock, the investor may not be able to liquidate our shares should there be a need or desire to do so. Only
a small percentage of our common stock is available to be traded and is held by a small number of holders and the price, if traded, may not reflect our actual or perceived value.
There can be no assurance that there will be an active market for our shares of common stock either now or in the future. The market liquidity of our common stock is limited
and may be dependent on the market perception of our business, among other things. We may, in the future, take certain steps, including utilizing investor awareness
campaigns, press releases, road shows and conferences to increase awareness of our business and any steps that we might take to bring us to the awareness of investors may
require we compensate consultants with cash and/or stock. There can be no assurance that there will be any awareness generated or the results of any efforts will result in any
impact on our trading volume. Consequently, investors may not be able to liquidate their investment or liquidate it at a price that reflects the value of the business and trading
may be at an inflated price relative to our performance due to, among other things, availability of sellers of our shares. If a market should develop, the price may be highly
volatile. Because there may be a low price for our shares of common stock, many brokerage firms or clearing firms may not be willing to effect transactions in the securities or
accept our shares for deposit in an account. Even if an investor finds a broker willing to effect a transaction in the shares of our common stock, the combination of brokerage
commissions, transfer fees, taxes, if any, and any other selling costs may exceed the selling price. Further, many lending institutions will not permit the use of low-priced shares
of common stock as collateral for any loans.
Sales, offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.
Sales of substantial amounts of the common stock, or the availability of such securities for sale, could adversely affect the prevailing market prices for the common stock. A
decline in the market prices of the common stock could impair our ability to raise additional capital through the sale of securities should we desire to do so. In addition, if our
stockholders sell substantial amounts of our common stock in the public market or upon the expiration of any statutory holding period, under Rule 144, or upon the exercise of
outstanding options or warrants, it could create a circumstance commonly referred to as an “overhang” in anticipation of which the market price of our common stock could
decline. The existence of an overhang, whether or not sales have occurred or are occurring, also could make it more difficult for us to raise additional financing through the sale
of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.
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Our issuance of additional shares of common stock or securities convertible into common stock in exchange for services or to repay debt would dilute the proportionate
ownership and voting rights of existing stockholders and could have a negative impact on the market price of our common stock.
Our board of directors may generally issue shares of common stock or securities convertible into common stock to pay for debt or services, without further approval by our
stockholders, based upon such factors that our board of directors may deem relevant at that time. We have also issued securities as payment for services. It is likely that we will
issue additional securities to pay for services and reduce debt in the future. We cannot give you any assurance that we will not issue additional shares of common stock or
securities convertible into common stock under circumstances we may deem appropriate at the time.
Our articles of incorporation allow for our board to create new series of preferred stock without further approval by our stockholders, which could adversely affect the
rights of the holders of our common stock.
Our board of directors has the authority to fix and determine the relative rights and preferences of preferred stock. Our board of directors also has the authority to issue preferred
stock without further stockholder approval. As a result, our board of directors could authorize the issuance of a series of preferred stock that would grant to holders the
preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to the holders of our common stock and the right to the
redemption of the shares, together with a premium, prior to the redemption of our common stock. In addition, our board of directors could authorize the issuance of a series of
preferred stock that has greater voting power than our common stock or that is convertible into our common stock, which could decrease the relative voting power of our
common stock or result in dilution to our existing stockholders.
Anti-takeover provisions may impede the acquisition of our Company.
Certain provisions of the Nevada Revised Statutes have anti-takeover effects and may inhibit a non-negotiated merger or other business combination. These provisions are
intended to encourage any person interested in acquiring us to negotiate with, and to obtain the approval of, our board of directors in connection with such a transaction.
However, certain of these provisions may discourage a future acquisition of us, including an acquisition in which the stockholders might otherwise receive a premium for their
shares. As a result, stockholders who might desire to participate in such a transaction may not have the opportunity to do so.
Investor Relations activities, nominal “float” and supply and demand factors may affect the price of our stock
We expect to utilize various techniques such as non-deal road shows and investor relations campaigns in order to create investor awareness. These campaigns may include
personal, video and telephone conferences with investors and prospective investors in which our business practices are described. We may provide compensation to investor
relations firms and pay for newsletters, websites, mailings and email campaigns that are produced by third-parties based upon publicly-available information concerning us. We
will not be responsible for the content of analyst reports and other writings and communications by investor relations firms not authored by us or from publicly available
information. We do not intend to review or approve the content of such analysts’ reports or other materials based upon analysts’ own research or methods. Investor relations
firms should generally disclose when they are compensated for their efforts, but whether such disclosure is made or complete is not under our control. In addition, investors in
us may be willing, from time to time, to encourage investor awareness through similar activities. Investor awareness activities may also be suspended or discontinued which
may impact the trading market our common stock.
The SEC and FINRA enforce various statutes and regulations intended to prevent manipulative or deceptive devices in connection with the purchase or sale of any security and
carefully scrutinize trading patterns and company news and other communications for false or misleading information, particularly in cases where the hallmarks of “pump and
dump” activities may exist, such as rapid share price increases or decreases. We, and our shareholders may be subjected to enhanced regulatory scrutiny due to the small
number of holders who initially will own the registered shares of our common stock publicly available for resale, and the limited trading markets in which such shares may be
offered or sold which have often been associated with improper activities concerning penny-stocks, such as the OTCQB Marketplace or pink sheets. Until such time as our
restricted shares are registered or available for resale under Rule 144, there will continue to be a small percentage of shares held by a small number of holders, many of whom
acquired such shares in privately negotiated purchase and sale transactions, that will constitute the entire available trading market. The Supreme Court has stated that
manipulative action is a term of art connoting intentional or willful conduct designed to deceive or defraud investors by controlling or artificially affecting the price of securities.
Often times, manipulation is associated by regulators with forces that upset the supply and demand factors that would normally determine trading prices. Since a small
percentage of our outstanding common stock will initially be available for trading, held by a small number of individuals or entities, the supply of our common stock for sale
will be extremely limited for an indeterminate amount of time, which could result in higher bids, asks or sales prices than would otherwise exist. Securities regulators have often
cited thinly-traded markets, small numbers of holders, and awareness campaigns as components of their claims of price manipulation and other violations of law when
combined with manipulative trading, such as wash sales, matched orders or other manipulative trading timed to coincide with false or touting press releases. There can be no
assurance that our or third-parties’ activities, or the small number of potential sellers or small percentage of stock in the “float,” or determinations by purchasers or holders as to
when or under what circumstances or at what prices they may be willing to buy or sell stock will not artificially impact (or would be claimed by regulators to have affected) the
normal supply and demand factors that determine the price of the stock.
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The Company’s does not intend to pay dividends in the foreseeable future.
We have rarely declared or paid any dividends on our common stock. We anticipate that we will retain any future earnings to support operations and to finance the development
of our business and do not expect to pay cash dividends in the foreseeable future. As a result, the success of an investment in our common stock will depend entirely upon any
future appreciation in its value. There is no guarantee that our common stock will appreciate in value or even maintain the price at which stockholders have purchased their
shares.
If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could
decline.
The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. We have relatively
little research coverage by securities and industry analysts. If no additional industry analysts commence coverage of the Company, the trading price for our common stock could
be negatively impacted. If one or more of the analysts who cover us downgrades our common stock or publishes inaccurate or unfavorable research about our business, our
stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our common stock could decrease,
which could cause our stock price and trading volume to decline.
We may not meet the continued listing requirements of the NASDAQ, which could result in a delisting of our common stock.
Our common stock is listed on the NASDAQ. We have in the past, and may in the future, be unable to comply with certain of the listing standards that we are required to meet
to maintain the listing of our common shares on the NASDAQ. For instance, on November 7, 2019, we received a letter from the Listing Qualifications Department of the
NASDAQ Stock Market indicating that, based upon the closing bid price of our common stock for the 30 consecutive business day period between September 26, 2019,
through November 6, 2019, we did not meet the minimum bid price of $1.00 per share required for continued listing on the NASDAQ pursuant to NASDAQ Listing Rule
5550(a)(2). On April 3, 2020, we received notice from the NASDAQ indicating that we have regained compliance with the minimum bid price requirement under NASDAQ
Listing Rule 5550(a)(2), and the matter is now closed.
If NASDAQ delists our common stock from trading on its exchange for failure to meet the listing standards, we and our stockholders could face significant material adverse
consequences including:
●
●
●
●
a limited availability of market quotations for our securities;
a determination that our common stock is a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules, possibly
resulting in a reduced level of trading activity in the secondary trading market for our common stock;
a limited amount of analyst coverage; and
a decreased ability to issue additional securities or obtain additional financing in the future.
Delisting could also have other negative results, including the potential loss of confidence by employees, the loss of institutional investor interest and fewer business
development opportunities.
Item 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
Item 2. PROPERTIES
Mining Properties
We own, lease, sublease or have certain other mining rights to the foregoing properties. For a complete description of each property owned, leased subleased or controlled by,
including property in which we hold any or all mineral rights (the “Mining Properties”), see Item 1.
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Other Properties
In addition to the Mining Properties described in Item 1, we own, lease, sublease, or control certain other properties related to its business and operations as follows:
We lease a facility in Elko, NV on a month to month basis for $1,420 per month.
We have an easement agreement in Laramie County, WY for $10,000 per year. The term of the agreement is effective July 1, 2017 on an annual term, and renewable every year
at our option.
Item 3. LEGAL PROCEEDINGS
None.
Item 4. MINE SAFETY DISCLOSURES
Pursuant to Section 1503(a) of 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 specified information about mine health and safety in their periodic reports. These reporting requirements are based on the safety and health requirements
applicable to mines under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”) which is administered by the U.S. Department of Labor’s Mine Safety and Health
Administration (“MSHA”). During the twelve months period ended April 30, 2020, we and our properties or operations were not subject to regulation by MSHA under the
Mine Act and thus no disclosure is required under Section 1503(a) of the Dodd-Frank Act.
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Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
PART II
Market Information
Our Common Stock is traded on the NASDAQ Capital Market under the symbol “USAU”.
Holders of Common Stock
On July 13, 2020, we had 414 registered holders of record of our common stock, which number does not reflect beneficial stockholders who hold their stock in nominee or
“street” name through various brokerage firms. On July 10, 2020, the closing sales price of our common stock as reported on NASDAQ Capital Market was $7.35 per share.
Dividends and dividend policy
We do not anticipate paying dividends on shares of its common stock in the foreseeable future as the Board of Directors intends to retain future earnings for use in our business.
Any future determination as of the payment of dividends on our common stock will depend upon our financial condition, results of operations and such other factors as the
Board of Directors seems relevant.
Recent Sales of Unregistered Securities.
There were no sales of unregistered securities during the fiscal year ended April 30, 2020 that were not previously reported on a Quarterly Report on Form 10-Q or a Current
Report on Form 8-K. None of the transactions involved any underwriters, underwriting discounts or commissions.
Item 6. SELECTED FINANCIAL DATA
Not applicable.
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and other parts of this Form 10-K contain forward-looking statements,
within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Forward-looking statements provide current expectations of
future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be
identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and similar terms.
Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking
statements. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of this Form 10-K under the heading “Risk Factors,”
which are included herein. The following discussion should be read in conjunction with the consolidated financial statements and notes thereto included in Part II, Item 8 of this
Form 10-K. All information presented herein is based on our fiscal calendar. Unless otherwise stated, references to particular years or quarters refer to our fiscal years ended in
April and the associated quarters of those fiscal years. We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law.
Overview
U.S. Gold Corp., formerly known as Dataram Corporation (the “Company”), was originally incorporated in the State of New Jersey in 1967 and was subsequently re-
incorporated under the laws of the State of Nevada in 2016. Effective June 26, 2017, the Company changed its legal name to U.S. Gold Corp. from Dataram Corporation. On
May 23, 2017, the Company merged with Gold King Corp. (“Gold King”), in a transaction treated as a reverse acquisition and recapitalization, and the business of Gold King
became the business of the Company. We are a gold and precious metals exploration company pursuing exploration and development properties. We own certain mining leases
and other mineral rights comprising the Copper King Project in Wyoming and the Keystone, Gold Bar North and Maggie Creek Projects in Nevada. None of our properties
contain proven and probable reserves under SEC Industry Guide 7, and all of our activities on all of our properties are exploratory in nature.
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On March 17, 2020, we filed a certificate of amendment to our Articles of Incorporation with the Secretary of State of Nevada in order to effectuate a reverse stock split of our
issued and outstanding common stock per share on a one for ten basis, effective as of 5:00 p.m. (Eastern Time) on March 19, 2020. All share and per share values of our
common stock for all periods presented in the accompanying consolidated financial statements are retroactively restated for the effect of the reverse stock splits.
Recent Developments
COVID-19 Developments
In December 2019, a novel strain of coronavirus, COVID-19, was reported to have surfaced in Wuhan, China and has reached multiple other countries, resulting in
government-imposed quarantines, travel restrictions and other public health safety measures in China and other countries. On March 12, 2020, the WHO declared COVID-19 to
be a global pandemic, and the COVID-19 pandemic has resulted in significant financial market volatility and uncertainty in recent months. A continuation or worsening of the
levels of market disruption and volatility seen in the recent past could have an adverse effect on the Company’s ability to access capital, on the Company’s business, results of
operations and financial condition, and on the market price of its common stock.
The Company, or its people, investors, contractors or stakeholders, has been prevented from free cross-border travel or normal attendance to activities in conducting its business
at trade shows, presentations, meetings or other activities meant to promote or execute its business strategy and transactions. The Company has been prevented from receiving
goods or services from contractors. Decisions beyond the Company’s control, such as canceled events, restricted travel, barriers to entry or other factors have affected or may
affect its ability to accomplish drilling programs, technical analysis of completed exploration actions, equity raising activities, and other needs that would normally be
accomplished without such limitations. Furthermore, the Company’s exploration activities rely heavily on outside contracts. The COVID-19 pandemic has caused disruptions in
travel and accessing our exploration properties with contractors. There can be no assurance travel and property access will resume in the near future.
Moreover, the COVID-19 pandemic has made and continues to make indeterminable adverse effects on general commercial activity and the world economy, and the Company’s
business and results of operations could be adversely affected to the extent that COVID-19 or any other epidemic harms the global economy generally.
The Company does not yet know the full extent of potential delays or impact on its business, its relationship with its business partners, or the global economy as a whole.
However, any one or a combination of these events could have an adverse effect on the Company’s other business operations.
Summary of Activities for the Year ended April 30, 2020
During the year ended April 30, 2020, we focused primarily on enhancing our understanding of the Keystone Project deposit; planning and commencing an exploration drilling
program on our Keystone Project; and completing equity financings. We also completed the acquisition of a significant mineral property in Nevada and commenced an internal
analysis of this newly acquired Maggie Creek exploration project.
An overview of certain significant events follows:
Copper King Project
No drilling or geophysical surveys were engaged or completed at Copper King during the year ended April 30, 2020. However, our management and geologist made
multiple visits to the project to advance the project from a regulatory and community relations standpoint.
Keystone Project
● On July 8, 2019. We released two technical geological reports on our Keystone Project. The first report outlined our geological summary and 2019 exploration plans for
our Keystone Project. The second report mapped out the entire land package of the Keystone Project and surrounding lands.
● On July 30, 2019, we commenced our 2019 exploration drilling program on our Keystone Project on the Cortez Gold Trend in Nevada. We plan to drill nine reverse
circulation holes and one core hole for a total of approximately 20,000 feet (6,400 meters). During the quarter ended October 31, 2019, we drilled six reverse circulation
holes and one core hole for a total of 13,177 feet (4,016 meters). Hole KEY19-05rc was drilled in a previously undrilled target area called Nina Skarn. The hole
intersected thick, continuous gold mineralization and will be the focus of future Keystone follow-up exploration efforts.
46
● On November 12, 2019, we announced the results of our 2019 Keystone exploration program, including the results of assays on hole KEY 19-05rc. Hole KEY19-05rc
was drilled in a previously undrilled target area called Nina Skarn. The hole intersected thick, continuous gold mineralization and will be the focus of future Keystone
follow-up exploration efforts.
Maggie Creek Project
● On September 11, 2019, we announced the acquisition of Orevada Metals, Inc. (“Orevada”). Orevada is a wholly owned subsidiary of a Canadian corporation. Orevada
has an option to earn up to a 70% interest in the Maggie Creek exploration project, located on the Carlin Trend, Nevada, close to Newmont’s Gold Quarry mine. A total
of 241 historic drill holes have been drilled on the Maggie Creek property. Recent discoveries on the Carlin Trend have shown higher grade mineralization at greater
depths and this will be the focus of our future Maggie Creek exploration efforts. Details of the Maggie Creek exploration project are included on our corporate website.
● On November 21, 2019, we announced a new Maggie Creek section on our website with a link to a Maggie Creek presentation.
Sales of Preferred Units & Common Shares to raise a total of $4.3 million in cash
On June 20, 2019, pursuant to a securities purchase agreement, dated June 19, 2019, by and among us and certain purchasers thereto, we sold 1,250 Series F Preferred units (a
“Unit”), each Unit consisting of one (1) share of 0% Series F Preferred Stock (“Preferred Stock”) and 87 Class X Warrants. Each Unit was sold for its stated value of $2,000
(the “June Offering”). Each share of Preferred Stock, at the option of the holder at any time, was convertible into the number of shares of common stock of the Company
(“Common Stock”) determined by dividing the $2,000 stated value per share of the Preferred Stock by a conversion price of $11.40 per share (initially approximately 219,375
shares of common stock), subject to adjustment. Each Class X Warrant was exercisable to acquire one share of our common stock and one Class Y Warrant at an exercise price
of $1.14, for a period of six (6) months from the date of issuance. Class X Warrants expired on December 19, 2019. Class Y Warrant was exercisable to acquire one share of
common stock at an exercise price of $11.40 per share, commencing six (6) months from the date of issuance (the “Initial Issuance Date”) and will expire on a date that is the
five (5) year anniversary of the Initial Exercise Date. No Class X Warrant was exercised prior to its expiration, and, as such, no Class Y Warrants were issued. Concurrent with
the June Offering, we issued to the purchasers in the June Offering 2,193,750 Class A Warrants in a private placement. Each Class A Warrant is exercisable to acquire one share
of common stock at an exercise price of $11.40 per share, commencing six (6) months from the date of issuance and will expire on a date that is the five (5) year anniversary of
the date of issuance. The net proceeds, after expenses of the June Offering, were approximately $2.4 million.
On April 1, 2020, we sold, pursuant to a securities purchase agreement, dated March 29, 2020, by and among us and certain institutional investors, in a registered direct offering
an aggregate of 357,142 shares of common stock, at an offering price of $5.60 per share, for net proceeds of approximately $1.89 million, after the deduction of offering
expenses.
Shareholder Meeting, Appointment of Directors & Corporate Matters
On September 18, 2019, we held our annual meeting of stockholders. At that meeting, among other matters, shareholders approved a new Equity Incentive Plan, approved our
new audit firm, and elected a new board member.
Effective September 18, 2019, our Board of Directors appointed Mr. Douglas Newby to the Board of Directors to fill the vacancy created by the resignation of Mr. Davidson in
July 2019. Mr. Newby brings a wealth of senior financial knowledge and experience to us, which includes experience with mining companies and financing mining operations.
His biography follows in Part II of this Form 10-K.
On December 9, 2019, we announced the formation of a Strategic Advisory Board, which was formed for the purpose of introducing us to a wider audience in the mining
industry, including mining investors.
47
Results of Operations
The Years Ended April 30, 2020 and 2019
Net Revenues
We are an exploration stage company with no operations, and we generated no revenues for the years ended April 30, 2020 and 2019.
Operating Expenses
Total operating expenses for the year ended April 30, 2020 as compared to the year ended April 30, 2019, were approximately $5.7 million and $7.6 million, respectively. The
approximate $1.9 million decrease in operating expenses for the year ended April 30, 2020, as compared to April 30, 2019, is comprised principally of decreases in
compensation expense of $880,000 and exploration costs of $1.3 million, offset by increases of approximately $180,000 in professional fees and general administrative expenses
of approximately $90,000. The decrease in exploration expenses was planned as we conserved cash by reducing our field exploration activities. We expect our operating
expenses for the year ending April 30, 2021 to be approximately $200,000 per month.
Pre-tax Loss from Operations
We reported pre-tax losses from operations of approximately $5.7 million and $7.6 million for the years ended April 30, 2020 and 2019, respectively.
Benefit from Income Taxes
For the year ended April 30, 2020 and 2019, benefit (provision) from income taxes was $438,145 and $(435,345), respectively. During the year ended April 30, 2020, we
recognized a tax benefit for our alternative minimum tax credit carryforward which became refundable under the Tax Cuts and Jobs Act of 2017 in the United States, of which
we received $219,073 during the current year and expect to receive the remaining $219,072 during the year ended April 30, 2021. During the year ended April 30, 2019, we had
established a valuation allowance of $438,145 to offset any previously recognized net deferred tax assets for which management believed it was more likely than not that the net
deferred asset would not be realized. Consequently, we recognized $435,345 income tax expense during the year ended April 30, 2019.
Net Loss
As a result of the operating expense and other expense discussed above, we reported a net loss of approximately $5.2 million for the year ended April 30, 2020 as compared to a
net loss of approximately $8.0 million for the year ended April 30, 2019.
Liquidity and Capital Resources
The following table summarizes total current assets, liabilities and working capital at April 30, 2020 compared to April 30, 2019:
Current Assets
Current Liabilities
Working Capital
April 30, 2020
April 30, 2019
Increase/ (Decrease)
$
$
$
3,181,747
157,840
3,023,907
$
$
$
2,810,442
160,209
2,650,233
$
$
$
371,305
2,369
373,674
As of April 30, 2020, we had working capital of $3,023,907 as compared to working capital of $2,650,233 as of April 30, 2019, an increase of $373,674. During the year ended
April 30, 2020, we received proceeds of approximately $4.3 million from the issuance of common stock, preferred stock and warrants. We used the proceeds primarily to fund
operations during the fiscal year 2020 and to increase cash reserves.
We cannot be certain that additional funding will be available on acceptable terms, or at all. To the extent that we raise additional funds by issuing equity securities, our
stockholders may experience significant dilution. Any debt financing, if available, may involve restrictive covenants that impact our ability to conduct business. If unable to
raise additional capital when required or on acceptable terms, we may [have to delay, scale back or discontinue the exploration activities or programs].
48
We are obligated to file annual, quarterly and current reports with the SEC pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition, the
Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) and the rules subsequently implemented by the SEC and the Public Company Accounting Oversight Board have imposed
various requirements on public companies, including requiring changes in corporate governance practices. We expect these rules and regulations to increase our legal and
financial compliance costs and to make some activities of ours more time-consuming and costly. We expect to spend between $150,000 and $200,000 in legal and accounting
expenses annually to comply with our reporting obligations and Sarbanes-Oxley. These costs could affect profitability and our results of operations.
