-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, S/DDUJ2VipPgedmksk+BQMcbQSIHpD/C5kMHChlVk2rabDkW4NkZUxBdNsZ63KS1 kZSaDi+/rJ5g4EcFTrcFhg== 0001014909-04-000151.txt : 20041112 0001014909-04-000151.hdr.sgml : 20041111 20041112095226 ACCESSION NUMBER: 0001014909-04-000151 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20040930 FILED AS OF DATE: 20041112 DATE AS OF CHANGE: 20041112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: U S GOLD CORP CENTRAL INDEX KEY: 0000314203 STANDARD INDUSTRIAL CLASSIFICATION: MINERAL ROYALTY TRADERS [6795] IRS NUMBER: 840796160 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-09137 FILM NUMBER: 041135805 BUSINESS ADDRESS: STREET 1: 2201 KIPLING ST STREET 2: STE 100 CITY: LAKEWOOD STATE: CO ZIP: 80215-1545 BUSINESS PHONE: 3032381438 MAIL ADDRESS: STREET 1: 2201 KIPLING STREET STE 100 CITY: LAKEWOOD STATE: CO ZIP: 80215 FORMER COMPANY: FORMER CONFORMED NAME: U S SILVER STATE MINING CORP DATE OF NAME CHANGE: 19880706 FORMER COMPANY: FORMER CONFORMED NAME: SILVER STATE MINING CORP DATE OF NAME CHANGE: 19880629 10QSB 1 f10q_sept2004usgold.txt FORM 10-QSB U. S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2004 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from to -------------- --------------- Commission file number 0-9137 U.S. GOLD CORPORATION (Exact name of small business issuer as specified in its charter) COLORADO 84-0796160 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2201 Kipling Street, Suite 100 Lakewood, Colorado 80215-1545 (Address of principal executive offices) (303) 238-1438 (Issuer's telephone number) (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 X No --- --- State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: Class Outstanding as of November 12, 2004 ----- ----------------------------------- Common Stock, $0.10 par value 20,457,176 U.S. GOLD CORPORATION Index Page ---- Part I - FINANCIAL INFORMATION Item 1. Consolidated Balance Sheet (unaudited) at September 30, 2004 3 Consolidated Statements of Operations (unaudited) for the three and nine months ended September 30, 2004 and 2003 4 Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2004 and 2003 5 Notes to Consolidated Financial Statements (unaudited) 6 Item 2. Management's Discussion and Analysis or Plan of Operation 11 Item 3. Controls and Procedures 14 Part II - OTHER INFORMATION Item 5. Other Information 15 Item 6. Exhibits and Reports on Form 8-K 15 SIGNATURES 16 The descriptions in this report of any agreement or other document are qualified in their entirety by reference to the agreement or document as a whole. Copies of these documents are filed as exhibits to, or incorporated by reference into, this report. 2 U.S. GOLD CORPORATION CONSOLIDATED BALANCE SHEET SEPTEMBER 30, 2004 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 97,788 Purchase contract receivable 548,692 Other current assets 1,769 ------------ Total current assets 648,249 ------------ Property and equipment, net 3,960 Investment in Tonkin Springs LLC 880,840 Investment in affiliate-GRC - Other assets 703 ------------ 885,503 ------------ TOTAL ASSETS $ 1,533,752 ============ LIABILITIES & SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 25,163 ------------ Total current liabilities 25,163 ------------ Related party payables, long-term 510,449 ------------ Total liabilities 535,612 ------------ Shareholders' equity: Common stock, $.10 par value, 35,000,000 shares authorized; 20,457,176 shares issued and outstanding 2,045,717 Additional paid-in capital 33,726,307 Accumulated (deficit) (34,773,884) ------------ Total shareholders' equity 998,140 ------------ TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 1,533,752 ============ The accompanying notes are an integral part of these consolidated financial statements. 3
U.S. GOLD CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Month Period Ended Nine Month Period Ended September 30, September 30, 2004 2003 (Restated) 2004 2003 (Restated) ---- --------------- ---- --------------- OTHER REVENUES: Gain on sale of TSLLC interest to BacTech Nevada $ - $ 601,924 $ - $ 601,924 Interest income 10,009 13,376 31,418 16,758 Gain on sale of assets - - - 4,000 ----------- ----------- ----------- ----------- Total revenues 10,009 615,300 31,418 622,682 ----------- ----------- ----------- ----------- COSTS AND EXPENSES: General and administrative 210,629 196,505 608,102 340,569 Holding costs of Tonkin Springs property - 30,970 - 449,718 Stock compensation expense - - 43,229 290,000 Realization reserve-GRC stock - 363,165 - 363,165 Interest 128 370 1,435 1,028 Accretion of asset retirement obligation-SFAS 143 - 9,102 - 56,583 Depreciation 1,286 4,037 4,384 7,563 ----------- ----------- ----------- ----------- Total costs and expenses 212,043 604,149 657,150 1,508,626 ----------- ----------- ----------- ----------- Income (loss) before income taxes and cumulative effect of accounting change (202,034) 11,151 (625,732) (885,944) ----------- ----------- ----------- ----------- Provision for income taxes - - - - ----------- ----------- ----------- ----------- Income (loss) before cumulative effect (202,034) 11,151 (625,732) (885,944) ----------- ----------- ----------- ----------- Accounting change: cumulative effect: gain on implementation of SFAS 143 - - - 404,000 ----------- ----------- ----------- ----------- Net income (loss) $ (202,034) $ 11,151 $ (625,732) $ (481,944) =========== =========== =========== =========== Basic and diluted per share data: Income (loss) before cumulative effect of accounting change: Basic $ (0.01) $ 0.00 $ (0.03) $ (0.05) =========== =========== =========== =========== Diluted $ (0.01) $ 0.00 $ (0.03) $ (0.05) =========== =========== =========== =========== Cumulative effect of accounting change Basic $ 0.00 $ 0.00 $ 0.00 $ 0.02 =========== =========== =========== =========== Diluted $ 0.00 $ 0.00 $ 0.00 $ 0.02 =========== =========== =========== =========== Net income (loss) Basic $ (0.01) $ 0.00 $ (0.03) $ (0.03) =========== =========== =========== =========== Diluted $ (0.01) $ 0.00 $ (0.03) $ (0.03) =========== =========== =========== =========== The accompanying notes are an integral part of these consolidated financial statements.
4
U.S. GOLD CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Month Period Nine Month Period Ended Ended September 30, September 30, 2004 2003 (Restated) ------------------ ---------------- Cash flows from operating activities: Cash paid to suppliers and employees $(660,406) $(787,537) Interest received - 3,942 Interest paid (1,435) (1,028) Income taxes paid - - --------- --------- Cash (used in) operating activities (661,841) (784,623) --------- --------- Cash flows from investing activities: BacTech Nevada purchase price payments 187,500 400,000 Sale of assets - 4,000 --------- --------- Cash provided by investing activities 187,500 404,000 --------- --------- Cash flows from financing activities: Sale of common stock for cash 374,492 450,000 Purchase of treasury stock (355) - Advance to GRC - (30,000) Repayment of advance from GRC - 30,000 Payments on installment purchase contracts - (8,165) --------- --------- Cash provided by financing activities 374,137 441,835 --------- --------- Increase (decrease) in cash and cash equivalents (100,204) 61,212 Cash and cash equivalents, beginning of period 197,992 4,437 --------- --------- Cash and cash equivalents, end of period $ 97,788 $ 65,649 ========= ========= Reconciliation of net (loss) to cash (used in) operating activities: Net (loss) Items not requiring cash: $(625,732) $(481,944) Interest income Stock compensation expense (31,418) (12,817) Realization reserve-GRC stock 43,229 290,000 Gain on sale of interest to BacTech - 363,165 Accretion of asset retirement obligation - SFAS 143 - (601,924) Cumulative-effect: gain on implementation of SFAS 143 - 56,583 Depreciation - (404,000) (Increase) decrease in other assets related to operations 4,384 7,563 Increase (decrease) in liabilities related to operations 6,867 38,415 (59,171) (39,664) --------- --------- Cash (used in) operating activities $(661,841) $(784,623) ========= ========= The accompanying notes are an integral part of these consolidated financial statements.
