UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

(Mark One)

 

[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended JanuaryOctober 31, 20182020

 

orOR 

 

[  ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _____________ to _____________

For the transition period from ___________to _____________

 

Commission file number:1-08266 001-08266

 

U.S. GOLD CORP.

(Exact nameName of registrantRegistrant as specifiedSpecified in its charter)Charter)

 

Nevada 22-1831409

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

1910 E. Idaho Street, Suite 102-Box 604, Elko, NV 89801
(Address of principal executive offices)Principal Executive Offices) (Zip Code)

 

(800) 557-4550

(Registrant’s telephone number,Telephone Number, including area code)Area Code)

 

 

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common StockUSAUNasdaq Capital Market

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’sregistrant’s classes of common stock, as of the latest practicable date. Common Stock ($0.001 par value): As of March 16, 2018,December 11, 2020, there were 17,352,0845,756,711 shares outstanding.

 

 

 

 

 

 

U.S. GOLD CORP.

FORM 10-Q

TABLE OF CONTENTS

 

  Page
PART I – FINANCIAL INFORMATION 
   
Item 1.Financial Statements- UnauditedStatements34
 Condensed Consolidated Balance Sheets as of JanuaryOctober 31, 2018 (unaudited)2020 (Unaudited) and April 30, 2017202034
 Condensed Consolidated Statements of Operations for the Three and NineSix Months ended JanuaryOctober 31, 20182020 and 2017 (unaudited)2019 (Unaudited)45
 Condensed Consolidated StatementStatements of Changes in Stockholders’ Equity for the NineThree and Six Months ended JanuaryOctober 31, 2018 (unaudited)2020 and 2019 (Unaudited)56
 Condensed Consolidated Statements of Cash Flows for the NineSix Months ended JanuaryOctober 31, 20182020 and 2017 (unaudited)2019 (Unaudited)68
 Notes to Unaudited Condensed Consolidated Financial Statements (unaudited)(Unaudited)79
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations23
Item 3.Quantitative and Qualitative Disclosures About Market Risk27
Item 4.Controls and Procedures2827
   
PART II – OTHER INFORMATION 
   
Item 1.Legal Proceedings2827
Item 1A.Risk Factors28
Item 2.Unregistered Sales of Equity Securities and useUse of Proceeds2829
Item 3.Defaults Upon Senior Securities2830
Item 4.Mine Safety Disclosures2930
Item 5.Other Information2930
Item 6.Exhibits2931
Signature Page3032

 

2

 

 

FORWARD-LOOKING STATEMENTS

Some information contained in or incorporated by reference into this Quarterly Report on Form 10-Q may contain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking statements concern our anticipated results and developments in our operations in future periods, planned exploration and development of our properties, plans related to our business and other matters that may occur in the future. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. These statements include, but are not limited to, comments regarding:

●our plans to conduct geologic surveys and determine the scope of our drilling program during our fiscal year ended April 30, 2021,
●the impact of COVID-19 on our business and exploration activities,
●the conclusions of additional exploration programs and related studies,
●expectations and the timing and budget for exploration and future exploration of our properties,
●our planned expenditures during our fiscal year ended April 30, 2021 and future periods,
●our estimates of the cost of future permitting changes and additional bonding requirements,
●future exploration plans and expectations related to our properties,
●our ability to fund our business with our current cash reserves based on our currently planned activities,
●our expected cash needs and the availability and plans with respect to future financing,
●statements concerning our financial condition,
●our anticipation of future environmental and regulatory impacts,
●our business and operating strategies, and
●statements related to operating and legal risks.

We use the words “anticipate,” “continue,” “likely,” “estimate,” “expect,” “may,” “could,” “will,” “project,” “should,” “believe” and variations of such words and similar expressions to identify forward-looking statements. Statements that contain these words discuss our future expectations and plans, or state other forward-looking information. Although we believe the expectations and assumptions reflected in those forward-looking statements are reasonable, we cannot assure you that these expectations and assumptions will prove to be correct. Our actual results could differ materially from those expressed or implied in these forward-looking statements as a result of various factors, including the risk factors described in this report and in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended April 30, 2020.

Many of these factors are beyond our ability to control or predict. Although we believe that the expectations reflected in our forward-looking statements are based on reasonable assumptions, such expectations may prove to be materially incorrect due to known and unknown risk and uncertainties. You should not unduly rely on any of our forward-looking statements. These statements speak only as of the date of this Quarterly Report. Except as required by law, we are not obligated to publicly release any revisions to these forward-looking statements to reflect future events or developments. All subsequent written and oral forward-looking statements attributable to us and persons acting on our behalf are qualified in their entirety by the cautionary statements contained in this section and elsewhere in this Quarterly Report.

3

 

PART I: FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS.

 

U.S. GOLD CORP. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 

 January 31, 2018 April 30, 2017  October 31, April 30, 
 (Unaudited)    2020 2020 
          
ASSETS                
CURRENT ASSETS:                
Cash $8,373,535  $6,820,623  $7,307,253  $2,749,957 
Note receivable  -   250,000 
Income tax receivable  219,072   219,072 
Prepaid expenses and other current assets  602,893   198,151   510,523   212,718 
                
Total Current Assets  8,976,428   7,268,774 
Total current assets  8,036,848   3,181,747 
                
NON - CURRENT ASSETS:                
Property, net  176,500   133,371 
Reclamation bond deposit  81,847   41,301   389,556   355,556 
Mineral rights  4,176,952   4,120,623   16,413,191   6,163,559 
                
Total Non - Current Assets  4,258,799   4,161,924 
Total non - current assets  16,979,247   6,652,486 
                
Total Assets $13,235,227  $11,430,698 
Total assets $25,016,095  $9,834,233 
                
LIABILITIES AND STOCKHOLDERS’ EQUITY                
                
CURRENT LIABILITIES:                
Accounts payable $179,309  $40,550  $1,150,182  $154,381 
Accounts payable - related party  2,431   2,431 
Accrued liabilities  18,198   137,500 
Accounts payable - related parties  -   3,459 
                
Total Liabilities  199,938   180,481 
Total current liabilities  1,150,182   157,840 
        
LONG- TERM LIABILITIES        
Asset retirement obligation  190,132   168,392 
        
Total liabilities  1,340,314   326,232 
                
Commitments and Contingencies                
                
STOCKHOLDERS’ EQUITY :                
Preferred stock, $0.001 par value; 50,000,000 authorized                
Convertible Series C Preferred stock ($0.001 Par Value; 45,002 Shares Authorized; 2,379 and 45,002 issued and outstanding as of January 31, 2018 and April 30, 2017; Liquidation value $237,900)  2   45 
Convertible Series E Preferred stock ($0.001 Par Value; 2,500 Shares Authorized; 730 issued and outstanding as of January 31, 2018; Liquidation value $1,460,000)  1   - 
Common stock ($0.001 Par Value; 200,000,000 Shares Authorized; 16,210,416 and 6,932,059 shares issued and outstanding as of January 31, 2018 and April 30, 2017)  16,210   6,932 
Convertible Series F Preferred stock ($0.001 Par Value; 1,250 Shares Authorized; none issued and outstanding as of October 31, 2020 and April 30, 2020)  -   - 
Convertible Series G Preferred stock ($0.001 Par Value; 127 Shares Authorized; none and 57 issued and outstanding as of October 31, 2020 and April 30, 2020)  -   - 
Convertible Series H Preferred stock ($0.001 Par Value; 106,894 Shares Authorized; 106,894 and none issued and outstanding as of October 31, 2020 and April 30, 2020; no liquidation preference)  107   - 
Convertible Series I Preferred stock ($0.001 Par Value; 921,666 Shares Authorized; 921,666 and none issued and outstanding as of October 31, 2020 and April 30, 2020; no liquidation preference)  922   - 
Common stock ($0.001 Par Value; 200,000,000 Shares Authorized; 3,664,019 and 2,903,393 shares issued and outstanding as of October 31, 2020 and April 30, 2020)  3,664   2,903 
Additional paid-in capital  30,067,117   15,813,297   61,060,826   41,093,050 
Accumulated deficit  (17,048,041)  (4,570,057)  (37,389,738)  (31,587,952)
        
Total Stockholders’ Equity  13,035,289   11,250,217 
        
Total Liabilities and Stockholders’ Equity $13,235,227  $11,430,698 
Total stockholders’ equity  23,675,781   9,508,001 
Total liabilities and stockholders’ equity $25,016,095  $9,834,233 

 

See the accompanying notes are integral part of theto unaudited condensed consolidated financial statements.

 

3

U.S. GOLD CORP. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

  For the Three  For the Three  For the Nine  For the Nine 
  Months Ended  Months Ended  Months Ended  Months Ended 
  January 31, 2018  January 31, 2017  January 31, 2018  January 31, 2017 
  (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited) 
             
Net revenues $-  $-  $-  $- 
                 
Operating expenses:                
Compensation and related taxes  224,109   462,668   1,875,367   913,681 
Exploration costs  932,182   988,476   2,236,461   1,225,214 
Professional fees  463,714   155,820   1,990,401   1,336,034 
General and administrative expenses  148,243   41,482   544,600   205,793 
                 
Total operating expenses  1,768,248   1,648,446   6,646,829   3,680,722 
                 
Operating loss from operations from continuing operations  (1,768,248)  (1,648,446)  (6,646,829)  (3,680,722)
                 
Other income (expense):                
Interest expense  -   -   -   (4,242)
                 
Total other expense  -   -   -   (4,242)
                 
Loss from continuing operations before provision for income taxes  (1,768,248)  (1,648,446)  (6,646,829)  (3,684,964)
                 
Provision for income taxes  -   -   -   - 
                 
Loss from continuing operations  (1,768,248)  (1,648,446)  (6,646,829)  (3,684,964)
                 
Discontinued operations:                
Gain (loss) from discontinued operations  3,428   -   (5,925,640)  - 
(Loss) gain from sale of discontinued operations  (7,538)  -   94,485   - 
                 
Total (loss) gain from discontinued operations  (4,110)  -   (5,831,155)  - 
                 
Net loss $(1,772,358) $(1,648,446) $(12,477,984) $(3,684,964)
                 
Loss per common share, basic and diluted                
Loss from continuing operations $(0.12) $(0.16) $(0.55) $(0.38)
Discontinuing :                
Operations $-  $-  $(0.49) $- 
Gain (loss) $-  $-  $0.01  $

-

 
Total discontinuing operations $-  $-  $(0.48) $- 
Net loss per share $(0.12) $(0.16) $(1.03) $(0.38)
                 
Weighted average common shares outstanding - basic and diluted  14,400,023   10,300,000   12,152,505   9,610,326 

See the accompanying notes are integral part of the unaudited condensed consolidated financial statements.

4

U.S. GOLD CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED JANUARY 31, 2018

 Preferred Stock - Series C Preferred Stock - Series E Common Stock Additional    Total 
 $0.001 Par Value $0.001 Par Value $0.001 Par Value Paid-in Accumulated  Stockholders’ 
 Shares Amount Shares Amount Shares Amount Capital Deficit  Equity 
                    
Balance, May 1, 2017 45,002 $45  - $- 6,932,059 $6,932 $15,813,297 $(4,570,057) $11,250,217 
                            
Recapitalization of the Company -  -  -  - 1,204,667  1,205  5,660,730      5,661,935 
                            
Issuance of common stock for cash -  -  -  - 1,568,100  1,568  2,588,436  -   2,590,004 
                            
Issuance of preferred stock and warrants for cash -  -  2,500  3 -  -  4,918,617  -   4,918,620 
                            
Issuance of common stock for the acquisition of mineral rights -  -  -  - 15,000  15  35,835  -   35,850 
                            
Issuance of common stock for services -  -  -  - 299,435  300  664,910  -   665,210 
                            
Issuance of common stock for prepaid services -  -  -  - 106,250  106  253,831  -   253,937 
                            
Conversion of preferred stock into common stock (42,623) (43) (1,770)  (2)6,032,320  6,032  (5,987) -   - 
                            
Issuance of common stock for accrued services -  -  -  - 52,585  52  137,448  -   137,500 
                            
Net loss -  -  -  - -  -  -  (12,477,984)  (12,477,984)
                            
Balance, January 31, 2018 2,379 $2  730 $1 16,210,416 $16,210 $30,067,117 $(17,048,041) $13,035,289 

See the accompanying notes are integral part of the unaudited condensed consolidated financial statements.

5

 

 

U.S. GOLD CORP. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSOPERATIONS

 

  For the Nine  For the Nine 
  Months Ended  Months Ended 
  January 31, 2018  January 31, 2017 
       
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net loss $(12,477,984) $(3,684,964)
Adjustments to reconcile net loss to net cash used in operating activities:        
Stock based compensation  665,210   875,000 
Amortization of prepaid stock based expenses  242,537   - 
Impairment expense  6,094,760   - 
Gain on sale of business  (94,485)  - 
Gain on extinguishment of liabilities  (248,684)  - 
Changes in operating assets and liabilities:        
Prepaid expenses and other current assets  (404,725)  (112,601)
Reclamation bond deposit and other assets  (27,881)  (32,311)
Accounts payable  138,759   (24,464)
Accounts payable - related parties  -   (40,035)
Accrued liabilities  (149,144)  89,115 
         
NET CASH USED IN OPERATING ACTIVITIES  (6,261,637)  (2,930,260)
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
Net proceeds received from sale of business  326,404   - 
Acquisition of mineral rights  (20,479)  (288,917)
         
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES  305,925   (288,917)
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
Repayment of note payable - related party  -   (285,000)
Repayments to related party for advances  -   (123,624)
Issuance of preferred stock and warrants, net of issuance cost  4,918,620   10,865,826 
Issuance of common stock  2,590,004   - 
         
NET CASH PROVIDED BY FINANCING ACTIVITIES  7,508,624   10,457,202 
         
NET INCREASE IN CASH  1,552,912   7,238,025 
         
CASH - beginning of period  6,820,623   305,661 
         
CASH - end of period $8,373,535  $7,543,686 
         
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:        
Cash paid for:        
Interest $-  $4,242 
Income taxes $-  $- 
         
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:        
Issuance of common stock for the acquisition of mineral rights $35,850  $555,000 
Issuance of common stock pursuant to merger $

5,661,935

  $- 
Grant of stock options for the acquisition of mineral rights $-  $184,968 
Conversion of preferred stock into common stock $43  $- 
Issuance of common stock for accrued services $137,500  $- 
Issuance of common stock for prepaid services $253,937  $- 
  For the Three Months  For the Three Months  For the Six Months  For the Six Months 
  Ended  Ended  Ended  Ended 
  October 31, 2020  October 31, 2019  October 31, 2020  October 31, 2019 
             
Net revenues $-  $-  $-  $- 
                 
Operating expenses:                
Compensation and related taxes - general and administrative  1,087,752   290,364   1,282,025   577,446 
Exploration costs  1,724,211   943,356   1,798,559   1,138,749 
Professional and consulting fees  1,754,200   822,313   2,305,000   1,466,386 
General and administrative expenses  278,503   171,053   416,202   353,104 
                 
Total operating expenses  4,844,666   2,227,086   5,801,786   3,535,685 
                 
Loss from operations  (4,844,666)  (2,227,086)  (5,801,786)  (3,535,685)
                 
Loss before benefit (provision) for income taxes  (4,844,666)  (2,227,086)  (5,801,786)  (3,535,685)
                 
Provision for income taxes  -   -   -   - 
                 
Net loss  (4,844,666)  (2,227,086)  (5,801,786)  (3,535,685)
                 
Deemed dividend related to beneficial conversion feature of preferred stock  (5,530,004)  -   (5,530,004)  (2,022,712)
                 
Net loss applicable to U.S. Gold Corp. common shareholders $(10,374,670) $(2,227,086) $(11,331,790) $(5,558,397)
                 
Net Loss per common share, basic and diluted $(2.93) $(0.99) $(3.51) $(2.60)
                 
Weighted average common shares outstanding - basic and diluted  3,539,582   2,257,431   3,224,791   2,136,398 

 

See the accompanying notes are integral part of theto unaudited condensed consolidated financial statements.

