UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended April 30, 2022 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 or 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 ☒
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. Yes ☐ No ☒
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those
Sections.
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 ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically 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 ☒ No ☐
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 the definitions 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 ☒
Accelerated filer ☐
Smaller reporting company ☒
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 Act). Yes ☐ No ☒
As of October 31, 2021, 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 $63,354,675. This figure is based on the closing sale price of $9.92 per share of the Registrant’s common stock on
October 29, 2021.
Number of shares of Common Stock outstanding as of August 12, 2022: 8,349,843
The information called for by Part III of this Form 10-K is incorporated herein by reference from the registrant’s Definitive Proxy Statement for its 2022 annual meeting of
stockholders which the registrant intends to file pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this report.
DOCUMENTS INCORPORATED BY REFERENCE
U.S. GOLD CORP
INDEX
Items 1 and 2.
Item 1A.
Item 1B.
Item 3.
Item 4.
Business and Properties
Risk Factors
Unresolved Staff Comments
Legal Proceedings
Mine Safety Disclosures
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
[Reserved]
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
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
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 Accountant Fees and Services
Part I
Part II
Part III
Part IV
Item 15.
Item 16.
Exhibit and Financial Statement Schedules
Form 10-K Summary
Signatures
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Page
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40
40
41
43
44
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:
● The timing of preparation and filing of our mine construction and operating permits for the CK Gold Project;
● The assumptions and projections contained in the CK Gold PFS, including estimated mineral resources and mineral reserves, mine life, projected operating and capital
costs, projected production, IRR and NPV calculations, and the possibility of upside potential at the project;
● Our planned expenditures during our fiscal year ended April 30, 2023;
● Future exploration plans and expectations related to our properties;
● Our ability to fund our business over through April 30, 2023 with our current cash reserves based on our currently planned activities;
● Our anticipation of future environmental and regulatory impacts; and
● Our business and operating strategies.
We use the words “anticipate,” “continue,” “likely,” “estimate,” “expect,” “may,” “could,” “will,” “project,” “should,” “believe” and similar expressions (including negative
and grammatical variations) 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 this annual report on Form 10-K, including:
● Timing, duration and overall impact of the COVID-19 pandemic, including potential future suspension of exploration activities at our properties;
● Unfavorable results from our exploration activities;
● Decreases in gold, copper or silver prices;
● Whether we are able to raise the necessary capital required to continue our business on terms acceptable to us or at all, and the likely negative effect of volatility in
metals prices or unfavorable exploration results;
● Whether we will be able to begin to mine and sell minerals successfully or profitably at any of our current properties at current or future metals prices;
● Potential delays in our exploration activities or other activities to advance properties towards mining resulting from environmental consents or permitting delays or
problems, accidents, problems with contractors, disputes under agreements related to exploration properties, unanticipated costs and other unexpected events;
● Our ability to retain key management and mining personnel necessary to successfully operate and grow our business;
● Economic and political events affecting the market prices for gold, copper, silver, and other minerals that may be found on our exploration properties;
● Volatility in the market price of our common stock; and
● The factors set forth under “Risk Factors” in Item 1A of this annual report on Form 10-K.
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. 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.
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.
ADDITIONAL INFORMATION
3
Items 1 and 2. BUSINESS AND PROPERTIES
Overview
PART I
U.S. Gold Corp., formerly known as Dataram Corporation (the “Company”), was incorporated under the laws of the State of Nevada in 2016 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 Wyoming, Nevada and Idaho.
We are an exploration and development company that owns certain mining leases and other mineral rights comprising the CK Gold Project in Wyoming the Keystone and
Maggie Creek Projects in Nevada and the Challis Gold Project in Idaho. The Company’s CK Gold property contains proven and probable mineral reserves and accordingly is
classified as a development stage property, as defined in subpart 1300 of Regulation S-K promulgated by the Securities and Exchange Commission (“S-K 1300”). None of the
Company’s other properties contain proven and probable mineral reserves and all activities are exploratory in nature. We do not currently have any revenue-producing
activities.
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.
Corporate Organization Chart
The name, place of incorporation, continuance or organization and percent of equity securities that we own or control as of July 29, 2022 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
4
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, 2022, we had 4 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
Property Map
For a map showing the more precise location of each property, see the individual property descriptions set forth below.
5
Summary of Mineral Properties
Property
Stage of Property/Mine
and mineralization types
Ownership, Mineral Rights,
Leases or Options
Key permit conditions
CK Gold
Project -
Wyoming
Keystone -
Nevada
Development stage,
proposed open-pit mine
producing a copper
concentrate containing
gold, copper and silver
from porphyry-style
mineralization.
Gold exploration
Maggie Creek -
Nevada
Gold exploration
Challis - Idaho Gold exploration
100% ownership - Two state of Wyoming
Mineral Leases covering approximately
1,120 acres in Laramie County, Wyoming.
State of Wyoming has certain royalty
interests on mineral production.
Exploration permits received.
Preparing to submit applications to
the Wyoming Division of
Enviromental Quality for the
permit to mine, industrial siting,
and air permits.
Exploration permits received.
Reclamation bonding in place.
Additional exploration permits
may be necessary for additional
exploration.
Exploration permits received and
reclamation bond in place.
Additional exploration permits
may be necessary for additional
exploration.
100% ownership - 650 unpatented lode
mining claims comprising approximately
20 square miles in Eureka County, Nevada.
Earn-in Agreement to acquire a 50%
ownership interest with the ability to
increase ownership to 70% of 103
unpatented mining claims in Eureka
County, Nevada covering approximately 3
square miles. Certain royalty interests have
been granted on the Maggie Creek property.
100% ownership - 87 unpatented lode
mining claims in Lemhi County, Idaho
covering approximately 1,710 acres. A
royalty interest has been granted on the
Challis property.
Processing
plants and other
available
facilities
No significant
facilities
No significant
facilities
Other
Working on
detailed
engineering
studies for
feasibility study
No significant
facilities
Drilled two
exploration holes
in the year ended
April 30, 2022
Preparing a revised plan of
operations for further exploration.
No significant
facilities
Quality Assurance/Quality Control (“QA/QC”) Procedure
We employ a rigorous QA/QC protocol on all aspects of sampling and analytical procedure. Drill core is checked, logged, marked for sampling and sawn in half. One-half of
each drill core is maintained for future reference and the other half of each drill core is sent to ALS, an ISO 17025 accredited laboratory in Reno, Nevada to complete all
sample preparation and assaying. Samples are analyzed by employing fire assaying with atomic absorption finish for gold, and four-acid ICP-MS analysis for silver and copper.
For QA/QC purposes, certified standards, blank samples and sample duplicates are inserted into the sample stream. We also periodically submit sample pulps to another
independent laboratory for check analysis.
CK Gold Project, Wyoming
The CK Gold Project (the “CK Gold”) consists of certain mining leases and other mineral rights comprising the CK Gold, gold and copper exploration project located in the
Silver Crown Mining District of southeast Wyoming.
Location and Access
The CK Gold Project is located in southeastern Wyoming, approximately 20 miles west of the city of Cheyenne, on the southeastern margin of the Laramie Range (Figure 1).
The property covers about two square miles that include the S½ Section 25, NE¼ Section 35, and all of Section 36, T.14N., R.70W., Sixth Principal Meridian. Access to within
an approximate 0.9 miles of the property is provided by paved and maintained gravel roads. The surface of S½ Section 25, NE¼ Section 35 is privately owned. An easement
agreement providing access for exploration and other minimal impact activities has been negotiated with an adjacent landowner. The fee for this easement is $10,000 per year,
renewable each year prior to July 11. The surface of Section 36 is owned by the State of Wyoming and is currently leased to an adjacent landowner for grazing.
The project is entirely located on mineral rights owned and administered by the State of Wyoming. There are no federal lands within or adjoining the CK Gold land position.
Curt Gowdy State Park lies northwest of the property, partially within Section 26. The state park’s southeastern boundary is approximately 1,000 feet northwest of the property
and approximately 3,000 feet northwest of the mineralized area. The CK Gold property position consists of two State of Wyoming Metallic and Non- metallic Rocks and
Minerals Mining Leases.
6
Figure 1 – CK Gold Project Location and Project Boundary
7
Rights to the CK Gold Project
Our rights to the CK Gold 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. These leases were assigned to us on June 23, 2014.
Lease 0-40828 is a ten-year lease that expires on February 1, 2023. Lease 0-40858 is a ten-year lease that expires on February 1, 2024. Each lease requires an annual payment
of $2.00 per acre. Each lease is renewable for successive ten-year terms by submitting a renewal application fee and paying a nominal fee of $50. We are currently in discussion
with the State of Wyoming concerning the lease renewals beyond the current expiration dates.
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
Infrastructure.
Percentage Royalty
5%
7%
9%
10%
Given the project’s proximity to Cheyenne, the state capital of Wyoming and the Front Range metropolitan area, personnel needs, delivery of consumables, and infrastructure
needs are available both locally and regionally. The area has access to a Union Pacific railroad line, intersection of 2 major interstate highways I-80 and I-25, and a regional
airport.
High voltage powerlines are approximately 1.5 miles (2.4km) from the current project area. A connection to the local power provider and easement for transmission lines has
been identified and scoped. While there is a nearby line serving the local population, we anticipate that a new line to the project site will be constructed. Water to meet project
demand has been identified and potential well sites investigated. Minor water sources have been identified around the project site from monitoring well locations, and
additional deeper well sites will be investigated in upcoming fields seasons with a view to securing an independent water supply. However, water is available to purchase from
the City of Cheyenne from its infrastructure running along North Crow Creek less than a mile away from the project site. Additionally, a pipeline to access purchased water
runs across the property and may provide an alternative source of water.
History of Prior Operations and Exploration on the CK Gold Project
Limited exploration and mining were conducted on the CK Gold 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 CK
Gold, previously referred to as 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 CK Gold 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 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 CK Gold 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.
8
Geology and Mineralization
The CK Gold 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 CK Gold. 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. The mineralization style is consistent with a porphyry gold-copper deposit of Paleoproterozoic age. 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 ring 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 and within chalcopyrite crystals.
The CK Gold exploration property contains oxide, mixed oxide-sulfide, and sulfide rock types. At the stated cutoff grade of 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.
Mineral Reserves and Mineral Resources
Mineral reserve and mineral resource estimates were calculated by Gustavson Associates through the effective date of November 15, 2021 as shown in the Technical Report
Summary attached to this annual report on Form 10-K. The mineral reserve and mineral resource tabulations shown below are based on assumed metals prices of $1,625/oz
gold, $3.25/lb copper and $18.00/oz silver. These metals price assumptions are comprised of long-term metals forecasting (33%) and the two-year trailing average (67%).
Based on the actual prices of these metals at the end of our fiscal year ($1,911/oz gold, $4.45/lb copper and $23.45/oz silver, based on the respective London Metal Exchange,
we believe that the price assumptions used in preparing our mineral reserve and mineral resource estimates at November 15, 2021 remain reasonable and, therefore, we believe
the estimates prepared by Gustavson Associates remain a reasonable estimate of our mineral resources and mineral reserves at April 30, 2022.
CK Gold Project – Summary of Gold, Copper and Silver Mineral Resources at April 30, 2022 based on $1,625/oz gold, $3.25/lb copper and $18.00/oz silver
Measured (M)
Indicated (I)
M + I
Inferred
Mass
Tons
(000’s)
1,000
10,500
11,500
Gold (Au)
Copper (Cu)
Silver (Ag)
Oz
(000’s)
6
94
100
oz/
st
0.019
0.01
0.014
lbs
(millions)
2
30
32
%
0.196
0.15
0.16
Oz
(000’s)
100
450
550
oz/st
0.05
0.03
0.039
Au Equivalent
(AuEq)
Oz
(000’s)
2
138
140
oz/
st
0.024
0.016
0.018
22,500
235
0.01
68.3
0.152
323
0.014
357
0.016
(1) Resources tabulated at a cutoff grade of (0.0107 – 0.0088) AuEq oz/st, 0.009 AuEq oz/st average
(2) Note only 3 significant figures shown, may not sum due to rounding
(3) Estimates of mineral resources are exclusive of mineral reserves
CK Gold Project – Summary of Gold, Copper and Silver Mineral Reserves at April 30, 2022 based on $1,625/oz gold, $3.25/lb copper and $18.00/oz silver
Proven (P1)
Probable (P2)
P1 + P2
Mass
Tons
(000’s)
29,600
40,700
70,400
Gold (Au)
Copper (Cu)
Silver (Ag)
Au Equivalent
(AuEq)
Oz
(000’s)
574
440
1,010
oz/
st
0.019
0.011
0.014
lbs
(millions)
118
130
248
%
0.198
0.16
0.176
Oz
(000’s)
1,440
1,220
2,660
oz/
st
0.049
0.03
0.038
Oz
(000’s)
757
679
1,440
oz/
st
0.026
0.017
0.02
(1) Reserves tabulated at a cutoff grade of (0.0107 – 0.0088) AuEq oz./st, 0.009 AuEq Oz/st average
(2) Note only 3 significant figures shown, may not sum due to rounding
Mineral resources are reported at a gold equivalent grade (AuEq) cutoff grade, which considers metal recovery and pricing Cutoff grade varies with expected recovery for
delineated material types, but averages 0.009 short ton (oz/st) AuEq, equivalent to 0.31 grams per metric tonne (g/t) AuEq. Gold equivalent grade (Au/Eq) is used to simplify
cutoff grade to a single equivalent metal (gold). The mineral resource is constrained inside an optimization shell which, combined with the cutoff grade, represents reasonable
prospects for economic extraction. The mineral reserve estimate lies inside of a designed mine open pit. See Section 12.1 in the Technical Report Summary incorporated by
reference in this Form 10-K for a discussion of pit optimization, cutoff grade and dilution.
9
Prefeasibility Study (“PFS”)
On December 1, 2021, we released the results of our PFS. The PFS was prepared by Gustavson Associates, LLC with an effective date of November 15, 2021.
The following are highlights from the PFS:
● 10-year Mine Life at 20,000 short tons per day process rate
○ Average AuEq production: 108,500 ounces per year
○ First three years: 135,300 AuEq ounces per year
● Initial Capital: $221 million
○ Potential attractive financing terms from equipment suppliers and development capital sources
○ 2-year Payback
● Economics – 39.4% IRR before tax and 33.7% IRR after tax
○ NPV (5%): $323 million and $266 million, before and after tax, respectively
○ All in Sustaining Cost (“AISC”) at $800 per AuEq ounce
○ Assumes $1,625/ounce gold price and $3.25/lb copper price
○ Highly leveraged to increasing metals prices
● Upside Potential
○ Aggregate sales from mine waste rock, proven to be excellent quality
○ FS level value engineering and plant optimization
○ Ongoing metallurgical testing to enhance recovery of gold and copper
○ Resource expansion potential at depth and to the south-east
● Permitting and Development
○ Project footprint under the jurisdiction of Wyoming agencies
● Potential to submit mine permit in 2022 and receive approval in 2023
The economic projections in the PFS are subject to a variety of assumptions and qualifications that are described in more detail in the Technical Report Summary incorporated
by reference into this Form 10-K. In summary, the low-grade copper, silver and gold deposit located on Wyoming State Land and under lease to US Gold Corp, is proposed as
an open pit mine. The rate of extraction will be sufficient to feed minerals to the process plant at a rate of 20,000 tons per day, involving the removal of surrounding waste
material at a similar rate. The process plant serves to crush and grind the ore into a fine particle form in a slurry, whereupon the copper, silver and gold values can be separated
from non-mineralized rock into a concentrate using froth flotation. The concentrate will be dried and shipped off site and sold to a smelter for final metal extraction. The waste
material will be filtered to recoup and recycle water back to the process plant, and the filtered tailings will be trucked and mechanically stacked onto a tailings pile. The process
facility is also on the same Wyoming State section less than a mile away from the mineralized orebody, with the entire operation some 20-miles west of Cheyenne. The
metallurgical test work supporting the extraction methodology was initially performed by a previous owner between 2009 and 2012, but the company has gathered additional
representative sample and conducted further extensive test work between 2020 and 2022. The results of the test work were incorporated into the prefeasibility study published
on December 1st, 2021, and have continued to confirm results and inform the feasibility study due for publication in the second half of 2022.
