# U.S. GOLD CORP. (USAU) FY 2024 MD&A

Verbatim Item 7 Management's Discussion and Analysis from U.S. GOLD CORP.'s 10-K for fiscal year 2024.

SEC filing source: https://www.sec.gov/Archives/edgar/data/27093/000149315224029423/form10-k.htm
Accession: 0001493152-24-029423
Filing date: 2024-07-29
Report date: 2024-04-30
Extracted from Item 7 to the first post-MD&A boundary after HTML sanitization.
Confidence: high

Company profile: /company/USAU/
All MD&A years: /company/USAU/mda/
Previous year: /company/USAU/mda/fy2023/ (FY 2023)
Next year: /company/USAU/mda/fy2025/ (FY 2025)

Item
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

U.S.
Gold Corp., formerly known as Dataram Corporation (the “Company,” “we,” “our,” or “us”),
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 Fiscal Year Ended April 30, 2024

During
the fiscal year ended April 30, 2024, we focused primarily on advancing our CK Gold Project in Wyoming with the approval of two major
permits; our surface gold mine permit (mine operation and reclamation plan (“MOP”)) approved April 2024 and an Industrial
Siting permit for the construction and operation of our CK Gold project approved May 2023, and continued engineering studies towards
the completion of a revised prefeasibility study and feasibility study. Additional exploration and geologic investigations were undertaken,
enhancing our understanding of the Keystone Project deposit in Nevada and continued analysis of the historic geological data on the Challis
Gold Project in Idaho. Management focused on investor relations and awareness, resulting in the completion of an equity financing in
April 2024.

An
overview of certain significant events follows:

CK
Gold Project, Wyoming

[[GREPCENT_TABLE]]
[["","\u25cf","In May 2023, we received notification from the Industrial Siting Division of the Wyoming Department of Environmental Quality (\u201cWDEQ\u201d) that an Industrial Siting Permit was granted to us for the construction and operation of the proposed mine at the CK Gold Project."],["","\u25cf","In April 2024, we received a letter from the United States Army Corps of Engineers (\u201cUSACE\u201d) confirming that the proposed CK Gold Project did not need a permit from the USACE for the activities outlined in the MOP. With the project being situated on Wyoming State and private land and falling under the jurisdiction of Wyoming State authorities, this was the only direct nexus to Federal Government involvement in obtaining the necessary project permits."],["","\u25cf","In April 2024, we received notification from the Land Quality Division of the WDEQ that we received approval on our surface gold mine permit, subject to certain conditions."],["","\u25cf","In May 2024, we satisfied two of the three conditions associated with our MOP with 1) the approval of our Wyoming Pollutant Discharge Elimination System permit and 2) acceptance by the WDEQ of our reclamation bond"],["","\u25cf","During the year-ended April 30, 2024, we continued to advance towards approval of our Air Quality permit with the Air Quality Division of the WDEQ. Approval of this air quality permit is the final condition associated with our MOP and is expected to be received this year."]]
[[/GREPCENT_TABLE]]

36

Keystone
Project, Cortez Trend, Nevada

[[GREPCENT_TABLE]]
[["","","\u25cf We continue systematic exploration investigations at our highly prospective Keystone Project looking for potential drill targets. We conducted a hyperspectral survey on the property identifying evidence of potential mineralization. Numerous anomalies often associated with mineralization were identified. Field investigation of the most prospective anomalies was completed during the 2023 field season. Altered sedimentary outcrops containing anomalous gold grades were discovered which require additional investigation."]]
[[/GREPCENT_TABLE]]

Challis
Gold Project, Idaho

[[GREPCENT_TABLE]]
[["","\u25cf","We continue towards the completion of a Plan of Operations as the next phase of exploration."]]
[[/GREPCENT_TABLE]]

Sales
of Common Shares to raise a total of $4.9 million in cash

On
April 19, 2024, we entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain institutional
and accredited investors in connection with a registered direct offering of 1,400,000 shares of our common stock at a price of $3.50
per share and warrants to purchase 1,400,000 shares of our common stock at an exercise price of $4.48 per share (the “Registered
Offering”). The warrants are exercisable on October 19, 2024 and will expire on October 19, 2029. The aggregate gross proceeds
of the Registered Offering was $4,900,000 before deduction of legal related offering expenses of $72,309. The closing of the Registered
Offering occurred on April 19, 2024.