 

65

 

 

U.S. GOLD CORP. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE AND SIX MONTHS ENDED OCTOBER 31, 2020 AND 2019

  Preferred Stock - Series F  Preferred Stock - Series G  Preferred Stock - Series H  Preferred Stock - Series I  Common Stock  Additional     Total 
  $0.001 Par Value  $0.001 Par Value  $0.001 Par Value  $0.001 Par Value  $0.001 Par Value  Paid-in  Accumulated  Stockholders’ 
  Shares  Amount  Shares  Amount  Shares  Amount  Shares  Amount  Shares  Amount  Capital  Deficit  Equity 
                                        
Balance, April 30, 2020  -  $-   57  $-   -  $-   -  $-   2,903,393  $2,903  $41,093,050  $(31,587,952) $9,508,001 
                                                     
Conversion of preferred stock into common stock  -   -   (57)  -   -   -   -   -   20,357   21   (21)  -   - 
                                                     
Stock options granted for services  -   -   -   -   -   -   -   -   -   -   51,262   -   51,262 
                                                     
Stock-based compensation in connection with restricted common stock award grants and restricted common stock unit grants  -   -   -   -   -   -   -   -   1,875   2   20,216   -   20,218 
                                                     
Net loss  -   -   -   -   -   -   -   -   -   -   -   (957,120)  (957,120)
                                                     
Balance, July 31, 2020  -   -   -   -   -   -   -   -   2,925,625   2,926   41,164,507   (32,545,072)  8,622,361 
                                                     
Issuance of preferred stock for cash  -   -   -   -   -   -   921,666   922   -   -   5,529,082   -   5,530,004 
                                                     
Issuance of common stock for services  -   -   -   -   -   -   -   -   147,341   147   1,442,055   -   1,442,202 
                                                     
Issuance of preferred stock and common stock in connection with the Share Exchange Agreement  -   -   -   -   106,894   107   -   -   581,053   581   12,640,292   -   12,640,980 
                                                     
Issuance of common stock for exercise of warrants  -   -   -   -   -   -   -   -   10,000   10   69,990   -   70,000 
                                                     
Stock options granted for services  -   -   -   -   -   -   -   -   -   -   137,650   -   137,650 
                                                     
Stock-based compensation in connection with restricted common stock award grants and restricted common stock unit grants  -   -   -   -   -   -   -   -   -   -   77,250   -   77,250 
                                                     
Net loss  -   -   -   -   -   -   -   -   -   -   -   (4,844,666)  (4,844,666)
                                                     
Balance, October 31, 2020  -  $-   -  $-   106,894  $107   921,666  $922   3,664,019  $3,664  $61,060,826  $(37,389,738) $23,675,781 

6

  Preferred Stock - Series F  Preferred Stock - Series G  Preferred Stock - Series H  Preferred Stock - Series I  Common Stock  Additional     Total 
  $0.001 Par Value  $0.001 Par Value  $0.001 Par Value  $0.001 Par Value  $0.001 Par Value  Paid-in  Accumulated  Stockholders’ 
  Shares  Amount  Shares  Amount  Shares  Amount  Shares  Amount  Shares  Amount  Capital  Deficit  Equity 
                                        
Balance, April 30, 2019  -  $-   -  $-   -  $-   -  $-   1,986,063  $1,986 $33,425,931 $(26,275,102) $7,152,815 
                                                     
Issuance of preferred stock and warrants for cash, net of offering cost  1,250   1   -   -   -   -   -   -   -   -   2,401,201   -   2,401,202 
                                                     
Conversion of preferred stock into common stock  (616)  -   -   -   -   -   -   -   108,071   108   (108)  -   - 
                                                     
Issuance of common stock for services  -   -   -   -   -   -   -   -   2,153   2   24,998   -   25,000 
                                                     
Issuance of common stock for accrued services  -   -   -   -   -   -   -   -   1,068   1   12,499   -   12,500 
                                                     
Stock options granted for services  -   -   -   -   -   -   -   -   -   -   52,214   -   52,214 
                                                     
Stock-based compensation in connection with restricted common stock unit grants  -   -   -   -   -   -   -   -   -   -   52,682   -   52,682 
                                                     
Cancellation of common stock  -   -   -   -   -   -   -   -   (8,500)  (9)  9   -   - 
                                                     
Net loss  -   -   -   -   -   -   -   -   -   -   -   (1,308,599)  (1,308,599)
                                                     
Balance, July 31, 2019  634   1   -   -   -   -   -   -   2,088,855   2,088   35,969,426   (27,583,701)  8,387,814 
                                                     
Conversion of preferred stock into common stock  (364)  (1)  -   -   -   -   -   -   63,860   64   (63)  -   - 
                                                     
Issuance of common stock for services  -   -   -   -   -   -   -   -   200,000   200   2,019,800   -   2,020,000 
                                                     
Stock options granted for services  -   -   -   -   -   -   -   -   -   -   52,213   -   52,213 
                                                     
Stock-based compensation in connection with restricted common stock unit grants  -   -   -   -   -   -   -   -   33,500   34   393,064   -   393,098 
                                                     
Net loss  -   -   -   -   -   -   -   -   -   -   -   (2,227,086)  (2,227,086)
                                                     
Balance, October 31, 2019  270  $-   -  $-   -  $-   -  $-   2,386,215  $2,386  $38,434,440  $(29,810,787) $8,626,039 

See accompanying notes to unaudited condensed consolidated financial statements.

7

U.S. GOLD CORP. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

  For the Six Months  For the Six Months 
  Ended  Ended 
  October 31, 2020  October 31, 2019 
       
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net loss $(5,801,786) $(3,535,685)
Adjustments to reconcile net loss to net cash used in operating activities:        
Depreciation  9,716   4,523 
Accretion  8,388   4,331 
Stock based compensation  1,728,582   575,207 
Amortization of prepaid stock based expenses  -   99,210 
Changes in operating assets and liabilities:        
Prepaid expenses and other current assets  (297,805)  44,935 
Reclamation bond deposit  (34,000)  (16,109)
Accounts payable  887,149   (17,376)
Accounts payable - related parties  (3,459)  (4,606)
Accrued liabilities  -   7,305 
         
NET CASH USED IN OPERATING ACTIVITIES  (3,503,215)  (2,838,265)
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
         
Purchase of property and equipment  (39,493)  - 
Proceeds received in connection with the share exchange agreement  2,500,000   159,063 
         
NET CASH PROVIDED BY INVESTING ACTIVITIES  2,460,507   159,063 
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
Issuance of preferred stock and warrants, net of issuance cost  5,530,004   2,401,202 
Issuance of common stock for exercise of warrants  70,000   - 
         
NET CASH PROVIDED BY FINANCING ACTIVITIES  5,600,004   2,401,202 
         
NET INCREASE (DECREASE) IN CASH  4,557,296   (278,000)
         
CASH - beginning of period  2,749,957   2,197,181 
         
CASH - end of period $7,307,253  $1,919,181 
         
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:        
Cash paid for:        
Interest $-  $- 
Income taxes $-  $- 
         
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:        
Issuance of common stock for accrued services $-  $12,500 
Deemed dividends - Series F preferred stock $-  $2,022,712 
Deemed dividends - Series I preferred stock $5,530,004  $- 
Issuance of common stock in connection with conversion of preferred stock $21  $2,020,000 
Assumption of liabilities in connection with the share exchange agreement $108,652  $125,670 
Increase in acquisition of mineral properties in connection with the share exchange agreement $10,249,632  $1,986,607 
Increase in asset retirement cost and obligation $13,352  $- 

See accompanying notes to unaudited condensed consolidated financial statements.

8

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JANUARYOCTOBER 31, 2018 AND 20172020

 

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 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 withJune 13, 2016, Gold King Corp. (“Gold King”), in a transactionprivate Nevada corporation, entered into an Agreement and Plan of Merger (the “Gold King Merger Agreement”) with the Company, the Company’s wholly-owned subsidiary Dataram Acquisition Sub, Inc., a Nevada corporation (“Acquisition Sub”), and all of the principal shareholders of Gold King. Upon closing of the transactions contemplated under the Gold King Merger Agreement (the “Gold King Merger”), Gold King merged with and into Acquisition Sub with Gold King as the surviving corporation and became a wholly-owned subsidiary of the Company. The Gold King Merger was treated as a reverse acquisition and recapitalization, and the business of Gold King became the business of the Company. The financial statements are those of Gold King (the accounting acquirer) prior to the merger and include the activity of Dataram Corporationthe Company (the legal acquirer) from the date of the merger.Gold King 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 May 3, 2017, theThe Company filedhas a 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.

Recent developments -wholly owned subsidiary, U.S. Gold 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 subsidiary,Corporation, formerly Dataram Acquisition Sub, Inc. (“U.S. Gold Acquisition”), 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.which was formed in April 2016.

 

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

 

On July 31, 2017,September 10, 2019, the Company, 2637262 Ontario Inc., a corporation incorporated under the laws of the Providence of Ontario (“NumberCo”), and all of the shareholders of NumberCo (the “NumberCo Shareholders”), entered into a Share Exchange Agreement (the “Share Exchange Agreement”), pursuant to which, among other things, the Company agreed to issue to the NumberCo Shareholders 200,000 shares of the Company’s Board of Directors, or Board, reviewed and approved the recommendation of management to consider strategic optionscommon stock in exchange for Dataram Corporation’s legacy business (“Dataram Memory”) including the saleall of the business, withinissued and outstanding shares of NumberCo, with NumberCo becoming a wholly-owned subsidiary of the next 12 months.Company.

 

In approvingOn March 17, 2020, the recommendation and adopting a formal plan, the Board retained the right to review all offers received and final approval on any saleboard of directors (the “Board”) of the business. As such,Company approved a 1-for-10 reverse stock split of the legacy business activities were re-classedCompany’s issued and reported as partoutstanding shares of “discontinued operations”. Prior to the sale of Dataram Memory business, assetscommon stock (the “Reverse Stock Split”), and liabilities were reflected on the balance sheet as “held for sale”. On October 13, 2017,March 18, 2020, the Company soldfiled with the Dataram Memory businessSecretary of State of the State of Nevada a Certificate of Amendment to its Articles of Incorporation to effect the Reverse Stock Split. The Reverse Stock Split became effective as of 5:00 p.m. Eastern Time on March 19, 2020, and the Company’s common stock began trading on a split-adjusted basis when the market opened on March 20, 2020. Accordingly, all common share and per share data are retrospectively restated to give effect of the split for all periods presented herein.

On August 10, 2020, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Gold King Acquisition Corp. (“Acquisition Corp.”), a purchase pricewholly owned subsidiary of $900,000the Company, Northern Panther Resources Corporation (“Northern Panther” or “NPRC”) and the Stockholder Representative named therein, pursuant to which Acquisition Corp. merged with and into NPRC, with NPRC surviving as a wholly-owned subsidiary of the Company (see Note 4).

 

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None of the Company’s properties contain proven and probable reserves and all of the Company’s activities are exploratory in nature.

 

Unless the context otherwise requires, all references herein to the “Company” refer to U.S. Gold Corp. and its consolidated subsidiaries.

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentationpresentation and Liquidityprinciples of consolidation

 

The accompanying interim unaudited condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), the instructions to Form 10-Q, 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 presentpresents the unaudited condensed consolidated financial statements of the Company and its wholly-owned subsidiaries as of JanuaryOctober 31, 2018.2020. 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, 2017,2020, which are contained in the Form 8-K/A10-K filed on July 31, 2017.13, 2020. The unaudited condensed consolidated balance sheet as of April 30, 20172020 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. TheOperating results forduring the interim periodthree and six months ended October 31, 2020 are not necessarily indicative of the results to be expected for the year endedending April 30, 2018.2021.

9

 

As reflected in the accompanying unaudited condensed consolidated financial statements, the Company had a net loss and used cash in its operations of approximately $12.5 million and $6.3 million, respectively, for the nine months ended January

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2018. Additionally, the Company had an accumulated deficit of approximately $17 million at January 31, 2018. The Company consummated 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, received net proceeds from sale of the Company’s common stock of approximately $2.6 million between July 2017 and October 2017 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 the Company will be able to raise additional capital or if the terms will be favorable.2020

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 consolidated balance sheet, and revenues and expenses for the period then ended. Actual results may differ significantly from those estimates. Significant estimates made by management include, but are not limited to, valuation of mineral rights, stock-based compensation, the fair value of common and preferred stock, issuedvaluation of warrants, asset retirement obligations and the valuation of deferred tax assets and liabilities.

 

Fair Value of Financial InstrumentsMeasurements

 

The Company has 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 thatU.S. GAAP, which requires the use of fair value measurements, establishes a framework for measuring fair value and expands disclosure about such fair value measurements.

 

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.

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These inputs are prioritized below:

 

Level 1:Observable inputs such as quoted market prices in active markets for identical assets or liabilities.
Level 2:Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3:Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.

 

The Company analyzes all financial instruments with features of both liabilities and equity under the Financial Accounting Standard Board’s (“FASB”) accounting standard for such instruments. Under this standard, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

 

The carrying amounts reported inAt October 31, 2020 and April 30, 2020, the condensed consolidated balance sheetsCompany had no financial instruments or liabilities accounted for cash, prepaid expenseat fair value on a recurring basis or nonrecurring basis.

