UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
For the Quarterly Period Ended
OR
For the transition period from _____________ to _____________
Commission file number
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization | (I.R.S. Employer Identification No.) |
|
|
||
| (Address of principal executive offices) | (Zip Code) |
(
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| N/A | N/A | N/A |
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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. ☒
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | |
| Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: shares of common stock, $0.001 par value, issued and outstanding as of August 14, 2026.
TABLE OF CONTENTS
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PART I
FINANCIAL INFORMATION
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
THIS QUARTERLY REPORT ON FORM 10-Q, INCLUDING EXHIBITS HERETO, CONTAIN FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THESE FORWARD-LOOKING STATEMENTS ARE TYPICALLY IDENTIFIED BY THE WORDS “ANTICIPATES,” “BELIEVES,” “EXPECTS,” “INTENDS,” “FORECASTS,” “PLANS,” “ESTIMATES,” “MAY,” “FUTURE,” “STRATEGY,” OR WORDS OF SIMILAR MEANING. VARIOUS FACTORS COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN THE FORWARD-LOOKING STATEMENTS, INCLUDING THOSE DESCRIBED IN “RISK FACTORS” IN OUR ANNUAL REPORT ON FORM 10-K. WE ASSUME NO OBLIGATIONS TO UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT NEW INFORMATION, ACTUAL RESULTS, CHANGES IN ASSUMPTIONS, OR CHANGES IN OTHER FACTORS, EXCEPT AS REQUIRED BY LAW.
| 3 |
ITEM 1. FINANCIAL STATEMENTS
PATRIOT GOLD CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
| (Unaudited) | (Audited) | |||||||
| June 30, 2026 | December 31, 2025 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Marketable securities | ||||||||
| Royalty receivables, net of allowance for uncollectible receivables | ||||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| Long-term assets: | ||||||||
| Deferred tax asset, net of valuation allowance | ||||||||
| Total long-term assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Accounts payable and accrued liabilities – related parties | ||||||||
| Convertible note payable – related party | ||||||||
| Total current liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders' equity: | ||||||||
| Preferred stock, par value $; shares authorized; shares issued at June 30, 2026 and December 31, 2025, respectively | ||||||||
| Series A Preferred stock, par value $; shares authorized; shares issued at June 30, 2026 and December 31, 2025, respectively | ||||||||
| Common stock, par value $; shares authorized; shares issued and outstanding at June 30, 2026 and December 31, 2025 respectively | ||||||||
| Treasury stock ( shares) | ( | ) | ( | ) | ||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive income (loss) | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders' equity | ( | ) | ( | ) | ||||
| Total liabilities and stockholders' equity | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 4 |
PATRIOT GOLD CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenues (see Note 4) | $ | $ | $ | $ | ||||||||||||
| Expenses: | ||||||||||||||||
| Mineral costs | ||||||||||||||||
| Consulting expense | ||||||||||||||||
| Directors Fees | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total operating expense | ||||||||||||||||
| Net income (loss) from operations | ( | ) | ( | ) | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ||||||||||||
| Unrealized holding gain (loss) on marketable securities | ( | ) | ( | ) | ||||||||||||
| Currency exchange | ||||||||||||||||
| Other miscellaneous income | ||||||||||||||||
| Total other income (expense) | ( | ) | ( | ) | ( | ) | ||||||||||
| Net income (loss) | ( | ) | ( | ) | ||||||||||||
| Other comprehensive income (loss) | ||||||||||||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ||||||||||||
| Comprehensive income (loss) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Earnings per share, basic and diluted: | ||||||||||||||||
| Income (loss) per common share - basic | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Income (loss) per common share - diluted | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Weighted average shares outstanding - basic | ||||||||||||||||
| Weighted average shares outstanding - diluted | ||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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PATRIOT GOLD CORP.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
| Series A | Common | Accumulated | ||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Additional | Shares | Other | ||||||||||||||||||||||||||||||||||||
| Par | Par | Treasury | Paid-In | To be | Comprehensive | Retained | ||||||||||||||||||||||||||||||||||
| Shares | Value | Shares | Value | Stock | Capital | Issued | Income | Deficit | Total | |||||||||||||||||||||||||||||||
| For the 3 months ended June 30, 2025 | ||||||||||||||||||||||||||||||||||||||||
| Balance March 31, 2025 | $ | $ | $ | ( |
) | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||||
| Net loss and comprehensive loss | – | – | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||
| Balance June 30, 2025 | $ | $ | $ | ( |
) | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||||
| For the 6 months ended June 30, 2025 | ||||||||||||||||||||||||||||||||||||||||
| Balance December 31, 2024 | $ | $ | $ | ( |
) | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||||
| Net loss and comprehensive loss | – | – | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||
| Balance June 30, 2025 | $ | $ | $ | ( |
) | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||||
| For the 3 months ended June 30, 2026 | ||||||||||||||||||||||||||||||||||||||||
| Balance March 31, 2026 | $ | $ | $ | ( |
) | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||||
| Net income and comprehensive income | – | – | ||||||||||||||||||||||||||||||||||||||
| Balance June 30, 2026 | $ | $ | $ | ( |
) | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||||
| For the 6 months ended June 30, 2026 | ||||||||||||||||||||||||||||||||||||||||
| Balance December 31, 2025 | $ | $ | $ | ( |
) | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||||
| Net income and comprehensive income | – | – | ||||||||||||||||||||||||||||||||||||||
| Balance June 30, 2026 | $ | $ | $ | ( |
) | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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PATRIOT GOLD CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Fair value adjustment for marketable securities | ( | ) | ( | ) | ||||
| Change in operating assets and liabilities: | ||||||||
| Royalties receivables | ( | ) | ||||||
| Prepaid expenses | ||||||||
| Accounts payable and accrued liabilities | ( | ) | ||||||
| Accounts payable and accrued liabilities – related parties | ||||||||
| Net cash flows provided by (used in) operating activities | ( | ) | ||||||
| Cash flows from investing activities: | ||||||||
| Net cash flows from investing activities | ||||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from convertible note payable - related party | ||||||||
| Net cash flows from financing activities | ||||||||
| Foreign exchange effect on cash | ( | ) | ||||||
| Net increase (decrease) in cash | ( | ) | ||||||
| Cash, beginning of year | ||||||||
| Cash, end of year | $ | $ | ||||||
| Supplemental disclosure of cash paid for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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PATRIOT GOLD CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
NOTE 1 - NATURE OF BUSINESS AND OPERATIONS
Patriot Gold Corp. (“Company”) was incorporated in the State of Nevada on November 30, 1998. The Company is engaged in natural resource exploration and is focused on acquiring, exploring, and developing natural resource properties. Currently the Company is undertaking programs in Nevada. The Company’s common stock trades on the Canadian Securities Exchange under the symbol PGOL, and also on the Over-The-Counter (“OTC”) market under the symbol PGOL.
