Quarterly report [Sections 13 or 15(d)]



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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, 2020







OR






















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




OTCQB








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 11, 2021 was 6,151,937.







1












CONTANGO ORE, INC.






TABLE OF CONTENTS

















































































































































Page








PART I

– FINANCIAL INFORMATION





Item

1.




Financial Statements










Condensed Consolidated Balance Sheets as of December 31, 2020 (unaudited) and June

30, 2020




3








Condensed Consolidated Statements of Operations for the three and six months ended December 31, 2020 and 2019 (unaudited)




4








Condensed Consolidated Statements of Cash Flows for the six months ended December 31, 2020 and 2019 (unaudited)




5








Condensed Consolidated Statement of Shareholders

’ Equity for the three and six months ended December 31, 2020 and 2019 (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




18





Item

3.




Quantitative and Qualitative Disclosures about Market Risk




36





Item

4.




Controls and Procedures




36









PART II

– OTHER INFORMATION








Item

1.




Legal Proceedings




37





Item

1A.




Risk Factors




37





Item

2.




Unregistered Sales of Equity Securities and Use of Proceeds




37





Item

4.




Mine Safety Disclosures




37





Item

5.




Other Information




37





Item

6.




Exhibits




38








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






2












CONTANGO ORE, INC.






CONDENSED CONSOLIDATED BALANCE SHEETS









Item 1 - Financial Statements
































































































































































































































































































































































































December 31, 2020








(Unaudited)











June 30, 2020








ASSETS

































CURRENT ASSETS:












Cash




$

31,939,882



$


3,011,918




Prepaid expenses and other





412,761





72,244




Total current assets





32,352,643




3,084,162












TOTAL ASSETS




$


32,352,643




$


3,084,162














LIABILITIES AND SHAREHOLDERS

’ EQUITY


































CURRENT LIABILITIES:












Accounts payable




$

23,667



$


83,158




Accrued liabilities





445,881




1,006,237


Income tax payable



1,834,925










Total current liabilities





2,304,473




1,089,395











NON-CURRENT LIABILITIES:









Advance royalty reimbursement



1,200,000









Total non-current liabilities



1,200,000


















TOTAL LIABILITIES



3,504,473




1,089,395












COMMITMENTS AND CONTINGENCIES (NOTE 11)





















SHAREHOLDERS

’ EQUITY:












Common Stock, $0.01 par value, 45,000,000 shares authorized; 6,200,500 shares issued and outstanding at December 31, 2020; 6,590,113 shares issued and 6,557,239 outstanding at June

30, 2020





62,005




65,901



Additional paid-in capital





57,454,296




61,302,249


Treasury stock at cost (0 shares at December 31, 2020; and 32,874 at June 30, 2020)











(476,672


)


Accumulated deficit






(28,668,131



)






(58,896,711



)




TOTAL SHAREHOLDERS

’ EQUITY






28,848,170






1,994,767













TOTAL LIABILITIES AND SHAREHOLDERS



EQUITY




$

32,352,643



$

3,084,162






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






3












CONTANGO ORE, INC.






CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS




(Unaudited)


































































































































































































































































































































































































































Three Months Ended December 31,







Six Months Ended December 31,









2020









2019







2020





2019





EXPENSES:




















Exploration expense


$

(60,609

)


$







$

(81,437

)


$








General and administrative expense





(2,602,590


)





(1,150,944


)





(6,127,582

)



(2,141,935

)



Total expenses





(2,663,199


)





(1,150,944


)





(6,209,019

)



(2,141,935

)





















OTHER INCOME/(EXPENSE):





















Interest income





705




22,412




919




62,069




Loss from equity investment in Peak Gold, LLC (Note 4)





(1,123,452


)





(1,800,000


)





(1,371,252

)



(2,700,000

)


Gain on sale of a portion of the equity investment in Peak Gold, LLC

















39,642,857










Total other income/(expense)



(1,122,747)




(1,777,588

)



38,272,524




(2,637,931

)





















INCOME/(LOSS) BEFORE TAXES





(3,785,946


)





(2,928,532


)





32,063,505




(4,779,866

)


Income tax (expense)/benefit




571,901












(1,834,925

)









NET INCOME/(LOSS)


$

(3,214,045

)


$

(2,928,532

)


$

30,228,580



$

(4,779,866

)





















NET INCOME/(LOSS) PER SHARE




















Basic and diluted


$

(0.53

)


$

(0.45

)


$

4.79



$

(0.75

)



WEIGHTED AVERAGE COMMON SHARES OUTSTANDING




















Basic and diluted



6,042,150




6,439,273




6,309,482




6,398,193







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






4












CONTANGO ORE, INC.






CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS




(Unaudited)


















































































































































































































































































































Six Months Ended December 31,


















2020

















2019










CASH FLOWS FROM OPERATING ACTIVITIES:












Net income/(loss)




$

30,228,580





$


(4,779,866



)




Adjustments to reconcile net income/(loss) to net cash used in operating activities:












Stock-based compensation






1,902,058





1,623,323


Loss from equity investment in Peak Gold, LLC



1,371,252




2,700,000


Gain on sale of a portion of the equity investment in Peak Gold, LLC



(39,642,857

)









Changes in operating assets and liabilities:












Decrease/(increase) in prepaid expenses and other





(340,517

)



10,763



Decrease in accounts payable and accrued liabilities





(619,847

)




(100,037


)

Increase in income taxes payable



1,834,925









Increase in advance royalty reimbursement



1,200,000










Net cash used in operating activities





(4,066,406


)






(545,817



)












CASH FLOWS FROM INVESTING ACTIVITIES:









Cash invested in Peak Gold, LLC




(1,371,252


)




(2,700,000


)

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






29,828,748






(2,700,000


)










CASH FLOWS FROM FINANCING ACTIVITIES:









Cash proceeds from capital raise, net



3,165,622









Net cash provided by financing activities



3,165,622


















NET INCREASE/(DECREASE) IN CASH



28,927,964





(3,245,817


)


CASH, BEGINNING OF PERIOD






3,011,918






8,600,658




CASH, END OF PERIOD




$

31,939,882



$


5,354,841







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






5












CONTANGO ORE, INC.






CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS

’ EQUITY





(Unaudited)









































































































































































































































































































































































Common Stock






















Additional

















Paid-In















Treasury














Accumulated



















Total

















Shareholders
























Shares

















Amount

















Capital












Stock










Deficit















Equity











Balance at June 30, 2020








6,590,113






$




65,901






$

61,302,249



$




(476,672




)


$




(58,896,711





)




$




1,994,767






Stock-based compensation





























892,158




























892,158


Issuance of common stock



214,298




2,143




2,796,189




476,672











3,275,004




Cost of common stock issuance



















(109,382



)






























(109,382)







Shares received from the partial sale of the investment in Peak Gold, LLC and retired







(809,744



)





(8,097



)





(8,434,760



)

























(8,442,857



)



Net income for the period































33,442,625




33,442,625



Balance at September 30, 2020




5,994,667




59,947




56,446,454











(25,454,086

)



31,052,315


Stock-based compensation

















1,009,900


















1,009,900


Restricted stock activity



205,833




2,058




(2,058

)























Net income for the period



















































(3,214,045




)







(3,214,045




)





Balance at December 31, 2020





6,200,500



$




62,005






$

57,454,296



$











$




(


28,668,131





)




$


28,848,170






















































































































































































































































Common Stock
























Additional



















Paid-In





















Accumulated

















Total


















Shareholders


























Shares



















Amount



















Capital

















Deficit

















Equity












Balance at June 30, 2019








6,357,113






$




63,571






$

57,935,663



$




(49,656,670





)




$



8,342,564





Stock-based compensation





























740,442

















740,442


Net loss for the period















(1,851,334

)




(1,851,334


)


Balance at September 30, 2019




6,357,113




63,571




58,676,105




(51,508,004

)



7,231,672


Stock-based compensation

















882,881











882,881


Restricted stock activity



158,000




1,580




(1,580

)
















Net loss for the period









































(2,928,532





)








(2,928,532





)





Balance at December 31, 2019








6,515,113






$




65,151






$

59,557,406



$




(54,436,536





)




$

5,186,021














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






6










CONTANGO ORE, INC.




NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS










1.

Organization and Business





Contango ORE, Inc. (“CORE” or the “Company”) engages in exploration for gold, silver and copper ores in Alaska. The Company has a 30.0% membership interest in Peak Gold, LLC (the “Joint Venture Company”), which leases approximately 675,000 acres from the Tetlin Tribal Council (the "Tetlin Lease") for exploration and development  through its wholly-owned subsidiary, CORE Alaska, LLC (“CORE Alaska”).  The Company's wholly-owned subsidiary, Contango Minerals, LLC (“Contango Minerals”) also owns 100% interest in the mineral rights to approximately 167,000 acres of State of Alaska mining claims located north and northwest of  the Tetlin Lease.





The Company is in an exploration stage. The Company’s fiscal year end is June 30.





On January 8, 2015, the Company and a subsidiary of Royal Gold, Inc. (“Royal Gold”) formed the Joint Venture Company. The Company contributed a 100% leasehold interest in an estimated 675,000 acres (the “Tetlin Lease”) from the Tetlin Tribal Council, the council formed by the governing



The above information was disclosed in a filing to the SEC. To see the filing, click here.

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