5 U.S. GOLD CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2004 (Unaudited) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation: The interim consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. Certain adjustments have been made in the financial statements for September 30, 2003 to conform to accounting and financial statement presentation for the period ended September 30, 2004. The changes had no effect on Net income for the quarter ended September 30, 2003 or the Net (loss) for the nine months ended September 30, 2003. These statements reflect all adjustments, consisting of normal recurring adjustments which, in the opinion of management, are necessary for fair presentation of the information contained therein. However, the results of operations for the interim periods may not be indicative of results expected for the full fiscal year. It is suggested that these financial statements be read in conjunction with the audited financial statements and notes thereto included in the Company's Form 10-KSB/A as of and for the year ended December 31, 2003. Per Share Amounts: Statement of Financial Accounting Standards No. 128, "Earnings Per Share", provides for the calculation of "Basic" and "Diluted" earnings per share. Basic earnings per share includes no dilution and is computed by dividing income available to common shareholders by the weighted-average number of shares outstanding during the period (20,457,526 and 19,887,255 for the three and nine month periods ended September 30, 2004 and 17,468,463 and 17,402,910 for the corresponding periods of 2003). Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of the Company, similar to fully diluted earnings per share. As of September 30, 2004 and 2003, warrants and options are not considered in the computation of diluted earnings per share as their inclusion would be anti-dilutive. 2. TONKIN SPRINGS PROJECT As of September 30, 2004, the Company owns 45% of Tonkin Springs LLC, a Delaware limited liability company ("TSLLC") which, in turn, owns the Tonkin Springs gold mine property located in Eureka County, Nevada. Effective July 31, 2003, the Company sold a 55% equity ownership interest in TSLLC to BacTech Nevada Corporation ("BacTech Nevada"), a Nevada corporation and subsidiary of BacTech Mining Corporation ("BacTech"), a Canadian corporation based in Ontario with shares traded on the TSX-Venture Exchange (symbol BM-TSX.V). BacTech Nevada assumed management and funding responsibilities for TSLLC effective July 31, 2003. BacTech is currently evaluating the Tonkin Springs property to determine if the property can be put back into production. On March 15, 2004, TSLLC submitted permit applications to governmental agencies for review, approval and permit issuances related to proposed recommencement of gold production at Tonkin Springs. In conjunction with the permitting process, TSLLC has determined the project will require an Environmental Impact Statement ("EIS") which involves certain statutory evaluations by the federal Bureau of Land Management ("BLM") and provides for public comment. The EIS is currently in process and is anticipated to proceed consistent with regulatory agency permit application 6 U.S. GOLD CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2004 (Unaudited) evaluations. The permit amendments are for a staged operation lasting up to 10 years. BacTech Nevada commissioned a third party feasibility study for Tonkin Springs by the engineering firm of Micon International Limited ("Micon"), of Toronto, Canada. Micon was retained to determine the feasibility of processing approximately 2 million short tons of oxide and sulfide mineralization per year and the study was prepared consistent with National Instrument 43-101 of the Canadian Securities Administration. The study was completed in May 2004 and BacTech Nevada reported that the study concluded that the Tonkin Springs gold mine project is a viable project and recommends development. BacTech Nevada reported that they are continuing to optimize the planned project based on ongoing metallurgical and other testing and as a result the specific production and cost targets of the Micon Report may change and that such changes would be incorporated into the current permitting process. The permitting process could take approximately a year for permits for operations to be issued. BacTech also announced, in light of new discoveries by others on properties on trend with Tonkin Springs, that the exploration plans of step-out and infill drilling around known mineralization at Tonkin Springs would be modified to include deeper drilling to investigate Lower Plate geology. The purchase price for BacTech Nevada's 55% equity ownership interest in TSLLC was $1,750,000 of which $1,000,000 was paid during 2003 with the remaining $750,000 to be paid in 12 consecutive monthly payments of $62,500 commencing July 31, 2004. BacTech Nevada has made monthly payments totaling $250,000 through October 31, 2004. As of September 30, 2004, the purchase price receivable from BacTech Nevada of $548,692 includes accrued interest of $57,785 related to the initial present value of the BacTech Nevada purchase price payment obligations. BacTech Nevada is also required to pay 100% of the funding required by TSLLC up to $12 million (the "Funding Obligation"). Through September 30, 2004, BacTech Nevada has spent approximately $3,609,343 towards its Funding Obligation. If additional funding is required by TSLLC after the Funding Obligation, BacTech Nevada is required to advance the Company's share of any cash calls if requested by the Company (the "Advances"), with repayment to BacTech Nevada of any Advances plus interest from 50% of cash distributions otherwise due the Company. If BacTech Nevada withdraws from TSLLC at any time, its equity ownership interest would revert back to subsidiaries of the Company. At September 30, 2004, TSLLC, on a 100% basis, had total assets of $6,901,567, liabilities and obligations of $2,027,620 and equity of $4,873,947. The Company's equity account is $5,465,907 and BacTech's is $(591,960). For the nine months ended September 30, 2004, BacTech reports that total expenses of TSLLC were $2,460,182 which included $78,278 in accretion expense related to asset retirement obligation, and $2,381,904 reflecting property holding, amortization and evaluation costs. Since BacTech is funding all costs until it has funded its $12 million Funding Obligation, BacTech's members' equity account is credited for its funding and charged for 100% of the results of operations as provided in the TSLLC agreements. Bonding of reclamation as required under various Nevada agencies and the BLM is the responsibility of TSLLC under the terms of the Tonkin Springs LLC Operating Agreement and is to be funded by BacTech Nevada and credited to their Funding Obligation. On September 30, 2004, BacTech Nevada filed on behalf of TSLLC an updated reclamation cost estimate with the BLM of $2,856,633 related to existing disturbances for Tonkin Springs which also includes additional regulatory requirements since the last reclamation plan submission. Reclamation cost estimates to the BLM are required to be updated at approximate three year intervals and the revised estimate noted above was such a periodic update. The prior corresponding estimate of reclamation costs filed with the BLM was $1,737,866. As of September 30, 2004, TSLLC had bonds posted, including the BLM reclamation bond, in the aggregate amount of approximately $1,823,323 with the required governmental agencies secured by a restricted cash time deposit related to the estimate of reclamation costs. It is anticipated that related to governmental agency review of this revised estimate of reclamation cost, the required bonding amount could be increased by approximately $1,120,000. 