Our consolidated financial statements are prepared using the accrual method of accounting in accordance with accounting principles generally accepted in the United States of
America (“U.S. GAAP”) and have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and the settlement of
liabilities in the normal course of business.
At April 30, 2020, we had working capital of approximately $3 million. We had approximately $158,000 outstanding in current liabilities and a cash balance of approximately
$2.7 million. For the fiscal years ended April 30, 2020 and 2019, we incurred losses in the amounts of approximately $5.2 million and $8.0 million, respectively. We believe
that our existing resources will be sufficient to fund our planned operations for 9 to 12 months. We have based this estimate on assumptions that may prove to be wrong, and we
could use our available capital resources sooner than we currently expect. Our future capital requirements will depend on many factors, including potential acquisitions, changes
in exploration programs and related studies and other operating strategies. We continue to assess the impact of COVID-19, which may adversely affect our ability to obtain
additional future capital.
The audit opinion and notes that accompany our consolidated financial statements for the year ended April 30, 2020 disclose a ‘going concern’ qualification to our ability to
continue in business. The accompanying consolidated financial statements have been prepared under the assumption that we will continue as a going concern. We have incurred
losses since our inception. We do not have sufficient cash to fund normal operations and meet all of our obligations for the next 12 months without deferring payment on certain
current liabilities and/or raising additional funds. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period at least a year
from when these financial statements are made available. The consolidated financial statements do not include any adjustments that might be necessary should we be unable to
continue as a going concern. If the going concern basis were not appropriate for these financial statements, adjustments would be necessary in the carrying value of assets and
liabilities, the reported expenses and the balance sheet classifications used.
Financing Transactions
Cash flows from financing activities continued to provide the primary source of our liquidity. We are anticipating raising additional capital but there can be no assurance that it
will be able to do so or if the terms will be favorable. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of
recorded assets or the amounts of and classification of liabilities that might be necessary in the event we cannot continue in existence.
Management has determined that additional capital will be required in the form of equity or debt securities. There are no assurances that management will be able to raise
capital on terms acceptable to us. If we are unable to obtain sufficient amounts of additional capital, we may be required to reduce the scope of our planned exploration
activities, which could harm our business, financial condition and operating results. If we obtain additional funds by selling any of our equity securities or by issuing common
stock to pay current or future obligations, the percentage ownership of our stockholders will be reduced, stockholders may experience additional dilution, or the equity securities
may have rights preferences or privileges senior to the common stock. If adequate funds are not available to us when needed on satisfactory terms, we may be required to cease
operating or otherwise modify our business strategy.
Contractual Obligations
Our contractual obligations at April 30, 2020 are summarized as follows:
Contractual Obligations
Long-term debt and capital lease obligations
Capital Lease Obligations
Operating Mineral Property Lease Obligations
Purchase Obligations
Other Long-Term Liabilities (If Any)
Total
Summary Cash flows for the years ended April 30, 2020 and 2019:
Total
-
-
7,680
-
-
7,680
Less than
1 Year
Payments Due by Period
1 - 3
Years
4 - 5
Years
More Than
5 Years
-
-
2,240
-
-
2,240
-
-
4,480
-
-
4,480
-
-
960
-
-
960
-
-
-
-
-
-
Net cash used in operating activities
Net cash provided by investing activities
Net cash provided by financing activities
49
For the Year Ended
April 30, 2020
For the Year Ended
April 30, 2019
$
$
$
(3,897,743)
159,063
4,291,456
$
$
$
(5,668,894)
-
219,796
Cash Used in Operating Activities
Net cash used in operating activities totaled approximately $3.9 million and $5.7 million for the years ended April 30, 2020 and 2019, respectively. Net loss for the years ended
April 30, 2020 and 2019 totaled approximately $5.2 million and $8.0 million. The adjustments for the non-cash items decreased from the year ended April 30, 2019 to April 30,
2020 due primarily to the reduction in stock-based compensation of approximately $1.0 million and a reduction of the deferred tax reserve of approximately $435,000. Net
changes in operating assets and liabilities are primarily due to a cash tax refund receivable of approximately $219,000 and a reduction in prepaid expenses of approximately
$240,000, which were partially offset by approximately $101,000 of decreases in current liabilities during the year ended April 30, 2020.
Cash Provided by Investing Activities
Net cash provided by investing activities totaled approximately $159,000 and $0 for the year ended April 30, 2020 and 2019, respectively, primarily due to the net proceeds
received from the share exchange agreement.
Cash Provided by Financing Activities
Net cash provided by financing activities totaled approximately $4.3 million and $220,000, net of issuance costs, for the years ended April 30, 2020 and 2019, respectively,
from the issuance of common stock for cash under the ATM agreement. During the year ended April 30, 2020, cash provided by financing activities consisted of net proceeds of
approximately $2.4 million from the issuance of preferred stock and warrants and approximately $1.9 million from the issuance of common stock. During the year ended April
30, 2019, cash provided by financing activities consisted $220,000 from the issuance of common stock for cash under the ATM agreement.
Off-Balance Sheet Arrangements
We do not have, and do not have any present plans to implement, any off-balance sheet arrangements.
Recently Issued Accounting Pronouncements
Refer to Note 2 to the consolidated financial statements.
Critical Accounting Policies
The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with U.S.
generally accepted accounting principles. The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates based on historical experience and
on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of
assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Management believes the following critical accounting policies affect the significant judgments and estimates used in the preparation of the financial statements.
Use of Estimates and Assumptions
In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the
date of the balance sheet, and revenues and expenses for the period then ended. Actual results may differ significantly from those estimates. Significant estimates made by
management include, but are not limited to valuation of mineral rights, goodwill, stock-based compensation, the assumptions used to fair value of common stock issued and
options granted, asset retirement obligation, and the valuation of deferred tax assets and liabilities.
Stock-Based Compensation
Share-based compensation is accounted for based on the requirements of ASC 718, “Compensation – Stock Compensation” (“ASC 718”) which requires recognition in the
financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to
perform the services in exchange for the award (presumptively, the vesting period). ASC 718 also requires measurement of the cost of employee and director services received
in exchange for an award based on the grant-date fair value of the award. Pursuant to ASC 505, “Equity – Equity Based Payments to Non-Employees” (“ASC 505-50”), for
share-based payments to consultants and other third-parties, compensation expense is determined at the measurement date which is the grant date. Until the measurement date is
reached, the total amount of compensation expense remains uncertain.
50
In June 2018, the FASB issued ASU 2018-07, “Compensation — Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting”, which
expands the scope of Topic 718 to include all share-based payment transactions for acquiring goods and services from nonemployees. ASU 2018-07 specifies that Topic 718
applies to all share-based payment transactions in which the grantor acquires goods and services to be used or consumed in its own operations by issuing share-based payment
awards. ASU 2018-07 also clarifies that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in
conjunction with selling goods or services to customers as part of a contract accounted for under ASC 606. ASU 2018-07 is effective for fiscal years beginning after December
15, 2018, including interim periods within those fiscal years, with early adoption permitted, but no earlier than adoption of ASC 606. We chose to early adopt ASU 2018-07 in
July 2018. The adoption of this standard did not have a material impact on our consolidated financial statements and related disclosures.
Mineral Rights
Costs of lease, exploration, carrying and retaining unproven mineral lease properties are expensed as incurred. We expense all mineral exploration costs as incurred as we are
still in the exploration stage. If we identify proven and probable reserves in our investigation of our properties and upon development of a plan for operating a mine, we would
enter the development stage and capitalize future costs until production is established.
When a property reaches the production stage, the related capitalized costs are amortized on a units-of-production basis over the proven and probable reserves following the
commencement of production. We assess the carrying costs of the capitalized mineral properties for impairment under ASC 360-10, “Impairment of long-lived assets”, and
evaluates its carrying value under ASC 930-360, “Extractive Activities - Mining”, annually. An impairment is recognized when the sum of the expected undiscounted future
cash flows is less than the carrying amount of the mineral properties. Impairment losses, if any, are measured as the excess of the carrying amount of the mineral properties over
its estimated fair value.
ASC 930-805, “Extractive Activities-Mining: Business Combinations” (“ASC 930-805”), states that mineral rights consist of the legal right to explore, extract, and retain at
least a portion of the benefits from mineral deposits. Mining assets include mineral rights. Acquired mineral rights are considered tangible assets under ASC 930-805. ASC
930-805 requires that mineral rights be recognized at fair value as of the acquisition date. As a result, the direct costs to acquire mineral rights are initially capitalized as tangible
assets. Mineral rights include costs associated with acquiring patented and unpatented mining claims.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
51
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
U.S. GOLD CORP. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2020
Index to Consolidated Financial Statements
Consolidated Financial Statements:
Report of Independent Registered Public Accounting Firm (Marcum, LLP)
Report of Independent Registered Public Accounting Firm (KBL LLP)
Consolidated Balance Sheets as of April 30, 2020 and 2019
Consolidated Statements of Operations – Years ended April 30, 2020 and 2019
Consolidated Statements of Changes in Stockholders’ Equity - Years ended April 30, 2020 and 2019
Consolidated Statements of Cash Flows - Years ended April 30, 2020 and 2019
Notes to Consolidated Financial Statements - Years ended April 30, 2020 and 2019
52
Page
F-1
F-2
F-3
F-4
F-5
F-6
F-7
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and
Board of Directors of
U.S. Gold Corp.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of U.S. Gold Corp. and Subsidiaries (the “Company”) as of April 30, 2020, the related consolidated statements
of operations, changes in stockholders’ equity and cash flows for the year in the period ended April 30, 2020, and the related notes (collectively referred to as the “financial
statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of April 30, 2020, and the results of its
operations and its cash flows for the year in the period ended April 30, 2020 in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph – Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 3, the
Company has a significant working capital deficiency, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These
conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The
consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our
audit. 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 audit 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 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 audit 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 audit included performing procedures to assess the risks of material misstatement of the 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 financial statements. Our audit also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe
that our audit provides a reasonable basis for our opinion.
Retrospective Adjustments
As part of our audit of the 2020 financial statements, we also audited the adjustments to the 2019 financial statements to retroactively apply the effects of the reverse stock splits
that occurred subsequent to the year ended April 30, 2019 as described in Notes 1. In our opinion, such adjustments are appropriate and have been properly applied. We were
not engaged to audit, review, or apply any procedures to U.S. Gold Corp.’s 2019 financial statements other than with respect to the adjustments and, accordingly, we do not
express an opinion or any other form of assurance on the 2019 financial statements as whole.
/s/ Marcum llp
Marcum llp
We served as the Company’s auditor from 2016 through 2018 and subsequently reappointed as the Company’s auditor in 2019.
New York, NY
July 13, 2020
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of U.S. Gold Corp and Subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of U.S. Gold Corp and Subsidiaries (the “Company”) as of April 30, 2019, the related consolidated statements of
operations, changes in stockholders’ equity, and cash flows for the year 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 consolidated financial position of the Company as of April 30, 2019, and the results
of its consolidated operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
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 audit. 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 audit 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 controls over financial reporting. As part of our audit 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 audit 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 financial statements. Our
audit 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 audit provides a reasonable basis for our opinion.
Going Concern Consideration
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the
consolidated financial statements, the Company has sustained significant operating losses and needs to obtain additional financing to continue the services they provide. These
conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The
consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Reverse Stock Split
We were not engaged to audit, review or apply any procedures to the adjustments to retrospectively apply the change in accounting related to the reverse stock splits described in
Note 1 on Form 10-K, accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly
applied. Those adjustments were audited by other auditors.
/s/ KBL, LLP
We served as the Company’s auditor for fiscal year 2019.
KBL, LLP
New York, NY
July 26, 2019
F-2
U.S. GOLD CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
April 30,
2020
April 30,
2019
CURRENT ASSETS:
Cash
Income tax receivable
Prepaid expenses and other current assets
ASSETS
Total current assets
NON - CURRENT ASSETS:
Property, net
Reclamation bond deposit
Mineral rights
Total non - current assets
Total assets
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable
Accounts payable - related parties
Accrued liabilities
Total current liabilities
LONG- TERM LIABILITIES
Asset retirement obligation
Total liabilities
Commitments and Contingencies
STOCKHOLDERS' EQUITY :
Preferred stock, $0.001 par value; 50,000,000 authorized
Convertible Series F Preferred stock ($0.001 Par Value; 1,250 Shares Authorized; none issued and
outstanding as of April 30, 2020 and 2019; liquidation preference of $0
Convertible Series G Preferred stock ($0.001 Par Value; 127 Shares Authorized; 57 and none issued and
outstanding as of April 30, 2020 and 2019; liquidation preference of $114,000)
Common stock ($0.001 Par Value; 200,000,000 Shares Authorized; 2,903,393 and 1,986,063 shares
issued and outstanding as of April 30, 2020 and 2019)
Additional paid-in capital
Accumulated deficit
Total stockholders' equity
Total liabilities and stockholders' equity
$
$
$
$
2,749,957
219,072
212,718
3,181,747
133,371
355,556
6,163,559
6,652,486
9,834,233
$
$
154,381
3,459
-
157,840
168,392
326,232
-
-
2,903
41,093,050
(31,587,952)
9,508,001
$
9,834,233
$
See accompanying notes to consolidated financial statements.
F-3
2,197,181
-
613,261
2,810,442
74,929
339,447
4,176,952
4,591,328
7,401,770
112,303
42,539
5,367
160,209
88,746
248,955
-
-
1,986
33,425,931
(26,275,102)
7,152,815
7,401,770
U.S. GOLD CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Net revenues
Operating expenses:
Compensation and related taxes - general and administrative
Exploration costs
Professional and consulting fees
General and administrative expenses
Total operating expenses
Loss before benefit (provision) for income taxes
Benefit (provision) for income taxes
Net loss
Deemed dividend related to beneficial conversion feature of preferred stock
Net loss applicable to U.S. Gold Corp. common shareholders
Net Loss per common share, basic and diluted
Weighted average common shares
outstanding - basic and diluted
$
$
$
For the Year
Ended
April 30, 2020
For the Year
Ended
April 30, 2019
-
$
-
1,366,168
1,278,372
2,381,513
661,442
5,687,495
(5,687,495)
438,145
(5,249,350)
(2,086,212)
(7,335,562)
(3.17)
$
$
2,246,202
2,584,417
2,204,359
576,227
7,611,205
(7,611,205)
(435,345)
(8,046,550)
-
(8,046,550)
(4.36)
2,316,610
1,847,156
See accompanying notes to consolidated financial statements.
F-4
U.S. GOLD CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE YEARS ENDED APRIL 30, 2020 AND 2019
Preferred Stock - Series F
$0.001 Par Value
Preferred Stock - Series G
$0.001 Par Value
Common Stock
$0.001 Par Value
Additional
Paid-in
Accumulated
Total
Stockholders’
Shares
Amount
Shares
Amount
Shares
Amount
Capital
Deficit
Equity
Balance, April 30, 2018
Issuance of common stock for cash, net of offering
cost
Issuance of common stock for salaries
Issuance of common stock for exploration
expenses
Issuance of common stock for services
Issuance of common stock for accrued services
Stock options granted for services
Net loss
Balance, April 30, 2019
$
-
-
-
-
-
-
-
-
-
Issuance of preferred stock and warrants for cash,
net of offering cost
Issuance of preferred stock in connection with the
Exchange Agreement
Issuance of common stock for cash, net of offering
cost
Issuance of common stock to private placement
agent related to sale of common stock
1,250
(127)
-
-
-
-
-
-
-
-
-
-
-
1
-
-
-
$
-
-
-
-
-
-
-
-
-
127
-
-
Conversion of preferred stock into common stock
(1,123)
(1)
(70)
Issuance of common stock in connection with the
share exchange agreement
Issuance of common stock for services
Issuance of common stock for accrued services
Stock options granted for services
Stock-based compensation in connection with
restricted common stock award grants and
restricted common stock unit grants
Fractional difference due to the reverse stock split
Net loss
Balance, April 30, 2020
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
57
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,759,057
$
1,759
$ 30,927,054
$ (18,228,552)
$ 12,700,261
29,007
56,976
19,916
120,187
920
-
-
29
57
20
120
1
-
-
219,767
567,443
183,206
1,187,880
12,499
328,082
-
-
-
-
-
-
219,796
567,500
183,226
1,188,000
12,500
328,082
-
(8,046,550)
(8,046,550)
1,986,063
$
1,986
$ 33,425,931
$ (26,275,102)
$
7,152,815
-
-
-
-
2,401,201
-
357,142
357
1,889,898
25,281
222,018
200,000
78,153
2,862
-
25
222
200
78
3
-
(25)
(221)
2,019,800
572,525
26,900
196,046
32,454
(580)
-
33
(1)
-
497,495
-
-
-
-
-
-
-
-
-
-
-
-
-
2,401,202
-
1,890,255
-
-
2,020,000
572,603
26,903
196,046
497,528
(1)
(5,249,350)
(5,249,350)
2,903,393
$
2,903
$ 41,029,550
$ (31,524,452)
$
9,508,001
See accompanying notes to consolidated financial statements.
F-5
U.S. GOLD CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation
Accretion
Stock based compensation
Amortization of prepaid stock based expenses
Deferred income taxes
Changes in operating assets and liabilities:
Income tax receivable
Prepaid expenses and other current assets
Reclamation bond deposit
Accounts payable
Accounts payable - related parties
Accrued liabilities
For the Year
Ended
April 30, 2020
For the Year
Ended
April 30, 2019
$
(5,249,350)
$
(8,046,550)
10,730
10,474
1,266,177
160,377
-
(219,072)
240,166
(16,109)
(83,592)
(12,177)
(5,367)
6,956
6,861
2,275,337
45,253
435,345
-
(40,715)
(246,519)
(132,139)
40,108
(12,831)
NET CASH USED IN OPERATING ACTIVITIES
(3,897,743)
(5,668,894)
CASH FLOWS FROM INVESTING ACTIVITIES:
Net proceeds received in connection with the share exchange agreement
NET CASH PROVIDED BY INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of preferred stock and warrants, net of issuance cost
Issuance of common stock, net of offering costs
NET CASH PROVIDED BY FINANCING ACTIVITIES
NET INCREASE (DECREASE) IN CASH
CASH - beginning of year
CASH - end of year
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest
Income taxes
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Increase in asset retirement obligation
Issuance of common stock for accrued services
Deemed dividends - Series F and G preferred stock
Issuance of common stock in connection with the share exchange agreement
Assumption of liabilities in connection with the share exchange agreement
Increase in mineral properties in connection with the share exchange agreement
Issuance of common stock for prepaid services
Increase in asset retirement cost and obligation
159,063
159,063
2,401,201
1,890,255
4,291,456
552,776
2,197,181
2,749,957
$
-
-
-
26,903
2,086,212
2,020,000
125,670
1,986,607
-
69,172
$
$
$
$
$
$
$
$
$
$
-
-
-
219,796
219,796
(5,449,098)
7,646,279
2,197,181
-
-
81,885
12,500
-
-
-
-
160,377
-
$
$
$
$
$
$
$
$
$
$
$
See accompanying notes to consolidated financial statements.
F-6
U.S. Gold Corp and Subsidiaries
Notes to Consolidated Financial Statements
April 30, 2020 and 2019
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Organization
U.S. Gold Corp., formerly known as Dataram Corporation (the “Company”), was originally incorporated in the State of New Jersey in 1967 and was subsequently re-
incorporated under the laws of the State of Nevada in 2016. Effective June 26, 2017, the Company changed its name to U.S. Gold Corp. from Dataram Corporation.
On June 13, 2016, Gold King Corp. (“Gold King”), a private Nevada corporation, entered into an Agreement and Plan of Merger (the “Merger Agreement”) with the Company,
the Company’s wholly-owned subsidiary Dataram Acquisition Sub, Inc., a Nevada corporation (“Acquisition Sub”), and all of the principal shareholders of Gold King (the
“Gold King Shareholders”). Upon closing of the transactions contemplated under the Merger Agreement (the “Merger”), Gold King merged with and into Acquisition Sub with
Gold King as the surviving corporation and became a wholly-owned subsidiary of the Company. The Merger was treated as a reverse acquisition and recapitalization, and the
business of Gold King became the business of the Company. The financial statements are those of Gold King (the accounting acquirer) prior to the merger and include the
activity of the Company (the legal acquirer) from the date of the Merger. Gold King is a gold and precious metals exploration company pursuing exploration and development
opportunities primarily in Nevada and Wyoming. The Company has a wholly owned subsidiary, U.S. Gold Acquisition Corporation, formerly Dataram Acquisition Sub, Inc.
(“U.S. Gold Acquisition”), a Nevada corporation which was formed in April 2016.
On May 23, 2017, the Company closed the Merger with Gold King. The Merger constituted a change of control and the majority of the Board of Directors changed with the
consummation of the Merger. The Company issued shares of common stock to Gold King which represented approximately 90% of the combined company.
On September 10, 2019, the Company, 2637262 Ontario Inc., a corporation incorporated under the laws of the Providence of Ontario (“NumberCo”), and all of the shareholders
of NumberCo (the “NumberCo Shareholders”), entered into a Share Exchange Agreement (the “Share Exchange Agreement”), pursuant to which, among other things, the
Company agreed to issue to the NumberCo Shareholders 200,000 shares of the Company’s common stock in exchange for all of the issued and outstanding shares of
NumberCo, with NumberCo becoming a wholly-owned subsidiary of the Company (see Note 4).
On March 17, 2020, the board of directors of the Company (the “Board”) approved a 1-for-10 reverse stock split of the Company’s issued and outstanding shares of common
stock (the “Reverse Stock Split”), and on March 18, 2020, the Company filed with the Secretary of State of the State of Nevada a Certificate of Amendment to its Articles of
Incorporation to effect the Reverse Stock Split. The Reverse Stock Split became effective as of 5:00 p.m. Eastern Time on March 19, 2020, and the Company’s common stock
began trading on a split-adjusted basis when the market opened on March 20, 2020. Accordingly, all common share and per share data are retrospectively restated to give effect
of the split for all periods presented herein.
None of the Company’s properties contain proven and probable reserves and all of the Company’s activities are exploratory in nature.
Unless the context otherwise requires, all references herein to the “Company” refer to U.S. Gold Corp. and its consolidated subsidiaries.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation and principles of consolidation
The accompanying consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of
America (“U.S. GAAP”), the instructions to Form 10-K, and the rules and regulations of the United States Securities and Exchange Commission for financial information,
which includes the consolidated financial statements and presents the consolidated financial statements of the Company and its wholly-owned subsidiaries as of April 30, 2020.
