UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended October 31, 20172018

or

For the transition period from _____________ to _____________

Commission file number:1-08266

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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. [X] Yes [  ] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [X] 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. (Check One):

Large accelerated filer [  ] Accelerated filer [  ] Non-accelerated filer [  ][X] Smaller reporting company [X] Emerging growth Company [  ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [  ] Yes [X] No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Common Stock ($.0010.001 par value): As of December 14, 2017,2018, there were 14,211,66018,163,703 shares outstanding.

U.S. GOLD CORP.

FORM 10-Q

TABLE OF CONTENTS

PART I: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

U.S. GOLD CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

See theThe accompanying notesNotes to Unaudited Condensed Consolidated Financial Statements are an integral part of the unaudited condensed consolidatedthese financial statements.

U.S. GOLD CORP. AND SUBSIDIARIES

UNAUDITEDUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

See theThe accompanying notesNotes to Unaudited Condensed Consolidated Financial Statements are an integral part of the unaudited condensed consolidatedthese financial statements.

U.S. GOLD CORP. AND SUBSIDIARIES

UNAUDITEDUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSCHANGES IN STOCKHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED OCTOBER 31, 2018

See the

The accompanying notesNotes to Unaudited Condensed Consolidated Financial Statements are an integral part of the unaudited condensed consolidatedthese financial statements.

U.S. GOLD CORP. AND SUBSIDIARIES

UNAUDITEDCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

The accompanying Notes to Unaudited Condensed Consolidated Financial Statements are an integral part of these financial statements.

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 20172018 AND 20162017

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

Organization

U.S. Gold Corp., formerly known as Dataram Corporation (the “Company”), was incorporated under the laws of the State of Nevada and was originally incorporated in the State of New Jersey in 1967.1967 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. The financial statements are those of Gold King (the accounting acquirer) prior to the merger and include the activity of Dataram Corporation (the legal acquirer) from the date of the merger. Gold King is a gold and precious metals exploration company pursuing exploration and development opportunities primarily in Nevada and Wyoming. None of the Company’s properties contain proven and probable reserves and all of the Company’s activities on all of its properties are exploratory in nature.

On July 6, 2016, the Company filed a certificate of amendment to its Articles of Incorporation with the Secretary of State of Nevada in order to effectuate a reverse stock split of the Company’s issued and outstanding common stock per share on a one for three basis, effective on July 8, 2016. Subsequently, on May 3, 2017, the Company filed aanother certificate of amendment to its Articles of Incorporation, as amended, with the Secretary of State of the State of Nevada in order to effectuate a reverse stock split of the Company’s issued and outstanding common stock on a one for four basis. All share and per share values of the Company’s common stock for all periods presented in the accompanying unaudited condensed consolidated financial statements are retroactively restated for the effect of the reverse stock split in accordance with Staff Accounting Bulletin 4C.splits.

Recent developments-developments - Acquisition and Disposition

On June 13, 2016, Gold King, a private Nevada corporation, entered into an Agreement and Plan of Merger (the “Merger Agreement”) with the Company, the Company’s wholly-owned Subsidiaries,subsidiary, Dataram Acquisition Sub, Inc., a Nevada corporation (“Acquisition Sub”), and all of the principal shareholders of Gold King (the “Gold King Shareholders”). Upon closing of the transactions contemplated under the Merger Agreement (the “Merger”), Gold King merged with and into Acquisition Sub with Gold King as the surviving corporation and became a wholly-owned subsidiary of the Company.

On May 23, 2017, the Company closed the Merger with Gold King. The Merger has constituted a change of control or change in control, the majority of the Board of Directors changed with the consummation of the Merger. The Company issued to Gold King shares of common stock to Gold King which represented approximately 90% of the combined company.

On July 31, 2017, the Company’s Board of Directors, or Board, reviewed and approved the recommendation of management to consider strategic options for Dataram Corporation’s legacy business (“Dataram Memory”) including the sale of the business, within the next 12 months.

In approving the recommendation and adopting a formal plan, the Board retained the right to review all offers received and finallegacy business. Upon board approval, on any sale of the business. As such, the legacy business activities were re-classed and reported as part of “discontinued operations”. Prior to on the salecondensed consolidated statements of Dataram Memory business,operations and assets and liabilities were reflected on the condensed consolidated balance sheetsheets as “held for sale”.

On October 13, 2017, the Company sold the Dataram Memory business for a purchase price of $900,000 (see Note 4)7).

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Liquidity

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information, which includes the unaudited condensed consolidated financial statements and present the unaudited condensed consolidated financial statements of the Company and its wholly-owned subsidiaries as of October 31, 2017.2018. All intercompany transactions and balances have been eliminated. The accounting policies and procedures used in the preparation of these unaudited condensed consolidated financial statements have been derived from the audited financial statements of the Company for the year ended April 30, 2017,2018, which are contained elsewhere in the Form 8-K/A10-K filed on July 31, 2017.30, 2018. The unaudited condensed consolidated balance sheet as of April 30, 20172018 was derived from those financial statements. 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. The results for the interim period are not necessarily indicative of the results to be expected for the year endedending April 30, 2018.

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2017 AND 2016

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)2019.

As reflected in the accompanying unaudited condensed consolidated financial statements, the Company had a net loss and used cash in its operations of approximately $10.7$4.5 million and $4.3$3.6 million, respectively, for the six months ended October 31, 2017.2018. Additionally, the Company had an accumulated deficit of approximately $15.3$22.7 million at October 31, 2017.2018. The Company took steps to mitigate these factors by completingconsummated private placements to several investors for the sale of the Company’s Series B Convertible Preferred Stock (“Series B Preferred Stock”) and Series C Convertible Preferred Stock (“Series C Preferred Stock”) for aggregate net proceeds of approximately $10.9 million between July 2016 and October 2016, andreceived net proceeds from sale of the Company’s common stock of approximately $2.6 million between July 2017 and October 2017. The Company is anticipating raising additional capital but there2017 and completed a private placement for the sale of the Company’s Series E Convertible Preferred Stock (“Series E Preferred Stock”) and warrants for aggregate net proceeds of approximately $4.9 million in January 2018. There can be no assurance that itthe Company will be able to do soraise additional capital or if the terms will be favorable.

The above steps substantially lowered the Company’s potential cash exposure. Additionally, the Company is able to control cash spending on its exploration activities. As a result, as of the date of the issuance of these financial statements, the Company believes its current cash position and plans have alleviated substantial doubt about its ability to sustain operations for at least one year from the issuance of these condensed unaudited consolidated financial statements.

Use of Estimates and Assumptions

In preparing the unaudited condensed 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 condensed 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, goodwill, stock-based compensation, the fair value of common stock issued, asset retirement obligation and the valuation of deferred tax assets and liabilities.

Fair Value of Financial Instruments

The Company adopted Accounting Standards Codification (“ASC”) 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 accounting principles generally accepted in the United States of America that 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:

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 carrying amounts reported in the unaudited condensed consolidated balance sheets for cash, prepaid expense and other current assets – current, accounts payable, and accrued liabilities, approximate their estimated fair values based on the short-term maturity of these instruments.

Goodwill and other intangible assets

In accordance with ASC 350-30-65, the Company assesses the impairment of identifiable intangibles whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors the Company considers to be important which could trigger an impairment review include the following:

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2017 AND 2016

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

When the Company determines that the carrying value of intangibles may not be recoverable based upon the existence of one or more of the above indicators of impairment and the carrying value of the asset cannot be recovered from projected undiscounted cash flows, the Company records an impairment charge. The Company measures any impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent in the current business model. Significant management judgment is required in determining whether an indicator of impairment exists and in projecting cash flows.

Property

Property is carried at cost. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. Depreciation is calculated on a straight-line basis over the estimated useful life of the assets, generally ten years.