7 U.S. GOLD CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2004 (Unaudited) The projected estimate of "Obligation for asset retirement" for the Tonkin Springs properties as of September 30, 2004, reflecting the adoption of SFAS 143 and the 2004 updated estimate of reclamation cost noted above, is $1,446,019 . The Company reflects its 45% share of this obligation, $650,709, in its investment balance for TSLLC. These amounts may be revised upon regulatory review of the updated reclamation cost estimate developed for regulatory purposes. Actual asset retirement and reclamation, generally, will be commenced upon the completion of operations at the properties. The Company adopted SFAS 143 effective January 1, 2003 and related thereto, the Company recorded a cumulative-effect gain to operations of $404,000. This reflected the reversal of prior period expense related to reclamation cost accruals, and reduced in part by amortization of capitalized reclamation amounts based upon units of production in prior years. During 2003 and through the date of the sale of 55% interest in TSLLC to BacTech, the Company recorded an expense for accretion and an increase in the obligation for asset retirement by $56,583, to recognize the accretion of reclamation liability at an 8.5% annual factor through July 31, 2003. The following is a reconciliation of the aggregate of asset retirement obligation projected for TSLLC: Asset retirement and reclamation liability-1/1/2004 $1,193,508 Increase in asset retirement and reclamation liability estimate 174,233 Accretion of liability at assumed 8.5% annual rate 78,278 ---------- Asset retirement and reclamation liability-9/30/04 $1,446,019 ========== It is anticipated that the capitalized asset retirement costs will be charged to expense based on the units of production method commencing with gold production at Tonkin Springs. There was no projected adjustment during 2003 or 2004 for amortization expense of capitalized asset retirement cost required under SFAS 143 since the Tonkin Springs property was not in operation. 3. SHAREHOLDERS' EQUITY During the nine month period ended September 30, 2004, the Company made certain sales of equity to address our cash requirements. Effective February 25, 2004, the Company entered into a Finder's Fee Agreement with Meridian Capital Ltd. ("Meridian"), a Canadian merchant bank, whereby Meridian agreed to assist the Company in seeking qualified equity investment through the sale of Units. With Unit Subscription Agreements, the Company sold Units at $0.90 where each Unit was made up of one share of common stock and one Unit Purchase Warrant. Unit Purchase Warrants are exercisable for 2 years from date of issue and provide that one share of common stock can be purchased for $1.25 plus four (4) Unit Purchase Warrants for up to 25,000 shares of common stock. Through the March 12, 2004 termination date of the Meridian agreement, the Company raised net proceeds of $72,350 through the sale of 100,000 Units. Meridian was paid a fee of 8.5% of monies raised for the Company through the sale of Units plus $10,000 for expenses, and warrants exercisable for 2 years to purchase 20,000 shares of the Company (equal to 20% of the Units sold) at a warrant exercise price of $0.90 per share (the "Meridian Warrants"). No value was assigned to the Unit Purchase Warrants since the exercise price of those warrants were above the market price of the common stock at the date of the closing of the transaction. A value of $21,800 was assigned to the Meridian Warrants based on the Black-Scholes pricing model and was recorded as finance fees in the first quarter of 2004. In June 2004, the Company sold 400,000 Units, with each Unit consisting of one share of common stock and one Unit Purchase Warrant at $0.50 per Unit. These 8 U.S. GOLD CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2004 (Unaudited) Unit Purchase Warrants are exercisable for two years from date of issue and provide that one share of common stock can be purchased for $0.80 plus two (2) Unit Purchase Warrants for up to 200,000 shares of common stock. The offering netted $195,000. An independent director of the Company was paid a success fee of $5,000 related to one of these private placement sales of stock. Also during June 2004, warrants to exercise 428,572 shares at exercise price of $0.30 per share were exercised at a reduced price of $0.25 per share for total proceeds of $107,142. The Company agreed to the reduced exercise price to induce the holder to exercise the warrants and recognized stock compensation expense of $21,429 for the reduction of the exercise price of these warrants. The Company may continue efforts to raise additional funds through the sale of equity securities to supplement our existing cash. During the nine months ended September 30, 2004, options to purchase a total of 340,000 shares at an exercise price of $0.16 per share were exercised. In connection with those transactions, 34,286 option shares were surrendered and cancelled under a cashless exercise to fund the exercise price of 150,000 of the option shares and accrued directors fees were reduced for exercise of 190,000 additional option shares. Options to purchase 375,550 shares at exercise price of $0.16 per share expired by their terms on January 20, 2004. 4. RELATED PARTY TRANSACTIONS-GOLD RESOURCE CORPORATION As of September 30, 2004, the Company owns 1,955,676 shares (approximately 32.85%) of the common stock of Gold Resource Corporation ("GRC"), a private Colorado corporation which ownership reflects dilution from recent shares issued by GRC. Through its stock ownership in GRC the Company has the opportunity to benefit from GRC's activities in Mexico. GRC is currently evaluating a gold/silver property in Mexico. During the period ended September 30, 2003, the Company made a non-interest bearing and unsecured advance to GRC of $30,000 to enable GRC to make critical payments related to its mineral properties. This advance was repaid September 16, 2003. William W. Reid and David C. Reid, each founders of GRC and officers and directors of the Company, in aggregate own approximately 23.7% of GRC as of September 30, 2004. The shares of GRC are not currently publicly traded. The shares of GRC were assessed by the Company to have indeterminable market value and the investment was therefore recorded at zero basis. Under equity accounting, the Company has not recorded its share of GRC's operating losses to date since such recognition would reduce its zero basis investment in GRC to below zero. GRC is exploring its "El Aguila" property located in the historic Totolapan mining district in the state of Oaxaca, Mexico, which until August 2004 was subject to an exploration funding agreement with Canyon Resources Corporation ("Canyon"). Under that agreement Canyon had the right to earn a 50% interest in the El Aguila property