Shareholder
Meeting, Appointment of Directors and Corporate Matters

On
April 26, 2024, we held our annual meeting of stockholders. At that meeting, among other matters, shareholders re-elected to our Board
four of the five incumbent Directors: Mr. Norman, Mr. Bee, Mr. Schafer and Mr. Waldkirch; and elected Ms. Johanna Fipke to our Board,
replacing Ms. Tara Gilfillan, who did not stand for re-election. Each of the elected Directors will hold office until the next meeting
of stockholders and until their successors are named and qualified or until their earlier resignation or removal. The stockholders also
ratified the appointment of our audit firm for our fiscal year ended April 30, 2024.

Results
of Operations

Net
Revenues

We
are a development-stage company with no operations, and we did not generate any revenues for the years ended April 30, 2024 and 2023.

Operating
Expenses

Total
operating expenses for the fiscal year ended April 30, 2024, as compared to the fiscal year ended April 30, 2023, were approximately
$7,257,000 and $9,401,000, respectively. The approximate $2,144,000 decrease in operating expenses for the fiscal year ended April 30,
2024, as compared to the fiscal year ended April 30, 2023, is comprised of (i) a decrease in compensation expense of approximately $437,000
primarily due to a decrease in stock based compensation, (ii) a decrease of approximately $336,000 in exploration expenses on our mineral
properties due to the decrease in exploration activities and related consulting expenses at our CK Gold property, (iii) a decrease in
professional and consulting fees of approximately $1,204,000 primarily due to decreases in general strategic and permitting consulting
services of $698,000, decrease in legal fees of $64,000, decreases in director fees of $247,000 (primarily due to the decrease in director
stock based compensation), decrease in investor relation fees of $244,000, offset marginally by an increase in accounting fees of $49,000
and (iv) a decrease in general and administrative expenses of approximately $167,000 due primarily to decreases related to advertising,
insurance, research and development, and travel expenses.

37

Loss
from Operations

We
reported loss from operations of approximately $7,257,000 and $9,401,000 for the fiscal years ended April 30, 2024 and 2023, respectively.

Other
Income (Loss)

We
reported other income of approximately $360,000 and $1,786,000 for the years ended April 30, 2024 and 2023, respectively. We reported
a change in fair value of warrant liability of approximately $314,000 and $1,560,000 for the years ended April 30, 2024 and 2023, respectively.
We reported a gain from the sale of asset (Maggie Creek) of approximately $0 and $763,000 for the years ended April 30, 2024 and 2023,
respectively. We reported interest income and gain from settlement of asset retirement obligation of approximately $40,000 and $6,000,
respectively, for the fiscal year ended April 30, 2024, as compared to approximately $4,900 and $0 during the fiscal year ended April
30, 2023, respectively. We reported a decrease in change in fair value due to modification of warrants of approximately $263,000 and
decrease in offering cost related to warrant liability of approximately $279,000 for the fiscal year ended April 30, 2023 as compared
to none during the fiscal year ended April 30, 2024.

Net
Loss

We
reported a net loss of approximately $6,897,000 and $7,614,000 for the years ended April 30, 2024 and 2023, respectively.

Liquidity
and Capital Resources

The
following table summarizes total current assets, liabilities and working capital at April 30, 2024, compared to April 30, 2023, and the
changes between those periods:

[[GREPCENT_TABLE]]
[["","","April 30, 2024","","","April 30, 2023","","","Increase (decrease)"],["Current Assets","","$","6,523,111","","","$","8,433,070","","","$","(1,909,959",")"],["Current Liabilities","","$","452,790","","","$","378,798","","","$","73,992"],["Working Capital","","$","6,070,321","","","$","8,054,272","","","$","(1,983,951",")"]]
[[/GREPCENT_TABLE]]

As
of April 30, 2024, we had working capital of $6,070,321, as compared to working capital of $8,054,272 as of April 30, 2023, a decrease
of $1,983,951.