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. During the six monthsyear ended October 31, 2017,April 30, 2018, the Company determined that the carrying value of Goodwill (see Note 4)6) exceeded its fair value, which triggered an impairment analysis. The Company recorded a goodwill impairment expense of $6,094,760 during the year ended April 30, 2018, nonrecurring level 3 fair value measurement. No impairment of goodwill was recorded during the six months ended October 31, 2017.2018.

Mineral Rights

Costs of lease, exploration, carrying and retaining unproven mineral lease properties are expensed as incurred. The Company expenses all mineral exploration costs as incurred as it is still in the exploration stage. If the Company identifies proven and probable reserves in its investigation of its properties and upon development of a plan for operating a mine, it would enter the development stage and capitalize future costs until production is established.

When a property reaches the production stage, the related capitalized costs are amortized on a units-of-production basis over the proven and probable reserves following the commencement of production. The Company assesses the carrying costs of the capitalized mineral properties for impairment under ASC 360-10, “Impairment of long-lived assets”, and evaluates its carrying value under ASC 930-360, “Extractive Activities - Mining”, annually. An impairment is recognized when the sum of the expected undiscounted future cash flows is less than the carrying amount of the mineral properties. Impairment losses, if any, are measured as the excess of the carrying amount of the mineral properties over its estimated fair value.

To date, the Company has not established the commercial feasibility of any exploration prospects; therefore, all exploration costs are being expensed.

ASC 930-805, “Extractive Activities-Mining: Business Combinations” (“ASC 930-805”), states that mineral rights consist of the legal right to explore, extract, and retain at least a portion of the benefits from mineral deposits. Mining assets include mineral rights. Acquired mineral rights are considered tangible assets under ASC 930-805. ASC 930-805 requires that mineral rights be recognized at fair value as of the acquisition date. As a result, the direct costs to acquire mineral rights are initially capitalized as tangible assets. Mineral rights include costs associated with acquiring patented and unpatented mining claims.

ASC 930-805 provides that in measuring the fair value of mineral assets, an acquirer should take into account both:

● The value beyond proven and probable reserves (“VBPP”) to the extent that a market participant would include VBPP in determining the fair value of the assets.

● The effects of anticipated fluctuations in the future market price of minerals in a manner that is consistent with the expectations of market participants.

Revenue Recognition

Revenue is recognized when title passes upon shipment of goods to customers. The Company’s revenue earning activities relate to Dataram Memory and involve delivering or producing goods and is included as part of discontinued operations. The following criteria are met before revenue is recognized: persuasive evidence of an arrangement exists, shipment has occurred, selling price is fixed or determinable and collection is reasonably assured. The Company does experience a minimal level of sales returns and allowances for which the Company accrues a reserve at the time of sale in accordance with the Revenue Recognition – Right of Return Topic of the FASB ASC. Estimated warranty costs are accrued by management upon product shipment based on an estimate of future warranty claims.

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2017 AND 2016

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Share-Based Compensation

Share-based compensation is accounted for based on the requirements of ASC 718, “Compensation – Stock Compensation’ (“ASC 718”) which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). ASC 718 also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. Pursuant to ASC 505, “Equity – Equity Based Payments to Non-Employees” (“ASC 505-50”), for share-based payments to consultants and other third-parties, compensation expense is determined at the measurement date which is the grant date. Until the measurement date is reached, the total amount of compensation expense remains uncertain.

Accounting for Warrants

The Company classifies as equity any contracts that (i) require physical settlement or net-share settlement or (ii) gives 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) gives the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement).

The Company assessed the classification of its common stock purchase warrants as of the date of each equity offering and determined that such instruments met the criteria for equity classification, as the settlement terms indicate that the instruments are indexed to the entity’s underlying stock.

Convertible Preferred Stock

The Company accounts for its convertible preferred stock under the provisions of ASC 480, “Distinguishing Liabilities from Equity”, 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.

Convertible Instruments

The Company bifurcates conversion options from their host instruments and account 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.

Asset Retirement Obligations

Asset retirement obligations (“ARO”), consisting primarily of estimated reclamation costs at the Company’s Copper King and Keystone properties, are recognized in the period incurred and when a reasonable estimate can be made, and recorded as liabilities at fair value. Such obligations, which are initially estimated based on discounted cash flow estimates, are accreted to full value over time through charges to accretion expense. Corresponding asset retirement costs are capitalized as part of the carrying amount of the related long-lived asset and depreciated over the asset’s remaining useful life. Asset retirement obligations 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 asset retirement obligations annually or more frequently at interim periods if deemed necessary.

Income taxes

The Company accounts for income taxes pursuant to the provision of ASC 740-10, “Accounting for Income Taxes” (“ASC 740-10”), which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized.

The Company follows the provision of ASC 740-10 related to Accounting for Uncertain Income Tax Positions. 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.

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 IRS and state taxing authorities, generally for three years after they are filed.

The Tax Cuts and Jobs Act (the “Act”) was enacted in December 2017. Among other things, the Act reduced the U.S. federal corporate tax rate from 34 percent to 21 percent as of January 1, 2018 and eliminated the alternative minimum tax (“AMT”) for corporations. Since the deferred tax assets are expected to reverse in a future year, it has been tax effected using the 21% federal corporate tax rate. As a result of the reduction in the corporate tax rate, the Company decreased its gross deferred tax assets by approximately $2.1 million which was offset by a corresponding decrease to the valuation allowance as of April 30, 2018, which had no impact on the Company’s consolidated financial statements for the year ended April 30, 2018. The Company will continue to analyze the Tax Act to assess its full effects on the Company’s financial results, including disclosures, for the Company’s fiscal year ending April 30, 2019, but the Company does not expect the Tax Act to have a material impact on the Company’s unaudited condensed consolidated financial statements.

On December 22, 2017, the Securities and Exchange Commission issued Staff Accounting Bulletin 118, which allows a measurement period, not to exceed one year, to finalize the accounting for the income tax effects of the Act. Until the accounting for the income tax effects of the Act is complete, the reported amounts are based on reasonable estimates, are disclosed as provisional and reflect any adjustments in subsequent periods as estimates are refined or the accounting of the tax effects are completed.

Recent Accounting Pronouncements

In January 2017,June 2018, the FASB issued ASU 2017-01 “Business Combinations2018-07, “Compensation — Stock Compensation (Topic 805)718): ClarifyingImprovements to Nonemployee Share-Based Payment Accounting”, which expands the Definitionscope of Topic 718 to include all share-based payment transactions for acquiring goods and services from nonemployees. ASU 2018-07 specifies that Topic 718 applies to all share-based payment transactions in which the grantor acquires goods and services to be used or consumed in its own operations by issuing share-based payment awards. ASU 2018-07 also clarifies that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a Business”, which clarifies the definition of a business to assist entities with evaluating whether transactions should becontract accounted for as acquisitions or disposals of assets or businesses. The standard introduces a screen for determining when assets acquired are not a business and clarifies that a business must include, at a minimum, an input and a substantive process that contribute to an output to be considered a business. This standardunder ASC 606. ASU 2018-07 is effective for fiscal years beginning after December 15, 2017,2018, including interim periods within that reporting period. The Company early adopted this ASU on May 1, 2017, and expects that the adoption of this ASU could have a material impact on future consolidated financial statements for acquisitions that are not considered to be businesses.

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2017 AND 2016

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

In July 2017, the FASB issued ASU 2017-11 “Earnings Per Share (Topic 260)”. The amendments in the update change the classification of certain equity-linked financial instruments (or embedded features) with down round features. The amendments also clarify existing disclosure requirements for equity-classified instruments. For freestanding equity-classified financial instruments, the amendments require entities that present earnings per share (“EPS”) in accordance with Topic 260, Earnings Per Share, to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features would be subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt—Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). For public business entities, the amendments in Part I of this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15,with early adoption permitted, but no earlier than our adoption of ASC 606. The Company chose to early adopt ASU 2018-07 in July 2018. The Company doesadoption of this standard did not believe the guidance will have a material impact on itsthe Company’s unaudited condensed consolidated financial statements.statements and related disclosures.

