STAR
GOLD CORP.
CONDENSED
BALANCE SHEETS (UNAUDITED)
|
|
October 31, 2021
|
|
|
April 30, 2021
|
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
60,756
|
|
|
$
|
265,944
|
|
Other current assets (NOTE 5)
|
|
|
163,755
|
|
|
|
33,331
|
|
TOTAL CURRENT ASSETS
|
|
|
224,511
|
|
|
|
299,275
|
|
MINING INTEREST (NOTE 4)
|
|
|
566,167
|
|
|
|
554,167
|
|
RECLAMATION BOND
|
|
|
89,400
|
|
|
|
89,400
|
|
TOTAL ASSETS
|
|
$
|
880,078
|
|
|
$
|
942,842
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
23,473
|
|
|
$
|
32,336
|
|
TOTAL CURRENT LIABILITIES
|
|
|
23,473
|
|
|
|
32,336
|
|
DEFERRED COMPENSATION TO OFFICERS AND DIRECTORS (NOTE 6)
|
|
|
129,000
|
|
|
|
-
|
|
TOTAL LIABILITIES
|
|
|
152,473
|
|
|
|
32,336
|
|
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES (NOTE 4)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
Preferred Stock, $.001 par value; 10,000,000 shares authorized,
none issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
Common Stock, $.001 par value; 300,000,000 shares authorized;
97,290,810 shares issued and outstanding
|
|
|
97,291
|
|
|
|
97,291
|
|
Additional paid-in capital
|
|
|
12,702,879
|
|
|
|
12,615,008
|
|
Accumulated deficit
|
|
|
(12,072,565
|
)
|
|
|
(11,801,793
|
)
|
TOTAL STOCKHOLDERS EQUITY
|
|
|
727,605
|
|
|
|
910,506
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
|
|
$
|
880,078
|
|
|
$
|
942,842
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these condensed unaudited financial statements.
STAR
GOLD CORP.
CONDENSED
STATEMENTS OF OPERATIONS (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
October 31, 2021
|
|
|
October 31, 2020
|
|
|
October 31, 2021
|
|
|
October 31, 2020
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mineral exploration expense
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
25,146
|
|
|
$
|
25,146
|
|
Pre-development expense
|
|
|
13,596
|
|
|
|
103,741
|
|
|
|
26,911
|
|
|
|
135,908
|
|
Legal and professional fees
|
|
|
8,519
|
|
|
|
20,853
|
|
|
|
48,680
|
|
|
|
61,588
|
|
Management and administrative
|
|
|
83,023
|
|
|
|
21,802
|
|
|
|
169,577
|
|
|
|
43,415
|
|
Depreciation
|
|
|
-
|
|
|
|
416
|
|
|
|
-
|
|
|
|
832
|
|
TOTAL OPERATING EXPENSES
|
|
|
105,138
|
|
|
|
146,812
|
|
|
|
270,314
|
|
|
|
266,889
|
|
LOSS FROM OPERATIONS
|
|
|
(105,138
|
)
|
|
|
(146,812
|
)
|
|
|
(270,314
|
)
|
|
|
(266,889
|
)
|
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
12
|
|
|
|
11
|
|
|
|
66
|
|
|
|
11
|
|
Interest expense
|
|
|
(262
|
)
|
|
|
(262
|
)
|
|
|
(524
|
)
|
|
|
(524
|
)
|
Interest expense, related party
|
|
|
-
|
|
|
|
(630
|
)
|
|
|
-
|
|
|
|
(1,367
|
)
|
TOTAL OTHER INCOME (EXPENSE)
|
|
|
(250
|
)
|
|
|
(881
|
)
|
|
|
(458
|
)
|
|
|
(1,880
|
)
|
Provision (benefit) for income tax
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
NET LOSS
|
|
$
|
(105,388
|
)
|
|
$
|
(147,693
|
)
|
|
$
|
(270,772
|
)
|
|
$
|
(268,769
|
)
|
Basic and diluted loss per share
|
|
$
|
Nil
|
|
|
$
|
Nil
|
|
|
$
|
Nil
|
|
|
$
|
Nil
|
|
Basic and diluted weighted average number shares outstanding
|
|
|
97,290,810
|
|
|
|
91,213,526
|
|
|
|
97,290,810
|
|
|
|
84,415,053
|
|
The
accompanying notes are an integral part of these condensed unaudited financial statements.
STAR
GOLD CORP.