We expense all mineral exploration costs as incurred. Although we have identified proven and probable mineral reserves on our CK Gold project, development costs will be
capitalized when all the following criteria have been met, (a) we receive the requisite operating permits, (b) completion of a favorable Feasibility Study and (c) approval from
our board of director’s authorizing the development of the ore body. Until such time all these criteria have been met, we record pre-development costs to expense as incurred.
The current book value of our property is approximately $3.1 million, which is recorded in mineral properties and reflects the value that was attributed to the purchase of CK
Gold. We do not have any costs on our balance sheet related to plant or equipment as we have not incurred any such costs.
Recent Activities
Primarily in support of the feasibility study presently underway, during the 2021 field season, 47 core, rotary and conventional holes were drilled at the CK Gold Project. The
primary purpose of the drilling program is to supplement the geotechnical and hydrological information.
Additional work centered around the capture and interpretation of environmental base line data encompassing sub-surface and surface water, fauna, flora, cultural, air quality,
meteorological conditions, wetlands and socio-economic factors in the project area. Starting in September 2020 over 19 months of monitoring data have been gathered and
ongoing monitoring in critical areas continues. With the data in hand, the project impacts have been assessed and the preparation of a mine operating permit application
submission is in progress for the second half of 2022.
Additionally, a great deal of social outreach has been conducted to familiarize the immediate population and the Wyoming, Cheyenne and Laramie governmental and regulatory
agencies.
Geological Potential of the CK Gold Project
Potential to expand existing resource exists primarily at depth beyond current drilling depths and to the south of the proposed pit. Numerous drill holes end in significant
mineralization. We are developing a program to evaluate a magnetic anomaly, similar to that found centered on the CK Gold mineralization, ½ mile to the southeast of the
project.
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 (Figures 2 and 3).
10
Figure 2 – Location of Keystone, Maggie Creek and Gold Bar North Projects and Major Gold Trends in Nevada
11
Figure 3 – Keystone Project Claim Boundaries
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The Keystone Project is accessible via unpaved roads. Navigation through the interior of the project is by off-road vehicle on exploration tracks.
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 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.
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.
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Under the terms of the Purchase and Sale Agreement, dated May 25, 2016, under which we acquired the claims, we had the right to buy down 1% of the NSR owed to Nevada
Gold Ventures LLC at any time through the fifth anniversary of the closing date, May 25, 2021, 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, May 25, 2024, for $5,000,000. At April 30, 2022, 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 do not currently anticipate
making 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.
Geology and Mineralization
To date, a technical report has not been prepared on the Keystone Project. Keystone is positioned on the prolific Cortez gold trend. 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.
Infrastructure and Facilities
The Keystone Project does not currently include any significant facilities. The Keystone Project sits some 10 miles to the southwest of Nevada Gold mines Cortez Complex.
The Cortez Complex, consisting of surface and underground mines, is served by roads and power, while water in the area is extracted from sub-surface water resources. The
Keystone Project is served by paved and unpaved roads, which extend down trend from the Cortez Complex to the north and additional road and infrastructure to the north-east.
The whole area is some 30 miles to the south of the I-80 interstate corridor between the towns of Battle Mountain and Winnemucca, with Elko, Nevada being the dormitory
town for the majority of the workforce and support services.
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Maggie Creek Project, Nevada
On September 10, 2019, we, 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,
we agreed to issue to the NumberCo Shareholders 200,000 shares of our common stock in exchange for all of the issued and outstanding shares of NumberCo, with NumberCo
becoming a wholly owned subsidiary.
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,
we acquired from NumberCo cash of $159,063, and assumed liabilities consisting of accounts payable totaling $125,670. As a result, we 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 $4.5 million in exploration and development expenditures (“Initial Earn-in”) and
payment to Renaissance Exploration, Inc. (“Renaissance”), now Orogen Royalties, Inc. (OGN: TSX-V), 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.
Location
The Maggie Creek Project lies on the eastern margin of the Lynn-Carlin window, adjacent to the giant Gold Quarry deposits. U.S. Gold controls approximately three-square
miles of unpatented mining claims on the Carlin Trend (Figure 4).
Figure 4 – Location of Maggie Creek Project and Major Gold Trends in Nevada
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Figure 5 – Maggie Creek Project Claim Boundaries
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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.
Geology and Mineralization
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.
U.S Gold Corp. Maggie Creek Exploration Activities
On April 7, 2021, we announced new targets for a Maggie Creek exploration drilling program including:
- We drilled two holes totaling 4,400 feet.
- This program seeks to assess a new target concept below post-mineral cover to the east of Nevada Gold Mines’ Gold Quarry mine. Target was developed using structural
projections, gravity data and geochemistry
On June 30, 2021, we announced the successful interception of the Popovich Formation, the host of the majority of gold mine in the northern Carlin trend. A presumed
hangingwall structure above the Popovich contained sooty pyrite and orpiment in a hydrothermal breccia (Figure 6). Assays were anomalous in gold, arsenic, mercury and
thallium with a high of 165 ppb gold. The second hole was terminated within the upper plate Vinini sandstone at 1,503 ft. The hole is cased and secured for reentry, permitting
completion of the hole into the Popovich in the near future.
Infrastructure and Facilities
The Maggie Creek project does not currently include any significant facilities The property is located within two to three miles of the Nevada Gold Mines Gold Quarry Mine.
The area is reached via the I80 interstate and the turn-off to the site is at Carlin some 5-miles south of the Maggie Creek Claims. The Maggie Creek property sits on the prolific
Carlin Trend which host some of the largest gold mines in the State of Nevada. As such, significant paved road and power infrastructure pass withing 2-miles of the Maggie
Creek Property.
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The Challis Gold Project, Idaho
Location
The Challis Gold property is situated in the Salmon River Mountains, approximately 40 km (25 mi) southwest of the town of Salmon, Idaho, and 69 km (43 mi) north of the
smaller town of Challis (Figure 7). The project area is considered to be within the Cobalt Mining District, as the past-producing Blackbird Cobalt Mine is located 9.3 km (5.75
mi) north-northwest of the property. The nearly-abandoned town of Cobalt, a previous company town for the Blackbird Mine, is along Panther Creek 9.7 km (6 mi) northeast of
the property. Meridian Gold’s Beartrack Mine, the closest of the larger gold mines in the region, is 24 km (15 mi) northeast of the Challis Gold Project. The central portion of
the property is located at approximately 45º 2’ North Latitude and 114º 20’ West Longitude. The claims are situated in the south-central portion of unsurveyed Township T20N,
R18E.
- Figure 7: The Challis Gold Project Location in Idaho
Title and Ownership for Challis Gold Project
All of the mining claims comprising the Musgrove property are unpatented lode mining claims that have been recorded in the Lemhi County Court House in Salmon, Idaho and
filed with the US Bureau of Land Management office in Boise.
History of Prior Operations and Exploration
Early mining dates to the late 1880’s when gold was discovered at the nearby Yellow Jacket Mine and copper and cobalt was discovered north of the project area at the
Blackbird Mine. Small scale intermittent mining was conducted in the project area from 1908 through the 1930’s at the Musgrove Mine and at the Smith-Gahan Mine.
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In the mid-1980’s, alteration and quartz veining was identified located along the ridge north of Musgrove CreekA large block of claims covering the area was staked by an
independent geologist and then leased to Atlas Minerals. Atlas completed an extensive sampling program and, in 1991, drilled nine reverse circulation holes resulting in the
discovery of significant mineralization at the Johny’s Point deposit.
The project was acquired by Newmont in 1992 as part of the Grassy Mountain Deposit acquisition. Newmont conducted an extensive exploration program between 1992 and
the fall of 1995 consisting of mapping and rock chip sampling. Twenty-seven core holes were completed consisting of nine holes in the Johny’s Point area and 18 holes testing
targets along strike from Johny’s Point. Newmont concluded that the project did not meet the potential for their size criteria and the project was dropped.
In 1996, Meridian Gold acquired the property and drilled an additional 20 core holes and three reverse circulation drill holes. The property was subsequently returned to the
owner due to declining gold prices.
In 2003, Wave Exploration leased the property and completed a GIS compilation of the surface and drill hole data. Wave subsequently commissioned a technical report. In
2004, Wave drilled two confirmation drill holes and two step out holes and completed a soil geochemical program northwest of Johny’s Point.
In 2005, Wave optioned the property to Journey Resources. In 2006 and 2007, Journey drilled nine reverse circulation drill holes and five core holes northwest of Johny’s Point.
There is no documented exploration activity from 2008 until 2018. On September 1, 2018, Journey Resources failed to pay the required claim payments to the Bureau of Land
Management and the claims were forfeited. Subsequently, Northern Panther Resources Corporation located or acquired new claims covering the project. In 2020, we acquired
Northern Panther Resources. In 2020, we contracted with Wright Geophysics to conduct a ground magnetic geophysical over the current claim block. This survey identified a
prominent low magnetic linear feature that trends from the Musgrove Mine north-northwest for over two miles.
Geology and Mineralization
The project is located within the Trans-Challis Fault System, a prominent NE-trending fault zone which crosscuts central Idaho and hosts numerous gold deposits. Host rocks
consist of quartzites and phyllites of the Precambrian Apple Creek Fm with minor mineralization within the Eocene Challis Volcanics. The Musgrove Mine – Johny’s Point
mineral trend is within and adjacent to the Musgrove Fault, a northwest-trending fault that brings the Challis Volcanics into contact with the Precambrian rocks. This is a major
structural zone that forms the northern edge of the Panther Creek Graben.
Gold mineralization occurs within epithermal quartz veins, quartz vein stockworks, and silicified breccia. The mineralization displays the characteristics of a low sulfidation
epithermal gold system. The Musgrove Mine – Johny’s Point mineral trend has been defined by a broad soil and rock chip gold and arsenic anomaly that extends a distance
3000 feet and is up to 800 feet wide. Approximately 600 feet of this zone has been drilled with the remainder tested by wide spaced drilling.
Infrastructure and Facilities
The Challis Gold project does not currently include any significant facilities. The Challis property is located in the Salmon-Challis National Forest and served by paved and
unpaved roads. There are historic workings in the area and there has been recent mining activity in the area. The site is somewhat remote from grid power and power lines
would have to be extended into the area, or onsite power generation used to support an eventual operation. There is water in the area from both surface and sub-surface sources.
The Bear Track operation, now closed but under renewed exploration, is some 16 miles as the crow flies to the northeast of the property. Historic mining was conducted;
however the facilities have been abandoned decades ago and the nearest habited area is a forest ranger station near Forney some 5-miles from site.
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 and the US Forest Service (“Forest Service”) with respect to mining claims on federal lands.
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Future exploration drilling on any of our properties that consist of BLM or Forest Service land will require us to either file a Notice of Intent (NOI) or a Plan of Operations,
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.
The State of Wyoming, where we focus mineral exploration and development efforts at the CK Gold Project, requires exploration and mining projects to obtain permits from
the Wyoming Department of Environmental Quality (WDEQ), and various other state agencies. 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. WDEQ in granting permits requires that reclamation plans and permits
are in place and that bonds have been secured covering the cost of remediation of disturbances on both state and private land.
Executive Officers of U.S. Gold Corp.
Name
Eric Alexander
George M. Bee
Kevin Francis
Age
55
64
62
Principal Occupation
Chief Financial Officer - Principal Financial and Accounting Officer
of U.S. Gold Corp.
Chief Executive Officer, President and Director of U.S. Gold Corp.
Vice President – Exploration and Technical Services
Officer/
Director Since
2020
2020
2021
Eric Alexander is our Chief Financial Officer and Secretary and has been with us since September 2020. He has over 30 years of corporate, operational and business
experience, and over 15 years of mining industry experience. Previously he served as Corporate Controller of Helix Technologies, Inc., a publicly traded software and
technology company from April 2019 to September 2020. Prior to that, he served as the Vice President Finance and Controller of Pershing Gold Corporation, a mining
company (formerly NASDAQ: PGLC), from September 2012 until April 2019. Prior to that, Mr. Alexander was the Corporate Controller for Sunshine Silver Mines
Corporation, a privately held mining company with exploration and pre-development properties in Idaho and Mexico, from March 2011 to August 2012. He was a consultant to
Hein & Associates LLP from August 2012 to September 2012 and a Manager with Hein & Associates LLP from July 2010 to March 2011. He served from July 2007 to May
2010 as the Corporate Controller for Golden Minerals Company (and its predecessor, Apex Silver Mines Limited), a publicly traded mining company with operations and
exploration activities in South America and Mexico. In addition to his direct experience in the mining industry, he has also held the position of Senior Manager with the public
accounting firm KPMG LLP, focusing on mining and energy clients. Mr. Alexander has a B.S. in Business Administration (concentrations in Accounting and Finance) from the
State University of New York at Buffalo and is also a licensed CPA.
George M. Bee has been serving as a member of our Board since November 2020 and our Executive Chairman from March 2021 to May 2022. He was appointed as our
President in August 2020 and become Chief Executive Officer in November 2020. Mr. Bee is a senior mining industry executive, with deep mine development and operational
experience. He has an extensive career advancing world-class gold mining projects in eight countries on three continents for both major and junior mining companies. In 2018,
Mr. Bee concluded a third term with Barrick Gold Corporation (“Barrick Gold”) (NYSE: GOLD) as Senior VP Frontera District in Chile and Argentina working to advance
Pascua Lama feasibility as an underground mine. This capped a 16-year tenure at Barrick Gold, where he served in multiple senior-level positions, including Mine Manager at
Goldstrike during early development and operations, Operations Manager at Pierina Mine taking Pierina from construction to operations, and General Manager of Veladero
developing the project from advanced exploration through permitting, feasibility and into production. Previously, Mr. Bee held positions as CEO and Director of Jaguar Mining
Inc. between March 2014 and December 2015, President and CEO of Andina Minerals Inc. from February 2009 until January 2013 and Chief Operating Officer for Aurelian
Resources, Inc. from 2007 to 2009. As Chief Operating Officer of Aurelian Resources in 2007, he was in charge of project development for Fruta del Norte in Ecuador until
Aurelian was acquired by Kinross Gold in 2008. Mr. Bee has served on the board of directors of Stillwater Mining Company, Sandspring Resources Ltd., Jaguar Mining,
Peregrine Metals Ltd. and Minera IRL. He received a Bachelor of Science degree from the Camborne School of Mines in Cornwall, United Kingdom. He also holds ICD.D
designation from the Institute of Corporate Directors.
Kevin Francis is our Vice President - Exploration and Technical Services and has been with us since July 2021. Mr. Francis has held many senior roles within the mining
industry, including VP of Project Development for Aurcana Corporation, VP of Technical Services for Oracle Mining Corporation, VP of Resources for NovaGold Resources
and Principal Geologist for AMEC Mining and Metals. Most recently, he consulted to U.S. Gold Corp. as Principal of Mineral Resource Management LLC, a consultancy
providing technical leadership to the mining industry, as well as through his association with Gustavson Associates (a member of WSP) since September 2020. Mr. Francis is a
“qualified person” as defined by SEC S-K 1300 and Canadian NI 43-101 reporting standards and holds both an M.S. degree and a B.A. in geology from the University of
Colorado.
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Item 1A. RISK FACTORS
RISKS RELATED TO OUR FINANCIAL CIRCUMSTANCES
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 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, 2022,
management has concluded that our internal controls over financial reporting were not effective.
There is substantial doubt about whether we can continue as a going concern.
To date, we have earned no revenues and have incurred accumulated net losses of $57.9 million. We have limited financial resources. As of April 30, 2022, we had cash and
cash equivalents of $9.1 million and working capital of $8.8 million. Therefore, our continuation as a going concern is dependent upon our achieving a future financing or
strategic transaction. However, there is no assurance that we will be successful pursuing a financing or strategic transaction. Accordingly, there is substantial doubt as to
whether our existing cash resources and working capital are sufficient to enable us to continue our operations for the next 12 months as a going concern. Ultimately, in the event
that we cannot obtain additional financial resources, or achieve profitable operations, we may have to liquidate our business interests and investors may lose their investment.
The accompanying consolidated financial statements have been prepared assuming that our company will continue as a going concern. Continued operations are dependent on
our ability to obtain additional financial resources or generate profitable operations. Such additional financial resources may not be available or may not be available on
reasonable terms. Our consolidated financial statements do not include any adjustments that may result from the outcome of this uncertainty. Such adjustments could be
material.