Prepaid expenses and other current assets –

Prepaid expenses and other current accounts payable,assets of $510,523 and accrued liabilities, approximate$212,718 at October 31, 2020 and April 30, 2020, respectively, consist primarily of costs paid for future services which will occur within a year. Prepaid expenses principally include prepayments in cash and equity instruments for consulting, public relations, and business advisory services, insurance premiums, mining claim fees, drilling fees, and mineral lease fees which are being amortized over the terms of their estimated fair values based on the short-term maturity of these instruments.respective agreements.

 

Goodwill and other intangible assetsProperty

 

In accordance with ASC 350-30-65,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 Company assessescost and accumulated depreciation are removed from the impairmentaccounts, and any resulting gains or losses are included in income in the year of identifiable intangibles whenever events or changes in circumstances indicate thatdisposition. Depreciation is calculated on a straight-line basis over the carrying value may not be recoverable. Factorsestimated useful life of the Company considers to be important which could trigger an impairment review include the following:assets, generally ten years.

 

1.Significant underperformance relative to expected historical or projected future operating results;
2.Significant changes in the manner of use of the acquired assets or the strategy for the overall business; and
3.Significant negative industry or economic trends.10

 

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.

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2020

 

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 nine months ended January 31, 2018, the Company determined that the carrying value of Goodwill (see Note 4) exceeded its fair value, which triggered an impairment analysis. The Company recorded a goodwilldid not recognize any impairment expense of $6,094,760 during the nine monthsperiods ended JanuaryOctober 31, 2018, nonrecurring level 3 fair value measurement.2020 and April 30, 2020.

9

 

Mineral Rights

 

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

 

When a property reaches the production stage, the related capitalized costs arewill be amortized on a units-of-production basis over the proven and probable reserves following the commencement of production. The Company assesses the carrying costs of the capitalized mineral properties for impairment under ASC 360-10, “Impairment of long-lived assets”Long-Lived Assets”, and evaluates its carrying value under ASC 930-360, “Extractive Activities - 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:Activities—Mining: Business Combinations” (“ASC 930-805”), states that mineral rights consist of the legal right to explore, extract, and retain at least a portion of the benefits from mineral deposits. Mining assets include mineral rights.

Acquired mineral rights are considered tangible assets under ASC 930-805. ASC 930-805 requires that mineral rights be recognized at fair value as of the acquisition date. As a result, the direct costs to acquire mineral rights are initially capitalized as tangible assets. Mineral rights include costs associated with acquiring patented and unpatented mining claims.

 

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

 

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

 

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

 

Leases to explore for or use of natural resources are outside the scope of ASU 2016-02, “Leases”.

Share-Based Compensation

 

Share-based compensation is accounted for based on the requirements of ASC 718, “Compensation – “Compensation—Stock Compensation’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—Equity Based Payments to Non-Employees” (“ASC 505-50”), for share-based payments to consultants and other third-parties,third parties, compensation expense is determined at the measurement date, which is the grant date. Until the measurement date is reached, the total amount of compensation expense remains uncertain.

 

ASU 2018-07 applies to all share-based payment transactions in which the grantor acquires goods and services to be used or consumed in its own operations by issuing share-based payment awards. ASU 2018-07 also clarifies that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under ASC 606. ASU 2018-07 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted, but no earlier than adoption of ASC 606. The Company chose to early adopt ASU 2018-07 in July 2018. The adoption of this standard did not have a material effect on the Company’s consolidated financial statements and related disclosures.

11

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2020

Accounting for Warrants

Warrants are accounted for in accordance with the applicable accounting guidance provided in ASC 815, “Derivatives and Hedging” (“ASC 815”) as either derivative liabilities or as equity instruments, depending on the specific terms of the agreements. The Company classifies as equity any contracts that (i) require physical settlement or net-share settlement or (ii) give the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement (including a requirement to net-cash settle the contract if an event occurs and if that event is outside the control of the Company) or (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). Instruments that are classified as liabilities are recorded at fair value at each reporting period, with any change in fair value recognized as a component of change in fair value of derivative liabilities in the consolidated statements of operations.

The Company assessed the classification of its outstanding common stock purchase warrants as of the date of issuance and determined that such instruments met the criteria for equity classification under the guidance in ASU 2017-11 “Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Feature”. The Company has no outstanding warrants that contain a “down round” feature under Topic 815 of ASU 2017-11.

Convertible Preferred Stock

The Company accounts for its convertible preferred stock under the provisions of ASC 480, “Distinguishing Liabilities from Equity” (“ASC 480”), which sets forth the standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. ASC 480 requires an issuer to classify a financial instrument that is within the scope of ASC 480 as a liability if such financial instrument embodies an unconditional obligation to redeem the instrument at a specified date and/or upon an event certain to occur. During the periods ended October 31, 2020 and April 30, 2020, the Company’s outstanding convertible preferred shares were accounted for as equity, with no liability recorded.

Convertible Instruments

The Company bifurcates conversion options from their host instruments and accounts for them as free standing derivative financial instruments according to certain criteria. The criteria includes circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule when the host instrument is deemed to be conventional as that term is described under applicable U.S. GAAP.

When the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, the Company records, when necessary, a beneficial conversion feature (“BCF”) related to the issuance of convertible debt and equity instruments that have conversion features at fixed rates that are in-the-money when issued, and the fair value of warrants issued in connection with those instruments. The BCF for the convertible instruments is recognized and measured by allocating a portion of the proceeds to warrants, based on their relative fair value, and as a reduction to the carrying amount of the convertible instrument equal to the intrinsic value of the conversion feature. The discounts recorded in connection with the BCF and warrant valuation are recognized (a) for convertible debt as interest expense over the term of the debt, using the effective interest method or (b) for convertible preferred stock as dividends at the time the stock first becomes convertible.

Remediation and Asset Retirement Obligation

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

12

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2020

Foreign Currency Transactions

The reporting and functional currency of the Company is the U.S. dollar. Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on the transaction dates. Assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the balance sheet date with any transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency included in the results of operations as incurred. Transaction gains or losses have not had, and are not expected to have, a material effect on the results of operations of the Company, and are included in General and administrative expenses.

Income taxesTaxes

 

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.

 

10

The Company follows the provision of ASC 740-10, related to Accounting“Accounting for Uncertain Income Tax Positions.Positions” (“ASC 740-10”). When tax returns are filed, there may be uncertainty about the merits of positions taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions.

 

Tax positions that meet the more likely than not recognition threshold are measured at the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefit associated with tax positions taken that exceed the amount measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company believes its tax positions are all more likely than not to be upheld upon examination. As such, the Company has not recorded a liability for uncertain tax benefits.

 

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 IRSInternal Revenue Service and state taxing authorities, generally for three years after they are filed.

 

On December 22, 2017,The Unaudited Condensed Consolidated Balance Sheets includes a tax refund receivable of $219,072 as of the periods ended October 31, 2020 and April 30, 2020, under the Tax Cuts and Jobs Act (“Tax Act”) was signed into law. ASC 740,Accountingof 2017 for Income Taxesrequires companies to recognize the effectscarryovers of changes inpreviously paid alternative minimum tax laws and rates on deferred tax assets and liabilities and the retroactive effects of changes in tax laws in the period in which the new legislation is enacted. There is no further change to its assertion on maintaining a full valuation allowance against its U.S. deferred tax assets. The Company’s gross deferred tax assets will be revalued from 35% to 21% with a corresponding offset to the valuation allowance and any potential other taxes arising due to the Tax Act will result in reductions to its net operating loss carryforward and valuation allowance. The Company is in the process of determining the amount of the change. Deferred tax assets will be revalued with a corresponding decrease to the Company’s valuation allowance. 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, 2018, but the Company does not expect the Tax Act to have a material impact on the Company’s condensed consolidated financial statements.by Dataram Corporation.

 

Recent Accounting Pronouncements

 

In January 2017, the FASB issued ASU 2017-01 “Business Combinations (Topic 805): Clarifying the Definition of a Business”, which clarifies the definition of a business to assist entities with evaluating whether transactions should be 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 standard is effective for fiscal years beginning after December 15, 2017, 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.

11

In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of this update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable noncontrolling interests. The amendments in Part II of this update do not have an accounting effect. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company early adopted this ASU on November 1, 2017, and expects that the adoption of this ASU will not have a material impact on future consolidated financial statements.

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

 

NOTE 3 — 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 whereby the Company acquired certain mining leases and other mineral rights comprising the Copper King project and certain unpatented mining claims located in Montana. 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. under the terms of a Purchase and Sale Agreement. At the time of purchase, the Keystone Project consisted of 284 unpatented lode mining claims situated in Eureka County, Nevada. The purchase price for the Keystone Project consisted of the following: (a) cash payment in the amount of $250,000, (b) 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.

1213

 

 

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.U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2020

 

In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes.” This guidance, among other provisions, eliminates certain exceptions to existing guidance related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. This guidance also requires an entity to reflect the effect of an enacted change in tax laws or rates in its effective income tax rate in the first interim period that includes the enactment date of the new legislation, aligning the timing of recognition of the effects from enacted tax law changes on the effective income tax rate with the effects on deferred income tax assets and liabilities. Under existing guidance, an entity recognizes the effects of the enacted tax law change on the effective income tax rate in the period that includes the effective date of the tax law. ASU 2019-12 is effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the impact of this guidance.

In August 2017,2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging Contracts in Entity’s Own Equity (Subtopic 815-40), which eliminates the beneficial conversion and cash conversion accounting models for convertible instruments, amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions, and modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS calculation. The standard is effective for annual periods beginning after December 15, 2021, and interim periods within those reporting periods. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those reporting periods. The standard can be adopted under the modified retrospective method or the full retrospective method. The Company is currently evaluating the impact of this guidance.

NOTE 3 — GOING CONCERN

The accompanying unaudited 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. As of October 31, 2020, the Company had cash of approximately $7.3 million, working capital of approximately $6.9 million, and an accumulated deficit of approximately $37.4 million. The Company had a net loss and cash used in operating activities of approximately $5.8 million and $3.5 million, respectively, for the six-month period ended October 31, 2020. As a result of the utilization of cash in its operating activities, and the development of its assets, the Company has incurred losses since it commenced operations. The Company’s primary source of operating funds since inception has been equity financings. As of October 31, 2020, the Company had sufficient cash to fund its operations for approximately 6 to 9 months and expects that it would be required to raise additional funds to fund its operations thereafter. These matters raise substantial doubt about the Company’s ability to continue as a going concern for the twelve months following the issuance of these financial statements.

As more fully discussed in Note 4, on August 11, 2020, the Company closed on a transactionmerger with Acquisition Corp and NPRC, together with a concurrent equity placement, 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, pursuant to which Nevada Gold sold and U.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). Mr. David Mathewson,added approximately $7.9 million of net proceeds to its cash reserves.

The consolidated financial statements do not include any adjustments relating to the Company’s Chief Geologist, isrecoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a member of Nevada Gold.going concern.

NOTE 4 — MINERAL RIGHTS

 

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:

  January 31, 2018  April 30, 2017 
Copper King project $3,091,738  $3,091,738 
Keystone project  1,028,885   1,028,885 
Gold Bar North project  56,329   - 
Total $4,176,952  $4,120,623 

NOTE 4 — ACQUISITION AND DISPOSITIONNorthern Panther Merger Agreement

 

On May 23, 2017,August 10, 2020, the Company closedentered into the Merger Agreement with Gold King. PursuantAcquisition Corp., NPRC and the Stockholder Representative named therein, pursuant to which Acquisition Corp. merged with and into NPRC, with NPRC surviving as a wholly-owned subsidiary of the termsCompany (such transaction, the “Merger”).

At the closing of the Merger, Agreementwhich occurred on August 11, 2020, the shares of common stock of NPRC outstanding immediately prior to the Merger (other than shares held as treasury stock) were converted into and as consideration forrepresent the acquisition of Gold King, on the closing date, 2,446,433right to receive (i) 581,053 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(ii) 106,894 shares of the Company’s newly designated Series CH Convertible Preferred Stock, par value $0.001 per share convertible(the “Series H Preferred Stock” and, together with the common stock, the “Merger Consideration”), which Series H Preferred Stock is expected to convert into common stock on a 1 for 10 basis (see Notes 8 and 11). On November 13, 2020, the Company issued an aggregate of 4,500,1801,068,940 shares of the Company’s common stock were issued to Copper King, 45,500.18in exchange for the conversion of all 106,894 outstanding shares of Series CH Preferred Stock were issued to Copper King upon closing, 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.

 

1314

 

 

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2020

Pursuant to ASU 2017-01 and ASC 805, the Company analyzed the Merger Agreement to determine if the Company acquired a business or acquired assets. Based on this analysis, it was determined that the Company acquired assets primarily consisting of 1) cash and 2) mineral rights on a gold exploration project in Idaho called the Challis Gold exploration project. The Company’sCompany excluded the cash received in the determination of the gross assets and liabilities were recorded at their fair values asconcluded that the mineral right- Challis Gold project represents substantially all of the datefair value of the Merger and the results of operationsgross assets acquired. If substantially all of the Company are consolidated with results of operations of Gold King starting on the datefair value of the Merger. The Companygross assets acquired is deemed to have issued 1,204,667 sharesconcentrated in a single identifiable asset or group of common stock which representssimilar identifiable assets, the outstanding common stock ofasset is not considered a business.

In accordance with ASC 805-50-30 “Business Combinations”, the Company prior to the closing of the Merger. The Company accounted for the value under ASC 805-50-30-2 “Business Combinations” wherebydetermined that if the consideration paid is not in the form of cash, the measurement ismay be based on either (i) the cost which shall beis measured based on the fair value of the consideration given or (ii) the fair value of the assets (or net assets) acquired, whichever is more clearly evident and thus more reliably measurable. Accordingly, the total consideration given consist of the shares of common stock and common stock equivalents of 1,650,000 shares, valued at the Volume Weighted Average Price for the 30-day period immediately prior to the date of the Merger Agreement of $7.6612 per common share, or $12,640,980. Net assets purchased consist of:

Cash – US Dollars $2,500,000 
Intangible assets – (mineral rights) Challis Gold Project  10,249,632 
Total assets acquired at fair value  12,749,632 
Total Liabilities assumed at fair value – US Dollars  (108,652)
Total purchase consideration $12,640,980 

As of the dates presented, mineral properties consisted of the following:

  October 31, 2020  April 30, 2020 
CK Gold Project $3,091,738  $3,091,738 
Keystone Project  1,028,885   1,028,885 
Gold Bar North Project  56,329   56,329 
Maggie Creek Project  1,986,607   1,986,607 
Challis Gold Project  10,249,632   - 
Total $16,413,191  $6,163,559 

NOTE 5 — PROPERTY

As of the dates presented, property consisted of the following:

  October 31, 2020  April 30, 2020 
Site costs $164,409  $151,057 
Vehicle  39,493   - 
Total  203,902   151,057 
Less: accumulated depreciation  (27,402)  (17,686)
Total $176,500  $133,371 

For the three months ended October 31, 2020 and 2019, depreciation expense amounted to $5,516 and $2,100, respectively. For the six months ended October 31, 2020 and 2019, depreciation expense amounted to $9,716 and $4,523, respectively.