CONDENSED
STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (UNAUDITED)
For
the periods ended October 31, 2021 and 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
Issued
|
|
|
Par Value
$.001 per share
|
|
|
Additional
Paid in Capital
|
|
|
Accumulated
Deficit
|
|
|
Total
Stockholders
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE, April 30, 2020
|
|
|
77,394,841
|
|
|
$
|
77,395
|
|
|
$
|
11,576,571
|
|
|
$
|
(11,157,593
|
)
|
|
$
|
496,373
|
|
Common stock issued for exercise of warrants
|
|
|
816,000
|
|
|
|
816
|
|
|
|
35,904
|
|
|
|
-
|
|
|
|
36,720
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(121,076
|
)
|
|
|
(121,076
|
)
|
BALANCE, July 31, 2020
|
|
|
78,210,841
|
|
|
$
|
78,211
|
|
|
$
|
11,612,475
|
|
|
$
|
(11,278,669
|
)
|
|
$
|
412,017
|
|
Common shares issued for exercise of warrants
|
|
|
18,679,969
|
|
|
|
18,680
|
|
|
|
821,918
|
|
|
|
-
|
|
|
|
840,598
|
|
Common shares issued for accounts payable
|
|
|
400,000
|
|
|
|
400
|
|
|
|
19,600
|
|
|
|
-
|
|
|
|
20,000
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(147,693
|
)
|
|
|
(147,693
|
)
|
BALANCE, October 31, 2020
|
|
|
97,290,810
|
|
|
$
|
97,291
|
|
|
$
|
12,453,993
|
|
|
$
|
(11,426,362
|
)
|
|
$
|
1,124,922
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE, April 30, 2021
|
|
|
97,290,810
|
|
|
$
|
97,291
|
|
|
$
|
12,615,008
|
|
|
$
|
(11,801,793
|
)
|
|
$
|
910,506
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(165,384
|
)
|
|
|
(165,384
|
)
|
BALANCE, July 31, 2021
|
|
|
97,290,810
|
|
|
$
|
97,291
|
|
|
$
|
12,615,008
|
|
|
$
|
(11,967,177
|
)
|
|
$
|
745,122
|
|
Warrants issued for other current assets
|
|
|
-
|
|
|
|
-
|
|
|
|
87,871
|
|
|
|
-
|
|
|
|
87,871
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(105,388
|
)
|
|
|
(105,388
|
)
|
BALANCE, October 31, 2021
|
|
|
97,290,810
|
|
|
$
|
97,291
|
|
|
$
|
12,702,879
|
|
|
$
|
(12,072,565
|
)
|
|
$
|
727,605
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these condensed unaudited financial statements.
STAR
GOLD CORP.
CONDENSED
STATEMENTS OF CASH FLOWS (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
Six months ended
|
|
|
|
October 31, 2021
|
|
|
October 31, 2020
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(270,772
|
)
|
|
$
|
(268,769
|
)
|
Adjustments to reconcile net loss to net cash used by operating activities Depreciation
|
|
|
-
|
|
|
|
832
|
|
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Other current assets
|
|
|
(42,553
|
)
|
|
|
-
|
|
Other asset
|
|
|
-
|
|
|
|
(5,438
|
)
|
Accounts payable and accrued liabilities
|
|
|
(8,863
|
)
|
|
|
29,256
|
|
Deferred compensation to officers and directors
|
|
|
129,000
|
|
|
|
(89,000
|
)
|
Net cash used by operating activities
|
|
|
(193,188
|
)
|
|
|
(333,119
|
)
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Payments for mining interest
|
|
|
(12,000
|
)
|
|
|
(12,000
|
)
|
Net cash used by investing activities
|
|
|
(12,000
|
)
|
|
|
(12,000
|
)
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Proceeds from note payable, related party
|
|
|
-
|
|
|
|
30,000
|
|
Repayment of note payable, related party
|
|
|
-
|
|
|
|
(80,000
|
)
|
Proceeds from common stock payable
|
|
|
-
|
|
|
|
-
|
|
Proceeds from exercise of warrants
|
|
|
-
|
|
|
|
877,318
|
|
Net cash provided by financing activities
|
|
|
-
|
|
|
|
827,318
|
|
Net decrease in cash and cash equivalents
|
|
|
(205,188
|
)
|
|
|
482,199
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
|
|
|
265,944
|
|
|
|
26,617
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT END OF YEAR
|
|
$
|
60,756
|
|
|
$
|
508,816
|
|
|
|
|
|
|
|
|
|
|
NON-CASH FINANCING AND INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Warrants issued for prepaid expense
|
|
$
|
87,871
|
|
|
$
|
-
|
|
The
accompanying notes are an integral part of these condensed unaudited financial statements.