All intercompany transactions and balances have been eliminated. It is management’s opinion that all material adjustments (consisting of normal recurring adjustments) have
been made, which are necessary for a fair financial statement presentation.
F-7
U.S. Gold Corp and Subsidiaries
Notes to Consolidated Financial Statements
April 30, 2020 and 2019
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less when acquired to be cash equivalents. The Company places its cash with
high credit quality financial institutions. At April 30, 2020 and 2019, the Company does not have any cash equivalents. The Company’s accounts at these institutions are
insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. At April 30, 2020 and 2019, the Company had bank balances exceeding the FDIC insurance
limit on interest bearing accounts. To reduce its risk associated with the failure of such financial institutions, the Company evaluates at least annually the rating of the financial
institutions in which it holds deposits.
Use of Estimates and Assumptions
In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the
date of the consolidated balance sheet, and revenues and expenses for the period then ended. Actual results may differ significantly from those estimates. Significant estimates
made by management include, but are not limited to, valuation of mineral rights, stock-based compensation, the fair value of common and preferred stock, valuation of
warrants, asset retirement obligations and the valuation of deferred tax assets and liabilities.
Fair Value Measurements
The Company has adopted Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures” (“ASC 820”), for assets and liabilities measured at
fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied in accordance with U.S. GAAP, which requires the use of fair value
measurements, establishes a framework for measuring fair value and expands disclosure about such fair value measurements.
ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.
These inputs are prioritized below:
Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.
The Company analyzes all financial instruments with features of both liabilities and equity under the Financial Accounting Standard Board’s (“FASB”) accounting standard for
such instruments. Under this standard, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value
measurement.
At April 30, 2020 and 2019, the Company had no financial instruments or liabilities accounted for at fair value on a recurring basis or nonrecurring basis.
Prepaid expenses and other current assets
Prepaid expenses and other current assets of $212,718 and $613,261 at April 30, 2020 and 2019, respectively, consist primarily of costs paid for future services which will
occur within a year. Prepaid expenses principally include prepayments in cash and equity instruments for consulting, public relations, and business advisory services, insurance
premiums, mining claim fees and mineral lease fees which are being amortized over the terms of their respective agreements.
Property
Property is carried at cost. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or
disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition.
Depreciation is calculated on a straight-line basis over the estimated useful life of the assets, generally ten years.
F-8
U.S. Gold Corp and Subsidiaries
Notes to Consolidated Financial Statements
April 30, 2020 and 2019
Impairment of long-lived assets
The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully
recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the
asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. The Company did not recognize any impairment
during the years ended April 30, 2020 and 2019.
Mineral Rights
Costs of leasing, exploring, carrying and retaining unproven mineral lease properties are expensed as incurred. The Company expenses all mineral exploration costs as incurred
as it is still in the exploration stage. If the Company identifies proven and probable reserves in its investigation of its properties and upon development of a plan for operating a
mine, it would enter the development stage and capitalize future costs until production is established.
When a property reaches the production stage, the related capitalized costs will be amortized on a units-of-production basis over the proven and probable reserves following the
commencement of production. The Company assesses the carrying costs of the capitalized mineral properties for impairment under ASC 360-10, “Impairment of Long-Lived
Assets”, and evaluates its carrying value under ASC 930-360, “Extractive Activities—Mining”, annually. An impairment is recognized when the sum of the expected
undiscounted future cash flows is less than the carrying amount of the mineral properties. Impairment losses, if any, are measured as the excess of the carrying amount of the
mineral properties over its estimated fair value.
To date, the Company has not established the commercial feasibility of any exploration prospects; therefore, all exploration costs are being expensed.
ASC 930-805, “Extractive Activities—Mining: Business Combinations” (“ASC 930-805”), states that mineral rights consist of the legal right to explore, extract, and retain at
least a portion of the benefits from mineral deposits. Mining assets include mineral rights.
Acquired mineral rights are considered tangible assets under ASC 930-805. ASC 930-805 requires that mineral rights be recognized at fair value as of the acquisition date. As a
result, the direct costs to acquire mineral rights are initially capitalized as tangible assets. Mineral rights include costs associated with acquiring patented and unpatented mining
claims.
ASC 930-805 provides that in measuring the fair value of mineral assets, an acquirer should take into account both:
● The value beyond proven and probable reserves (“VBPP”) to the extent that a market participant would include VBPP in determining the fair value of the assets.
● The effects of anticipated fluctuations in the future market price of minerals in a manner that is consistent with the expectations of market participants.
Leases to explore for or use of natural resources are outside the scope of ASU 2016-02, “Leases”.
Goodwill and other intangible assets
In accordance with ASC 350-30-65, the Company assesses the impairment of identifiable intangibles whenever events or changes in circumstances indicate that the carrying
value may not be recoverable. Factors the Company considers to be important which could trigger an impairment review include the following:
1. Significant underperformance relative to expected historical or projected future operating results;
2. Significant changes in the manner of use of the acquired assets or the strategy for the overall business; and
3. Significant negative industry or economic trends.
When the Company determines that the carrying value of intangibles may not be recoverable based upon the existence of one or more of the above indicators of impairment and
the carrying value of the asset cannot be recovered from projected undiscounted cash flows, the Company records an impairment charge. The Company measures any
impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent in the current
business model. Significant management judgment is required in determining whether an indicator of impairment exists and in projecting cash flows.
F-9
U.S. Gold Corp and Subsidiaries
Notes to Consolidated Financial Statements
April 30, 2020 and 2019
Share-Based Compensation
Share-based compensation is accounted for based on the requirements of ASC 718, “Compensation—Stock Compensation’ (“ASC 718”), which requires recognition in the
financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to
perform the services in exchange for the award (presumptively, the vesting period). ASC 718 also requires measurement of the cost of employee and director services received
in exchange for an award based on the grant-date fair value of the award. Pursuant to ASC 505, “Equity—Equity Based Payments to Non-Employees” (“ASC 505-50”), for
share-based payments to consultants and other third parties, compensation expense is determined at the measurement date, which is the grant date. Until the measurement date
is reached, the total amount of compensation expense remains uncertain.
ASU 2018-07 applies to all share-based payment transactions in which the grantor acquires goods and services to be used or consumed in its own operations by issuing share-
based payment awards. ASU 2018-07 also clarifies that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards
granted in conjunction with selling goods or services to customers as part of a contract accounted for under ASC 606. ASU 2018-07 is effective for fiscal years beginning after
December 15, 2018, including interim periods within those fiscal years, with early adoption permitted, but no earlier than adoption of ASC 606. The Company chose to early
adopt ASU 2018-07 in July 2018. The adoption of this standard did not have a material effect on the Company’s consolidated financial statements and related disclosures.
Accounting for Warrants
Warrants are accounted for in accordance with the applicable accounting guidance provided in ASC 815, “Derivatives and Hedging” (“ASC 815”) as either derivative liabilities
or as equity instruments, depending on the specific terms of the agreements. The Company classifies as equity any contracts that (i) require physical settlement or net-share
settlement or (ii) give the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as
assets or liabilities any contracts that (i) require net-cash settlement (including a requirement to net-cash settle the contract if an event occurs and if that event is outside the
control of the Company) or (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). Instruments that are
classified as liabilities are recorded at fair value at each reporting period, with any change in fair value recognized as a component of change in fair value of derivative liabilities
in the consolidated statements of operations.
The Company assessed the classification of its outstanding common stock purchase warrants as of the date of issuance and determined that such instruments met the criteria for
equity classification under the guidance in ASU 2017-11 “Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic
815): (Part I) Accounting for Certain Financial Instruments with Down Round Feature”. The Company has no outstanding warrants that contain a “down round” feature under
Topic 815 of ASU 2017-11.
Convertible Preferred Stock
The Company accounts for its convertible preferred stock under the provisions of ASC 480, “Distinguishing Liabilities from Equity” (“ASC 480”), which sets forth the
standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. ASC 480 requires an issuer to classify a
financial instrument that is within the scope of ASC 480 as a liability if such financial instrument embodies an unconditional obligation to redeem the instrument at a specified
date and/or upon an event certain to occur. During the periods ended April 30, 2020 and 2019, the Company’s outstanding convertible preferred shares were accounted for as
equity, with no liability recorded.
Convertible Instruments
The Company bifurcates conversion options from their host instruments and accounts for them as free standing derivative financial instruments according to certain criteria. The
criteria includes circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic
characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair
value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the
same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule when the host instrument is deemed to be
conventional as that term is described under applicable U.S. GAAP.
F-10
U.S. Gold Corp and Subsidiaries
Notes to Consolidated Financial Statements
April 30, 2020 and 2019
When the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, the Company records, when necessary, a
beneficial conversion feature (“BCF”) related to the issuance of convertible debt and equity instruments that have conversion features at fixed rates that are in-the-money when
issued, and the fair value of warrants issued in connection with those instruments. The BCF for the convertible instruments is recognized and measured by allocating a portion of
the proceeds to warrants, based on their relative fair value, and as a reduction to the carrying amount of the convertible instrument equal to the intrinsic value of the conversion
feature. The discounts recorded in connection with the BCF and warrant valuation are recognized (a) for convertible debt as interest expense over the term of the debt, using the
effective interest method or (b) for convertible preferred stock as dividends at the time the stock first becomes convertible.
The incremental fair value of the Company’s outstanding Series F Convertible Preferred shares during the year ended April 30, 2020, $2,022,712, was accounted for as a
deemed dividend to holders of the Series F Convertible Preferred shares for fiscal year 2020 and increased the net loss applicable to common shareholders.
In connection with the April Offering, on March 29, 2020, we entered into an exchange agreement with holders of shares of our 0% Series F Convertible Preferred Stock (the
“Series F Preferred Stock”) pursuant to which 127 shares of our Series F Preferred Stock exchanged for 127 shares of the Series G Convertible Preferred Stock (“Series G
Preferred Stock”). The Series G Preferred Stock had substantially the same terms as that of the Series F Preferred Stock except the conversion price of the Series G Preferred
Stock is $5.60 per share. As of June 3, 2020, all Series G Preferred Stock had converted and there are no shares of Series G Preferred Stock outstanding.
Remediation and Asset Retirement Obligation
Asset retirement obligations (“ARO”), consisting primarily of estimated reclamation costs at the Company’s Copper King and Keystone properties, are recognized in the period
incurred and when a reasonable estimate can be made, and recorded as liabilities at fair value. Such obligations, which are initially estimated based on discounted cash flow
estimates, are accreted to full value over time through charges to accretion expense. Corresponding asset retirement costs are capitalized as part of the carrying amount of the
related long-lived asset and depreciated over the asset’s remaining useful life. AROs are periodically adjusted to reflect changes in the estimated present value resulting from
revisions to the estimated timing or amount of reclamation and closure costs. The Company reviews and evaluates its AROs annually or more frequently at interim periods if
deemed necessary.
Foreign Currency Transactions
The reporting and functional currency of the Company is the U.S. dollar. Transactions denominated in foreign currencies are translated into the functional currency at the
exchange rates prevailing on the transaction dates. Assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates
prevailing at the balance sheet date with any transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the
functional currency included in the results of operations as incurred. Transaction gains or losses have not had, and are not expected to have, a material effect on the results of
operations of the Company, and are included in General and administrative expenses.
Income Taxes
The Company accounts for income taxes pursuant to the provision of ASC 740-10, “Accounting for Income Taxes” (“ASC 740-10”), which requires, among other things, an
asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected
future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net
deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized.
The Company follows the provision of ASC 740-10, “Accounting for Uncertain Income Tax Positions” (“ASC 740-10”). When tax returns are filed, there may be uncertainty
about the merits of positions taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax
position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position
will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions.
F-11
U.S. Gold Corp and Subsidiaries
Notes to Consolidated Financial Statements
April 30, 2020 and 2019
Tax positions that meet the more likely than not recognition threshold are measured at the largest amount of tax benefit that is more than 50 percent likely of being realized
upon settlement with the applicable taxing authority. The portion of the benefit associated with tax positions taken that exceed the amount measured as described above should
be reflected as a liability for uncertain tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing
authorities upon examination. The Company believes its tax positions are all more likely than not to be upheld upon examination. As such, the Company has not recorded a
liability for uncertain tax benefits.
The Company has adopted ASC 740-10-25, “Definition of Settlement”, which provides guidance on how an entity should determine whether a tax position is effectively settled
for the purpose of recognizing previously unrecognized tax benefits and provides that a tax position can be effectively settled upon the completion and examination by a taxing
authority without being legally extinguished. For tax positions considered effectively settled, an entity would recognize the full amount of tax benefit, even if the tax position is
not considered more likely than not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open. The federal and state income tax
returns of the Company are subject to examination by the Internal Revenue Service and state taxing authorities, generally for three years after they are filed.
Recent Accounting Pronouncements
Accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material effect on the financial
statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an effect on or are unrelated to its financial condition, results
of operations, cash flows or disclosures.
NOTE 3 — GOING CONCERN
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. As of April 30, 2020, the Company had cash of approximately $2.7 million, working capital of approximately $3.0 million, and an
accumulated deficit of approximately $31.6 million. The Company had a net loss and cash used in operating activities of approximately $5.2 million and $3.9 million,
respectively, during the year ended April 30, 2020. As a result of the utilization of cash in its operating activities, and the development of its assets, the Company has incurred
losses since it commenced operations. The Company’s primary source of operating funds since inception has been equity financings. As of April 30, 2020, the Company had
sufficient cash to fund its operations for approximately 9 to 12 months and expects that it will be required to raise additional funds to fund its operations thereafter. These
matters raise substantial doubt about the Company’s ability to continue as a going concern for the twelve months following the issuance of these financial statements.
On June 20, 2019, the Company sold 1,250 Series F Preferred units for an aggregate purchase price of $2,500,000, or $2,000 per unit. Each unit consisted of one (1) share of
0% Series F Preferred Stock and 87 Class X Warrants on a registered basis and 175 Class A Warrants on an unregistered basis (see Note 8).
On April 1, 2020, the Company sold 357,142 units of common shares and warrants for an aggregate purchase price of $2,000,000 (see Note 8), which the Company believes
may not be indicative of the Company’s ability to raise additional funds for operations, due to a further downturn in equity markets for companies in its industry. There can be
no assurance that the Company will be able to raise additional capital or if the terms will be favorable.
The consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that
might be necessary should the Company be unable to continue as a going concern.
F-12
U.S. Gold Corp and Subsidiaries
Notes to Consolidated Financial Statements
April 30, 2020 and 2019
NOTE 4 — MINERAL RIGHTS
Copper King Project
The Company owns the Copper King gold and copper development project (the “Copper King Project”), which is comprised of two State of Wyoming Metallic and Non-
metallic Rocks and Minerals Mining Leases covering an area of approximately 1.8 square miles located in the Silver Crown Mining District of southeast Wyoming.
On July 2, 2014, the Company entered into an Asset Purchase Agreement whereby the Company acquired certain mining leases and other mineral rights comprising the Copper
King Project. The purchase price consisted of (a) cash payment in the amount of $1.5 million and (b) closing shares calculated at 50% of the issued and outstanding shares of
the Company’s common stock and valued at $1.5 million. In accordance with ASC 360-10, “Property, Plant, and Equipment”, assets are recognized based on their cost to the
acquiring entity, which generally includes the transaction costs of the asset acquisition. Accordingly, the Company recorded a total cost of the acquired mineral properties of
$3,091,738 at the date of purchase, which included the purchase price ($3,000,000) and related transaction costs.
Keystone Project
The Company, through its wholly-owned subsidiary, U.S. Gold Acquisition Corporation (“USGAC”), a Nevada corporation, acquired the mining claims comprising the
Keystone Project on May 27, 2016 from Nevada Gold Ventures, LLC (“Nevada Gold”) and Americas Gold Exploration, Inc. under the terms of a purchase and sale agreement.
At the time of purchase, the Keystone Project consisted of 284 unpatented lode mining claims situated in Eureka County, Nevada. The purchase price for the Keystone Project
consisted of the following: (a) cash payment in the amount of $250,000, (b) 46,250 shares of the Company’s common stock and (c) an aggregate of 23,145 five-year options to
purchase shares of the Company’s common stock at an exercise price of $36.00 per share.
The Company valued the shares of common stock at the fair value of $555,000 or $12.00 per share of common stock based on the contemporaneous sale of its preferred stock
in a private placement at $1.00 per common share. The options were valued at $184,968. The options vested over a period of two years whereby 1/24 of the options vested and
became exercisable each month for the 24 months following the closing of the acquisition. The options are non-forfeitable and are not subject to obligations or service
requirements.
Accordingly, at the date of acquisition, the Company recorded a total cost of the acquired mineral properties of $1,028,885 which includes the purchase price ($989,968) and
related transaction cost ($38,917). Some of the Keystone Project claims are subject to pre-existing net smelter royalty (“NSR”) obligations. In addition, under the terms of the
purchase and sale agreement, Nevada Gold retained additional NSR rights of 0.5% with regard to certain claims and 3.5% with regard to certain other claims. Under the terms of
the Purchase and Sale Agreement, the Company may buy down one percent (1%) of the royalty from Nevada Gold at any time through the fifth anniversary of the closing date
for $2,000,000. In addition, the Company may buy down an additional one percent (1%) of the royalty anytime through the eighth anniversary of the closing date for
$5,000,000.
Gold Bar North Project
In August 2017, the Company closed on a transaction under a purchase and sale agreement executed in June 2017 with Nevada Gold and USGAC, pursuant to which Nevada
Gold sold and USGAC purchased all rights, title and interest in the Gold Bar North Property, a gold development project located in Eureka County, Nevada. The purchase price
for the Gold Bar North Property was: (a) cash payment in the amount of $20,479, which was paid in August 2017, and (b) 1,500 shares of common stock of the Company,
which were issued in August 2017, valued at $35,850.
Maggie Creek Project
On September 10, 2019, the Company, NumberCo and the NumberCo Shareholders, entered into the Share Exchange Agreement, pursuant to which, among other things, the
Company agreed to issue to the NumberCo Shareholders 200,000 shares of the Company’s common stock in exchange for all of the issued and outstanding shares of
NumberCo, with NumberCo becoming a wholly owned subsidiary of the Company (see Note 1).
F-13
U.S. Gold Corp and Subsidiaries
Notes to Consolidated Financial Statements
April 30, 2020 and 2019
NumberCo owns all of the issued and outstanding shares of Orevada Metals Inc. (“Orevada”), a corporation under the laws of the state of Nevada. At the time of acquisition, the
Company acquired from NumberCo cash of $159,063, and assumed liabilities consisting of accounts payable totaling $125,670. As a result, the Company acquired Orevada’s
right to an option agreement dated in February 2019 (the “Option Agreement”). The Option Agreement grants Orevada the exclusive right and option to earn-in and acquire up to
50% undivided interest in a property called Maggie Creek, located in Eureka County, Nevada by completing a $4.5 million in exploration and development expenditures
(“Initial Earn-in”) and payment to Renaissance Exploration, Inc. (“Renaissance”), the grantor, of $250,000. Orevada may elect within 60 days after making the $250,000
payment, to increase its interest by an additional 20% (total interest of 70%) by producing a feasibility study by the end of the ninth year of the Option Agreement. One of the
directors of the Company, Mr. Tim Janke, is also a director of Renaissance, a company which is not under common control. No Earn-in expenditures have yet been invested
toward the Option Agreement.
Pursuant to ASU 2017-01 and ASC 805, each titled “Business Combinations”, the Company analyzed the Share Exchange Agreement to determine if the Company acquired a
business or assets. Based on this analysis, it was determined that the Company acquired assets, primarily consisting of cash and the right to an Option Agreement. The Company
excluded the cash received in the determination of the gross assets and concluded that the right to the Option Agreement represents substantially all of the fair value of the gross
assets acquired. If substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, the asset is not
considered a business.
The monetary value of the 200,000 shares issued to the NumberCo Shareholders is deemed by the Company to be $2,020,000. In accordance with ASC 805-50-30 “Business
Combinations”, the Company determined that if the consideration paid is not in the form of cash, the measurement may be based on either (i) the cost which is measured based
on the fair value of the consideration given or (ii) the fair value of the assets (or net assets) acquired, whichever is more clearly evident and thus more reliably measurable.
The 200,000 shares issued to the NumberCo Shareholders were valued at $2,020,000, or $10.10 per share, the fair value of the Company’s common stock based on the quoted
trading price on the date of the Share Exchange Agreement (see Note 8). No goodwill was recorded as the Share Exchange Agreement was accounted for as an asset purchase.
The relative fair value of the assets acquired and liabilities assumed were based on management’s estimates of the fair values on September 10, 2019, the date of the Share
Exchange Agreement. Based upon the purchase price allocation, the following table summarizes the estimated relative fair value of the assets acquired and liabilities assumed at
the date of acquisition:
Cash
Mineral property – Maggie Creek
Total assets acquired at fair value
Total Liabilities assumed at fair value
Total purchase consideration
$
$
159,063
1,986,607
2,145,670
(125,670)
2,020,000
As of the date of these consolidated financial statements, the Company has not established any proven or probable reserves on its mineral properties and has incurred only
acquisition costs and exploration costs.
As of the dates presented, mineral properties consisted of the following:
Copper King Project
Keystone Project
Gold Bar North Project
Maggie Creek Project
Total
April 30, 2020
$
$
3,091,738 $
1,028,885
56,329
1,986,607
6,163,559 $
April 30, 2019
3,091,738
1,028,885
56,329
-
4,176,952
F-14
U.S. Gold Corp and Subsidiaries
Notes to Consolidated Financial Statements
April 30, 2020 and 2019
NOTE 5 — PROPERTY
Property consisted of the following:
Site costs
Less: accumulated depreciation
Total
April 30, 2020
$
$
151,057 $
(17,686)
133,371 $
April 30, 2019
81,885
(6,956)
74,929
For the years ended April 30, 2020 and 2019, depreciation expense amounted to $10,730 and $6,956, respectively.
NOTE 6 — ASSET RETIREMENT OBLIGATION
In conjunction with various permit approvals permitting the Company to undergo exploration activities at the Copper King Project and Keystone Project, the Company has
recorded an ARO based upon the reclamation plans submitted in connection with the various permits. The following table summarizes activity in the Company’s ARO for the
periods presented:
Balance, beginning of period
Addition and changes in estimates
Accretion expense
Balance, end of period
April 30, 2020
April 30, 2019
$
$
88,746 $
69,172
10,474
168,392 $
-
81,885
6,861
88,746
For the year ended April 30, 2020 and 2019, accretion expense amounted to $10,474 and $6,861, respectively.