15

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2020

NOTE 6 — ASSET RETIREMENT OBLIGATION

In conjunction with various permit approvals permitting the Company to undergo exploration activities at the CK Gold Project and Keystone Project, the Company has recorded an ARO based upon the reclamation plans submitted in connection with the various permits. The following table summarizes activity in the Company’s ARO for the periods presented:

  October 31, 2020  April 30, 2020 
       
Balance, beginning of period $168,392  $88,746 
Addition and changes in estimates  13,352   69,172 
Accretion expense  8,388   10,474 
Balance, end of period $190,132  $168,392 

For the three months ended October 31, 2020 and 2019, accretion expense amounted to $4,328 and $2,191, respectively. For the six months ended October 31, 2020 and 2019, accretion expense amounted to $8,388 and $4,331, respectively.

NOTE 7 — RELATED PARTY TRANSACTIONS

On April 16, 2019, the Company entered into a one-year consulting agreement with a director of the Company for providing services related to investor and strategic introduction to potential industry partners. In consideration for the services, the consultant was paid $3,750 per month in cash, and total shares of the Company’s common stock with a value of $45,000. In April 2019, the Company issued 4,592 shares of the Company’s common stock, valued at $45,000 at the market price on the dates of grant, in connection with this consulting agreement. This agreement was not renewed. The Company deemedpaid consulting fees to such director of $0 and $11,250 in cash during the three months ended October 31, 2020 and 2019, respectively. The Company paid consulting fees to such director of $3,750 and $22,500 in cash during the six months ended October 31, 2020 and 2019, respectively.

Accounts payable to related parties as of October 31, 2020 and April 30, 2020 was $0 and $3,459, respectively, and was reflected as accounts payable – related party in the accompanying condensed consolidated balance sheets. The related party to which accounts were payable as of April 30, 2020 was the former Chief Financial Officer, who was owed a total of $3,459 (including $2,700 payable in shares of common stock).

NOTE 8 — STOCKHOLDERS’ EQUITY

As of October 31, 2020, authorized capital stock consisted of 200,000,000 shares of common stock, par value $0.001 per share, and 50,000,000 shares of “blank check” preferred stock, par value $0.001 per share, of which 1,300,000 shares are designated as Series A Convertible Preferred Stock, 400,000 shares are designated as Series B Convertible Preferred Stock, 45,002 shares are designated as Series C Convertible Preferred Stock, 7,402 shares are designated as Series D Convertible Preferred Stock, 2,500 shares are designated as Series E Convertible Preferred Stock, 1,250 shares are designated as Series F Preferred Stock, 127 shares are designated as Series G Preferred Stock, 106,894 shares are designated as Series H Preferred Stock, and 921,666 shares are designated as Series I Preferred Stock. The Company’s Board has the authority, without further action by the stockholders, to issue shares of preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions granted to or imposed upon the preferred stock.

Effective on March 19, 2020, the Company filed an amendment to the Articles of Incorporation to effect the Reverse Stock Split (see Note 1). All share and per share information in this Quarterly Report on Form 10-Q has been retroactively adjusted to reflect the Reverse Stock Split. As of October 31, 2020, there were 3,664,019 shares of common stock issued and outstanding, 106,894 shares of Series H Preferred Stock issued and outstanding and 921,666 shares of Series I Preferred Stock issued and outstanding. See Note 11 for the subsequent conversion of all outstanding preferred stock.

Series G Convertible Preferred Stock

During the six months ended October 31, 2020, the Company issued an aggregate of 20,357 shares of the Company’s common stock in exchange for the conversion of 57 shares of Series G Preferred Stock. As of October 31, 2020, all Series G Preferred Stock had converted and there were no shares of Series G Preferred Stock outstanding.

16

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2020

Series H Convertible Preferred Stock

Northern Panther Merger Agreement

On August 10, 2020, the Company entered into the Merger Agreement with Acquisition Corp., NPRC and the Stockholder Representative named therein, pursuant to which the Company agreed to issue (i) 581,053 shares of the Company’s common stock, and (ii) 106,894 shares of the Company’s Series H Preferred Stock in exchange for all the issued and outstanding shares of NPRC with NPRC becoming a wholly owned subsidiary of the Company. The Merger closed on August 11, 2020 (see Note 4).

On August 11, 2020, the Company filed a Certificate of Designations, Preferences and Rights of the Series H Preferred Stock with the Secretary of State of the State of Nevada amending its Articles of Incorporation to establish the Series H Preferred Stock and the number, relative rights, preferences and limitations thereof. Pursuant to the Certificate of Designations, 106,894 shares of preferred stock have been designated as Series H Preferred Stock.

The Series H Preferred Stock was convertible into common stock on a 1 for 10 basis upon the receipt of the approval by the requisite vote of the Company’s stockholders at the Company’s 2020 annual meeting, which was held on November 9, 2020. The Company’s stockholders approved such conversion on November 9, 2020. On November 13, 2020, the Company issued an aggregate of 1,068,940 shares of the Company’s common stock in exchange for the conversion of all 106,894 outstanding shares of Series H Preferred Stock (see Note 11).

In connection with the Merger, Luke Norman Consulting Ltd. received a finder’s fee equal to the quotient of (a) 5% of the purchase value for the Merger and (b) the 30-day Volume Weighted Average Price (“VWAP”) of a share of the Company’s common stock as reported on the Nasdaq Capital Market prior to the execution Merger Agreement, which was paid in 82,500 shares of restricted common stock on August 11, 2020.

Total consideration given consist of the shares of common stock and common stock equivalents of 1,650,000 shares, valued at the Volume Weighted Average Price for the 30-day period immediately prior to the date of the Merger Agreement of $7.6612 per common share, or $12,640,980.

Series I Convertible Preferred Stock

Securities Purchase Agreement

In connection with the Merger, on August 10, 2020, the Company entered into a securities purchase agreement (the “SPA”) with certain investors (the “Purchasers”), pursuant to which the Company sold to the Purchasers in a private placement (i) an aggregate of 921,666 shares of the Company’s Series I Convertible Preferred Stock, par value $0.001 per share (the “Series I Preferred Stock”) and (ii) warrants to purchase an aggregate of 921,666 shares of common stock at an exercise price of $6.00 per share (the “Warrants”) for aggregate consideration of $5,530,004.

On August 11, 2020, the Company filed a Certificate of Designation of Rights, Powers, Preferences, Privileges and Restrictions of the Series I Preferred Stock (the “Series I Certificate of Designation”) with the Secretary of State of the State of Nevada amending its Articles of Incorporation to establish the Series I Preferred Stock and the number, relative rights, powers, preferences, privileges and restrictions thereof. Pursuant to the Series I Certificate of Designations, 921,666 shares of preferred stock have been designated as Series I Preferred Stock. The Series I Preferred Stock has substantially the same terms as the Series H Preferred Stock, except that each share of Series I Preferred Stock is convertible into one share of common stock. The Warrants are exercisable in whole or in part at any time, from time to time following the initial exercise date, terminate five years following the issuance. The sale of the Series I Preferred Stock and Warrants under the SPA closed on August 11, 2020. The conversion of the Series I Preferred Stock and the Warrants into common stock was subject to the Company’s stockholder’s approval, which was received on November 9, 2020. On November 17, 2020, the Company issued an aggregate of 921,666 shares of the Company’s common stock in exchange for the conversion of all 921,666 outstanding shares of Series I Preferred Stock (see Note 11).

The fair value of the consideration givenSeries I Preferred Stock and Warrants if converted on the date of issuance was $4.70greater than the value allocated to the Series I Preferred Stock and Warrants. As a result, the Company recorded a BCF of approximately $5.5 million that the Company recognized as deemed dividend to the holders of Series I Preferred Stock and accordingly, an adjustment to net loss to arrive at net loss available to common stockholders and a corresponding increase in additional paid in capital upon issuance of the Series I Preferred Stock and warrants. The Company accounted for the deemed dividend resulting from the issuance of Series I Preferred Stock and warrants using the relative fair value method.

17

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2020

Common Stock Issued, Restricted Stock Awards, and RSUs Granted for Services

On April 30, 2020, the Compensation Committee of the Board awarded four former directors of the Company an aggregate of 1,875 shares of restricted stock for board services pursuant to respective restricted stock award agreements. The shares of restricted stock vested immediately on the date of grant. The total 1,875 shares of restricted stock had a fair value of $9,581, or $5.11 per share, based on the quoted trading price on the date of the Merger amounting to $5,661,935 which is more clearly evident and 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:

Current assets (including cash of $255,555) $3,063,059 
Other assets  45,984 
Goodwill  6,094,760 
     
Liabilities assumed (including a note payable – credit line of $1,096,504)  (3,541,868)
Net purchase price $5,661,935 

During the nine months ended January 31, 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 nine months ended January 31, 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 and other liabilities assumed.

During the nine months ended January 31, 2018, the Company recognized a gain on extinguishment of liabilities of $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 recorded at the time of acquisition. Additionally, during the nine months ended January 31, 2018, the Company recognized gain from sale of discontinued operations of $94,485 related to the sale of the Dataram Memory business on October 13, 2017.

14

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 January 31, 2018.

The following table sets forth for the nine months ended January 31, 2018, indicated selected financial data of the Company’s discontinued operations of its memory product business from the date of merger to January 31, 2018.

  January 31, 2018 
Revenues $7,885,310 
Cost of sales  6,653,363 
Gross profit  1,231,947 
Operating and other non-operating expenses (including impairment charge of 6,094,760)  (7,406,271)
Gain from extinguishment of liabilities  248,684 
Loss from discontinued operations  (5,925,640)
Gain from sale of discontinued operations  94,485 
     
Total loss from discontinued operations $(5,831,155)

The following table sets forth for the three months ended January 31, 2018, indicated selected financial data of the Company’s discontinued operations of its memory product business from the date of merger to January 31, 2018.

  January 31, 2018 
Revenues $- 
Cost of sales  - 
Gross profit  - 
Operating and other non-operating expenses  - 
Gain from extinguishment of liabilities  3,428 
Loss from sale of discontinued operations  (7,538)
     
Total loss from discontinued operations $(4,110)

15

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

Total consideration $900,000 
Direct legal and sales commission expenses related to the sale  (201,510)
Estimated Dataram’s accrued expenses to be deducted from the sales proceeds  (174,880)
Total carrying value of Dataram Memory business on date of sale *  (429,125)
Net gain from sale of Dataram Memory business $94,485 

Current assets $3,271,426 
Other assets  33,320 
Current liabilities  (2,866,660)
Liabilities – long term  (8,961)
* Total carrying value of Dataram Memory business on date of sale $429,125 

NOTE 5 — RELATED PARTY TRANSACTIONS

Accounts payable to related party as of January 31, 2018 and April 30, 2017 was $2,431, 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 U.S. Gold Acquisition Corporation pursuant to which Nevada Gold sold and U.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 (see Note 3). The purchase price for the Gold Bar North Property was: (a) cash payment in the amount of $20,479grant, which was paid in August 2017fully vested and (b) 15,000expensed immediately. These 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 6 — STOCKHOLDERS’ EQUITY

Onon 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.

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

Series E Convertible Preferred Stock5, 2020.

 

On January 19, 2018, July 31, 2020, the Company filed a Certificate of Designations of Series E Preferred with the Secretary of State of Nevada. The Company designated 2,500 shares as Series E Preferred Stock, par value $0.001 per share. Each share of Series E Preferred Stock is convertible into sharesCompensation Committee of the Company’s common stock equal to the stated value of the Preferred Share, which is $2,000, divided by the conversion price, which is $2.00 per share of common stock, subject to adjustment in the event of stock split, stock dividends, and recapitalization or otherwise. Holders of shares of Series E Preferred Stock shall be entitled to receive dividends when and as declared by the Company’s board ofBoard awarded four former directors from time to time, and shall participate on an “as converted” basis with all dividends declared on the Company’s common stock.

16

The Series E Preferred Stock does not contain any redemption provision. Upon the Company’s liquidation, the holders of shares of Series E Preferred Stock are entitled to receive in cash out of the assets of the Company after paymentan aggregate of the liquidation preference for any outstanding1,875 shares of senior preferredrestricted stock but before any amount is paidfor board services pursuant to the holders of any ofrespective restricted stock award agreements. The shares of juniorrestricted stock and pari passu with any parity stock then outstanding, an amount per share equal the greater of (A) the stated value thereofvested immediately on the date of such payment and (B) the amount per share such holder would receive if such holder convertedgrant. The total 1,875 shares of Series E Preferred Stock into commonrestricted stock immediately prior to the date of such payment.

Except as required by law or the Company’s Articles of Incorporation, including certain protective provisions in the Certificate of Designations, holders of shares of Series E Preferred Stock have the same voting rights as holders of common stock, voting together as one class on an as-converted basis based on a conversion price equal to $3.10, subject to beneficial ownership limitations.

On January 22, 2018, the Company completed a private placement to several investors for the purchase of 2,500 shares of the Company’s Series E Preferred Stock for aggregate gross proceeds of $5.0 million. The purchase price of one share of Series E Preferred Stock was $2,000. Based on the initial conversion price, approximately 2,500,000 shares of common stock would be issuable upon conversion of all of the shares sold.

The investors in the private placement were granted warrants to acquire an aggregate of 1,250,000 shares of common stock at an exercise price of $3.30, subject to adjustment in the event of stock split, stock dividends, and recapitalization or otherwise. The warrants shall be exercisable commencing six months from the issuance and have a term of exercise equal to three years from the initial exercise date. The Company is obligated to register the shares of common stock issuable upon exercise of the warrants as soon as practicable, but no later than 60 days from the closing date of the offering and to have such registration statement declared effective no later than 181 days from the closing.