On May 23, 2017, the Company caused the incorporation of its wholly owned subsidiary, Patriot Gold Canada Corp (“Patriot Gold Canada”), under the laws of British Columbia, Canada.
On April 16, 2010, the Company caused the incorporation of its wholly owned subsidiary, Provex Resources, Inc., (“Provex”) under the laws of Nevada. Effective May 7, 2018, Provex’s name was changed to Goldbase, Inc. (“Goldbase”).
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). These condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Goldbase and Patriot Gold Canada. Collectively, they are referred to herein as “the Company”. Inter-company accounts and transactions have been eliminated. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, together with management’s discussion and analysis of financial condition and results of operations, contained in our Annual Report on Form 10-K for the year ended December 31, 2025.
Management’s Estimates and Assumptions
The preparation of the condensed consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management believes that all applicable estimates and adjustments are appropriate. Actual results could differ from those estimates.
Going Concern
The Company's ability to continue as a going concern is dependent on its ability to develop its natural resource properties and achieve profitable operations, and to generate sufficient cash flow from financing and operations to meet its obligations as they become payable. The Company expects that it will need approximately $1,000,000 to fund its operations during the next twelve months, which will including working capital, general, legal, accounting and administrative expenses. During prior periods, there was a temporary cessation in revenues derived from the Moss royalty, which raised substantial doubt regarding the Company’s ability to fund its operations. As described in Note 4, royalty payments have resumed and are currently being collected, and management expects such payments to continue. However, the resumption of royalty payments has not yet alleviated the conditions that raise substantial doubt about the Company’s ability to continue as a going concern. No adjustment relating to the recoverability and classification of recorded asset amounts and the classification of liabilities has been made to the accompanying financial statements in anticipation of the Company not being able to continue as a going concern.
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Exploration and Development Costs
Mineral exploration costs and payments related to the acquisition of the mineral rights are expensed as incurred. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to acquire and develop such property will be capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable reserve. No costs have been capitalized through June 30, 2026.
Cash and Cash Equivalents
The Company considers all investment instruments
purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes. The
Company has
Marketable Securities
Equity investments with readily determinable fair values are measured at fair value. Equity investments without readily determinable fair values are measured using the equity method or measured at costs with adjustments for observable changes in price or impairments (referred to as the measurement alternative). We currently do not have investments without readily determinable fair values. We perform a qualitative assessment on a periodic basis and recognize an impairment if there are sufficient indicators that the fair value of the investment is less than carrying value. Changes in value are recorded in Other income (expense), net.
Royalties Receivables and Allowance for Uncollectible Receivables
Royalties Receivables consist of amounts due
from Golden Vertex related to the net smelter return royalty on the Moss Mine in Arizona (see Note 4). An allowance for uncollectible
receivables is based upon the amount of losses expected to be incurred in the collection of these royalties pursuant to the guidance
outlined in ASU 2025-05, Financial Instruments – Credit Losses (ASC 326). This pronouncement replaces the former incurred
loss methodology with an expected credit loss methodology that requires consideration of a broader range of information to estimate expected
losses over the lifetime of the asset. Management’s evaluation process used to determine the appropriateness of the allowance is
complex and requires the use of estimates, assumptions and judgements which are inherently subject to high uncertainty. The estimated
losses are calculated based upon a review of the outstanding receivables, including the age of the receivable, historical collection
experience and, as applicable, current conditions and forecasts that affect collectability. The estimate could require a change based
on changing circumstances, including changes in the economy or changes specifically related to Golden Vertex. Specific receivables are
written off against the allowance when management determines the account is uncollectible. As of June 30, 2026 and December 31, 2025,
there was an allowance of $
Foreign Currency Translation
The Company’s functional currency and reporting currency is the U.S. dollar. Monetary items denominated in foreign currency are translated to U.S. dollars at exchange rates in effect at the balance sheet date and non-monetary items are translated at rates in effect when the assets were acquired, or obligations incurred. Revenue and expenses are translated at rates in effect at the time of the transactions. Foreign exchange gains and losses are included in the condensed consolidated statements of operations.
