NOTE 10 — STOCKHOLDERS’ EQUITY

As of April 30, 2023, 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.

There were no shares of Preferred Stock outstanding as of April 30, 2023 and 2022.

Common Stock issued for cash

On February 14, 2022, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain institutional and accredited investors in connection with a registered direct offering of 384,741 shares of the Company’s common stock at a price of $6.50 per share and warrants to purchase 192,370 shares of the Company’s common stock at an exercise price of $8.00 per share (the “Registered Offering”). The warrants are exercisable immediately following issuance and will expire five years from the issuance date. The aggregate gross proceeds of the Registered Offering was $2,500,817 before deduction of legal related offering expenses of $30,767. The closing of the Registered Offering occurred on February 16, 2022.

On March 15, 2022, the Company entered into a definitive agreement with a single institutional investor in connection with a registered direct offering of 625,000 shares of the Company’s common stock at a price of $8.00 per share and warrants to purchase 625,000 shares of the Company’s common stock. The exercise price was $8.60 per share (the “Securities”), resulting in total gross proceeds of $5 million before the deduction of placement agent fees of $415,000 and legal related offering expenses of $25,399 for a total of $440,399. The warrants were exercisable six months following the date of issuance and were to expire 5 years following the initial exercise date. The closing of the sale of the Securities occurred on March 18, 2022. Pursuant to ASC 470-20-25, if the warrants are classified as liability, the proceeds should be allocated first to the warrants based on their fair value (not relative fair value). The residual should be allocated to the remaining equity instruments.

These 625,000 warrants were recorded as warrant liability as of April 30, 2022 (see Note 9) and was allocated to the proceeds as follows:

SCHEDULE OF WARRANT LIABILITY 

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2023

Additionally, on April 10, 2023, the Company agreed to amend, effective as of the closing of a registered offering (see below), these 625,000 warrants at an exercise price of $8.60 per share and a termination date of September 18, 2027, so that the amended warrants will have a reduced exercise price of $6.16 per share and a termination date of April 10, 2028. Accordingly, the Company recorded a change in fair value due to modification of warrants of $262,500 during the year ended April 30, 2023.

On April 10, 2023, the Company entered into a definitive agreement with a single institutional investor in connection with a registered direct offering of 870,000 shares of the Company’s common stock at a price of $5.75 per share and warrants to purchase 870,000 shares of the Company’s common stock at an exercise price of $6.16 per share (the “Securities”), resulting in total gross proceeds of $5,002,500 before the deduction of placement agent fees of $415,175 and legal related offering expenses of $37,115 for a total of $452,290. The warrants are exercisable six months following the date of issuance and will expire 5 years following the initial exercise date. The closing of the sale of the Securities occurred on April 10, 2023. Pursuant to ASC 470-20-25, if the warrants are classified as liability, the proceeds should be allocated first to the warrants based on their fair value (not relative fair value). The residual should be allocated to the remaining equity instruments.

These 870,000 warrants were recorded as warrant liability as of April 30, 2023 (see Note 9) and was allocated to the proceeds as follows:

Common Stock Issued, Restricted Stock Awards, and RSU’s Granted for Services

On June 1, 2021, the Company granted 2,097 Restricted Stock Units (“RSU’s”) to a consultant for consulting services rendered. The 2,097 RSU’s had a fair value of $25,000 or $11.92 per share of common stock based on the quoted trading price on the date of grant. The RSU’s fully vested and expensed immediately.

On June 9, 2021, the Company issued 25,000 shares of common stock to a consultant in connection with an investor relations agreement for services to be rendered from April 2021 to April 2022. The 25,000 shares of common stock had a fair value of $258,500, or $10.34 per share, based on the quoted trading price on the date of grant. In connection with this issuance, the Company reduced accrued liabilities by $14,203 and recognized stock-based consulting of $244,297 during the year ended April 30, 2022.

On July 19, 2021, the Company granted 15,322 RSU’s to an employee pursuant to his employment agreement. The 15,322 RSU’s had a fair value of $150,000 or $9.79 per share of common stock based on the quoted trading price on the date of grant. The RSU’s vested 25% on the date of issuance, and the remaining shall vest one-third over a three-year period from the date of issuance.

On October 20, 2021, the Company issued 1,116 shares of common stock to a former employee in connection with vested RSU’s on the date of termination of service.

On October 22, 2021, the Company issued an aggregate of 2,162 shares of common stock to a consultant in connection with a consulting agreement for services rendered from May 2021 to October 2021. The 2,162 shares of common stock had a fair value of $22,500, or $10.41 per share, based on the quoted trading price on the date of grants, which was fully vested and expensed immediately.

