STAR
GOLD CORP.
|
BALANCE
SHEETS (UNAUDITED)
|
|
|
January 31, 2021
|
|
|
April 30, 2020
|
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
346,816
|
|
|
$
|
26,617
|
|
Other current assets (NOTE 5)
|
|
|
34,626
|
|
|
|
20,331
|
|
|
|
|
|
|
|
|
|
|
TOTAL CURRENT ASSETS
|
|
|
381,442
|
|
|
|
46,948
|
|
EQUIPMENT AND MINING INTEREST, net (NOTE 4)
|
|
|
554,236
|
|
|
|
543,485
|
|
RECLAMATION BOND
|
|
|
89,400
|
|
|
|
89,400
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
1,025,078
|
|
|
$
|
679,833
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
65,922
|
|
|
$
|
24,460
|
|
Deferred compensation to officers and directors
|
|
|
-
|
|
|
|
89,000
|
|
|
|
|
|
|
|
|
|
|
TOTAL CURRENT LIABILITIES
|
|
|
65,922
|
|
|
|
113,460
|
|
OTHER LIABILITIES
|
|
|
-
|
|
|
|
20,000
|
|
NOTE PAYABLE RELATED PARTY
|
|
|
-
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
65,922
|
|
|
|
183,460
|
|
|
|
|
|
|
|
|
|
|
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 and 77,394,841 shares issued and outstanding, respectively
|
|
|
97,291
|
|
|
|
77,395
|
|
Additional paid-in capital
|
|
|
12,453,993
|
|
|
|
11,576,571
|
|
Accumulated deficit
|
|
|
(11,592,128
|
)
|
|
|
(11,157,593
|
)
|
|
|
|
|
|
|
|
|
|
TOTAL STOCKHOLDERS EQUITY
|
|
|
959,156
|
|
|
|
496,373
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
|
|
$
|
1,025,078
|
|
|
$
|
679,833
|
|
The
accompanying notes are an integral part of these financial statements.
STAR
GOLD CORP.
|
STATEMENTS
OF OPERATIONS (UNAUDITED)
|
|
|
Three months ended January 31,
|
|
|
Nine months ended January 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mineral exploration expense
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
25,146
|
|
|
$
|
26,630
|
|
Pre-development expense
|
|
|
95,168
|
|
|
|
42,331
|
|
|
|
231,076
|
|
|
|
100,094
|
|
Legal and professional fees
|
|
|
48,179
|
|
|
|
9,099
|
|
|
|
109,767
|
|
|
|
68,821
|
|
Management and administrative
|
|
|
21,868
|
|
|
|
72,895
|
|
|
|
65,283
|
|
|
|
162,756
|
|
Depreciation
|
|
|
416
|
|
|
|
417
|
|
|
|
1,248
|
|
|
|
1,249
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL OPERATING EXPENSES
|
|
|
165,631
|
|
|
|
124,742
|
|
|
|
432,520
|
|
|
|
359,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM OPERATIONS
|
|
|
(165,631
|
)
|
|
|
(124,742
|
)
|
|
|
(432,520
|
)
|
|
|
(359,550
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
127
|
|
|
|
43
|
|
|
|
138
|
|
|
|
759
|
|
Interest expense
|
|
|
(262
|
)
|
|
|
(223
|
)
|
|
|
(786
|
)
|
|
|
(671
|
)
|
Interest expense, related party
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,367
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL OTHER INCOME (EXPENSE)
|
|
|
(135
|
)
|
|
|
(180
|
)
|
|
|
(2,015
|
)
|
|
|
88
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS BEFORE INCOME TAX
|
|
|
(165,766
|
)
|
|
|
(124,922
|
)
|
|
|
(434,535
|
)
|
|
|
(359,462
|
)
|
Provision (benefit) for income tax
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS
|
|
$
|
(165,766
|
)
|
|
$
|
(124,922
|
)
|
|
|
(434,535
|
)
|
|
$
|
(359,462
|
)
|
Basic and diluted loss per share
|
|
$
|
Nil
|
|
|
$
|
Nil
|
|
|
$
|
Nil
|
|
|
$
|
Nil
|
|
Basic and diluted weighted average number shares outstanding
|
|
|
97,290,810
|
|
|
|
77,394,841
|
|
|
|
88,706,972
|
|
|
|
77,394,841
|
|
The
accompanying notes are an integral part of these financial statements.