Other 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 impact on the financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures.

NOTE 3 — GOING CONCERN

The accompanying condensed 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. The Company has incurred significant operating losses since its inception. As of October 31, 2018, the Company had cash of approximately $4.1 million, working capital of approximately $4.1 million, an accumulated deficit of approximately $22.7 million, and cash used in operating activities of approximately $3.6 million. 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. These matters raise substantial doubt about the Company’s ability to continue as a going concern for the twelve months following the issuance of these financial statements.

The condensed 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

Copper King Project

The mineral properties consist of the Copper King gold and copper development project located in the Silver Crown Mining District of southeast Wyoming (the “Copper King Project”) and certain unpatented mining claims in Meagher County, Montana.. On July 2, 2014, the Company entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) whereby the Company acquired certain mining leases and other mineral rights comprising the Copper King project and certain unpatented mining claims located in Montana. Pursuant to the Asset Purchase Agreement, theproject. The purchase price was (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 which includes the purchase price ($3,000,000) and related transaction cost.

Keystone Project

The Company, through its wholly-owned subsidiary, U.S. Gold Acquisition Corp., acquired the mining claims comprising the Keystone Project on May 27, 2016 from Nevada Gold Ventures, LLC (“Nevada Gold”) and Americas Gold Exploration, Inc. (collectively, the “Sellers”) under the terms of a Purchase and Sale Agreement (the “Purchase and Sale Agreement”).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 PropertyProject consisted of the following: (a) cash payment in the amount of $250,000, (b) the closing shares which is equivalent to 462,500 shares of the Company’s common stock and (c) an aggregate of 231,458 five-year options to purchase shares of the Company’s common stock at an exercise price of $3.60 per share.

The Company valued the common shares at the fair value of $555,000 or $1.20 per common share based on the contemporaneous sale of its preferred stock in a private placement at $0.10 per common share. The options were valued at $184,968. The options shall vest over a period of two years whereby 1/24 of the options shall vest and become exercisable each month for the next 24 months. The options are non-forfeitable and are not subject to obligations or service requirements.

Accordingly, the Company recorded a total cost of the acquired mineral properties of $1,028,885 which includes the purchase price ($989,968) and related transaction cost ($38,917). Some of the Keystone Project claims are subject to pre-existing net smelter royalty (“NSR”) obligations. In addition, under the terms of the Purchase and Sale Agreement, Nevada Gold retained additional NSR rights of 0.5% with regard to certain claims and 3.5% with regard to certain other claims. Under the terms of the Purchase and Sale Agreement, the Company may buy down one percent (1%) of the royalty from Nevada Gold at any time through the fifth anniversary of the closing date for $2,000,000. In addition, the Company may buy down an additional one percent (1%) of the royalty anytime through the eighth anniversary of the closing date for $5,000,000.

In August 2017, the Company closed on a transaction under a purchase and sale agreement executed in June 2017 with Nevada Gold and the Company’s wholly-owned subsidiary, U.S. Gold Acquisition Corporation, a Nevada corporation, (“Buyer”) pursuant to which Nevada Gold sold and the BuyerU.S. Gold Acquisition Corporation purchased all right, 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) 15,000 shares of common stock of the Company which were issued in August 2017 (see Note 6).valued at $35,850. Mr. David Mathewson, the Company’s Chief Geologist, is a member of Nevada Gold.

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2017 AND 2016

NOTE 3 — MINERAL RIGHTS (continued)

As of the date of these unaudited condensed consolidated financial statements, the Company has not established any proven or probable reserves on its mineral properties and has incurred only acquisition costs and exploration costs.

Mineral properties consisted of the following:

NOTE 45 — PROPERTY

Property consisted of the following:

For the six months ended October 31, 2018 and 2017, depreciation expense amounted to $2,826 and $0, respectively.

NOTE 6 — ASSET RETIREMENT OBLIGATION

In conjunction with various permit approvals permitting the Company to undergo exploration activities at the Copper King project and Keystone project, the Company has recorded an asset retirement obligation based upon the reclamation plans submitted in connection with the various permits.

The following table summarizes activity in the Company’s ARO:

NOTE 7 — ACQUISITION AND DISPOSITION

On May 23, 2017, the Company closed the Merger with Gold King. Pursuant to the terms of the Merger Agreement and as consideration for the acquisition of Gold King, on the closing date, 2,446,433 shares of the Company’s common stock, par value $0.001 per share, were issued to holders of Gold King’s common stock, Series A Preferred Stock, Series B Preferred Stock and certain incoming officers. In addition, 45,000.18 shares of the Company’s newly designated Series C Convertible Preferred Stock, par value $0.001 per share, (the “Series C Preferred Stock”), convertible into an aggregate of 4,500,180 shares of the Company’s common stock that were issued to Copper King LLC, 45,500.18 shares of Series C Preferred Stock were issued to Copper King LLC upon closing, and 4,500.01 shares of Series C Preferred Stock were to be held in escrow pursuant to the terms of an escrow agreement and 4,523,589 shares of the Company’s common stock and warrants to purchase up to 452,359 shares of the Company’s common stock were issued to the holders of Gold King’s Series C Preferred Stock. Additionally, 231,458 of the Company’s stock options were issued to the holders of Gold King’s outstanding stock options issued in connection with the closing of the acquisition of the Keystone Project.

As a result of the Merger, for financial statement reporting purposes, the business combination between the Company and Gold King has been treated as a reverse acquisition and recapitalization with Gold King deemed the accounting acquirer and the Company deemed the accounting acquiree under the acquisition method of accounting in accordance with FASB Accounting Standards Codification (“ASC”) Section 805-10-55. At the time of the Merger, both the Company and Gold King have their own separate operating segments. Accordingly, the assets and liabilities and the historical operations that are reflected in the consolidated financial statements after the Merger are those of the Gold King and are recorded at the historical cost basis of the Company. The acquisition process utilizes the capital structure of the Company and the assets and liabilities of Gold King which are recorded at historical cost.

The Company’s assets and liabilities were recorded at their fair values as of the date of the Merger and the results of operations of the Company are consolidated with results of operations of Gold King starting on the date of the Merger. The Company is deemed to have issued 1,204,667 shares of common stock which represents the outstanding common stock of the Company prior to the closing of the Merger. The Company accounted for the value under ASC 805-50-30-2 “Business Combinations” whereby if the consideration is not in the form of cash, the measurement is based on either the cost which shall be measured based on the fair value of the consideration given or the fair value of the assets (or net assets) acquired, whichever is more clearly evident and thus more reliably measurable. The Company deemed that the fair value of the consideration given was $4.70 per share based on the quoted trading price on the date of the Merger amounting to $5,661,935 which is more clearly evident anda more reliable measurement basis. The estimated fair values of assets acquired and liabilities assumed are provisional and are based on the information that was available as of the acquisition date to estimate the fair value of assets acquired and liabilities assumed. The Company believes that information provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed.

As a result of the reverse merger, the total purchase consideration exceeded the net assets acquired. The Company recorded $6,094,760 of goodwill at the time of the merger. None of the goodwill recognized is expected to be deductible for income tax purposes. The following table summarizes the consideration paid and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date:

The net purchase price paid by the Company was allocated to assets acquired and liabilities assumed on the records of the Company as follows:

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2017 AND 2016

NOTE 4 — ACQUISITION AND DISPOSITION (continued)

During the six monthsyear ended October 31, 2017,April 30, 2018, the Company recorded an impairment loss of $6,094,760 as the Company determined that the carrying value of the goodwill is not recoverable. The Company has determined that if the business combination would have occurred on the first day of the reporting period there would not have been a material change to the continuing operations of the financial statements presented.