STAR
GOLD CORP.
|
NOTES
TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
|
OCTOBER
31, 2021
|
NOTE
1 - NATURE OF OPERATIONS
Star
Gold Corp. (the Company) was initially incorporated as Elan Development, Inc., in the State of Nevada on December 8, 2006.
The Company was originally organized to explore mineral properties in British Columbia, Canada but the Company is currently focusing
on gold, silver and other base metal-bearing properties in Nevada.
The
Companys core business consists of assembling and/or acquiring land packages and mining claims the Company believes have potential
mining reserves, and expending capital to explore these claims by drilling, and performing geophysical work or other exploration work
deemed necessary. The business is a high-risk business as there is no guarantee that the Companys exploration work will ultimately
discover or produce any economically viable minerals.
NOTE
2 - SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
This
summary of significant accounting policies is presented to assist in understanding the financial statements. The financial statements
and notes are representations of the Companys management, which is responsible for their integrity and objectivity. The accompanying
unaudited financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United
States of America for interim financial information, as well as the instructions to Form 10-Q. Accordingly, the financial statements
do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America
for complete financial statements.
In
the opinion of the Companys management, all adjustments, consisting of only normal recurring adjustments, considered necessary
for a fair statement of the interim financial statements have been included. The balance sheet at April 30, 2021 was derived from audited
annual financial statements but does not contain all the footnote disclosures from the annual financial statements. All amounts presented
are in U.S. dollars. Operating results for the three- and six-month periods ended October 31, 2021 are not necessarily indicative of
the results that may be expected for the full fiscal year ending April 30, 2022.
For
further information, refer to the financial statements and footnotes thereto in the Companys Annual Report on Form 10-K for the
year ended April 30, 2021.
Going
Concern
As
shown in the accompanying financial statements, the Company has incurred operating losses since inception. As of October 31, 2021, the
Company has limited financial resources with which to achieve the objectives and obtain profitability and positive cash flows, which
raises substantial doubt about the Companys ability to continue as a going concern. As shown in the accompanying balance sheets
of October 31, 2021, the Company has an accumulated deficit of $12,072,565. The financial statements do not include any adjustments relating
to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary
in the event the Company cannot continue in existence. Achievement of the Companys objectives will be dependent upon the ability
to obtain additional financing, to locate profitable mining properties and generate revenue from current and planned business operations,
and control costs. The Company plans to fund its future operations by joint venturing or obtaining additional financing from investors
and/or lenders.
Use
of Estimates
The
preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires
the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements,
and the reported amounts of revenues and expenses during the reporting period. Significant areas requiring the use of management assumptions
and estimates relate to long-lived asset impairments and stock-based compensation valuation. Actual results could differ from these estimates
and assumptions and could have a material effect on the Companys reported financial position and results of operations.
STAR
GOLD CORP.
|
NOTES
TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
|
OCTOBER
31, 2021
|
Risks
and Uncertainties
The
Companys operations are subject to significant risks and uncertainties, including financial, operational, technological and other
risks associated with operating an emerging exploration mining business, including the potential risk of business failure.
Cash
and Cash Equivalents
For
the purposes of the statement of cash flows, the Company considers all highly liquid investments with original maturities of three months
or less when acquired to be cash equivalents.
Reclamation
bond
The
Reclamation bond constitutes cash held as collateral for the faithful performance of the bond securing exploration permits and are accounted
for on a cost basis.
Financial
Instruments
The
Companys financial instruments include cash and cash equivalents and reclamation bond. All instruments are accounted for on a
cost basis, which, due to the short maturity of these financial instruments, approximates fair value at October 31, 2021.
Fair
Value Measures
When
required to measure assets or liabilities at fair value, the Company uses a fair value hierarchy based on the level of independent, objective
evidence surrounding the inputs used. The Company determines the level within the fair value hierarchy in which the fair value measurements
in their entirety fall. The categorization within the fair value hierarchy is based upon the lowest level of input that is significant
to the fair value measurement. Level 1 uses quoted prices in active markets for identical assets or liabilities, Level 2 uses significant
other observable inputs, and Level 3 uses significant unobservable inputs. The amount of the total gains or losses for the period are
included in earnings that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still
held at the reporting date.