On October 22, 2021, the Company issued an aggregate of 2,824 shares of common stock to a consultant in connection with an advisory consulting agreement for services rendered from April 2021 to September 2021. The 2,824 shares of common stock had a fair value of $30,000, or $10.62 per share, based on the quoted trading price on the date of grants, which was fully vested. In connection with this issuance, the Company reduced accrued liabilities by $5,000 and recognized stock-based consulting of $25,000 during the year ended April 30, 2022.

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2023

On January 24, 2022, the Company issued an aggregate of 47,108 RSU’s to certain employees of the Company for services rendered. The 47,108 RSU’s had a fair value of $326,475, or $6.93 per share, based on the quoted trading price on the date of grants, which was fully vested and expensed immediately.

On January 24, 2022, the Company issued an aggregate of 13,852 RSU’s to the directors of the Company for services rendered. The 13,852 RSU’s had a fair value of $96,000, or $6.93 per share, based on the quoted trading price on the date of grants, which was fully vested and expensed immediately.

On January 24, 2022, the Company issued an aggregate of 25,685 RSU’s to certain consultants of the Company for services rendered. The 25,685 RSU’s had a fair value of $178,000, or $6.93 per share, based on the quoted trading price on the date of grants, which was fully vested and expensed immediately. One of the consultants is Mr. Karr, the Company’s former Executive Chairman (see Note 8).

On April 9, 2022, the Company issued 25,000 shares of common stock to a consultant in connection with an investor relations agreement for services to be rendered from April 2022 to April 2023. The 25,000 shares of common stock had a fair value of $157,000, or $6.28 per share, based on the quoted trading price on the date of grant. The Company recognized stock-based consulting of $143,917 and $13,083 during the years ended April 30, 2023 and 2022, respectively.

On April 22, 2022, the Company issued an aggregate of 2,749 shares of common stock to a consultant in connection with a consulting agreement for services rendered from November 2021 to April 2022. The 2,749 shares of common stock had a fair value of $22,500, or $8.18 per share, based on the quoted trading price on the date of grants, which was fully vested and expensed immediately.

On April 22, 2022, the Company issued an aggregate of 3,708 shares of common stock to a consultant in connection with an advisory consulting agreement for services rendered from October 2021 to March 2022. The 3,708 shares of common stock had a fair value of $30,000, or $8.09 per share, based on the quoted trading price on the date of grants, which was fully vested and expensed immediately.

On April 22, 2022, the Company issued an aggregate of 5,814 shares of common stock to a director of the Company pursuant to the January 2022 Agreement (see Note 8). The 5,814 shares had a fair value of $50,000 or $8.60 per share of common stock based on the quoted trading prices on the date of grant. The Company recognized stock-based consulting of $33,333 and $16,667 during the years ended April 30, 2023 and 2022, respectively.

On April 25, 2022, the Company issued 5,168 and 7,353 shares of common stock to Edward Karr, former Executive Chairman of the Company, pursuant to the March 2021 Agreement and the March 2022 Agreement, respectively (see Note 8). The 5,168 shares of common stock had a fair value of $60,000, or $11.61 per share, based on the quoted trading price on the date of grant. In connection with this issuance, the Company reduced accrued liabilities by $7,500 and recognized stock-based consulting of $52,500 during the year ended April 30, 2022. The 7,353 shares of common stock had a fair value of $60,000, or $8.16 per share, based on the quoted trading price on the date of grant. The Company recognized stock-based consulting of $52,500 and $7,500 during the years ended April 30, 2023 and 2022, respectively.

On April 25, 2022, the Company issued 12,634 shares of common stock to a consultant in connection with a one-year strategic advisory agreement for services to be rendered from March 10, 2021 to March 10, 2022. The 12,634 shares of common stock had a fair value of $130,000, or $10.29 per share, based on the quoted trading price on the date of grant. In March 2022, the Company and the consultant mutually agreed to extend the term of the agreement from March 11, 2022 to March 10, 2023 under the same terms as the initial agreement. On April 25, 2022, the Company issued 14,286 shares of common stock to such consultant for services to be rendered from March 11, 2022 to March 10, 2023. The 14,286 shares of common stock had a fair value of $130,000, or $9.10 per share, based on the quoted trading price on the date of grant. The Company recognized stock-based consulting of $113,750 and $130,000 during the year ended April 30, 2023 and 2022, respectively and reduced accrued liabilities by $16,250.