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 mineral reserves and commercial viability, including the ability to find sufficient mineral reserves to support a
commercial mining operation;
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● 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;
● inability to secure fair and reasonable terms associated with mineral leases; 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 will require significant additional capital to fund our business plan.
We will be required to expend significant funds 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 and copper. 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, development activities and the possible partial
or total loss of our potential interest in our properties.
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RISKS RELATED TO OUR BUSINESS
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.
Most of our projects are in the exploration stage.
Although we have established an estimate of mineral reserves on the CK Gold Project, there are no current estimates of mineral resources or mineral reserves at the Keystone
Property, Maggie Creek Property or Challis Gold Project. There is no assurance that we can establish the existence of any mineral reserves on those projects in commercially
exploitable quantities. If we do not establish the existence of mineral reserves or mineral resources on those projects, we may lose all of the funds that we expend on
exploration.
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 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 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:
● the timing and cost, which are considerable, of the construction of mining and processing facilities;
● 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. 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.
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 and development activities,
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:
● laws and regulations governing mineral concession acquisition, prospecting, exploration and development and operation;
● 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 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.
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.
We cannot guarantee that title to our properties will not be challenged. Title insurance is not available for our mineral properties, and our ability to ensure that we have obtained
secure rights to individual mineral properties or mining concessions may be severely constrained. 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. We cannot provide any assurances that there are no title defects affecting
our properties. 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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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. The recent inflationary environment has also resulted in a
significant increase in costs, including fuel. 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.
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 CK Gold, Keystone, Maggie
Creek and Challis Gold 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 Orogen Royalties, Inc. 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 will achieve the work commitment expenditure and the payment of $250,000 to Orogen Royalties, Inc. 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. In addition, we are dependent upon our employees being able to safely perform their jobs,
including the potential for physical injuries or illness.
We are dependent on a relatively small number of key employees, including our President and Chief Executive Officer, our Chief Financial Officer and our Vice President –
Exploration and Technical Services. 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.
Our success is also dependent on the contributions of our highly skilled and experienced workforce. Our ability to achieve our operating goals depends upon our ability to
recruit, hire, retain and develop qualified and diverse personnel to execute on our strategy. There continues to be competition over highly skilled personnel in our industry. If we
lose key personnel, or one or more members of our senior management team, and we fail to develop adequate succession plans, or if we fail to hire, retain and develop qualified
and diverse employees, our business, financial condition, results of operations and cash flows could be harmed. COVID-19 vaccine mandates and other COVID-19 related laws
and policies could make hiring and retaining highly skilled key employees more difficult in the future.
Our business is dependent upon our workforce being able to safely perform their jobs, including the potential for physical injuries or illness. If we experience periods where our
employees are unable to perform their jobs for any reason, including as a result of illness (such as COVID-19), our business, financial condition, results of operations and cash
flows could be adversely affected.
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 the COVID-19 pandemic, 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.
The COVID-19 pandemic has resulted in numerous actions taken by governments and governmental agencies in an attempt to mitigate the spread of the virus, including travel
bans, quarantines and other emergency public health measures. These measures have resulted in a significant reduction in economic activity and extreme volatility in the
financial markets.
The risks we face 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 ensure social distancing
recommended safety standards While our contractors are currently able to access our projects, there can be no assurances that this access will continue if subsequent waves of
the infection or variant strains appear.
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The COVID-19 pandemic has brought tremendous uncertainty to the global financial markets. As an exploration and development 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.
RISKS RELATED TO THE MINERAL EXPLORATION INDUSTRY
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 we have established the existence of mineral reserves at the CK Gold Project, we may be
unsuccessful in bringing it into production on a profitable basis. 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.
Estimates of mineral reserves and 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 or mineral reserves within the earth using statistical sampling techniques. Estimates of mineral resources or mineral reserves on our properties are 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.
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We may be denied the government licenses and permits which we need to explore or mine on 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.
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.
We may not be able to maintain the infrastructure necessary to conduct exploration and development activities.
Our exploration and development activities depend upon adequate infrastructure. Reliable roads, bridges, power sources and water supply are important factors which affect
capital and operating costs. Climate change or 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:
● 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.
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, wildfires 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.
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RISKS RELATED TO OWNERSHIP OF OUR COMMON STOCK
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 and copper;
● 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 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. 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 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 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 possible that we will issue additional securities to
pay for services 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.
31
The Company does not intend to pay dividends in the foreseeable future.
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 3. LEGAL PROCEEDINGS
From time to time we may be involved in claims and legal actions that arise in the ordinary course of business. To our knowledge, there are no material pending legal
proceedings to which we are a party or of which any of our property is the subject.
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, 2022, 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.
32
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 August 12, 2022, we had 452 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 August 12, 2022, the closing sales price of our common stock as reported on NASDAQ Capital Market was $4.60 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, 2022 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. [RESERVED].
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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 CK Gold Project in Wyoming, the Keystone and Maggie Creek Projects in Nevada and the Challis Gold Project in Idaho. We have
established an estimate of proven and probable mineral reserves under S-K 1300 at our CK Gold Project, where we are conducting exploration and pre-development activities,
and all of our activities on our other properties are exploratory in nature.
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.
Summary of Activities for the Year ended April 30, 2022
During the year ended April 30, 2022, we focused primarily on advancing our CK Gold Project in Wyoming with the completion of an S-K 1300-compliant Pre-Feasibility
Study (“PFS”), exploration drilling to enhance the estimate of mineral resources and minerals reserves, continued progress in the preparation of our permit to mine application
submittal and further engineering studies towards the completion of a feasibility study. Additional exploration and geologic investigations were undertaken, enhancing our
understanding of the Keystone Project deposit in Nevada, completed a drill program on our Maggie Creek Project in Nevada, analyzed the historic geological data on the
Challis Gold Project in Idaho. Management focused on investor relations and awareness, resulting in the completion of two equity financings.
An overview of certain significant events follows:
CK Gold Project, Wyoming
● On December 1, 2021, we released the results of our PFS and published our Technical Summary Report in accordance with S-K 1300. The PFS was prepared by
Gustavson Associates, LLC with an effective date of November 15, 2021. See “Items 1 and 2: Business and Properties – Our Mineral Properties and Projects – CK
Gold Project, Wyoming” for a discussion of the highlights of the PFS.
● On March 10, 2022, we announced that we awarded Samuel Engineering Inc. to complete the next phase of engineering for our CK Gold Project.
● On April 19, 2022, we announced that drilling during our 2021 field season extended mineralization 700 feet below the proposed open pit. These holes have
discovered future mineral resource expansion potential at depth below the proposed open pit and to the southeast of the proposed pit.
● On June 21, 2022, we announced an update on the status of our preparations to file mine construction and operating permits within the next few months for
consideration by the State of Wyoming authorities, principally the Wyoming Department of Environmental Quality (WDEQ) and the Office of State Lands and
Investments.
● On July 12, 2022, we announced assay results of the last three holes from our 2021 field season which continues to confirm gold and copper mineralization beyond our
current resource estimate. In addition, we hosted Dr. Richard Sillitoe on site at our CK Gold Project. Dr. Sillitoe confirmed previous geological examinations which
theorized that the copper and gold mineralization was derived from a porphyritic granodiorite intrusion.
33
Keystone Project, Cortez Trend, Nevada
● On May 19, 2021, we received Bureau of Land Management (BLM) approval for an additional 50 acres of disturbance under our effective Plan of Operations (POO)
for Keystone. We advanced the required reclamation bond. We also announced potential interest in the Keystone project from various industry partners for potential
joint venture opportunities.
Maggie Creek Project, Carlin Trend, Nevada
● On June 30, 2021, we announced the successful completion of our Maggie Creek 2021 contractual exploration program, drilling 2 holes for a total of 4,440 feet (1,353
meters). With these 2 holes, we satisfied our 2021 contractual exploration commitments at Maggie Creek and plan to review the results for future potential exploration
programs.
During the year-ended April 30, 2022 we also satisfied our 2022 contractual exploration commitments based upon the above drilling and further analysis of the results.
Challis Gold Project, Idaho
● On May 26, 2021, we announced an exploration and operational update for our Challis Gold Project in Idaho. Highlights included:
- We continue towards the completion of a Plan of Operations as the next phase of exploration;
- We engaged in mapping, geochemical and geophysical surveys in the second half of 2021; and
-
Potential strategic joint-venture partners have expressed interest in our Challis Gold project
Sales of Common Shares to raise a total of $7.5 million in cash
On February 16, 2022, we completed a registered direct offering with certain institutional and accredited investors for the issuance of 384,741 shares of common stock at a
price of $6.50 per share and warrants (the “February 2022 Warrants”) to purchase 192,370 shares of the Company’s common stock at an exercise price of $8.00 per share (the
“February 2022 Registered Offering”). The February 2022 Warrants are exercisable immediately following issuance and will expire five years from the issuance date. The
aggregate gross proceeds of the February 2022 Registered Offering are approximately $2.5 million.
On March 15, 2022, we completed a registered direct offering with a single institutional investor for the issuance of 625,000 shares of common stock at a price of $8.00 per
share and warrants (the “March 2022 Warrants”) to purchase 625,000 shares of the Company’s common stock at an exercise price of $8.60 per share (the “March 2022
Registered Offering”). The March 2022 Warrants are exercisable six months following issuance and will expire five years from the initial exercise date. The aggregate gross
proceeds of the March 2022 Registered Offering are approximately $5.0 million.
Shareholder Meeting, Appointment of Directors & Corporate Matters
On September 20, 2021, we held our annual meeting of stockholders. At that meeting, among other matters, shareholders re-elected the five incumbent Directors to hold office
until the next annual meeting of stockholders and until their successors are named and qualified or until their earlier resignation or removal and approved our audit firm for our
fiscal year-ended April 30, 2022.
On July 19, 2021, we appointed Kevin Francis as our Vice President – Exploration and Technical Services.
On May 18, 2022, we appointed Luke Norman to serve as non-independent Chairman of our board of directors. In connection with the appointment of Mr. Norman as
Chairman, the board of directors expanded from 5 to 6 directors.
Results of Operations
The Years ended April 30, 2022 and 2021:
Net Revenues
We are a development stage company with no operations, and we generated no revenues for the years ended April 30, 2022 and 2021.
Operating Expenses
Total operating expenses for the year ended April 30, 2022 as compared to the year ended April 30, 2021, were approximately $14,952,000 and $12,387,000, respectively. The
approximate $2,565,000 increase in operating expenses for the year ended April 30, 2022 as compared to the year ended April 30, 2021, is comprised of (i) a decrease in
compensation of approximately $1,047,000 primarily due to decrease in compensation related to stock-based compensation from RSU’s and stock option grants to our officers
and stock-based compensation to two former officers from the accelerated vesting of certain stock options and restricted stock units during the prior period for a total of
$1,198,000 offset by increase in cash compensation of $151,000 primarily from bonuses to our officers and hiring one full-time employee (ii) an increase of approximately
$3,211,000 in exploration expenses on our mineral properties due to an increase in exploration activities in our CK Gold property and also at our Maggie Creek property, (iii)
an increase in professional and consulting fees of approximately $143,000 primarily due to an increase in general strategic, investor relations, and permitting consulting
services of $498,000 offset by a decrease in stock-based consulting fees of approximately $231,000, a decrease in legal fees of $76,000 and accounting fees of $48,000, and (iv)
an increase in general and administrative expenses of approximately $258,000 due primarily to increases related to insurance, travel and conference related expenses, lease
expense, advertising expenses and office expenses.
Loss from Operations
We reported loss from operations of approximately $14,952,000 and $12,387,000 for the years ended April 30, 2022 and 2021, respectively.
Net Loss
We reported a net loss of approximately $13,931,000 and $12,387,000 for the years ended April 30, 2022 and 2021, respectively.
34
Liquidity and Capital Resources
The following table summarizes total current assets, liabilities and working capital at April 30, 2022 compared to April 30, 2021, and the increase (decrease) between those
periods:
Current Assets
Current Liabilities
Working Capital
April 30,
2022
April 30,
2021
Increase
(decrease)
$
$
$
9,899,414
1,136,035
8,763,379
$
$
$
14,075,765
619,038
13,456,727
$
$
$
(4,176,351)
516,997
(4,693,348)
As of April 30, 2022, we had working capital of $8,763,379, as compared to working capital of $13,456,727 as of April 30, 2021, a decrease of $4,693,348.
Our consolidated financial statements are prepared using the accrual method of accounting in accordance with 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. For the year ended April 30, 2022
and 2021, we incurred losses in the amounts of approximately $13.9 million and $12.4 million, respectively. As of April 30, 2022, we had cash of approximately $9.1 million,
working capital of approximately $8.8 million, and an accumulated deficit of approximately $57.9 million. As a result of the utilization of cash in its operating activities, and
the development of its assets, we have incurred losses since we commenced operations. Our primary source of operating funds since inception has been equity financings. As
noted above, in February 2022, we completed a registered offering which raised gross proceeds of $2.5 million, in March 2022 we completed another registered offering for
gross proceeds of $5.0 million before deducting fees and other estimated offering expenses and in April 2022 warrants were exercised for gross proceeds of $1.0 million.
For the twelve months ended April 30, 2023, we anticipate that we will spend approximately $1.1 million in exploration expenses, $1.5 million in development costs on the CK
Gold Project and $3.1 million in general and administrative expenses. The actual amount of cash expenditures that we incur during the twelve-month period ending April 30,
2023 may vary significantly from the amounts specified above and will depend on a number of factors, including variations in the costs for continued exploration, project
assessment, and advancement of the CK Gold Project and our exploration properties. If cash expenditures are greater than anticipated, we may need to take certain actions to
maintain sufficient cash balances over the next twelve months, including asset dispositions or raising additional equity capital. As of the date of this report, we believe we have
sufficient cash for the next twelve months to fund our corporate activities and general and administrative costs and currently undertaken project activities related to permitting
and engineering studies. However, in order to advance any of its projects past the aforementioned objectives we will need to raise additional funds.
To the extent we require additional funding, we cannot be certain that additional funding will be available on acceptable terms, or at all. To the extent 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.
Cash Flows from Operating Activities
Net cash used in operating activities totaled $12.6 million and $8.6 million for the years ended April 30, 2022 and 2021, respectively. Net cash used in operating activities
during the year ended April 30, 2022 primarily increase due to increase in net loss and increase in net changes in accounts payable and accrued liabilities as compared to the
year ended April 30, 2021. Additionally, we expensed approximately $1,670,000 in stock-based compensation for shares, RSU’s, and stock options issued to officers,
employee, and consultants during the year ended April 30, 2022 and approximately $191,000 for issuance costs related to the March 2022 warrants. Net changes of
approximately $270,000 in operating assets and liabilities are primarily due to net increases in prepaid expenses and other assets of approximately $42,000, increase in
reclamation of bond deposits of approximately $114,000, increase of approximately $466,000 in accounts payable to trade vendors and decrease in operating lease liability of
approximately $40,000.
Cash Flows from Investing Activities
Net cash used in investing activities totaled approximately $179,000 for the year ended April 30, 2022 primarily due to purchase of property and equipment as compared to net
cash provided by investing activities for the year ended April 30, 2021 of approximately $2,457,000 primarily consisted of proceeds received in connection with a share
exchange agreement of $2,500,000 minimally offset by approximately $43,000 from purchase of property and equipment.
Cash Flows from Financing Activities
Net cash provided by financing activities totaled approximately $8.2 million for the year ended April 30, 2022 primarily due to the sale of our common stock and warrants for
approximately $7.2 million, net of offering costs, in February 2022 and March 2022 for cash and proceeds received from the exercise of warrants for approximately $1.0
million. Net cash provided by financing activities totaled approximately $17.0 million, net of issuance costs, for the year ended April 30, 2021 primarily due to proceeds from
the issuance of Series I Preferred Stock and warrants in August 2020 for approximately $5.5 million, proceeds from exercise of stock warrants for approximately $2.5 million
and the registered direct sale of common stock and warrants in February 2021 for approximately $9.0 million.
Recently Issued Accounting Pronouncements
See Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements for a summary of recently issued accounting pronouncements.
