Paramount Gold Nevada Corp. 10-K

Item 9A. Controls and Procedures. DISCLOSURE CONTROLS AND PROCEDURES Under the supervision and with the participation of our management, including the Principal Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, our Principal Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of such date. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including the Principal Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under then supervision of, the company’s principal executive and principal financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: • Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; • Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and • Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Our management assessed the effectiveness of our internal control over financial reporting as of June 30, 2020. In making this assessment, the Company’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated 2013 Framework. Based on this assessment, our management concluded that, as of June 30, 2020, our internal control over financial reporting is effective based on those criteria. Because we are a smaller reporting company, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting for so long as we are a smaller reporting company. CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING There were no changes to our internal control over financial reporting that occurred during the year ended June 30, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information. None. 30 PART III Item 10. Directors, Executive Officers and Corporate Governance. The information required by Items 401, 405, 406, 407(c)(3), (d)(4) and (d)(5) of Regulation S-K will be contained in the Company’s 2020 Proxy Statement, to be filed with the SEC 120 days following the end of the Company’s fiscal year ended June 30, 2020 (the “2020 Proxy Statement”) and is hereby incorporated by reference thereto. Item 11. Executive Compensation. The information required by Item 402 and paragraph (e)(4) and (e)(5) of Item 407 of Regulation S-K will be contained in the Company’s 2020 Proxy Statement, to be filed with the SEC 120 days following the end of the Company’s fiscal year ended June 30, 2020 and is hereby incorporated by reference thereto. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The information required by Item 201(d) and Item 403 of Regulation S-K will be contained in the Company’s 2020 Proxy Statement, to be filed with the SEC 120 days following the end of the Company’s fiscal year ended June 30, 2020 and is hereby incorporated by reference thereto. Item 13. Certain Relationships and Related Transactions, and Director Independence. The information required by Item 404 and Item 407(a) of Regulation S-K will be contained in the Company’s 2020 Proxy Statement, to be filed with the SEC 120 days following the end of the Company’s fiscal year ended June 30, 2020 and is hereby incorporated by reference thereto. Item 14. Principal Accounting Fees and Services. The information required by Item 9(e) of Schedule 14A will be filed in the Company’s 2020 Proxy Statement, to be filed with the SEC within 120 days following the end of the Company’s fiscal year ended June 30, 2020 and is hereby incorporated by reference thereto. 31 PART IV Item 15. Exhibits, Financial Statement Schedules. (a) The following report and financial statements are filed together with this Annual Report: (1) Audited Consolidated Financial Statements of Paramount Gold Nevada Corp. Included in Part II of this report: Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of June 30, 2020 and 2019 Consolidated Statements of Operations for the years ended June 30, 2020 and 2019 Consolidated Statements of Cash Flows for the years ended June 30, 2020 and 2019 Consolidated Statements of Stockholders’ Equity for the years ended June 30, 2020 and 2019 Notes to Consolidated Financial Statements 32 (b) Index to Exhibits Exhibit Number Description 1.1 Controlled Equity Offering SM Sales Agreement, dated as of May 20, 2020, by and between Paramount Gold Nevada Corp., Cantor Fitzgerald & Co. and Canaccord Genuity LLC (Incorporated herein by reference to Exhibit 1.1 to Current Report on Form 8-K of the Company filed on May 20, 2020) 1.2 Agency Agreement, dated as of June 24, 2020, by and between Paramount Gold Nevada Corp., Canaccord Genuity Corp. and Cantor Fitzgerald Canada Corporation. (Incorporated herein by reference to Exhibit 1.2 to Current Report on Form 8-K of the Company filed on June 25, 2020) 2.1 Form of Separation and Distribution Agreement by and between Paramount Gold and Silver Corp. and the Registrant. 1 2.2 Agreement and Plan of Merger among Coeur Mining, Inc., Hollywood Merger Sub, Inc., Paramount Gold and Silver Corp., and the Registrant, Dated as of December 16, 2014. 