for funding $3.5 million in exploration and development costs at the property, or alternatively, Canyon could receive 600,000 shares of GRC common stock for funding to date of $500,000. GRC commissioned a scoping study by an independent engineering firm on the El Aguila project in order to estimate capital and operating costs of a theoretical 750 tonne per day open pit mining and milling operation. The scoping study was intended to provide information to define the minimum resource level required in order for GRC to be able to make a production decision. After completion of the scoping study Canyon elected to convert their prior funding to GRC of $500,000 into 600,000 shares of GRC stock, representing approximately 10% of GRC as of September 30, 2004. The theoretical scoping study was completed in July 2004 and indicated positive economics. A preliminary resource study based upon limited exploration drilling (3,900 meters in 69 drill holes) indicated mineralized material at a 1 gram gold/tonne cut-off, in a shallow, massive quartz body, at 108,500 ounces of gold and 1,368,000 ounces of silver. Additional drilling will be required to potentially increase the mineralized material prior to any production decision being made by GRC. Capital costs were projected at approximately $11 million and cash operating costs were projected at $107/ounce gold based upon processing mineralization of 7.43 grams/tonne gold (cut-off 2.5 grams) and 63 grams/tonne silver. 9 U.S. GOLD CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2004 (Unaudited) At September 30, 2004, GRC has reported on an unaudited basis that it has assets of $8,630, total liabilities of $353,679, and shareholders' (deficit) of $345,049. For the nine months ended September 30, 2004, GRC has reported a loss of $341,380 made up of $152,883 in mineral property exploration and evaluation, including Canyon funding noted above, $15,241 in property acquisition maintenance and related costs, a $90,000 stock bonus to a consultant of GRC, and $83,347 in general, administrative and other costs. GRC is currently seeking additional funding to proceed with its business plan and protect its assets. Such funding could include sale of equity and/or other corporate or property transactions. There can be no assurance that GRC will be successful in obtaining such additional funding. 10 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION OVERVIEW The following discussion and analysis covers the financial condition of U.S. Gold Corporation and its subsidiaries ("we" or the "Company") at September 30, 2004, changes in our financial condition since fiscal year end December 31, 2003, and a comparison of our results of operations for the three and nine months ended September 30, 2004 to the same period of the prior year. This information should be read in conjunction with the other financial information and reports filed with the Securities and Exchange Commission ("SEC"), especially our Annual Report on Form 10-KSB/A for the year ended December 31, 2003. The Company participates in two mining properties through a 45% interest in the Tonkin Springs gold property in Eureka County, Nevada, and through an approximate 32.85% equity interest in Gold Resource Corporation ("GRC") which is exploring the El Aguila gold/silver property in the state of Oaxaca, Mexico. The Tonkin Springs property is operated by BacTech Nevada in its capacity as manager of the Tonkin Springs LLC ("TSLLC") where BacTech is evaluating placing the property back into production. The El Aguila property is operated by GRC which is involved in the exploration and evaluation of that property. Both of these projects are currently in the development or exploration stage so we currently have no revenue from operations. We are dependent on funding from third parties and development of these properties to continue as a going concern. LIQUIDITY AND CAPITAL RESOURCES As of September 30, 2004, the Company had working capital of $623,086 made up of current assets of $648,249, and current liabilities of $25,163. Based on our existing capital needs, the cash available at September 30, 2004, and expected payments from BacTech Nevada, we believe that we have sufficient working capital to carry us through June 30, 2005. However, we will require additional capital in the future. The Company has no source of anticipated working capital other than payments from BacTech Nevada under the 2003 Purchase Agreement. BacTech Nevada has committed to pay us the balance of the purchase price for its interest in the TSLLC in monthly installments of $62,500 through May 30, 2005. In addition, BacTech Nevada has committed to fund development of the property up to at least $12 million so long as it retains its interest in TSLLC. While we expect BacTech Nevada to continue to honor its funding obligations and to make those payments, there is no assurance that it will do so. During the nine months ended September 30, 2004, the Company made various sales of equity to address our cash requirements. During the first quarter of 2004, we sold 100,000 Units, each Unit consisting of one share of common stock and one Unit Purchase Warrant at $0.90 per Unit. These Unit Purchase Warrants are exercisable for two years from date of issue and provide that one share of common stock can be purchased for $1.25 plus four (4) Unit Purchase Warrants for up to 25,000 shares of common stock. During the second quarter of 2004, we sold 400,000 Units, with each Unit consisting of one share of common stock and one Unit Purchase Warrant at $0.50 per Unit. These Unit Purchase Warrants are exercisable for two years from date of issue and provide that one share of common stock can be purchased for $0.80 plus two (2) Unit Purchase Warrants for up to 200,000 shares of common stock. These offerings netted us $267,350 after payment of expenses and fees. Also during the second quarter of 2004, warrants to exercise 428,572 shares at exercise price of $0.30/share were exercised at a reduced price of $0.25/share for total proceeds of $107,142. The Company recorded a stock issuance expense of $21,429 for the reduction of the exercise price of these warrants. We may continue efforts to raise additional funds through the sale of equity securities to supplement our existing cash. 11 Net cash used by operations decreased to $(661,841) for the nine months ended September 30, 2004 from $(784,623) for the corresponding period in 2003, reflecting in the 2003 period $449,718 of costs of the Tonkin Springs project paid by the Company while during the 2004 period, funding Tonkin Springs was the responsibility of BacTech Nevada. Cash paid to suppliers and employees decreased to $660,406 during the 2004 period from $787,537 during the 2003 period, primarily reflecting payment during 2004 of $66,221 of prior years accrued directors fees and deferred salaries, and the $449,718 holding costs of Tonkin Springs during the 2003. Cash flows from investing activities was $187,500 for 2004 compared to $404,000 in 2003 primarily reflecting purchase price payment from BacTech in both periods. Cash flow from financing activities decreased to $374,137 in 2004 from $441,835 in 2003 primarily reflecting lower amounts of net proceeds from the sale of common stock in 2004 compared to 2003. RESULTS OF OPERATIONS - 2004 COMPARED TO 2003 For the nine months ended September 30, 2004, the Company recorded a net loss of $(625,732), or $(.03) per share, compared to a loss for the corresponding period of 2003 of $(481,944) or $(.03) per share. Interest income related to the BacTech Nevada purchase price payment obligations were $31,418 in 2004 