Critical Accounting Policies
The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance
with U.S. generally accepted accounting principles. The preparation of our consolidated 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 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 warrant
liability, asset retirement obligations and the valuation of deferred tax assets and liabilities.
35
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.
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.
Mineral Rights
Costs of leasing, exploring, carrying and retaining unproven mineral lease properties are expensed as incurred. We expense all mineral exploration costs as incurred. Where we
have identified proven and probable mineral reserves on any of its properties, development costs will be capitalized when all the following criteria have been met, (a) we
receive the requisite operating permits, (b) completion of a favorable Feasibility Study and (c) approval from our board of director’s authorizing the development of the ore
body. Until such time all these criteria have been met we record pre-development costs to expense as incurred.
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. 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.
To date, we have expenses all exploration and pre-development costs as none of its properties have satisfied the criteria above for capitalization.
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”.
Warrant Liability
We account for certain warrants that do not meet the criteria for equity treatment in accordance with the guidance contained in ASC 815 “Derivatives and Hedging” whereby
under that provision these warrants must be recorded as a liability. Accordingly, we classified these warrant instruments as a liability at fair value and adjusts the instruments to
fair value at each reporting period. The liability will be re-measured at each balance sheet date until the warrants are exercised or expire, and any change in fair value will be
recognized in our statement of operations. The fair value of these warrants are estimated using the Monte Carlo simulation model. Such warrant classification is also subject to
re-evaluation at each reporting period.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
36
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
U.S. GOLD CORP. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2022
Index to Consolidated Financial Statements
Consolidated Financial Statements:
Report of Independent Registered Public Accounting Firm (PCAOB ID 688)
Consolidated Balance Sheets as of April 30, 2022 and 2021
Consolidated Statements of Operations – Years ended April 30, 2022 and 2021
Consolidated Statements of Changes in Stockholders’ Equity - Years ended April 30, 2022 and 2021
Consolidated Statements of Cash Flows - Years ended April 30, 2022 and 2021
Notes to Consolidated Financial Statements - Years ended April 30, 2022 and 2021
37
Page
F-1
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 sheets of U.S. Gold Corp. and Subsidiaries (the “Company”) as of April 30, 2022 and 2021, the related consolidated
statements of operations, changes in stockholders’ equity and cash flows for each of the two years in the period ended April 30, 2022, 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,
2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended April 30, 2022, 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
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits 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 audits we are required to obtain an understanding of internal control over financial reporting but not for the
purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the 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 audits 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 audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be
communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved especially challenging,
subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are
not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
F-1
Accounting for Complex Financial Instruments
Description of the Matter
As described in Notes 2, 9 and 10 to the consolidated financial statements, the Company entered into a definitive agreement in connection with a direct offering of 625,000
shares of the Company’s common stock and warrants to purchase 625,000 shares of the Company’s common stock. The warrants met the criteria for liability accounting and the
fair value was estimated using the Monte Carlo Method. The Company determines whether the warrants are classified as either a derivative liability or equity instrument
depending on the specific terms of the agreement based upon the following criteria:
Classification as equity of any contracts that:
a)
require physical settlement or net-share settlement or
b) gives the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement)
Classification as liabilities of any contracts that:
a)
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
b) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement)
The estimate of fair value of the warrant liability requires a high degree of subjective judgment which is primarily due to the complexity of the valuation model used and the
sensitivity of underlying significant assumptions.
We identified the accounting for the complex financial instruments and the estimation of the fair value of the warrant liabilities as a critical audit matter. Evaluating the
Company’s judgments in determining whether the warrants are a liability and the assumptions used in the valuation required a high degree of complex auditor judgment.
How We Addressed the Matter in Our Audit
Our audit procedures related to the accounting of warrant liability to address this critical audit matter included the following:
● We gained an understanding of the Company’s process to identify and account for warrant liabilities.
● We obtained and read the relevant agreement in which the Company evaluated and compared the terms of the agreement to the Company’s assessment.
● We reviewed the Company’s analysis to determine if the warrants met the criteria for classification as a liability in accordance with Accounting Standards Codification
815, Derivatives and Hedging.
● We obtained valuation report prepared by third party valuation specialists and performed the following procedures:
○ Assessed the qualifications of the third party specialists
○ Tested the mathematical accuracy of all schedules used in the analysis
○ Evaluated the reasonableness of the valuation methodology and significant inputs and assumption
○ Performed a sensitivity analysis to determine if the third party specialists’ fair value calculations were reasonable
/s/ Marcum LLP
Marcum LLP
We have served as the Company’s auditor since from 2016 through 2018 and subsequently reappointed as the Company’s auditor in 2019.
New York, NY
August 15, 2022
F-2
U.S. GOLD CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
April 30,
2022
2021
ASSETS
CURRENT ASSETS:
Cash
Prepaid expenses and other current assets
Total current assets
NON - CURRENT ASSETS:
Property, net
Reclamation bond deposit
Operating lease right-of-use asset, net
Mineral rights
Total non - current assets
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities
Operating lease liabilities, current portion
Total current liabilities
LONG- TERM LIABILITIES
Warrant liability
Asset retirement obligation
Operating lease liabilities, less current portion
Total long-term liabilities:
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, 2022 and 2021)
Convertible Series G Preferred stock ($0.001 Par Value; 127 Shares Authorized; none issued and
outstanding as of April 30, 2022 and 2021)
Convertible Series H Preferred stock ($0.001 Par Value; 106,894 Shares Authorized; none issued and
outstanding as of April 30, 2022 and 2021)
Convertible Series I Preferred stock ($0.001 Par Value; 921,666 Shares Authorized; none issued and
outstanding as of April 30, 2022 and 2021)
Common stock ($0.001 Par Value; 200,000,000 Shares Authorized; 8,349,843 and 7,065,621 shares
issued and outstanding as of April 30, 2022 and 2021)
Additional paid-in capital
Accumulated deficit
Total stockholders’ equity
$
$
$
9,111,512
787,902
$
9,899,414
349,917
832,509
64,064
16,356,862
17,603,352
27,502,766
$
1,080,405
55,630
$
1,136,035
2,440,000
260,196
8,734
2,708,930
3,844,965
-
-
-
-
8,350
81,555,379
(57,905,928)
23,657,801
Total liabilities and stockholders’ equity
$
27,502,766
$
See accompanying notes to consolidated financial statements.
F-3
13,645,405
430,360
14,075,765
172,222
718,509
-
16,356,862
17,247,593
31,323,358
619,038
-
619,038
-
204,615
-
204,615
823,653
-
-
-
-
7,065
74,467,686
(43,975,046)
30,499,705
31,323,358
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 from operations
Other income (expense):
Offering cost related to warrant liability
Change in fair value of warrant liability
Total other income, net
Loss before provision for income taxes
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, 2022
For the Year
Ended
April 30, 2021
$
-
$
-
2,287,020
7,231,097
4,228,139
1,205,786
14,952,042
(14,952,042)
(190,840)
1,212,000
1,021,160
3,334,227
4,019,838
4,085,516
947,513
12,387,094
(12,387,094)
-
-
-
$
$
$
(13,930,882)
(12,387,094)
-
-
(13,930,882)
$
(12,387,094)
-
$
$
(13,930,882)
(1.92)
7,253,760
(5,530,004)
(17,917,098)
(3.80)
4,712,755
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, 2022 AND 2021
Preferred Stock -
Series F
$0.001 Par Value
Preferred Stock -
Series G
$0.001 Par Value
Preferred Stock -
Series H
$0.001 Par Value
Preferred Stock -
Series I
$0.001 Par Value
Shares Amount Shares Amount Shares
Amount
Shares
Amount
Shares
Common Stock
$0.001 Par Value
Additional
Paid-in
Amount Capital
Accumulated
Deficit
Total
Stockholders’
Equity
Balance, April 30, 2020
- $ -
57 $ - - $ - - $ - 2,903,393 $
2,903 $ 41,093,050 $ (31,587,952) $
9,508,001
Issuance of preferred stock and warrants,
net of issuance cost
Issuance of preferred stock and common
stock in connection with the Share
Exchange Agreement
Conversion of preferred stock into
common stock
Common stock issued for cash
Issuance of common stock for services
Issuance of common stock for prepaid
services
Issuance of common stock for exercise of
warrants
Stock options granted for services
Stock-based compensation in connection
with restricted common stock award
grants and restricted common stock unit
grants
Net loss
Balance, April 30, 2021
Issuance of common stock and warrants,
net of issuance cost
Issuance of common stock for exercise of
warrants
Issuance of common stock for prepaid
services and accrued services
Issuance of common stock for services
Stock options granted for services
Stock-based compensation in connection
with restricted common stock award
grants and restricted common stock unit
grants
Net loss
Balance, April 30, 2022
-
-
-
-
-
- 921,666
922
-
- 5,529,082
-
5,530,004
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- $
-
-
- 106,894
107
-
-
581,053
581 12,640,292
-
12,640,980
-
(57)
- (106,894)
(107) (921,666)
(922) 2,010,963
2,011
(982)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- $
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- $
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- $
-
914,136
914 8,998,163
-
163,076
163 1,539,201
-
8,231
8
106,242
-
482,894
483 2,499,511
-
-
-
194,761
-
-
-
-
-
-
-
8,999,077
1,539,364
106,250
2,499,994
194,761
-
-
1,875
2 1,868,366
-
1,868,368
-
-
- (12,387,094)
(12,387,094)
- 7,065,621
7,065 74,467,686 (43,975,046)
30,499,705
- 1,009,741
1,010 3,567,480
-
166,667
167
999,834
-
95,710
96
850,404
-
12,104
12
99,988
-
-
-
183,475
-
-
-
-
-
3,568,490
1,000,001
850,500
100,000
183,475
-
-
-
-
- 1,386,512
-
1,386,512
-
- (13,930,882)
(13,930,882)
- 8,349,843 $
8,350 $ 81,555,379 $ (57,905,928) $
23,657,801
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
Amortization of right-of-use asset
Stock based compensation
Abandonment of mineral properties
Amortization of prepaid stock based expenses
Change in fair value of warrant liability
Changes in operating assets and liabilities:
Income tax receivable
Prepaid expenses and other current assets
Reclamation bond deposit
Accounts payable and accrued liabilities
Accounts payable - related parties
Operating lease liability
NET CASH USED IN OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment
Proceeds received in connection with the share exchange agreement
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of preferred stock, net of issuance cost
Issuance of common stock, net of offering costs
Issuance of common stock for exercise of warrants
NET CASH PROVIDED BY FINANCING ACTIVITIES
NET (DECREASE) INCREASE 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 FINANCING ACTIVITIES:
Issuance of common stock for prepaid services and accrued services
Deemed dividend related to beneficial conversion feature of preferred stock
Issuance of common stock in connection with conversion of preferred stock
Operating lease right-of-use asset and operating lease liability recorded upon adoption of ASC 842
Assumption of liabilities in connection with the share exchange agreement
Increase in acquisition of mineral properties in connection with the share exchange agreement
Increase in asset retirement cost and obligation
Initial valuation of warrant liability
For the Year
Ended
April 30, 2022
For the Year
Ended
April 30, 2021
$
(13,930,882)
$
(12,387,094)
34,794
22,064
40,031
1,669,987
-
530,194
(1,212,000)
-
(42,236)
(114,000)
466,367
-
(39,731)
22,886
17,477
-
3,602,493
56,329
40,105
-
219,072
(151,497)
(362,953)
356,005
(3,459)
-
(12,575,412)
(8,590,636)
(178,972)
-
(178,972)
-
7,220,490
1,000,001
8,220,491
(4,533,893)
13,645,405
9,111,512
-
-
850,500
-
-
104,095
-
-
33,517
3,652,000
$
$
$
$
$
$
$
$
$
$
$
(42,991)
2,500,000
2,457,009
5,530,004
8,999,077
2,499,994
17,029,075
10,895,448
2,749,957
13,645,405
-
-
106,250
5,530,004
2,011
-
108,652
10,249,632
18,746
-
$
$
$
$
$
$
$
$
$
$
$
See accompanying notes to consolidated financial statements.
F-6
U.S. GOLD CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2022
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 “Gold King 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. Upon closing of the transactions contemplated under the Gold King Merger Agreement (the “Gold King 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 Gold King 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 Gold King 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 Gold King Merger with Gold King. The Gold King Merger constituted a change of control and the majority of the board of directors
changed with the consummation of the Gold King 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 Province 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.
On March 17, 2020, the board of directors (the “Board”) of the Company 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 stock and per share data are retrospectively restated to give effect
of the split for all periods presented herein.
On August 10, 2020, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Gold King Acquisition Corp. (“Acquisition Corp.”), a wholly
owned subsidiary of the Company, Northern Panther Resources Corporation (“Northern Panther” or “NPRC”) and the Stockholder Representative named therein, pursuant to
which Acquisition Corp. merged with and into NPRC, with NPRC surviving as a wholly-owned subsidiary of the Company.
The Company’s CK Gold property contains proven and probable mineral reserves and accordingly is classified as a development stage property, as defined in subpart 1300 of
Regulation S-K promulgated by the Securities and Exchange Commission (“S-K 1300”). None of the Company’s other properties contain proven and probable mineral reserves
and all 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 (the “SEC”) 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, 2022. 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, 2022
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 warrant
liability, 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.
The Company’s warrant liability for warrants issued in the Definitive Agreement (see Note 9) was estimated using a Monte Carlo simulation model using Level 3 inputs.
At April 30, 2021, 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 $787,902 and $430,360 at April 30, 2022 and 2021, 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, business advisory services, insurance
premiums, mining claim fees, drilling fees, easement fees, options 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 three to five years.
F-8
U.S. GOLD CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2022
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, 2022 and 2021.
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.
Where the Company has identified proven and probable mineral reserves on any of its properties, development costs will be capitalized when all the following criteria have
been met, a) the Company receives the requisite operating permits, b) completion of a favorable Feasibility Study and c) approval from the Company’s board of director’s
authorizing the development of the ore body. Until such time all these criteria have been met the Company records pre-development costs to expense as incurred.
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 expensed all exploration and pre-development costs as none of its properties have satisfied the criteria above for capitalization.
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”.
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.
F-9
U.S. GOLD CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2022
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.
Warrant Liability
The Company accounts for the 625,000 warrants issued in connection with the Definitive Agreement which occurred in March 2022 in accordance with the guidance contained
in ASC 815 “Derivatives and Hedging” whereby under that provision these warrants do not meet the criteria for equity treatment and must be recorded as a liability (see Note
9). Accordingly, the Company classifies these warrant instruments as a liability at fair value and adjusts the instruments to fair value at each reporting period. This liability
will be re-measured at each balance sheet date until the warrants are exercised or expire, and any change in fair value will be recognized in the Company’s statement of
operations. The fair value of these warrants are estimated using Monte Carlo simulation model. Such warrant classification is also subject to re-evaluation at each reporting
period.
Offering Costs
Offering costs consisted of legal, placement agent fees and other costs incurred through the balance sheet date that are directly related to registered direct offerings. Offering
costs are allocated to the separable financial instruments issued in the registered direct offering based on a relative fair value basis, compared to total proceeds received.
Offering costs associated with warrant liability are expensed as incurred, presented as offering cost related to warrant liability in the consolidated statements of operations.
Offering costs associated with the sale of common shares were charged against equity.
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 years ended April 30, 2022 and 2021, the Company’s convertible preferred shares were accounted for as equity, with no
liability recorded. There was no outstanding preferred stock as of April 30, 2022 and April 30, 2021.
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.
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.
Remediation and Asset Retirement Obligation
Asset retirement obligations (“ARO”), consisting primarily of estimated reclamation costs at the Company’s CK Gold, Keystone and Maggie Creek 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.
F-10
U.S. GOLD CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2022
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. Translation adjustments, and 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.
Leases
On January 1, 2019, the Company adopted ASC Topic 842, Leases (Topic 842), the Company has elected the ‘package of practical expedients’, which permits it not to reassess
under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. In addition, the Company elected not to apply ASC Topic 842
to arrangements with lease terms of 12 month or less. Operating lease right of use (“ROU”) assets represents the right to use the leased asset for the lease term and operating
lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most leases do not provide an
implicit rate, the Company use an incremental borrowing rate based on the information available at the adoption date in determining the present value of future payments. Lease
expense for minimum lease payments is amortized on a straight-line basis over the lease term and is included in general and administrative expenses in the statements of
operations.