1 2.3 Arrangement Agreement and Plan of Arrangement dated March 14, 2016, among Paramount Gold Nevada Corp. and Calico Resources Corp. (Incorporated herein by reference to Exhibit 2.1 to Current Report on Form 8-K of the Company filed on March 17, 2016) 3.1 Certificate of Amended and Restated Articles of Incorporation. 2 3.2 Amended and Restated Bylaws. 2 4.1* Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 4.2 Form of Warrant (Incorporated herein by reference to Exhibit 4.1 to Current Report on Form 8-K of the Company filed on February 9, 2017) 4.3 Form of Warrant (Incorporated herein by reference to Exhibit 4.1 to Current Report on Form 8-K of the Company filed on June 29, 2018) 4.4 Form of Senior Secured Convertible Note (Incorporated herein by reference to Exhibit 4.1 to Current Report on Form 8-K of the Company filed on September 13, 2019) 10.1 2015 Stock Incentive and Equity Compensation Plan. 2 10.2 2016 Stock Incentive and Equity Compensation Plan (Incorporated herein by reference to Exhibit 1 to Definitive Proxy Statement on Schedule 14A of the Company filed on October 28, 2016) 10.3 Form of Stock Subscription Agreement between Coeur Mining, Inc. and the Registrant. 3 10.4 Employment Agreement dated October 26, 2015 between Company and Glen Van Treek (Incorporated herein by reference to Exhibit 10.1 to Current Report on Form 8-K of the Company filed on October 26, 2015) 10.5 Employment Agreement dated October 26, 2015 between Company and Carlo Buffone (Incorporated herein by reference to Exhibit 10.2 to Current Report on Form 8-K of the Company filed on October 26, 2015) 10.6 Amended Employment Agreement Glen Van Treek dated August 10, 2016 (Incorporated herein by reference to exhibit 10.1 to Current Report on Form 8-K of the Company filed on August 12, 2016) 10.7 Amended Employment Agreement Carlo Buffone dated August 10, 2016 (Incorporated herein by reference to exhibit 10.2 to Current Report on Form 8-K of the Company filed on August 12, 2016) 10.8 Form of Subscription Agreement (Incorporated herein by reference to Exhibit 10.1 to Current Report on Form 8-K of the Company filed on February 9, 2017) 10.9 Form of Subscription Agreement (Incorporated herein by reference to Exhibit 10.1 to Current Report on Form 8-K of the Company filed on June 29, 2018) 10.10 Form of Security Agreement (Incorporated herein by reference to Exhibit 10.1 to Current Report on Form 8-K of the Company filed on September 13, 2019) 21.1* List of subsidiaries. 23.1* Consent of MNP LLP, Independent Registered Public Accounting Firm 31.1* Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2* Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1* Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2* Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS XBRL Instance Document 101.SCH XBRL Taxonomy Extension Schema Document 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF XBRL Taxonomy Extension Definition Linkbase Document 101.LAB XBRL Taxonomy Extension Label Linkbase Document 33 Exhibit Number Description 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document * Filed herewith. 1 Incorporated by reference to the exhibit filed in the Registrant’s Amendment No. 1 to Registration Statement on Form S-1 filed on February 23, 2015. 2 Incorporated by reference to the exhibit filed in the Registrant’s Form 10-Q filed on May 22, 2015. 3 Incorporated by reference to the exhibit filed in the Registrant’s Amendment No. 3 to Registration Statement on Form S-1 filed on April 2, 2015. 34 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. Company Name Date: September 25, 2020 By: /s/ Rachel Goldman Rachel Goldman (Director and CEO) Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated. Name Title Date /s/ Rachel Goldman Director and CEO (Principal Executive Officer) September 25, 2020 Rachel Goldman /s/ Carlo Buffone Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) September 25, 2020 Carlo Buffone /s/ Glen Van Treek Director, President and Chief Operating Officer September 25, 2020 Glen Van Treek /s/ John Seaberg Director September 25, 2020 John Seaberg /s/ Rudi Fronk Director September 25, 2020 Rudi Fronk /s/ John Carden Director September 25, 2020 John Carden /s/ Eliseo Gonzalez-Urien Director September 25, 2020 Eliseo Gonzalez-Urien /s/ Christopher Reynolds Director September 25, 2020 Christopher Reynolds /s/ Pierre Pelletier Director September 25, 2020 Pierre Pelletier 35 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm F-2 Consolidated Balance Sheets as of June 30, 2020 and 20 19 F-3 Consolidated Statements of Operations for the Years ended June 30, 2020 and 20 19 F-4 Consolidated Statements of Stockholders’ Equity for the Years ended June 30, 2020 and 20 19 F-5 Consolidated Statements of Cash Flows for the Years ended June 30, 2020 and 20 19 F-6 Notes to Consolidated Financial Statements F-7 F-1 REPORT OF INDEPENDENT REGIST ERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Paramount Gold Nevada Corp. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Paramount Gold Nevada Corp. (the Company) as of June 30, 2020 and 2019, and the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the years in the two year period ended June 30, 2020, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of June 30, 2020 and 2019, and the results of its consolidated operations and its consolidated cash flows for each of the years in the two year period ended June 30, 2020, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Chartered Professional Accountants We have served as the Company’s auditor since 2015. Toronto, ON September 25, 2020 F-2 PARAMOUNT GOLD NEVADA CORP. Consolidated Balance Sheets as of June 30, 2020 and 2019 As at June 30, As at June 30, 2020 2019 Assets Current Assets Cash and cash equivalents $ 5,434,081 $ 463,690 Prepaid and deposits 442,596 348,771 Total Current Assets 5,876,677 812,461 Non-Current Assets Mineral properties (Note 7) 47,333,313 47,055,132 Property and equipment 8,467 6,303 Reclamation bond (Note 8) 695,041 1,401,833 Total Non-Current Assets 48,036,821 48,463,268 Total Assets $ 53,913,498 $ 49,275,729 Liabilities and Stockholders' Equity Liabilities Current Liabilities Accounts payable and accrued liabilities $ 925,260 $ 980,310 Reclamation and environmental obligation, current portion (Note 8) 154,231 97,287 Total Current Liabilities 1,079,491 1,077,597 Non-Current Liabilities Convertible debt (Note 6) 5,256,228 — Promissory note (Note 6) 35,628 — Reclamation and environmental obligation, non-current portion (Note 8) 460,939 868,390 Total Liabilities 6,832,286 1,945,987 Stockholders' Equity Common stock, par value $0.01, 50,000,000 authorized shares, 32,958,404 issued and outstanding at June 30, 2020 and 26,519,954 issued and outstanding at June 30, 2019 (Note 5) 329,584 265,200 Additional paid in capital 100,881,957 94,764,730 Deficit (54,130,329 ) (47,700,188 ) Total Stockholders' Equity 47,081,212 47,329,742 Total Liabilities and Stockholders' Equity $ 53,913,498 $ 49,275,729 The accompanying notes are an integral part of these consolidated financial statements. Commitments and Contingencies: Note 12 Subsequent Events: Note 13 F-3 PARAMOUNT GOLD NEVADA CORP. Consolidated Statements of Operations and Comprehensive Loss for the Years ended June 30, 2020 and 2019 For the Year Ended June 30, 2020 For the Year Ended June 30, 2019 Revenue Other income (Note 9) $ 728,910 $ 400,388 Total Revenue 728,910 400,388 Expenses Exploration (Note 10) 4,201,138 3,558,663 Land holding costs (Note 10) 592,978 610,018 Professional fees 166,894 186,852 Salaries and benefits 989,602 929,179 Directors compensation 92,054 153,033 General and administrative 495,628 651,538 Insurance 150,911 130,720 Depreciation 2,555 2,624 Accretion (Note 8) 94,591 165,505 Total Expenses 6,786,351 6,388,132 Net Loss before other items 6,057,441 5,987,744 Other items Interest income (16,509 ) (27,177 ) Interest and service charges 389,209 9,481 Net Loss before Income Taxes $ 6,430,141 $ 5,970,048 Net Loss and Comprehensive Loss $ 6,430,141 $ 5,970,048 Loss per Common share Basic $ 0.23 $ 0.23 Diluted $ 0.23 $ 0.23 Weighted Average Number of Common Shares Used in Per Share Calculations Basic 27,583,566 25,855,541 Diluted 27,583,566 25,855,541 The accompanying notes are an integral part of these consolidated financial statements. F-4 PARAMOUNT GOLD NEVADA CORP. Consolidated Statements of Stockholders’ Equity for the Years ended June 30, 2020 and 2019 Shares (#) Common Stock Additional Paid-In Capital Deficit Total Stockholders' Equity Balance at June 30, 2018 23,074,954 $ 230,750 $ 90,695,497 $ (41,730,140 ) $ 49,196,107 Stock based compensation — — 231,527 — 231,527 Capital issued for financing (Note 5) 2,400,000 24,000 2,887,286 — 2,911,286 Capital issued for warrant exercise (Note 5) 1,045,000 10,450 950,420 — 960,870 Net loss — — — (5,970,048 ) (5,970,048 ) Balance at June 30, 2019 26,519,954 $ 265,200 $ 94,764,730 $ (47,700,188 ) $ 47,329,742 Stock based compensation — — 203,192 — 203,192 Capital issued for services (Note 4) 1,096,791 10,968 965,176 — 976,144 Capital issued for payment of interest 161,217 1,612 117,697 — 119,309 Capital issued for financing (Note 5) 5,180,442 51,804 4,831,162 — 4,882,966 Net loss — — — (6,430,141 ) (6,430,141 ) Balance at June 30, 2020 32,958,404 $ 329,584 $ 100,881,957 $ (54,130,329 ) $ 47,081,212 The accompanying notes are an integral part of these consolidated financial statements. F-5 PARAMOUNT GOLD NEVADA CORP. Consolidated Statements of Cash Flows for the Years ended June 30, 2020 and 2019 For the Year Ended June 30, 2020 For the Year Ended June 30, 2019 Net Loss $ (6,430,141 ) $ (5,970,048 ) Adjustment for: Depreciation 2,555 2,624 Share based payments 976,144 — Stock based compensation 203,192 231,527 Amortization of debt issuance