STAR
GOLD CORP.
|
STATEMENTS
OF CHANGES IN STOCKHOLDERS EQUITY
|
For
the three and nine months ended January 31, 2021 and 2020 (UNAUDITED)
|
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
Issued
|
|
|
Par Value
$.001 per share
|
|
|
Additional
Paid in Capital
|
|
|
Accumulated
Deficit
|
|
|
Total
Stockholders
Equity
|
|
BALANCE, April 30, 2019
|
|
|
77,394,841
|
|
|
$
|
77,395
|
|
|
$
|
11,560,527
|
|
|
$
|
(10,702,743
|
)
|
|
$
|
935,179
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(124,451
|
)
|
|
|
(124,451
|
)
|
BALANCE, July 31, 2019
|
|
|
77,394,841
|
|
|
$
|
77,395
|
|
|
$
|
11,560,527
|
|
|
$
|
(10,827,194
|
)
|
|
$
|
810,728
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(110,089
|
)
|
|
|
(110,089
|
)
|
Options issued for mining interest
|
|
|
-
|
|
|
|
-
|
|
|
|
16,044
|
|
|
|
-
|
|
|
|
16,044
|
|
BALANCE, October 31, 2019
|
|
|
77,394,841
|
|
|
$
|
77,395
|
|
|
$
|
11,576,571
|
|
|
$
|
(10,937,283
|
)
|
|
$
|
716,683
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(124,922
|
)
|
|
|
(124,922
|
)
|
BALANCE, January 31, 2020
|
|
|
77,394,841
|
|
|
$
|
77,395
|
|
|
$
|
11,576,571
|
|
|
$
|
(11,062,205
|
)
|
|
$
|
591,761
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE, April 30, 2020
|
|
|
77,394,841
|
|
|
$
|
77,395
|
|
|
$
|
11,576,571
|
|
|
$
|
(11,157,593
|
)
|
|
$
|
496,373
|
|
Common shares 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 other liabilities
|
|
|
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
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(165,766
|
)
|
|
|
(165,766
|
)
|
BALANCE, January 31, 2021
|
|
|
97,290,810
|
|
|
$
|
97,291
|
|
|
$
|
12,453,993
|
|
|
$
|
(11,592,128
|
)
|
|
$
|
959,156
|
|
The
accompanying notes are an integral part of these financial statements.
STAR
GOLD CORP.
|
STATEMENTS
OF CASH FLOWS (UNAUDITED)
|
|
|
For the nine months ended
|
|
|
|
January 31, 2021
|
|
|
January 31, 2020
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(434,535
|
)
|
|
$
|
(359,462
|
)
|
Adjustments to reconcile net loss to net cash used by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
1,248
|
|
|
|
1,249
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Other current assets
|
|
|
(14,295
|
)
|
|
|
(5,170
|
)
|
Other assets
|
|
|
-
|
|
|
|
2,557
|
|
Accounts payable and accrued liabilities
|
|
|
41,463
|
|
|
|
(3,155
|
)
|
Deferred compensation to officers and directors
|
|
|
(89,000
|
)
|
|
|
73,500
|
|
Net cash used by operating activities
|
|
|
(495,119
|
)
|
|
|
(290,481
|
)
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Payments for mining interest
|
|
|
(12,000
|
)
|
|
|
(62,000
|
)
|
Payments for collateral on reclamation bond
|
|
|
-
|
|
|
|
(67,800
|
)
|
Net cash used in investing activities
|
|
|
(12,000
|
)
|
|
|
(129,800
|
)
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Proceeds from note payable, related party
|
|
|
30,000
|
|
|
|
-
|
|
Repayment of note payable, related party
|
|
|
(80,000
|
)
|
|
|
-
|
|
Proceeds from exercise of warrants
|
|
|
877,318
|
|
|
|
-
|
|
Net cash provided by financing activities
|
|
|
827,318
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents
|
|
|
320,199
|
|
|
|
(420,281
|
)
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
|
|
26,617
|
|
|
|
440,316
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
|
$
|
346,816
|
|
|
$
|
20,035
|
|
The
accompanying notes are an integral part of these financial statements.