Concentration of Credit Risk
The Company has no off-balance-sheet concentrations
of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. Financial instruments that
potentially subject the Company to concentration of credit risk consist principally of cash deposits. The Company maintains the majority
of its cash balances with two financial institutions in the form of demand deposits. Accounts at banks in the United States are insured
by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000, while accounts at banks in Canada are insured by the
Canada Deposit Insurance Corporation (“CDIC”) up to $100,000. At June 30, 2026 and December 31, 2025, the Company had $
| 9 |
Basic earnings per share is computed by dividing the net income by the weighted average number of shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted-average number of common shares plus dilutive potential common shares outstanding during the period.
As of June 30, 2026 and 2025, all of the outstanding stock options and warrants, as well as approximately shares issuable upon conversion of the Company’s convertible notes (see Note 10), were excluded from the computation of diluted shares outstanding as they would have had an anti-dilutive impact on the Company’s income from continuing operations.
Comprehensive Income
Comprehensive income consists of net income and other gains and losses affecting shareholders’ equity that, under generally accepted accounting principles, are excluded from net income. For the Company, such items consist primarily of foreign currency translation gains and losses.
Stock Options
The Company measures all employee stock-based compensation awards using a fair value method on the date of grant and recognizes such expense in its condensed consolidated financial statements over the requisite service period. The Company uses the Black-Scholes pricing model to determine the fair value of stock-based compensation awards on the date of grant. The Black-Scholes pricing model requires management to make assumptions regarding option lives, expected volatility, and risk-free interest rates.
The Company accounts for non-employee stock-based awards in accordance with the Accounting Standards Update (ASU) 2018-07, Compensation—Stock Compensation (Topic 718): Under this standard, the Company values all equity classified awards at their grant-date under ASC718.
The Company accounts for equity-based transactions with nonemployees awards in accordance with the Accounting Standards Update (ASU) 2018-07,Compensation—Stock Compensation (Topic 718): ASU 2018-07 establishes that equity-based payment transactions with nonemployees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The fair value of common stock issued for payments to nonemployees is measured at the market price on the date of grant. The fair value of equity instruments, other than common stock, is estimated using the Black-Scholes option valuation model. In general, we recognize the fair value of the equity instruments issued as deferred stock compensation and amortize the cost over the term of the contract.
The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation—Stock Compensation, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The fair value of the equity instrument is charged directly to compensation expense and credited to additional paid-in capital over the period during which services are rendered.
The Company has granted Restricted Common Stock, where the Restricted Common Stock is restricted for a period of three years following the date of grant. During the three-year period the recipient may not sell or otherwise dispose of the shares. The Company generally measures share-based compensation based on the fair value of its common stock on the grant date. In circumstances where the characteristics of the restricted shares differ from those of the Company’s actively traded common stock, the Company may apply a discount to the quoted market price to estimate fair value. The Company would apply a discount for illiquidity to the price of the Company’s stock when determining the amount of expense to be recorded for the Restricted Common Stock issuance. The discount for illiquidity for the Restricted Common Stock would be estimated on the date of grant by taking the average close price of the freely traded common shares for the period in which the services were provided, and applying an illiquidity discount of 10% for each multiple that the total Restricted Common Stock is of the average daily volume for the period, to a maximum of 50%.
| 10 |
Fair Value of Financial Instruments
The carrying value of the Company's financial instruments, including prepaids, accounts payable and accrued liabilities, at June 30, 2026 and December 31, 2025 approximates their fair values due to the short-term nature of these financial instruments. Management is of the opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments. The Company carries other company’s equity instruments at fair value as required by U.S. GAAP, which are valued using level 1 inputs under the fair value hierarchy.
In general, investments with original maturities of greater than 90 days and remaining maturities of less than one year are classified as short-term investments. Investments with maturities beyond one year may also be classified as short-term based on their highly liquid nature and can be sold to fund current operations.
Fair Value Hierarchy
Fair value is defined within the accounting rules as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The rules established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. As presented in the tables below, this hierarchy consists of three broad levels:
Level 1. Quoted prices in active markets for identical assets or liabilities.
Level 2. Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions (less active markets), or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated with observable market data for substantially the full term of the assets or liabilities. Level 2 inputs also include non-binding market consensus prices that can be corroborated with observable market data, as well as quoted prices that were adjusted for security-specific restrictions.
Level 3. Unobservable inputs to the valuation methodology are significant to the measurement of the fair value of assets or liabilities. These Level 3 inputs also include non-binding market consensus prices or non-binding broker quotes that we were unable to corroborate with observable market data.