compared to $16,758 in 2003. General and administrative expense increased $267,533 in 2004 to $608,102, reflecting a small increase in salary expense and legal costs in 2004 as well as no allocation of overhead costs to holding costs of the Tonkin Springs project in the 2004 period since BacTech Nevada was manager of the project. In the nine months ended September 30, 2003, $258,613 in general and administrative costs were allocated to the cost category "holding costs of Tonkin Springs". Holding costs for the Tonkin Springs property were $449,718 during 2003 while in the 2004 period the project was funded and managed by BacTech Nevada. During the 2004 period, stock compensation expense of $21,800 was recognized for the Black-Scholes pricing model value of the Meridian Warrants issued in conjunction with the sale of 100,000 Units and $21,429 in similar expense was recognized as expense for the reduction of the exercise price of warrants to purchase 428,572 shares, while in the 2003 period, stock compensation expense of $290,000 was recognized related to the sale of 1,000,000 shares of common stock to our largest shareholder. The Company took an expense charge as a realization reserve for the full value ($363,165) of shares of its common stock issued in exchange for 675,676 shares of stock of GRC. In the 2003 period, accretion expense of asset retirement obligation under SFAS 143 totaled $56,583 while no similar expense was recognized for 2004 since the Company does not consolidate the accounts of TSLLC subsequent to the sale of 55% interest to BacTech Nevada effective July 31, 2003. In the 2003 period, a gain on the January 1, 2003 implementation of SFAS 143 reflecting an accounting change of $404,000 was recognized. For the three months ended September 30, 2004, the Company recorded a net loss of $(202,034), or $(.01) per share, compared to net income for the corresponding period of 2003 of $11,151 or $.00 per share. In the 2003 period the Company recognized a gain of $601,924 on the sale of 55% interest in TSLLC to BacTech Nevada which transaction closed July 31, 2003. Interest income related to the BacTech Nevada purchase price payment obligations were $10,009 in three months ended September 30, 2004 compared to $13,376 of other interest income in the corresponding period of 2003. General and administrative expense increased $14,124 in 2004 to $210,629, reflecting a small increase in salary expense and legal costs in 2004 as well as no allocation of overhead costs to holding costs of the Tonkin Springs project since BacTech Nevada was manager of the project in the 2004 period. In the three months ended September 30, 2003, $38,000 in general and administrative costs were allocated to the cost category "Holding costs of Tonkin Springs". Holding costs for the Tonkin Springs property were $30,970 during 2003 (net of certain cost reimbursements by BacTech), while in the 2004 period the project was funded and managed by BacTech Nevada. 12 TSLLC, with BacTech Nevada as manager, is evaluating the Tonkin Springs property to determine if the property can be put back into production. On March 15, 2004, TSLLC submitted permit applications to governmental agencies for review, approval and permit issuances related to proposed recommencement of gold production at Tonkin Springs. BacTech Nevada reported in September 2004 that they are continuing to optimize the planned project based on ongoing metallurgical and other testing and changes in processes, if any, would be incorporated into the current permitting efforts. Such changes to the planned operations, if any, may impact the time required to secure operating permits. These permits could take approximately a year to be issued. In conjunction with the permitting process, TSLLC has determined that the project will require an Environmental Impact Statement ("EIS") that involves certain statutory evaluations by the federal Bureau of Land Management ("BLM") and provides for public comment. The EIS is currently in process and is anticipated to proceed consistent with regulatory agency permit application evaluations. The permit amendments are currently for a staged operation lasting up to 10 years. TSLLC is currently proposing for Tonkin Springs the construction of a new heap leach pad for processing oxide and oxidized sulfide mineralization and to oxidize sulfide mineralization in an engineered bio-oxidation facility that has been designed to contemporary standards. BacTech Nevada commissioned a third party feasibility study for Tonkin Springs by the engineering firm of Micon International Limited ("Micon"), of Toronto, Canada. Micon was retained to determine the feasibility of processing approximately two million short tons of oxide and sulfide mineralization per year in a study prepared consistent with Canadian securities laws. The study was completed in May 2004 and BacTech Nevada reported that the study concluded that the Tonkin Springs gold mine project is a viable project and recommends development. As noted above, in September 2004, BacTech Nevada stated that they are continuing metallurgical and other testing, and, as a result, the specific production and cost targets of the Micon study may change. The project will use traditional open pit mining methods and involve three open pits. The reclamation and closure plans and reclamation bond are designed to fully close the property at the end of the project's life. Commencement of operations at Tonkin Springs is dependent, among other things, upon the timing of regulatory permit review and approval. BacTech Nevada has spent approximately $3,609,343 towards its $12,000,000 Funding Obligation through September 30, 2004. GRC's unaudited operating loss for the nine month periods ended September 30, 2004 and 2003 is $(341,380) and $(281,707), respectively, of which the Company's share would be approximately $(128,403) and $(74,500), respectively. Under equity accounting, the Company has not recorded its share of GRC's operating losses to date since such recognition would reduce its zero basis investment in GRC to below zero. GRC is currently seeking additional funding to proceed with its business plan and protect its assets which funding could include sale of equity and/or other corporate or property transactions. There can be no assurance that GRC will be successful in obtaining such additional funding. FORWARD-LOOKING STATEMENTS This Form 10-QSB contains or incorporates by reference "forward-looking statements," as that term is used in federal securities laws, about our financial condition, results of operations and business. These statements include, among others: - statements concerning the benefits that we expect will result from our business activities and certain transactions that we contemplate or have completed, such as increased revenues, decreased expenses and avoided expenses and expenditures; and - statements of our expectations, beliefs, future plans and strategies, anticipated developments and other matters that are not historical facts. 