If at any time after the six-month anniversary of the initial issuance date of the warrants, there is no effective registration statement registering, or no current prospectus available for, the resale of the warrant shares by the investors, then this warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the investor shall be entitled to receive a number of warrant shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

(A)= the volume weighted average price on the trading day immediately preceding the date of the applicable notice of exercise;
(B)= the exercise price of the warrant; and
(X)= the number of warrant shares that would be issuable upon exercise of this warrant in accordance with the terms of this warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

In connection with the private placement above, the Company paid legal fees and related private placement expenses of approximately $81,000 for total net proceeds of approximately $4.9 million from the private placement.

Common Stock

In connection with the Merger, the Company is deemed to have issued 1,204,667 shares of common stock to the Dataram Memory Legacy Shareholders 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. 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 nine months ended January 31, 2018.

In May 2017, in connection with the Merger (see Note 4), the Company issued 37,879 shares of the Company’s common stock havinghad 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, 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$15,244, or $2.55$8.13 per common share, based on the quoted trading price on the date of grant, which was fully vested and reduced accrued salaries by $137,500 during the nine months ended January 31, 2018 and recognized stock based compensation of $37,500 for services rendered between May 2017 to July 2017.expensed immediately. These shares were issued in August 2020.

 

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.

17

Between May 2017 and January 2018,On August 11, 2020, the Company issued 4,262,32082,500 shares of the Company’s common stock in exchange for the conversion of 42,623 shares of the Company’s Series C Preferred Stock.

In August 2017, the Company issued an aggregate of 195,525 shares of the Company’srestricted common stock to officers and employeesa consultant for finder’s fee related to the Merger. The 82,500 shares of the Company for services rendered. The Company valued these common shares at thestock had a fair value of $467,305$786,225, or $2.39$9.53 per common share, based on the quoted trading price on the date of grant, which was fully vested and recognized stock based compensation of $467,305 during the nine months ended January 31, 2018.expensed immediately.

 

In August 2017,On September 16, 2020, the Company issuedand David Rector, the Company’s former Chief Operating Officer, agreed by mutual understanding that Mr. Rector’s employment as an aggregateofficer and employee of 6,462the Company will terminate, effective as of October 31, 2020 (the “Separation Date”). In connection with Mr. Rector’s departure, the Company entered into a General Release and Severance Agreement with Mr. Rector (the “Separation Agreement”), pursuant to which Mr. Rector will provide certain transition services to the Company from the Separation Date until December 31, 2020. Pursuant to the Separation Agreement, Mr. Rector is entitled to receive (i) a prorated annual bonus for the 2020 calendar year and through the Separation Date equal to $150,000 (the “Prorated Bonus”), payable in the number of fully vested shares of restricted common stock of the Company equal to the Prorated Bonus determined based on the common stock’s fair market value on the date of grant, and subject to the terms and conditions of the Company’s 2020 Stock Incentive Plan (the “2020 Plan”) and the Company’s standard form Restricted Stock Award Agreement; and (ii) any equity awards granted to Mr. Rector by the Company pursuant to its 2014 Equity Incentive Plan (the “2014 Plan”), 2017 Equity Incentive Plan (the “2017 Plan”), or 2020 Plan (the 2014 Plan, 2017 Plan, and 2020 Plan are collectively referred to herein as, the “Equity Plans”) during the term of Mr. Rector’s employment, shall be 100% vested and retained by Mr. Rector, notwithstanding any terms in an award agreement or plan document regarding forfeiture of such awards under the Equity Plans upon termination of employment provided that the foregoing shall not in any way extend the awards beyond their original term. The $150,000 bonus was paid in 18,502 shares of restricted common stock to five directors of the Company for services rendered. The Company valued these common shares at theand had a fair value of $15,444$150,000, or $2.39$8.11 per common share, based on the quoted trading price on the date of grant, which was fully vested and expensed immediately. Additionally, the Company recognized stock basedstock-based compensation of $15,444 during$77,250 due to the nine months ended January 31, 2018.accelerated vesting of the 7,500 restricted stock units granted on September 18, 2019.

 

In August 2017,On September 17, 2020, the Compensation Committee of the Board awarded five directors of the Company issued an aggregate of 117,50012,500 shares of the Company’srestricted common stock. The shares of restricted common stock to four consultants pursuant to consulting agreements related to investor relations and business advisory services. The term of 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 pricevested immediately on the date of grant. The Company recognized stock based compensation of $256,925 during the nine months ended January 31, 2018. As of January 31, 2018, $23,900 was recorded as a prepaid expense and will be amortized over the remaining 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) 15,000total 12,500 shares of restricted common stock of the Company which were issued in August 2017. The Company valued these common shares at thehad a fair value of $35,850$140,125, or $2.39$11.21 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.

On November 10, 2017, the Company appointed Andrew Kaplan as a director of the Company. Mr. Kaplan received the Company’s equity award for new independent directors of 12,000 shares of the Company’s common stock as compensation, which shall vest in 24 equal monthly installments over a two year period, beginning on the one month anniversary of the date of issuance.The Company valued these common shares at the fair value of $15,240 or $1.27 per common share based on the quoted trading price on the date of grant. The fair value of the shares will be expensed on a straight line basis to consulting expense over the vesting period.

On November 16, 2017, the Company issued 21,213 shares 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 $1.76 per common share based on the quoted trading prices on the date of grants and reduced accrued salaries by $37,500.

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 $55,574 or $1.65 per common share, based on the quoted trading price on the date of grant, which was fully vested and reduced accrued salaries of $55,574.expensed immediately. These shares were issued in November 2020.

 

On December 22, 2017,September 17, 2020, the Company issued 8,92930,107 shares of the Company’srestricted common stock to Edward Karr, then Chief Executive Officer, and now Executive Chairman, as bonus in connection with the Chief Geologist for services rendered toconsummation of the acquisition by the Company for November 2017 pursuant to his employment agreementof the NPRC (see Note 8)4). The Company valued theseagreed to pay Mr. Karr a bonus in the amount of $450,000 payable as follows: (i) 75% or $337,500 of the bonus payable in fully vested shares of restricted common stock and (ii) the remaining 25% or $112,500 in cash which was paid in October 2020. The $337,500 bonus was paid in 30,107 shares at theof restricted common stock and had a fair value of $12,500$337,500, or $1.40$11.21 per share, based on the quoted trading price on the date of grant, which was fully vested and expensed immediately.

On October 31, 2020, the Compensation Committee of the Board awarded four former directors of the Company an aggregate of 1,875 shares of restricted common stock for board services. The shares of restricted common stock vested immediately on the date of grant. The total 1,875 shares of restricted common stock had a fair value of $15,206, or $8.11 per share, based on the quoted trading price on the date of grant, which was fully vested and expensed immediately. These shares were issued in November 2020.

18

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2020

On October 31, 2020, the Company paid its former Chief Financial Officer for accounting services rendered from February 2020 to September 2020 by issuing 1,857 shares of restricted common stock at an average price of $7.08 per share of common stock based on the quoted trading prices on the date of grantsgrants. In connection with this issuance, the Company recorded stock-based accounting fees of $13,145 during the six months ended October 31, 2020. The restricted common stock issued to the former Chief Financial Officer were fully vested at the date of issuance.

Total stock compensation expense for awards issued for services of $77,250 and reduced accrued salaries by $12,500.$393,098 was expensed for the three months ended October 31, 2020 and 2019, respectively. Total stock compensation expense for awards issued for services of $97,468 and $445,780 was expensed for the six months ended October 31, 2020 and 2019, respectively. A balance of $257,500 remains to be expensed over future vesting periods related to unvested restricted stock units issued for services.

Common Stock issued for exercise of Stock Warrants

In October 2020, the Company issued 10,000 shares of common stock for the exercise of stock warrants and received proceeds of $70,000.

Equity Incentive Plan

In August 2017, the Board approved the Company’s 2017 Plan including the reservation of 165,000 shares of common stock thereunder.

 

On January 3, 2018,August 6, 2019, the Board approved and adopted, subject to stockholder approval, the 2020 Plan. The 2020 Plan reserves 330,710 shares for future issuance to officers, directors, employees and contractors as directed from time to time by the Compensation Committee of the Board. The Board directed that the 2020 Plan be submitted to the Company’s stockholders for their approval at the 2019 Annual Meeting of Stockholders of the Company, issued 7,669which was held on September 18, 2019. The 2020 Plan was approved by a vote of stockholders at the 2019 annual meeting. With the approval and effectivity of the 2020 Plan, no further grants will be made under the 2017 Plan. On August 31, 2020, the Board approved and adopted, subject to stockholder approval, an amendment (the “2020 Plan Amendment”) to the 2020 Plan. The 2020 Plan Amendment increased the number of shares of common stock available for issuance pursuant to awards under the 2020 Plan by an additional 836,385, to a total of 1,167,095 shares of the Company’s common stock. The 2020 Plan Amended was approved by the Company’s stockholders on November 9, 2020.

Stock options

The following is a summary of the Company’s stock tooption activity during the Chief Geologist for services rendered to the Company for December 2017 pursuant to his employment agreement (see Note 8). The Company valued these common shares at the fair value of $12,500 or $1.63 per common share based on the quoted trading prices on the date of grantsperiods ended October 31, 2020 and reduced accrued salaries by $12,500.April 30, 2020:

  Number of
Options		  Weighted
Average
Exercise
Price		  Weighted
Average
Remaining
Contractual
Life
(Years)		 
Balance at April 30, 2020  100,000  $14.31   2.87 
Granted  —   —   — 
Exercised  —   —   — 
Forfeited  (3,125)  —   — 
Cancelled  —   —   — 
Balance at October 31, 2020  96,875   14.51   2.18 
             
Options exercisable at end of period  95,625  $14.52     
Options expected to vest  1,250  $13.40     
Weighted average fair value of options granted during the period     $-     

 

1819

 

During January 2018, the Company issued 1,770,000 shares of the Company’s common stock in exchange for the conversion of 1,770 shares of the Company’s Series E Preferred Stock.

 

Stock OptionsU.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2020

 

A summaryAt October 31, 2020 and April 30, 2020, the aggregate intrinsic value of options outstanding and exercisable were de minimus for each period.

In September 2020, the Board approved the acceleration of the Company’s outstandingvesting terms of the 50,000 stock options asgranted to Edward Karr, Executive Chairman of January 31, 2018the Company, and changes during25,000 stock options granted to David Rector, former Chief Operating Officer of the Company, on December 21, 2017 and therefore the total 75,000 stock options are fully vested. Additionally, the Board of Directors of the Company approved to extend the exercise period then ended are presented below:of the stock options granted to Mr. Rector and three former directors, to December 21, 2022, the original termination date of the respective stock option agreements. The Company recognized stock-based compensation of $133,439 due to the accelerated vesting of the 75,000 fully vested stock options granted on December 21, 2017.

 

  Number of
Options		  Weighted
Average
Exercise
Price		  Weighted
Average
Remaining
Contractual
Life
(Years)		 
Balance at April 30, 2017 (see Note 4)  231,458  $3.60   4.01 
Granted  —   —   — 
Exercised  —   —   — 
Forfeited  —   —   — 
Cancelled  —   —   — 
Balance at January 31, 2018  231,458   3.60   3.32 
             
Options exercisable at end of period  192,882  $3.60     
Options expected to vest  38,576  $3.60     
Weighted average fair value of options granted during the period     $—     

The 38,576Stock-based compensation for stock options are expectedrecorded in the unaudited consolidated statements of operations totaled $137,650 and $52,213 for the three months ended October 31, 2020 and 2019, respectively. Stock-based compensation for stock options recorded in the unaudited consolidated statements of operations totaled $188,912 and $104,427 for the six months ended October 31, 2020 and 2019, respectively. A balance of $5,848 remains to vestbe expensed over the next 4 months. There was $0 intrinsic value as of January 31, 2018.future vesting periods.

 

Stock Warrants

 

A summary of the Company’s outstanding warrants to purchase shares of common stock warrants as of JanuaryOctober 31, 20182020 and changes during the period thensix-months ended are presented below:

 

  Number of
Warrants		  Weighted
Average
Exercise
Price		  Weighted
Average
Remaining
Contractual
Life
(Years)		 
Balance at April 30, 2017 (see Note 4)  452,359  $2.64   4.23 
Recapitalization on May 23, 2017  33,415   32.61   0.90 
Granted  1,250,000   3.30   3.5 
Exercised  —   —   — 
Forfeited  —   —   — 
Cancelled  —   —   — 
Balance at January 31, 2018  1,735,774   3.69   3.42 

  Number of Warrants  Weighted Average
Exercise
Price		  Weighted Average Remaining Contractual
Life
(Years)		 
Warrants with no Class designation:            
Balance at April 30, 2020  527,378  $14.83   3.73 
Granted  921,666   6.00   5.00 
Exercised  (10,000)  7.00   3.20 
Forfeited  —   —   — 
Canceled  —   —   — 
Balance at October 31, 2020  1,439,044   9.23   4.21 
Class A Warrants:            
Balance at April 30, 2020  219,375   11.40   4.22 
Granted  —   —   — 
Exercised  —   —   — 
Forfeited  —   —   — 
Canceled  —   —   — 
Balance at October 31, 2020  219,375   11.40   3.72 
Total Warrants Outstanding at October 31, 2020  1,658,419  $9.52   4.15 
Warrants exercisable at end of period  1,658,419  $9.52     
Weighted average fair value of warrants granted during the period     $9.09     

 

As of October 31, 2020, the aggregate intrinsic value of warrants outstanding and exercisable was $2,330,043.

Warrants exercisable at end of period  485,774  $4.70 
Warrants expected to vest  1,250,000  $3.30 
Weighted average fair value of warrants granted during the period     $1.24 

In October 2020, the Company issued 10,000 shares of common stock for the exercise of stock warrants and received proceeds of $70,000.

Pursuant to the SPA, the Company issued 921,666 Warrants and are exercisable in whole or in part at any time, from time to time following the initial exercise date, and terminate five years following the issuance. The fair value of the warrants was $5,530,004, as measured on the date of the issuance with a Black-Scholes pricing model using the assumptions noted in the following table:

 

1920

 

 

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2020

  Warrants Issued During the Six Months Ended
October 31, 2020		 
Expected volatility  169.0%
Stock price on date of grant $9.53 
Exercise price $6.00 
Expected dividends  - 
Expected term (in years)  5.00 
Risk-free rate  0.27%
Expected forfeiture rate  0%

The fair value of the warrant was credited to Additional paid-in capital, and also represents a deemed dividend to those shareholders, which was charged to Additional paid-in capital, therefore with no effect on that account.

NOTE 79 — NET LOSS PER COMMON SHARE

 

Net loss per share of common sharestock 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.