Assets measured at fair value on a recurring basis by level within the fair value hierarchy are as follows:
| Fair Value Measurement at | Fair Value Measurement at | |||||||||||||||
| June 30, 2026 | December 31, 2025 | |||||||||||||||
| Using Level 1 |
Total | Using Level 1 |
Total | |||||||||||||
| Assets: | ||||||||||||||||
| Equity securities with readily determinable fair values | $ | $ | $ | $ | ||||||||||||
Revenue Recognition
The Company has adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”), which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The Company receives a royalty of 3% of net smelter returns on the Moss Mine (see Note 3) and recognizes revenue at the time minerals are produced and sold at the Moss Mine. The Company’s revenue recognition policy standards include the following elements under ASC 606:
| 11 |
| 1. | Identify the contract with the customer. The agreement with Golden Vertex is documented in the Purchase and Sale Agreement dated 5/12/16 and the Royalty Deed dated 5/25/16. | |
| 2. | Identify the performance obligations. The performance obligation required Patriot to relinquish its 30% interest in the Moss Mine. The Company conveyed all of its right, title and interest in those certain patented and unpatented lode mining claims situated in the Oatman Mining District, Mohave County, Arizona together with all extralateral and other associated rights, water rights, tenements, hereditaments and appurtenances belonging or appertaining thereto, and all rights-of-way, easements, rights of access and ingress to and egress from the claims appurtenant thereto, and in which the Company had any interest. | |
| 3. | Determine the transaction price. The transaction price was C$1,500,000 plus 3% of the Net Smelter Returns on the future production of the Moss Mine. See Note 3 for definition of Net Smelter Returns. | |
| 4. | Allocate the transaction price to the performance obligations. The Company only has one performance obligation, the transfer of the rights to the Moss Mine, which has already been fulfilled. | |
| 5. | Recognize revenue when (or as) the entity satisfies a performance obligation. The C$1,500,000 was recognized as a sale of the mining rights in 2016, resulting in a gain from the disposition of the property. The 3% net smelter returns royalty are recognized as revenue in the period that Golden Vertex produces and sells minerals from the Moss Mine, which began in March 2018. The royalties that have been received to date have been highly variable, as the amounts are dependent upon the monthly production, the demand of the buyers, the spot price of gold and silver, the costs associated with refining and transporting the product, etc. As such, management has determined that the revenue recognition shall be treated as variable consideration as defined in ASC 606. Variable consideration should only be recognized to the extent that it is probable that a significant reversal of revenue will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Given the fact that royalties to date have been highly variable with a great degree of uncertainty, and any attempts to estimate future revenue would likely result in a significant reversal of revenue, royalty revenue will be recognized when payments and settlement statements are received from Golden Vertex, in the period for which the sales were made by Golden Vertex. It is at that time that any uncertainty related to royalty payments is resolved. The Company applied ASC 606 using the modified retrospective method. |
Related Party Transactions
A related party is generally defined as (i) any person who holds 10% or more of the Company’s securities and their immediate families, (ii) the Company’s management, (iii) an entity or person who directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.
Income Taxes
The Company follows ASC 740-10-30, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Income in the period that includes the enactment date.
| 12 |
The Company adopted ASC 740-10-25 (“ASC 740-10-25”) with regard to uncertainty of income tax positions. ASC 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740-10-25, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. ASC 740-10-25 also provides guidance on derecognition, classification, interest and penalties on income taxes, and accounting in interim periods and requires increased disclosures.
New Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances the transparency and decision usefulness of income tax disclosures, including requiring additional disaggregation of the rate reconciliation and income taxes paid. The standard is effective for fiscal years beginning after December 15, 2024. The Company adopted this ASU, effective for the year ended December 31, 2025. The adoption has no impact on the Company’s financial positions, results of operations or cash flow, but has resulted in a change to the footnote disclosure in Note 10 on Income Taxes, as prior period amounts have been conformed to the current presentation.
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
NOTE 3 - MINERAL PROPERTIES
Vernal Property
The Vernal Property is located approximately 140
miles east-southeast of Reno, Nevada on the west side of the Shoshone Mountains. The Company holds the property via
Moss Mine Property
In 2004, the Company obtained a 100% interest in a number of patented and unpatented mining claims known as the Moss Mine property located in the Oatman Mining District of Mohave county Arizona. In 2011, the Company entered into an Exploration and Option to Enter Joint Venture Agreement (the “Moss Agreement”), with Idaho State Gold Company, LLC, (“ISGC”) whereby the Company granted the option and right to earn a vested seventy percent (70%) interest in the property and the right and option to form a joint venture for the management and ownership of the properties called the Moss Mine, Mohave County, Arizona. Subsequently, ISGC transferred its rights to Elevation Gold Mining Corporation. (“Elevation”), formerly known as Northern Vertex Mining Corporation. In 2016, it was determined that Northern Vertex had met the required conditions to earn an undivided 70% interest in the Moss Mine. As such, the Company entered into a material definitive Agreement for Purchase and Sale of Mining Claims and Escrow Instructions (the “Purchase and Sale Agreement”) with Golden Vertex Corp., an Arizona corporation (“Golden Vertex,” a wholly-owned Subsidiary of Northern Vertex) whereby Golden Vertex agreed to purchase the Company’s remaining 30% working interest in the Moss Mine for $1,155,600 (C$1,500,000) plus a 3% net smelter return (“NSR”) royalty. See Note 4 for additional information regarding the royalty from the Moss Mine.
Windy Peak Property
The Windy Peak Property, (“Windy Peak”)
consists of
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Rainbow Mountain Property
The Rainbow Mountain gold project consisted of
NOTE 4 - ROYALTY INTERESTS
Pursuant to the Purchase and Sale Agreement with
Golden Vertex, the Company has a
Revenue recognition criteria is outline in Note 2 above. However, ASC 606-10-25-1(e) requires the Company to assess whether it is probable that it will collect substantially all of the revenue.
In early 2024, the Company was notified that
Golden Vertex, which operates the Moss Mine, had suspended royalty payments to Patriot and other royalty holders in order to
preserve liquidity. Patriot subsequently took legal action against Golden Vertex, relating to outstanding royalty payments which
were owed to Patriot under its Moss Mine royalty. On April 9, 2024, Patriot initiated litigation in the State of Arizona.
