conta20211231b

conta20211231b_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-35770

CONTANGO ORE, INC.

(Exact name of registrant as specified in its charter)

Delaware		27-3431051
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

3700 BUFFALO SPEEDWAY, SUITE 925
Houston, Texas		77098
(Address of principal executive offices)		(Zip code)

(713) 877-1311

(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
Common Stock, Par Value $0.01 per share	CTGO	NYSE American

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. Yes ☒ No ☐

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). Yes ☒ No ☐.

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,” or “emerging growth company” in Rule 12b-2 of the Exchange Act.:


Large accelerated filer ☐		Accelerated filer ☐		Non-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 ☒

The total number of shares of common stock, par value $0.01 per share, outstanding as of February 10, 2022 was 6,745,750.

CONTANGO ORE, INC.

TABLE OF CONTENTS




		Page
	PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of December 31, 2021 and June 30, 2021 (unaudited)	3
	Condensed Consolidated Statements of Operations for the three and six months ended December 31, 2021 and 2020 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the six months ended December 31, 2021 and 2020 (unaudited)	5
	Condensed Consolidated Statement of Shareholders’ Equity for the three and six months ended December 31, 2021 and 2020 (unaudited)	6
	Notes to the Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	41
Item 4.	Controls and Procedures	41
	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 4.	Mine Safety Disclosures	43
Item 5.	Other Information	43
Item 6.	Exhibits	44

All references in this Form 10-Q to the “Company”, “CORE”, “we”, “us” or “our” are to Contango ORE, Inc.

CONTANGO ORE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

Item 1 - Financial Statements

	December 31, 2021			June 30, 2021
ASSETS

CURRENT ASSETS:
Cash	$	21,867,982		$	35,220,588
Restricted cash		231,000			—
Prepaid expenses and other		1,351,429			515,635
Income tax receivable		278,126			198,126
Total current assets		23,728,537			35,934,349

LONG-TERM ASSETS:
Investment in Peak Gold (Note 4)		—			—
Property & equipment, net		13,628,324			36,531
Total long-term assets		13,628,324			36,531

TOTAL ASSETS	$	37,356,861		$	35,970,880

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:
Accounts payable	$	396,444		$	26,268
Accrued liabilities		174,052			195,837
Note payable		6,250,000			—
Total current liabilities		6,820,496			222,105

NON-CURRENT LIABILITIES:
Advance royalty reimbursement		1,200,000			1,200,000
Asset retirement obligations		222,486			—
Contingent consideration liability		1,847,063			—
Total non-current liabilities		3,269,549			1,200,000

TOTAL LIABILITIES		10,090,045			1,422,105

COMMITMENTS AND CONTINGENCIES (NOTE 13)

SHAREHOLDERS’ EQUITY:
Common Stock, $0.01 par value, 45,000,000 shares authorized; 6,809,246 shares issued and 6,806,654 outstanding at December 31, 2021; 6,675,746 shares issued and outstanding at June 30, 2021		68,092			66,757
Additional paid-in capital		71,742,871			69,509,606
Treasury stock at cost (2,592 shares at December 31, 2021; and 0 at June 30, 2021)		(69,307	)		—
Accumulated deficit		(44,474,840	)		(35,027,588	)
TOTAL SHAREHOLDERS’ EQUITY		27,266,816			34,548,775

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	37,356,861		$	35,970,880

The accompanying notes are an integral part of these condensed consolidated financial statements.

