U.S. Gold (USAU) - 2025 Q1 - Quarterly Report

PART I: FINANCIAL INFORMATION Item 1. Financial Statements The unaudited condensed consolidated financial statements for the three months ended July 31, 2024, show a net loss of $4.3 million, an increase from the $2.9 million loss in the prior-year period, with a decrease in cash and total assets and an increase in total liabilities, primarily driven by a significant rise in warrant liability Condensed Consolidated Balance Sheets As of July 31, 2024, total assets decreased to $20.1 million from $22.6 million at April 30, 2024, mainly due to a reduction in cash from $5.6 million to $3.4 million, while total liabilities increased from $5.1 million to $7.0 million, largely because of a rise in warrant liability from $3.9 million to $5.7 million, consequently declining total stockholders' equity from $17.5 million to $13.2 million Condensed Consolidated Balance Sheet Highlights (Unaudited) | Balance Sheet Items | July 31, 2024 ($) | April 30, 2024 ($) | | :--- | :--- | :--- | | Assets | | | | Cash | $3,380,667 | $5,574,278 | | Total current assets | $4,129,003 | $6,523,111 | | Total assets | $20,139,950 | $22,581,133 | | Liabilities & Equity | | | | Total current liabilities | $572,868 | $452,790 | | Warrant liability | $5,666,050 | $3,916,900 | | Total liabilities | $6,988,023 | $5,120,678 | | Total stockholders' equity | $13,151,927 | $17,460,455 | Condensed Consolidated Statements of Operations For the three months ended July 31, 2024, the company reported a net loss of $4.3 million, or ($0.40) per share, compared to a net loss of $2.9 million, or ($0.31) per share, for the same period in 2023, with the increased loss primarily driven by a $1.75 million loss from the change in fair value of warrant liability, which offset a decrease in total operating expenses from $2.9 million to $2.6 million Statement of Operations Summary (Unaudited) | Metric | Three Months Ended July 31, 2024 ($) | Three Months Ended July 31, 2023 ($) | | :--- | :--- | :--- | | Total operating expenses | $2,592,693 | $2,930,115 | | Loss from operations | ($2,592,693) | ($2,930,115) | | Change in fair value of warrant liability | ($1,749,150) | $14,950 | | Net loss | ($4,325,305) | ($2,894,683) | | Net loss per common share | ($0.40) | ($0.31) | Condensed Consolidated Statements of Cash Flows For the three months ended July 31, 2024, net cash used in operating activities was $2.2 million, an increase from $1.8 million in the prior-year period, with the higher cash burn primarily due to changes in operating assets and liabilities, resulting in the company's cash balance decreasing from $5.6 million at the beginning of the period to $3.4 million at the end Cash Flow Summary (Unaudited) | Cash Flow Item | Three Months Ended July 31, 2024 ($) | Three Months Ended July 31, 2023 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | ($2,193,611) | ($1,808,742) | | Net decrease in cash | ($2,193,611) | ($1,808,742) | | Cash - beginning of period | $5,574,278 | $7,822,930 | | Cash - end of period | $3,380,667 | $6,014,188 | Notes to Condensed Consolidated Financial Statements The notes detail the company's accounting policies and provide further information on its financial status, including a 'going concern' warning, indicating substantial doubt about the company's ability to continue operations for the next twelve months without additional funding, and elaborating on the valuation of its mineral rights, the significant increase in warrant liability due to fair value adjustments, and future commitments related to mining leases - The company is a gold and precious metals exploration entity with three main properties: the CK Gold Project in Wyoming (development stage), the Keystone Project in Nevada, and the Challis Gold Project in Idaho (both exploratory)[14][15] - Management has expressed substantial doubt about the company's ability to continue as a going concern for the next twelve months, as of July 31, 2024, the company had approximately $3.4 million in cash but incurred a net loss of $4.3 million for the quarter and will require additional funds to advance its projects[45] - Warrants issued in March 2022 and April 2023 are classified as liabilities and re-measured to fair value each period, with the fair value of this liability increasing from $3.9 million to $5.7 million during the quarter, resulting in a $1.75 million non-cash loss[31][57][61] - The company has future minimum lease payment commitments for its Wyoming mining leases totaling $28,320 through fiscal 2030 and beyond, and annual advance minimum royalty payments of $25,000 for the Challis Gold project through fiscal 2031[74][75] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's discussion highlights the company's focus on advancing the CK Gold Project, noting recent progress in obtaining a surface gold mine permit, with the analysis of operations showing a wider net loss of $4.3 million for the quarter compared to $2.9 million in the prior year, primarily due to the non-cash change in fair