Subsequently, Golden Vertex requested a stay of creditor claims and processes under chapter 15 of the US Bankruptcy Code within the
District of Arizona. On December 30, 2024, the US Bankruptcy court then provided that, until it makes a ruling relating to
Patriot’s claims against Golden Vertex, certain Golden Vertex assets including cash, accounts receivable, rights to proceeds
from mineral production, and other rights to payment, were to be segregated, accounted for, and preserved, and no distributions
could be made of same, pending further order of the US Bankruptcy Court. Patriot sought to recover said assets under its turnover,
constructive trust, and conversion claims. On October 22, 2025, the Court granted Patriot’s motions for partial summary
judgment, determining that, pursuant to the Patriot Royalty Deed, Patriot owns and holds a real property interest in the minerals at
the Moss Mine and the proceeds generated therefrom, and that Patriot’s interest is binding on Golden Vertex and any future
owner of the mine. On December 22, 2025, the Court granted Patriot’s request for a preliminary injunction requiring Golden
Vertex to provide monthly detailed calculations of all royalties owing in accordance with the terms of the Royalty Deed, including
all data supporting or otherwise relating to the calculations; and segregate and hold in the United States the dollar amount of
royalties payable to Patriot under the Royalty Deed. Pursuant to the summary judgment, royalties earned since the time the new
owners of Golden Vertex began operation are being paid and the related revenue recognized (see Notes 2 and 5). As of June 30, 2026
and December 31, 2025, the Company had Royalties Receivables, net of allowance for doubtful accounts of $
Pursuant to the Bruner Purchase and Sale Agreement
with Canamex Resources (“Buyer”) dated April 25, 2017, the Company has a
In March 2019, the Company purchased a Vanadium
Oxide royalty interest from a related party. In exchange for a non-refundable payment of $
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NOTE 5 - COMMITMENTS AND CONTINGENCIES
In the ordinary course of business, we may be exposed to claims and threatened litigation, and use various methods to resolve these matters in a manner that we believe serves the best interest of our shareholders and other constituents. When a loss is probable, we disclose the amount of probable loss or disclose a range of reasonably possible losses if they are material and we are able to estimate such a range. If we cannot provide an estimate, we explain the factors that prevent us from doing so. We believe the recorded reserves in our condensed consolidated financial statements are adequate in light of the probable and estimable liabilities. In early 2024, the Company was notified that Golden Vertex had suspended royalty payments to Patriot and other royalty holders, in order to preserve liquidity. In April 2024, the Company filed a complaint in the Maricopa County Superior Court for payment of the amounts owed pursuant to the NSR royalty. See Note 2 and Note 4 for additional information.
The Company’s Board of Directors adopted the 2019 Stock Option Plan (the “2019 Plan”) in July 2019 and the 2014 Stock Option Plan (the “2014 Plan”) in June 2014. There were compensation costs charged against those plans for the six months ended June 30, 2026 and 2025, respectively.
The 2019 Plan reserves and makes available for grant common stock shares of up to . No options can be granted under the plans 10 years after the plan inception date. As such, no additional options can be granted under the 2014 Plan.
Options granted to officers or employees under the plans may be incentive stock options or non-qualified stock options. Options granted to directors, consultants, and independent contractors are limited to non-qualified stock options.
The plans are administered by the Board of Directors or a committee designated by the Board of Directors. Subject to specified limitations, the Board of Directors or the Committee has full authority to grant options and establish the terms and conditions for vesting and exercise thereof. However, the aggregate fair market value (determined at the time the option is granted) of the shares with respect to which incentive stock options are exercisable for the first time by an optionee during any calendar year cannot exceed $100,000.
Options granted pursuant to the plans are exercisable within ten years after the date of grant. The exercise price per share of common stock for options granted shall be determined by the Board of Directors or the designated committee, except for incentive stock options granted to a holder of ten percent or more of Patriot's common stock, for whom the exercise price per share will not be less than 110% of the fair market value.
As of June 30, 2026, there were shares available for grant under the 2019 Plan.
Stock Option Activity
The fair value of each stock option is estimated at the date of grant using the Black-Scholes option pricing model. No options were granted in the six months ended June 30, 2026 or 2025. Assumptions regarding volatility, expected term, dividend yield and risk-free interest rate are required for the Black-Scholes model. The volatility assumption is based on the Company’s historical experience. The risk-free interest rate is based on a U.S. treasury note with a maturity similar to the option award’s expected life. The expected life represents the average period of time that options granted are expected to be outstanding.
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The following table summarizes stock option activity and related information for the period ended June 30, 2026:
| Number of Stock Options Outstanding | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value | |||||||||||||
| Balance December 31, 2024 | $ | $ | ||||||||||||||
| Option granted | – | – | ||||||||||||||
| Options cancelled / expired | ( | ) | – | – | ||||||||||||
| Options exercised | – | – | ||||||||||||||
| Balance December 31, 2025 | $ | $ | ||||||||||||||
| Option granted | – | – | ||||||||||||||
| Options cancelled / expired | – | – | ||||||||||||||
| Options exercised | – | – | ||||||||||||||
| Balance June 30, 2026 | $ | $ | ||||||||||||||
| Exercisable at June 30, 2026 | $ | $ | ||||||||||||||
There were unvested stock options at June 30, 2026 and 2025. The Company issues new stock when options are exercised.
NOTE 7 - COMMON STOCK
The Company may issue up to shares of $ par value common stock. As of June 30, 2026, the Company had of common shares outstanding. Some of these outstanding shares were granted as payment for services provided to the Company and are restricted. The restricted common stock is restricted for a period of three years following the date of grant. During the three-year period the recipient may not sell or otherwise dispose of the shares. The Company generally measures share-based compensation based on the fair value of its common stock on the grant date. In circumstances where the characteristics of the restricted shares differ from those of the Company’s actively traded common stock, the Company may apply a discount to the quoted market price to estimate fair value. See Note 2 for further discussion.
In November 2025, shares at $ per share were issued to a related party in connection with a stock warrant exercise on July 22, 2020.