13 These statements may be made expressly in this document or may be incorporated by reference to other documents that we will file with the SEC. You can find many of these statements by looking for words such as "believes," "expects," "anticipates," "estimates" or similar expressions used in this report or incorporated by reference in this report. These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause our actual results to be materially different from any future results expressed or implied by us in those statements. Because the statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied. We caution you not to put undue reliance on these statements, which speak only as of the date of this report. Further, the information contained in this document or incorporated herein by reference is a statement of our present intention and is based on present facts and assumptions, and may change at any time and without notice, based on changes in such facts or assumptions. RISK FACTORS IMPACTING FORWARD-LOOKING STATEMENTS The important factors that could prevent us from achieving our stated goals and objectives include, but are not limited to, those set forth in our other reports filed with the SEC and the following: o The price of gold; o The worldwide economic situation; o Any change in interest rates or inflation; o The willingness and ability of third parties to honor their contractual commitments; o Our ability to raise additional capital, as it may be affected by current conditions in the stock market and competition in the gold mining industry for risk capital; o Our costs of production; o Environmental and other regulations, as the same presently exist and may hereafter be amended; o Our ability to identify, finance and integrate other acquisitions; and o Volatility of our stock price. We undertake no responsibility or obligation to update publicly these forward-looking statements, but may do so in the future in written or oral statements. Investors should take note of any future statements made by or on our behalf. ITEM 3. CONTROLS AND PROCEDURES (a) We maintain a system of controls and procedures designed to provide reasonable assurance as to the reliability of the financial statements and other disclosures included in this report. As of September 30, 2004, under the supervision and with the participation of our Chief Executive Officer and Principal Financial Officer, management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective in timely alerting them to material information required to be included (b) Changes in Internal Controls. There were no significant changes in the Company's internal controls or, to the Company's knowledge, in other factors that could significantly affect these controls subsequent to the date of their evaluation. 14 PART II ITEM 5. OTHER INFORMATION. As provided in its Articles of Incorporation, the Company may indemnify officers and directors for discharge of their respective responsibilities to the Company. In furtherance of the indemnification provisions contained in the Articles of Incorporation, effective September 21, 2004, the Company entered into indemnification agreements with each of its executive officers and directors, those persons being William W. Reid, William F. Pass, David C. Reid, John W. Goth, Richard F. Mauro, Richard F. Nanna, Peter Bojtos and Curtis Deane. The form of Indemnification Agreement provides, among other things and subject to certain exclusions, that the Company will indemnify such officers and directors against any and all losses, claims, damages, expenses and liabilities arising our of their service to, and activities on behalf of, the Company, provided that the officer or director acted in good faith and in a manner which he reasonably believed to be in, or not opposed to, the best interest of the Company. The Indemnification Agreements also provide that the Company shall advance expenses to the officer or director upon the request of such individual, subject again to certain exceptions. The form of Indemnification Agreement is included as an exhibit to this report. Effective September 24, 2004, the Securities and Exchange Commission declared effective a registration statement of the Company covering resale by certain shareholders of 4,203,243 shares of common stock which were sold by the Company during 2002 and through September 30, 2004 including shares issuable upon exercise of related warrants. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. a. Exhibits 10.1* Form of Indemnification Agreement entered into by the Corporation with each of its executive officers and directors effective September 21, 2004. 31.1* Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for William W. Reid. 31.2* Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for William F. Pass. 32* Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for William W. Reid and William F. Pass. * Filed and included in this Form 10-QSB. b. Reports on Form 8-K. On July 14, 2004, the Company reported on Form 8-K, Item 5, Other Events and Regulation FD Disclosures, a news release which reported that its affiliate, Gold Resource Corporation, an affiliate of the Company, received positive results from an independent scoping study on the El Aguila gold/sliver project in Oaxaca, Mexico. On September 1, 2004, the Company reported on Form 8-K, Item 8.01, Other Events, a news release which reported that Canyon Resources Corporation elected to take 600,000 shares of the common stock of Gold Resource Corporation, an affiliate of the Company, for the $500,000 funding previously provided by Canyon for exploration of Gold Resource's El Aguila gold/silver project in Oaxaca, Mexico. 15 SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the Company caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. U.S. GOLD CORPORATION Dated: November 12, 2004 By /s/ William W. Reid --------------------------------- William W. Reid, President and Chairman of the Board Dated: November 12, 2004 By /s/ William F. Pass --------------------------------- William F. Pass, Vice President and Chief Financial Officer 16 EX-10 2 exh10_1.txt Exhibit 10.1 INDEMNIFICATION AGREEMENT This Agreement is made as of the 21st day of September 2004, by and between U.S. Gold Corporation, a Colorado Corporation ("the Company"), and the undersigned director and/or officer of the Company (the "Indemnitee") with reference to the following facts: The Indemnitee is currently serving as a director and/or officer of the Company and the Company wishes the Indemnitee to continue in such capacity, and, if requested in the future, to serve in such other positions with the Company and its subsidiaries as the Company may determine. The Indemnitee is willing, under certain circumstances, to continue serving as a director and/or officer of the Company. The Indemnitee does not regard the indemnities available under the Company's Articles of Incorporation (the "Articles of Incorporation") and Bylaws (the "Bylaws") as adequate to protect the Indemnitee against the risks of personal liability associated with the Indemnitee's service to the Company. In this connection the Company and the Indemnitee now agree they should enter into this Indemnification Agreement in order to provide greater protection to Indemnitee against such risks of service to the Company. In order to induce the Indemnitee to continue to serve as a director and/or officer of the Company and in consideration of the Indemnitee's continued service, the Company hereby agrees to indemnify the Indemnitee as follows: 1 . INDEMNITY. The Company will indemnify the Indemnitee, his executors, administrators or assigns, for any Expenses (as defined below) which the Indemnitee is or becomes legally obligated to pay in connection with any Proceeding. As used in this Agreement the term "Proceeding" includes any threatened, pending or completed claim, action, suit or proceeding, whether brought by or in the right of the Company or otherwise and whether of a civil, criminal, administrative or investigative nature, in which the Indemnitee may be or may have been involved as a party or otherwise, by reason of the fact that Indemnitee is or was a director or officer of the Company, by reason of any actual or alleged error