NOTE 9 — WARRANT LIABILITY

As of July 31, 2023 and April 30, 2023, the Company’s warrant liabilities were valued at $4,215,900 and $4,230,850, respectively. Under the guidance in ASC 815-40, certain warrants do not meet the criteria for equity treatment. As such, these warrants are recorded at fair value as of each reporting date with the change in fair value reported within other income in the accompanying consolidated statements of operations as “Change in fair value of warrant liability” until the warrants are exercised, expired or other facts and circumstances lead the warrant liability to be reclassified to stockholders’ equity. The Company utilized a Monte Carlo Simulation model to estimate the fair values of the April 2023 and March 2022 warrants, which incorporates significant inputs that are not observable in the market, and thus represents a Level 3 measurement as defined in ASC 820. The unobservable inputs utilized for measuring the fair value of the contingent consideration reflect management’s own assumptions about the assumptions that market participants would use in valuing the contingent consideration. The Company determined the fair value by using the below key inputs to the Monte Carlo Simulation Model.

Initial Measurement

The Company accounted for the 625,000 warrants issued on March 18, 2022, in accordance with the guidance contained in ASC 815 “Derivatives and Hedging” whereby under that provision these warrants did not meet the criteria for equity treatment and were recorded as a liability. The initial valuation of these warrants was valued at $3,652,000 on March 18, 2022. Additionally, the Company accounted for the 870,000 warrants issued on April 10, 2023, in accordance with the guidance contained in ASC 815 “Derivatives and Hedging” whereby under that provision these warrants did not meet the criteria for equity treatment and were recorded as a liability at an initial valuation of $3,088,500.

The key inputs for the warrant liability were as follows as of July 31, 2023:

 SCHEDULE OF KEY INPUTS FOR THE WARRANT LIABILITY

The key inputs for the warrant liability were as follows as of April 30, 2023:

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JULY 31, 2023

The following table sets forth a summary of the changes in the fair value of the Level 3 warrant liability for the three months ended July 31, 2023:

 SCHEDULE OF CHANGES IN FAIR VALUE OF LEVEL THREE WARRANT LIABILITY