In June 2017, subsequent to the Merger, the Company decided to discontinue its memory product business. The Company sold the Dataram Memory business on October 13, 2017 for a purchase price of $900,000. The Company will focus its activities on its gold and precious metal exploration business. During the six monthsyear ended October 31, 2017,April 30, 2018, the Company has received net proceeds from the sale of Dataram Memory business of $326,404 after payment of fees related to the sale such as legal and commission expenses aggregating to $201,510. Following the payment of these related fees, the Company has reserved $167,342 for payment of obligations included in accruedand other liabilities and $204,744 for the payment of distribution payable and have been reflected in the unaudited condensed consolidated financial statement as assets of discontinued operations of $372,086 as of October 31, 2017 as reflected in the table below.

assumed.

During the six monthsyear ended October 31, 2017,April 30, 2018, the Company recognized a gain on extinguishment of liabilities of $245,256$248,684 which is included in the loss from discontinued operations as the Company has settled the distribution payable to the former Dataram Memory shareholders at an amount less than the liability originally estimatedrecorded at $500,000. Consequently, the Company recorded distribution payabletime of $254,744 and has been included in liabilities of discontinued operations as of October 31, 2017.acquisition. Additionally, during the six monthsyear ended October 31, 2017,April 30, 2018, the Company recognized gain from sale of discontinued operations of $102,023$94,485 related to the sale of the Dataram Memory business on October 13, 2017.

The remaining assets and liabilities of held for sale operations are presented in the unaudited condensed balance sheets under the caption “Liabilities of discontinued operations” and relates to the operations of the memory product business. The carrying amounts of the major classes of these liabilities as of October 31, 2017 are summarized as follows:

Credit Facility

The Company had a financing agreement (the “Financing Agreement”) with Rosenthal & Rosenthal, Inc. that provides for a revolving loan with a maximum borrowing capacity of $3,500,000. The Financing Agreement renewal date was August 31, 2017 and will renew from year to year unless such Financing Agreement is terminated as set forth in the loan agreement. The amount outstanding under the Financing Agreement bore interest at a rate of the Prime Rate (as defined in the Financing Agreement) plus 3.25% (the “Effective Rate”) or on Over-advances (as defined in the Financing Agreement), if any, at a rate of the Effective Rate plus 3%. The Financing Agreement contained other financial and restrictive covenants, including, among others, covenants limiting the Company’s ability to incur indebtedness, guarantee obligations, sell assets, make loans, enter into mergers and acquisition transactions and declare or make dividends. Borrowings under the Financing Agreement are collateralized by substantially all the assets of the Company. The Financing Agreement provided for advances against eligible accounts receivable and inventory balances based on prescribed formulas of raw materials and finished goods. On October 13, 2017, upon the sale of the Dataram Memory business, the buyer assumed the obligation under this Financing Agreement, therefore, liabilities related to this financing agreement was $0 as of October 31, 2017.April 30, 2018.

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2017 AND 2016

NOTE 4 — ACQUISITION AND DISPOSITION (continued)

The following table sets forth for the six monthsyear ended October 31, 2017,April 30, 2018, indicated selected financial data of the Company’s discontinued operations of its memory product business from the date of merger to October 31, 2017.April 30, 2018.

The following table sets forth for the three monthsyear ended October 31, 2017, indicated selected financial data of the Company’s discontinued operations of its memory product business from the date of merger to October 31, 2017.

The following table sets forth for the three and six months ended October 31, 2017,April 30, 2018, indicated selected financial data of the Company’s gain from sale of the Dataram Memory business.

NOTE 58 — RELATED PARTY TRANSACTIONS

Accounts payable to related party as of October 31, 20172018 and April 30, 20172018 was $2,431, and $2,431 respectively and was reflected as accounts payable – related party in the accompanying unaudited condensed consolidated balance sheets. The related party is the managing partner of Copper King LLC who was a principal stockholder of Gold King.

In August 2017, the Company closed on a transaction under a purchase and sale agreement executed in June 2017 with Nevada Gold and the Buyer pursuant to which the Seller sold and the Buyer purchased all right, title and interest in the Gold Bar North Property, a gold development project located in Eureka County, Nevada (see Note 3). 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) 15,000 shares of common stock of the Company which were issued in August 2017. Mr. David Mathewson, the Company’s Chief Geologist is a member of Nevada Gold.

NOTE 69 — STOCKHOLDERS’ EQUITY

On May 3, 2017 the Company filed a certificate of amendment to its Articles of Incorporation, as amended with the Secretary of State of the State of Nevada in order to (i) effectuate a reverse stock split of the Company’s issued and outstanding common stock on a one (1) for four (4) basis and (ii) increase the Company’s authorized number of shares of common stock and preferred stock to 200,000,000 shares from 54,000,000 shares and 50,000,000 shares from 5,000,000 shares, respectively.Equity Incentive Plan

In August 2017, the Company’s Board of Directors approved the Company’s 2017 Equity Incentive Plan (the “Plan”) including the reservation of 1,650,000 shares of common stock thereunder.

Series C Convertible PreferredOn January 1st of each year during the term of the Plan (the “Calculation Date”), the aggregate number of shares of Common Stock

In May 2017, the Company designated 45,002 that are available for issuance shall automatically be increased by such number of shares as Series C Preferred Stock, par value $0.001 per share. Each share of Series C Preferred Stock is convertible into shares of the Company’s common stock with a stated value of $1,000 per share and conversion price of $1.00 per share of common stock, subject to adjustment in the event of stock split, stock dividends, and recapitalization or otherwise. The holders of the Series C Preferred Stock shall not possess any voting rights. The Series C Preferred Stock does not contain any redemption provision. The Series C Preferred Stock are entitled to a liquidation preference equal to the par valuenumber of $0.001, priorshares sufficient to cause the Share Limit (as defined in the Plan) to equal twenty percent (20%) of the issued and outstanding Common Stock of the Company at such time, provided, however, that if on any paymentsCalculation Date the number of shares equal twenty percent (20%) of our total issued and outstanding Common Stock is less than the number of shares of Common Stock available for issuance under the Plan, no change will be made to holdersthe aggregate number of (i) any other class or seriesshares of capital stock whose terms expressly provideCommon Stock issuable under the Plan for that year (such that the holdersaggregate number of preferred shares should receive preferential payment with respect to such distribution and (ii)of Common Stock available for issuance under the common stock.

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2017 AND 2016Plan will never decrease).

Common Stock

In connection with the Merger, the Company is deemed to have issued 1,204,667 shares of common stock which represents the outstanding common shares of the Company prior to the closing of the Merger (see Note 4).

On May 18, 2016, the Company issued 125,000 shares of the Company’s common stock to a consultant in connection with a one year consulting agreement. The Company valued these common shares at the fair value of $150,000 or $1.20 per common share based on the sale of its preferred stock in a private placement at $0.10 per common share. In connection with the issuance of these common shares, the Company recorded stock based compensation of $12,500 (amortization of prepaid stock based expense balance as of April 30, 2017) for the six months ended October 31, 2017.

In May 2017, in connection with the Merger (see Note 4)7), the Company issued 37,879 shares of the Company’s common stock having a fair value of $100,000 to the Chief Geologist for services rendered to the Company from June 2016 to January 2017 pursuant to his employment agreement with the Company’s wholly-owned subsidiary Gold King. Additionally, in August 2017,King (see Note 11). Consequently, the Company issued 29,412 shares of the Company’s common stock to the Chief Geologist for services rendered to the Company from February 2017 to July 2017 pursuant to his employment agreement (see Note 8). The Company valued these common shares at the fair value of $75,000 or $2.55 per common share based on the quoted trading price on the date of grant and reduced accrued salaries by $137,500$100,000 as of OctoberJuly 31, 2017 and recognized stock based compensation of $37,500 for services rendered between May 2017 to July 2017.