STAR
GOLD CORP.
|
NOTES
TO FINANCIAL STATEMENTS
|
JANUARY
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 January 31, 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 nine-month period ended January 31, 2021 are not
necessarily indicative of the results that may be expected for the full fiscal year ending April 30, 2021.
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, 2020.
Going
Concern
As
shown in the accompanying financial statements, the Company has incurred operating losses since inception. As of January 31, 2021,
the Company has limited financial resources with which to achieve the objectives and obtain profitability and positive cash flows.
As shown in the accompanying balance sheets at January 31, 2021, the Company has an accumulated deficit of $11,592,128. At January
31, 2021, the Companys working capital was $315,520. 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 FINANCIAL STATEMENTS
|
JANUARY
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 January 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
January 31, 2021 and April 30, 2020, the Company had no assets or liabilities accounted for at fair value on a recurring or nonrecurring
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 FINANCIAL STATEMENTS
|
JANUARY
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.
Stock-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 2018, the FASB issued ASU No. 2018-13 Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure
Requirements for Fair Value Measurement. The update removes, modifies and makes additions to the disclosure requirements on fair
value measurements. The Company adopted ASU No. 2108-13 on May 1, 2020. There is no impact on the effect of this update on fair
value measurement disclosures for the period ended January 31, 2021.
STAR
GOLD CORP.
|
NOTES
TO FINANCIAL STATEMENTS
|
JANUARY
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 January 31, 2021 and 2020, that could have a dilutive effect are as follows:
|
|
January 31, 2021
|
|
|
January 31, 2020
|
|
Stock options
|
|
|
7,145,000
|
|
|
|
7,145,000
|
|
Warrants
|
|
|
6,789,667
|
|
|
|
29,039,849
|
|
TOTAL POSSIBLE DILUTIVE SHARES
|
|
|
13,934,667
|
|
|
|
36,184,849
|
|
|
|
|
|
|
|
|
|
|
For
the three and nine months ended January 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 diluted EPS.
NOTE 4 – EQUIPMENT AND MINING INTEREST
The
following is a summary of the Companys equipment and mining interest at January 31, 2021 and April 30, 2020.
|
|
January 31, 2021
|
|
|
April 30, 2020
|
|
Equipment
|
|
$
|
4,995
|
|
|
$
|
4,995
|
|
Less accumulated depreciation
|
|
|
(4,926
|
)
|
|
|
(3,677
|
)
|
Equipment, net of accumulated depreciation
|
|
|
69
|
|
|
|
1,318
|
|
Mining interest - Longstreet
|
|
|
554,167
|
|
|
|
542,167
|
|
TOTAL EQUIPMENT AND MINING INTEREST
|
|
$
|
554,236
|
|
|
$
|
543,485
|
|
|
|
|
|
|
|
|
|
|
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
December 4, 2018, the Company amended the Longstreet Agreement to change the due date of certain expenditures required by that
agreement (the 2018 Amendment). The 2018 Amendment extended the due date of the 2019 expenditures from January 16,
2019 to August 31, 2019 and also extended the due date of the 2020 expenditures from January 16, 2020 to August 31, 2020. No other
provisions of the Longstreet Agreement, as previously amended, were affected by the 2018 Amendment.
On
August 12, 2019, the Company and Great Basin agreed to, again, amend the Longstreet Agreement (the 2019 Amendment)
to eliminate the required property expenditure structure and to implement new consideration for the transfer of the Longstreet
Property pursuant to that agreement. The 2019 Amendment eliminated the remainder of the required property expenditures. The 2019
Amendment set forth Great Basin would transfer title of the Longstreet Property to the Company upon the Company:
|
a)
|
Adjusting
the exercise price, to $0.04, on 435,000 existing options to purchase shares of Company common stock from exercise prices ranging
from $0.05 to $0.08 per share;
|
|
b)
|
issuing
an additional 500,000 options to purchase shares of Company common stock at the exercise price of $0.04;
|
|
c)
|
making
a cash payment of $50,000 to Great Basin (paid on August 19, 2019) and
|
|
d)
|
entering
into a consulting agreement with Great Basin with a term of eighteen (18) months.
|
STAR
GOLD CORP.
|
NOTES
TO FINANCIAL STATEMENTS
|
JANUARY
31, 2021
|
|
On
August 12, 2019, the Company repriced 435,000 existing options to purchase shares of the Companys common stock to an exercise
price of $0.04 and issued an additional 500,000 options to purchase shares of the Companys common stock at an exercise
price of $0.04. The fair value of the re-pricing and issuance of additional stock options was $16,044 which was capitalized as
Mining Interest.