At
October 31, 2021 and April 30, 2021, the Company had no assets or liabilities accounted for at fair value on a recurring basis.
Mining
Interests and Mineral Exploration Expenditures
Exploration
costs are expensed in the period in which they occur. The Company capitalizes costs for acquiring and leasing mining properties and expenses
costs to maintain mineral rights as incurred. Should a property reach the production stage, capitalized costs would be amortized using
the units-of-production method based on periodic estimates of ore reserves. Mining interests are periodically assessed for impairment
of value, and any subsequent losses are charged to operations at the time of impairment. If a property is abandoned or sold, its capitalized
costs are charged to operations.
Pre-development
Expenditures
Pre-development
activities involve costs incurred in the exploration stage that may ultimately benefit production which are expensed due to
the lack of evidence of economic development which is necessary to demonstrate future recoverability of these costs.
Equipment
Equipment
is stated at cost. Significant improvements are capitalized and depreciated. Depreciation of equipment is calculated using the straight-line
method over the estimated useful lives of the assets, which range from three to seven years. Maintenance and repairs are charged to operations
as incurred. Gains or losses on disposition or retirement of property and equipment are recognized in operating expenses.
STAR
GOLD CORP.
|
NOTES
TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
|
OCTOBER
31, 2021
|
Reclamation
and Remediation
The
Companys operations are subject to standards for mine reclamation that have been established by various governmental agencies.
In the period in which the Company incurs a contractual obligation for the retirement of tangible long-lived assets, the Company will
record the fair value of an asset retirement obligation as a liability. A corresponding asset will also be recorded and depreciated over
the life of the asset. After the initial measurement of an asset retirement obligation, the liability will be adjusted at the end of
each reporting period to reflect changes in the estimated future cash flows underlying the obligation. To date, the Company has not incurred
any contractual obligation requiring recording either a liability or associated asset.
Impairment
of Long-lived Assets
The
Company periodically reviews its long-lived assets to determine if any events or changes in circumstances have transpired which indicate
that the carrying value of its assets may not be recoverable. The Company determines impairment by comparing the undiscounted net future
cash flows estimated to be generated by its assets to their respective carrying amounts. If impairment is deemed to exist, the assets
will be written down to fair value.
Share-based
Compensation
The
Company estimates the fair value of options to purchase Common Stock using the Black-Scholes model, which requires the input of some
subjective assumptions. These assumptions include estimating the length of time employees will retain their vested stock options before
exercising them (expected life), the estimated volatility of the Companys Common Stock price over the expected term
(volatility), employee forfeiture rate, the risk-free interest rate and the dividend yield. Changes in the subjective assumptions
can materially affect the estimate of fair value of stock-based compensation. Options granted have a ten-year maximum term and varying
vesting periods as determined by the Board of Directors. The value of shares of Common Stock awards is determined based on the closing
price of the Companys stock on the date of the award.
Income
Taxes
The
Company accounts for income taxes using the liability method. The liability method requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of (i) temporary differences between financial statement carrying amounts of assets
and liabilities and their basis for tax purposes and (ii) operating loss and tax credit carryforwards for tax purposes. Deferred tax
assets are reduced by a valuation allowance when management concludes that it is more likely than not that a portion of the deferred
tax assets will not be realized in a future period.
The
Company assesses its income tax positions and records tax benefits for all years subject to examination based upon its evaluation of
the facts, circumstances and information available at the reporting date. For those tax positions where there is a greater than 50% likelihood
that a tax benefit will be sustained, our policy is to record the largest amount of tax benefit that is more likely than not to be realized
upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions
where there is less than 50% likelihood that a tax benefit will be sustained, no tax benefit will be recognized in the financial statements.
Reclassifications
Certain
reclassifications have been made to the 2020 financial statements in order to conform to the 2021 presentation. These reclassifications
have no effect on net loss, total assets or accumulated deficit as previously reported.
New
Accounting Pronouncements
In
August 2020, the FASB issued ASU No. 2020-06 Debt – Debt With Conversion And Other Options (Subtopic 470-20) And Derivatives and
Hedging – Contracts In Entitys Own Equity (Subtopic 815-40): Accounting For Convertible Instruments And Contracts In An
Entitys Own Equity. The update simplifies the accounting for and disclosures related to company debt that is convertible or can
be settled in a companys own equity securities. The update is effective for fiscal years beginning after December 15, 2021. Management
is evaluating the impact of this update on the Companys consolidated financial statements.