In July 2017, the Company sold 179,211 shares of its common stock at $2.79 per common share for proceeds of approximately $500,000. Additionally, in October 2017, pursuant to an underwriting agreement, the Company sold 1,388,889 shares of its common stock at $1.80 per share to an underwriter for net proceeds of approximately $2,090,000 after payment of underwriting discounts, commissions and related offering expenses and legal fees of approximately $410,000.

Between May 2017 and SeptemberJuly 2017, the Company issued 4,050,1623,682,000 shares of the Company’s common stock in exchange for the conversion of 40,50036,820 shares of the Company’s Series C Preferred Stock.

Common stock issued for services

During the six months ended October 31, 2018, the Company issued an aggregate of 195,52561,110 shares of the Company’s common stock to officers and employees ofthe Chief Geologist for services rendered to the Company for services rendered.from April 2018 to September 2018 pursuant to his employment agreement (see Note 11). The Company valued these common shares at the fair value of $467,305$75,000 or $2.39$1.06 - $1.36 per common share based on the quoted trading priceprices on the date of grantgrants and recognized stock based compensation of $467,305 during the six months ended October 31, 2017.reduced accrued salaries by $12,500.

In August 2017,On September 30, 2018, the Company issued an aggregate of 6,4621,000,000 shares of the Company’s common stock to fiveofficers, directors of the Companyand employees for services rendered. The Company valued these common shares at the fair value of $15,444 or $2.39 per common share based on the quoted trading pricevest 50% on the date of grantissuance and recognized stock based compensation50% on the one-year anniversary of $15,444 duringthe date of issuance. The 1,000,000 shares had a fair value of $990,000 and will be expensed over the vesting period.

During the six months ended October 31, 2017.

NOTE 6 — STOCKHOLDERS’ EQUITY (continued)

In August 2017,2018, the Company issued an aggregatehas recorded $774,664 to the condensed consolidated statements of 117,500 shares of the Company’soperations relating to common stock to four consultants pursuant to consulting agreements related to investor relations and business advisoryissued for services. The termAs of October 31, 2018, the consulting agreements ranged from 3 months to 12 months. The Company valued these common shares at the fair value of $280,825 or $2.39 per common share based on the quoted trading price on the date of grant. The Company recognized stock basedcompany has deferred compensation of $234,021 and prepaid expenses of $46,804 at October 31, 2017 to be amortized over the term of its respective consulting agreements.

In August 2017, the Company closed on a transaction under a purchase and sale agreement executed in June 2017 with Nevada Gold and the Buyer pursuant to which Nevada Gold sold and the Buyer purchased all right, title and interest in the Gold Bar North Property, a gold development project located in Eureka County, Nevada (see Note 3). 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) 15,000 shares of common stock of the Company which were issued in August 2017. The Company valued these common shares at the fair value of $35,850 or $2.39 per common share based on the quoted trading price on the date of grant. Mr. David Mathewson, the Company’s Chief Geologist, is a member of Nevada Gold.

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2017 AND 2016$435,011.

Stock Options

A summary of the Company’s outstanding stock options as of October 31, 20172018 and changes during the period then ended are presented below:

The 67,508At October 31, 2018, the aggregate intrinsic value of options are expected to vest over the next 7 months. Thereoutstanding and exercisable was $0 and $0, respectively.

At April 30, 2018, the aggregate intrinsic value asof options outstanding and exercisable was $1,000 and $0, respectively.

Stock-based compensation for stock options has been recorded in the unaudited condensed consolidated statements of operations and totaled $132,848 for the six months ended October 31, 2018 and $0 for six months ended October 31, 2017. As of October 31, 2017.2018, the remaining balance of unamortized expense is $751,447 and is expected to be amortized over a weighted average period of 2.11 years.

Stock Warrants

A summary of the Company’s outstanding stock warrants as of October 31, 20172018 and changes during the period then ended are presented below:

NOTE 6 — STOCKHOLDERS’ EQUITY (continued)

All warrants as of October 31, 2018 are fully vested.

At October 31, 2018, the aggregate intrinsic value of warrants outstanding and exercisable was $0 and $0, respectively.

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2017 AND 2016At October 30, 2018, the aggregate intrinsic value of warrants outstanding and exercisable was $0 and $0, respectively.

NOTE 710 — NET LOSS PER COMMON SHARE

Net loss per common share 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.

NOTE 811 — COMMITMENTS AND CONTINGENCIES

Mining Leases

The Copper King property position consists of two State of Wyoming Metallic and Non-metallic Rocks and Minerals Mining Leases. These leases were assigned to the Company in July 2014 through the acquisition of the Copper King project.

The Company’s rights to the Copper King Project arise under two State of Wyoming mineral leases:

1) State of Wyoming Mining Lease No. 0-40828 consisting of 640 acres.

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:

The future minimum lease payments under these mining leases are as follows:

NOTE 8 — COMMITMENTS AND CONTINGENCIES (continued)

The Company may renew the lease for a third ten-year term which will require an annual payment of $3.00 per acre and then $4.00 per acre thereafter.

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2017 AND 2016

Executive Employment Agreements

On April 12, 2016,October 29, 2018, the Company entered intoand Mr. Karr executed an employment agreement with its Chief Executive Officer, Mr. Edward Karr.(the “Karr Employment Agreement”). The initial termmaterial terms of the agreement is for two years ending on April 30, 2018, with automatic renewals for successive one year terms unless terminatedKarr Employment Agreement include: (i) an annual base salary of $250,000; (ii) eligibility to earn an annual incentive bonus of up to 100% of Mr. Karr’s base salary, payable in cash or stock at Mr. Karr’s discretion; (iii) eligibility to participate in any long term incentive plan adopted by written notice at least 90 days priorthe Company; and (iv) eligibility to the expiration of the term.participate in any Company employee benefit plans. Mr. Karr is also subject to receive anon-solicitation and confidentiality provisions set forth in the Karr Employment Agreement.

On October 29, 2018, the Company and Mr. Rector executed an employment agreement (the “Rector Employment Agreement”). The material terms of the Rector Employment Agreement include: (i) an annual base salary of $250,000 per year. The agreement calls for a$180,000; (ii) eligibility to earn an annual incentive bonus of $250,000up to be awarded upon meeting a certain milestone goal which is concluding a financing100% of at least $10,000,000, a minimum of $2,500,000 of which must come from foreign investors. The bonus may be paidMr. Rector’s base salary, payable in cash or stock or a combination thereof in the discretion of the board. Any bonus for a calendar year shall be subjectat Mr. Rector’s discretion; (iii) eligibility to Mr. Karr’s continued employment with the Company through the end of the calendar year in which it is earned and shall be paid after the conclusion of the calendar year in accordance with the Company’s regular bonus payment policies in the year following the year with respect to which the bonus relates, andparticipate in any case not later than twolong term incentive plan adopted by the Company; and one half (2-1/2) months following the end of the year with respect(iv) eligibility to which a bonus is earned.

The Company’s Chief Financial Officer, Mr. David Rector, is employed under an executive employment agreement dated Apri1 14, 2016. The initial term of the Agreement is for one year, with automatic renewals for successive one year terms unless terminated by written notice at least 30 days prior to the expiration of the term.participate in any Company employee benefit plans. Mr. Rector is also subject to receive a base salary of $15,000 per month. The agreement calls for a bonus in an amount up to the amount of the base salary, to be awardednon-solicitation and confidentiality provisions set forth in the discretion of the board of directors and to be paid in cash, stock, or a combination thereof in the discretion of the board.Rector Employment Agreement.

