UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended October 31, 2021

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

For the transition period from ___________to _____________

Commission file number: 001-08266

U.S. GOLD CORP.

(Exact Name of Registrant as Specified in its Charter)

Nevada		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)		(Zip Code)

(800) 557-4550

(Registrant’s Telephone Number, including 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 class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock		USAU		Nasdaq Capital Market

Indicate by check mark whether the registrant (1) 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. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth Company ☐

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

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

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. Common Stock ($0.001 par value): As of December 14, 2021, there were 7,096,723 shares outstanding.

U.S. GOLD CORP.

FORM 10-Q

TABLE OF CONTENTS

		Page
PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements	4
	Condensed Consolidated Balance Sheets as of October 31, 2021 (Unaudited) and April 30, 2021	4
	Condensed Consolidated Statements of Operations for the Three and Six months ended October 31, 2021 and 2020 (Unaudited)	5
	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six months ended October 31, 2021 and 2020 (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows for the Six months ended October 31, 2021 and 2020 (Unaudited)	7
	Notes to Condensed Consolidated Financial Statements (Unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	25

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.	Defaults Upon Senior Securities	26
Item 4.	Mine Safety Disclosures	26
Item 5.	Other Information	26
Item 6.	Exhibits	27
Signature Page		28

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, 2022,
	●	the timing, duration and overall impact of the COVID-19 pandemic on our business and exploration activities,
	●	the impact of public health threats and outbreaks of other highly communicable diseases,
	●	the strength of the world economies,
	●	fluctuations in interest rates and foreign exchange rates,
	●	changes in governmental rules and regulations or actions taken by regulatory authorities,
	●	our ability to maintain compliance with the NASDAQ Capital Market’s (the “NASDAQ”) listing standards,
	●	the conclusions of additional exploration programs and related studies,
	●	expectations and the timing and budget for exploration and future exploration of our properties,
	●	our planned expenditures during our fiscal year ended April 30, 2022 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,
	●	volatility in the market price of our common stock,
	●	our ability to fund our business with our current cash reserves based on our currently planned activities,
	●	our ability to raise the necessary capital required to continue our business on terms acceptable to us or at all,
	●	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 ability to retain key management and mining personnel necessary to successfully operate and grow our business,
	●	potential conflicts of interest involving members of our Board of Directors (the “Board”) and senior management,
	●	our business and operating strategies,
	●	statements related to operating and legal risks, including potential liability from pending or future litigation, and
	●	other factors detailed in this Quarterly Report on Form 10-Q and from time to time in our annual report, other quarterly reports and periodic reports.

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, 2021.

Many of these factors are beyond our ability to control or predict. Although we believe that the expectations reflected in our forward-looking statements are based on reasonable assumptions, such statements can only be based on facts and factors currently known to us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the heading “Risk Factors” below, as well as those discussed elsewhere in this Quarterly Report on Form 10-Q. You should not unduly rely on any of our forward-looking statements. These statements speak only as of the date of this Quarterly Report on Form 10-Q. 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 on Form 10-Q.

PART I: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

U.S. GOLD CORP. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

	October 31,			April 30,
	2021			2021

ASSETS
CURRENT ASSETS:
Cash	$	7,138,361		$	13,645,405
Prepaid expenses and other current assets		743,258			430,360

Total current assets		7,881,619			14,075,765

NON - CURRENT ASSETS:
Property, net		193,399			172,222
Reclamation bond deposit		832,509			718,509
Operating lease right-of-use asset, net		91,823			-
Mineral rights		16,356,862			16,356,862

Total non - current assets		17,474,593			17,247,593

Total assets	$	25,356,212		$	31,323,358

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:
Accounts payable and accrued liabilities	$	1,631,267		$	619,038
Operating lease liabilities, current portion		52,016			-

Total current liabilities		1,683,283			619,038

LONG- TERM LIABILITIES
Asset retirement obligation		248,318			204,615
Operating lease liabilities, less current portion		39,957			-
Total long-term liabilities:		288,275			204,615