or misstatement or misleading statement made or suffered by the Indemnitee, by reason of any action taken by him or of any inaction on his part while acting as such director or officer, or by reason of the fact that he was serving at the request of the Company as a director, trustee, officer, fiduciary, employee or agent of another corporation, partnership, joint venture, trust or other enterprise; provided, that in each such case Indemnitee acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company, and, in the case of a criminal proceeding, had no reasonable cause to believe that his conduct was unlawful. As used in this Agreement, the term "other enterprise" includes (without limitation) employee benefit plans and administrative committees thereof, and the term "fines" includes (without limitations) any excise tax assessed with respect to any employee benefit plan. 2. EXPENSES. As used in this Agreement, the term "Expenses" includes, without limitation, damages, judgments, fines, penalties, settlements and costs, reasonable attorneys' fees and disbursements and costs of attachment or similar bonds, and investigations in connection with investigating, defending, being a witness or participating in any Proceeding, and any expenses of establishing a right to indemnification under this Agreement. 3. ENFORCEMENT. If a claim or request under this Agreement is not paid by the Company, or on its behalf, within thirty days after a written claim or request has been received by the Company, the Indemnitee may at any time thereafter bring suit against the Company to recover the unpaid amount of the claim or request and if successful in whole or in part, the Indemnitee shall be entitled to be paid also the Expenses of prosecuting such suit. 4. SUBROGATION. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights; provided, however, that neither this right of subrogation nor the exclusion set forth in Section 5(b) below shall apply to any right of recovery of the Indemnitee or any payment received by the Indemnitee from an entity that is the primary employer of the Indemnitee or on whose behalf the Indemnitee serves as a director and/or officer of the Company or an affiliate of any such entity. 5. EXCLUSIONS. The Company shall not be liable under the Agreement to make any payment in connection with any claim made against the Indemnitee: (a) to the extent that payment is actually made to the Indemnitee under a valid, enforceable and collectible insurance policy; (b) to the extent that the Indemnitee is indemnified and actually paid otherwise than pursuant to this Agreement, subject to Section 4; (c) in connection with a judicial action by or in the right of the Company, in respect of any claim, issue or matter as to which the Indemnitee shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the Company unless, and only to the extent that, any court in which such action was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, the Indemnitee is fairly and reasonably entitled to indemnity for such expenses as such court shall deem proper; (d) if it is proved by final judgment in a court of law or other final adjudication to have been based upon or attributable to the Indemnitee's having gained any personal profit or advantage to which he was not legally entitled; (e) for a disgorgement of profits made from the purchase and sale by the Indemnitee of securities pursuant to Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar provisions of any state statutory law or common law; 2 (f) brought about or contributed to by the dishonesty of the Indemnitee; provided, however, notwithstanding the foregoing, the Indemnitee shall be protected under this Agreement as to any claims upon which suit may be brought against him by reason of any alleged dishonesty on his part, unless a judgment or other final adjudication thereof adverse to the Indemnitee shall establish that he committed (i) acts of active and deliberate dishonesty, (ii) with actual dishonest purpose and intent, (iii) which acts were material to the cause of action so adjudicated; or (g) for any judgment, fine or penalty which the Company is prohibited by applicable law from paying as indemnity or for any other reason. 6. INDEMNIFICATION OF EXPENSES OF SUCCESSFUL PARTY. Notwithstanding any other provision of this Agreement, to the extent that the Indemnitee has been successful on the merits or otherwise in defense of any Proceeding or in defense of any claim, issue or matter therein, including dismissal without prejudice, Indemnitee shall be indemnified against any and all Expenses incurred in connection therewith. 7. PARTIAL INDEMNIFICATION. If the Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for a portion of any Expenses, but not for the total amount thereof, the Company shall indemnify the Indemnitee for the portion of such Expenses to which the Indemnitee is entitled. 8. ADVANCE OF EXPENSES. Expenses reasonably and necessarily incurred by the Indemnitee in connection with any Proceeding, except the amount of any settlement, shall be paid by the Company in advance upon request of the Indemnitee that the Company pay such Expenses. The Indemnitee hereby undertakes to repay to the Company the amount of any Expenses theretofore paid by the Company to the extent that it is ultimately determined that such Expenses were not reasonable or that the Indemnitee is not entitled to indemnification in respect thereof. Such advances shall be made by the Company unless: (a) the Board of Directors determines, by a majority vote of a quorum of disinterested directors based on clear and convincing evidence known to the Board of Directors at the time such determination is made, that the Indemnitee would not be entitled to indemnification under applicable law, or (b) if such a quorum is not obtainable or a quorum of disinterested directors so directs, independent legal counsel determines, based on clear and convincing evidence known to the counsel at the time such determination is made, that Indemnitee would not be entitled to indemnification under applicable law. 9. NOTICE AND DEFENSE OF CLAIM. The Indemnitee, as a condition precedent to his right to be indemnified under this Agreement, shall give to the Company notice in writing as soon as practicable of any claim made against him for which indemnity will or could be sought under this Agreement. Notice to the Company shall be given at its principal office, shall be directed to the Corporate Secretary (or such other address as the Company shall designate in writing to the Indemnitee) and shall be effective only upon actual receipt. In addition, the Indemnitee shall give the Company such information and cooperation as it may reasonably require and as shall be within the Indemnitee's power. 