U.S. Gold Corp.: Form 10-Q for the period ended Oct 31, 2023

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 SEC. Certain information and footnote disclosure normally included in interim unaudited consolidated financial statements prepared in accordance with U.S. GAAP, which are duplicate to the disclosures in the audited consolidated financial statements have been omitted pursuant to such rules and regulations, although we 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 10-K for the fiscal year ended April 30, 2023, filed with the SEC.

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 us and our subsidiaries as of October 31, 2023, the results of our unaudited interim condensed consolidated statements of operations and changes in stockholders’ equity for the three and six months ended October 31, 2023 and 2022. 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 U.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” above. 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, 2023.

Overview

U.S. Gold Corp., formerly known as Dataram Corporation, was originally incorporated in the State of New Jersey in 1967 and was subsequently re-incorporated under the laws of the State of Nevada in 2016. Effective June 26, 2017, the Company changed its legal name to U.S. Gold Corp. from Dataram Corporation. On May 23, 2017, the Company merged with Gold King Corp. (“Gold King”), in a transaction treated as a reverse acquisition and recapitalization, and the business of Gold King became the business of the Company. We are a gold and precious metals exploration company pursuing exploration and development properties. We own certain mining leases and other mineral rights comprising the CK Gold Project in Wyoming, the Keystone Project in Nevada and the Challis Gold Project in Idaho. We have established an estimate of proven and probable mineral reserves under S-K 1300 at our CK Gold Project, where we are conducting exploration and pre-development activities, and all of our activities on our other properties are exploratory in nature.

Summary of Activities for the Three Months Ended October 31, 2023

During the three months ended October 31, 2023, we focused primarily on advancing our CK Gold Project in Wyoming and continued exploration work on our Keystone project located in Nevada’s Cortez Trend.

An overview of certain significant events follows:

• During the period, we continued to work with the Land Quality Division of the WDEQ regarding the technical review of our Permit to Mine and the Mine Reclamation Plan which we initially submitted in September 2022.
• During the period, we concluded a sampling program based upon the 2022 hyperspectral study on our Keystone project which yielded the discovery of multiple high-priority targets requiring further investigation.

22

Results of Operations

For the three and six months ended October 31, 2023, compared to the three and six months ended October 31, 2022:

Net Revenues

We are a development-stage company with no operations and we did not generate any revenues for the three and six months ended October 31, 2023 and 2022.

Operating Expenses

Total operating expenses for the six months ended October 31, 2023, as compared to the six months ended October 31, 2022, were approximately $4,695,000 and $4,996,000, respectively. The approximate $301,000 decrease in operating expenses for the six months ended October 31, 2023, as compared to the six months ended October 31, 2022, is comprised of (i) an increase in compensation of approximately $10,000 primarily due to an increase in payroll taxes, (ii) a decrease of approximately $71,000 in exploration expenses on our mineral properties due to the decrease in exploration activities and related consulting expenses in our CK Gold property, (iii) a decrease in professional and consulting fees of approximately $221,000 primarily due to decreases in general strategic and permitting consulting services of $400,000 and decreases in director fees of $12,000 offset by increases in investor relation fees of $182,000, increase in legal fees of $7,000, and an increase in accounting fees of $2,000 and (iv) a decrease in general and administrative expenses of approximately $19,000 due primarily to decreases related to insurance, research and development, and travel.

Total operating expenses for the three months ended October 31, 2023, as compared to the three months ended October 31, 2022, were approximately $1,765,000 and $2,111,000, respectively. The approximate $346,000 decrease in operating expenses for the three months ended October 31, 2023, as compared to the three months ended October 31, 2022, is comprised of (i) an increase in compensation of approximately $1,000 primarily due to an increase in payroll taxes, (ii) a decrease of approximately $149,000 in exploration expenses on our mineral properties due to a decrease in exploration activities and related consulting expenses in our CK Gold property, (iii) a decrease in professional and consulting fees of approximately $242,000 primarily due to decreases in investor relation fees of $34,000, decrease in legal fees of $56,000, decrease in accounting fees of $17,000, decrease in general strategic and permitting consulting services of $128,000 and decreases in director fees of $6,000 and (iv) an increase in general and administrative expenses of approximately $44,000 due primarily to increases related to advertising expenses and meals and entertainment expenses offset by decrease in research and development expense.