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2023

On November 14, 2022, the Company issued an aggregate of 7,510 shares of common stock to a consultant in connection with an advisory consulting agreement for services rendered from May 2022 to October 2022 and issued 885 shares of common stock for services rendered in April 2022 for a total of 8,395 shares. The 8,395 shares of common stock had a fair value of $35,000, or $4.17 per share, based on the quoted trading price on the date of grants, which was fully vested. The Company reduced accrued liabilities by $5,000 in connection with the issuance of the 885 shares and recognized stock-based consulting of $30,000 in connection with the issuance of the 7,510 shares during the year ended April 30, 2023.

On November 14, 2022, the Company issued an aggregate of 5,425 shares of common stock to a consultant in connection with a consulting agreement for services rendered from May 2022 to October 2022. The 5,425 shares of common stock had a fair value of $22,500, or $4.15 per share, based on the quoted trading price on the date of grants, which was fully vested and expensed immediately.

On December 22, 2022, the Company issued 7,927 shares of common stock to a former director in connection with vested RSU’s (see Note 8).

On March 10, 2023, the Company issued 33,419 shares of common stock to a director of the Company pursuant to the March 2023 Agreement (see Note 8). The 33,419 shares had a fair value of $130,000 or $3.89 per share of common stock based on the quoted trading price on the date of grant. The Company recognized stock-based consulting of $5,417 during the year ended April 30, 2023 and recorded prepaid stock-based expense of $113,750 at April 30, 2023 to be amortized over the term of the agreement.

On March 10, 2023, the Company issued 15,424 shares of common stock to Edward Karr, former Executive Chairman of the Company, pursuant to the March 2023 Agreement (see Note 8). The 15,424 shares of common stock had a fair value of $60,000, or $3.89 per share, based on the quoted trading price on the date of grant. The Company recognized stock-based consulting of $7,500 during the year ended April 30, 2023 and recorded prepaid stock-based expense of $52,500 at April 30, 2023 to be amortized over the term of this agreement.

On April 4, 2023, the Company issued an aggregate of 5,404 shares of common stock to a consultant in connection with an advisory consulting agreement for services rendered from November 2022 to March 2023. The 5,404 shares of common stock had a fair value of $25,000, or $4.63 per share, based on the quoted trading price on the date of grants, which was fully vested and expensed immediately.

Total stock compensation expense for awards issued for services of $738,125 and $1,386,512 was expensed for the years ended April 30, 2023 and 2022, respectively. There are 90,160 unvested restricted stock units with unvested compensation expense of $661,573 at April 30, 2023 remaining to be expensed over future vesting periods of a weighted average period of 0.68 years. There were 343,315 vested restricted stock units awarded but unissued into common stock as of April 30, 2023. A total of 433,475 restricted stock units are outstanding, vested and unvested, as of April 30, 2023.

A summary of the of changes in restricted stock units outstanding during the years ended April 30, 2023 and 2022, is as follows:

 SCHEDULE OF ACTIVITY RESTRICTED STOCK UNITS

Common Stock issued for exercise of Stock Warrants

In April 2022, the Company issued 166,667 shares of common stock for the exercise of stock warrants and received proceeds of approximately $1,000,000.

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.

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2023

On August 6, 2019, the Board approved and adopted, subject to stockholder approval, the 2020 Plan. The 2020 Plan initially reserved 330,710 shares for future issuance to officers, directors, employees and contractors as directed from time to time by the Compensation Committee of the Board. The 2020 Plan was approved by a vote of stockholders at the 2019 annual meeting. With the approval and effectivity of the 2020 Plan, no further grants will be made under the 2017 Plan. On August 31, 2020, the Board approved and adopted, subject to stockholder approval, an amendment (the “2020 Plan Amendment”) to the 2020 Plan. The 2020 Plan Amendment increased the number of shares of common stock available for issuance pursuant to awards under the 2020 Plan by an additional 836,385, to a total of 1,167,095 shares of the Company’s common stock. The 2020 Plan Amendment was approved by the Company’s stockholders on November 9, 2020. On December 16, 2022 the Company’s stockholders approved another amendment to the 2020 plan increasing the number of shares of common stock available for issuance pursuant to awards under the 2020 Plan by an additional 1,252,476 shares, to a total of 2,419,571 shares of the Company’s common stock.

Stock options

The following is a summary of the Company’s stock option activity during the years ended April 30, 2023 and 2022:

SCHEDULE OF STOCK OPTION ACTIVITY 

At April 30, 2023 and 2022, the aggregate intrinsic value of options outstanding and exercisable were de minimis for each period.

On January 24, 2022, the Company granted an aggregate of 26,200 options to purchase the Company’s common stock to certain employees of the Company. The options have a term of 5 years from the date of grant and are exercisable at an exercise price of $6.93. The options vest 25% on the date of grant and 25% each next three years from the date of grant.