On June 27, 2016, the Company entered into an employment agreement with its Chief Geologist, Mr. David Mathewson. The initial term of the Agreementagreement is for one year, with automatic renewals for successive one year terms unless terminated by written notice at least 30 days prior to the expiration of the term by either party. Mr. Mathewson is to receive a base salary of $200,000 per year. The base salary shall be payable as follows: (a) 25% of the base salary shall be payable in equal monthly cash installments and (b) the remaining 75% of the base salary shall be payable in equal monthly installments in the form of common stock of the Company. Each installment of common stock shall be issued on the first business day of the months and shall be valued at the market price on the trading day immediately prior to the date of issuance. Market price is the closing bid price on the principal securities exchange or trading market. Mr. Mathewson shall be entitled to receive bonus to be paid in cash, stock, or a combination thereof and equity awards.

Separation Agreements

On June 8, 2017, the Company and David A. Moylan, the Company’s former President and Chief Executive Officer, entered into a separation agreement (the “Moylan Separation Agreement”).agreement. Mr. Moylan resigned as Chairman of the Board of Directors and as the President and Chief Executive Officer of the Company on May 23, 2017 in connection with the closing of the transactions contemplated by the Merger Agreement and Merger (see Note 4)7).

Under the terms of the Moylan Separation Agreement,separation agreement, Mr. Moylan received a severance payment of an aggregate of $494,227. Unless revoked, the Moylan Separation AgreementThe separation agreement became effective eight days following execution. Such severance payment is the sole and exclusive payment by the Company and is in lieu of any and all payments or obligations, including any separation payments under prior agreements between Mr. Moylan and the Company. Also as set forth in the Moylan Separation Agreement,separation agreement, Mr. Moylan will, until terminated by the Company’s Board of Directors at its sole option with two weeks’ notice, serve as the President and Chief Executive Officer of Dataram Memory for a monthly fee of $19,667, payable 90% in common stock of the Company and 10% in cash and provide general consulting and support services to the Company. Mr. Moylanno longer serves in any capacity with the Company or its subsidiaries effective October 31, 2017.

2017.

On June 6, 2017, Anthony Lougee resigned as Chief Financial Officer of the Company pursuant to a Change in Control and Severance Agreement by and between the Company and Mr. Lougee dated July 31, 2015 (the “Lougee Severance Agreement”).2015. Mr. Lougee’s decision to resign did not result from any disagreement with the Company, the Company’s management or the Board of Directors. On June 8, 2017, the Company entered into a separation agreement with Mr. Lougee (the “Lougee Separation Agreement”).Lougee. Under the terms of the Lougee Separation Agreement,separation agreement, Mr. Lougee received a severance payment of an aggregate of $221,718. Unless revoked, the Lougee Separation AgreementThe separation agreement became effective eight days following execution. Such severance payment is the sole and exclusive payment by the Company and is in lieu of any and all payments or obligations, including any separation payments under prior agreements between Mr. Lougee and the Company, including the Lougee Severance Agreement.severance agreement.

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2017 AND 2016

NOTE 8 — COMMITMENTS AND CONTINGENCIES (continued)

Subsequent to the Merger, on June 8, 2017, the Company reappointed Mr. Lougee to serve as our Chief Financial Officer and as the Chief Financial Officer of Dataram Memory and entered into an amended and restated offer letter agreement which was accepted (the “Employment Agreement”).accepted. Mr. Lougee’s compensation remained the same as his compensation immediately prior to his resignation: a base salary of $144,000 with additional monthly cash payments of $2,500 through the earliest to occur of (i) his resignation or removal as Chief Financial Officer of the Company or of Dataram Memory or (ii) November 23, 2017. He shall also receivereceived a monthly award of 500 shares of restricted common stock. Mr. Lougee’s employment iswas on an at-will basis and may be terminated without notice at any time by Mr. Lougee or the Board of Directors. The Employment Agreementemployment agreement canceled and superseded the Lougee Severance Agreement,severance agreement, the offer letter agreement by and between the Company and Mr. Lougee dated July 31, 2015 and the incentive agreement by and between the Company and Mr. Lougee dated February 7, 2017.Effective October 17, 2017, Mr. Lougee resigned as the Company’s Chief Financial Officer.

NOTE 912 — SUBSEQUENT EVENTS

On November 10, 2017,1, 2018 Robert DelAversano resigned from his position as Principal Financial and Accounting Officer of the Company to pursue other opportunities. Mr. DelAversano served as the Principal Financial and Accounting Officer pursuant to a consulting agreement between the Company and Brio Financial Group, where Mr. DelAversano serves as Director of Financial Reporting & Taxation.

On November 1, 2018 the Company appointed Andrew KaplanJonathan Tegge, age 29, as its Principal Financial and Accounting Officer. Mr. Tegge will serve as the Principal Financial and Accounting Officer pursuant to a directorconsulting agreement between the Company and Brio Financial Group, where Mr. Tegge serves as an Associate of Financial Reporting.

Effective November 1, 2018, the Board of Directors of the Company. Mr. Kaplan shall receiveCompany authorized and approved the Company’s equity awardamendment and restatement of the Bylaws of Corporation to:

(i) change the reference of the name of the Corporation to U.S. Gold Corp. (formerly, Dataram Corporation);

(ii) provide for new independent directorsthe representation of 12,000securities of the Corporation in the form of certificated or uncertificated securities;

(iii) reduce the quorum requirement for shareholder meetings from shareholders representing a majority of the shares entitled to vote to the minimum required by Nasdaq Stock Market Rule 5620(c) of one-third (33-1/3%) of the issued shares of the Company’sCorporation’s common stockvoting stock; and

(iv) make such other grammatical corrections as compensation, which shall vestmanagement of the Corporation may determine be reasonably necessary.

On November 2, 2018, the Company entered into an At-the-Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC (“Wainwright”) as sales manager. Under the terms of the ATM Agreement, the Company will be entitled to sell, at its sole discretion and from time to time as it may choose, common shares in 24 equal monthly installments over a two year period, beginning on the one month anniversarycapital of the Company (“Shares”) through Wainwright, with such sales having an aggregate gross sales value of up to $1,000,000 (the “Offering”). The ATM Agreement will remain in full force and effect until the ATM Agreement is terminated. As of the date of issuance. Mr. Kaplan was appointedthis filing the Company has not raised any money through the ATM Agreement.

Subject to the Nominatingterms and Governance Committee, Audit Committee and Compensation Committeeconditions of the Board of Directors.ATM Agreement, Wainwright will use its commercially reasonable efforts to sell the Shares from time to time, based upon the Company’s instructions. The Company valued these common shareshas provided Wainwright with customary indemnification rights, and Wainwright will be entitled to a commission at the fair value of $15,240 or $1.27 per common share based on the quoted trading price on the date of grant.

On November 16, 2017, the Company issued 21,213 sharesa fixed commission rate equal to 3.0% of the Company’s common stock to the Chief Geologist for services rendered to the Company from August 2017 to October 2017 pursuant to his employment agreement (see Note 8). The Company valued these common shares at the fair value of $37,500 or $1.76gross proceeds per common share based on the quoted trading prices on the date of grants and reduced accrued salaries by $37,500.Share sold.

On November 16, 2017, the Company issued an aggregate of 33,681 shares of the Company’s common stock to two former officers of the Company for services rendered. The Company valued these common shares at the fair value of $55,374 or $1.65 per common share based on the quoted trading price on the date of grant and reduced accrued salaries of $55,374.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10Q10-Q contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Many of the forward-looking statements are located in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and similar terms. Forward-looking statements are not guarantees of future performance and the Company’s actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed under the heading “Risk Factors” in Part I, Item 1A of the Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “Commission”) which can be reviewed at http://www.sec.gov. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.

The interim unaudited consolidated financial statements included herein have been prepared by U.S. Gold Corp. (the “Company”) without audit, pursuant to the rules and regulations of the Commission. Certain information and footnote disclosure normally included in interim unaudited consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) which are duplicate to the disclosures in the audited consolidated financial statement have been omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These interim unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto in the Form 10-K filed with the Commission.Commission on July 30, 2018.