3 With respect to any such Proceeding: (a) the Company will be entitled to participate therein at its own expense; and (b) except as otherwise provided below ' to the extent that it may wish, the Company jointly with any other indemnifying party similarly notified will be entitled to assume the defense thereof, with counsel reasonably satisfactory to Indemnitee. After notice from the Company to Indemnitee, given within a reasonable time, of its election so to assume the defense thereof, the Company will not be liable to Indemnitee under this Agreement for any legal or other expenses subsequently incurred by Indemnitee in connection with the defense of such Proceeding except as otherwise provided below. Indemnitee shall have the right to employ his own counsel in such Proceeding but the fees and expenses of such counsel incurred after notice from the Company of its assumption of the defense thereof shall be at the expense of Indemnitee unless (i) the employment of counsel by Indemnitee has been authorized by the Company, or (ii) Indemnitee shall have obtained the written opinion of refutable counsel with expertise in such matters (such counsel to be reasonably satisfactory to a majority of disinterested directors) that there may be one or more defenses available to Indemnitee that could reasonably be expected to result in a conflict of interest between the Company and Indemnitee in the conduct of the defense of such action, in each of which cases the reasonable fees and expenses of Indemnitee's counsel shall be at the expense of the Company. The Company shall not be entitled to assume the defense of any Proceeding- brought by or on behalf of the Company or that is the subject of the opinion provided by Indemnitee under clause (ii) above. The Company shall not be liable to indemnify Indemnitee under this Agreement for any amounts paid in settlement of any Proceeding effected without its prior written consent. Indemnitee shall execute and deliver such agreements, releases and other documents as the Company may reasonably request to effect a settlement of any Proceeding. Without Indemnitee's consent, the Company shall not enter into any settlement that provides for any action by Indemnitee other than the payment of amounts against which Indemnitee is entitled to indemnification hereunder. In the event that the Company proposes to settle any Proceeding by the payment of damages against which Indemnitee is entitled to indemnification hereunder and in an amount that the plaintiff has indicated would be acceptable, and the Indemnitee refuses to enter into a reasonable settlement agreement, the Company shall not thereafter be responsible for any costs of defense or the amount by which any judgment or settlement thereafter paid exceeds the damages that the Company proposed to pay in settlement. Neither the Company nor Indemnitee will unreasonably withhold their consent to any proposed settlement. 10. NO EMPLOYMENT AGREEMENT. Nothing contained herein shall be deemed to create a contract of employment between the Company and Indemnitee. 11. COUNTERPARTS. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one instrument. 12. INDEMNIFICATION HEREUNDER NOT EXCLUSIVE. Nothing herein shall be deemed to diminish or otherwise restrict the Indemnitee's right to indemnification under any provision of the Articles of Incorporation or Bylaws of the Company and amendments thereto or under law. 13. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with Colorado law without giving effect to the principles of conflicts of laws. 4 14. COVERAGE. The provisions of this Agreement shall apply with respect to the Indemnitee's service in any of the capacities described in Section I above prior to as well as after the date of this Agreement. The right of Indemnitee to be indemnified hereunder shall continue after the termination of Indemnitee's service as an officer and/or director of the Company with respect to all periods prior to such termination. 15. AMENDMENTS; WAIVERS. No supplement, modification or amendment of this Agreement shall be binding- unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 16. BINDING EFFECT. This Agreement shall be binding upon and inure to the benefit of and be enforceable by both of the parties hereto and their respective successors, assignees (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company), heirs, executors and personal and legal representatives. 17. SEVERABILITY. If any provision of this Agreement (including any provision within a single section, paragraph or sentence) is held by a court of competent jurisdiction to be invalid. void or otherwise unenforceable in any respect, the validity and enforceability of any such provision in every other respect and of the remaining provisions of this Agreement shall not be in any way impaired and shall remain enforceable to the full extent permitted by law. 18. NOTICES. All notices, requests, demands and other communications which are required or may be given under this Agreement shall be in writing and shall be deemed to have been duly given when delivered in person (by express courier or otherwise), by telecopier or three days after being deposited in the United States mail, certified mail, return receipt requested, first class postage prepaid, as follows: If to the Company: Name: U.S. Gold Corporation Address: 2201 Kipling St., Suite 100 Lakewood, Colorado 80215 Tele No.: 303-238-1438 If to Indemnitee: Name: Address: Tele No.: IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and signed as of the day and year first above written. COMPANY ----------------------------------------------------- By: INDEMNITEE By: -------------------------------------------------- Printed Name: 5 EX-31 3 ex31_1sept2004.txt Exhibit 31.1 CERTIFICATION Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, WILLIAM W. REID, certify that: 1. I have reviewed this Quarterly Report on Form 10-QSB of U.S. Gold Corporation (The "Company") for the quarter ended September 30, 2004; 2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report; 3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this Report; 4. The Company's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared; b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c. Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and d. Disclosed in this Report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter (the Company's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and 5. The Company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting. Dated: November 12, 2004. /s/ William W. Reid --------------------------------------------- William W. Reid, President, Chief Executive Officer and Chairman 2 EX-31 4 ex31_2sept2004.txt Exhibit 31.2 CERTIFICATION Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, WILLIAM F. PASS, certify that: 1. I have reviewed this Quarterly Report on Form 10-QSB of U.S. Gold Corporation (the "Company") for the quarter ended September 30, 2004; 2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report; 3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this Report; 4. The Company's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared; b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c. Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and d. Disclosed in this Report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter (the Company's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and 5. The Company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting. Dated: November 12, 2004. /s/ William F. Pass ----------------------------------------- William F. Pass, Vice President and Chief Financial Officer 2 EX-32 5 ex32_sept2004.txt Exhibit 32 CERTIFICATION Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the Quarterly Report on Form 10-QSB of U.S. Gold Corporation, a Colorado corporation (the "Company") for the quarter ended September 30, 2004 as filed with the Securities and Exchange Commission (the "Report"), each of the undersigned officers of the Company does hereby certify pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that to the best of our knowledge: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: November 12, 2004. U.S. GOLD CORPORATION /s/ William W. Reid ------------------------------------- William W. Reid, President, Chief Executive Officer and Chairman of the Board of Directors /s/ William F. Pass ------------------------------------- William F. Pass, Vice President and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----