Total liabilities		1,971,558			823,653

Commitments and Contingencies		-

STOCKHOLDERS’ EQUITY :
Preferred stock, value
Preferred stock, $0.001 par value; 50,000,000 authorized
Convertible Series F Preferred stock ($0.001 Par Value; 1,250 Shares Authorized; none issued and outstanding as of October 31, 2021 and April 30, 2021)		-			-
Convertible Series G Preferred stock ($0.001 Par Value; 127 Shares Authorized; none issued and outstanding as of October 31, 2021 and April 30, 2021)		-			-
Convertible Series H Preferred stock ($0.001 Par Value; 106,894 Shares Authorized; none issued and outstanding as of October 31, 2021 and April 30, 2021)		-			-
Convertible Series I Preferred stock ($0.001 Par Value; 921,666 Shares Authorized; none issued and outstanding as of October 31, 2021 and April 30, 2021)		-			-
Common stock ($0.001 Par Value; 200,000,000 Shares Authorized; 7,096,723 and 7,065,621 shares issued and outstanding as of October 31, 2021 and April 30, 2021)		7,097			7,065
Additional paid-in capital		75,195,628			74,467,686
Accumulated deficit		(51,818,071	)		(43,975,046	)

Total stockholders’ equity		23,384,654			30,499,705

Total liabilities and stockholders’ equity	$	25,356,212		$	31,323,358

See accompanying notes to unaudited condensed consolidated financial statements.

U.S. GOLD CORP. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Three Months			For the Three Months			For the Six Months			For the Six Months
	Ended			Ended			Ended			Ended
	October 31, 2021			October 31, 2020			October 31, 2021			October 31, 2020

Net revenues	$	-		$	-		$	-		$	-

Operating expenses:
Compensation and related taxes - general and administrative		377,833			1,087,752			768,482			1,282,025
Exploration costs		2,941,071			1,724,211			4,772,431			1,798,559
Professional and consulting fees		643,511			1,754,200			1,719,486			2,305,000
General and administrative expenses		330,895			278,503			582,626			416,202

Total operating expenses		4,293,310			4,844,666			7,843,025			5,801,786

Loss from operations		(4,293,310	)		(4,844,666	)		(7,843,025	)		(5,801,786	)

Loss before provision for income taxes		(4,293,310	)		(4,844,666	)		(7,843,025	)		(5,801,786	)

Provision for income taxes		-			-			-			-

Net loss	$	(4,293,310	)	$	(4,844,666	)	$	(7,843,025	)	$	(5,801,786	)

Deemed dividend related to beneficial conversion feature of preferred stock		-			(5,530,004	)		-			(5,530,004	)

Net loss applicable to U.S. Gold Corp. common shareholders	$	(4,293,310	)	$	(10,374,670	)	$	(7,843,025	)	$	(11,331,790	)

Net loss per common share, basic and diluted	$	(0.61	)	$	(2.93	)	$	(1.10	)	$	(3.51	)

Weighted average common shares outstanding - basic and diluted		7,091,249			3,539,582			7,124,215			3,224,791

See accompanying notes to unaudited condensed consolidated financial statements.

U.S. GOLD CORP. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE AND SIX MONTHS ENDED OCTOBER 31, 2021 AND 2020

	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Equity
	Preferred Stock - Series F				Preferred Stock - Series G				Preferred Stock - Series H				Preferred Stock - Series I				Common Stock
	$0.001 Par Value				$0.001 Par Value				$0.001 Par Value				$0.001 Par Value				$0.001 Par Value				Additional Paid-in		Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Equity

Balance, April 30, 2021		-	$	-		-	$	-		-	$	-		-	$	-		7,065,621	$	7,065	$	74,467,686	$	(43,975,046	)	$	30,499,705

Issuance of common stock for prepaid services		-		-		-		-		-		-		-		-		25,000		25		258,475		-			258,500
Issuance of common stock for services
Issuance of common stock for services, shares
Issuance of common stock for accrued services
Issuance of common stock for accrued services, shares
Conversion of preferred stock into common stock
Conversion of preferred stock into common stock, shares
Stock options granted for services
Issuance of preferred stock for cash
Issuance of preferred stock for cash,shares
Issuance of preferred stock and common stock in connection with the Share Exchange Agreement
Issuance of preferred stock and common stock in connection with the Share Exchange Agreement, shares
Issuance of common stock for exercise of warrants
Issuance of common stock for exercise of warrants, shares

Stock-based compensation in connection with restricted common stock award grants and restricted common stock unit grants		-		-		-		-		-		-		-		-		-		-		232,443		-			232,443

Net loss		-		-		-		-		-		-		-		-		-		-		-		(3,549,715	)		(3,549,715	)