In the opinion of management, all adjustments have been made consisting of normal recurring adjustments and consolidating entries, necessary to present fairly the unaudited interim condensed consolidated financial position of the Company and subsidiaries as of October 31, 2017,2018, the results of their unaudited interim condensed consolidated statements of operations for the three and six month periods ended October 31, 20172018 and 2016,2017, and their unaudited interim condensed consolidated cash flows for the six-monthsix month periods ended October 31, 20172018 and 2016.2017. The results of unaudited interim condensed consolidated operations for the interim periods are not necessarily indicative of the results for the full year.

The preparation of interim unaudited condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Overview

U.S. Gold Corp., formerly known as Dataram Corporation (the “Company”), was incorporated under the laws of the State of Nevada and was originally incorporated in the State of New Jersey in 1967.1967 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. The Company is a gold and precious metals exploration company pursuing exploration and development opportunities primarily in Nevada and Wyoming. None of the Company’s properties contain proven and probable reserves, and all of the Company’s activities on all of its properties are exploratory in nature.

On July 6, 2016, the Company filed a certificate of amendment to its Articles of Incorporation with the Secretary of State of Nevada in order to effectuate a reverse stock split of the Company’s issued and outstanding common stock per share on a one for three basis, effective on July 8, 2016. Subsequently, on May 3, 2017, the Company filed another certificate of amendment to its Articles of Incorporation, as amended, with the Secretary of State of the State of Nevada in order to effectuate a reverse stock split of the Company’s issued and outstanding common stock on a one for four basis. All share and per share values of the Company’s common stock for all periods presented in the accompanying condensed consolidated financial statements are retroactively restated for the effect of the reverse stock split.splits.

On July 31, 2017, Company’s Board of Directors, or Board, reviewed and approved the recommendation of management to consider strategic options for the legacy business (“Dataram Memory”) including the sale of the business, within the next 12 months. The Company sold the Dataram memory business on October 13, 2017 for a purchase price of $900,000. The Company received net proceeds from the sale of Dataram Memory business of $326,404 after payment of fees related to the sale such as legal and commission expenses and other liabilities assumed. On January 29, 2018, the Company paid a distribution of $251,316 to shareholders of record of Dataram Memory as of the close of business on May 8, 2017, or $0.2086 per share. As such, the legacy business transactions and operations will beare reflected on the balance sheet and statement of operations as “discontinued operation”.

Results of Operations

Three and Six Months Ended October 31, 20172018 and 20162017

Net Revenues

The Company is an exploration stage company with no operations, and we generated no revenues for the three and six months ended October 31, 20172018 and 2016.2017. The Company is an exploration stage company with no operations, and we generated no revenues for the three months ended October 31, 2018 and 2017.

Operating Expenses

Total operating expenses for thesix months ended October 31, 2018 as compared to six months ended October 31, 2017, as compared to the six months ended October 31, 2016, were approximately $4,879,000$4.5 million and $2,032,000,$4.9 million, respectively. The $2,847,000 increaseapproximate $397,000 decrease in operating expenses for the six months ended October 31, 2018 as compared to six months ended October 31, 2017 is comprised of an increasea decrease of $1,201,000approximately $424,000 in compensation as a result of the employment of the Company’s officers, hiring of additional employees during the six months ended October 31, 2017 and payment of severance expense of approximately $718,000 to two former officers of the Companya decrease in officer compensation pursuant to separation agreements and change in control in connection with the Merger, a $1,067,000$462,000 increase in exploration expenses on our mineral properties specifically the Keystone Property due to an increase in exploration activities increaseand a decrease in professional fees of approximately $347,000$359,000 due primarily to increase investor relations and business advisory services,a decrease in professional fees and an increase of $232,000overall decrease in general and administrative expenses of approximately $76,000 due primarily attributable to andecreases in public company expenses, insurance expense and travel and related expenses. Total operating expenses for three months ended October 31, 2018 as compared to three months ended October 31, 2017, were approximately $3.0 million and $1.7 million, respectively. The approximate $1.3 million increase in public related expenses and insurance expense.

Total operating expenses for the three months ended October 31, 20172018 as compared to the three months ended October 31, 2016, were approximately $1,672,000 and $694,000, respectively. The $978,000 increase in operating expenses for the three months ended October 31, 2017 is comprised of an increase of $59,000 in compensation as a result of hiring of additional employees, a $363,000 in professional fees due to increase investor relations and business advisory services, a $411,000 increaseapproximately $725,000 in exploration expenses on our mineral properties specifically the Keystone Property duecosts which is mainly attributed to an increase in exploration activities and an increase of $145,000 in general and administrative expenses primarily attributable to an increase in public relatedconsulting expenses and insurancedrilling expense.

Operating Loss from Operations from Continuing Operations

We reported an operating loss from continuing operations of approximately $4,879,000$4.5 million and $2,032,000$4.9 million for the six months ended October 31, 20172018 and 2016,2017, respectively. We reported an operating loss from continuing operations of approximately $1,672,000$3.0 million and $694,000$1.7 million for the three months ended October 31, 20172018 and 2016,2017, respectively.

Other Income (Expense)

Total other income (expense) was approximately $0 and $(4,200) for the six months ended October 31, 2017 and 2016, respectively, such decrease was primarily attributable to a decrease in interest expense.

Gain (Loss)Loss from discontinuedDiscontinued Operations

In June 2017, subsequent to the Merger, the Company decided to discontinue its memory product business. The Company will focussubsequently focused its activities on its gold and precious metal exploration business. The following table sets forth for the six months ended October 31, 2017, indicated selected financial data of the Company’s discontinued operations of its memory product business from the date of merger to October 31, 2017.

The following table sets forth for the three months ended October 31, 2017, indicated selected financial data of the Company’s discontinued operations of its memory product business from the date of merger to October 31, 2017.

The following table sets forth for the three and six months ended October 31, 2017, indicated selected financial data of the Company’s gain from sale of the Dataram Memory business.

Net Loss

As a result of the operating expense and other expense discussed above, we reported a net loss of approximately $10,706,000$4.5 million for the six months ended October 31, 20172018 as compared to a net loss of $2,037,000$10.7 million for the six months ended October 31, 2016.2017. As a result of the operating expense and other expense discussed above, we reported a net loss of approximately $1,428,000$3.0 million for the three months ended October 31, 20172018 as compared to a net loss of $694,000$1.4 million for the three months ended October 31, 2016.2017.

Liquidity and Capital Resources

The following table summarizes total current assets, liabilities and working capital at October 31, 2018 compared to April 30, 2018:

As of October 31, 2017,2018, we had cash totalingworking capital of $4,075,091 as compared to working capital of $7,992,236 as of April 30, 2018, a decrease of $3,917,145. During the year ended April 30, 2018 we received proceeds of approximately $5,428,000. Net cash$4.9 million from the issuance of preferred stock and warrants and $2.6 million from the issuance of common stock. The Company used in operating activities totaled approximately $4,288,000 and $1,473,000 forthe proceeds primarily to fund operations during the six months ended October 31, 20172018 and 2016, respectively. Net loss foryear ended April 30, 2018 and pay asset acquisition costs during the year ended April 30, 2018.

We are obligated to file annual, quarterly and current reports with the SEC pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition, the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) and the rules subsequently implemented by the SEC and the Public Company Accounting Oversight Board have imposed various requirements on public companies, including requiring changes in corporate governance practices. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities of ours more time-consuming and costly. We expect to spend between $200,000 and $250,000 in legal and accounting expenses annually to comply with our reporting obligations and Sarbanes-Oxley. These costs could affect profitability and our results of operations.

The Company’s unaudited condensed consolidated financial statements are prepared using the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and have been prepared assuming that the Company 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 six months ended October 31, 20172018 and 2016 totaledthe year ended April 30, 2018, the Company has incurred losses in the amounts of approximately $10,706,000$4.5 million and $2,037,000. Total stock based compensation expense for the six months ended$13.7 million, respectively.