STAR
GOLD CORP.
|
NOTES
TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
|
OCTOBER
31, 2021
|
Other
accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have
a material impact on the financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated
to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures.
NOTE
3 – EARNINGS PER SHARE
Basic
Earnings Per Share (EPS) is computed as net income (loss) available to common stockholders divided by the weighted average
number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable
through stock options and warrants.
The
outstanding securities at October 31, 2021 and 2020 that could have a dilutive effect are as follows:
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share
|
|
October 31, 2021
|
|
|
October 31, 2020
|
|
Stock options
|
|
|
5,035,000
|
|
|
|
7,145,000
|
|
Warrants
|
|
|
2,000,000
|
|
|
|
28,223,849
|
|
TOTAL POSSIBLE DILUTIVE SHARES
|
|
|
7,035,000
|
|
|
|
35,368,849
|
|
For
the three- and six-months ended October 31, 2021 and 2020, respectively, the effect of the Companys outstanding stock options
and warrants would have been anti-dilutive and so are excluded in the calculation of diluted EPS.
NOTE
4 – EQUIPMENT AND MINING INTEREST
The
following is a summary of the Companys equipment and mining interest at October 31, 2021 and April 30, 2021.
Schedule of Company Equipment and Mining Interest
|
|
October 31, 2021
|
|
|
April 30, 2021
|
|
Mining interest - Longstreet
|
|
$
|
566,167
|
|
|
|
554,167
|
|
TOTAL EQUIPMENT AND MINING INTEREST
|
|
$
|
566,167
|
|
|
$
|
554,167
|
|
Pursuant
to the Longstreet Property Option Agreement with Great Basin Resources, Inc. (Great Basin), as amended, which was originally
entered into by the Company on or about January 15, 2010 (the Longstreet Agreement), the Company leased, with an option
to acquire, unpatented mining claims located in the State of Nevada known as the Longstreet Property. Through August 12, 2019, the Company
was required to make minimal lease payments in the form of cash and options to purchase shares of the Companys common stock.
On September 1, 2019, the Company executed a consulting
agreement with Great Basin for a term of 18 months (the Consulting Agreement). Under the Consulting Agreement, the Company
agreed to pay Great Basin $7,500 per month for the term of the Consulting Agreement.
On August 24, 2020, the Company executed an amendment
to the Consulting Agreement which accelerated the payments to Great Basin to include a $22,500 lump sum payment and three subsequent monthly
payments of $7,500 in consideration of the execution and recording of a quit claim deed on the Longstreet claims for benefit of the Company.
For the year ended April 30, 2021, the Company paid Great Basin a total of $67,500 which is included in pre-development expense. As of
October 31, 2021, no amount is due to Great Basin under the Consulting Agreement.
The
August 24, 2020 Amendment also grants the Company the option, to be exercised no later than six (6) months following the first receipt
of proceeds from the sale of ore from the Longstreet Property, to purchase one-half of Great Basins 3.0% Net Smelter Royalty on
the Longstreet Project for a payment of $1,750,000.
STAR
GOLD CORP.
|
NOTES
TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
|
OCTOBER
31, 2021
|
In
addition, the Company is obligated, pursuant to the Longstreet Agreement, as amended, to pay an annual advance royalty payment of $12,000
related to the Clifford claims. For the six-months ended October 31, 2021 and 2020, respectively, the Company paid the annual $12,000
advance royalty for additional mining interest on the Longstreet Property.
The
Company has paid $89,400 to the United States Department of Agriculture-Forest Service to increase the Reclamation Bond as collateral
on the Longstreet Property. The bond is collateral on reclamation of planned drilling activities on the Longstreet Property and is refundable
subject to the Company completing defined reclamation actions upon completion of drilling.
NOTE
5 – OTHER CURRENT ASSETS
On
December 31, 2016, the Company entered into an Option and Lease of Water Rights with Stone Cabin Company, LLC (the Stone Cabin
Water Rights Agreement). In exchange for a one-time payment of $20,000, the Stone Cabin Water Rights Agreement granted the Company
a three-year option to commence a ten-year lease of certain water rights in Nevada. The water rights are for use in conjunction with
the Companys Longstreet Project. Lease payments for the water rights do not commence unless the Company exercises the option to
lease. The Stone Cabin Water Rights Agreement also granted the Company the ability to extend, upon additional annual payments, the option
to lease for up to an additional three years and the ability to extend the water rights lease (if exercised) for an additional ten-year
period. The Company has exercised its first and second options to extend the Stone Cabin Water Rights Agreement on December 31, 2019
and 2020 respectively.