In October 2025, the Board of Directors
approved the issuance of
shares at $
per share for the $
NOTE 8 - WARRANTS
The following table summarizes warrant activity during the period ended June 30, 2026. All outstanding warrants were exercisable during this period.
| Number of Warrants | Weighted Average Exercise Price | |||||||
| Outstanding December 31, 2024 | $ | |||||||
| Issued | ||||||||
| Canceled / exercised | ||||||||
| Expired | ||||||||
| Outstanding December 31, 2025 | ||||||||
| Issued | ||||||||
| Canceled / exercised | ||||||||
| Expired | ||||||||
| Outstanding June 30, 2026 | $ | |||||||
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The following tables summarizes outstanding warrants as of June 30, 2026, all of which are exercisable:
| Warrants Outstanding and Exercisable | ||||||||||||
| Range of Exercise Prices | Number of Warrants | Weighted Average Exercise Price | Remaining Contractual Life (years) | |||||||||
| $0.08 | $ | |||||||||||
| $0.09 - $0.14 | $ | |||||||||||
| $0.15 - $0.18 | $ | |||||||||||
| Total Outstanding June 30, 2026 | ||||||||||||
NOTE 9 - PREFERRED STOCK
As of June 30, 2026, there are shares of Series A preferred stock outstanding, owned by a related party. The holders of the Series A Preferred stock shall be entitled to receive non-cumulative dividends in preference to the declaration or payments of dividends on the Common Stock. In the event of liquidation of the Company, the holders of the Series A Preferred Stock shall receive any accrued and unpaid dividends before distribution or payments to the holders of the Common Stock. Series A Preferred Stock carries the same right to vote and act as Common stock, except that it carries super-voting rights entitling it to One Hundred (100) votes per share.
NOTE 10 - CONVERTIBLE NOTES PAYABLE – RELATED PARTY
On various dates between September 29, 2025 and
May 29, 2026, the Company borrowed an aggregate of $
The principal amount of the Notes is denominated in Canadian dollars, while the conversion price is denominated in U.S. dollars. Upon conversion, the outstanding balance (inclusive of accrued interest) is first translated into U.S. dollars using the applicable exchange rate on the conversion date, and the resulting U.S. dollar amount is divided by the stated conversion price to determine the number of shares issuable. As a result, the number of shares issuable upon conversion is subject to variability based on foreign exchange rate fluctuations.
As of June 30, 2026 and December 31, 2025, the
outstanding principal balance of the Notes were $
NOTE 11 - RELATED PARTY TRANSACTIONS
Mr. Zachary Black, a Board Member, provides geological
consulting services to the Company pursuant to a consulting agreement. He is paid on an hourly basis for his services and reimbursed
for his out-of-pocket expenses in performing such consulting services. For the six months ended June 30, 2026 and 2025, there were
Mr. Robert Coale, a Board Member, provides
geological consulting services to the Company pursuant to a consulting agreement. He is paid on an hourly basis for his services and
reimbursed for his out-of-pocket expenses in performing such consulting services. For the six months ended June 30, 2026 and
2025, there were
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Mr. Trevor Newton, President, Chief Financial
Officer, Secretary, Treasurer and Director of the Company, provides consulting services to the Company pursuant to a consulting agreement.
He is paid on an hourly basis for his services and reimbursed for his out-of-pocket expenses in performing such consulting services. For
the six months ended June 30, 2026 and 2025 Mr. Newton was paid fees in the amount of $
Board members are paid fees of $70,000 per calendar
year. Each director term is three years. For the six months ended June 30, 2026 and 2025, directors’ fees totaled $
The Company owns shares of common stock of Strata Power Corp. (“Strata”), acquired through a series of private placements, as an investment in lithium mining extraction technologies. The purchase was accounted for as a marketable security in available for sale securities. Strata is a related party through Trevor Newton, who is President and a member the Board of Directors of both Patriot and Strata. Management has considered the guidance that is used to evaluate whether the Company has significant influence over Strata and has determined that no such significant influence exists.
NOTE 12 - SEGMENT REPORTING
ASC Topic 280, “Segment Reporting” establishes the standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about services categories, business segments and major customers in financial statements. The Company’s chief operating decision maker (“CODM”), represented by the Company’s Chief Executive Officer and President, reviews financial information and assesses the operations of the Company in order to make strategic decisions such as allocation of resources and assessing operating performance.
The Company has determined that it operates as operating unit, rather than multiple reporting units, for internal reporting purposes and for internal decision-making and discloses its operating results in a reportable segment. The CODM evaluates performance based primarily on consolidated net income (loss) and cash flows. The CODM regularly reviews significant expense categories in assessing performance and allocating resources. The CODM also reviews total consolidated assets in evaluating the deployment of capital resources and operational performance. Because the Company operates as a single reportable segment, all required segment financial information can be found in the accompanying condensed consolidated financial statements.
NOTE 13 - SUBSEQUENT EVENTS
In accordance with SFAS 165 (ASC 855-10) management has performed an evaluation of subsequent events through the date that the financial statements were available to be issued and has determined that it does not have any material subsequent events to disclose in these financial statements, other than the following:
Subsequent to June 30, 2026, the Company reached a settlement agreement with Golden Vertex regarding its ongoing litigation against Golden Vertex with respect to the Company’s royalty interest in the Moss Mine. The royalty remains intact going forward, and the parties are currently in the process of advancing the proposed order approving the settlement agreement, and the stipulated judgment, to the Court. The Company is pleased the matter is resolved and is confident that the Moss Mine will continue to be a successful producer well into the future. Litigation against the previous owners of Golden Vertex, who filed for bankruptcy protection (see Note 4) is still ongoing.