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
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 years ended April 30, 2024 and 2023, we incurred net losses in the amounts of approximately $6,897,000
and $7,614,000, respectively. For the fiscal year ended April 30, 2024, cash used in operating activities was approximately $7,076,000.
As of April 30, 2024, we had cash of approximately $5,574,000, working capital of approximately $6,070,000, and an accumulated deficit
of approximately $72,848,000. Our primary source of operating funds since inception has been equity financing. As of April 30, 2024,
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.

38

Cash
Used in Operating Activities

Net
cash used in operating activities totaled approximately $7,076,000 and $8,691,000 for the years ended April 30, 2024 and 2023, respectively.
Net cash used in operating activities during the year fiscal ended April 30, 2024, decreased primarily due to the i) decrease in net
loss of approximately $717,000 as compared to the year fiscal ended April 30, 2023 ii) increase in non-cash items of approximately $890,000
as compared to the years ended April 30, 2023. primarily due to the change in fair value of warrant liability, stock-based compensation
and gain from sale of asset and iii) decrease in changes in operating assets and liabilities of approximately $7,500 as compared to the
fiscal year ended April 30, 2023.

Cash
Used in Investing Activities

Net
cash used in investing activities during the year fiscal ended April 30, 2024 was $0. Net cash used in investing activities during the
years ended April 30, 2023 was approximately $2,572,000, primarily from proceeds received from the sale of Maggie Creek of $2,750,000
related to the Assignment and Assumption Agreement dated on November 9, 2022 and offset by approximately $178,000 primarily for the purchase
of property and equipment.

Cash
Provided by Financing Activities

Net
cash provided by financing activities totaled approximately $4,828,000 for the year fiscal ended April 30, 2024 primarily due to the
sale of our common stock and warrants for approximately $4,900,000 in April 2024, net of offering costs. Net cash provided by financing
activities totaled approximately $4,830,000 for the fiscal year ended April 30, 2023, primarily due to the sale of our common stock and
warrants for approximately $4,800,000 in April 2023, net of offering costs.

Off-Balance
Sheet Arrangements

As
of April 30, 2024, 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 consolidated financial statements for a summary of recently issued accounting
pronouncements.

Critical
Accounting Estimates

In preparing the consolidated financial statements, we are 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. Critical accounting
estimates are those estimates made in accordance with U.S. generally accepted accounting principles that involve a significant level of
estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations.
Our critical accounting estimates are discussed below, including, to the extent material and reasonably available, the impact such estimates
have had, or are reasonably likely to have, on our financial condition or results of operations.

39

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.

Mineral
Rights

Costs
of leasing, exploring, carrying and retaining unproven mineral lease properties are expensed as incurred. We expense all mineral exploration
costs as incurred. Where we have identified proven and probable mineral reserves on any of our properties, development costs will be
capitalized when all the following criteria have been met, a) we receive the requisite operating permits, b) completion of a favorable
Feasibility Study and c) approval from our Board authorizing the development of the ore body. Until such time all these criteria have
been met, we record pre-development costs to expense as incurred.

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 expensed all exploration and pre-development costs as none of its properties have satisfied the criteria above
for capitalization.

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:

[[GREPCENT_TABLE]]
[["","\u25cf","The value beyond proven and probable reserves (\u201cVBPP\u201d) to the extent that a market participant would include VBPP in determining the fair value of the assets."],["","\u25cf","The effects of anticipated fluctuations in the future market price of minerals in a manner that is consistent with the expectations of market participants."]]
[[/GREPCENT_TABLE]]

Leases
to explore for or use of natural resources are outside the scope of ASC 842, “Leases”.

Warrant
Liability

We
account for the warrants issued in March 2022 and April 2023, respectively, in accordance with the guidance contained in ASC 815 “Derivatives
and Hedging” whereby under that provision these warrants do not meet the criteria for equity treatment and must be recorded as
a liability. Accordingly, we classify these warrant instruments as liabilities at fair value and adjusts the instruments to fair value
at each reporting period. This liability is re-measured at each balance sheet date until the warrants are exercised or expire, and any
change in fair value will be recognized in our statement of operations. The fair value of these warrants is estimated using a Monte Carlo
simulation model. Such warrant classification is also subject to re-evaluation at each reporting period.