As
of October 31, 2021, the unamortized portion of the Stone Cabin Water Rights Agreement and subsequent exercise of its second option is
$3,342.
On
August 21, 2017, the Company entered into an Option and Lease of Water Rights, with High Test Hay, LLC (the High Test Water Rights
Agreement). In exchange for a one-time payment of $25,000, the High Test Water Rights Agreement grants the Company a three-year
option to commence a ten-year lease on certain water rights in Nevada. The water rights are for use in conjunction with the Companys
Longstreet Project. Lease payments for the water rights do not commence unless and until the Company exercises the option to lease. The
High Test Water Rights Agreement also grants the Company the ability to extend, upon additional option payments, the option to lease
for up to an additional three years and the ability to extend the water rights lease (if exercised) for up to an additional twenty years.
The initial $25,000 payment has been deferred
and was amortized on a straight-line basis over the three-year option period.
On
August 21, 2020, the Company exercised its first option to extend the High Test Hay Water Rights agreement for an additional twelve months
and made a $25,000 payment to be amortized over twelve months. On August 21, 2021, the Company exercised its second option to extend
the High Test Hay Water Rights agreement for an additional twelve months and made a $25,000 payment to be amortized over twelve months.
As of October 31, 2021, the unamortized portion of the High Test Hay Water Rights Agreement and subsequent exercise of its second option
is $20,137.
As
of October 31, 2021, the Company issued 2,000,000 Warrants to Purchase Common Stock. The fair value of the warrants issued was $87,871
and is included in Other Current Assets and will be recognized over subsequent periods when services are received. (Note
7).
The
following is a summary of the Companys Other Current Assets at October 31, 2021 and April 30, 2021:
Schedule of Company Other Current Assets
|
|
October 31, 2021
|
|
|
April 30, 2021
|
|
Option on water rights lease agreements, net
|
|
$
|
23,479
|
|
|
$
|
21,570
|
|
Prepaid insurance
|
|
|
13,242
|
|
|
|
11,761
|
|
Prepaid promotion expense
|
|
|
125,084
|
|
|
|
-
|
|
Prepaid legal expense
|
|
|
1,950
|
|
|
|
-
|
|
Total
|
|
$
|
163,755
|
|
|
$
|
33,331
|
|
STAR
GOLD CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
OCTOBER
31, 2021
NOTE
6– RELATED PARTY TRANSACTIONS
Effective
September 1, 2019, the Board authorized the Company to accrue for a period of six months a monthly total of $18,000 to reward, compensate
and incentivize for the Chairman of the Board, two other respective members of the Board, and the Companys Chief Financial Officer.
During the year ended April 30, 2021, the accrued balance of $89,000 was paid to the respective officers and directors. As of April 30,
2021, there were no further payments due under this board action.
On
March 10, 2020 and June 25, 2020, the Company entered into promissory notes with the Companys Chairman of the Board of Directors
in the amount of $50,000 and $30,000, respectively. The notes had maturity dates of March 10, 2022 and June 27, 2022, respectively
and accrued interest at 6% per annum. During the year ended April 30, 2021, the total outstanding balance of the respective promissory
notes of $80,000 and accrued interest of $1,786 was paid to the Companys Chairman of the Board.
On
May 1, 2021, the Company entered into consulting agreements with four members of the Companys management team. The Company entered
into an Agreement each with the Chairman of the Board, the President, the Chief Financial Officer and the Vice President of Finance.
Each
Agreement is for a two-year period, automatically renewable annually thereafter, and pays each executive $6,000 per month. Each executive
is eligible to receive a bonus payable upon a change in control event equal to eighteen (18) months compensation. The Consulting
Agreements supersede any previous agreements or resolutions. For the three months ended October 31, 2021, the Company recognized $72,000
in management and administrative expense under the Consulting Agreements. For the six months ended October 31, 2021, the Company recognized
$144,000 in management and administrative expense under the Consulting Agreements.
NOTE
7 – WARRANTS
On
June 8, 2020, the Company notified all of its warrant holders that the Company was re-pricing, for a limited time, all issued and outstanding
Common Stock Warrants, of the Company, to an Exercise Price of $0.045 per share.