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 will pay Great Basin $7,500 per month for the term of the Consulting
Agreement. The Company paid Great Basin $60,000 for the year ended April 30, 2020. The payments to Great Basin are included in
Pre-development expense on the statement of operations.
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 nine months ended January 31, 2021, the Company
paid Great Basin a total of $67,500 which is included in pre-development expense.
The
2019 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.
No
other provisions of the Longstreet Agreement, as previously amended, were affected by the 2019 Amendment.
In
addition, the Company is obligated, pursuant to the Longstreet Agreement, to pay an annual advance royalty payment of $12,000
related to the Clifford claims. For the nine months ended January 31, 2021 and year ended April 30, 2020, respectively, the Company
paid the annual $12,000 advance royalty for additional mining interest on the Longstreet Property.
On
September 20, 2019, the Company paid $67,800 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 initial $20,000 payment was deferred and was being amortized on a straight-line
basis over the three-year option period ending December 31, 2019.
On
December 31, 2019, the Company exercised its first option to extend the Stone Cabin Water Rights agreement for an additional twelve
months and made a $20,000 payment. The $20,000 payment was deferred as Other Currents Assets and is being amortized
on a straight-line basis over the subsequent one-year option period. The Company retains the right to exercise two additional
options to extend the Stone Cabin Water Rights Agreement, upon annual payments of $20,000 each.
As
of January 31, 2021, the unamortized portion of the Stone Cabin Water Rights Agreement and subsequent exercise of its first option
is $18,302.
STAR
GOLD CORP.
|
NOTES
TO FINANCIAL STATEMENTS
|
JANUARY
31, 2021
|
|
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 is being amortized on a straight-line basis over the three-year option period. As
of January 31, 2021, the unamortized portion of the High Test Water Rights Agreement is $14,133.
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.
The
following is a summary of the Companys Other Assets at January 31 and April 30, 2020.
|
|
January 31, 2021
|
|
|
April 30, 2020
|
|
Option on water rights lease agreements, net
|
|
$
|
32,435
|
|
|
$
|
15,927
|
|
Prepaid insurance and other expenses
|
|
|
2,191
|
|
|
|
2,488
|
|
Other receivables
|
|
|
-
|
|
|
|
1,916
|
|
TOTAL OTHER CURRENT ASSETS
|
|
$
|
34,626
|
|
|
$
|
20,331
|
|
|
|
|
|
|
|
|
|
|
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 respective members of the Board, and the Companys Chief Financial
Officer. Under the resolution, in the event of a change of control or sale of substantially all of the Companys assets,
these individuals shall collectively be granted bonuses equal to an aggregate two per cent (2%) of the value of the change of
control or sale. During the three months ended October 31, 2020, the accrued balance of $89,000 was paid to the respective officers
and directors. As of January 31, 2021, the balance of Deferred compensation to officers and directors was $Nil.
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 mature on March 10, 2022 and June 27, 2022, respectively
and accrue interest at 6% per annum. For the three months ended January 31, 2021 and January 31, 2020, interest expense, related
party on the promissory notes was $Nil and $Nil, respectively. For the nine months ended January 31, 2021 and 2020, interest expense,
related party on the promissory notes was $1,367 and $Nil, respectively.
During
the nine months ended January 31, 2021, the outstanding balance of the respective promissory notes of $80,000 and accrued interest
of $1,786 was repaid to the Companys Chairman of the Board.
For
the nine months ended January 31, 2021, officers and directors of the Company exercised warrants to purchase 2,072,222 shares
of the Companys common stock at $0.045 per share for proceeds of $93,250 (Notes 7 and 9).
NOTE
7 – WARRANTS
On
June 8, 2020, Star Gold 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.
STAR
GOLD CORP.
|
NOTES
TO FINANCIAL STATEMENTS
|
JANUARY
31, 2021
|
|
After
August 31, 2020 each remaining outstanding and unexercised common stock warrant will 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 October 1, 2020, all warrants outstanding reverted to their original exercise price as set forth in
each respective warrant.