On October 7, 2025, the Company approved a reverse stock split of the Company’s common stock at a ratio of 1-for-10, pursuant to a resolution approved by the Company’s Board of Directors. The process of effecting the reverse stock split is currently underway and the Company does not yet have a date when it will be effective. Had the reverse stock split been effective as of June 30, 2026, the shares issued and outstanding at June 30, 2026 and December 31, 2025 would have been 6,829,649 for a value of $6,830. Additional paid-in capital would have been $28,435,726 at June 30, 2026 and December 31, 2025.
There would have been no change in total equity or net income (loss) as a result of the reverse split.
Basic income (loss) per share on a pro forma basis would be $0.15 and ($0.14) for the six months ended June 30, 2026 and 2025, respectively.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking information. Forward-looking information includes statements relating to future actions, prospective products, future performance or results of current or anticipated products, sales and marketing efforts, costs and expenses, interest rates, outcome of contingencies, financial condition, results of operations, liquidity, business strategies, cost savings, objectives of management of Patriot Gold Corp. (hereinafter referred to as the “Company,” “Patriot Gold” or “we”) and other matters. One can find many of these statements by looking for words including, for example, “believes,” “expects,” “anticipates,” “estimates” or similar expressions. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events.
The Company has based the forward-looking statements relating to the Company’s operations on management’s current expectations, estimates and projections about the Company and the industry in which it operates. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that we cannot predict. In particular, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. Accordingly, the Company’s actual results may differ materially from those contemplated by these forward-looking statements. Any differences could result from a variety of factors, including, but not limited to general economic and business conditions, competition, and other factors.
General Overview
As a natural resource exploration company, our focus is to acquire, explore and develop natural resource properties which may host mineral reserves which may be economical to extract commercially. With this in mind, we have identified and secured interests in mining claims with respect to properties in Nevada. Current cash on hand plus anticipated royalty revenue may not be sufficient to fund planned operations for 2026 after payment of accounts payable and convertible notes payable outstanding at June 30, 2026. Our officers and directors and advisors, attorneys and consultants will continue to be utilized to support all operations.
Results of Operations
Comparison of the Three Months and Six Months Ended June 30, 2026 to the Three Months and Six Months Ended June 30, 2025
During the three months and six months ended June 30, 2026 and 2025, we had revenue of $1,777,840 and $0, respectively, resulting from the Moss Mine royalty (see Note 4). We are currently exploring and developing our properties and are actively reviewing new projects.
Net income for the three months ended June 30, 2026 was $1,284,517 compared to net loss of ($574,930) for the three months ended June 30, 2025. Net income for the six months ended June 30, 2026 was $1,011,496 compared to net loss of ($975,036) for the six months ended June 30, 2025. The change in profitability is primarily due to the approximate $1,778,000 increase in royalty revenue, a decrease of $166,000 in general and administrative expenses and a $44,000 decrease in consulting expenses.
For the three months ended June 30, 2026 and 2025, mineral and exploration expenses were $13,982 and $21,330, respectively. For the six months ended June 30, 2026 and 2025, mineral and exploration expenses were $26,293 and $41,180, respectively. The slight decrease in 2026 is primarily due to a temporary pause in drilling and exploration expenditures on the Windy Peak project.
For the three months ended June 30, 2026 and 2025, general and administrative expenses were $379,447 and $471,715, respectively. For the six months ended June 30, 2026 and 2025, general and administrative expenses were $594,786 and $761,242, respectively. The decrease in 2026 is primarily due to a decrease in legal fees.
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For the three months ended June 30, 2026 and 2025, other income (expenses) were ($30,154) and ($2,664), respectively. For the six months ended June 30, 2026 and 2025, other income (expenses) were ($5,918) and $10,722, respectively. The change in other income/expense is due to an approximate $37,000 increase in interest expense, a $5,000 decrease in unrealized gains on marketable securities, offset by a $26,000 increase in currency exchange.
Liquidity and Capital Resources
We had total assets of $981,663 at June 30, 2026 consisting primarily of $573,666 of cash, $54,101 of marketable securities, $302,228 of royalties receivables and $51,668 of prepaid expenses. We had total liabilities of $1,813,649 at June 30, 2026, consisting primarily of accounts payable and accrued expenses, both trade and with related parties, as well as a convertible note payable.
We anticipate that we will incur the following during the year ended December 31, 2026:
| · | $1,000,000 for operating expenses, including exploration, working capital and general, legal, accounting and administrative expenses associated with reporting requirements under the Securities Exchange Act of 1934 and compliance with Canadian regulatory authorities. |
Cash provided by (used in) operations was $224,993 and ($277,487) for the six months ended June 30, 2026 and 2025, respectively. The $502,482 increase in cash provided by (used in) operations was primarily due to the change in royalty revenue.
There were no investing activities for the six months ended June 30, 2026 and 2025.
Cash provided by financing activities during the six months ended June 30, 2026 and 2025 were $286,351 and $0, respectively. In 2026, cash was received from notes payable to a related party.
Management estimates that the Company may need additional funding for the next twelve months.
We currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources.
Off Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Critical Accounting Policies
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management believes that all applicable estimates and adjustments are appropriate. Actual results could differ from those estimates.