 

 

January 31,

2018

  

January 31,

2017

  October 31, 2020  October 31, 2019 
Common stock equivalents:                
Preferred stock  1,990,606   47,368 
Restricted stock units  32,500   32,500 
Stock options  231,458   694,375   96,875   136,896 
Stock warrants  1,735,774   -   1,658,419   499,361 
Convertible preferred stock  967,860   31,720,809 
        
Total  2,935,092   32,415,184   3,778,400   716,125 

 

NOTE 810 — COMMITMENTS AND CONTINGENCIES

 

Mining Leases

The Copper KingCK Gold property position consists of two State of Wyoming Metallic and Non-metallic Rocks and Minerals Mining Leases. These leases were assigned to the Company in July 2014 through the acquisition of the Copper King project.CK Gold Project. Leases to explore for or use of natural resources are outside the scope of ASU 2016-02 “Leases”. There are no lease contracts for office space or other Company expenses which qualify for treatment as capital assets under ASU 2016-02.

 

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

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

acres, and 2) State of Wyoming Mining Lease No. 0-40858 consisting of 480 acres.

 

Lease 0-40828 was renewed in February 2013 for a second ten-year term and Lease 0-40858 was renewed for its second ten-year term in February 2014. Each lease requires an annual payment of $2.00 per acre. In connection with the Wyoming Mining Leases, the following production royalties must be paid to the State of Wyoming, although once the project is in operation, the Board of Land Commissioners has the authority to reduce the royalty payable to the State:State of Wyoming:

 

FOB Mine Value per Ton Percentage Royalty 
$00.00 to $50.00  5%
$50.01 to $100.00  7%
$100.01 to $150.00  9%
$150.01 and up  10%

 

21

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2020

The future minimum lease payments at October 31, 2020 under these mining leases are as follows:follows, each payment to be made in the fourth quarter of the respective fiscal years:

 

2018 $2,240 
2019  2,240 
2020  2,240 
2021  2,240 
2022  2,240 
Thereafter  3,200 
  $14,400 
Fiscal 2021 $2,240 
Fiscal 2022  2,240 
Fiscal 2023  2,240 
Fiscal 2024  960 
  $7,680 

 

20

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

 

Executive Employment AgreementsMaggie Creek option:

 

On April 12, 2016,The Maggie Creek option agreement grants the Company entered intothe exclusive right and option to earn-in and acquire up to 50% undivided interest in a property called Maggie Creek, located in Eureka County, Nevada by completing the Initial Earn-in over a seven-year period, as amended:

First agreement year $0 
Second agreement year  300,000 
Third agreement year  500,000 
Fourth agreement year  700,000 
Fifth agreement year  1,000,000 
Sixth agreement year  1,000,000 
Seventh agreement year  1,000,000 
  $4,500,000 

Once the Initial Earn-in has been met, the Company is required to pay an employment agreement with its Chief Executive Officer, Mr. Edward Karr. The initial term of the agreement is for two years ending on April 30, 2018, with automatic renewals for successive one year terms unless terminated by written notice at least 90 days prioradditional $250,000 to the expiration ofcounter-party to vest the term. Mr. Karr is to receive a base salary of $250,000 per year. The agreement calls for a bonus of $250,000 to be awarded upon meeting a certain milestone goal which is concluding a financing of at least $10,000,000, a minimum of $2,500,000 of which must come from foreign investors. The bonus may be paid in cash, stock, or a combination thereofCompany’s 50% interest in the discretion ofMaggie Creek property.

NPRC option:

Pursuant to the board. Any bonus for a calendar year shall be subject to Mr. Karr’s continued employment withMerger (see Note 4), the Company through the end of the calendar yearacquired from NPRC a mineral property called Challis Gold located in Idaho pursuant to an option agreement dated in February 2020 which it is earned and shall be paid after the conclusion of the calendar yearwas later amended in accordance with the Company’s regular bonus payment policies in the year following the year with respect to which the bonus relates, and in any case not later than two and one half (2-1/2) months following the end of the year with respect to which a bonus is earned.June 2020.

 

The Company’s Chief Operating Officer, and former Chief Financial Officer, Mr. David Rector, is employedannual advance minimum royalty payments at October 31, 2020 under an executive employmentthe option 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. Mr. Rector is 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,are as follows, each payment to be awardedmade 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.

On June 27, 2016, the Company entered into an employment agreement with its Chief Geologist, Mr. David Mathewson. 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 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 issuedbeginning on the first business dayanniversary of the monthseffective date of this option agreement and shallcontinuing until the tenth anniversary:

Fiscal 2022 $25,000 
Fiscal 2023  25,000 
Fiscal 2024  25,000 
Fiscal 2025  25,000 
Fiscal 2026 and thereafter  150,000 
  $250,000 

100% of the advance minimum royalty payments will be valued at the market price on the trading day immediately priorapplied 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. 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).

Under the terms of the separation agreement, Mr. Moylan received a severance payment of an aggregate of $494,227. Unless revoked, the 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 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. Moylan no longer serves in any capacity with the Company or its subsidiaries effective October 31, 2017.

21

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. 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. Under the terms of the separation agreement, Mr. Lougee received a severance payment of an aggregate of $221,718. Unless revoked, the 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 severance agreement.

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. 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 receive a monthly award of 500 shares of restricted common stock. Mr. Lougee’s employment is on an at-will basis and may be terminated without notice at any time by Mr. Lougee or the Board of Directors. The employment agreement canceled and superseded the 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.royalty credits.

 

NOTE 911 — SUBSEQUENT EVENTS

 

From February 1, 2018 through the date of this filing,In November and December 2020, the Company issued 730,000an aggregate of 100,000 shares of common stock for the exercise of stock warrants and received proceeds of $700,000.

On November 13, 2020, the Company issued an aggregate of 1,068,940 shares of the Company’s common stock in exchange for the conversion of 730106,894 shares of the Company’s Series EH Preferred Stock.

 

On February 8, 2018, November 16, 2020, the Company issued 4,902an aggregate of 188 shares of the Company’srestricted common stock to the Chief Geologist for director services rendered from November 1 to the Company for January 2018 pursuant to his employment agreement (see Note 8).November 9, 2020. The Company valued theseshares of restricted common shares at the fair value of $12,500 or $2.55 per common share based on the quoted trading pricesstock vested immediately on the date of grants and reduced accrued salaries by $12,500.grant.

 

On February 21, 2018,November 17, 2020, the Company issued 12,000 sharesan aggregate of the Company’s common stock as compensation to a director of the Company for his past appointment to the Board of Directors.

On February 28, 2018, the Company issued 237,860921,666 shares of the Company’s common stock in exchange for the conversion of 2,379921,666 shares of the Company’s Series CI Preferred Stock.

 

On March 5, 2018, the Company issued 6,906 shares of the Company’s common stock to the Chief Geologist for services rendered to the Company for February 2018 pursuant to his employment agreement (see Note 8). The Company valued these common shares at the fair value of $12,500 or $1.81 per common share based on the quoted trading prices on the date of grants and reduced accrued salaries by $12,500.

On March 5, 2018, the Company issued 150,000 shares of the Company’s common stock to a consultant pursuant to a consulting agreement related to business advisory services. The term of the consulting agreement is 12 months.

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

 

This Quarterly Report on Form 10-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 condensed consolidated financial statements included herein have been prepared by U.S. Gold Corp. (the “Company”, “we”, “us”, or “our”) without audit, pursuant to the rules and regulations of the Commission.Securities and Exchange Commission (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 (“USU.S. 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 believeswe believe 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 8-K10-K filed with the Commission.Commission on July 13, 2020.

 

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 Companyus and our subsidiaries as of JanuaryOctober 31, 2018,2020, the results of theirour unaudited interim condensed consolidated statements of operations and changes in stockholders’ equity for the threethree- and nine monthsix-month periods ended JanuaryOctober 31, 20182020 and 2017,2019, and theirour unaudited interim condensed consolidated cash flows for the nine monthsix-month periods ended JanuaryOctober 31, 20182020 and 2017.2019. 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 USU.S. GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

 

Forward-Looking Statements

In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. See “Forward-Looking Statements.” Our results and the timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including the risk factors described in this report and in “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended April 30, 2020.

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. 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 metalsWe are an exploration company pursuing explorationthat owns certain mining leases and development opportunities primarilyother mineral rights comprising the CK Gold Project in Wyoming, the Keystone and Maggie Creek Projects in Nevada and Wyoming.most recently the Challis Gold Project in Idaho. None of the Company’sour properties contain any proven and probable reserves under SEC Industry Guide 7, and all of the Company’sour activities on all of itsour properties are exploratory in nature.

 

On July 6, 2016,During the Company filedthree months ended October 31, 2020, we focused primarily on the advancement of a certificate of amendment to its Articles of Incorporation withPreliminary Feasibility Study (“PFS”) on our CK Gold Project and the Secretary of State of Nevada in order to effectuate a reverse stock splitclosing of the Company’s issuedMerger Agreement with Northern Panther Resources Corporation (“NPRC”), securing an additional fund of approximately $5.5 million in equity financing and outstanding common stock per sharestrengthening our management and board of directors. An overview of certain significant events follows:

●On October 28, 2020, we announced an exploration update on our Maggie Creek property in Nevada. Four initial exploration targets have been identified.
●On August 13, 2020, we announced the appointment of Mr. George Bee as our President.
●On August 11, 2020, we closed the acquisition of NPRC. Pursuant to the acquisition, we acquired the Challis Gold project in Idaho and approximately $2.5 million in cash. Concurrently with the acquisition, we completed a private placement of approximately $5.5 million led by several NPRC shareholders.

Recent Developments

Adoption of Amendment to U.S. Gold Corp. 2020 Stock Incentive Plan

On August 31, 2020, our board of directors approved and adopted, subject to stockholder approval, an amendment (the “2020 Plan Amendment”) to the U.S. Gold Corp. 2020 Stock Incentive Plan (the “2020 Plan”). Our stockholders approved the 2020 Plan Amendment at the 2020 Annual Meeting of Stockholders, which was held 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 splits.November 9, 2020 (the “Annual Meeting”).

 

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Election of Directors

 

On July 31, 2017,At the Annual Meeting, Edward M. Karr, George Bee, Ryan K. Zinke, Robert W. Schafer and Tara Gilfillan were elected as directors of our board of directors to serve for a term expiring at the Company’s Board2021 annual meeting of Directors, or Board, reviewedstockholders.

Appointment of Chief Executive Officer; Appointment of Executive Chairman

Immediately following the Annual Meeting, Mr. Karr voluntarily relinquished his position as our Chief Executive Officer, and approvedthe board of directors appointed Mr. Bee as the new Chief Executive Officer. In addition, the board of directors appointed Mr. Karr to serve as executive chairman of the board of directors. We intend to enter into new Employment Agreements with each of Messrs. Bee and Karr, subject to the recommendation of managementthe Compensation Committee and approval by the board of directors.

COVID-19 Developments

In December 2019, a novel strain of coronavirus, COVID-19, was reported to consider strategic options forhave surfaced in Wuhan, China and has reached multiple other countries, resulting in government-imposed quarantines, travel restrictions and other public health safety measures in China and other countries. On March 12, 2020, the legacyWHO declared COVID-19 to be a global pandemic, and the COVID-19 pandemic has resulted in significant financial market volatility and uncertainty in recent months. The ongoing COVID-19 pandemic has and may continue to adversely impact our business, (“Dataram Memory”) includingas our operations are based in and rely on third parties located in areas affected by the salepandemic.

We, or our people, investors, contractors or stakeholders, have been prevented from free cross-border travel or normal attendance to activities in conducting our business at trade shows, presentations, meetings or other activities meant to promote or execute our business strategy and transactions. We have been prevented from receiving goods or services from contractors. Decisions beyond our control, such as canceled events, restricted travel, barriers to entry or other factors have affected or may affect our ability to accomplish drilling programs, technical analysis of completed exploration actions, equity raising activities, and other needs that would normally be accomplished without such limitations. Furthermore, our exploration activities rely heavily on outside contracts. The COVID-19 pandemic has caused disruptions in travel and accessing our exploration properties with contractors. Such government-imposed precautionary measures may have been relaxed in certain countries or states, but there is no assurance that more strict measures will be put in place again due to a resurgence in COVID-19 cases. There can be no assurance that the Company and its personnel may travel and access property freely in the near future.

Moreover, the COVID-19 pandemic has made and continues to make indeterminable adverse effects on general commercial activity and the world economy, and our business and results of operations could be adversely affected to the extent that COVID-19 or any other epidemic harms the global economy generally.

We do not yet know the full extent of potential delays or impact on our business, our relationship with our business partners, or the global economy as a whole. However, any one or a combination of these events could have an adverse effect on our other business operations. A continuation or worsening of the levels of market disruption and volatility seen in the recent past could have an adverse effect on our ability to access capital, on our business, withinresults of operations and financial condition, and on the next 12 months. The Company sold the Dataram memory business on October 13, 2017 for a purchasemarket 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 be reflected on the balance sheet and statement of operations as “discontinued operation”.our common stock.

 

Results of Operations

 

Three and Nine Months Ended Januarysix months ended October 31, 20182020 compared to the three and 2017six months ended October 31, 2019:

 

Net Revenues

 

The Company isWe are an exploration stage company with no operations, and we generated no revenues for the threethree- and nine monthssix-month periods ended JanuaryOctober 31, 20182020 and 2017.2019.

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Operating Expenses

 

Total operating expenses for the ninesix months ended JanuaryOctober 31, 20182020 as compared to the ninesix months ended JanuaryOctober 31, 2017,2019, were approximately $6,647,000$5.8 million and $3,681,000,$3.5 million, respectively. The $2,966,000approximate $2.3 million increase in operating expenses for the ninesix months ended JanuaryOctober 31, 20182020 as compared to the six months ended October 31, 2019, is comprised of (i) an increase in compensation of approximately $705,000 primarily due to increase in compensation related to total bonuses of $600,000 paid in common stock and cash, stock-based compensation from the accelerated vesting of certain stock options and restricted stock units and the hiring of additional executive management in August and September 2020, (ii) an increase of $962,000 in compensation as a result of the employment of the Company’s officers, hiring of additional employees during the nine months ended January 31, 2018 and payment of severance expense of approximately $716,000 to two former officers of the Company pursuant to separation agreements and change in control in connection with the Merger, a $1,011,000 increase$660,000 in exploration expenses on our mineral properties specifically the Keystone Project due to an increase in exploration activities in our CK Gold property, (iii) an increase in professional consulting fees of approximately $654,000$839,000 primarily due to increased investor relations, business advisoryincreases in stock-based consulting fees of approximately $547,000, legal fees of approximately $189,000 primarily due to services related to the NPRC merger, accounting fees of approximately $50,000, and legalgeneral strategic and permitting consulting services of $53,000, and (iv) an increase of $339,000 in general and administrative expenses of approximately $63,000 due primarily attributable to an increaseincreases in public company expenses transportationrelated to the Annual Meeting and travel expenses, and insurance expense.advertising expenses.