Balance, July 31, 2021		-		-		-		-		-		-		-		-		7,090,621		7,090		74,958,604		(47,524,761	)		27,440,933

Issuance of common stock for services		-		-		-		-		-		-		-		-		5,647		6		47,494		-			47,500

Issuance of common stock for accrued services		-		-		-		-		-		-		-		-		455		1		4,999		-			5,000

Stock-based compensation in connection with restricted common stock award grants and restricted common stock unit grants		-		-		-		-		-		-		-		-		-		-		184,531		-			184,531

Net loss		-		-		-		-		-		-		-		-		-		-		-		(4,293,310	)		(4,293,310	)

Balance, October 31, 2021		-	$	-		-	$	-		-	$	-		-	$	-		7,096,723	$	7,097	$	75,195,628	$	(51,818,071	)	$	23,384,654

	Preferred Stock - Series F				Preferred Stock - Series G					Preferred Stock - Series H				Preferred Stock - Series I				Common Stock
	$0.001 Par Value				$0.001 Par Value					$0.001 Par Value				$0.001 Par Value				$0.001 Par Value				Additional Paid-in			Accumulated			Total 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

See accompanying notes to unaudited condensed consolidated financial statements.

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, 2021			October 31, 2020

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(7,843,025	)	$	(5,801,786	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		16,107			9,716
Accretion		10,186			8,388
Amortization of right-of-use asset		14,808			-
Stock based compensation		464,474			1,728,582
Amortization of prepaid stock based expenses		182,376			-
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(236,774	)		(297,805	)
Reclamation bond deposit		(114,000	)		(34,000	)
Accounts payable and accrued liabilities		1,017,229			887,149
Accounts payable - related parties		-			(3,459	)
Operating lease liability		(14,658	)		-

NET CASH USED IN OPERATING ACTIVITIES		(6,503,277	)		(3,503,215	)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property and equipment		(3,767	)		(39,493	)
Proceeds received in connection with the share exchange agreement		-			2,500,000

NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES		(3,767	)		2,460,507

CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of preferred stock, net of issuance cost		-			5,530,004
Issuance of common stock for exercise of warrants		-			70,000

NET CASH PROVIDED BY FINANCING ACTIVITIES		-			5,600,004

NET (DECREASE) INCREASE IN CASH		(6,507,044	)		4,557,296

CASH - beginning of period		13,645,405			2,749,957

CASH - end of period	$	7,138,361		$	7,307,253

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest	$	-		$	-
Income taxes	$	-		$	-

SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
Issuance of common stock for accrued services	$	5,000		$	5,000
Issuance of common stock for prepaid services	$	258,500		$	-
Deemed dividends - Series I preferred stock	$	-		$	5,530,004
Issuance of common stock in connection with conversion of preferred stock	$	-		$	21
Operating lease right-of-use asset and operating lease liability recorded upon adoption of ASC 842		106,631			-
Assumption of liabilities in connection with the share exchange agreement	$	-		$	108,652
Increase in acquisition of mineral properties in connection with the share exchange agreement	$	-		$	10,249,632
Increase in asset retirement cost and obligation	$	33,517		$	13,352

See accompanying notes to unaudited condensed consolidated financial statements.

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2021

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

Organization

U.S. Gold Corp., formerly known as Dataram Corporation (the “Company”), was originally incorporated in the State of New Jersey in 1967 and was subsequently re-incorporated under the laws of the State of Nevada in 2016. Effective June 26, 2017, the Company changed its name to U.S. Gold Corp. from Dataram Corporation.

On June 13, 2016, Gold King Corp. (“Gold King”), a private Nevada corporation, entered into an Agreement and Plan of Merger (the “Gold King Merger Agreement”) with the Company, the Company’s wholly-owned subsidiary Dataram Acquisition Sub, Inc., a Nevada corporation (“Acquisition Sub”), and all of the principal shareholders of Gold King. Upon closing of the transactions contemplated under the Gold King Merger Agreement (the “Gold King Merger”), Gold King merged with and into Acquisition Sub with Gold King as the surviving corporation and became a wholly-owned subsidiary of the Company. The Gold King Merger was treated as a reverse acquisition and recapitalization, and the business of Gold King became the business of the Company. The financial statements are those of Gold King (the accounting acquirer) prior to the merger and include the activity of the Company (the legal acquirer) from the date of the Gold King Merger. Gold King is a gold and precious metals exploration company pursuing exploration and development opportunities primarily in Nevada and Wyoming. The Company has a wholly owned subsidiary, U.S. Gold Acquisition Corporation, formerly Dataram Acquisition Sub, Inc. (“U.S. Gold Acquisition”), a Nevada corporation which was formed in April 2016.