As of October 31, 2017 was2018, we had cash totaling approximately $767,000 and impairment expense of $6,095,000 offset by gain from sale of business and extinguishment of liabilities of approximately $347,000. Net changes in operating assets and liabilities are primarily due$4.0 million. During the year ended April 30, 2018, The Company completed private placements to net changes in prepaid expenses and other current assets increased by approximately $733,000, and total accounts payable from unrelated parties and accrued liabilities increased by approximately $664,000.

Net cash provided by (used in) investing activities totaled approximately $306,000 and ($289,000)several investors for the six months ended October 31, 2017 and 2016, respectively, which was primarily attributable to net proceeds received from the sale of the Dataram memory business offset by the acquisition of mineral rights.

Net cash provided by financing activities totaled approximately $2,590,000 and $10,457,000Company’s common stock for the six months ended October 31, 2017 and 2016, respectively. During the six months ended October 31, 2017, financing activities consisted ofaggregate net proceeds of $2,590,000 fromapproximately $2.6 million between July 2017 and October 2017 and completed a private placement to several investors for the sale of the Company’s Series E Preferred Stock and warrants for aggregate net proceeds of approximately $4.9 million in January 2018. Cash flows from financing activities continued to provide the primary source of our liquidity. The Company may need to raise additional capital to support its continuing operations but there can be no assurance that it will be able to do so or if the terms will be favorable. The unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

Management has determined that additional capital will be required to continue its operations. There are no assurances that management will be able to raise capital on terms acceptable to the Company. If we are unable to obtain sufficient amounts of additional capital, we may be required to reduce the scope of our planned exploration activities, which could harm our business, financial condition and operating results. If we obtain additional funds by selling any of our equity securities or by issuing common stock to pay current or future obligations, the percentage ownership of our stockholders will be reduced, stockholders may experience additional dilution, or the equity securities may have rights preferences or privileges senior to the common stock. DuringIf adequate funds are not available to us when needed on satisfactory terms, we may be required to cease operating or otherwise modify our business strategy.

Financing Transactions

On November 2, 2018, the six months ended October 31, 2016, financing activities was primarily attributableCompany entered into an At-the-Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC (“Wainwright”) as sales manager. Under the terms of the ATM Agreement, the Company will be entitled to netsell, at its sole discretion and from time to time as it may choose, common shares in the capital of the Company (“Shares”) through Wainwright, with such sales having an aggregate gross sales value of up to $1,000,000 (the “Offering”). The ATM Agreement will remain in full force and effect until the ATM Agreement is terminated. As of the date of this filing the Company has not raised any money through the ATM Agreement.

Subject to the terms and conditions of the ATM Agreement, Wainwright will use its commercially reasonable efforts to sell the Shares from time to time, based upon the Company’s instructions. The Company has provided Wainwright with customary indemnification rights, and Wainwright will be entitled to a commission at a fixed commission rate equal to 3.0% of the gross proceeds from the sale of preferred stock, net of issuance cost, offset by repayments on related party advances and note payable.per Share sold.

The Company completed private placements to several investors for the sale of the Company’s Series B Preferred Stock and Series C Convertible Preferred Stock for aggregate net proceeds of approximately $10.9 million between July 2016 and October 2016, andreceived net proceeds from sale of the Company’s common stock of approximately $2.6 million between July 2017 and October 2017.2017 and completed a private placement to several investors for the sale of the Company’s Series E Preferred Stock and warrants for aggregate net proceeds of approximately $4.9 million in January 2018. The Company is anticipating raisingmay raise additional capital but there can be no assurance that it will be able to do so or if the terms will be favorable.

The above stepsfinancing transactions substantially lowered the Company’s potential cash exposure. Additionally, the Company is able to control cash spending on its exploration activities. As a result, as of the date of the issuance of these condensed consolidated financial statements, the Company believes its current cash position and plans to raise additional capital have alleviated substantial doubt about its ability to sustain operations forthrough at least one yearthe next 12 months.

Summary Cash flows for the six months October 31, 2018 and 2017:

Cash Used in Operating Activities

Net cash used in operating activities totaled approximately $3.6 million and $4.3 million for the six months ended October 31, 2018 and 2017, respectively. Net loss for the six months ended October 31, 2018 and 2017 totaled approximately $4.5 million and $10.7 million, respectively. The adjustments for the non-cash items decreased from the six months ended October 31, 2017 to October 31, 2018 due primarily a decrease in impairment expense of approximately $6.1 million. Net changes in operating assets and liabilities are primarily due to net decreases in cash of approximately $3.5 million and increases in reclamation of bond deposits of approximately $300,000.

Cash Provided by Investing Activities

Net cash provided by investing activities totaled $0 and $305,925 for the six months ended October 31, 2018 and 2017, respectively. During the six months ended October 31, 2017, cash provided by investing activities consisted of net proceeds of $326,404 from the sale of business.

Cash Provided by Financing Activities

Net cash provided by financing activities totaled $0 and $2,590,004 for the six months ended October 31, 2018 and 2017, respectively. During the six months ended October 31, 2017, cash provided by financing activities consisted of net proceeds of $2,590,004 from the issuance of these condensed unaudited consolidated financial statements.common stock.

Off-Balance Sheet Arrangements

The Company does not have, and do not have any present plans to implement, any off-balance sheet arrangements.

Recently Issued Accounting Pronouncements

Refer to the notes to the unaudited condensed consolidated financial statements.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Management believes the following critical accounting policies affect the significant judgments and estimates used in the preparation of the financial statements.

Use of Estimates and Assumptions

In preparing the unaudited condensed consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet, and revenues and expenses for the period then ended. Actual results may differ significantly from those estimates. Significant estimates made by management include, but are not limited to valuation of mineral rights, goodwill, stock-based compensation, the fair value of common stock issued, asset retirement obligation and the valuation of deferred tax assets and liabilities.

Stock-Based Compensation

Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). ASC 718 also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the measurement date which is the grant date. The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain.

Mineral Rights

Costs of lease, exploration, carrying and retaining unproven mineral lease properties are expensed as incurred. The Company expenses all mineral exploration costs as incurred as it is still in the exploration stage. If the Company identifies proven and probable reserves in its investigation of its properties and upon development of a plan for operating a mine, it would enter the development stage and capitalize future costs until production is established.

When a property reaches the production stage, the related capitalized costs are 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.

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.

Asset Retirement Obligations

Asset retirement obligations (“ARO”), consisting primarily of estimated reclamation costs at the Company’s Copper King and Keystone properties, are recognized in the period incurred and when a reasonable estimate can be made, and recorded as liabilities at fair value. Such obligations, which are initially estimated based on discounted cash flow estimates, are accreted to full value over time through charges to accretion expense. Corresponding asset retirement costs are capitalized as part of the carrying amount of the related long-lived asset and depreciated over the asset’s remaining useful life. Asset retirement obligations 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 asset retirement obligations annually or more frequently at interim periods if deemed necessary.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, we are not required to include disclosure under this item.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that material information required to be disclosed in our periodic reports filed under the Securities Exchange Act of 1934, as amended, or 1934 Act, is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms and to ensure that such information is accumulated and communicated to our management, including our chief executive officer and chiefprincipal financial officerand accounting Officer as appropriate, to allow timely decisions regarding required disclosure. We carried out an evaluation, under the supervision and with the participation of our management, including the principal executive officer and the principal financial officer (principal financial officer), of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13(a)-15(e) under the 1934 Act, as of the end of the period covered by this report. Based on this evaluation, because of the Company’s limited resources and limited number of employees, management concluded that our disclosure controls and procedures were not effective as of October 31, 2017.2018.

Remediation Plan

During 2018, the Company began to institute process and procedures by implementing the following:

Changes in Internal Control Over Financial Reporting

There have been no other changes in our internal control over financial reporting except as mentioned above that occurred during the period covered by this Quarterly Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II: OTHER INFORMATION