CONTANGO ORE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended December 31,						Six Months Ended December 31,
	*2021*			*2020*			*2021*			*2020*
EXPENSES:
Claim rental expense	$	(157,163	)	$	(55,809	)	$	(306,973	)	$	(76,637	)
Exploration expense		(1,219,437	)		(4,800	)		(2,165,682	)		(4,800	)
Depreciation expense		(8,933	)		—			(13,715	)		—
Accretion expense		(3,560	)		—			(3,560	)		—
General and administrative expense		(2,796,664	)		(2,602,590	)		(4,766,933	)		(6,127,582	)
Total expenses		(4,185,757	)		(2,663,199	)		(7,256,863	)		(6,209,019	)

OTHER INCOME/(EXPENSE):
Interest income		494			705			991			919
Interest expense		53,224			—			(3,380	)		—
Loss from equity investment in Peak Gold, LLC (Note 4)		(743,000	)		(1,123,452	)		(2,188,000	)		(1,371,252	)
Gain on sale of a portion of the equity investment in Peak Gold, LLC		—			—			—			39,642,857
Total other income/(expense)		(689,282	)		(1,122,747	)		(2,190,389	)		38,272,524

INCOME/(LOSS) BEFORE TAXES		(4,875,039	)		(3,785,946	)		(9,447,252	)		32,063,505
Income tax (expense)/benefit					571,901			—			(1,834,925	)
NET INCOME/(LOSS)	$	(4,875,039	)	$	(3,214,045	)	$	(9,447,252	)	$	30,228,580

NET INCOME/(LOSS) PER SHARE
Basic and diluted	$	(0.72	)	$	(0.53	)	$	(1.41	)	$	4.79
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic and diluted		6,751,581			6,042,150			6,716,076			6,309,482

The accompanying notes are an integral part of these condensed consolidated financial statements.

CONTANGO ORE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended December 31,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss)	$	(9,447,252	)	$	30,228,580
Adjustments to reconcile net income/(loss) to net cash used in operating activities:
Stock-based compensation		2,278,160			1,902,058
Depreciation expense		13,715			—
Accretion expense		3,560
Loss from equity investment in Peak Gold, LLC		2,188,000			1,371,252
Gain on sale of a portion of the equity investment in Peak Gold, LLC		—			(39,642,857	)
Changes in operating assets and liabilities net of assets and liabilities acquired:
Increase in prepaid expenses and other		(721,162)			(340,517	)
Increase (decrease) in accounts payable and accrued liabilities		337,558			(619,847	)
Decrease (increase) in income tax receivable		(80,000	)		1,834,925
Increase in advance royalty reimbursement		—			1,200,000
Net cash used in operating activities		(5,427,421	)		(4,066,406	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Cash invested in Peak Gold, LLC		(2,188,000	)		(1,371,252	)
Acquisition of property and equipment		(13	)		—
Cash paid for acquisition of Alaska Gold Torrent, LLC, net of cash received		(5,393,305	)		—
Cash proceeds from the sale of a portion of the equity investment in Peak Gold, LLC		—			31,200,000
Net cash provided/(used) by investing activities		(7,581,318	)		29,828,748

CASH FLOWS FROM FINANCING ACTIVITIES:
Cash paid for shares withheld from employees for payroll tax withholding		(69,307	)		—
Cash proceeds from capital raise, net		(43,560	)		3,165,622
Net cash provided/(used) by financing activities		(112,867	)		3,165,622

NET INCREASE/(DECREASE) IN CASH		(13,121,606	)		28,927,964
CASH, BEGINNING OF PERIOD		35,220,588			3,011,918
CASH AND RESTRICTED CASH, END OF PERIOD	$	22,098,982		$	31,939,882

Supplemental disclosure of cash flow information
Cash paid for:
Income taxes	$	80,000		$	—
Non-cash investing activities
Note payable issued for acquisition of Alaska Gold Torrent, LLC		6,250,000			—
Direct transaction costs for acquisition of Alaska Gold Torrent, LLC financed in accounts payable		719			—
Asset retirement obligations		218,927			—
Contingent liability for acquisition of Alaska Gold Torrent, LLC		1,847,063			—
Total non-cash investing activities	$	8,316,709		$	—

The accompanying notes are an integral part of these condensed consolidated financial statements.

CONTANGO ORE, INC.

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

(Unaudited)