 

Total operating expenses for the three months ended JanuaryOctober 31, 20182020 as compared to the three months ended JanuaryOctober 31, 2017,2019, were approximately $1,768 ,000$4.8 million and $1,648,000,$2.2 million, respectively. The $120,000approximate $2.6 million increase in operating expenses for the three months ended JanuaryOctober 31, 20182020 as compared to the three months ended October 31, 2019, is comprised of (i) an decrease of $239,000increase in compensation as a result of a decreaseapproximately $797,000 primarily due to increase in officercompensation related to total bonuses of $600,000 paid in common stock and cash, stock-based compensation from the accelerated vesting of certain stock options and restricted stock units and the hiring of additional executive management in August and September 2020 (ii) an increase $308,000 in professional fees due to increased investor relations, business advisory services, accounting, and legal services, a $56,000 decreaseof approximately $781,000 increase in exploration expenses on our mineral properties due to a decreasean increase in exploration activities andin our CK Gold property, (iii) an increase in professional and consulting fees of $107,000approximately $932,000 primarily due to increases in stock-based consulting fees of approximately $586,000 and increase in legal fees of approximately $121,000 primarily due to services related to the NPRC merger, accounting fees of approximately $32,000, and general strategic and permitting consulting services of $193,000, and (iv) an increase in general and administrative expenses of approximately $107,000 due primarily attributable to an increaseincreases in public company expenses transportationrelated to the Annual Meeting and travel expenses, and insurance expense.advertising expenses.

 

Operating Loss from Operations from Continuing Operations

 

We reported operating loss from continuingoperations before tax of approximately $5.8 million and $3.5 million for the six months ended October 31, 2020 and 2019, respectively. We reported loss from operations of approximately $6,647,000$4.8 million and $3,681,000 for the nine months ended January 31, 2018 and 2017, respectively. We reported operating loss from continuing operations of approximately $1,768,000 and $1,648,000$2.2 million for the three months ended JanuaryOctober 31, 20182020 and 2017,2019, respectively.

Other Income (Expense)

Total other income (expense) was approximately $0 and $(4,200) for the nine months ended January 31, 2018 and 2017, respectively, such decrease was primarily attributable to a decrease in interest expense.

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Gain (Loss) from discontinued Operations

In June 2017, subsequent to the Merger, the Company decided to discontinue its memory product business. The Company will focus its activities on its gold and precious metal exploration business. The following table sets forth for the nine months ended January 31, 2018, indicated selected financial data of the Company’s discontinued operations of its memory product business from the date of merger to January 31, 2018.

  January 31, 2018 
Revenues $7,885,310 
Cost of sales  6,653,363 
Gross profit  1,231,947 
Operating and other non-operating expenses (including impairment charge of 6,094,760)  (7,406,271)
Gain from extinguishment of liabilities  248,684 
Loss from discontinued operations  (5,925,640)
Gain from sale of discontinued operations  94,485 
     
Total loss from discontinued operations $(5,831,155)

The following table sets forth for the three months ended January 31, 2018, indicated selected financial data of the Company’s discontinued operations of its memory product business from the date of merger to January 31, 2018.

  January 31, 2018 
Revenues $- 
Cost of sales  - 
Gross profit  - 
Operating and other non-operating expenses  - 
Gain from extinguishment of liabilities  3,428 
Loss from sale of discontinued operations  (7,538)
     
Total loss from discontinued operations $(4,110)

The following table sets forth for the nine months ended January 31, 2018, indicated selected financial data of the Company’s gain from sale of the Dataram Memory business.

Total consideration $900,000 
Direct legal and sales commission expenses related to the sale  (201,510)
Estimated Dataram’s accrued expenses to be deducted from the sales proceeds  (174,880)
Total carrying value of Dataram Memory business on date of sale *  (429,125)
Net gain from sale of Dataram Memory business $94,485 

Current assets $3,271,426 
Other assets  33,320 
Current liabilities  (2,866,660)
Liabilities – long term  (8,961)
* Total carrying value of Dataram Memory business on date of sale $429,125 

 

Net Loss

 

As a result of the operating expense and other expensewith no revenues discussed above, we reported a net loss of approximately $12,478,000$5.8 million for the ninesix months ended JanuaryOctober 31, 20182020 as compared to a net loss of $3,685,000$3.5 million for the ninesix months ended JanuaryOctober 31, 2017. As a result of the operating expense and other expense discussed above, we2019. We reported a net loss of approximately $1,772,000$4.8 million for the three months ended JanuaryOctober 31, 20182020 as compared to a net loss of $1,648,000$2.2 million for the three months ended JanuaryOctober 31, 2017.2019.

 

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Liquidity and Capital Resources

 

The following table summarizes total current assets, liabilities and working capital at October 31, 2020 compared to April 30, 2020, and the increase between those periods:

  October 31, 2020  April 30, 2020  Increase 
Current Assets $8,036,848  $3,181,747  $4,855,101 
Current Liabilities $1,150,182  $157,840  $992,342 
Working Capital $6,886,666  $3,023,907  $3,862,759 

As of JanuaryOctober 31, 2018,2020, we had working capital of $6,886,666, as compared to working capital of $3,023,907 as of April 30, 2020, an increase of $4,855,101. During the six months ended October 31, 2020, we received approximately $5.5 million proceeds from the sale of an aggregate of 921,666 shares of our Series I Convertible Preferred Stock, par value $0.001 (“Series I Preferred Stock”) per share and warrants to purchase an aggregate of 921,666 shares of our common stock at an exercise price of $6.00 per share, which was the primary source of cash to fund operations. Additionally, we received approximately $2.5 million in cash as a part of the acquisition of NPRC in August 2020.

We are obligated to file annual, quarterly and current reports with the Commission 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 Commission 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 costlier. 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.

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Our unaudited condensed consolidated financial statements are prepared using the accrual method of accounting in accordance with U.S. GAAP and have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. For the six months ended October 31, 2020 and 2019, we incurred losses in the amounts of approximately $5.8 million and $3.5 million, respectively. As of October 31, 2020, we had cash totalingof approximately $8,374,000. $7.3 million, working capital of approximately $6.9 million, and an accumulated deficit of approximately $37.4 million. As a result of the utilization of cash in its operating activities, and the development of its assets, we have incurred losses since we commenced operations. Our primary source of operating funds since inception has been equity financings. As of October 31, 2020, we had sufficient cash to fund its operations for approximately 6 to 9 months and expected that we will be required to raise additional funds to fund our operations thereafter. These matters raise substantial doubt about our ability to continue as a going concern for the twelve months following the issuance of these financial statements.

We have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. Our future capital requirements will depend on many factors, including potential acquisitions, changes in exploration programs and related studies and other operating strategies. In addition, we continue to assess the impact of the COVID-19 pandemic, which may adversely affect our ability to obtain additional future capital. To the extent we require additional funding, we cannot be certain that additional funding will be available on acceptable terms, or at all. To the extent we raise additional funds by issuing equity securities, our stockholders may experience significant dilution. Any debt financing, if available, may involve restrictive covenants that impact our ability to conduct business. If unable to raise additional capital when required or on acceptable terms, we may have to delay, scale back or discontinue the exploration activities or programs.

Cash Used in Operating Activities

Net cash used in operating activities totaled approximately $6,262,000$3.5 million and $2,930,000$2.8 million for the ninesix months ended JanuaryOctober 31, 20182020 and 2017,2019, respectively. Net loss for the ninesix months ended JanuaryOctober 31, 20182020 and 20172019 totaled approximately $12,478,000$5.8 million and $3,685,000. Total stock based$3.5 million, respectively. Additionally, we expensed approximately $1.7 million in stock-based compensation expense for options and shares issued to employees and consultants during the ninesix months ended JanuaryOctober 31, 2018 was2020 compared to approximately $665,000$0.6 million during the six months ended October 31, 2019 primarily due to stock-based compensation related to bonuses to our CEO and impairment expenseformer COO and stock-based consulting fee paid to a consultant related to the NPRC merger. Net changes of $6,095,000 offset by gain from sale of business and extinguishment of liabilities of approximately $343,000. Net changes$551,885 in operating assets and liabilities are primarily due to net changesincreases in prepaid expenses and other current assets increased byof approximately $405,000,$298,000, reclamation of bond deposits of approximately $34,000, and totalnet of increases of approximately $884,000 in accounts payable from unrelated partiesto trade vendors and accrued liabilities increasedrelated parties.

Cash Provided by approximately $10,000.Investing Activities

 

Net cash provided by (used in) investing activities totaled approximately $306,000 and ($289,000)$2.5 million for the ninesix months ended JanuaryOctober 31, 20182020, as compared to $159,000 primarily due to cash received in connection with share exchange agreements during the six months ended October 31, 2020 and 2017, respectively, which was primarily attributable to net proceeds received from the sale of the Dataram memory business offset2019.

Cash Provided by the acquisition of mineral rights.Financing Activities

 

Net cash provided by financing activities totaled approximately $7,509,000 and $10,457,000 for the ninesix months ended JanuaryOctober 31, 2018 and 2017, respectively. During the nine months ended January 31, 2018, financing activities consisted of net proceeds2020 of approximately $2,590,000 from$5.6 million primarily due to the saleissuance of common stock and net proceeds of approximately $4,919,000 from the sale of common stock and warrants. During the nine months ended January 31, 2017, financing activities was primarily attributable to net proceeds from the sale of preferred stock, net of issuance cost, offset by repayments on related party advances and note payable.

The Company completed private placements to several investors for the sale of the Company’s Series B Preferred Stock and Series C Preferred Stock for aggregate net proceeds of approximately $10.9 million between July 2016 and October 2016, received net proceeds from sale of the Company’s common stock of approximately $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 EI Preferred Stock and warrants for aggregatein August 2020 as compared with net proceedscash provided by financing activities of approximately $4.9$2.4 million, in January 2018. The Company is anticipating raising additional capital but there can be no assurance that it will be ablenet of issuance costs, for the six months ended October 31, 2019, primarily due to do so 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 positionSeries F Preferred Stock 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.warrants.

 

Off-Balance Sheet Arrangements

 

The Company doesAs of October 31, 2020, we did not have, and do not have any present plans to implement, any off-balance sheet arrangements.

 

Recently Issued Accounting Pronouncements

 

Refer to the notesSee Note 2, Summary of Significant Accounting Policies, to the unaudited condensed consolidated financial statements.statements for a summary of recently issued accounting pronouncements.

 

Critical Accounting Policies

 

The discussionThere have been no changes to our critical accounting policies during the six months ended October 31, 2020. Critical accounting policies and analysisthe significant accounting estimates made in according with such policies are regularly discussed with the Audit Committee of the Company’s board of directors. Those policies are discussed under “Critical Accounting Policies” in our financial condition“Management’s Discussion and resultsAnalysis of operations are based uponthe Financial Condition and Results of Operations” included in Item 7, as well as Note 2 to our consolidated financial statements which have been preparedthereto, included in accordanceour Annual Report on Form 10-K, filed 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 basedCommission 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.July 13, 2020.

 

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

Use of Estimates and Assumptions

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

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

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

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ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

We maintainAt the end of the period covered by this Quarterly Report, an evaluation was carried out under the supervision of, and with the participation of, the Company’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a – 15(e) and Rule 15d – 15(e) of the Exchange Act). Based on that are designed to ensureevaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that materialas of the end of the period covered by this Quarterly Report, the Company’s disclosure controls and procedures were not effective in ensuring that information required to be disclosed by the Company in our periodicits reports filedthat it files or submits to the SEC under the Securities Exchange Act of 1934, as amended, or 1934 Act, is recorded, processed, summarized and reported within the time periodsperiod specified in the Commission’sapplicable rules and formsforms.

While present in the Company’s design of internal controls, the Company’s internal controls over financial reporting and to ensure that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer as appropriate, to allow timely decisions regarding required disclosure. We carried out an evaluation, underdisclosure are not written; however, 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 disclosuremany controls are in place and procedures,are applied on a consistent basis. Company personnel perform controls standard to: 1) approve all Company expenditures, 2) approve and sign contractual obligations, 3) reconcile bank accounts and other general ledger accounts, and 4) many other similar rudimentary controls applied 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 ofbest practice. However, management has concluded that due to the Company’s limited resourcessmall size and limited numberpersonnel available to perform control functions, the Company is precluded from applying adequate segregation of employees, management concluded that our disclosure controlsduties in financial transactions. These are material weaknesses common to companies of similar size and procedures were not effective as of January 31, 2018.

Remediation Plan

staffing in the Company’s industry. The Company is currentlyexpects these material weakness conditions to continue for the foreseeable future, or until significant Company growth results in a process of implementing a remediation plan which includes the hiring of an outside consulting firmadditional personnel to assist in preparation of Company’sperform financial statements and provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures are being made only in accordance with authorizations of Company’s management and directors.functions.

 

Changes in Internal Control Over Financial Reporting

 

During the three months ended October 31, 2020, management determined that the delay of its program for compliance with the Sarbanes-Oxley Act of 2002 and the 2013 COSO Framework continued to be necessary to conserve cash in the Company’s current financial condition. There have been no other changes in ourthe Company’s internal controlcontrols 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, ourthe Company’s internal control over financial reporting.

reporting; however, management has determined that for the sake of transparency and conservancy, it cannot state that internal controls over financial reporting are effective at this time.

 

PART II: OTHER INFORMATION

 

Item 1. LEGAL PROCEEDINGS

 

On October 27, 2020, Mandeep Singh (“Plaintiff”), through his attorney, filed a complaint (Singh v. U.S. Gold Corp., et al., Case No. 1:20-cv-08995 (S.D.N.Y.)) in the United States District Court for the Southern District of New York, against U.S. Gold Corp. (the “Company”) and its members (the “Directors”) of the board of directors (the “Board”). As previously reported,of the date of this Quarterly Report, the Company was party to two lawsuits. On April 9, 2015,has not been served with the complaint.