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

On September 10, 2019, the Company, 2637262 Ontario Inc., a corporation incorporated under the laws of the Province of Ontario (“NumberCo”), and all of the shareholders of NumberCo (the “NumberCo Shareholders”), entered into a Share Exchange Agreement (the “Share Exchange Agreement”), pursuant to which, among other things, the Company agreed to issue to the NumberCo Shareholders 200,000 shares of the Company’s common stock in exchange for all of the issued and outstanding shares of NumberCo, with NumberCo becoming a wholly-owned subsidiary of the Company.

On March 17, 2020, the board of directors (the “Board”) of the Company approved a 1-for-10 reverse stock split of the Company’s issued and outstanding shares of common stock (the “Reverse Stock Split”), and on March 18, 2020, the Company filed with the Secretary of State of the State of Nevada a Certificate of Amendment to its Articles of Incorporation to effect the Reverse Stock Split. The Reverse Stock Split became effective as of 5:00 p.m. Eastern Time on March 19, 2020, and the Company’s common stock began trading on a split-adjusted basis when the market opened on March 20, 2020. Accordingly, all common stock and per share data are retrospectively restated to give effect of the split for all periods presented herein.

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

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

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

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation and principles of consolidation

The accompanying 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 (the “SEC”) for interim financial information, which includes the unaudited condensed consolidated financial statements and presents the unaudited condensed consolidated financial statements of the Company and its wholly-owned subsidiaries as of October 31, 2021. 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, 2021, which are contained in the Form 10-K filed on July 29, 2021. The unaudited condensed consolidated balance sheet as of October 31, 2021 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. Operating results during the six months ended October 31, 2021 are not necessarily indicative of the results to be expected for the year ending April 30, 2022.

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2021

Use of Estimates and Assumptions

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

Fair Value Measurements

The Company has adopted Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures” (“ASC 820”), for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied in accordance with U.S. GAAP, which requires the use of fair value measurements, establishes a framework for measuring fair value and expands disclosure about such fair value measurements.

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

These inputs are prioritized below:

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

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

At October 31, 2021 and April 30, 2021, the Company had no financial instruments or liabilities accounted for at fair value on a recurring basis or nonrecurring basis.

Prepaid expenses and other current assets

Prepaid expenses and other current assets of $743,258 and $430,360 at October 31, 2021 and April 30, 2021, respectively, consist primarily of costs paid for future services which will occur within a year. Prepaid expenses principally include prepayments in cash and equity instruments for consulting, public relations, business advisory services, insurance premiums, mining claim fees, drilling fees, easement fees, options fees, and mineral lease fees which are being amortized over the terms of their respective agreements.

Property

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

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2021

Impairment of long-lived assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. The Company did not recognize any impairment during the period ended October 31, 2021 and April 30, 2021.

Mineral Rights

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

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

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

ASC 930-805, “Extractive Activities—Mining: Business Combinations” (“ASC 930-805”), states that mineral rights consist of the legal right to explore, extract, and retain at least a portion of the benefits from mineral deposits. Mining assets include mineral rights.

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

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

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

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

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

Share-Based Compensation

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

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

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2021

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, 2021 and April 30, 2021, the Company’s convertible preferred shares were accounted for as equity, with no liability recorded. There was no outstanding preferred stock as of October 31, 2021.

Convertible Instruments

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

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

Remediation and Asset Retirement Obligation

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

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2021

Foreign Currency Transactions

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

Leases

On January 1, 2019, the Company adopted ASC Topic 842, Leases (Topic 842), the Company has elected the ‘package of practical expedients’, which permit it not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. In addition, the Company elected not to apply ASC Topic 842 to arrangements with lease terms of 12 month or less. Operating lease right of use assets (“ROU”) assets represents the right to use the leased asset for the lease term and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most leases do not provide an implicit rate, the Company use an incremental borrowing rate based on the information available at the adoption date in determining the present value of future payments. Lease expense for minimum lease payments is amortized on a straight-line basis over the lease term and is included in general and administrative expenses in the statements of operations.

Income Taxes

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

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

Tax positions that meet the more likely than not recognition threshold are measured at the largest amount of t