value of warrant liability, and a weakened liquidity position with decreased working capital and cash, leading to a going concern warning Overview and Recent Activities The company is a development-stage gold exploration entity focused on its three main projects, with significant progress made on the CK Gold Project in Wyoming during the quarter ended July 31, 2024, including receiving conditional approval for its surface gold mine permit (MOP) from the Wyoming Department of Environmental Quality (WDEQ) - In May 2024, the company received conditional approval for its surface gold mine permit (MOP) for the CK Gold Project[84] - By June 2024, two of the three conditions for the MOP were satisfied: approval of the Wyoming Pollutant Discharge Elimination System permit and acceptance of the reclamation bond[84] - The final condition, approval of the Air Quality permit, is expected to be received in the current year[84] Results of Operations Comparing the three months ended July 31, 2024, to the same period in 2023, total operating expenses decreased by approximately $337,000 to $2.6 million due to lower compensation, exploration, and professional fees, partially offset by higher general and administrative costs, yet the net loss increased from $2.9 million to $4.3 million, driven by a $1.7 million non-cash loss from the change in fair value of warrant liability - Operating expenses decreased by approximately $337,000 year-over-year, driven by: - A $173,000 decrease in compensation - A $129,000 decrease in exploration expenses - A $693,000 decrease in professional and consulting fees - This was partially offset by a $658,000 increase in general and administrative expenses[86] - Other loss was approximately $1.73 million, compared to other income of $35,000 in the prior year, primarily due to the change in fair value of warrant liability[88] Liquidity and Capital Resources The company's financial position has weakened, with working capital decreasing by $2.5 million to $3.6 million as of July 31, 2024, and cash used in operating activities for the quarter was $2.2 million, leading management to state that while current cash may be sufficient for corporate activities and permitting studies over the next twelve months, it is insufficient to advance projects further, raising substantial doubt about the company's ability to continue as a going concern without raising additional funds Working Capital Summary | | July 31, 2024 ($) | April 30, 2024 ($) | Change ($) | | :--- | :--- | :--- | :--- | | Current Assets | $4,129,003 | $6,523,111 | ($2,394,108) | | Current Liabilities | $572,868 | $452,790 | $120,078 | | Working Capital | $3,556,135 | $6,070,321 | ($2,514,186) | - The company had cash of approximately $3.4 million and an accumulated deficit of $77.2 million as of July 31, 2024[92] - Substantial doubt exists about the company's ability to continue as a going concern as it does not have sufficient cash to advance its projects beyond current permitting and engineering studies and will need to raise additional funds[92] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, U.S. Gold Corp. is not required to provide disclosure under this item - The company is not required to include disclosure under this item as it qualifies as a smaller reporting company[96] Item 4. Controls and Procedures Based on an evaluation as of the end of the period, the company's Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective, with no material changes in internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[97] - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[98] PART II: OTHER INFORMATION Item 1. Legal Proceedings The company reports that it is not a party to any material pending legal proceedings - To the company's knowledge, there are no material pending legal proceedings to which it is a party[100] Item 1A. Risk Factors As a smaller reporting company, U.S. Gold Corp. is not required to provide disclosure under this item - The company is not required to include disclosure under this item as it qualifies as a smaller reporting company[101] Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities There were no sales of unregistered securities during the fiscal quarter ended July 31, 2024, that were not previously reported - No unregistered securities were sold during the quarter that had not been previously reported on a Form 8-K[101] Item 4. Mine Safety Disclosures The company and its properties were not subject to regulation by the Mine Safety and Health Administration (MSHA) during the quarter, and therefore no disclosure is required - During the three months ended July 31, 2024, the company was not subject to regulation by MSHA under the Mine Act, thus no disclosure is required[102] Item 6. Exhibits This section provides an index of the exhibits filed with the Form 10-Q, including officer certifications and XBRL data files - The report includes an index of exhibits, such as CEO and CFO certifications under Rule 13a-14(a) and Section 1350, as well as Inline XBRL documents[99][104]