NOTE 7 — RELATED PARTY TRANSACTIONS
On April 16, 2019, the Company entered into a one-year consulting agreement with a director of the Company for providing services related to investor and strategic
introduction to potential industry partners. In consideration for the services, the consultant shall be paid $3,750 per month in cash, and shares of the Company’s common stock
with a value of $45,000. In April 2019, the Company issued 4,592 shares of the Company’s common stock, valued at $45,000 at the market price on the dates of grant, in
connection with this consulting agreement. The Company paid consulting fees to such director for a total of $90,000 in cash and shares during the year ended April 30, 2020.
One director provided consulting services to the Company and was paid total consulting fees in the amount of $0 and $12,500 during the years ended April 30, 2020 and 2019,
respectively.
Accounts payable to related parties as of April 30, 2020 and 2019 was $3,459 and $42,539, respectively, and was reflected as accounts payable – related party in the
accompanying consolidated balance sheets. The related party to which accounts were payable as of April 30, 2020 was the Chief Financial Officer, who was owed a total of
$3,459 (includes $2,700 payable in shares of common stock). The related parties to which accounts were payable as of April 30, 2019 were the former Vice President-Head of
Exploration, who was owed $12,500 payable in shares of common stock and the Chief Financial Officer, who was owed a total of $30,039 (includes $14,403 payable in shares
of common stock). The amounts payable in shares of common stock to these two related parties were fully vested at the date of issuance.
On September 10, 2019, the Company acquired from Orevada its right to an option agreement dated in February 2019 (see Note 4). One of the board of directors of the
Company, Mr. Tim Janke, is also a director of Renaissance.
F-15
U.S. Gold Corp and Subsidiaries
Notes to Consolidated Financial Statements
April 30, 2020 and 2019
NOTE 8 — STOCKHOLDERS’ EQUITY
As of April 30, 2020, authorized capital stock consisted of 200,000,000 shares of common stock, par value $0.001 per share, and 50,000,000 shares of “blank check” preferred
stock, par value $0.001 per share, of which 1,300,000 shares are designated as Series A Convertible Preferred Stock, 400,000 shares are designated as Series B Convertible
Preferred Stock, 45,002 shares are designated as Series C Convertible Preferred Stock, 7,402 shares are designated as Series D Convertible Preferred Stock, 2,500 shares are
designated as Series E Convertible Preferred Stock, 1,250 shares are designated as Series F Preferred Stock and 127 shares are designated as Series G Preferred Stock. The
Company’s Board has the authority, without further action by the stockholders, to issue shares of preferred stock in one or more series and to fix the rights, preferences,
privileges and restrictions granted to or imposed upon the preferred stock. As of July 13, 2020, there were 2,919,867 shares of common stock issued and outstanding, and no
shares of preferred stock outstanding.
The holders of common stock are entitled to one vote per share on all matters to be voted upon by the stockholders and there are no cumulative rights. Subject to preferences
that may be applicable to any outstanding preferred stock, the holders of common stock are entitled to receive ratably any dividends that may be declared from time to time by
the Board out of funds legally available for that purpose. The Company does not anticipate paying any cash dividends on its common stock in the foreseeable future but intends
to retain its capital resources for reinvestment in its business. In the event of liquidation, dissolution or winding up, the holders of common stock are entitled to share ratably in
all assets remaining after payment of liabilities, subject to prior distribution rights of preferred stock then outstanding. The common stock has no preemptive or conversion
rights or other subscription rights. There are no redemption or sinking fund provisions applicable to the common stock. The outstanding shares of common stock are fully paid
and non-assessable, and any shares of common stock to be issued upon an offering will be fully paid and nonassessable upon issuance. To the extent that additional shares of
our common stock may be issued in the future, the relative interests of the then existing stockholders may be diluted.
Series F Convertible Preferred Stock
On June 20, 2019, the Company sold, under the terms of a securities purchase agreement (the “Purchase Agreement”) dated June 19, 2019, 1,250 Series F Preferred units for an
aggregate purchase price of $2,500,000, or $2,000 per unit. Each unit consisted of one (1) share of 0% Series F Preferred Stock and 87 Class X Warrants on a registered basis
and 175 Class A Warrants on an unregistered basis. The Series F Preferred Stock contains no redemption feature. The Company sold a total of 1,250 shares of Series F
Preferred Stock, 219,375 Class A Warrants and 109,750 Class X Warrants under the Purchase Agreement. Each share of Series F Preferred Stock, at the option of the holder at
any time, was convertible into the number of shares of common stock of the Company determined by dividing the $2,000 (the stated value per share of the Series F Preferred
Stock) by a conversion price of $11.40 per share (approximately 219,375 shares of common stock), subject to adjustment. Each Class X Warrant was exercisable to acquire one
share of the Company’s common stock and one Class Y Warrant at an exercise price of $11.40, for a period of six (6) months from the date of issuance. Class X Warrants
expired on December 19, 2019. Each Class Y Warrant was exercisable to acquire one share of the Company’s common stock at an exercise price of $11.40 per share,
commencing six (6) months from the date of issuance (the “Initial Exercise Date”) and would have expired on a date that is the five (5) year anniversary of the Initial Exercise
Date. No Class X Warrant was exercised prior to its expiration and, as such, no Class Y Warrants were issued. Each Class A Warrant is exercisable to acquire one share of the
Company’s common stock at an exercise price of $11.40 per share, commencing six (6) months from the date of issuance and will expire on a date that is the five (5) year
anniversary of the date of issuance. The Company incurred $98,799 in offering costs for this placement.
The fair value of the Series F Preferred Stock and warrants if converted on the date of issuance was greater than the value allocated to the Series F Preferred Stock and warrants.
As a result, the Company recorded a BCF of approximately $2.0 million that the Company recognized as deemed dividend to the preferred stockholders and accordingly, an
adjustment to net loss to arrive at net loss available to common stockholders and a corresponding increase in additional paid in capital upon issuance of the Series F Preferred
Stock and warrants. The Company accounted for the deemed dividend resulting from the issuance of Series F Preferred Stock and warrants using the relative fair value method
(see Note 2).
The Purchase Agreement includes customary representations, warranties and covenants by the Company and provides for indemnification of the purchasers against certain
liabilities, including liabilities incurred as a result of or relating to any breach of the representations, warranties, covenants or agreements made by the Company in the Purchase
Agreement. The Company assessed the classification of these warrants and determined that such instruments met the criteria for equity classification under the guidance in ASC
815.
During the three months ended July 31, 2019, the Company issued an aggregate of 108,070 shares of the Company’s common stock in exchange for the conversion of 616
shares of the Company’s Series F Preferred Stock.
During the three months ended October 31, 2019, the Company issued an aggregate of 63,860 shares of the Company’s common stock in exchange for the conversion of 364
shares of the Company’s Series F Preferred Stock.
F-16
U.S. Gold Corp and Subsidiaries
Notes to Consolidated Financial Statements
April 30, 2020 and 2019
During the three months ended April 30, 2020, the Company issued an aggregate of 25,088 shares of the Company’s common stock in exchange for the conversion of 143
shares of the Company’s Series F Preferred Stock. After the conversion of these shares, there remained 127 shares of Series F Convertible Preferred Stock outstanding, which
were exchanged for Series G Convertible Preferred Stock, as discussed below.
Series G Convertible Preferred Stock
On March 29, 2020, concurrent with the issuance of shares of common stock and warrants for cash, the Company entered into an exchange agreement with holders of shares of
the Series F Preferred Stock pursuant to which the remaining 127 shares of the Company’s Series F Preferred Stock were exchanged for 127 shares of the Series G Preferred
Stock at a stated value of $2,000 per share, the same as the Series F Convertible Preferred Stock. The Series G Preferred Stock had substantially the same terms as that of the
Series F Preferred Stock except the conversion price of the Series G Preferred Stock was $5.60 per share, for a total of 45,357 common shares.
During April 2020, the Company issued an aggregate of 25,000 shares of the Company’s common stock in exchange for the conversion of 70 shares of Series G Preferred
Stock.
As a result of the exchange, the Company recorded approximately $64,000 of deemed dividend to the preferred stockholders and accordingly, an adjustment to net loss to arrive
at net loss available to common stockholders and a corresponding increase in additional paid in capital upon issuance of the Series G Preferred Stock. The Company accounted
for the deemed dividend resulting from the exchange of Series F Preferred Stock into Series G Preferred Stock in accordance with ASC 470-50 and ASC 260-10-S99-2.
Common Stock Issued for Cash
On November 2, 2018, the Company entered into an ATM Agreement with H.C. Wainwright & Co., LLC (“Wainwright”) as sales manager. Under the terms of the ATM
Agreement, the Company was entitled to sell, at its sole discretion and from time to time as it may choose, common stock of the Company through Wainwright, with such sales
having an aggregate gross sales value of up to $1,000,000. Subject to the terms and conditions of the ATM Agreement, Wainwright used its commercially reasonable efforts to
sell the shares of common stock from time to time, based upon the Company’s instructions. The Company has provided Wainwright with customary indemnification rights, and
Wainwright was entitled to a commission at a fixed commission rate equal to 3.0% of the gross proceeds per share sold. The ATM program has expired.
For the year ended April 30, 2019, the Company has sold 29,006 shares of common stock and raised net proceeds of $219,796, net of issuance costs including legal cost related
to the sale of shares of common stock of $79,031, through the ATM Agreement at prices per share averaging $10.30.
On April 1, 2020, the Company, issued 357,142 shares of common stock of the Company at a price of $5.60 per share, for gross proceeds of approximately $2.0 million before
the deduction of placement agent fees and offering expenses. In relation to this offering, the Company entered into the advisory agreement, dated March 29, 2020 (the “Advisory
Agreement”), with Palladium Capital Advisors (“Palladium”) pursuant to which a fixed fee of $135,000 in shares of common stock would be issued, to be valued at the closing
price on the date of issuance. On March 30, 2020, pursuant to the Advisory Agreement, the Company issued 25,281 shares of its common stock to Palladium, based on the
closing price as of March 30, 2020 of $5.34.
Common Stock Issued for Accrued Services
On May 6, 2019, the Company paid an accrued service liability to its former Chief Geologist in the amount of $12,500 by issuing 1,068 shares of common stock at a price of
$11.70 per share of common stock based on the quoted trading price on the date of grant. In connection with this issuance, the Company reduced accrued salaries by $12,500
during the year ended April 30, 2020.
On November 26, 2019, the Company paid an accrued service liability to its Chief Financial Officer in the amount of $14,403 and stock-based accounting fees of $3,881 by
issuing 2,276 shares of restricted common stock at a price of $8.00 per share of common stock based on the quoted trading price on the date of grant. In connection with this
issuance, the Company reduced accrued expenses by $14,403 and recorded stock-based accounting fees of $3,881 during the year ended April 30, 2020. The restricted common
shares issued to this officer were fully vested at the date of issuance.
F-17
U.S. Gold Corp and Subsidiaries
Notes to Consolidated Financial Statements
April 30, 2020 and 2019
On February 1, 2020, the Company paid stock-based accounting fees to its Chief Financial Officer in the amount of $5,158 by issuing 639 shares of restricted common stock at
a price of $8.10 per share of common stock based on the quoted trading price on the date of grant. In connection with this issuance, the Company recorded stock-based
accounting fees of $5,158 during the year ended April 30, 2020. The restricted common shares issued to this officer were fully vested at the date of issuance.
Common Stock Issued for Salaries
Between May 2019 and June 2019, the Company issued an aggregate of 2,153 shares of common stock to satisfy a stock payable to its former Chief Geologist for services
rendered between May 2019 and June 2019. The shares were valued at $25,000 using a share price ranging from $10.30 to $13.30 on the dates of grant.
Common Stock Issued, Restricted Stock Awards, and RSUs Granted for Services
On September 18, 2019, the Compensation Committee of the Board awarded Edward Karr, the Company’s Chief Executive Officer, President and Director, 20,000
performance-based restricted stock units (“RSUs”), David Rector, the Company’s Chief Operating Officer, 7,500 performance-based RSUs and an employee of the Company
5,000 performance-based RSUs pursuant to respective restricted stock unit award agreements. The RSUs will vest upon the earlier to occur of (i) a Change in Control (as
defined in the 2020 Plan), or (ii) a material discovery of a mineral deposit, as determined by the Compensation Committee of the Board in its sole discretion. The total 32,500
RSUs had a fair value of $334,750 or $10.30 per share based on the quoted trading price on the date of grant and will be expensed upon the occurrence of the vesting term.
Additionally, on September 18, 2019, the Compensation Committee of the Board awarded five directors of the Company an aggregate of 25,000 shares of restricted stock
pursuant to respective restricted stock award agreements. The shares of restricted stock vested immediately on the date of grant. The total 25,000 shares of restricted stock had a
fair value of $257,500 or $10.30 per share based on the quoted trading price on the date of grant, which was expensed immediately.
On November 26, 2019, the Company issued 2,100 shares of restricted common stock to a consultant for investor relations-related services rendered. The 2,100 shares of
common stock had a fair value of $18,297, or $8.70 per share, based on the quoted trading price on the date of grant, which was fully vested and expensed immediately.
On November 26, 2019, the Company issued 3,703 shares of restricted stock to a consultant for services to be rendered. The shares vest over a six-month period. The 3,703
shares of restricted stock had a fair value of $29,848, or $8.10 per share, based on quoted trading price on the date of grant and will be expensed over the vesting period.
On January 14, 2020, the Compensation Committee of the Board awarded an aggregate of 47,777 restricted common shares to Edward Karr, the Company’s Chief Executive
Officer, and David Rector, the Company’s Chief Operating Officer as 2019 Executive Bonus Awards. The total 47,777 restricted common shares stock had a fair value of
$396,520, or $8.30 per share, based on the quoted trading price on the date of grant, which was fully vested and expensed immediately.
On January 6, 2020, the Compensation Committee of the Board awarded four directors of the Company an aggregate of 1,875 shares of restricted stock pursuant to respective
restricted stock award agreements. The shares of restricted stock vested immediately on the date of grant. The total 1,875 shares of restricted stock had a fair value of $17,438,
or $9.30 per share, based on the quoted trading price on the date of grant, which was fully vested and expensed immediately.
On April 9, 2020, the Company issued 25,000 shares of restricted common stock to a consultant for investor relations-related services rendered. The 25,000 shares of common
stock had a fair value of $123,750, or $4.95 per share, based on the quoted trading price on the date of grant, which was fully vested and expensed immediately.
On April 30, 2020, the Compensation Committee of the Board awarded four directors of the Company an aggregate of 1,875 shares of restricted stock pursuant to respective
restricted stock award agreements. The shares of restricted stock vested immediately on the date of grant. The total 1,875 shares of restricted stock had a fair value of $9,581, or
$5.11 per share, based on the quoted trading price on the date of grant, which was fully vested and expensed immediately. These shares were issued on May 5, 2020, subsequent
to the close of the fiscal year 2020.
A total of $497,528 and $880,623 was expensed for the year ended April 30, 2020 and 2019, respectively. A balance of $339,725 remains to be expensed over future vesting
periods.
F-18
U.S. Gold Corp and Subsidiaries
Notes to Consolidated Financial Statements
April 30, 2020 and 2019
Common Stock Issued Pursuant to Share Exchange Agreement
On September 10, 2019, the Company, NumberCo and the NumberCo Shareholders, entered into the Share Exchange Agreement, pursuant to which, among other things, the
Company agreed to issue to the NumberCo Shareholders 200,000 shares of the Company’s common stock in exchange for all of the issued and outstanding shares of
NumberCo, with NumberCo becoming a wholly owned subsidiary of the Company. The 200,000 shares issued to the NumberCo Shareholders were valued at $2,020,000, or
$10.10 per share, the fair value of the Company’s common stock based on the quoted trading price on the date of the Share Exchange Agreement (see Note 4).
Equity Incentive Plan
In August 2017, the Board approved the Company’s 2017 Equity Incentive Plan (the “2017 Plan”) including the reservation of 165,000 shares of common stock thereunder.
On August 6, 2019, the Board approved and adopted, subject to stockholder approval, the U.S. Gold Corp. 2020 Stock Incentive Plan (the “2020 Plan”). The 2020 Plan reserves
330,710 shares for future issuance to officers, directors, employees and contractors as directed from time to time by the Compensation Committee of the Board. The Board
directed that the 2020 Plan be submitted to the Company’s stockholders for their approval at the 2019 Annual Meeting of Stockholders of the Company (the “Annual
Meeting”), which was held on September 18, 2019. The 2020 Plan was approved by a vote of stockholders at the Annual Meeting. With the approval and effectivity of the 2020
Plan, no further grants will be made under the 2017 Plan.
Stock options issued for services
On November 26, 2019, the Company granted 5,000 options to purchase the Company’s common stock to the Company’s Chief Financial Officer. The options have a term of
10 years from the date of grant and are exercisable at an exercise price of $8.10. The options vest over 24 months at 208 options per month.
The Company used the Black-Scholes model to determine the fair value of stock options granted during the year ended April 30, 2020. In applying the Black-Scholes option
pricing model to options granted, the Company used the following assumptions:
Risk free interest rate
Dividend yield
Expected volatility
Contractual term (in years)
Forfeiture rate
F-19
For the
Year Ended
April 30, 2020
1.74%
0.00%
72%
10.0
0.00%
The following is a summary of the Company’s stock option activity during the years ended April 30, 2020 and 2019:
U.S. Gold Corp and Subsidiaries
Notes to Consolidated Financial Statements
April 30, 2020 and 2019
Balance at April 30, 2018
Granted
Exercised
Forfeited
Cancelled
Balance at April 30, 2019
Granted
Exercised
Forfeited
Cancelled
Balance at April 30, 2020
Options exercisable at end of period
Options expected to vest
Weighted average fair value of options granted during the period
Weighted
Average
Remaining
Contractual
Life
(Years)
3.43
—
—
—
—
2.29
10.00
—
—
—
2.87
Number of
Options
Weighted
Average
Exercise
Price
153,146
—
—
(7,500)
—
145,646
5,000
—
(50,646)
—
100,000
76,041
23,959
$
$
$
$
17.90
—
—
14.80
—
18.00
8.10
—
24.44
—
14.31
14.55
13.54
0.62
At April 30, 2020 and 2019, the aggregate intrinsic value of options outstanding and exercisable was $0 for each year.
Stock-based compensation for stock options recorded in the consolidated statements of operations totaled $196,046 and $328,082 for the years ended April 30, 2020 and 2019,
respectively. A balance of $214,050 remains to be expensed over future vesting periods.
Stock Warrants
In relation to the issuance of the shares of Series F Convertible Preferred Stock in June 2019, the Company issued 219,375 Class A Warrants and 109,750 Class X Warrants.
The fair value of the warrants was $2,022,712, as measured on the date of the issuance with a Black-Scholes pricing model using the assumptions noted in the following table:
Expected volatility
Stock price on date of grant
Exercise price
Expected dividends
Expected term (in years)
Risk-free rate
Expected forfeiture rate
Class A Warrants
Issued During the Year
Ended
April 30, 2020
$
$
46% - 74%
11.40
11.40
-
0.5 – 5
1.77% - 2.11%
0%
Each Class A Warrant is exercisable to acquire one share of the Company’s common stock at an exercise price of $11.40 per share, commencing six (6) months from the date of
issuance and will expire on a date that is the five (5) year anniversary of the date of issuance. Each Class X Warrant was exercisable to acquire one share of the Company’s
common stock and one Class Y Warrant at an exercise price of $11.40, for a period of six (6) months from the date of issuance. Class X Warrants expired on December 19,
2019. Each Class Y Warrant was exercisable to acquire one share of the Company’s common stock at an exercise price of $11.40 per share, commencing on the Initial Exercise
Date and would have expired on a date that is the five (5) year anniversary of the Initial Exercise Date. No Class X Warrant was exercised prior to its expiration, and, as such,
no Class Y Warrants were issued.
F-20
U.S. Gold Corp and Subsidiaries
Notes to Consolidated Financial Statements
April 30, 2020 and 2019
Concurrent with the April 1, 2020 issuance of shares of common stock, the Company issued 357,142 warrants. The warrants are exercisable six months following the initial
exercise date and terminate five years following issuance. The warrants have an exercise price of $7.00 per share and each warrant is exercisable to purchase one share of
common stock. Generally, a holder of a warrant will not have the right to exercise any portion of its warrants if the holder, together with its affiliates, would beneficially own in
excess of 4.99% (or 9.99% at the election of the holder prior to the date of issuance) of the number of shares of common stock outstanding immediately after giving effect to
such exercise (the “Beneficial Ownership Limitation”).
The fair value of the warrants was $1,613,765, as measured on the date of the issuance with a Black-Scholes pricing model using the assumptions noted in the following table:
Expected volatility
Stock price on date of grant
Exercise price
Expected dividends
Expected term (in years)
Risk-free rate
Expected forfeiture rate
Common Warrants
Issued During the Year
Ended
April 30, 2020
$
$
133.0%
5.34
7.00
-
5.00
0.39%
0%
The fair value of the warrant would be credited to Additional paid-in capital, and also represents a deemed dividend to those shareholders, which would be charged to
Additional paid-in capital, therefore with no effect on that account.
A summary of the Company’s outstanding warrants to purchase shares of common stock as of April 30, 2020 and changes during the year then ended are presented below,
restated to post-split:
Number of Warrants
Weighted Average
Exercise
Price
Weighted Average
Remaining
Contractual
Life
(Years)
Warrants with no Class designation:
Balance at April 30, 2018
Granted
Exercised
Forfeited
Canceled
Balance at April 30, 2019
Granted
Exercised
Forfeited
Canceled
Balance at April 30, 2020
Class A Warrants:
Balance at April 30, 2019
Granted
Exercised
Forfeited
Canceled
Balance at April 30, 2020
Class X Warrants:
Balance at April 30, 2019
Granted
Exercised
Forfeited, with no financial effect
Canceled
Balance at April 30, 2020
Class Y Warrants:
Balance at April 30, 2019
Granted
Exercised
Forfeited
Canceled
Balance at April 30, 2020
Total Warrants Outstanding at April 30, 2020
Warrants exercisable at end of period
Weighted average fair value of warrants granted during the period
As of April 30, 2020, the aggregate intrinsic value of warrants outstanding and exercisable was $0.