Income Taxes
The Company accounts for income taxes pursuant to the provision of ASC 740, “Accounting for Income Taxes” (“ASC 740”), 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.
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 or for any related interest and penalties. 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 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.
In December 2019, the FASB issued ASU 2019-12 – Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to
accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in ASC 740 and also clarifies and amends existing guidance to improve
consistent application. This ASU became effective and the Company adopted the guidance during fiscal 2022. The adoption of this ASU did not have an impact on the
Company’s consolidated financial statements.
F-11
U.S. GOLD CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2022
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.
In August 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and
Hedging Contracts in Entity’s Own Equity (Subtopic 815-40), which eliminates the beneficial conversion and cash conversion accounting models for convertible instruments,
amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions, and modifies how
particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS calculation. The standard is effective for annual periods
beginning after December 15, 2023 for smaller reporting companies, and interim periods within those reporting periods. Early adoption is permitted, but no earlier than fiscal
years beginning after December 15, 2020, including interim periods within those reporting periods. The Company adopted ASU 2020-06 as of the reporting period beginning
February 1, 2022. The adoption of this ASU did not have a material impact on the Company’s financial statements.
In October 2020, the FASB issued ASU 2020-09, Debt (Topic 470) - Amendments to SEC Paragraphs Pursuant to SEC Release No. 33-10762, or ASU 2020-09, to reflect the
SEC’s amended disclosure rules for guaranteed debt securities offerings. The final rule amends the disclosure requirements in SEC Regulation S-X, Rule 3-10, which require
entities to separately present financial statements for subsidiary issuers and guarantors of registered debt securities unless certain exceptions are met. The amended rule allows
entities to provide summarized financial information of the parent company and its issuers and guarantors on a combined basis either in a note to the financial statements or as
part of management’s discussion and analysis. ASU 2020-09 is effective for filings on or after January 4, 2021, with early adoption permitted. The adoption of this guidance did
not have a material impact on the Company’s consolidated financial statements.
In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt–Modifications and Extinguishments (Subtopic 470-50), Compensation–Stock
Compensation (Topic 718), and Derivatives and Hedging–Contracts in Entity’s Own Equity (Subtopic 815-40). This ASU reduces diversity in an issuer’s accounting for
modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. This ASU
provides guidance for a modification or an exchange of a freestanding equity-classified written call option that is not within the scope of another Topic. It specifically
addresses: (1) how an entity should treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity
classified after modification or exchange; (2) how an entity should measure the effect of a modification or an exchange of a freestanding equity-classified written call option
that remains equity classified after modification or exchange; and (3) how an entity should recognize the effect of a modification or an exchange of a freestanding equity-
classified written call option that remains equity classified after modification or exchange. This ASU will be effective for all entities for fiscal years beginning after December
15, 2021. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. Early adoption is
permitted, including adoption in an interim period. The Company is currently evaluating the effect the adoption of this ASU will have on the consolidated financial statements.
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.
The standard requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance
with ASC 606, Revenue from Contracts with Customers, as if the acquirer had originated the contracts, provided such contracts had been appropriately accounted for under
ASC 606 by the acquiree, rather than recognizing them at their estimated fair value on the acquisition date as required under the existing guidance. The standard is effective for
fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022 on a prospective basis, with early adoption permitted. The Company does not
expect the adoption of this standard to have a significant impact on its consolidated financial statements.
F-12
U.S. GOLD CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2022
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, 2022, the Company had cash of approximately $9.1 million, working capital of approximately $8.8 million and an
accumulated deficit of approximately $57.9 million. The Company had a net loss and cash used in operating activities of approximately $13.9 million and $12.6 million,
respectively, for the year ended April 30, 2022. 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 noted in Note 9, between February
2022 and March 2022, the Company completed registered offerings which raised total gross proceeds of $7.5 million before deducting fees and other estimated offering
expenses. As of the date of filing the annual report for the year ended April 30, 2022, the Company has sufficient cash to fund its corporate activities and general and
administrative costs and currently undertaken project activities related to permitting and engineering studies. However, in order to advance any of its projects past the
aforementioned objectives the Company does not have sufficient cash and will need to raise additional funds. The ongoing COVID-19 pandemic has and may continue to
adversely impact the Company’s business, as the Company’s operations are based in and rely on third parties located in areas affected by the pandemic. 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 consolidated financial statements.
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.
NOTE 4 — MINERAL RIGHTS
The Company’s CK Gold property contains proven and probable mineral reserves and accordingly is classified as a development stage property, as defined in subpart 1300 of
Regulation S-K promulgated by the Securities and Exchange Commission (“S-K 1300”). None of the Company’s other properties contain proven and probable mineral reserves
and all activities are exploratory in nature.
CK Gold Project
The Company, through its wholly-owned subsidiary, Gold King Corp., a Nevada corporation, owns the Copper King gold and copper development project (the “CK Gold
Property”), 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 CK
Gold Property. 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 cash payment in the amount of $250,000, shares of common stock at the fair value of $555,000 and options valued at $184,968 at the time of acquisition.
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 which the Company did not exercise. 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.
F-13
U.S. GOLD CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2022
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) shares of common stock of the Company, which were
issued in August 2017, valued at $35,850. During the year ended April 30, 2021, the Company did not renew the mineral claims on the Gold Bar North mineral properties and
as such the Company recorded an abandonment expense of $56,329 included in general and administrative expenses in the accompanying consolidated statements of
operations.
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.
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. As
of April 30, 2022, approximately $815,000 of expenditures have been incurred against 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 was 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.
F-14
U.S. GOLD CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2022
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
Northern Panther Merger Agreement
$
$
159,063
1,986,607
2,145,670
(125,670)
2,020,000
On August 10, 2020, the Company entered into the Merger Agreement with Acquisition Corp., NPRC and the Stockholder Representative named therein, pursuant to which
Acquisition Corp. merged with and into NPRC, with NPRC surviving as a wholly-owned subsidiary of the Company (such transaction, the “Merger”).
At the closing of the Merger, which occurred on August 11, 2020, the shares of common stock of NPRC outstanding immediately prior to the Merger (other than shares held as
treasury stock) were converted into and represent the right to receive (i) 581,053 shares of the Company’s common stock and (ii) 106,894 shares of the Company’s Series H
Convertible Preferred Stock, par value $0.001 per share (the “Series H Preferred Stock” and, together with the common stock, the “Merger Consideration”), which Series H
Preferred Stock was convertible into common stock on a 1 for 10 basis. On November 13, 2020, the Company issued an aggregate of 1,068,940 shares of the Company’s
common stock in exchange for the conversion of all 106,894 outstanding shares of Series H Preferred Stock.
Pursuant to ASU 2017-01 and ASC 805, the Company analyzed the Merger Agreement to determine if the Company acquired a business or acquired assets. Based on this
analysis, it was determined that the Company acquired assets primarily consisting of 1) cash and 2) mineral rights on a gold exploration project in Idaho called the Challis Gold
exploration project. The Company excluded the cash received in the determination of the gross assets and concluded that the mineral right- Challis Gold project 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.
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. Accordingly, the total consideration given consist of the shares of common stock and common stock equivalents of 1,650,000
shares, valued at the Volume Weighted Average Price for the 30-day period immediately prior to the date of the Merger Agreement of $7.6612 per share of common stock, or
$12,640,980. Net assets purchased consist of:
Cash – US Dollars
Intangible assets – (mineral rights) Challis Gold Project
Total assets acquired at fair value
Total Liabilities assumed at fair value – US Dollars
Total purchase consideration
As of the dates presented, mineral properties consisted of the following:
CK Gold Project
Keystone Project
Maggie Creek Project
Challis Gold Project
Total
$
$
2,500,000
10,249,632
12,749,632
(108,652)
12,640,980
April 30, 2022
April 30, 2021
3,091,738
1,028,885
1,986,607
10,249,632
16,356,862
$
$
3,091,738
1,028,885
1,986,607
10,249,632
16,356,862
$
$
F-15
U.S. GOLD CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2022
NOTE 5 — PROPERTY AND EQUIPMENT
As of the dates presented, property consisted of the following:
Site costs
Land
Computer equipment
Vehicle
Total
Less: accumulated depreciation
Total
April 30, 2022
April 30, 2021
203,320 $
175,205
7,265
39,493
425,283
(75,366)
349,917 $
169,803
-
3,498
39,493
212,794
(40,572)
172,222
$
$
For the years ended April 30, 2022 and 2021, depreciation expense amounted to $34,794 and $22,886, respectively.
NOTE 6 — ASSET RETIREMENT OBLIGATION
In conjunction with various permit approvals permitting the Company to undergo exploration activities at the CK Gold, Keystone and Maggie Creek projects, 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
years presented:
Balance, beginning of year
Addition and changes in estimates
Accretion expense
Balance, end of year
April 30, 2022
April 30, 2021
$
$
204,615 $
33,517
22,064
260,196 $
168,392
18,746
17,477
204,615
For the years ended April 30, 2022 and 2021, accretion expense amounted to $22,064 and $17,477, respectively.
NOTE 7 – OPERATING LEASE RIGHT-OF-USE ASSETS AND OPERATING LEASE LIABILITIES
On May 1, 2021, the Company entered into a lease agreement for its lease facility in Cheyenne, Wyoming. The term of the lease is for a two-year period from May 2021 to
May 2023 starting with a monthly base rent of $1,667. The Company has an option to renew the lease for an additional three years beyond the primary term. The Company
typically excludes options to extend the lease in a lease term unless it is reasonably certain that the Company will exercise the option and when doing so is in the Company’s
sole discretion. The base rent is subject to an annual increase as defined in the lease agreement. In addition to the monthly base rent, the Company is charged separately for
common area maintenance which is considered a non-lease component. These non-lease component payments are expensed as incurred and are not included in operating lease
assets or liabilities.
On September 1, 2021, the Company entered into another lease agreement for its lease facility in Cheyenne, Wyoming. The term of the lease is for a two-year period from
September 2021 to August 2023. The monthly base rent was $3,100 and was lowered to $2,950 starting in March 2022. The Company has an option to renew the lease for an
additional two years upon giving a written notice from 60 to 120 days prior to the expiration of the initial term of this lease. The Company typically excludes options to extend
the lease in a lease term unless it is reasonably certain that the Company will exercise the option and when doing so is in the Company’s sole discretion.
During the year ended April 30, 2022, lease expense of $44,200 was included in general and administrative expenses as reflected in the accompanying consolidated statements
of operations.
F-16
U.S. GOLD CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2022
Right-of- use assets are summarized below:
Operating leases
Operating Lease liabilities are summarized below:
Operating lease, current portion
Operating lease, long term portion
Total lease liability
April 30, 2022
April 30, 2021
64,064
$
April 30, 2022
April 30, 2021
55,630
8,734
64,364
$
$
$
$
$
The weighted average remaining lease term for the operating leases is 1.17 years and the weighted average incremental borrowing rate is 8.0% at April 30, 2022.
The following table includes supplemental cash and non-cash information related to the Company’s lease:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating lease
Lease assets obtained in exchange for new operating lease liabilities
Minimum lease payments under non-cancelable operating leases at April 30, 2022 are as follows:
Years ended April 30,
2022
2021
$
$
44,500
104,095
$
$
-
-
-
-
-
-
Year ended April 30, 2023
Year ended April 30, 2024
Total
Less: imputed interest
Total present value of lease liability
NOTE 8 — RELATED PARTY TRANSACTIONS
$
$
56,000
11,800
67,800
(3,436)
64,364
On January 7, 2021, the Company entered into a one-year agreement (“January 2021 Agreement”) with the director providing for an annual fee of $86,000 consisting of shares
of the Company’s common stock with a value of $50,000 and cash payments of $36,000, which is paid $3,000 per month. In January 2021, the Company issued 3,222 shares of
common stock pursuant to the January 2021 Agreement. The Company and the consultant mutually agree to extend the term of the agreement from January 2022 to January
2023 under the same terms as the initial agreement (the “January 2022 Agreement”). In January 2022, the Company issued 5,814 shares of common stock pursuant to the
January 2022 Agreement. During the years ended April 30, 2022 and 2021, the Company paid consulting fees in cash of $36,000 and $15,750, respectively.
On September 16, 2020, the Company and David Rector, the Company’s former Chief Operating Officer, agreed by mutual understanding, that Mr. Rector’s employment as an
officer and employee of the Company was terminated, effective as of October 31, 2020. In connection with Mr. Rector’s departure, the Company entered into a General Release
and Severance Agreement with Mr. Rector, pursuant to which Mr. Rector provided certain transition services to the Company from the Separation Date until December 31,
2020. The Company paid consulting fees to Mr. Rector of $30,000 in cash after his termination during the year ended April 30, 2021.
F-17
U.S. GOLD CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2022
On March 19, 2021, the Company and Edward Karr, the Company’s former Executive Chairman, agreed by mutual understanding, that Mr. Karr’s employment as an officer
and employee, and his service as a member of the board of directors, of the Company was terminated, effective March 19, 2021. In connection with Mr. Karr’s departure, the
Company entered into a General Release and Severance Agreement with Mr. Karr, as amended, pursuant to which Mr. Karr provided certain transition services to the Company
through the Separation Date. Pursuant to the Separation Agreement, Mr. Karr is entitled to receive any equity awards granted to Mr. Karr by the Company. Additionally, on
March 19, 2021, the Company entered into a one-year agreement (“March 2021 Agreement”) for general corporate advisory services to be provided by Mr. Karr for an annual
fee of $180,000 consisting of shares of the Company’s common stock with a value of $60,000 and cash payments of $120,000, which is paid $10,000 per month. In January
2022, the Company’s board of directors approved the renewal of Mr. Karr’s March 2021 Agreement for an additional year under the same terms as the initial period (the
“March 2022 Agreement”). In April 2022, the Company issued 5,168 and 7,353 shares of common stock pursuant to the March 2021 and March 2022 Agreements,
respectively. The Company paid consulting fees to Mr. Karr of $120,000 and $16,371 in cash during the years ended April 30, 2022 and 2021, respectively.
Additionally, on January 24, 2022, the Company issued an aggregate of 13,564 RSU’s and granted 5,310 five-year options to purchase the Company’s common stock to Mr.
Karr for consulting services rendered (see Note 10).
NOTE 9 — WARRANT LIABILITY
As of April 30, 2022, the Company’s warrants liability was valued at $2,440,000. Under the guidance in ASC 815-40, certain warrants do not meet the criteria for equity
treatment. As such, these warrants are recorded at fair value as of each reporting date with the change in fair value reported within other income (expense) in the accompanying
consolidated statements of operations as “Change in fair value of warrant liability” until the warrants are exercised, expired or other facts and circumstances lead the warrant
liability to be reclassified to stockholder’s equity. The Company utilized a Monte Carlo Simulation model to estimate the fair value of the March 2022 warrants, which
incorporates significant inputs that are not observable in the market, and thus represents a Level 3 measurement as defined in ASC 820. The unobservable inputs utilized for
measuring the fair value of the contingent consideration reflect management’s own assumptions about the assumptions that market participants would use in valuing the
contingent consideration. The Company determined the fair value by using the following key inputs to the Monte Carlo Simulation Model:
Initial Measurement
The Company accounts for the 625,000 warrants issued in connection with the Definitive Agreement which occurred on March 18, 2022 (see Note 10) in accordance with the
guidance contained in ASC 815 “Derivatives and Hedging” whereby under that provision these warrants do not meet the criteria for equity treatment and must be recorded as a
liability. The initial valuation of these warrants was valued at $3,652,000 and was allocated to the proceeds of the Definitive Agreement.
The key inputs for the warrant liability were as follows as of March 18, 2022:
Key Valuation Inputs
Expected term (years)
Annualized volatility
Volatility if fundamental transaction occurs
Risk-free interest rate
Stock price
Dividend yield
Exercise price
Probability of fundamental transaction
Date of fundamental transaction (1)
5.50
84.4%
100.00%
2.15%
8.00
0.00%
8.60
85%
2 years to 5.5 years
$
$
1) The fundamental transaction is simulated to occur 85% during one trading day through the 3.5 year period, 85% of the time.