During
the period beginning on June 8, 2020 and ending on August 31, 2020, each outstanding warrant to purchase Star Gold Common Stock could
be exercised, in whole or in part, at the per share price of $0.045 per share regardless of the exercise price set forth in the warrant
being exercised.
After
August 31, 2020 each remaining outstanding and unexercised Common Stock warrant would then revert to its original exercise price as set
forth in each respective warrant.
On
August 31, 2020, the Board approved extending the expiration of the repricing, of all issued and outstanding warrants, to September 11,
2020. On September 11, 2020, the Board approved extending the expiration of the repricing, of all issued and outstanding warrants, to
September 30, 2020. On September 30, 2020, all warrants outstanding reverted to their original exercise price as set forth in each respective
warrant.
On
July 6, 2020, an accredited investor exercised 816,000 Warrants to purchase shares of the Companys Common Stock at $0.045 per
shares for cash proceeds of $36,720.
For
the three months ended October 31, 2020, forty-three warrant holders exercised a total of 18,679,969 warrants to purchase shares of the
Companys Common Stock at $0.045 per share for aggregate cash proceeds of $840,598.
On
October 31, 2021, the Company granted 2,000,000 warrants to purchase Common Stock in lieu of cash payment for services. The warrants
have an exercise price of $0.0442 based on the closing price of the Companys Common Stock on the date of grant. The expiration
date of the warrants is October 31, 2026. The fair value of the warrants granted was $87,871 and is included in Other Current
Assets and will be amortized for services to be provided over the subsequent twelve months (Note 5).
STAR
GOLD CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
OCTOBER
31, 2021
The
Company estimated the fair value of the October 31, 2021 warrants issued using the Black-Scholes model with the following information
and range of assumptions:
Schedule
of Estimated Fair Value of Warrant using Black-Scholes model
|
|
|
|
|
Warrants issued
|
|
|
2,000,000
|
|
Fair value of warrant issuance
|
|
$
|
87,871
|
|
Exercise price
|
|
$
|
0.0442
|
|
Expected volatility
|
|
|
244.99%
|
|
Expected term
|
|
|
5 years
|
|
Risk free rate
|
|
|
1.18%
|
|
The
following is a summary of the Companys warrants to purchase shares of Common Stock activity:
Schedule
of Company’s Warrants to Purchase of Common Stock
|
|
Warrants
|
|
|
Weighted Average
Exercise Price
|
|
Balance outstanding at April 30, 2020
|
|
|
29,039,849
|
|
|
$
|
0.16
|
|
Exercised
|
|
|
(19,495,969
|
)
|
|
|
(0.05
|
)
|
Expired
|
|
|
(2,754,213
|
)
|
|
|
(0.05
|
)
|
Balance outstanding at April 30, 2021
|
|
|
6,789,667
|
|
|
$
|
0.15
|
|
Issued
|
|
|
2,000,000
|
|
|
|
0.0442
|
|
Expired
|
|
|
(6,789,667
|
)
|
|
|
(0.15
|
)
|
Balance outstanding at October 31, 2021
|
|
|
2,000,000
|
|
|
$
|
0.0442
|
|
The
composition of the Companys warrants outstanding at October 31, 2021 is as follows:
Schedule of Company’s Warrants Outstanding
Issue Date
|
|
Expiration Date
|
|
Warrants
|
|
|
Exercise Price
|
|
|
Remaining life (years)
|
|
October 31, 2021
|
|
October 31, 2026
|
|
|
2,000,000
|
|
|
$
|
0.0442
|
|
|
|
5.00
|
|
|
|
|
|
|
2,000,000
|
|
|
$
|
0.0442
|
|
|
|
5.00
|
|
NOTE
8 - STOCK OPTIONS
Options
issued for mining interest
In
consideration for its mining interest (see Note 4), the Company was obligated to issue stock options to purchase shares of the Companys
Common Stock based on fair market price which for financial statement purposes is considered to be the closing price of
the Companys Common Stock on the issue dates. Those costs are capitalized as Mining Interest.
Options
outstanding for mining interest totaled 935,000 on October 31, 2021 and April 30, 2021, and are fully vested. As of October 31, 2021,
the remaining weighted average term of the option grants for mining interest was 2.84 years. As of October 31, 2021, the weighted average
exercise price of the option grants for mining interest was $0.04 per share.