F-21
170,236 $
—
—
—
—
170,236 $
357,142
—
—
—
527,378
—
219,375
—
—
—
219,375
—
109,750
—
(109,750)
—
-
—
—
—
—
—
—
746,753 $
746,753 $
$
31.11
—
—
—
—
31.11
7.00
—
—
—
—
11.40
—
—
—
11.40
—
11.40
—
11.40
—
-
—
—
—
—
—
—
7.41
7.78
4.21
1.25
—
—
—
—
1.25
4.92
—
—
—
3.73
—
4.22
—
—
—
4.22
—
0.50
—
—
—
-
—
—
—
—
—
—
3.88
U.S. Gold Corp and Subsidiaries
Notes to Consolidated Financial Statements
April 30, 2020 and 2019
NOTE 9 — NET LOSS PER SHARE
Net loss per share of common stock is calculated in accordance with ASC 260, “Earnings Per Share”. Basic loss per share is computed by dividing net loss available to common
stockholder, by the weighted average number of shares of common stock outstanding during the period. The following were excluded from the computation of diluted shares
outstanding as they would have had an anti-dilutive impact on the Company’s net loss. In periods where the Company has a net loss, all dilutive securities are excluded.
Common stock equivalents:
Preferred stock
Restricted stock units
Stock options
Stock warrants
Total
NOTE 10 — COMMITMENTS AND CONTINGENCIES
Mining Leases
Year Ended
April 30, 2020
Year Ended
April 30, 2019
20,357
33,117
100,000
746,753
900,227
-
51,200
145,646
170,236
367,082
The Copper King property position consists of two State of Wyoming Metallic and Non-metallic Rocks and Minerals Mining Leases. These leases were assigned to the
Company in July 2014 through the acquisition of the Copper King Project. Leases to explore for or use of natural resources are outside the scope of ASU 2016-02 “Leases”.
There are no lease contracts for office space or other Company expenses which qualify for treatment as capital assets under ASU 2016-02.
The Company’s rights to the Copper King Project arise under two State of Wyoming mineral leases; 1) State of Wyoming Mining Lease No. 0-40828, consisting of 640 acres,
and 2) State of Wyoming Mining Lease No. 0-40858 consisting of 480 acres.
Lease 0-40828 was renewed in February 2013 for a second ten-year term and Lease 0-40858 was renewed for its second ten-year term in February 2014. Each lease requires an
annual payment of $2.00 per acre. In connection with the Wyoming Mining Leases, the following production royalties must be paid to the State of Wyoming, although once the
project is in operation, the Board of Land Commissioners has the authority to reduce the royalty payable to the State of Wyoming:
FOB Mine Value per Ton
$00.00 to $50.00
$50.01 to $100.00
$100.01 to $150.00
$150.01 and up
Percentage Royalty
5%
7%
9%
10%
The future minimum lease payments at April 30, 2020 under these mining leases are as follows, each payment to be made in the fourth quarter of the respective fiscal years. The
Fiscal 2020 payment was made during the quarter ended January 31, 2020:
Fiscal 2021
Fiscal 2022
Fiscal 2023
Fiscal 2024
$
$
2,240
2,240
2,240
960
7,680
The Company may renew each lease for a third ten-year term, which will require one annual payment of $3.00 per acre for the first year and $4.00 per acre for each year
thereafter.
F-22
U.S. Gold Corp and Subsidiaries
Notes to Consolidated Financial Statements
April 30, 2020 and 2019
Orevada option:
Pursuant to the acquisition of NumberCo on September 10, 2019, the Company acquired from Orevada its right to the Option Agreement. The option agreement grants Orevada
the exclusive right and option to earn-in and acquire up to 50% undivided interest in a property called Maggie Creek, located in Eureka County, Nevada by completing the Initial
Earn-in over a seven-year period:
First agreement year
Second agreement year
Third agreement year
Fourth agreement year
Fifth agreement year
Sixth agreement year
Seventh agreement year
$
$
100,000
200,000
500,000
700,000
1,000,000
1,000,000
1,000,000
4,500,000
The Initial Earn-in is vested by paying $250,000 to Renaissance Exploration, Inc. at the end of the Initial Earn-in period.
NOTE 11 — INCOME TAX
The components of income tax provision (benefit) are as follows:
Current
Federal
State and local
Total current
Deferred
Federal
State and local
Total deferred
Total income tax provision (benefit)
Year Ended April 30,
2020
2019
$
$
$
(438,145) $
-
(438,145)
- $
-
-
(438,145) $
-
-
-
435,345
-
435,345
435,345
F-23
U.S. Gold Corp and Subsidiaries
Notes to Consolidated Financial Statements
April 30, 2020 and 2019
The Company has a net operating loss carryforward for federal tax purposes totaling approximately $24.2 million at April 30, 2020. Approximately $13.2 million expires
through the year 2038, with approximately $11.0 million net operating losses incurred in fiscal 2020 and fiscal 2019 that do not expire and can be utilized to offset up to 80% of
future taxable income under the Tax Cuts and Jobs Act described below. The Company has approximately $3.0 million of various state net operating loss carryforwards that
expire through the year 2038; however, the Company’s business is currently conducted in states with no income tax, so these carryforwards may never be used.
The deferred tax assets are summarized as follows:
Net operating loss carryover
Stock-based compensation
Capitalized exploration costs
Accrued remediation costs
Alternative minimum tax credit carryover
Subtotal
Less: valuation allowance
Net deferred tax asset
April 30, 2020
April 30, 2019
5,083,000 $
2,019,000
340,000
7,000
-
7,449,000
(7,449,000)
- $
3,777,000
1,753,000
341,000
3,000
438,000
6,312,000
(6,312,000)
-
$
$
On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act (the “Act”) resulting in significant modifications to existing law. The Company completed the
accounting for the effects of the Act during the fiscal year April 30, 2019. The Company recognized an income tax benefit of 438,145 for the year ended April 30, 2020 as a
result of the changes to tax laws and tax rates under the Act. The Act modified the application of alternative minimum tax credits previously being carried forward, to allow for
refunds of the credits. The Company had been carrying forward a total of $438,000 in alternative minimum tax credits. As a result of the change, the Company received a
federal tax refund during the fiscal year ended April 30, 2020 and will receive another refund of like amount in the year ending April 30, 2021.
As of April 30, 2020, the Company had deferred tax assets arising principally from the net operating loss carryforward for income tax purposes multiplied by an expected
blended federal and state tax rate of 21.0%. Due to the physical presence (nexus) of the Company in the states of Wyoming and Nevada, the Company no longer has significant
income or loss apportioned to any taxable state. Any minor apportionment that may occur to any taxable state will be immaterial to current and future operations of the
company. Therefore, the effective state tax rate used in the calculation of deferred tax is 0%. As management of the Company cannot determine that it is more likely than not
that the Company will realize the benefits of the deferred tax assets, a valuation allowance equal to 100% of the net deferred tax asset has been established at April 30, 2020.
The differences between the provision (benefit) for federal income taxes and federal income taxes computed using the U.S. statutory tax rate of 21% were as follows:
Federal income tax provision (benefit) based on statutory rate
State income tax provision (benefit), net of federal taxes
Change in effective state tax rate
Change in prior year estimate
Increase (decrease) in valuation allowance
Total tax provision (benefit) on income (loss)
2020
(1,194,000)
-
-
(381,000)
1,137,000
(438,000)
$
$
Year Ended April 30,
21.0%
-%
-%
6.7%
(20.0)%
7.7%
$
$
2019
(1,598.000)
-
340,000
(971,000
2,664,000
435,000
21.0%
-%
(4.5)%
12.8%
(35.0)%
(5.7)%
The Company has assessed its tax positions and has determined that it has not taken a position that would give rise to an unrecognized tax liability being reported. In the event
that the Company is assessed penalties and/or interest, penalties will be charged to other operating expense and interest will be charged to interest expense.
The Company files income tax returns in the U.S. federal jurisdiction and various states. For both federal and state income tax purposes, the Company’s fiscal 2017 through
2020 tax years remain open for examination by the tax authorities under the normal three-year statute of limitations.
NOTE 12 – SUBSEQUENT EVENTS
On June 2, 2020, 57 shares of Series G Convertible Preferred shares were converted to 20,357 common shares.
F-24
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
During the fiscal years ended April 30, 2020 and 2019, there were (i) no disagreements related to accounting principles or practices, financial statement disclosure or auditing
scope or procedure, and (ii) there were no “reportable events” as defined in Item 304(a)(1)(v) of Regulation S-K.
Item 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under
the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Management recognizes that any controls
and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its
judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Our principal executive officer and principal financial officer evaluated the effectiveness of our disclosure controls and procedures as of April 30, 2020. Disclosure controls and
procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits
under the Exchange Act is accumulated and communicated to the Company’s management, including our principal executive and principal financial officer, as appropriate to
allow timely decisions regarding required disclosure. Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure
controls and procedures were not effective, at the reasonable assurance level, in ensuring that information required to be disclosed by us in the reports that we file or submit
under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (“ICFR”). Our internal control system was designed to, in
general, provide reasonable assurance to our management and board regarding the preparation and fair presentation of published financial statements, but because of its inherent
limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management, including our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal controls over financial reporting as of April 30,
2020. The framework used by management in making that assessment was the criteria set forth in the document entitled “2013 Internal Control - Integrated Framework” issued
by the Committee of Sponsoring Organizations of the Treadway Commission, (“COSO”). Based on that assessment, management concluded that, during the period covered by
this report, such internal controls and procedures were not effective as of April 30, 2020 and that material weaknesses in ICFR existed as more fully described below.
53
A material weakness is a deficiency, or a combination of deficiencies, within the meaning of Public Company Accounting Oversight Board (“PCAOB”) Audit Standard No. 5,
in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be
prevented or detected on a timely basis. Management has identified the following material weaknesses which have caused management to conclude that as of April 30, 2020
our internal controls over financial reporting were not effective at the reasonable assurance level:
As of April 30, 2020, management has not completed an effective assessment of the Company’s internal controls over financial reporting based on the COSO framework.
Management has concluded that, during the period covered by this report, our internal controls and procedures were not effective to detect the inappropriate application of U.S.
GAAP. Management identified the following material weaknesses set forth below in our internal control over financial reporting.
1. We did not perform an effective risk assessment or monitor internal controls over financial reporting.
2. We do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a
requirement of Section 404 of the Sarbanes-Oxley Act which is applicable to us for the year ended April 30, 2020. Management evaluated the impact of our failure to have
written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that
resulted represented a material weakness.
3.
In the absence of written documentation and procedures, we perform specific review functions in preparing financial reports and disclosures to assure fair presentation of our
financial reports.
Notwithstanding the assessment that our ICFR was not effective and that there are material weaknesses as identified herein, we believe that our consolidated financial
statements contained in this Annual Report fairly present our financial position, results of operations and cash flows for the periods covered thereby in all material respects.
This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was
not subject to attestation by our registered public accounting firm as we are a smaller reporting company and are not required to provide the report.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
During the year ended April 30, 2020, management determined that a delay of its program for compliance with the Sarbanes-Oxley Act of 2002 was necessary to conserve cash
in our current financial condition. There have been no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely
to materially affect, our internal control over financial reporting; however, management has determined that for the sake of transparency and conservancy, it cannot state that
internal controls over financial reporting are effective at this time.
As required by Rule 13a-15(d) of the Exchange Act, our management, including our principal executive officer and our principal financial officer conducted an evaluation of
the internal control over financial reporting to determine whether any changes occurred during the quarter ended April 30, 2020 that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting. Based on that evaluation, our management, including our principal executive officer and principal
financial officer, concluded that there were no such changes during the quarter ended April 30, 2020.
Item 9B. OTHER INFORMATION
None
54
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
PART III
EXECUTIVE OFFICERS
The following persons are our directors and executive officers and hold the offices set forth opposite their names.
Name
Edward M. Karr
Timothy M. Janke
John N. Braca
Andrew Kaplan
Ryan K. Zinke
Douglas Newby
David Rector
Ted Sharp
Age
50
67
61
52
57
60
72
63
Principal Occupation
Chief Executive Officer, President and Director of U.S. Gold Corp.
Director of U.S. Gold Corp.
Director of U.S. Gold Corp.
Director of U.S. Gold Corp.
Director of U.S. Gold Corp.
Director of U.S. Gold Corp.
Chief Operating Officer, Secretary of U.S. Gold Corp.
Chief Financial Officer - Principal Financial and Accounting Officer of U.S. Gold Corp.
Officer/
Director Since
2015
2016
2017
2017
2019
2019
2016
2018
Edward M. Karr has been serving as a Director since June 2015, and has been the President and Chief Executive Officer, and a Director of Gold King Corp. since April 2016.
Mr. Karr became our President and Chief Executive Officer on May 23, 2017 and remains a member of the Board. Mr. Karr is an international entrepreneur and founder of
several investment management companies based in Geneva, Switzerland. Mr. Karr was a Director and former Chair of the Audit Committee of Levon Resources, until its
merger with Discovery Metals, Inc. Mr. Karr previously served on the boards of Pershing Gold Corp., PolarityTE, Inc. (formerly Majesco Entertainment Company) and Spherix
Incorporated. Mr. Karr is a board member and past President of the American International Club of Geneva and Chairman of Republican’s Overseas Switzerland. Mr. Karr has
more than 25 years of capital markets experience as an executive manager, financial analyst, money manager and investor. In 2004, Futures Magazine named Mr. Karr as one of
the world’s Top Traders. He is a frequent contributor to the financial press. Mr. Karr previously worked for Prudential Securities in the United States. Before his entry into the
financial services arena, Mr. Karr was affiliated with the United States Antarctic Program and spent thirteen consecutive months working in the Antarctic, receiving the
Antarctic Service Medal for winter over contributions of courage, sacrifice and devotion. Mr. Karr studied at Embry-Riddle Aeronautical University, Lansdowne College in
London, England and received a B.S. in Economics/Finance with Honours (magna cum laude) from Southern New Hampshire University. Mr. Karr is qualified to serve on our
Board because of his global operating and executive management experience; deep knowledge of capital markets; experience in public company accounting, finance, and audit
matters as well as his experience in a range of board and committee functions as a member of various boards.
Timothy M. Janke has been serving as a member of the board of directors of Gold King Corp. since April 2016 and became a director in May 2017. In addition, he has been
serving as the Chief Operating Officer of Pershing Gold Corp. since August 2014. Since November 2010, Mr. Janke has been the president of his own consulting business
providing mine operating and evaluation services to several mining companies. Beginning in July 2012, he provided consulting services at the Relief Canyon Project advising
the company on mine start-up plans and related activities. From June 2010 to August 2014, Mr. Janke served as Vice President and Chief Operating Officer of Renaissance
Gold, Inc. and its predecessor Auex Ventures, Inc. He was General Manager-Projects for Goldcorp Inc. and its predecessor Glamis Gold, Inc. from July 2009 to May 2010, Vice
President and General Manager of the Marigold Mine from February 2006 to June 2009, and its Manager of Technical Services from September 2004 to January 2006. Since
August 2011, Mr. Janke has served as a director for Renaissance Gold. He is a past Director of both the Nevada Mining Association, and Silverado Area Council Boy Scouts.
He has a B.S. in Mining Engineering from the Mackay School of Mines. Mr. Janke is qualified to serve on our Board because of his more than 40 years of engineering and
operational experience in the mining industry, and broad range of expertise in mining operations throughout the USA, Canada and Australia.
John N. Braca has been serving as a member of our Board since May 2017 and was appointed Chairman in September 2018. In addition, he is a financial executive and
business partner with a strong track record in portfolio management, venture capital fundraising, as well as financial and operational management. He has served as a director
and board observer for life science, technology and development companies over the course of his career. Mr. Braca has also served as an active member of both Audit and
Compensation Committees for both public and private companies and has led several of the public companies as the Chairman of the Audit Committee. John N. Braca has been
a director of Sevion Therapeutics since October 2003. Since April 2013, Mr. Braca has been the President and sole proprietor of JNB Consulting, which provides strategic
business development counsel to biotechnology companies. From August 2010 through April 2013, Mr. Braca had been the executive director controller for Iroko
Pharmaceuticals, a privately-held global pharmaceutical company based in Philadelphia. From April 2006 through July 2010, Mr. Braca was the managing director of
Fountainhead Venture Group, a healthcare information technology venture fund based in the Philadelphia area, and has been working with both investors and developing
companies to establish exit and business development opportunities. From May 2005 through March 2006, Mr. Braca was also consultant and advisor to GlaxoSmithKline
management in their research operations. From 1997 to April 2005, Mr. Braca was a general partner and director of business investments for S.R. One, Limited, or S.R. One, the
venture capital subsidiary of GlaxoSmithKline. In addition, from January 2000 to July 2003, Mr. Braca was a general partner of Euclid SR Partners Corporation, an independent
venture capital partnership. Prior to joining S.R. One, Mr. Braca held various finance and operating positions of increasing responsibility within several subsidiaries and
business units of GlaxoSmithKline. Mr. Braca is a licensed Certified Public Accountant in the state of Pennsylvania and is affiliated with the American Institute of Certified
Public Accountants and the Pennsylvania Institute of Certified Public Accountants. Mr. Braca received a Bachelor of Science in Accounting from Villanova University and a
Master of Business Administration in Marketing from Saint Joseph’s University. Mr. Braca is qualified to serve on the Board because of his deep knowledge of financial and
operational issues; extensive experience in operational and executive management, deep governance acumen, and strong knowledge of early stage and public companies.
55
The Honorable Ryan Zinke has been serving as a member of our Board since April 2019. He was born and raised in Montana and attended the University of Oregon where he
was awarded All-PAC 10 honors, the Sahlstrom Award and the prestigious Emerald Cup Award for academic, leadership and athletic achievement. He then attended US Navy
Officers Candidate School and completed Navy SEAL Training in 1985 and was assigned to SEAL Team ONE. Highlights of Commander Zinke’s twenty-three-year career in
Special Operations includes two tours of duty at SEAL Team SIX, Acting Commander of Special Forces in Iraq, Task Force Commander in Bosnia and Kosovo, and served as
the “Dean” of Special Warfare training. He was awarded the Bronze Star for combat in Iraq and is credited with conducting 360 combat missions and the capture or kill of 72
terrorists. He retired from active duty in 2008 and was elected as a Montana State Senator and later twice elected as Montana’s sole member of the US House of Representatives.
He served on the House Armed Services and Natural Resources committees. In 2016, Congressman Zinke was nominated by President Donald J. Trump and later confirmed by
the US Senate to serve as the 52nd US Secretary of the Interior. As Secretary, he was a champion of restoring the voice of state and local communities in land and wildlife
management decisions, established and protected wildlife corridors, budgeted for the largest investment in our Nation’s history for National Parks, increased public access for
recreation and traditional use, and was the principle architect of the American Energy “Dominance” policy. After 31 years of public service, President Trump accepted his
resignation in 2019. The Honorable Ryan Zinke is the author of American Commander and serves on numerous boards. He holds an MBA in Finance, an MS in Global
Leadership, and a BS in Geology. He is married to the former Lolita Hand of Santa Barbara, has three children and two grandchildren.
Andrew Kaplan has been serving as a member of our Board since November 2017. In addition, he is a founder of A to B Capital Management and manages the A to B Capital
Special Situations Fund, LP which was launched on January 1, 2009. The fund invests in the small cap sector through private, pre-public and publicly traded companies. In
addition, he has been a Vice President of Barry Kaplan Associates for the past 22 years, a leading financial public relations firm for both public and private companies in the
US, Canada and abroad. Prior to working at BKA, he had six years’ experience working at major investment banks involved in deal structure, mergers and acquisitions and
trading. Mr. Kaplan is a member of the Board of Directors for Coral Gold Resources, Ltd. and a former member of the Board of PolarityTE, Inc. and Naked Brand Group. He
holds a BSBA from the University of Hartford in Finance and Insurance. Mr. Kaplan is qualified to serve as a director due to his extensive business and management expertise
and his extensive knowledge of capital markets.
Douglas Newby has been serving on our Board from September 2019 to the present. Mr. Newby has a 35-year career in financial analysis, corporate finance and corporate
management specializing in the international mining industry. He has served as Chief Financial Officer of USA Rare Earth, LLC from October 2019 to the present. From June
2017 to October 2019 has was primarily focused on his role as President of Proteus Capital Corp., a corporate advisory firm that he has owned since he formed it in 2001. From
November 2005 to June 2017 he served as Chief Financial Officer of PolyMet Mining Corp., a Canadian company developing a large copper-nickel project in Minnesota, and
as a member of the board of directors of PolyMet Mining, Inc. Mr. Newby was actively involved in all aspects of the company’s development, including developing a strategy
for a complex environmental review process that was successfully completed during his tenure, resulting in state and federal permits being issued. Mr. Newby also managed
financial reporting, internal controls, and raising more than $300 million in equity and debt and establishing and maintaining a strategic relationship with Glencore plc. Prior to
joining PolyMet in 2005, Mr. Newby was Chairman, President, Chief Executive Officer and a director of Western Goldfields Inc., where he arranged finance for and negotiated
the acquisition of the Mesquite gold mine from Newmont Mining in November 2003. Western Goldfields subsequently formed a core part of the formation of New Gold Inc.
He started his career as an institutional investment analyst and corporate finance specialist in London and New York. He has a B.Sc.(honors) degree in mathematics from Kings
College London. Mr. Newby is qualified to serve on our Board because of his more than 35 years of evaluation, financing and executive management of mines and mining
companies around the world.
56
David Rector is our Chief Operating Officer and Corporate Secretary and has been with us since April 2016. Since 1985, Mr. Rector has been the Principal of The David
Stephen Group, which provides enterprise consulting services to emerging and developing companies in a variety of industries. In addition, he was the Chief Executive Officer
of Sevion Therapeutics, Inc. from January 2015 to December 2017, and a director since February 2002. Mr. Rector served as a director and member of the compensation and
audit committee of the Dallas Gold and Silver Exchange Companies Inc. (formerly Superior Galleries, Inc.) from May 2004 to September 2015. From November 2012 through
January 2014, Mr. Rector has served as the CEO and President of Valor Gold. From February 2012 through January 2013, Mr. Rector has served as the VP Finance &
Administration of Pershing Gold Corp. From May 2011 through February 2012, Mr. Rector served as the President of Sagebrush Gold, Ltd. From October 2007 through
February 2013, Mr. Rector has served as President and CEO of Standard Drilling, Inc. From May 2004 through December 2006, Mr. Rector had served in senior management
positions with Nanoscience Technologies, Inc., a development stage company engaged in the development of DNA Nanotechnology. From 1983 until 1985, Mr. Rector served
as President and General Manager of Sunset Designs, Inc., a domestic and international manufacturer and marketer of consumer product craft kits, and a wholly-owned
subsidiary of Reckitt & Coleman N.A. From 1980 until 1983, Mr. Rector served as the Director of Marketing of Sunset Designs. From 1971 until 1980, Mr. Rector served in
progressive roles in the financial and product marketing departments of Crown Zellerbach Corporation, a multi-billion-dollar pulp and paper industry corporation. Mr. Rector
received a Bachelor of Science degree in Business/Finance from Murray State University in 1969.