Revenue Recognition
On June 1, 2018, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”), which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The Company receives a royalty of 3% of net smelter returns on the Moss Mine (see Note 3) and recognizes revenue at the time minerals are produced and sold at the Moss Mine. The Company’s revenue recognition policy standards include the following elements under ASU 606:
| 1. | Identify the contract with the customer. The agreement with Golden Vertex is documented in the Purchase and Sale Agreement dated 5/12/16 and the Royalty Deed dated 5/25/16. |
| 20 |
| 2. | Identify the performance obligations. The performance obligation required Patriot to relinquish its 30% interest in the Moss Mine. The Company conveyed all of its right, title and interest in those certain patented and unpatented lode mining claims situated in the Oatman Mining District, Mohave County, Arizona together with all extralateral and other associated rights, water rights, tenements, hereditaments and appurtenances belonging or appertaining thereto, and all rights-of-way, easements, rights of access and ingress to and egress from the claims appurtenant thereto, and in which the Company had any interest. | |
| 3. | Determine the transaction price. The transaction price was C$1,500,000 plus 3% of the Net Smelter Returns on the future production of the Moss Mine. See Note 3 for definition of Net Smelter Returns. | |
| 4. | Allocate the transaction price to the performance obligations. The Company only has one performance obligation, the transfer of the rights to the Moss Mine, which has already been fulfilled. | |
| 5. | Recognize revenue when (or as) the entity satisfies a performance obligation. The C$1,500,000 was recognized as a sale of the mining rights in 2016, resulting in a gain from the disposition of the property. The 3% net smelter returns royalty will be recognized as revenue in the period that Golden Vertex produces and sells minerals from the Moss Mine, which began in March 2018. The royalties that have been received to date have been highly variable, as the amounts are dependent upon the monthly production, the demand of the buyers, the spot price of gold and silver, the costs associated with refining and transporting the product, etc. As such, management has determined that the revenue recognition shall be treated as variable consideration as defined in ASC 606. Variable consideration should only be recognized to the extent that it is probable that a significant reversal of revenue will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Given the fact that royalties to date have been highly variable with a great degree of uncertainty, and any attempts to estimate future revenue would likely result in a significant reversal of revenue, royalty revenue will be recognized when payments and settlement statements are received from Golden Vertex, in the period for which the sales were made by Golden Vertex. It is at that time that any uncertainty related to royalty payments is resolved. The Company applied ASC 606 using the modified retrospective method. |
Mineral Property Acquisition and Exploration Costs
Mineral exploration costs and payments related to the acquisition of the mineral rights are expensed as incurred. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to acquire and develop such property will be capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable reserve. No costs have been capitalized through June 30, 2026.
Deferred Taxes
The Company follows ASC 740-10-30, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Income in the period that includes the enactment date.
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The Company adopted ASC 740-10-25 (“ASC 740-10-25”) with regard to uncertainty of income tax positions. ASC 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740-10-25, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. ASC 740-10-25 also provides guidance on derecognition, classification, interest and penalties on income taxes, and accounting in interim periods and requires increased disclosures.
Stock-Based Compensation
We account for equity-based transactions with nonemployees awards in accordance with the Accounting Standards Update (ASU) 2018-07, Compensation—Stock Compensation (Topic 718): ASU 2018-07 establishes that equity-based payment transactions with nonemployees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The fair value of common stock issued for payments to nonemployees is measured at the market price on the date of grant. The fair value of equity instruments, other than common stock, is estimated using the Black-Scholes option valuation model. In general, we recognize the fair value of the equity instruments issued as deferred stock compensation and amortize the cost over the term of the contract.
We account for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation—Stock Compensation, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The fair value of the equity instrument is charged directly to compensation expense and credited to additional paid-in capital over the period during which services are rendered.
The Company has granted Restricted Common Stock, where the Restricted Common Stock is restricted for a period of three years following the date of grant. During the three-year period the recipient may not sell or otherwise dispose of the shares. The Company generally measures share-based compensation based on the fair value of its common stock on the grant date. In circumstances where the characteristics of the restricted shares differ from those of the Company’s actively traded common stock, the Company may apply a discount to the quoted market price to estimate fair value. The Company would apply a discount for illiquidity to the price of the Company’s stock when determining the amount of expense to be recorded for the Restricted Common Stock issuance. The discount for illiquidity for the Restricted Common Stock would be estimated on the date of grant by taking the average close price of the freely traded common shares for the period in which the services were provided and applying an illiquidity discount of 10% for each multiple that the total Restricted Common Stock is of the average daily volume for the period, to a maximum of 50%.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this Item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures
Under the supervision and with the participation of our management, including our principal executive, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of June 30, 2026. Based on this evaluation, the Company’s Chief Executive Officer, who also serves as its Principal Financial Officer, concluded that our disclosure controls and procedures were effective.
Changes in internal controls
During the quarter covered by this report, management strengthened the internal controls regarding the information and communication of the expense obligations of the Company.
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PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 1A. RISK FACTORS
N/A
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
N/A
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. MINE SAFETY DISCLOSURES
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”) and Item 104 of Regulation S-K require certain mine safety disclosures to be made by companies that operate mines regulated under the Federal Mine Safety and Health Act of 1977. However, the requirements of the Act and Item 104 of Regulation S-K do not apply as the Company does not engage in mining activities. Therefore, the Company is not required to make such disclosures.
ITEM 5. OTHER INFORMATION
During the
quarter ended June 30, 2026, no director or officer of the Company
ITEM 6. EXHIBITS
INDEX TO EXHIBITS
| Exhibit No. | Description | |
| 31.1 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act.* | |
| 32.1 |
| |
| 101.INS | Inline XBRL Instance Document.* | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document.* | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document.* | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document.* | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document.* | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document.* | |
| 104 | The cover page for this report, formatted in Inline XBRL (included in Exhibit 101).* |
___________________
| *Filed Herewith |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: August 14, 2026
PATRIOT GOLD CORP.
| By: | /s/ Trevor Newton | |
| Trevor Newton | ||
| Chief Executive Officer and President |
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