F-18
U.S. GOLD CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2022
Subsequent Measurement
The key inputs for the warrant liability were as follows as of April 30, 2022:
Key Valuation Inputs
Expected term (years)
Annualized volatility
Volatility if fundamental transaction occurs
Risk-free interest rate
Stock price
Dividend yield
Exercise price
Probability of fundamental transaction
Date of fundamental transaction
The following table sets forth a summary of the changes in the fair value of the Level 3 warrant liability for the year ended April 30, 2022:
Fair value as of April 30, 2021
Initial fair value of warrant liability upon issuance
Change in fair value
Fair value as of April 30, 2022
NOTE 10 — STOCKHOLDERS’ EQUITY
5.39
84.2%
100.00%
2.92%
5.65
0.00%
8.60
85%
1.90 years to 5.4 years
Warrant
Liability
—
3,652,000
(1,212,000)
2,440,000
$
$
$
$
As of April 30, 2022, 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, 127 shares are designated as Series G Preferred Stock, 106,894
shares are designated as Series H Preferred Stock, and 921,666 shares are designated as Series I 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.
Series H Convertible Preferred Stock
Northern Panther Merger Agreement
On August 10, 2020, the Company entered into the Merger Agreement with Acquisition Corp., NPRC and the Stockholder Representative named therein, pursuant to which the
Company agreed to issue (i) 581,053 shares of the Company’s common stock, and (ii) 106,894 shares of the Company’s Series H Preferred Stock in exchange for all the issued
and outstanding shares of NPRC with NPRC becoming a wholly owned subsidiary of the Company. The Merger closed on August 11, 2020 (see Note 4).
On August 11, 2020, the Company filed a Certificate of Designations, Preferences and Rights of the Series H Preferred Stock with the Secretary of State of the State of Nevada
amending its Articles of Incorporation to establish the Series H Preferred Stock and the number, relative rights, preferences and limitations thereof. Pursuant to the Certificate
of Designations, 106,894 shares of preferred stock have been designated as Series H Preferred Stock.
The Series H Preferred Stock was convertible into common stock on a 1 for 10 basis upon the receipt of the approval by the requisite vote of the Company’s stockholders at the
Company’s 2020 annual meeting, which was held on November 9, 2020. The Company’s stockholders approved such conversion on November 9, 2020. On November 13,
2020, the Company issued an aggregate of 1,068,940 shares of the Company’s common stock in exchange for the conversion of all 106,894 outstanding shares of Series H
Preferred Stock.
In connection with the Merger, Luke Norman Consulting Ltd. received a finder’s fee equal to the quotient of (a) 5% of the purchase value for the Merger and (b) the 30-day
Volume Weighted Average Price (“VWAP”) of a share of the Company’s common stock as reported on the Nasdaq Capital Market prior to the execution Merger Agreement,
which was paid in 82,500 shares of restricted common stock on August 11, 2020.
F-19
U.S. GOLD CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2022
The total consideration given consist of the shares of common stock and common stock equivalents of 1,650,000 shares, valued at the Volume Weighted Average Price for the
30-day period immediately prior to the date of the Merger Agreement of $7.6612 per share of common stock, or $12,640,980.
During the year ended April 30, 2021, all Series H Preferred Stock had converted and there were no shares of Series H Preferred Stock outstanding as of April 30, 2022.
Series I Convertible Preferred Stock
Securities Purchase Agreement
In connection with the Merger, on August 10, 2020, the Company entered into a securities purchase agreement (the “SPA”) with certain investors, pursuant to which the
Company sold to such investors in a private placement (i) an aggregate of 921,666 shares of the Company’s Series I Convertible Preferred Stock, par value $0.001 per share
(the “Series I Preferred Stock”) and (ii) warrants to purchase an aggregate of 921,666 shares of common stock at an exercise price of $6.00 per share for aggregate
consideration of $5,530,004.
On August 11, 2020, the Company filed a Certificate of Designation of Rights, Powers, Preferences, Privileges and Restrictions of the Series I Preferred Stock (the “Series I
Certificate of Designation”) with the Secretary of State of the State of Nevada amending its Articles of Incorporation to establish the Series I Preferred Stock and the number,
relative rights, powers, preferences, privileges and restrictions thereof. Pursuant to the Series I Certificate of Designations, 921,666 shares of preferred stock have been
designated as Series I Preferred Stock. The Series I Preferred Stock has substantially the same terms as the Series H Preferred Stock, except that each share of Series I Preferred
Stock is convertible into one share of common stock. The Warrants are exercisable in whole or in part at any time, from time to time following the initial exercise date, and
terminate five years following the issuance. The sale of the Series I Preferred Stock and warrants under the SPA closed on August 11, 2020. The conversion of the Series I
Preferred Stock and the warrants into common stock was subject to the Company’s stockholders’ approval, which was received on November 9, 2020. On November 17, 2020,
the Company issued an aggregate of 921,666 shares of the Company’s common stock in exchange for the conversion of all 921,666 outstanding shares of Series I Preferred
Stock.
The fair value of the Series I Preferred Stock and warrants if converted on the date of issuance was greater than the value allocated to the Series I Preferred Stock and warrants.
As a result, the Company recorded a BCF of approximately $5.5 million that the Company recognized as deemed dividend to the holders of Series I Preferred Stock 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 I Preferred Stock and warrants. The Company accounted for the deemed dividend resulting from the issuance of Series I Preferred Stock and warrants using the relative
fair value method.
During the year ended April 30, 2021, all Series I Preferred Stock had converted and there were no shares of Series I Preferred Stock outstanding as of April 30, 2022.
Common Stock issued for cash
Pursuant to the February 2021 Purchase Agreement closed on February 1, 2021, the Company issued and sold to the Purchasers (i) in the Offering an aggregate of 914,136
shares of the Company’s common stock at a price of $10.54 per share and (ii) in a concurrent private placement warrants to purchase an aggregate of 457,068 shares of
common stock at an exercise price of $14.50 per share for aggregate gross proceeds from the Offering of $9,635,967 before the deduction of total placement agent fees, and
legal related offering expenses of approximately $636,890. Pursuant to the February 2021 Purchase Agreement, the warrants are exercisable six months following the date of
issuance and terminate five years following the initial exercise date. A holder of such 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”); provided, however, that upon 61 days’ prior notice to the Company,
the holder may increase the Beneficial Ownership Limitation, provided that in no event shall the Beneficial Ownership Limitation exceed 9.99%.
On January 27, 2021, the Company entered into an amendment to that certain engagement agreement (“Engagement Agreement Amendment”) with Palladium Capital Group,
LLC (“Palladium”), dated March 29, 2020, in connection with the Offering, among other things. Pursuant to the Engagement Agreement Amendment, the Company agreed to
pay Palladium a cash fee equal to 8% of the aggregate gross proceeds received by the Company in the Offering from investors introduced to the Company by Palladium. In
addition, the Company issued to Palladium warrants to purchase up to 46,490 shares of common stock which are identical in all material respects to the warrants issued
pursuant to the February 2021 Purchase Agreement.
F-20
U.S. GOLD CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2022
On February 14, 2022, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain institutional and accredited investors in
connection with a registered direct offering of 384,741 shares of the Company’s common stock at a price of $6.50 per share and warrants to purchase 192,370 shares of the
Company’s common stock at an exercise price of $8.00 per share (the “Registered Offering”). The warrants are exercisable immediately following issuance and will expire five
years from the issuance date. The aggregate gross proceeds of the Registered Offering was $2,500,817 before deduction of legal related offering expenses of $30,767. The
closing of the Registered Offering occurred on February 16, 2022.
On March 15, 2022, the Company entered into a definitive agreement (the “Definitive Agreement”) with a single institutional investor in connection with a registered direct
offering of 625,000 shares of the Company’s common stock at a price of $8.00 per share and warrants to purchase 625,000 shares of the Company’s common stock at an
exercise price of $8.60 per share (the “Securities”), resulting in total gross proceeds of $5 million before the deduction of placement agent fees of $415,000 and legal related
offering expenses of $25,399 for a total of $440,399. The warrants are exercisable six months following the date of issuance and will expire 5 years following the initial
exercise date. The closing of the sale of the Securities occurred on March 18, 2022. These 625,000 warrants were recorded as warrant liability as of April 30, 2022 (see Note 9)
and was allocated to the proceeds as follows:
Net proceeds on March 18, 2022
Less:
Proceeds allocated to warrant liability
Plus:
Offering cost associated with warrant liability
$
4,559,601
(3,652,000)
190,840
Net proceeds on March 18, 2022 allocated to equity
$
1,098,441
Pursuant to ASC 470-20-25, if the warrants are classified as liability, the proceeds should be allocated first to the warrants based on their fair value (not relative fair value). The
residual should be allocated to the remaining equity instruments.
Common Stock Issued, Restricted Stock Awards, and RSU’s Granted for Services
On July 31, 2020, the Company granted to four former directors of the Company an aggregate of 1,875 shares of common stock for board services. The shares of common stock
vested immediately on the date of grant. The total 1,875 shares of common stock had a fair value of $15,244, or $8.13 per share, based on the quoted trading price on the date
of grant, which was fully vested and expensed immediately.
On August 11, 2020, the Company issued 82,500 shares of common stock to a consultant for finder’s fee related to the Merger. The 82,500 shares of common stock had a fair
value of $786,225, or $9.53 per share, based on the quoted trading price on the date of grant, which was fully vested and expensed immediately.
On September 16, 2020, the Company and David Rector, the Company’s former Chief Operating Officer, agreed by mutual understanding that Mr. Rector’s employment as an
officer and employee of the Company would terminate, effective as of October 31, 2020 (the “Separation Date”). In connection with Mr. Rector’s departure, the Company
entered into a General Release and Severance Agreement with Mr. Rector (the “Separation Agreement”), pursuant to which Mr. Rector provided certain transition services to
the Company from the Separation Date until December 31, 2020. Pursuant to the Separation Agreement, Mr. Rector received (i) a prorated annual bonus for the 2020 calendar
year and through the Separation Date equal to $150,000 (the “Prorated Bonus”), which was paid in the number of fully vested shares of restricted common stock of the
Company equal to the Prorated Bonus determined based on the common stock’s fair market value on the date of grant, and subject to the terms and conditions of the Company’s
2020 Stock Incentive Plan (the “2020 Plan”) and the Company’s standard form Restricted Stock Award Agreement; and (ii) any equity awards granted to Mr. Rector by the
Company pursuant to its 2014 Equity Incentive Plan (the “2014 Plan”), 2017 Equity Incentive Plan (the “2017 Plan”), or 2020 Plan (the 2014 Plan, 2017 Plan, and 2020 Plan
are collectively referred to herein as, the “Equity Plans”) during the term of Mr. Rector’s employment, were 100% vested and retained by Mr. Rector, notwithstanding any
terms in an award agreement or plan document regarding forfeiture of such awards under the Equity Plans upon termination of employment provided that the foregoing did not
in any way extend the awards beyond their original term. The $150,000 bonus was paid in 18,502 shares of restricted common stock and had a fair value of $150,000, or $8.11
per share, based on the quoted trading price on the date of grant, which were fully vested and expensed immediately. Additionally, the Company recognized stock-based
compensation of $77,250 due to the accelerated vesting of the 7,500 RSUs granted on September 18, 2019. Accordingly, the Company issued 7,500 shares in November 2020
in connection with the vested 7,500 RSUs.
On September 17, 2020, the Compensation Committee of the Board awarded five directors of the Company an aggregate of 12,500 shares of common stock. The shares of
common stock vested immediately on the date of grant. The total 12,500 shares of common stock had a fair value of $140,125, or $11.21 per share, based on the quoted trading
price on the date of grant, which was fully vested and expensed immediately.
F-21
U.S. GOLD CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2022
On September 17, 2020, the Company issued 30,107 shares of common stock to Edward Karr, former Chief Executive Officer, as bonus in connection with the consummation
of the acquisition by the Company of the NPRC (see Note 4). The Company agreed to pay Mr. Karr a bonus in the amount of $450,000 payable as follows: (i) 75% or $337,500
of the bonus payable in fully vested shares of common stock and (ii) the remaining 25% or $112,500 in cash which was paid in October 2020. The $337,500 bonus was paid in
30,107 shares of common stock and had a fair value of $337,500, or $11.21 per share, based on the quoted trading price on the date of grant, which was fully vested and
expensed immediately.
On October 31, 2020, the Company granted four former directors of the Company an aggregate of 1,875 shares of common stock for board services. The shares of common
stock vested immediately on the date of grant. The total 1,875 shares of common stock had a fair value of $15,206, or $8.11 per share of common stock, based on the quoted
trading price on the date of grant, which was fully vested and expensed immediately.
On October 31, 2020, the Company paid its former Chief Financial Officer for accounting services rendered from February 2020 to September 2020 by issuing 1,857 shares of
common stock at an average price of $7.08 per share of common stock based on the quoted trading prices on the date of grants. In connection with this issuance, the Company
recorded stock-based accounting fees of $13,145 during the year ended April 30, 2021. The common stock issued to the former Chief Financial Officer were fully vested and
expensed immediately.
On November 9, 2020, the Company issued an aggregate of 188 shares of common stock for director services rendered from November 1 to November 9, 2020. The total 188
shares of common stock had a fair value of $1,598, or $8.50 per share, based on the quoted trading price on the date of grant, which was fully vested and expensed immediately.
On December 8, 2020, the Company entered into a one-year consulting agreements for investor relation services under which it was required to pay for services either in cash
or shares of the Company’s common stock. On December 8, 2020, the Company issued 5,009 shares at a fair value of $56,250 or $11.23 per share of common stock based on
the quoted trading prices on the date of grant. The Company recognized stock-based consulting of $23,437 during the year ended April 30, 2021 and recorded prepaid stock-
based expense of $32,813 at April 30, 2021. The Company fully amortized the prepaid stock-based expense of $32,813 into stock-based consulting during the year ended April
30, 2022.
On December 9, 2020, the Company granted an aggregate of 254,464 RSUs to two officers and one employee of the Company pursuant to respective restricted stock unit award
agreements. The RSUs vested 25% on the date of issuance and 25% vest on each of the first, second and third anniversaries of the date of grant. The 254,464 RSUs had a fair
value of $2,852,541 or $11.21 per share of common stock based on the quoted trading price on the date of grant and will be expensed over the vesting period.
On December 9, 2020, the Company granted 50,000 RSUs to Edward Karr, former Executive Chairman, pursuant to restricted stock unit award agreements. The RSUs vesting
terms were 25% on the date of issuance and 25% vest on each of the first, second and third anniversaries of the date of grant. The 50,000 RSUs had a fair value of $560,500 or
$11.21 per share of common stock based on the quoted trading price on the date of grant. On March 19, 2021, the Company and Edward, agreed by mutual understanding that
Mr. Karr’s employment as an officer and employee, and his service as a member of the board of directors, of the Company will terminate, effective as of March 19, 2021.
Accordingly, the Company recognized stock-based compensation of $560,500 due to the accelerated vesting of the 50,000 RSUs granted on December 9, 2020 pursuant to the
Separation Agreement.
On December 9, 2020, the Company granted an aggregate of 13,392 RSUs to three directors of the Company for services rendered. The 13,392 RSUs had a fair value of
$150,124 or $11.21 per share of common stock based on the quoted trading price on the date of grant. The RSUs fully vested and expensed immediately.
On January 7, 2021, the Company entered into another one-year agreement with a director of the Company (see Note 8). On January 7, 2021, the Company issued 3,222 shares
at a fair value of $50,000 or $15.52 per share of common stock based on the quoted trading prices on the date of grant. The Company recognized stock-based consulting of
$16,667 during the year ended April 30, 2021 and recorded prepaid stock-based expense of $33,333 at April 30, 2021. The Company fully amortized the prepaid stock-based
expense of $33,333 into stock-based compensation during the year ended April 30, 2022.
Between January 2021 and April 2021, the Company issued an aggregate of 8,047 shares of common stock to two consultants for business development and advisory, and
consulting services rendered. The total 8,047 shares of common stock had a fair value of $95,565, or $11.88 per share of common stock, based on the quoted trading price on
the date of grant, which was fully vested and expensed immediately.
F-22
U.S. GOLD CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2022
On February 14, 2021, the Company granted an aggregate of 3,946 RSUs to a director of the Company for services rendered. The 3,946 RSUs had a fair value of $50,000 or
$12.67 per share of common stock based on the quoted trading price on the date of grant. The RSUs fully vested and expensed immediately.