Loss from Operations

We reported loss from operations of approximately $4,695,000 and $4,996,000 for the six months ended October 31, 2023 and 2022, respectively. We reported loss from operations of approximately $1,765,000 and $2,111,000 for the three months ended October 31, 2023 and 2022, respectively.

Other Income

We reported other income of approximately $1,542,000 and $1,154,000 for the six months ended October 31, 2023 and 2022, respectively. We reported change in fair value of warrant liability of approximately $1,510,000 and $1,154,000 for the six months ended October 31, 2023 and 2022, respectively. We reported interest income and gain from settlement of asset retirement obligation of approximately $26,000 and $6,000, respectively, for the six months ended October 31, 2023, as compared to $0 during the prior period.

We reported other income of approximately $1,507,000 and $214,000 for the three months ended October 31, 2023 and 2022, respectively. We reported change in fair value of warrant liability of approximately $1,495,000 and $214,000 for the three months ended October 31, 2023 and 2022, respectively. We reported interest income of approximately $12,000 for the three months ended October 31, 2023, as compared to $0 during the prior period.

Net Loss

We reported a net loss of approximately $3,153,000 and $3,842,000 for the six months ended October 31, 2023 and 2022, respectively. We reported a net loss of approximately $258,000 and $1,897,000 for the three months ended October 31, 2023 and 2022, respectively.

Liquidity and Capital Resources

The following table summarizes total current assets, liabilities and working capital at October 31, 2023, compared to April 30, 2023, and the changes between those periods:

As of October 31, 2023, we had working capital of $3,994,666, as compared to working capital of $8,054,272 as of April 30, 2023, a decrease of $4,059,606.

We are obligated to file annual, quarterly and current reports with the SEC pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition, the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) and the rules subsequently implemented by the SEC and the Public Company Accounting Oversight Board have imposed various requirements on public companies, including requiring changes in corporate governance practices. We expect to spend between $175,000 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.

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, 2023 and 2022, we incurred net losses in the amounts of approximately $3,153,000 and $3,842,000, respectively. For the six months ended October 31, 2023, cash used in operating activities was approximately $3,859,000. As of October 31, 2023, we had cash of approximately $3,964,000, working capital of approximately $3,995,000, and an accumulated deficit of approximately $69,104,000. Our primary source of operating funds since inception has been equity financings. As of October 31, 2023, we may have sufficient cash to fund our corporate activities and general and administrative costs and currently undertaken project activities related to permitting and engineering studies over the next twelve months. However, in order to advance any of our projects past the aforementioned objectives, we do not have sufficient cash and will need to raise additional funds. 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.

Cash Used in Operating Activities

Net cash used in operating activities totaled approximately $3,859,000 and $4,907,000 for the six months ended October 31, 2023 and 2022, respectively. Net cash used in operating activities during the six months ended October 31, 2023, decreased primarily due to the i) decrease in net loss of approximately $689,000 as compared to the six months ended October 31, 2022 ii) increase in non-cash items of approximately $348,000 as compared to the six months ended October 31, 2022 primarily due to the change in fair value of warrant liability and iii) decrease in changes in operating assets and liabilities of approximately $707,000 as compared to the six months ended October 31, 2022 primarily due to accounts payable and accrued liabilities.

Cash Used in Investing Activities

Net cash used in investing activities during the six months ended October 31, 2023 and 2022 were both $0.

Cash Provided by Financing Activities

Net cash provided by financing activities during the six months ended October 31, 2023 and 2022 were both $0.

Off-Balance Sheet Arrangements

As of October 31, 2023, we did not have, and do not have any present plans to implement, any off-balance sheet arrangements.

Recently Issued Accounting Pronouncements

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

Critical Accounting Policies

There have been no changes to our critical accounting policies during the six months ended October 31, 2023. Critical accounting policies and the significant accounting estimates made in accordance 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 “Management’s Discussion and Analysis of the Financial Condition and Results of Operations” included in Item 7, as well as Note 2 to our consolidated financial statements thereto, included in our Annual Report on Form 10-K for the fiscal year ended April 30, 2023, filed with the SEC on July 31, 2023.

(a) Evaluation of Disclosure Controls and Procedures

At the end of the period covered by this Quarterly Report on Form 10-Q, 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 evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that as of the end of the period covered by this Quarterly Report, the Company’s disclosure controls and procedures were effective at the reasonable assurance level, in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

(b) Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.