On January 24, 2022, the Company granted an aggregate of 21,240 options to purchase the Company’s common stock to the directors of the Company. The options have a term of 5 years from the date of grant and are exercisable at an exercise price of $6.93. The options fully vested and was expensed immediately.

On January 24, 2022, the Company granted an aggregate of 10,620 options to purchase the Company’s common stock to certain consultants of the Company. The options have a term of 5 years from the date of grant and are exercisable at an exercise price of $6.93. The options fully vested and was expensed immediately. One of the consultants is Mr. Karr, the Company’s former Executive Chairman (see Note 8).

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2023

The Company used the Black-Scholes model to determine the fair value of stock options granted during the year ended April 30, 2022. In applying the Black-Scholes option pricing model to options granted, the Company used the following assumptions:

SCHEDULE OF STOCK OPTION 

On January 12, 2023, the Company granted an aggregate of 48,000 options to purchase the Company’s common stock to certain officers and employees of the Company. The options have a term of 5 years from the date of grant and are exercisable at an exercise price of $5.02 (see table below for the assumptions used). The options fully vested and was expensed immediately.

On January 12, 2023, the Company granted an aggregate of 70,000 options to purchase the Company’s common stock to the directors of the Company. The options have a term of 5 years from the date of grant and are exercisable at an exercise price of $5.02 (see table below for the assumptions used). The options fully vested and was expensed immediately.

On January 12, 2023, the Company granted an aggregate of 22,000 options to purchase the Company’s common stock to certain consultants of the Company. The options have a term of 5 years from the date of grant and are exercisable at an exercise price of $5.02 (see table below for the assumptions used). The options fully vested and was expensed immediately. One of the consultants is Mr. Karr, the Company’s former Executive Chairman (see Note 8).

The Company used the Black-Scholes model to determine the fair value of stock options granted during the year ended April 30, 2023. In applying the Black-Scholes option pricing model to options granted, the Company used the following assumptions:

Stock-based compensation for stock options recorded in the consolidated statements of operations totaled $493,008 and $183,475 for the years ended April 30, 2023 and 2022, respectively. A balance of $49,342 remains to be expensed over future vesting periods related to unvested stock options issued for services to be expensed over a weighted average period of 1.73 years.

Stock-based expense for stock options were recorded in the following as reflected in the consolidated statements of operations:

SCHEDULE OF STOCK-BASED EXPENSE FOR STOCK OPTION

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2023

Stock Warrants

The following is a summary of the Company’s stock warrant activity during the years ended April 30, 2023 and 2022:

SCHEDULE OF STOCK WARRANT ACTIVITY 

As of April 30, 2023 and 2022, the aggregate intrinsic value of warrants outstanding and exercisable were de minimis for each period.

Concurrent with the sales of common stock on February 14, 2022, the Company issued warrants to purchase 192,370 shares of the Company’s common stock at an exercise price of $8.00 per share. The warrants are exercisable immediately following issuance and will expire five years from the issuance date.

Concurrent with the sale of common stock on March 18, 2022, the Company issued warrants to purchase 625,000 shares of the Company’s common stock. The exercise price was $8.60 per share. The warrants were exercisable six months following the date of issuance and were to expire 5 years following the initial exercise date. These warrants allow for the potential settlement in cash if certain extraordinary events are affected by the Company, including a 50% or greater change of control in the Company’s common stock. Such payment in cash shall be equal to the black-scholes value as defined in the warrant agreement. These 625,000 warrants were recorded as warrant liability as of April 30, 2023 and 2022 (see Note 9).

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2023

Additionally, on April 10, 2023, the Company agreed to amend, effective as of the closing of a registered offering (see Note 10), the 625,000 warrants at an exercise price of $8.60 per share and a termination date of September 18, 2027, so that the amended warrants will have a reduced exercise price of $6.16 per share and a termination date of April 10, 2028.

In April 2022, the Company issued 166,667 shares of common stock for the exercise of stock warrants and received proceeds of approximately $1,000,000.

Concurrent with the sale of common stock on April 10, 2023, the Company issued warrants to purchase 870,000 shares of the Company’s common stock at an exercise price of $6.16 per share. The warrants are exercisable six months following the date of issuance and will expire 5 years following the initial exercise date. These warrants allow for the potential settlement in cash if certain extraordinary events are affected by the Company, including a 50% or greater change of control in the Company’s common stock. Such payment in cash shall be equal to the black-scholes value as defined in the warrant agreement. These 870,000 warrants were recorded as warrant liability as of April 30, 2023 (see Note 9).