Options
issued under the 2011 Stock Option/Restricted Stock Plan
The
Company established the 2011 Stock Option/Restricted Stock Plan (the 2011 Plan). The 2011 Plan is administered by the Board
of Directors and provides for the grant of stock options to eligible individual including directors, executive officers and advisors
that have furnished bona fide services to the Company not related to the sale of securities in a capital-raising transaction.
STAR
GOLD CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
OCTOBER
31, 2021
On
April 30, 2021, the Board of Directors authorized the grant of 2,700,000 options to purchase shares of Common Stock of the Company to
various directors and officers. The options have an exercise price of $0.06 based on the closing price of the Companys Common
Stock on the date of grant and vest immediately. The expiration date of the options is April 30, 2026.
The
Company estimated the fair value of the April 30, 2021 option grants using the Black-Scholes model with the following information and
range of assumptions:
Schedule
of Estimated Fair Value of Options using Black-Scholes model
|
|
|
|
|
Options granted
|
|
|
2,700,000
|
|
Fair value of option grant
|
|
$
|
161,015
|
|
Exercise price
|
|
$
|
0.06
|
|
Expected volatility
|
|
|
244.74
|
%
|
Expected term
|
|
|
5 years
|
|
Risk free rate
|
|
|
0.86
|
%
|
No
options were issued under the Stock Option Plan during the three- and six months ended October 31, 2021 or 2020.
The
total value of stock option awards is expensed ratably over the vesting period of the employees receiving the awards. As of October 31
and April 30, 2021, respectively, there was no unrecognized compensation cost related to stock-based options and awards.
The
following table summarizes additional information about the options under the Companys 2011 Plan as of October 31, 2021:
Schedule
of Company’s Stock Option Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options outstanding and exercisable
|
|
Date of Grant
|
|
Shares
|
|
|
Price
|
|
|
Remaining Term (years)
|
|
April 30, 2018
|
|
|
1,400,000
|
|
|
$
|
0.065
|
|
|
|
1.50
|
|
April 30, 2021
|
|
|
2,700,000
|
|
|
|
0.06
|
|
|
|
4.50
|
|
Total options
|
|
|
4,100,000
|
|
|
$
|
0.06
|
|
|
|
3.47
|
|
Summary:
The
following is a summary of the Companys stock options outstanding and exercisable:
Schedule
of Company’s Stock Option Outstanding and Exercisable
Options issued for:
|
|
Expiration Date
|
|
Options
|
|
|
Weighted Average
Exercise Price
|
|
Mining interests
|
|
August 31, 2024
|
|
935,000
|
|
|
$
|
0.04
|
|
Stock option plan
|
|
April 30, 2023 to April 30, 2026
|
|
|
4,100,000
|
|
|
|
0.06
|
|
Outstanding and exercisable at October 31, 2021
|
|
|
|
|
5,035,000
|
|
|
$
|
0.06
|
|
The
aggregate intrinsic value of all options vested and exercisable at October 31, 2021, was $3,927 based on the Companys closing
price of $0.0442 per common share at October 31, 2021. The Companys current policy is to issue new shares to satisfy option exercises.
STAR
GOLD CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
OCTOBER
31, 2021
NOTE
9 – STOCKHOLDERS EQUITY
On
August 1, 2020, the Company issued 400,000 shares of its Common Stock in lieu of cash to at $0.05 per share for accounts payable.
For
the six months ended October 31, 2020, the Company issued a total of 19,495,969 shares of its Common Stock upon exercise of warrants
at $0.045 per share by 44 warrant holders for aggregate proceeds of $877,318 (Note 7).
For
the three- and six-months ended October 31, 2021, the Company did not issue any shares of its Common Stock.
NOTE
10 – SUBSEQUENT EVENT
On
November 30, 2021, the Company entered into four Convertible Promissory Notes with certain officers and directors of the Company in consideration
of deferred compensation totaling $150,000. The notes accrue interest at 5% per annum with monthly interest-only payments through April
30, 2025. The Company is scheduled to make 41 monthly interest payments beginning no later than December 31, 2021.
The
Convertible Promissory Notes are convertible at any time after the original issue date into a number of shares of the Companys
Common Stock, determined by dividing the amount to be converted by a conversion price equal to the greater of $0.05 per share or the
closing price of the Companys common stock on November 30, 2021. The closing price of the Companys stock on November 30,
2021 was $0.03 per share. The Convertible Promissory Notes are convertible to an aggregate of 3,000,000 shares.
As
of October 31, 2021, the balance of deferred compensation subsequently converted to Convertible Promissory Notes was $129,000.