The complaint alleges, among other things, that the Company’s former Chief Executive Officer, John Freeman,definitive proxy statement on Schedule 14A (as further amended and supplemented, the “proxy statement”) filed a lawsuit, styled as John Freeman v. Dataram Corporation, David A. Moylan, Jon Isaac,with the Commission on September 14, 2020 contains material omissions and John Does 1-5,materially misleading statements in connection with the acquisition of NPRC (such acquisition, the Merger”) and the related financing transactions and that the Directors breached their duty by failing to disclose the required information in the Superior Courtproxy statement. The complaint seeks to enjoin the Company from taking any actions that would allow the issuances of shares of the StateCompany’s common stock upon the conversion of New Jersey, Essex County, Docket No. ESX-L-002471-15. On April 10, 2015,Series H Convertible Preferred Stock, Series I Convertible Preferred Stock and exercise of certain warrants, all of which were previously issued in connection with the Merger and the related financing or, in the event that the proposed share issuances are consummated, seeks a judgment for damages. The complaint alleges that the proxy statement failed to disclose, among other things, (i) the background process leading up to the Merger and related transactions, (ii) the discussion of due diligence undertaken by the Company filed an action against Mr. Freeman, styled as Dataram Corporation v. John Freeman, et al.,and financial analysis prepared in connection with the Superior CourtMerger, (iv) the discussion of the StateCompany’s financial advisor and the fairness opinion delivered by the financial advisor in connection with the Merger, and (v) a summary of New Jersey, Mercer County, Docket No. ESX-L-000886-15. These actions were consolidatedfinancial projections prepared by the Company in Essex County. On December 4, 2017,connection with the parties entered into a Settlement Agreementshare issuances.

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The Company believes that the suit is without merit and General Release pursuantintends to whichdefend vigorously against the parties resolved and settled all claims, liabilities or obligations between them.suit.

 

Item 1A. RISK FACTORS.

 

There have beenExcept as follows and as supplemented by the Risk Factors disclosed below, there were no material changes to the Risk Factors disclosed in Item 1A of“Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended April 30, 2017.2020. For more information concerning our risk factors, please see “Item 1A. Risk Factors” in our Form 10-K, filed with the Commission on July 13, 2020.

The Company’s activities may be adversely affected by unforeseeable and unquantifiable health risks, such as the COVID-19 pandemic, whether those effects are local, nationwide or global. Matters outside the Company’s control may prevent it from executing on its exploration programs, limit travel of Company representatives, adversely affect the health and welfare of Company personnel or prevent important vendors and contractors from performing normal and contracted activities.

In December 2019, a novel strain of coronavirus, COVID-19, was reported to have surfaced in Wuhan, China and has reached multiple other countries, resulting in government-imposed quarantines, travel restrictions and other public health safety measures in China and other countries. On March 12, 2020, the WHO declared COVID-19 to be a global pandemic, and the COVID-19 pandemic has resulted in significant financial market volatility and uncertainty in recent months. The ongoing COVID-19 pandemic has and may continue to adversely impact the Company’s business, as its operations are based in and rely on third parties located in areas affected by the pandemic.

The risks to the Company related to contagious disease, or policies implemented by governments to protect against the spread of a disease, are unforeseeable and unquantifiable by us. The COVID-19 pandemic has prevented the Company, or its people, investors, contractors or stakeholders, from free cross-border travel or normal attendance to activities in conducting its business at trade shows, presentations, meetings or other activities meant to promote or execute its business strategy and transactions. In addition, the Company has been prevented from receiving goods or services from contractors. Decisions beyond the Company’s control, such as canceled events, restricted travel, barriers to entry or other factors have affected or may affect its ability to accomplish drilling programs, technical analysis of completed exploration actions, equity raising activities, and other needs that would normally be accomplished without such limitations. Such government-imposed precautionary measures related to COVID-19 may have been relaxed in certain states, but there is no assurance that more strict measures will be put in place again due to a resurgence in COVID-19 cases. There can be no assurance that the Company and its personnel may travel and access property freely in the near future.

Furthermore, the Company uses a variety of outsourced contractors to execute its exploration programs. Drilling contractors need to be able to access the Company’s projects and insure social distancing recommended safety standards. The COVID-19 pandemic has caused disruptions in travel and accessing the Company’s exploration properties with contractors. There is still uncertainty and lack of clarity with regards to travel restrictions and future State openings in Wyoming and Nevada. The Company continues to monitor the overall situation closely, with safety of its employees and contractors our top priority. There are no assurances that material exploration activities can take place in 2021.

The COVID-19 pandemic has brought tremendous uncertainty to the global financial markets. As an exploration company with no revenues, the Company is reliant on constantly raising additional capital to fund its operations. A continuation or worsening of the levels of market disruption and volatility seen in the recent past could have an adverse effect on its ability to access capital, on its business, results of operations and financial condition, and on the market price of the Company’s common stock. There are no assurances we will be able to raise additional capital on favorable terms in the foreseeable future.

The COVID-19 pandemic can cause potential disruptions with several of its outsourced consultants and professionals which the Company relies on to execute its business. The Company’s outsourced accountants, financial advisors, auditors, legal counsel, employees and Board have all experienced disruptions due to travel restrictions and remote working conditions. This has the potential to cause delays to current and future financial filings. The Company has taken steps to mitigate the potential risks to suppliers and employees posed by the spread of COVID-19. The Company has implemented work from home policies where appropriate. The Company will continue to monitor developments affecting both its workforce and contractors, and will take additional precautions that management determines are necessary in order to mitigate the impacts.

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In addition, the economic disruptions caused by COVID-19 could also adversely impact the impairment risks for certain long-lived assets and equity method investments. The Company evaluated these impairment considerations and determined that no such impairments occurred as of October 31, 2020.

Litigation costs and the outcome of litigation could have a material adverse effect on the Company’s business.

From time to time, the Company has been and may be subject to various legal, administrative and regulatory inquiries, investigations, proceedings and claims through the ordinary course of its business operations regarding, but not limited to, environmental matters, contractual relations with third-party contracts, consultants, and professionals, property rights and other matters related to the Company’s operations and transactions. Litigation to defend the Company against claims by third parties, or to enforce any rights that the Company may have against third parties, may be necessary, which could result in substantial costs and diversion of the Company’ resources, causing a material adverse effect on its business, financial condition and results of operations. On October 27, 2020, Mandeep Singh filed a complaint in the United States District Court for the Southern District of New York, against the Company and its members of the board of directors. For further detailed discussion of the complaint, please see Item 1. “Legal Proceedings” herein. The Company believes that the suit is without merit and intends to defend vigorously against the suit. However, the outcome of any litigation is inherently uncertain.

 

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

DuringOther than set forth below, there were no sales of unregistered securities during the quarter ended JanuaryOctober 31, 2018,2020 that were not previously reported on a Current Report on Form 8-K.

On September 17, 2020, the Compensation Committee of the Board of Directors awarded five directors of the Company issued an aggregate of 71,49212,500 shares of restricted stock for board services pursuant to respective restricted stock award agreements. The shares of restricted stock vested immediately on the date of grant. The Company recognized stock-based compensation of $140,125 or $11.21 per share based on the quoted trading price on the date of grant. The issuance of the shares of common stock to the directors was not registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state, and the shares of the Company’s common stock to officers and employees of the Company for services rendered.

During the quarter ended January 31, 2018, holders of the Company’s Series C Preferred Stock converted an aggregate of 2,122 shares of Series C Preferred Stock into an aggregate of 212,158 shares of common stock.

On February 21, 2018, the Company issued 12,000 shares of the Company’s common stock as compensation to a director of the Company for his past appointment to the Board of Directors.

The securities referenced above were issued in reliance on the exemption from registration afford by Rule 506 of Regulation D and/orunder the Securities Act pursuant to Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering.Act.

 

On August 11, 2020, the Company issued 82,500 shares of restricted common stock to a consultant for finder’s fee related to the acquisition of NPRC. The shares of the common stock were issued in reliance on the exemption from registration under the Securities Act pursuant to Section 4(a)(2) of the Securities Act.

On September 17, 2020, the Company issued 30,107 shares of restricted common stock to Edward Karr, then Chief Executive Officer, and now Executive Chairman, as bonus in connection with the consummation of the acquisition of the NPRC, which was fully vested immediately. The shares of restricted common stock were issued in reliance on the exemption from registration under the Securities Act pursuant to Section 4(a)(2) of the Securities Act.

On October 31, 2020, the Compensation Committee of the Board awarded four directors of the Company an aggregate of 1,875 shares of restricted stock for board services pursuant to respective restricted stock award agreements. The shares of restricted stock vested immediately on the date of grant. The total 1,875 shares of restricted stock had a fair value of $15,206, or $8.11 per share, based on the quoted trading price on the date of grant, which was fully vested and expensed immediately. These shares were issued on November 16, 2020. The issuance of the shares of common stock to the directors was not registered under the Securities Act, or the securities laws of any state, and the shares of the common stock were issued in reliance on the exemption from registration under the Securities Act pursuant to Section 4(a)(2) of the Securities Act.

During the quarter ended October 31, 2020, the Company issued 1,857 shares of our common stock to its former chief financial officer for services rendered previously. The shares of restricted stock vested immediately on the dates of grant. The Company recognized stock-based compensation of $13,145 or an average of $7.08 per share based on the quoted trading price on the dates of grant. The issuance of the shares of common stock to the former chief financial officer was not registered under the Securities Act, or the securities laws of any state, and the shares of the common stock were issued in reliance on the exemption from registration under the Securities Act pursuant to Section 4(a)(2) of the Securities Act.

During the six months ended October 31, 2020, the Company issued an aggregate of 20,357 shares of the Company’s common stock in exchange for the conversion of 57 shares of Series G Preferred Stock. The shares of the common stock were issued in reliance on the exemption from registration under the Securities Act pursuant to Section 4(a)(2) of the Securities Act.

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Item 3. DEFAULTS UPON SENIOR SECURITIES.

 

None.

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Item 4. MINE SAFETY DISCLOSURES

 

Not applicable.Pursuant to Section 1503(a) of the Dodd-Frank Act, issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States are required to disclose specified information about mine health and safety in their periodic reports. These reporting requirements are based on the safety and health requirements applicable to mines under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”) which is administered by the U.S. Department of Labor’s Mine Safety and Health Administration (“MSHA”). During the six-month period ended October 31, 2020, the Company and its properties or operations were not subject to regulation by MSHA under the Mine Act and thus no disclosure is required under Section 1503(a) of the Dodd-Frank Act.

 

Item 5. OTHER INFORMATION.

 

None.

 

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Item 6. EXHIBITS.

 

Exhibit No Description
   
3.1Certificate of Designations of Series H Convertible Preferred Stock. Incorporated by reference from Exhibit 3.1 to a Current Report on Form 8-K filed with the Securities and Exchange Commission, SEC file number 001-08266, on August 13, 2020.
3.2Certificate of Designations of Series I Convertible Preferred Stock. Incorporated by reference from Exhibit 3.2 to a Current Report on Form 8-K filed with the Securities and Exchange Commission, SEC file number 001-08266, on August 13, 2020.
4.1Form of Warrant. Incorporated by reference from Exhibit 4.1 to a Current Report on Form 8-K filed with the Securities and Exchange Commission, SEC file number 001-08266, on August 13, 2020.
10.1Agreement and Plan of Merger, dated as of August 10, 2020, by and among the Company, Acquisition Corp., Northern Panther and the Stockholder Representative named therein. Incorporated by reference from Exhibit 10.1 to a Current Report on Form 8-K filed with the Securities and Exchange Commission, SEC file number 001-08266, on August 13, 2020.
10.2Form of Leak-Out Agreement. Incorporated by reference from Exhibit 10.2 to a Current Report on Form 8-K filed with the Securities and Exchange Commission, SEC file number 001-08266, on August 13, 2020.
10.3Securities Purchase Agreement, dated as of August 10, 2020, by and among the Company and the Purchasers signatory thereto. Incorporated by reference from Exhibit 10.3 to a Current Report on Form 8-K filed with the Securities and Exchange Commission, SEC file number 001-08266, on August 13, 2020.
10.4Form of Company Stockholder Agreement. Incorporated by reference from Exhibit 10.4 to a Current Report on Form 8-K filed with the Securities and Exchange Commission, SEC file number 001-08266, on August 13, 2020.
10.5Form of Northern Panther Stockholder Agreement. Incorporated by reference from Exhibit 10.5 to a Current Report on Form 8-K filed with the Securities and Exchange Commission, SEC file number 001-08266, on August 13, 2020.
10.6*Employment Letter, dated as of August 10, 2020, by and between the Company and George Bee. Incorporated by reference from Exhibit 10.6 to a Current Report on Form 8-K filed with the Securities and Exchange Commission, SEC file number 001-08266, on August 13, 2020.
10.7*Employment Letter, dated as of September 17, 2020, by and between the Company and Eric Alexander. Incorporated by reference from Exhibit 10.1 to a Current Report on Form 8-K filed with the Securities and Exchange Commission, SEC file number 001-08266, on September 22, 2020.
10.8*General Release and Severance Agreement, dated September 17, 2020, by and between the Company and David Rector. Incorporated by reference to Exhibit 10.2 to a Current Report on Form 8-K filed with the Securities and Exchange Commission, SEC file number 001-08266, on September 22, 2020.
10.9*U.S. Gold Corp 2020 Stock Incentive Plan Amendment. Incorporated by reference to Exhibit 10.1 to a Current Report on Form 8-K filed with the Securities and Exchange Commission, SEC file number 001-08266, on November 10, 2020.
31(a) Rule 13a-14(a) Certification of EdwardGeorge M. Karr.Bee.
   
31(b) Rule 13a-14(a) Certification of Robert J. DelAversano.Eric Alexander.
   
32(a) Section 1350 Certification of EdwardGeorge M. KarrBee (furnished not filed).
   
32(b) Section 1350 Certification of Robert J. DelAversanoEric Alexander (furnished not filed).
   
101.INS XBRL Instance Document.
   
101.SCH XBRL Taxonomy Extension Schema Document
   
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
   
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
   
101.LAB XBRL Taxonomy Extension Label Linkbase Document
   
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

 

#Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. U.S. Gold Corp. hereby undertakes to furnish supplemental copies of any of the omitted schedules and exhibits upon request by the Securities and Exchange Commission.
*Management Contract or Compensatory Plan or Arrangement.

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SignaturesSIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 U.S. GOLD CORP.
   
Date: March 16, 2018December 14, 2020By:/s/ EDWARDGeorge M. KARRBee
  EdwardGeorge M. KarrBee
  Chairman and Chief Executive Officer
  (Principal Executive Officer)
   
Date: March 16, 2018December 14, 2020By:/s/ ROBERT J. DELAVERSANOEric Alexander
  Robert J. DelAversanoEric Alexander
  Principal Financial and Accounting Officer

 

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