Ted Sharp has been our Chief Financial Officer, Principal Financial and Accounting Officer since December 2018. Mr. Sharp is a Certified Public Accountant and has
Bachelor of Business Administration Degree in Accounting from Boise State University. Since 2003, he has been President of Sharp Executive Associates, Inc., a privately-
held accounting firm providing Chief Financial Officer services to clients. Concurrent with his position with us, Mr. Sharp serves part-time as Chief Financial Officer of
Goldrich Mining Company, from February 2006 through the present; from September 2018 through the present, serves part-time as Chief Financial Officer of Timberline
Resources Corporation; from July 2012 through the present, as principal and serves part-time as Chief Executive and Financial Officer of US Calcium LLC, a privately-held
natural resource company. From May 2011 through January 2012, Mr. Sharp served part-time as Chief Financial Officer of Gryphon Gold Corporation, a natural resource
company trading on the FINRA OTCBB, and from September 2008 through November 2010, Mr. Sharp served part-time as Chief Executive Officer, President and Chief
Financial Officer of Texada Ventures, Inc, a natural resource exploration company formerly trading on the FINRA OTCBB. From November of 2006 to June 2009, Mr. Sharp
served part-time as Chief Financial Officer of Commodore Applied Technologies, Inc., an environmental solutions company formerly trading on the FINRA OTCBB. Prior to
2003, he worked for 14 years in positions of Chief Financial Officer, Managing Director of European Operations and Corporate Controller for Key Technology, Inc., a publicly-
traded manufacturer of capital goods. Mr. Sharp has more than 30 years of experience in treasury management, internal financial controls, SEC reporting and Corporate
Governance.
Family Relationships
There are no family relationships among any of our directors or executive officers.
Involvement in Certain Legal Proceedings
No director, executive officer or control person has been involved in any legal proceeding listed in Item 401(f) of Regulation S-K in the past 10 years.
General
Corporate Governance
We believe that good corporate governance is important to ensure that we are managed for the long-term benefit of our stockholders. This section describes key corporate
governance practices that we have adopted.
57
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our directors, executive officers and shareholders who own more than 10% of our stock to file forms with the SEC to report their
ownership of our stock and any changes in ownership. We assist our directors and executive officers by identifying reportable transactions of which it is aware and preparing
and filing their forms on their behalf. All persons required to file forms with the SEC must also send copies of the forms to us. We have reviewed all forms provided to us.
Based on that review and on written information given to use by our executive officers and directors, we believe that all Section 16(a) filings during the past fiscal year were
filed on a timely basis and that all directors, executive officers and 10% beneficial owners have fully complied with such requirements during the past fiscal year except for four
late filings related to six transactions involving David Mathewson, our former Vice-President and Head of Exploration.
Independence of Directors
Our Board is currently comprised of six members, five of whom are independent directors. Mr. Karr is not an independent director. Officers are appointed and serve at the
discretion of our board of directors.
The Board, upon recommendation of the Nominating and Corporate Governance Committee, unanimously determined that each of our five non-employee directors is
“independent,” as such term is defined in the NASDAQ Stock Market Rules (“Stock Market Rules”).
The definition of “independent director” included in the Stock Market Rules includes a series of objective tests, such as that the director is not an employee of the Company,
has not engaged in various types of specified business dealings with the Company, and does not have an affiliation with an organization that has had specified business dealings
with the Company. Consistent with the Company’s Corporate Governance Principles, the Board’s determination of independence is made in accordance with the Stock Market
Rules, as the Board has not adopted supplemental independence standards. As required by the Stock Market Rules, the Board also has made a subjective determination with
respect to each director that such director has no material relationship with the Company (either directly or as a partner, shareholder or officer of an organization that has a
relationship with the Company), even if the director otherwise satisfies the objective independence tests included in the definition of an “independent director” included in the
Stock Market Rules.
In determining that each individual who served as a member of the Board is independent, the Board considered that, in the ordinary course of business, transactions may occur
between the Company and entities with which some of our directors are affiliated. The Board unanimously determined that the relationships discussed below were not material.
No unusual discounts or terms were extended.
Board Leadership Structure
The Board believes that our shareholders are best served if the Board retains the flexibility to adapt its leadership structure to applicable facts and circumstances, which
necessarily change over time. Accordingly, our Corporate Governance Principles provide that the Board may combine or separate the roles of the CEO and chairman, as it
deems advisable and in the best interests of us and our shareholders.
The independent directors have concluded that the most effective leadership structure for us at the present time is for Mr. Karr to serve as our CEO. and Mr. Braca as Chairman.
The Board made this determination in light of Mr. Karr and Mr. Braca’s experience, which allow them to bring to the Board a broad and uniquely well-informed perspective on
our business, as well as insight into the trends and opportunities that can affect our future. In adopting the structure, the Board also concluded that the strong independent
membership of the Board and its standing committees ensures robust and effective communication between the directors and members of management, and that the overall
leadership structure is effective in providing the Board with a well-informed and current view of our business that enhances its ability to address strategic considerations, as
well as focus on the opportunities and risks that are of greatest importance to us and our shareholders. The Board believes this structure has served us well since September
2018.
Under our Corporate Governance Principles, the Board has the flexibility to modify or continue the leadership structure, as it deems appropriate. As part of its ongoing
evaluation of the most effective leadership structure for us, in September 2018, the independent directors decided to separate the roles of CEO and Chairman, and also appoint a
lead director. The independent directors believe that having a lead director enhances the Board’s independent oversight of management by further providing for strong
independent leadership; independent discussion among directors; and independent evaluation of, and communication with, our senior management. Mr. Braca currently serves
as Chairman of the Board lead director and has since September 2018. The independent directors unanimously approved Mr. Braca to be Chairman and lead director based on
his experience knowledge of governance practices, strategic considerations, and our business interests.
58
Specific duties of the lead director include:
●
●
●
●
●
●
●
●
●
presiding at meetings of the independent directors;
serving as a liaison between the chairman and the independent directors;
consulting on meeting agendas;
working with management to assure that meeting materials are fulfilling the needs of directors;
consulting on the meeting calendar and schedules to assure there is sufficient time to discuss all agenda items;
calling meetings of the independent directors, including at the request of such directors;
presiding at Board meetings when the chairman is not present;
working with the independent directors to respond to shareholder inquiries involving the Board; and
performing such other duties as the Board may from time to time delegate.
Director Attendance at Board, Committee, and Other Meetings
Directors are expected to attend Board meetings and meetings of the committees on which they serve, with the understanding that on occasion a director may be unable to attend
a meeting. The Board does not have a policy on director attendance at our annual meeting.
The non-management directors (who also constitute all of the independent directors) meet in executive sessions in connection with regularly scheduled Board meetings and at
such other times as the non-management directors deem appropriate. During the fiscal year ended April 30, 2020, these sessions were led by the lead director.
During the fiscal year ended April 30, 2020, the Board held 7 regular and special meetings, the non-management directors did not hold regular and special executive sessions,
the Audit Committee held 4 regular and special meetings, the Compensation Committee held 3 regular and special meetings, and the Nominating and Corporate Governance
Committee held 2 regular and special meetings. With the exception of one director absent from one meeting, each director attended 100% of the regular and special meetings of
the Board and of the committees on which he or she served that were held during his or her term of office.
Board Role in Risk Oversight
Our Board plays an active role in our risk oversight. The Board does not have a formal risk management committee but administers this oversight function through various
standing committees of the Board, which are described below. The Audit Committee periodically reviews overall enterprise risk management, in addition to maintaining
responsibility for oversight of financial reporting-related risks, including those related to our accounting, auditing and financial reporting practices. The Audit Committee also
reviews reports and considers any material allegations regarding potential violations of our Code of Ethics and Business Conduct (the “Code of Ethics” or the “Code”). The
Compensation Committee oversees risks arising from our compensation policies and programs. This Committee has responsibility for evaluating and approving our executive
compensation and benefit plans, policies and programs. The Nominating Committee oversees corporate governance risks and oversees and advises the Board with respect to our
policies and practices regarding significant issues of corporate responsibility.
The Board of Directors has a process for shareholders to communicate with directors. Shareholders should write to the President at our mailing address and specifically request
that a copy of the letter be distributed to a particular Board member or to all Board members. Where no such specific request is made, the letter will be distributed to Board
members if material, in the judgment of the President, to matters on the Board’s agenda.
Committees of the Board
Our Board has three standing committees: Audit, Compensation, and Nominating and Corporate Governance. Each of the committees is solely comprised of and chaired by
independent directors, each of whom the Board has affirmatively determined is independent pursuant to the Stock Market Rules. Each of the committees operates pursuant to its
charter. The committee Charters are reviewed annually by the Nominating and Corporate Governance Committee. If appropriate, and in consultation with the chairs of the other
committees, the Nominating and Corporate Governance Committee proposes revisions to the charters. The responsibilities of each committee are described in more detail below.
The charters for the three committees are available on our website at www.usgoldcorp.gold by following the link to “Investor Relations” and then to “Corporate Governance.”
59
Audit Committee
The Audit Committee, among other things, is responsible for:
●
●
●
●
●
●
●
appointing; approving the compensation of; overseeing the work of; and assessing the independence, qualifications, and performance of the independent
auditor;
reviewing the internal audit function, including its independence, plans, and budget;
approving, in advance, audit and any permissible non-audit services performed by our independent auditor;
reviewing our internal controls with the independent auditor, the internal auditor, and management;
reviewing the adequacy of our accounting and financial controls as reported by the independent auditor, the internal auditor, and management;
overseeing our financial compliance system; and
overseeing our major risk exposures regarding our accounting and financial reporting policies, the activities of our internal audit function, and information
technology.
The Audit Committee has reviewed and discussed our audited financial statements for the year ended April 30, 2020 with our management and has discussed with Marcum, the
matters required to be discussed by the statement on Auditing Standards No. 61, as amended, as adopted by the Public Company Accounting Oversight Board in Rule 3200T.
The Board has affirmatively determined that each member of the Audit Committee meets the additional independence criteria applicable to audit committee members under
SEC rules and the Stock Market Rules. The Board of Directors has adopted a written charter setting forth the authority and responsibilities of the Audit Committee. The Board
has affirmatively determined that John Braca meets the qualifications of an Audit Committee financial expert. Our Audit Committee currently consists of the following
members: Douglas Newby, John Braca and Andrew Kaplan. Mr. Newby serves as Chairman of the Audit Committee. The Company is in compliance with NASDAQ Listing
Rule 5605(2)(A), which requires at least 3 independent directors serve on the Audit Committee.
Compensation Committee
The Compensation Committee was formed in October 2014. Among other things, it is responsible for:
●
●
●
●
reviewing and making recommendations to the Board with respect to the compensation of our officers and directors, including the CEO;
overseeing and administering our executive compensation plans, including equity-based awards;
negotiating and overseeing employment agreements with officers and directors; and
overseeing how our compensation policies and practices may affect our risk management practices and/or risk-taking incentives.
The Board has adopted a written charter setting forth the authority and responsibilities of the Compensation Committee. Our Compensation Committee currently consists of the
following members: John Braca, Ryan Zinke and Andrew Kaplan. Mr. Kaplan serves as Chairman of the Compensation Committee. The Board has affirmatively determined
that each member of the Compensation Committee meets the additional independence criteria applicable to compensation committee members under SEC rules and the Stock
Market Rules.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee, among other things, is responsible for:
●
●
●
●
●
●
●
●
reviewing and assessing the development of the executive officers, and considering and making recommendations to the Board regarding promotion and
succession issues;
evaluating and reporting to the Board on the performance and effectiveness of the directors, committees, and the Board as a whole;
working with the Board to determine the appropriate and desirable mix of characteristics, skills, expertise, and experience, including diversity considerations,
for the full Board and each committee;
annually presenting to the Board a list of individuals recommended to be nominated for election to the Board;
reviewing, evaluating, and recommending changes to our Corporate Governance Principles and committee Charters;
recommending to the Board individuals to be elected to fill vacancies and newly created directorships;
overseeing our compliance program, including the Code of Ethics; and
overseeing and evaluating how our corporate governance and legal and regulatory compliance policies and practices, including leadership, structure, and
succession planning, may affect our major risk exposures.
60
The Board of Directors has adopted a written charter setting forth the authority and responsibilities of the Corporate Governance/Nominating Committee. Our Nominating and
Corporate Governance Committee currently consists of the following members: John Braca, Andrew Kaplan and Ryan Zinke. Mr. Kaplan serves as Chairman of the
Nominating and Corporate Governance Committee. Andrew Kaplan served as chairman of the Compensation Committee for the fiscal year ended April 30, 2020.
Consideration of Director Nominees
As specified in our Corporate Governance Principles, we seek directors with the highest standards of ethics and integrity, sound business judgment, and the willingness to make
a strong commitment to us and our success. The Nominating and Corporate Governance Committee works with the Board on an annual basis to determine the appropriate and
desirable mix of characteristics, skills, expertise, and experience for the full Board and each committee, taking into account both existing directors and all nominees for election
as directors, as well as any diversity considerations and the membership criteria reflected in the Corporate Governance Principles. The Nominating and Corporate Governance
Committee and the Board, which do not have a formal diversity policy, consider diversity in a broad sense when evaluating board composition and nominations; and they seek
to include directors with a diversity of experience, professions, viewpoints, skills, and backgrounds that will enable them to make significant contributions to the Board and us,
both as individuals and as part of a group of directors. The Board evaluates each individual in the context of the full Board, with the objective of recommending a group that can
best contribute to the success of the business and represent shareholder interests through the exercise of sound judgment. In determining whether to recommend a director for
re-election, the Nominating and Corporate Governance Committee also considers the director’s attendance at meetings and participation in and contributions to the activities of
the Board and its committees.
The Nominating and Corporate Governance Committee will consider director candidates recommended by shareholders, and its process for considering such recommendations
is no different than its process for screening and evaluating candidates suggested by directors, management, or third parties.
Corporate Governance Matters
We are committed to maintaining strong corporate governance practices that benefit the long-term interests of our shareholders by providing for effective oversight and
management of our company. Our governance policies, including our Corporate Governance Principles, Code of Ethics, and Committee Charters can be found on our website at
www.usgoldcorp.gold by following the link to “Investors” and then to “Corporate Governance” and then to “Governance Documents.”
The Nominating and Corporate Governance Committee regularly reviews our Corporate Governance Principles, Code of Ethics, and Committee Charters to ensure that they
take into account our developments, changes in regulations and listing requirements, and the continuing evolution of best practices in the area of corporate governance.
The Board conducts an annual self-evaluation in order to assess whether the directors, the committees, and the Board are functioning effectively.
Code of Ethics
Our Code of Ethics which was amended and restated as of November 2018, applies to our employees, directors, officers, contractors, consultants, and persons performing
similar functions (“Covered Persons”). This includes our CEO and Chairman, our CFO, and our controller/treasurer. We require that they avoid conflicts of interest, comply
with applicable laws, protect our assets, and conduct business in an ethical and responsible manner and in accordance with the Code. The Code prohibits employees from taking
unfair advantage of our business partners, competitors, and employees through manipulation, concealment, misuse of confidential or privileged information, misrepresentation
of material facts, or any other practice of unfair dealing or improper use of information. The Code requires employees to comply with all applicable laws, rules, and regulations
wherever in the world we conduct business. This includes applicable laws on privacy and data protection, anti-corruption and anti-bribery, and trade sanctions. Our Code was
initially amended and restated in 2014 (and subsequently amended and restated in 2015, 2017 and 2018) to better reflect our expanding global operations and diverse employee
base, enhance its clarity and general readability, and to make other stylistic changes to more closely align the Code with our overall brand. The Code is incorporated herein by
reference to this Annual Report as Exhibit 14.1. In addition, the Code is publicly available and can be found on our website at www.usgoldcorp.gold by following the link to
“Investors” and then to “Corporate Governance” and may be reviewed by accessing our public filings at the SEC’s website at www.sec.gov. A copy of our Code of Ethics is
available without charge, to any person desiring a copy of the Code of Ethics, by written request to us at our principal offices at 1910 E. Idaho Street, Suite 102-Box 604, Elko,
NV 89801.
61
If we make substantive amendments to the Code, or grant any waiver, including any implicit waiver, from a provision of the Code to our CEO and Chairman, CFO,
controller/treasurer, and any of our other officers, financial professionals, and persons performing similar functions, we will disclose the nature of such amendment or waiver on
our website or in a report filed with the SEC on Form 8-K.
Item 11. EXECUTIVE COMPENSATION
The following table summarizes all compensation awarded to, earned by, or paid to our former or current executive officers for the fiscal years ended April 30, 2020 and 2019.
Year
Salary
($)(1)
Bonus
($)(2)
Stock
Awards
($)(4)
Option
awards
($)(4)
Non-equity
incentive plan
compensation
($)
Change in
pension
value and
nonqualified
deferred
compensation
earnings
($)
All other
compensation
($)
Total
($)
2020 $ 250,000 $
2019 $ 250,000 $
- $ 428,500 $
- $
- $ 250,000 $ 118,613 $
2020 $ 180,000 $
2019 $ 180,000 $
- $ 251,270 $
- $
- $ 180,000 $ 59,306 $
2020 $
2019 $
- $
- $
- $
- $
- $ 30,865 $
- $
- $
- $
- $
- $
- $
- $
- $
- $
- $
- $
- $
- $ 678,500
- $ 618,613
- $ 431,270
- $ 419,306
- $
- $
50,405 $ 81,270
43,867 $ 43,867
Name and
principal
position (1)
Edward M. Karr
Chief Executive Officer (PEO)
David Rector
Chief Operating Officer (COO)
Ted Sharp(5)
Principal Financial and Accounting
Officer
Notes:
(1) All executives have employment agreements with U.S. Gold Corp.
(2) The annual bonus for the executives is determined by the Board of Director’s Compensation Committee and subject to annual review and renegotiation. The current bonus
targets for each executive as a percentage of base salary are as follows:
a.
b.
President and Chief Executive Officer (CEO): 100%
Chief Operating Officer (COO): 100%
(3) Ted Sharp was appointed as Chief Financial Officer on January 1, 2019.
(4) In accordance with SEC rules, this column reflects the aggregate fair value of the stock awards or option awards, as applicable, granted during the respective fiscal year
computed as of their respective grant dates in accordance with Financial Accounting Standard Board Accounting Standards Codification Topic 718 for share-based
compensation transactions. The assumptions made in the valuation of the share-based payments are contained in Note 2 to our financial statements included in this Annual
Report.
62
Outstanding Equity Awards at Year-End
The following table shows grants of stock options and grants of unvested stock awards outstanding on the last day of the fiscal year ended April 30, 2020, to each of the then
executive officers and directors named in the Summary Compensation Table.
Option Awards
Stock Awards
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
Option
Exercise
Price ($)
Option
Expiration
Date
Number of
Shares or
Units of Stock
That Have Not
Vested (#)
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)
5,000
37,500
18,750
-
1,041
5,000
-
5,000
-
12,500
6,250
-
3,959
-
-
-
14.70
14.70
14.70
-
12/21/2022
12/21/2022
12/21/2022
-
8.10 11/26/2029
14.70
-
14.70
12/21/2022
-
12/21/2022
-
20,000
7,500
-
-
-
-
-
-
206,000
77,250
-
-
-
-
-
Name
Andrew Kaplan
Edward Karr(1)
David Rector(1)
Douglas Newby
Ted Sharp
Timothy M. Janke
Ryan Zinke
John N. Braca
(1) Unvested option shares vest on December 21, 2021, unvested shares of common stock vest on the first to occur of the following: (i) a change in control or (ii) a material
discovery of a mineral deposit by the Company.
The following table represents stock options that have been exercised and restricted stock awards that have vested as of April 30, 2020.
Name
Edward Karr
David Rector
Timothy M. Janke
Douglas Newby
John N. Braca
Ted Sharp
Andrew Kaplan
Ryan Zinke
Option Awards
Stock Awards
Number of
Shares
Acquired on
Exercise (#)
Value
Realized on
Exercise ($)
Number of
Shares
Acquired on
Vesting
(#)(a)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,000
10,000
7,950
6,200
8,700
-
9,600
5,000
Value
Realized on
Vesting ($)
198,000
99,000
79,492
60,146
84,896
-
97.975
51,500
Employment and Separation Agreements
We have current and active employment and/or separation agreements with executive officers as noted below.
On October 1, 2018, we entered into an employment agreement with our Chief Executive Officer, Edward Karr. The initial term of the Agreement is for two years ending on
April 30, 2020, with automatic renewals for successive one-year terms unless terminated by written notice at least 90 days prior to the expiration of the term. Mr. Karr receives a
base salary of $250,000 per year. The agreement provides for a bonus in an amount up to the amount of the base salary, to be awarded in the discretion of the board of directors
and to be paid in cash, stock, or a combination thereof in the discretion of the board. The agreement contains a change of control provision of one year’s salary plus bonus. Mr.
Karr was issued 20,000 restricted stock units and 12,500 options to purchase shares of common stock vested during the year ended April 30, 2020. He was issued 40,000
restricted stock units and 12,500 options to purchase shares of common stock vested during the year ended April 30, 2019.
63
On October 1, 2018, we entered into an employment agreement with our Chief Operating Officer, and former Chief Financial Officer, David Rector (“COO”). The initial term
of the agreement is for one year, with automatic renewals for successive one-year terms unless terminated by written notice at least 30 days prior to the expiration of the term.
Mr. Rector receives a base salary of $15,000 per month. The agreement provides for a bonus in an amount up to the amount of the base salary, to be awarded in the discretion of
the board of directors and to be paid in cash, stock, or a combination thereof in the discretion of the board. The agreement contains a change of control provision of one year’s
salary plus bonus. Mr. Rector was issued 7,500 restricted stock units during the year ended April 30, 2020. He was issued 20,000 restricted stock units and 6,250 options to
purchase shares of common stock vested during the year ended April 30, 2019.
Effective on November 30, 2018, we entered into a consulting agreement in connection with the appointment of our Chief Financial Officer, Ted Sharp. The agreement is with
Sharp Executive Associates, Inc., where Ted Sharp serves as the President. In connection with this agreement between us and Sharp Executive Associates, Inc., Mr. Sharp acts
as our Principal Financial and Accounting Officer. This Agreement may be terminated upon thirty-day notice by either party. Mr. Sharp’s firm was paid $50,405 and $43,867
in consulting fees for the years ended April 30, 2020 and 2019, respectively. He was also issued options to purchase 5,000 shares of common stock during the year ended April
30, 2020.
Director Compensation
The following table shows the total compensation paid or accrued during the fiscal year ended April 30, 2020 to each of our directors, current and former.