On June 1, 2021, the Company granted 2,097 Restricted Stock Units (“RSU’s”) to a consultant for consulting services rendered. The 2,097 RSU’s had a fair value of $25,000 or
$11.92 per share of common stock based on the quoted trading price on the date of grant. The RSU’s fully vested and expensed immediately.
On June 9, 2021, the Company issued 25,000 shares of common stock to a consultant in connection with an investor relations agreement for services to be rendered from April
2021 to April 2022. The 25,000 shares of common stock had a fair value of $258,500, or $10.34 per share, based on the quoted trading price on the date of grant. In connection
with this issuance, the Company reduced accrued liabilities by $14,203 and recognized stock-based consulting of $244,297 during the year ended April 30, 2022.
On July 19, 2021, the Company granted 15,322 RSU’s to an employee pursuant to his employment agreement. The 15,322 RSU’s had a fair value of $150,000 or $9.79 per
share of common stock based on the quoted trading price on the date of grant. The RSU’s vested 25% on the date of, issuance, and the remaining shall vest one-third over a
three-year period from the date of issuance.
On October 20, 2021, the Company issued 1,116 shares of common stock to a former employee in connection with vested RSU’s on the date of termination of service.
On October 22, 2021, the Company issued an aggregate of 2,162 shares of common stock to a consultant in connection with a consulting agreement for services rendered from
May 2021 to October 2021. The 2,162 shares of common stock had a fair value of $22,500, or $10.41 per share, based on the quoted trading price on the date of grants, which
was fully vested and expensed immediately.
On October 22, 2021, the Company issued an aggregate of 2,824 shares of common stock to a consultant in connection with an advisory consulting agreement for services
rendered from April 2021 to September 2021. The 2,824 shares of common stock had a fair value of $30,000, or $10.62 per share, based on the quoted trading price on the date
of grants, which was fully vested. In connection with this issuance, the Company reduced accrued liabilities by $5,000 and recognized stock-based consulting of $25,000 during
the year ended April 30, 2022.
On January 24, 2022, the Company issued an aggregate of 47,108 RSU’s to certain employees of the Company for services rendered. The 47,108 RSU’s had a fair value of
$326,475, or $6.93 per share, based on the quoted trading price on the date of grants, which was fully vested and expensed immediately.
On January 24, 2022, the Company issued an aggregate of 13,852 RSU’s to the directors of the Company for services rendered. The 13,852 RSU’s had a fair value of $96,000,
or $6.93 per share, based on the quoted trading price on the date of grants, which was fully vested and expensed immediately.
On January 24, 2022, the Company issued an aggregate of 25,685 RSU’s to certain consultants of the Company for services rendered. The 25,685 RSU’s had a fair value of
$178,000, or $6.93 per share, based on the quoted trading price on the date of grants, which was fully vested and expensed immediately. One of the consultants is Mr. Karr, the
Company’s former Executive Chairman (see Note 8).
On April 9, 2022, the Company issued 25,000 shares of common stock to a consultant in connection with an investor relations agreement for services to be rendered from April
2022 to April 2023. The 25,000 shares of common stock had a fair value of $157,000, or $6.28 per share, based on the quoted trading price on the date of grant. The Company
recognized stock-based consulting of $13,083 during the year ended April 30, 2022 and recorded prepaid stock-based expense of $143,917 at April 30, 2022 to be amortized
over the term of the consulting agreement.
On April 22, 2022, the Company issued an aggregate of 2,749 shares of common stock to a consultant in connection with a consulting agreement for services rendered from
November 2021 to April 2022. The 2,749 shares of common stock had a fair value of $22,500, or $8.18 per share, based on the quoted trading price on the date of grants, which
was fully vested and expensed immediately.
F-23
U.S. GOLD CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2022
On April 22, 2022, the Company issued an aggregate of 3,708 shares of common stock to a consultant in connection with an advisory consulting agreement for services
rendered from October 2021 to March 2022. The 3,708 shares of common stock had a fair value of $30,000, or $8.09 per share, based on the quoted trading price on the date of
grants, which was fully vested and expensed immediately.
On April 22, 2022, the Company issued an aggregate of 5,814 shares of common stock to a director of the Company pursuant to the January 2022 Agreement (see Note 8). The
5,814 shares had a fair value of $50,000 or $8.60 per share of common stock based on the quoted trading prices on the date of grant. The Company recognized stock-based
consulting of $16,667 during the year ended April 30, 2022 and recorded prepaid stock-based expense of $33,333 at April 30, 2022 to be amortized over the term of the
agreement.
On April 25, 2022, the Company issued 5,168 and 7,353 shares of common stock to Edward Karr, former Executive Chairman of the Company, pursuant to the March 2021
Agreement and the March 2022 Agreement, respectively (see Note 8). The 5,168 shares of common stock had a fair value of $60,000, or $11.61 per share, based on the quoted
trading price on the date of grant. In connection with this issuance, the Company reduced accrued liabilities by $7,500 and recognized stock-based consulting of $52,500 during
the year ended April 30, 2022. The 7,353 shares of common stock had a fair value of $60,000, or $8.16 per share, based on the quoted trading price on the date of grant. The
Company recognized stock-based consulting of $7,500 during the year ended April 30, 2022 and recorded prepaid stock-based expense of $52,500 at April 30, 2022 to be
amortized over the term of this agreement.
On April 25, 2022, the Company issued 12,634 shares of common stock to a consultant in connection with a one-year strategic advisory agreement for services to be rendered
from March 10, 2021 to March 10, 2022. The 12,634 shares of common stock had a fair value of $130,000, or $10.29 per share, based on the quoted trading price on the date of
grant. In March 2022, the Company and the consultant mutually agreed to extend the term of the agreement from March 11, 2022 to March 10, 2023 under the same terms as
the initial agreement. On April 25, 2022, the Company issued 14,286 shares of common stock to such consultant for services to be rendered from March 11, 2022 to March 10,
2023. The 14,286 shares of common stock had a fair value of $130,000, or $9.10 per share, based on the quoted trading price on the date of grant. The Company recognized
stock-based consulting of $130,000, reduced accrued liabilities by $16,250 during the year ended April 30, 2022 and recorded prepaid stock-based expense of $113,750 at April
30, 2022 to be amortized over the term of this agreement.
Total stock compensation expense for awards issued for services of $1,386,512 and $1,868,368 was expensed for the years ended April 30, 2022 and 2021, respectively. A
balance of $1,399,698 remains to be expensed over future vesting periods related to unvested restricted stock units issued for services to be expensed over a weighted average
period of 1.66 years.
Common Stock issued for exercise of Stock Warrants
In October 2020, the Company issued 10,000 shares of common stock for the exercise of stock warrants and received proceeds of $70,000.
In November and December 2020, the Company issued an aggregate of 168,571 shares of common stock for the exercise of stock warrants and received proceeds of
$1,179,997.
In December 2020, the Company issued 33,858 shares of common stock for the cashless exercise of 109,688 stock warrants.
Between February 2021 and March 2021, the Company issued an aggregate of 178,571 shares of common stock for the exercise of stock warrants and received proceeds of
$1,249,997.
In February 2021, the Company issued 91,894 shares of common stock for the cashless exercise of 166,666 stock warrants.
In April 2022, the Company issued 166,667 shares of common stock for the exercise of stock warrants and received proceeds of approximately $1,000,000.
F-24
U.S. GOLD CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2022
Equity Incentive Plan
In August 2017, the Board approved the Company’s 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 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 2020 Plan was approved by a vote of stockholders at the
2019 annual meeting. With the approval and effectivity of the 2020 Plan, no further grants will be made under the 2017 Plan. On August 31, 2020, the Board approved and
adopted, subject to stockholder approval, an amendment (the “2020 Plan Amendment”) to the 2020 Plan. The 2020 Plan Amendment increased the number of shares of
common stock available for issuance pursuant to awards under the 2020 Plan by an additional 836,385, to a total of 1,167,095 shares of the Company’s common stock. The
2020 Plan Amendment was approved by the Company’s stockholders on November 9, 2020.
Stock options
The following is a summary of the Company’s stock option activity during the years ended April 30, 2022 and 2021:
Balance at April 30, 2020
Granted
Exercised
Forfeited
Cancelled
Balance at April 30, 2021
Granted
Exercised
Forfeited
Cancelled
Balance at April 30, 2022
Options exercisable at end of period
Options expected to vest
Weighted average fair value of options granted during the period
Number of
Options
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life
(Years)
100,000
—
—
—
(5,000)
95,000
58,060
—
—
(5,000)
148,060
128,410
19,650
$
$
$
$
$
14.31
—
—
—
—
14.63
6.93
—
—
13.40
11.65
12.38
6.93
4.52
2.87
—
—
—
—
1.57
5.00
—
—
—
2.23
At April 30, 2022 and 2021, the aggregate intrinsic value of options outstanding and exercisable were de minimis for each period.
In September 2020, the Board approved the acceleration of the vesting terms of the 50,000 stock options granted to Edward Karr, former Chief Executive Officer of the
Company, and 25,000 stock options granted to David Rector, former Chief Operating Officer of the Company on December 21, 2017 and therefore the total 75,000 stock
options are fully vested. Additionally, the Board of Directors of the Company approved to extend the exercise period of the stock options granted to Mr. Rector and three
former directors, to December 21, 2022, the original termination date of the respective stock option agreements. During the year ended April 30, 2021, the Company recognized
stock-based compensation of $133,439 due to the accelerated vesting of the 75,000 fully vested stock options granted on December 21, 2017.
On January 24, 2022, the Company granted an aggregate of 26,200 options to purchase the Company’s common stock to certain employees of the Company. The options have a
term of 5 years from the date of grant and are exercisable at an exercise price of $6.93. The options vest 25% on the date of grant and 25% each next three years from the date
of grant.
F-25
U.S. GOLD CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2022
On January 24, 2022, the Company granted an aggregate of 21,240 options to purchase the Company’s common stock to the directors of the Company. The options have a term
of 5 years from the date of grant and are exercisable at an exercise price of $6.93. The options fully vested and was expensed immediately.
On January 24, 2022, the Company granted an aggregate of 10,620 options to purchase the Company’s common stock to certain consultants of the Company. The options have
a term of 5 years from the date of grant and are exercisable at an exercise price of $6.93. The options fully vested and was expensed immediately. One of the consultants is Mr.
Karr, the Company’s former Executive Chairman (see Note 8).
The Company used the Black-Scholes model to determine the fair value of stock options granted during the year ended April 30, 2022. 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
For the Year Ended
April 30, 2022
1.53%
0.00%
82%
5.0
0.00%
Stock-based compensation for stock options recorded in the consolidated statements of operations totaled $183,475 and $194,761 for the years ended April 30, 2022 and 2021,
respectively. A balance of $78,948 remains to be expensed over future vesting periods related to unvested stock options issued for services to be expensed over a weighted
average period of 2.73 years.
Stock Warrants
The following is a summary of the Company’s stock warrant activity during the years ended April 30, 2022 and 2021:
Number of Warrants
Weighted Average
Exercise
Price
Weighted Average
Remaining Contractual
Life
(Years)
Warrants with no Class designation:
Balance at April 30, 2020
Granted
Exercised
Forfeited
Canceled
Balance at April 30, 2021
Granted
Exercised
Forfeited
Canceled
Balance at April 30, 2022
Class A Warrants:
Balance at April 30, 2020
Granted
Exercised
Forfeited
Canceled
Balance at April 30, 2021
Granted
Exercised
Forfeited
Canceled
Balance at April 30, 2022
Total Warrants Outstanding at April 30, 2022
Warrants exercisable at end of period
Weighted average fair value of warrants granted during the period
F-26
527,378
1,425,224
(523,808)
—
—
1,428,794
817,370
(166,667)
(170,235)
—
1,909,262
219,375
—
(109,688)
—
—
109,687
—
—
—
—
109,687
2,018,949
1,393,949
$
$
$
$
$
14.83
9.09
6.68
—
—
12.00
8.46
6.00
31.25
—
9.29
11.40
—
11.40
—
—
11.40
—
—
—
—
11.40
9.41
9.77
—
3.73
5.18
4.03
—
—
4.08
5.39
3.33
—
—
4.38
4.22
—
3.22
—
—
3.22
—
—
—
—
2.22
4.27
U.S. GOLD CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2022
As of April 30, 2022, the aggregate intrinsic value of warrants outstanding and exercisable were de minimis for each period.
In relation to the issuance of the shares of Series I Convertible Preferred Stock on August 10, 2020, the Company issued 921,666 warrants which are exercisable in whole or in
part at any time, from time to time following the initial exercise date, and terminate five years following the issuance. The fair value of the warrants was $5,530,004, 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
Warrants Issued During the
Year ended
April 30, 2021
$
$
169.0%
9.53
6.00
-
5.00
0.27%
0%
The fair value of the warrants was credited to Additional paid-in capital, and also represented a deemed dividend to those shareholders, which was charged to Additional paid-
in capital, therefore with no effect on that account.
In October 2020, the Company issued 10,000 shares of common stock for the exercise of stock warrants and received proceeds of $70,000.
In November and December 2020, the Company issued an aggregate of 168,571 shares of common stock for the exercise of stock warrants and received proceeds of
$1,179,997.
In December 2020, the Company issued 33,858 shares of common stock for the cashless exercise of 109,688 stock warrants.
Between February 2021 and March 2021, the Company issued an aggregate of 178,571 shares of common stock for the exercise of stock warrants and received proceeds of
$1,249,997.
In February 2021, the Company issued 91,894 shares of common stock for the cashless exercise of 166,666 stock warrants.
Concurrent with the sales of common stock on February 1, 2021, the Company issued 457,068 stock warrants. The stock warrants are exercisable six months following the
initial exercise date and terminate five years following issuance. The stock warrants have an exercise price of $14.50 per share and each warrant is exercisable to purchase one
share of common stock. In addition, the Company issued to Palladium Capital Group, LLC warrants to purchase up to 46,490 shares of common stock which are identical in all
material respects to the warrants issued pursuant to the February 2021 Purchase Agreement in connection with the Offering.
Concurrent with the sales of common stock on February 14, 2022, the Company issued warrants to purchase 192,370 shares of the Company’s common stock at an exercise
price of $8.00 per share. The warrants are exercisable immediately following issuance and will expire five years from the issuance date.
Concurrent with the sale of common stock on March 18, 2022, the Company issued warrants to purchase 625,000 shares of the Company’s common stock at an exercise price
of $8.60 per share. The warrants are exercisable six months following the date of issuance and will expire 5 years following the initial exercise date. These warrants allow for
the potential settlement in cash if certain extraordinary events are affected by the Company, including a 50% or greater change of control in the Company’s common stock.
Such payment in cash shall be equal to the black-scholes value as defined in the warrant agreement. These 625,000 warrants were recorded as warrant liability as of April 30,
2022 (see Note 9).
F-27
U.S. GOLD CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2022
In April 2022, the Company issued 166,667 shares of common stock for the exercise of stock warrants and received proceeds of approximately $1,000,000.
NOTE 11 — NET LOSS PER COMMON 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:
Restricted stock units
Stock options
Stock warrants
Total
NOTE 12 — COMMITMENTS AND CONTINGENCIES
Mining Leases
April 30, 2022
April 30, 2021
441,402
148,060
2,018,949
2,608,411
346,802
95,000
1,538,481
1,980,283
The CK Gold 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 CK Gold Project. Leases to explore for or use of natural resources are outside the scope of ASU 2016-02 “Leases”.
The Company’s rights to the CK Gold 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, 2022 under these mining leases are as follows, each payment to be made in the fourth quarter of the respective fiscal years:
Fiscal 2023
Fiscal 2024
$
$
2,240
960
3,200
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-28
U.S. GOLD CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2022
Maggie Creek option:
The Maggie Creek option agreement grants the Company 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 for a total payment of $4,500,000. Exploration and development expenses incurred
by the Company on the Maggie Creek property satisfy the annual required earn-in payments. To the extent exploration and development expenses do not satisfy the full annual
amounts, a cash payment for the difference is required. Additionally, costs incurred over a year’s minimum, may be carried forward to satisfy future years obligations. The
Company satisfied the minimum payment required for fiscal 2021 by incurring exploration expenses in excess of $300,000 and an additional $500,000 for fiscal 2022.