For
the nine months ended January 31, 2021, forty-three (43) 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 $877,318, inclusive of five (5)
officers and directors who exercised 1,622,222 at $0.045 per share for aggregate cash proceeds of $73,000.
The
following is a summary of the Companys warrants to purchase shares of common stock activity:
|
|
Warrants
|
|
|
Weighted Average
Exercise Price
|
|
Balance outstanding at April 30, 2019
|
|
|
30,654,249
|
|
|
$
|
0.16
|
|
Expired
|
|
|
(1,614,400
|
)
|
|
|
0.23
|
|
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 January 31, 2021
|
|
|
6,789,667
|
|
|
$
|
0.15
|
|
|
|
|
|
|
|
|
|
|
The
composition of the Companys warrants outstanding at January 31, 2021 is as follows:
Issue Date
|
|
Expiration Date
|
|
Warrants
|
|
|
Exercise Price
|
|
|
Remaining life (years)
|
|
October 12, 2016
|
|
October 12, 2021
|
|
|
6,789,667
|
|
|
$
|
0.15
|
|
|
|
0.70
|
|
|
|
|
|
|
6,789,667
|
|
|
$
|
0.15
|
|
|
|
0.70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 options at both January 31, 2021 and April 30, 2020 and are all fully vested.
As of January 31, 2021, the remaining weighted average term of the option grants for mining interest was 3.58 years. As of January
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 Stock Option Plan is administered by the Board of Directors
and provides for the grant of stock options to eligible individuals 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 FINANCIAL STATEMENTS
|
JANUARY
31, 2021
|
|
The
Stock Option Plan has a fixed maximum percentage of 10% of the Companys outstanding shares of Common Stock that are eligible
for the plan pool, whereby the number of Shares under the plan increases automatically increases as the total number of outstanding
shares of Common Stock increase. The number of shares of Common Stock subject to the Stock Option Plan and any outstanding awards
will be adjusted appropriately by the Board of Directors if the Companys Common Stock is affected through a reorganization,
merger, consolidation, recapitalization, restructuring, reclassification dividend (other than quarterly cash dividends) or other
distribution, stock split, spin-off or sale of substantially all of the Companys assets.
The
Stock Option plan also has terms and conditions, including without limitations that the exercise price for stock options granted
under the Stock Option Plan must equal the stocks fair value, based on the closing price per share of Common Stock, at
the time the stock option is granted. The fair value of each option award is estimated on the date of grant utilizing the Black-Scholes
model and commonly utilized assumptions associated with the Black-Scholes methodology. Options granted under the Plan have a ten-year
maximum term and varying vesting periods as determined by the Board.
The
total value of stock option awards is expensed ratably over the vesting period of the employees receiving the awards. As of January
31, 2021 and 2020, respectively, there was no unrecognized compensation cost related to stock-based options and awards. No options
were issued under the 2011 Plan during the three months and nine months ended January 31, 2021 and 2020, respectively.
The
following table summarizes additional information about the options under the Companys Stock Option Plan as of January
31, 2021:
|
|
Options outstanding and exercisable
|
|
Date of Grant
|
|
Shares
|
|
|
Price
|
|
|
Remaining Term
|
|
October 18, 2016
|
|
|
4,810,000
|
|
|
$
|
0.06
|
|
|
|
0.71
|
|
April 30, 2018
|
|
|
1,400,000
|
|
|
|
0.065
|
|
|
|
2.25
|
|
Total options
|
|
|
6,210,000
|
|
|
$
|
0.06
|
|
|
|
1.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary:
The
following is a summary of the Companys stock options 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
|
|
October 18, 2021 to April 30, 2023
|
|
|
6,210,000
|
|
|
|
0.06
|
|
Outstanding and exercisable at January 31, 2021
|
|
|
|
|
7,145,000
|
|
|
$
|
0.06
|
|
|
|
|
|
|
|
|
|
|
|
|
The
aggregate intrinsic value of all options vested and exercisable at January 31, 2021, was $9,631 based on the Companys closing
price of $0.0503 per common share at January 31, 2021. The Companys current policy is to issue new shares to satisfy option
exercises.
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 other liabilities.
For
the nine months ended January 31, 2020, the Company issued a total of 18,679,969 shares of its common stock upon exercise of warrants
at $0.045 per share by 43 warrant holders for aggregate proceeds of $877,318. (Note 7).