Name
Edward M. Karr
Timothy M. Janke
John N. Braca
Douglas Newby
Andrew Kaplan
Ryan Zinke (3)
Fees
Earned or
Paid in
Cash ($)
Stock
Awards
($) (1)
Option
Awards
($) (2)
All Other
Compensation
($)
$
$
$
$
$
$
-
24,000
24,000
12,844
24,000
23,143
$
$
$
$
$
$
-
54,742
60,146
60,146
57,985
51,500
$
$
$
$
$
$
-
-
-
-
-
-
$
$
$
$
$
$
-
-
-
-
-
45,000
$
$
$
$
$
$
Total ($)
-
78,742
84,146
72,990
81,985
119,643
* Share ownership and option awards for each director are disclosed below in Item 12, Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
(1) Represents the aggregate grant date fair value for stock awards granted by us in fiscal year 2020 computed in accordance with FASB ASC Topic 718. See Note 8 to our
consolidated financial statements reported in our Annual Report on Form 10-K for fiscal year ended April 30, 2020 for details as to the assumptions used to determine
the fair value of the stock awards.
(2) Represents the aggregate grant date fair value for options granted by us in fiscal year 2020 computed in accordance with FASB ASC Topic 718. See Note 8 to our
consolidated financial statements reported in our Annual Report on Form 10-K for fiscal year ended April 30, 2020 for details as to the assumptions used to determine
the fair value of the option awards.
(3) Concurrent with the appointment of Mr. Zinke to our Board, we retained Mr. Zinke as a consultant, pursuant to such arrangement Mr. Zinke will provide certain
consulting services under the terms of the consulting agreement. Effective April 16, 2019, the consulting agreement was expanded, to which Mr. Zinke will provide
certain consulting services to us, including investor relations and governmental relations services. We agreed to pay for Mr. Zinke’s services at a rate of $90,000 per
year, with $45,000 per year or $3,750 per month payable in cash and $45,000 payable in our common stock. We may terminate the agreement at any time. Mr. Zinke
also will be reimbursed for reasonable expenses provided that no such expenses will result in aggregate payments from us to Mr. Zinke in excess of $120,000 during any
12-month period.
Director Compensation Policy
We pay members of our Board $6,000 per quarter and compensate the Board through the issuance of stock option awards and restricted stock.
64
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of July 13, 2020, the number of and percent of our common stock beneficially owned by: (1) all directors and nominees,
naming them; (2) our executive officers; (3) our directors and executive officers as a group; and (4) persons or groups known by us to own beneficially 5% or more of our
voting securities. Except as otherwise indicated, each of the shareholders listed below has sole voting and investment power over the shares beneficially owned and addresses
are c/o U.S. Gold Corp., 1910 E., Idaho Street, Suite 102-Box 604, Elko, NV 89801.
Name of Beneficial Owner
John N. Braca(4)
Timothy M. Janke(5)
Edward M. Karr(6)
Andrew Kaplan(7)
Douglas Newby
David Rector(8)
Ted Sharp(9)
Ryan K. Zinke
Directors and Executive Officers as a group (8 persons)
5% or Greater Shareholders
* Less than 1%.
Amount and Nature of
Beneficial Ownership (1,2,3)
Number
Percent
16,315
17,648
185,566
18,350
6,200
97,918
4,372
9,592
355,961
-
*
*
6.3%
*
*
3.3%
*
*
11.9%
-
(1) The number of shares has been adjusted to reflect the reverse 1-for-10 reverse stock split effective March 17, 2020.
(2) On July 13, 2020, 2,919,867 shares of Common Stock and Common Stock equivalents were outstanding.
(3) Beneficial ownership includes all stock options and restricted awards held by a shareholder that are currently exercisable or exercisable within 60 days of July 13, 2020.
(4)
(5)
(6)
Includes options to purchase 5,000 shares of common stock at an exercise price of $14.70 per share.
Includes options to purchase 5,000 shares of common stock at an exercise price of $14.70 per share.
Includes options to purchase 37,500 shares of common stock at an exercise price of $14.70 per share. Does not include options to purchase 12,500 shares of common
stock that are not exercisable within 60 days of the date of this report.
Includes options to purchase 5,000 shares of common stock at an exercise price of $14.70 per share.
Includes options to purchase 18,750 shares of common stock at an exercise price of $14.70 per share. Does not include options to purchase 6,250 shares of common
stock that are not exercisable within 60 days of the date of this report.
Includes options to purchase 1,456 shares of common stock at an exercise price of $8.10 per share. Does not include options to purchase 3,544 shares of common stock
that are not exercisable within 60 days of the date of this report.
(7)
(8)
(9)
65
EQUITY COMPENSATION PLAN INFORMATION
In August 2017, the Company’s Board of Directors approved the Company’s 2017 Equity Incentive Plan (the “2017 Plan”) including the reservation of 165,000 shares of
common stock thereunder.
On August 6, 2019, the Board of Directors of the Company approved and adopted, subject to stockholder approval, the U.S. Gold Corp. 2020 Stock Incentive Plan (the “2020
Plan”). The 2020 Plan reserves 330,710 shares for future issuance to officers, directors, employees and contractors as directed from time to time by the Compensation
Committee of the Board of Directors. The Board directed that the 2020 Plan be submitted to the Company’s stockholders for their approval at the 2019 Annual Meeting of
Stockholders of the Company (the “Annual Meeting”), which was held on September 18, 2019. The 2020 Plan was approved by a vote of stockholders at the Annual Meeting.
With the approval and effectivity of the 2020 Plan, no further grants will be made under the 2017 Plan.
Equity Compensation Plan Information (as of April 30, 2020)
Plan Category
Equity compensation plans approved by security
holders
Equity compensation plans not approved by security
holders
Total
(a)
Number of Securities to
be Issued Upon Exercise
of Outstanding Options,
Warrants and Rights
(b)
Weighted-average
Exercise Price of
Outstanding Options,
Warrants and Rights
(c)
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding
Securities
Reflected in Column (a)
100,000
-
100,000
14.31
-
14.31
230,710
-
230,710
In addition to our 2020 Plan, we may grant options or issue equity under employment and consulting agreements, subject to the requirements of NASDAQ. During the fiscal
year ended April 30, 2020, there were no options granted.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
The Audit Committee has responsibility for reviewing and, if appropriate, for approving any related party transactions that would be required to be disclosed pursuant to
applicable SEC rules.
Described below are any transactions during the fiscal year ended April 30, 2020 and 2019 and any currently proposed transactions to which we were a party in which:
●
●
The amounts involved exceeded or will exceed the lower of either $120,000 or 1% of the average of our total assets at year-end for the last two completed fiscal
years; and
A director, executive officer, holder of more than 5% of our outstanding capital stock, or any member of such person’s immediate family had or will have a
direct or indirect material interest.
Apart from any transactions disclosed herein, no such transaction was entered into with any director or executive officer during the last two fiscal years. Such transactions were
entered into and will be entered into only if found to be in our best interest and approved in accordance with our Code of Ethics, which are available on our website.
For the fiscal year ended April 30, 2020, we entered into the following transactions.
Employment agreements with our corporate officers, Mr. Karr, our Chief Executive Officer, and Mr. Rector, our Chief Operating Officer, whose annual compensations
are $250,000 and $180,000, respectively, with bonuses paid in the discretion of the Board, as described in Employment and Separation Agreements above.
An engagement letter with Sharp Executive Associates, Inc., a consulting firm owned by Mr. Sharp, our Chief Financial Officer. Through Sharp Executive Associates,
Inc, Mr. Sharp is compensated by the hour for time expended in his service as an officer of the Company. Mr. Sharp may also receive stock or option awards
commensurate with his service as an executive officer. Mr. Sharp receives 10% of his fees in the form of shares of the Company’s common stock, valued at market
prices on the date of issuance. His compensation for our fiscal years ended April 30, 2020 and 2019 in cash and stock was $50,405 and $43,867, respectively. In
addition, Mr. Sharp received 5,000 options during the year ended April 30, 2020 with a fair value of $30,865.
Accounts payable to related parties as of April 30, 2020 and 2019 was $3,459 and $42,539, respectively, and was reflected as accounts payable – related party in the
accompanying consolidated balance sheets. The related party to which accounts were payable as of April 30, 2020 was the Chief Financial Officer, who was owed a total
of $3,459 (includes $2,700 payable in shares of common stock). The related parties to which accounts were payable as of April 30, 2019 were the former Vice President-
Head of Exploration, who was owed $12,500 payable in shares of common stock and the Chief Financial Officer, who was owed a total of $30,039 (includes $14,403
payable in shares of common stock). The amounts payable in shares of common stock to these two related parties were fully vested at the date of issuance.
One director provided consulting services to us and was paid total consulting fees in the amount of $0 and $12,500 during the years ended April 30, 2020 and 2019,
respectively.
On April 16, 2019, we entered into a one-year consulting agreement with Ryan Zinke, a director, to provide services related to investor and strategic introductions to
potential industry partners and assistance with governmental relations. In consideration for the services, the consultant shall be paid $3,750 per month in cash, for a total
of $45,000, and shares of our common stock with a value of $45,000. In April 2019, we issued 4,592 shares of our common stock in connection with this consulting
agreement. We paid a total of $90,000 in cash and shares for consulting fees to Mr. Zinke during the year ended April 30, 2020.
66
Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The following table sets forth the aggregate fees billed to us for the last two fiscal years by our independent accounting firm KBL and Marcum:
Audit Fees (1)
Audit Related Fees (2)
Tax Fees (3)
Other Fees (4)
Total fees
2020
2019
97,490
-
-
-
97,490
$
$
103,694
12,013
-
-
115,707
$
$
(1) Audit Fees: Audit fees paid to KBL and Marcum and for professional services associated with the annual audit, the reviews of our quarterly reports on Form 10-Q,
statutory and subsidiary audits required in certain locations, consultations concerning financial accounting and reporting standards, and regulatory filings.
(2) Audit Related Fees: For assurance and related services that were reasonably related to the performance of the audit or review of financial statements and not reported
under “Audit Fees”.
(3) Tax Fees: Consist of fees billed for professional services for tax compliance, tax advice and tax planning. These services include preparation of federal and state income
tax returns.
(4) Other Fees: Consist of fees for product and services other than the services reported above.
Audit Committee Pre-approval Policies and Procedures
Our Audit Committee assists the Board of Directors in overseeing and monitoring the integrity of our financial reporting process, its compliance with legal and regulatory
requirements and the quality of its internal and external audit processes. The role and responsibilities of the Audit Committee are set forth in a written charter adopted by the
Board of Directors, which is available on our website at www.usgoldcorp.gold. The Audit Committee is responsible for selecting, retaining and determining the compensation of
our independent public accountant, approving the services they will perform, and reviewing the performance of the independent public accountant. The Audit Committee
reviews with management and our independent public accountant our annual financial statements on Form 10-K and our quarterly financial statements on Forms 10-Q. The
Audit Committee reviews and reassesses the charter annually and recommends any changes to the Board of Directors for approval. The Audit Committee is responsible for
overseeing our overall financial reporting process. In fulfilling its responsibilities for the financial statements for fiscal year 2020, the Audit Committee took the following
actions:
●
●
●
reviewed and discussed the audited financial statements for the fiscal year ended April 30, 2020 with management and Marcum, our independent public
accountant;
discussed with Marcum the matters required to be discussed in accordance with the rules set forth by the Public Company Accounting Oversight Board
(“PCAOB”), relating to the conduct of the audit; and
received written disclosures and the letter from Marcum regarding its independence as required by applicable requirements of the PCAOB regarding Marcum
communications with the Audit Committee and the Audit Committee further discussed with Marcum its independence. The Audit Committee also considered
the status of pending litigation, taxation matters and other areas of oversight relating to the financial reporting and audit process that the Audit Committee
determined appropriate.
Our Audit Committee approved all services that our independent accountants provided to us in the past two fiscal years.
67
Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
The following documents are filed as part of this report:
EXHIBIT INDEX
PART IV
2.1
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
3.10
3.11
4.1
Articles of Merger as filed with the Nevada Secretary of State on May 23, 2017. Incorporated by reference from Exhibit 3.1 to a Current Report on Form 8-K filed with
the Securities and Exchange Commission, SEC file number 001-08266, on May 26, 2017.
Articles of Incorporation filed with the Secretary of State of the State of Nevada. Incorporated by reference from the Current Report on Form 8-K filed with the
Securities and Exchange Commission, SEC file number 001-08266, on January 8, 2016.
Certificate of Amendment to Articles of Incorporation dated July 6, 2016. Incorporated by reference from the Current Report on Form 8-K filed with the Securities and
Exchange Commission, SEC file number 001-08266, on July 8, 2016.
Certificate of Designation of Preferences, Rights and Limitations of Series A Preferred Stock. Incorporated by reference from the Current Report on Form 8-K filed with
the Securities and Exchange Commission, SEC file number 001-08266, on January 8, 2016.
Certificate of Designations, Preferences and Rights of 0% Series B Convertible Preferred Stock. Incorporated by reference from the Current Report on Form 8-K filed
with the Securities and Exchange Commission, SEC file number 001-08266, on January 21, 2016.
Certificate of Designation of Rights, Powers, Preferences, Privileges and Restrictions of 0% Series D Convertible Preferred Stock. Incorporated by reference from the
Current Report on Form 8-K filed with the Securities and Exchange Commission, SEC file number 001-08266, on August 5, 2016.
Certificate of Designations, Preferences and Rights of the Company’s 0% Series C Convertible Preferred Stock. Incorporated by reference from the Current Report on
Form 8-K filed with the Securities and Exchange Commission, SEC file number 001-08266 on May 26, 2017.
Amended and Restated Bylaws. Incorporated by reference from the Current Report on Form 8-K filed with the Securities and Exchange Commission, SEC file number
001-08266, on February 23, 2016.
Certificate of Designations, Rights, Powers, Preferences, Privileges and Restrictions of the Company’s 0% Series F Convertible Preferred Stock. Incorporated by
reference from Exhibit 3.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission, SEC file number 001-08266 on June 20, 2019.
Certificate of Amendment of Articles of Incorporation of U.S. Gold Corp. Incorporated by reference from Exhibit 3.1 to the Current Report on Form 8-K filed with the
Securities and Exchange Commission, SEC file number 001-08266 on March 19, 2020.
Certificate of Designation of 0% Series G Convertible Preferred Stock. Incorporated by reference from Exhibit 3.1 to Current Report on Form 8-K filed with the
Securities and Exchange Commission, SEC file number 001-8266, on March 30, 2020.
Certificate of Amendment to Articles of Incorporation dated May 2, 2017. Incorporated by reference from Exhibit 3.3 to the Registration Statement on Form S-3 filed
with the Securities and Exchange Commission, SEC file number 333-239062 on June 9, 2020.
Form of Common Stock Purchase Warrant. Incorporated by reference from Exhibits to a Current Report on Form 8-K with the Securities and Exchange Commission,
SEC file number 001-08266, filed on May 12, 2011.
68
4.2
4.3
4.4
4.5
Form of Class X Warrant Certificate. Incorporated by reference from Exhibit 4.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission,
SEC file number 001-08266 on June 20, 2019.
Form of Class Y Warrant Certificate. Incorporated by reference from Exhibit 4.2 to the Current Report on Form 8-K filed with the Securities and Exchange Commission,
SEC file number 001-08266 on June 20, 2019.
Form of Class A Warrant Certificate. Incorporated by reference from Exhibit 4.3 to the Current Report on Form 8-K filed with the Securities and Exchange Commission,
SEC file number 001-08266 on June 20, 2019.
Form of Common Warrant. Incorporated by reference from Exhibit 4.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission, SEC file
number 001-08266 on March 30, 2020.
4.6*
Description of Securities
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
2014 Equity Incentive Plan.(1) Incorporated by reference from Exhibits to a Definitive Proxy Statement for an Annual Meeting of Shareholders held on November 10,
2014, filed with the Securities and Exchange Commission, SEC file number 001-08266, on October 21, 2014.
2017 Equity Incentive Plan.(1) Incorporated by reference from Appendix A to a Definitive Proxy Statement for an Annual Meeting of Shareholders held on July 31,
2017, filed with the Securities and Exchange Commission, SEC file number 001-08266, on July 12, 2017.
Employment Agreement dated October 1, 2018 by and between Edward M. Karr and U.S. Gold Corp.(1) Incorporated by reference from Exhibit 10.2 to a Current Report
on Form 8-K filed with the Securities and Exchange Commission, SEC file number 001-8266, on November 2, 2018.
Employment Agreement dated October 1, 2018 by and between David Rector and U.S. Gold Corp.(1) Incorporated by reference from Exhibit 10.3 to a Current Report on
Form 8-K filed with the Securities and Exchange Commission, SEC file number 001-8266, on November 2, 2018.
Consulting Agreement with Sharp Executive Associates, Inc. dated November 30, 2018.(1) Incorporated by reference from Exhibit 10.01 to a Current Report on Form 8-
K filed with the Securities and Exchange Commission, SEC file number 001-8266, on December 31, 2018.
Consulting Agreement dated April 12, 2019 by and between Ryan K. Zinke and U.S. Gold Corp.(1) Incorporated by reference from Exhibit 10.1 to a Current Report on
Form 8-K filed with the Securities and Exchange Commission, SEC file number 001-8266, on April 16, 2019.
Securities Purchase Agreement dated June 19, 2019. Incorporated by reference from Exhibit 10.1 to a Current Report on Form 8-K filed with the Securities and
Exchange Commission, SEC file number 001-8266, on June 20, 2019.
Share Exchange Agreement with 2637262 Ontario Inc. Incorporated by reference from Exhibit 10.1 to Current Report on Form 8-K filed with the Securities and
Exchange Commission, SEC file number 001-8266, on September 11, 2019.
Form of Common Warrant. Incorporated by reference from Exhibit 4.1 to Current Report on Form 8-K filed with the Securities and Exchange Commission, SEC file
number 001-8266, on March 30, 2020
Securities Purchase Agreement. Incorporated by reference from Exhibit 10.1 to Current Report on Form 8-K filed with the Securities and Exchange Commission, SEC
file number 001-8266, on March 30, 2020.
Exchange Agreement for Series F Preferred Convertible shares for Series G Preferred Convertible shares. Incorporated by reference from Exhibit 10.2 to Current Report
on Form 8-K filed with the Securities and Exchange Commission, SEC file number 001-8266, on March 30, 2020.
U.S. Gold Corp 2020 Stock Incentive Plan. Incorporated by reference from Exhibit 10.1 to a Current Report on Form 8-K filed with the Securities and Exchange
Commission on September 24, 2019.
69
10.13
10.14
10.15
10.16
10.17
Restricted Stock Unit Award Agreement, dated as of September 18, 2019, by and between Edward Karr and U.S. Gold Corp. Incorporated by reference from Exhibit
10.2 to a Current Report on Form 8-K filed with the Securities and Exchange Commission on September 24, 2019.
Restricted Stock Unit Award Agreement, dated as of September 18, 2019, by and between David Rector and U.S. Gold Corp. Incorporated by reference from Exhibit
10.3 to a Current Report on Form 8-K filed with the Securities and Exchange Commission on September 24, 2019.
Form of Restricted Stock Unit Award Agreement under the U.S. Gold Corp. 2020 Stock Incentive Plan. Incorporated by reference from Exhibit 10.5 of the Quarterly
Report on Form 10-Q filed with the Securities and Exchange Commission, SEC file number 001-08266, on December 16, 2019.
Form of Restricted Stock Award Agreement under the U.S. Gold Corp. 2020 Stock Incentive Plan. Incorporated by reference from Exhibit 10.6 of the Quarterly Report
on Form 10-Q filed with the Securities and Exchange Commission, SEC file number 001-08266, on December 16, 2019.
Form of Nonqualified Stock Option Award Agreement under the U.S. Gold Corp. 2020 Stock Incentive Plan. Incorporated by reference from Exhibit 10.7 of the
Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission, SEC file number 001-08266, on December 16, 2019.
10.18* Keystone Purchase and Sale Agreement, As Amended and Restated between Nevada Gold Ventures, LLC; Americas Gold Exploration, Inc.; U.S. Gold Corp.; and U.S.
Gold Acquisition Corporation, dated May 25, 2016.
14.1*
Code of Ethics as adopted, amended and restated by the Corporation on November 1, 2018.
21.1
List of Subsidiaries. Incorporated by reference from Exhibit 21.1 of the Registration Statement on Form S-1 filed with the Securities and Exchange Commission, SEC
file number 333-239146 on June 12, 2020.
23.1*
KBL, LLP consent
23.2* Marcum LLP consent
31.1
Rule 13a-14(a) Certification of Edward Karr
31.2
Rule 13a-14(a) Certification of Ted Sharp
32.1
Section 1350 Certification of Edward Karr (Furnished not Filed)
32.2
Section 1350 Certification of Ted Sharp (Furnished not Filed)
101.INS
101.SCH
101.CAL
101.LAB
101.PRE
101.DEF
XBRL Instance Document
XBRL Taxonomy Extension Schema Document
XBRL Taxonomy Extension Calculation Link base Document
XBRL Taxonomy Extension Label Link base Document
XBRL Taxonomy Extension Presentation Link base Document
XBRL Taxonomy Extension Definition Link base Document
* Furnished herewith
(1) Management Contract or Compensatory Plan or Arrangement
# Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. U.S. Gold Corp. hereby undertakes to furnish supplemental copies of any of the
omitted schedules and exhibits upon request by the Securities and Exchange Commission.
70
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SIGNATURES
Date: July 13, 2020
Date: July 13, 2020
U.S. GOLD CORP.
By:
/s/ EDWARD M. KARR
Edward M. Karr
Chairman and Chief Executive Officer
(Principal Executive Officer)
By:
/s/ TED SHARP
Ted Sharp
Principal Financial and Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
Date: July 13, 2020
Date: July 13, 2020
Date: July 13, 2020
Date: July 13, 2020
Date: July 13, 2020
Date: July 13, 2020
By:
/s/ Edward M. Karr
Edward M. Karr, Director and Chairman
By:
/s/ John N, Braca
John N Braca, Director
By:
/s/ Timothy M. Janke
Timothy M. Janke, Director
By:
/s/ Andrew Kaplan
Andrew Kaplan, Director
By:
/s/ Douglas Newby
Douglas Newby, Director
By: /s/ Ryan K. Zinke
Ryan K. Zinke, Director
71
DESCRIPTION OF SECURITIES
Exhibit 4.6
The following description is intended as a summary and is qualified in its entirety by reference to our articles of incorporation, as amended, any certificates of designation for
our preferred stock, and our amended and restated bylaws, as currently in effect, copies of which are filed as exhibits to this Annual Report on Form 10-K and are incorporated
by reference herein.