The remaining required Initial Earn-in payments at April 30, 2022, as amended:
Fiscal 2023
Fiscal 2024
Fiscal 2025
Fiscal 2026
$
$
700,000
1,000,000
1,000,000
1,000,000
3,700,000
Once the Initial Earn-in has been met, the Company is required to pay an additional $250,000 to the counterparty to vest the Company’s 50% interest in the Maggie Creek
property.
NPRC option:
Pursuant to the Merger, the Company acquired from NPRC a mineral property called Challis Gold located in Idaho pursuant to an option agreement dated in February 2020
which was later amended in June 2020. The Company satisfied the minimum royalty payment of $25,000 for fiscal 2022.
The annual advance minimum royalty payments at April 30, 2022 under the option agreement are as follows, each payment to be made in the beginning on the first anniversary
of the effective date of this option agreement and continuing until the tenth anniversary:
Fiscal 2023
Fiscal 2024
Fiscal 2025
Fiscal 2026
Fiscal 2027 and thereafter
$
$
25,000
25,000
25,000
25,000
125,000
225,000
100% of the advance minimum royalty payments will be applied to the royalty credits.
Exploration Access and Option to Lease Agreement
On August 25, 2021 (“Effective Date”), the Company entered into an Exploration Access and Option to Lease Agreement (the “Agreement”) with a private-party landowner
(the “Landowner”) whereby the Landowner granted the Company an option (the “Option”) to lease and right of way on a property located in Laramie County, Wyoming. The
Company may exercise the Option for five years (“Option Term”) from the Effective Date. During the Option, the Landowner granted non-exclusive rights (the “Exploration
Access Rights”) to the Company to use the surface of the property for an annual exploration and access right payment of $10,000, thirty days after the effective date and each
year on the anniversary of the Effective Date during the Option Term until such time the Option is exercised or expires. The Company is also required to pay an annual Option
payment of $35,780 for the lease and $6,560 for the right of way within thirty days after the Effective Date and each year on the anniversary of the Effective Date during the
Option Term until such time the Option is exercise by the Company or expires. The Company paid a total of $42,340 on September 1, 2021 pursuant to this Agreement.
At any time during the Option Term, the Company may exercise the Option by providing a written notice to the Landowner and the Company shall pay a one-time right of way
payment of $26,240 at closing and shall execute a lease agreement. The exclusive option to lease (the “Lease”) and right of way (the “Right of Way”) is for a term of ten years
with the right to extend for an additional ten years and requires an annual lease payment of $50,000, compensation for loss of grazing of $40.00 per acre impacted land and
annual Right of Way payments of $13,120.
F-29
U.S. GOLD CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2022
In consideration for the option rights, lease rights and right of way rights under this Agreement, the Company agreed to grant the Landowner shares of the Company’s common
stock worth $50,000, which shares will not vest, or be issued, until the Company executes the Lease.
At any time during the Option Term, the Company may terminate this Agreement by providing a written notice to the Landowner. Upon termination, the Landowner is entitled
to retain any payments already made and the Company shall have no further obligation after the date of termination. The Agreement, including the Option and the Exploration
Access Rights, may be extended for a period of five years upon written notice from the Company. In the absence of such notice, the Agreement shall automatically terminate at
the end of the Option Term. Currently, the Company has not exercised the Option.
Legal Matters
From time to time the Company may be involved in claims and legal actions that arise in the ordinary course of business. To the Company’s knowledge, there are no material
pending legal proceedings to which the Company is a party or of which any of the Company’s property is the subject.
NOTE 13 — INCOME TAX
The Company has a net operating loss carryforward for federal tax purposes totaling approximately $44.8 million at April 30, 2022. Approximately $13.2 million expires
through the year 2038, with approximately $31.6 million net operating losses incurred after December 31, 2017 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 $7.2 million of various state net operating loss carryforwards that
expire through the year 2038; however, the majority of the Company’s business is currently conducted in the states of Wyoming and Nevada which don’t have state income
taxes, so these carryforwards may never be used.
The deferred tax assets and deferred tax liabilities are summarized as follows:
Deferred tax assets:
Net operating loss carryover
Stock-based compensation
Capitalized exploration costs
Accrued remediation costs
Alternative minimum tax credit carryover
Subtotal
Less: valuation allowance
Total deferred tax asset
Deferred tax liabilities:
Acquired mineral rights in excess of tax basis in a tax-free merger
Total deferred tax liabilities
Net deferred tax asset (liabilities)
April 30, 2022
April 30, 2021
$
$
$
$
9,970,000
2,234,000
—
11,000
—
12,215,000
(10,063,000)
2,152,000
April 30, 2022
(2,152,000)
(2,152,000)
—
$
$
$
$
6,793,000
2,776,000
431,000
7,000
—
10,007,000
(7,855,000)
2,152,000
April 30, 2021
(2,152,000)
(2,152,000)
—
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 partial
federal tax refund during the fiscal year ended April 30, 2021.
The Company will amend its fiscal year 2018 and 2019 tax returns to deduct capitalized exploration expenses that should have been deducted under the Act. Such impact has
been updated on the tax provision. The effect of those amendments will increase total deductions by approximately $755,000, with a like increase to the net operating loss
carryforwards when they are completed. The tax effect on the deferred tax assets will be an increase of approximately $159,000 which have been included in the tax provision.
The Company will file the amended fiscal year 2018 and 2019 tax returns before the end of the year.
On August 10, 2020, the Company acquired mineral rights totaling $10,249,632 (see Note 4 – Mineral Rights) in a tax-free reorganization pursuant to IRS Section 368. The
Company recorded the assets at fair value for financial reporting purposes and retained the seller’s tax basis which was zero resulting in a deferred tax liability on the business
combination date. As required by ASC 740, the Company has recognized the deferred tax impact of acquiring the mineral rights asset in this transaction, with the amount paid
exceeding the tax basis of the asset on the acquisition date. This deferred tax liability partially offsets the deferred tax assets recognized by the Company resulting in a carryover
tax basis equal to zero.
F-30
U.S. GOLD CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2022
As of April 30, 2022, the Company had deferred tax assets and liabilities arising principally from the acquisition of the mineral rights described above and the net operating loss
carryforward for income tax purposes, multiplied by an expected blended federal and state tax rate of 21.0%. The Company primarily operates in the states of Wyoming and
Nevada which do not impose a corporate income tax. Any minor apportionment that may occur to any taxable state will be immaterial to current and future operations of the
Company and as such the state’s net operating loss carryforward have been fully offset with in the valuation allowance. 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, 2022.
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)
2022
(2,925,000)
—
—
717,000
2,208,000
—
$
$
Year Ended April 30,
21.0%
—%
—%
(5.1)%
(15.9)%
—%
$
$
2021
(2,601,000)
—
—
43,000
2,558,000
—
21.0%
—%
—%
(0.3)%
(20.7)%
—%
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 operates exclusively in the United States and in various state jurisdictions but primarily in the states of Wyoming and Nevada. For both federal and state income
tax purposes, the Company’s fiscal 2019 through 2022 tax years remain open for examination by the tax authorities under the general three-year statute of limitations.
F-31
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
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, 2022. 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,
2022. 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, 2022 and that material weaknesses in ICFR existed as more fully described below.
38
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, 2022
our internal controls over financial reporting were not effective at the reasonable assurance level:
As of April 30, 2022, 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, 2022. 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.
4. The Company's accounting for complex financial instruments was not effectively designed and maintained.
5. The Company's accounting for income tax was not effectively designed and maintained.
Management has implemented remediation steps to improve our review controls, disclosure controls, procedures and our internal control over financial reporting. Specifically,
we expanded and improved our review process for complex securities and related accounting standards as well as income tax accounting. We plan to further improve this
process by enhancing access to accounting literature, identification of professionals with whom to consult regarding complex accounting applications and income tax
accounting applications, and consideration of additional staff with the requisite experience and training to supplement existing accounting professionals.
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, 2022, 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, 2022 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, 2022.
Item 9B. OTHER INFORMATION
None.
Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
Not applicable.
39
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
PART III
Incorporated by reference from the information in our proxy statement for the 2022 Annual Meeting of Stockholders, which we will file with the Securities and Exchange
Commission within 120 days of the end of the fiscal year to which this report relates.
We have adopted a code of ethics that applies to all of our employees, including the principal executive officer, principal financial officer, principal accounting officer, and
those of our officers performing similar functions. The full text of our code of ethics can be found on the Corporate Governance page on our website. In the event our Board of
Directors approves an amendment to or waiver from any provision of our code of ethics, we will disclose the required information pertaining to such amendment or waiver on
our website.
Item 11. EXECUTIVE COMPENSATION
Incorporated by reference from the information in our proxy statement for the 2022 Annual Meeting of Stockholders or amendment to this annual report on Form 10-K, which
we will file with the SEC within 120 days of the end of the fiscal year to which this report relates.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Incorporated by reference from the information in our proxy statement for the 2022 Annual Meeting of Stockholders or amendment to this annual report on Form 10-K, which
we will file with the SEC within 120 days of the end of the fiscal year to which this report relates.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Incorporated by reference from the information in our proxy statement for the 2022 Annual Meeting of Stockholders or amendment to this annual report on Form 10-K, which
we will file with the SEC within 120 days of the end of the fiscal year to which this report relates.
Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Incorporated by reference from the information in our proxy statement for the 2022 Annual Meeting of Stockholders or amendment to this annual report on Form 10-K, which
we will file with the SEC within 120 days of the end of the fiscal year to which this report relates.
40
Item 15. EXHIBIT AND 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
3.12
3.13
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 the 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 the Current Report on Form 8-K filed with the
Securities and Exchange Commission, SEC file number 001-08266, on March 30, 2020.
Certificate of Amendment to Articles of Incorporation dated May 2, 2017. 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 May 5, 2017.
Certificate of Designations of Series H 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 August 13, 2020.
Certificate of Designations of Series I 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 August 13, 2020.
Form of Common Stock Purchase Warrant. Incorporated by reference from Exhibits to the Current Report on Form 8-K with the Securities and Exchange
Commission, SEC file number 001-08266, filed on May 12, 2011.
41
4.2
4.3
4.4
4.5
4.6
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
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.
Description of Securities. Incorporated by reference from Exhibit 4.3 to the Annual Report on Form 10-K filed with the Securities and Exchange Commission, SEC
file number 001-08266, on July 29, 2021.
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 January 28, 2021.
Form of Common Stock Purchase 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 February 18, 2022.
Form of Common Stock Purchase 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 21, 2022.
2014 Equity Incentive Plan. 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. 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.
Consulting Agreement dated January 7, 2021 by and between Ryan K. Zinke and U.S. Gold Corp. Incorporated by reference from Exhibit 10.3 to the Annual Report
on Form 10-K filed with the Securities and Exchange Commission, SEC file number 001-08266, on July 29, 2021.
Employment Agreement dated December 4, 2020 by and between George Bee and U.S. Gold Corp. Incorporated by reference from Exhibit 10.1 to the Current Report
on Form 8-K filed with the Securities and Exchange Commission, SEC File number 001- 08266, on December 10, 2020.
Employment Agreement dated December 4, 2020 by and between Eric Alexander and U.S. Gold Corp. Incorporated by reference from Exhibit 10.3 to the Current
Report on Form 8-K filed with the Securities and Exchange Commission, SEC File number 001- 08266, on December 10, 2020.
Employment Agreement dated July 19, 2021 by and between Kevin Francis and U.S. Gold Corp. Incorporated by reference from Exhibit 10.1 to the Current Report on
Form 8-K filed with the Securities and Exchange Commission, SEC File number 001- 08266, on July 19, 2021.
U.S. Gold Corp 2020 Stock Incentive Plan. Incorporated by reference from Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange
Commission, SEC File number 001-08266, on September 24, 2019.
First Amendment to the U.S. Gold Corp. 2020 Stock Incentive Plan. Incorporate by reference from Exhibit 10.1 to the Current Report on Form 8-K filed with the
Securities and Exchange Commission, SEC File number 001-08266, on November, 10, 2020.
Form of Leak-Out Agreement. Incorporated by reference from Exhibit 10.2 to the Current Report on Form 8-K filed with the Securities and Exchange Commission,
SEC file number 001-08266, on August 13, 2020.
42
10.10
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.
10.11
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.
10.12
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.
10.13
Form of Securities Purchase Agreement. Incorporated by reference from Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange
Commission, SEC file number 001-08266, on February 18, 2022.
10.14
Form of Securities Purchase Agreement. Incorporated by reference from Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange
Commission, SEC file number 001-08266, on March 21, 2022.
10.15
Consulting Agreement dated March 10, 2021 by and between Luke Norman and U.S. Gold Corp. Incorporated by reference from Exhibit 10.1 to the Current Report on
Form 8-K filed with the Securities and Exchange Commission, SEC file number 001-08266, on May 24, 2022.
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
Consent of Marcum LLP.
23.2
Consent of Gustavson Associates (a member of WSP Global Inc.).
23.3
Consent of John A. Wells.
31.1
Rule 13a-14(a) Certification of George Bee.
31.2
Rule 13a-14(a) Certification of Eric Alexander.
32.1 * Section 1350 Certification of George Bee (Furnished not Filed).
32.2 * Section 1350 Certification of Eric Alexander (Furnished not Filed).
96.1
Technical Report Summary. Incorporated by reference from Exhibit 96.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission, SEC
file number 001-08266, on December 3, 2021.
101.INS Inline XBRL Instance Document
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Link base Document
101.LAB Inline XBRL Taxonomy Extension Label Link base Document
101.PRE Inline XBRL Taxonomy Extension Presentation Link base Document
101.DEF Inline XBRL Taxonomy Extension Definition Link base Document
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
* Furnished herewith
# 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.
Item 16. FORM 10-K SUMMARY
None.
43
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: August 15, 2022
Date: August 15, 2022
U.S. GOLD CORP.
By:
/s/ George M. Bee
George M. Bee
President and Chief Executive Officer
(Principal Executive Officer)
By:
/s/ Eric Alexander
Eric Alexander
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: August 15, 2022
Date: August 15, 2022
Date: August 15, 2022
Date: August 15, 2022
Date: August 15, 2022
Date: August 15, 2022
By:
/s/ Luke Norman
Luke Norman, Director and Chairman
By:
/s/ George M. Bee
George M. Bee, Director
By:
/s/ Tara Gilfillan
Tara Gilfillan, Director
By:
/s/ Robert W. Schafer
Robert W. Schafer, Director
By:
/s/ Michael Waldkirch
Michael Waldkirch, Director
By: /s/ Ryan K. Zinke
Ryan K. Zinke, Director
44
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S CONSENT
We consent to the incorporation by reference in the Registration Statement of U.S. Gold Corp. and Subsidiaries (the “Company”) on Form S-3 (File No. 333-262415 and 333-
253165) of our report dated August 15, 2022, which included an explanatory paragraph as to the Company’s ability to continue as a going concern, with respect to our audits of
the consolidated financial statements of U.S. Gold Corp. and Subsidiaries as of April 30, 2022 and 2021 and for the each of the two years in the period ended April 30, 2022,
which report is included in this Annual Report on Form 10-K of U.S. Gold Corp. and Subsidiaries for the year ended April 30, 2022.
Exhibit 23.1
/s/ Marcum LLP
New York, NY
August 15, 2022
Exhibit 23.2
Exhibit 23.3
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, George M. Bee, certify that:
1)
I have reviewed this Annual Report on Form 10-K of U.S. Gold Corp. (the “registrant”);
2) 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;
3) 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;
4) 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
5) The registrant’s other certifying officer(s) and 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/ George M. Bee
George M. Bee
Chief Executive Officer
August 15, 2022
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, Eric Alexander, certify that:
1)
I have reviewed this Annual Report on Form 10-K of U.S. Gold Corp. (the “registrant”);
2) 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;
3) 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;
4) 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
5) The registrant’s other certifying officer(s) and 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/ Eric Alexander
Eric Alexander
Principal Financial and Accounting Officer
August 15, 2022
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, George M. Bee, 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: August 15, 2022
By:
/s/ George M. Bee
George M. Bee
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, Eric Alexander, 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: August 15, 2022
By:
/s/ Eric Alexander
Eric Alexander
Principal Financial and Accounting Officer