Authorized Capital Stock
As of April 30, 2020, our authorized capital stock consisted of 200,000,000 shares of common stock, par value $0.001 per share, and 50,000,000 shares of “blank check”
preferred stock, par value $0.001 per share, of which 1,300,000 shares are designated as Series A Convertible Preferred Stock, 400,000 shares are designated as Series B
Convertible Preferred Stock, 45,001.8 shares are designated as Series C Convertible Preferred Stock, 7,402 shares are designated as Series D Convertible Preferred Stock,
2,500 shares are designated as Series E Convertible Preferred Stock, 1,250 shares are designated as Series F Preferred Stock and 127 shares are designated as Series G
Preferred Stock. Our board of directors (the “Board”) has the authority, without further action by the stockholders, to issue shares of preferred stock in one or more series and to
fix the rights, preferences, privileges and restrictions granted to or imposed upon the preferred stock. As of April 30, 2020, there were 2,903,393 shares of our common stock
issued and outstanding, and 57 shares of preferred stock outstanding.
Common Stock
The holders of common stock are entitled to one vote per share on all matters to be voted upon by the stockholders and there are no cumulative rights. Subject to preferences
that may be applicable to any outstanding preferred stock, the holders of common stock are entitled to receive ratably any dividends that may be declared from time to time by
the Board out of funds legally available for that purpose. We do not anticipate paying any cash dividends on our common stock in the foreseeable future but intend to retain our
capital resources for reinvestment in our business. In the event of our liquidation, dissolution or winding up, the holders of common stock are entitled to share ratably in all
assets remaining after payment of liabilities, subject to prior distribution rights of preferred stock then outstanding. The common stock has no preemptive or conversion rights
or other subscription rights. There are no redemption or sinking fund provisions applicable to the common stock.
The transfer agent and registrar for our common stock is Equity Stock Transfer. Its address is 237 West 37th Street, Suite 601, New York, New York 10018. Our common stock
is listed on the NASDAQ under the symbol “USAU.”
Preferred Stock
The Board is authorized, subject to any limitations prescribed by law, without further vote or action by the stockholders, to issue from time to time shares of preferred stock in
one or more series. Each such series of preferred stock shall have such number of shares, designations, preferences, voting powers, qualifications, and special or relative rights
or privileges as shall be determined by the Board, which may include, among others, dividend rights, voting rights, liquidation preferences, conversion rights and preemptive
rights. Issuance of preferred stock by our Board may result in such shares having dividend and/or liquidation preferences senior to the rights of the holders of our common
stock and could dilute the voting rights of the holders of our common stock.
Prior to the issuance of shares of each series of preferred stock, the Board is required by the Nevada Revised Statutes and our articles of incorporation to adopt resolutions and
file a certificate of designation with the Secretary of State of the State of Nevada. The certificate of designation fixes for each class or series the designations, powers,
preferences, rights, qualifications, limitations and restrictions, including, but not limited to, some or all of the following:
●
the number of shares constituting that series and the distinctive designation of that series, which number may be increased or decreased (but not below the number of
shares then outstanding) from time to time by action of the Board;
●
the dividend rate and the manner and frequency of payment of dividends on the shares of that series, whether dividends will be cumulative, and, if so, from which date;
● whether that series will have voting rights, in addition to any voting rights provided by law, and, if so, the terms of such voting rights;
● whether that series will have conversion privileges, and, if so, the terms and conditions of such conversion, including provision for adjustment of the conversion rate in
such events as the Board may determine;
● whether or not the shares of that series will be redeemable, and, if so, the terms and conditions of such redemption;
● whether that series will have a sinking fund for the redemption or purchase of shares of that series, and, if so, the terms and amount of such sinking fund;
● whether or not the shares of the series will have priority over or be on a parity with or be junior to the shares of any other series or class in any respect;
●
the rights of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the corporation, and the relative rights or priority, if
any, of payment of shares of that series; and
●
any other relative rights, preferences and limitations of that series.
Once designated by the Board, each series of preferred stock may have specific financial and other terms.
Nevada Anti-Takeover Law, Provisions of our Certificate of Incorporation and Bylaws
Anti-Takeover Effects of Provisions of Nevada State Law
We may be, or in the future we may become, subject to Nevada’s control share laws. A corporation is subject to Nevada’s control share law if it has more than 200 stockholders,
at least 100 of whom are stockholders of record and residents of Nevada, and if the corporation does business in Nevada, including through an affiliated corporation. This
control share law may have the effect of discouraging corporate takeovers. As of April 30, 2020, we have less than 100 stockholders of record who are residents of Nevada.
The control share law focuses on the acquisition of a “controlling interest,” which means the ownership of outstanding voting shares that would be sufficient, but for the
operation of the control share law, to enable the acquiring person to exercise the following proportions of the voting power of the corporation in the election of directors: (1) one-
fifth or more but less than one-third; (2) one-third or more but less than a majority; or (3) a majority or more. The ability to exercise this voting power may be direct or indirect,
as well as individual or in association with others.
The effect of the control share law is that an acquiring person, and those acting in association with that person, will obtain only such voting rights in the control shares as are
conferred by a resolution of the stockholders of the corporation, approved at a special or annual meeting of stockholders. The control share law contemplates that voting rights
will be considered only once by the other stockholders. Thus, there is no authority to take away voting rights from the control shares of an acquiring person once those rights
have been approved. If the stockholders do not grant voting rights to the control shares acquired by an acquiring person, those shares do not become permanent non-voting
shares. The acquiring person is free to sell the shares to others. If the buyer or buyers of those shares themselves do not acquire a controlling interest, the shares are not governed
by the control share law.
If control shares are accorded full voting rights and the acquiring person has acquired control shares with a majority or more of the voting power, a stockholder of record, other
than the acquiring person, who did not vote in favor of approval of voting rights, is entitled to demand fair value for such stockholder’s shares.
In addition to the control share law, Nevada has a business combination law, which prohibits certain business combinations between Nevada publicly traded corporations and
“interested stockholders” for two years after the interested stockholder first becomes an interested stockholder, unless the corporation’s board of directors approves the
combination in advance. For purposes of Nevada law, an interested stockholder is any person who is: (a) the beneficial owner, directly or indirectly, of 10% or more of the
voting power of the outstanding voting shares of the corporation, or (b) an affiliate or associate of the corporation and at any time within the previous two years was the
beneficial owner, directly or indirectly, of 10% or more of the voting power of the then-outstanding shares of the corporation. The definition of “business combination”
contained in the statute is sufficiently broad to cover virtually any kind of transaction that would allow a potential acquirer to use the corporation’s assets to finance the
acquisition or otherwise to benefit its own interests rather than the interests of the corporation and its other stockholders.
The effect of Nevada’s business combination law is to potentially discourage parties interested in taking control of the Company from doing so if it cannot obtain the approval
of our board of directors.
Articles of Incorporation and Bylaws
Provisions of our articles of incorporation, as amended, and amended and restated bylaws may delay or discourage transactions involving an actual or potential change in our
control or change in our management, including transactions in which stockholders might otherwise receive a premium for their shares, or transactions that our stockholders
might otherwise deem to be in their best interests. Therefore, these provisions could adversely affect the price of our common stock. Among other things, our articles of
incorporation and bylaws:
●
●
●
●
●
●
●
permit our Board to issue up to 50,000,000 shares of preferred stock, without further action by the stockholders, with any rights, preferences and privileges as our Board
may designate, including the right to approve an acquisition or other change in control;
provide that the authorized number of directors may be changed only by a resolution adopted by a majority of the whole Board;
provide that all vacancies, including newly created directorships, may, except as otherwise required by law, be filled by the affirmative vote of a majority of directors
then in office, even if less than a quorum;
do not provide for cumulative voting rights (therefore allowing the holders of a majority of the shares of common stock entitled to vote in any election of directors to
elect all of the directors standing for election, if they should so choose);
provide that special meetings of our stockholders may be called only by (i) the Chairman of the Board, (ii) the Chief Executive Officer or (iii) a resolution adopted by a
majority of the whole Board;
provide that stockholders may alter, amend or repeal any section of our bylaws by an affirmative vote of the holders of at least sixty-six and two-thirds (66 2/3%) of the
outstanding voting power, voting together as a single class; and
provide advance notice provisions with which a stockholder who wishes to nominate a director or propose other business to be considered at a stockholder meeting must
comply.
Exhibit 10.18
U.S. GOLD CORP.
CODE OF ETHICS AND BUSINESS CONDUCT
Adopted August 1, 2017
Exhibit 14.1
The business of U.S. Gold Corp. (the “Company”) shall be conducted with honesty and integrity and in accordance with the highest ethical and legal standards. This
Code of Ethics and Business Conduct (the “Code”) has been adopted by the Company pursuant to Item 406 of Regulation S-K of the Securities and Exchange Commission in
order to provide written standards and guidance to the Company’s directors, officers and employees (collectively, “Covered Persons”) to promote:
● Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
● Compliance with applicable governmental laws, rules and regulations;
● Full, fair, accurate, timely, and understandable disclosure in reports and documents that the Company files with, or submits to, the Securities and Exchange
Commission and in other public communications made by the Company;
● The prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and
● Accountability for adherence to the Code.
This Code is the sole code of ethics adopted by the Company for the purposes of the Item 406 of Regulation S-K.
1. Honest and Ethical Conduct.
The Company is committed to compliance with the highest ethical standards in pursuing its business interests and expects Covered Persons to observe those standards.
Stated generally, some of the ethical standards to which the Company is committed, and for which all Covered Persons are individually accountable, are as follows:
● Conducting the Company’s business in compliance with applicable governmental laws, rules, and regulations.
● Dealing ethically in transactions with contractors, suppliers, customers, employees and others.
● Avoiding situations where personal interests are, or appear to be, in conflict with the Company’s interests.
● Responsibly using and protecting the Company’s assets, including property, equipment, facilities, funds and information.
● Maintaining confidentiality of nonpublic information and not acting on such information for personal gain. Some of these ethical standards are discussed in more
detail below.
2. Compliance with Law.
The Company and all Covered Persons should respect and comply with all of the applicable laws, rules and regulations of the United States and the other countries and
state, local and other jurisdictions in which the Company conducts its business or in which the Company’s stock is traded. The Company is subject to legal requirements that are
both numerous and complex. All Covered Persons should understand those laws that apply to them in the performance of their jobs and take steps to ensure that the parts of the
Company’s operations with which they are involved are conducted in conformity with those laws. The failure of Covered Persons to adhere to the letter and the spirit of the law
could result in both personal and corporate civil or criminal liability. Each Covered Person is personally responsible for complying with the law. In addition, each Covered
Person is charged with the responsibility of reporting to the Compliance Officer (as defined in Section 8) any behavior or conduct related to the Company’s business or affairs
that could reasonably constitute a criminal offense. If a Covered Person has questions or any concerns about whether his or her conduct or the conduct of others may result in
personal or criminal liability, the Covered Person should seek specific guidance and advice from the Compliance Officer or from counsel, which may include the Company’s
counsel.
These laws include:
● Prohibition on insider trading. U.S. Federal securities laws prohibit persons with access to or knowledge of material, non-public information about the Company
from buying, selling, or otherwise trading in the Company’s securities. In addition, the Company has adopted a Corporate Policy and Procedure on Insider Trading, which
prohibits trading in the Company’s securities at certain times and under certain circumstances.
● Foreign Corrupt Practices Act. The U.S. Foreign Corrupt Practices Act generally prohibits payments or gifts to foreign officials, political parties, or candidates for
the purpose of influencing their decision, the decisions of foreign government, or gaining any improper advantage.
● Environmental compliance. The Company’s operations are subject to many laws and regulations regarding protection of the environment. This Code does not
summarize all laws, rules and regulations applicable to the Company and its employees, officers and directors. Please consult the Compliance Officer, the Company’s counsel
or the various guidelines that the Company has prepared on specific laws, rules and regulations for additional information. If you believe that directions from a manager or
supervisor may violate applicable law, you should consult with the manager or supervisor, the Compliance Officer or legal counsel.
3. Conflicts of Interest.
Conflicts of interest are prohibited as a matter of Company policy, except under guidelines approved by the Company’s board of directors. A “conflict of interest”
exists when a person’s private interest interferes or conflicts, or appears to interfere or conflict, with the interests of the Company or the person’s duties to the Company.
Conflicts of interest may also arise when a person, or members of his or her family, receives improper personal benefits as a result of his or her position in the Company or takes
an action or has a personal interest that may adversely influence his or her objectivity or the exercise of sound, ethical business judgment. For example, a conflict of interest
could exist if a Covered Person:
● Accepts a gift, service, payment or other benefit of more than nominal value from a competitor, supplier, or customer of the Company, or any entity or organization
with which the Company does business or seeks to do business; provided normal course of business gatherings sponsored by customers or suppliers are permissible;
● Lends to, borrows from, or has a material interest (equity or otherwise) in a competitor, supplier, or customer of the Company, or any entity or organization with
which the Company does business or seeks to do business;
● Accepts compensation (in any form) for services performed for the Company from any source other than the Company;
● Serves as a director, officer, partner, consultant, or in any other significant role, in any competitor, supplier, or customer of the Company, or any entity or
organization with which the Company does business or seeks to do business;
● Acts as a broker, finder or other intermediary for the benefit of a third party in transactions involving the Company or its interests;
● Knowingly competes with the Company; or
● Conducts significant outside business activity that precludes the Covered Person from devoting appropriate time and attention to his or her responsibilities with the
Company.
Covered Persons are also prohibited from (a) taking for themselves personally opportunities that properly belong to the Company or are discovered through the use of
corporate property, information or position; (b) using corporate property, information or position for personal gain; and (c) competing with the Company. Covered Persons owe
a duty to the Company to advance its legitimate interests when the opportunity to do so arises.
Conflicts of interest may not always be clear-cut, so if you have a question, you should consult with the Compliance Officer. The Board shall have the authority to
evaluate and waive any conflict or apparent conflict of interest in the manner set forth in Section 9 below.
4. Confidentiality.
Covered Persons must maintain the confidentiality of confidential information entrusted to them by the Company, except when disclosure is expressly authorized by
the Compliance Officer or is legally mandated. Whenever feasible, Covered Persons should consult the Compliance Officer or the Company’s counsel if they believe they have
a legal obligation to disclose confidential information. Confidential information includes all non-public information that might be of use to existing or potential new
shareholders or competitors of the Company, or harmful to the Company if disclosed.
5. Fair Dealing.
Each Covered Person should endeavor to deal fairly with the Company’s employees, officers, directors, customers, suppliers and competitors. No employee should
take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other unfair dealing practice.
6. Protection and Proper Use of Company Assets.
All Covered Persons should protect the Company’s assets and ensure their efficient use. Theft, carelessness and waste have a direct impact on the Company’s
profitability. All Company assets should be used only for legitimate business purposes.
7. Public Reporting.
As a public company, it is of critical importance that the Company’s public disclosures, including filings with the Securities and Exchange Commission, be accurate
and timely. A Covered Person may be called upon to provide necessary information to assure that the Company’s public disclosures are complete, fair and understandable. The
Company expects Covered Persons to take this responsibility very seriously and to provide prompt, accurate answers to inquiries related to the Company’s public disclosure
requirements.
All of the Company’s books, records, accounts and financial statements must be maintained in reasonable detail, must appropriately reflect the Company’s
transactions and must conform both to applicable legal requirements and to the Company’s system of internal controls.
In addition, each Covered Person must promptly bring to the attention of his or her supervisor or the Compliance Officer any information that the Covered Person may
have concerning (i) significant deficiencies in the design or operation of internal control over financial reporting that could adversely affect the Company’s ability to record,
process, summarize and report financial data or (ii) any fraud, whether or not material, that involves management, directors, or other Covered Persons.
8. Compliance with this Code.
Covered Persons are expected to comply with all of the provisions of this Code. Each Covered Person has an obligation to promptly notify the Compliance Officer in
writing of any situation that may involve violation of this Code. The Company will not allow retaliation for reports of potential violations that are made in good faith.
Any suspected violation of this Code shall be promptly reported to Tony Lougee, the Company’s Chief Financial Officer. He may be reached as follows:
U.S. Gold Corp., 1910 E. Idaho Street, Suite 102-Box 604, Elko, NV 89801 Phone: 609-799-0071 x2431 Email: tlougee@dataram.com
If the Board receives information regarding an alleged violation of this Code, then the Board shall either directly or through the services of others under its
supervision, which may include directors, members of management and outside counsel and advisors:
● evaluate such information as to gravity and credibility;
● if necessary, initiate an informal inquiry or a formal investigation with respect thereto;
● if appropriate, prepare a written report of the results of such inquiry or investigation, including recommendations as to the disposition of such matter;
● if appropriate, make the results of such inquiry or investigation available to the public (including disciplinary action); and
● if appropriate, recommend changes to this Code that the Board deems necessary or desirable to prevent similar violations of this Code.
The Board shall enforce this Code through appropriate disciplinary actions. It shall determine whether violations of this Code have occurred and, if so, shall determine
the disciplinary actions to be taken against any Covered Person who has violated the Code. The disciplinary actions available to the Board include counseling, oral or written
reprimands, warnings, probations or suspensions (with or without pay), demotions, reductions in salary, terminations of employment, and restitution.
Reports of alleged violations should be factual, rather than speculative or conclusory, and should contain as much specific detail as possible to allow for proper
assessment. The report should clearly set forth all the information the employee knows about the alleged violation. The report or complaint describing an alleged violation or
concern should be candid and should set forth all of the information that the employee knows regarding the allegation or concern. In addition, the report or complaint should
contain sufficient corroborating information to support the commencement of an investigation. The Company may, in its reasonable discretion, determine not to commence an
investigation if a report or complaint contains only unspecified or broad allegations of wrongdoing without appropriate factual support.
For the avoidance of doubt, the jurisdiction of the Board shall include, in addition to the Covered Person that violated this Code, any other employee involved in the
wrongdoing such as (i) persons who fail to use reasonable care to detect a material violation and (ii) persons who withhold material information about a suspected violation of
this Code when requested to divulge such information.
Situations that may involve a violation of this Code may not always be clear. Covered Persons are encouraged to discuss questions or concerns about violations of
laws, rules or regulations with the Compliance Officer.
9. Amendment and Waiver.
This Code may only be amended by the Board, and any waiver or implicit waiver of this Code must be approved by the Board. All amendments or waivers of the
Code for a director or executive officer shall be disclosed in the manner prescribed by the Securities and Exchange Commission or any national securities exchange on which the
Company’s securities are listed.
Exhibit 23.1
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S CONSENT
We consent to the incorporation by reference in the Annual Report on Form 10-K (File No. 333-217860) of our report dated July 26, 2019 with respect to our audit of the
consolidated financial statements of U.S. Gold Corp. as of April 30, 2019 and for the year then ended, which report is included in the Annual Report on Form 10-K of U.S. Gold
Corp. for the year ended April 30, 2019.
We hereby consent to the incorporation by reference of our report dated July 26, 2019, relating to our audit of the consolidated financial statements of U.S. Gold Corp and
Subsidiaries for the year ended April 30, 2019, included in its Annual Report (Form 10-K) for the year ended April 30, 2019 as filed with the Securities and Exchange
Commission, in U.S. Gold Corp’s Registration Statement on Form S-1 filed on June 12, 2020. We also consent to the reference to us under the heading “Experts” in such
Registration Statement.
We hereby consent to the incorporation by reference of our report dated July 26, 2019, relating to our audit of the consolidated financial statements of U.S. Gold Corp and
Subsidiaries for the year ended April 30, 2019, included in its Annual Report (Form 10-K) for the year ended April 30, 2019 as filed with the Securities and Exchange
Commission, in U.S. Gold Corp’s Registration Statement on Form S-3 and related prospectus filed on June 9, 2020. We also consent to the reference to us under the heading
“Experts” in such Registration Statement.
We were not engaged to audit, review or apply any procedures to the adjustments to retrospectively apply the change in accounting related to the reverse stock splits described in
Note 1 on Form 10-K, accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly
applied. Those adjustments were audited by other auditors.
/s/ KBL LLP
KBL LLP
New York, NY
July 13, 2020
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S CONSENT
We consent to the incorporation by reference in the Registration Statement of U.S. Gold Corp. on Form S-1 (File No. 333-239146) and Forms S-3 (File No. 333-217860 and File
No. 333-239062) of our report dated July 13, 2020, which includes an explanatory paragraph as to the Company’s ability to continue as a going concern, and our audit of
adjustments to retrospectively apply the reverse stock split of the Company’s common stock, which occurred subsequent to the year ended April 30, 2019, to the 2019 financial
statements which were audited by other auditors, with respect to our audit of the consolidated financial statements of U.S Gold Corp. as of April 30, 2020 and for the year then
ended which report is included in this Annual Report on Form 10-K of U.S. Gold Corp. for the year ended April 30, 2020.
Exhibit 23.2
/s/ Marcum llp
Marcum llp
New York, NY
July 13, 2020
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
EXHIBIT 31.1
I, Edward M. Karr, certify that:
I have reviewed this Annual Report on Form 10-K of U.S. Gold Corp (the “registrant”);
1) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with respect to the period covered by the report;
2) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results
of operations and cash flows of the issuer as of, and for, the periods presented in this report;
3) The small business issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which
this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
4)
I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board
of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect
the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s internal control over financial reporting.
By:
/s/ Edward M. Karr
Edward M. Karr
Chief Executive Officer
July 13, 2020
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION OF CHIEF FINANCIAL OFFICER
EXHIBIT 31.2
I, Ted Sharp, certify that:
I have reviewed this Annual Report on Form 10-K of U.S. Gold Corp (the “registrant”);
1) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with respect to the period covered by the report;
2) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for, the periods presented in this report;
3) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-
15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which
this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
4)
I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small
business issuer’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect
the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s internal control over financial reporting.
By:
/s/ Ted Sharp
Ted Sharp
Principal Financial and Accounting Officer
July 13, 2020
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 32.1
In connection with the Annual Report on Form 10-K of U.S. Gold Corp. (the “Company”), as filed with the U.S. Securities and Exchange Commission on the date
hereof (the “Report”), I, Edward M. Karr , the Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in such Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: July 13, 2020
By:/s/ Edward M. Karr
Edward M. Karr
Chief Executive Officer
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 32.2
In connection with the Annual Report on Form 10-K of U.S. Gold Corp (the “Company”), as filed with the U.S. Securities and Exchange Commission on the date
hereof (the “Report”), I, Ted Sharp, the Principal Financial and Accounting Officer of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of
the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: July 13, 2020
By:
/s/ Ted Sharp
Ted Sharp
Principal Financial and Accounting Officer