costs 54,421 — Interest expense 324,160 — Accretion expense (Note 8) 94,591 165,505 Interest earned on reclamation bond (16,487 ) (27,117 ) (Increase) decrease in other assets — 16,292 (Increase) decrease in prepaid expenses (93,825 ) (104,646 ) Increase (decrease) in accounts payable and accrued liabilities (259,901 ) 52,348 Cash used in operating activities (5,145,291 ) (5,633,515 ) Purchase of equipment (4,719 ) — Sale of royalty on mineral property (Note 7) — 1,927,660 Cash provided by (used in) investing activities (4,719 ) 1,927,660 Capital issued for financing (Note 5) 4,882,966 2,911,286 Convertible debt issued (Note 6) 5,201,807 — Promissory note (Note 6) 35,628 — Capital issued for warrant exercise (Note 5) — 960,870 Cash provided by financing activities 10,120,401 3,872,156 Change in cash during year 4,970,391 166,301 Cash at beginning of year 463,690 297,389 Cash at end of year $ 5,434,081 $ 463,690 The accompanying notes are an integral part of these consolidated financial statements. F-6 PARAMOUNT GOLD NEVADA CORP. Notes to Consolidated Financial Statements Note 1. Description of Business and Summary of Significant Accounting Policies Paramount Gold Nevada Corp. (the “Company” or “Paramount”), incorporated under the General Corporation Law of the State of Nevada, and its wholly-owned subsidiaries are engaged in the acquisition, exploration and development of precious metal properties. The Company’s wholly owned subsidiaries include New Sleeper Gold LLC, Sleeper Mining Company, LLC, and Calico Resources USA Corp (“Calico”). The Company is in the process of exploring its mineral properties in Nevada and Oregon, United States. The Company’s activities are subject to significant risks and uncertainties, including the risk of failing to secure additional funding to advance its projects and the risks of determining whether these properties contain reserves that are economically recoverable. The Company’s shares of common stock trade on the NYSE AMERICAN LLC under the symbol “PZG”. Basis of Presentation and Preparation The consolidated financial statements are prepared by management in accordance with U.S. generally accepted accounting principles (‘U.S. GAAP”) and are presented in US dollars. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions are eliminated in consolidation. The Company faces various risks related to the COVID-19 global pandemic. The Company cannot at this time predict the impact of the COVID-19 pandemic, but it could have a material adverse effect on the business, financial position, results of operations and/or cash flows. The results of operations for the year ending June 30, 2020 is not necessarily indicative of the operating results expected for any future period. Foreign Currency Translation and Transactions The Company’s functional and reporting currency is the United States dollar. Foreign denominated monetary assets and liabilities are translated into their U.S. dollar equivalents using foreign exchange rates which prevailed at the balance sheet date. Revenues and expenses are translated at average rates of exchange during the period. Related translation adjustments as well as gains or losses resulting from foreign currency transactions are reported as part of operating expenses on the statement of operations. Use of Estimates The preparation of these consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates made by management in the accompanying consolidated financial statements include the adequacy of the Company’s reclamation and environmental obligation, share based compensation, warrant valuation, valuation of deferred tax asset, and assessment of impairment of mineral properties. Cash and Cash Equivalents All highly liquid investments with maturities of three months or less at the date of purchase are classified as cash and cash equivalents. The carrying amount of these securities approximates fair value because of the short-term maturity of these instruments. Concentration of Credit Risk Financial instruments that potentially subject the Company to a concentration of credit risk consist principally of cash and cash equivalents. The Company maintains cash in accounts which may, at times, exceed federally insured limits. At June 30, 2020, the Company had $5.13 million of balances in excess of federally insured limits. The Company deposits its cash with financial institutions which it believes have sufficient credit quality to minimize the risk of loss. F-7 Fair Value Measurements The Company has adopted FASB ASC 820, Fair Value Measurements and Disclosures, which defines fair value, establishes guidelines for measuring fair value and expands disclosures regarding fair value measurements. The Company applies fair value accounting for all financial assets and liabilities and non – financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company has adopted FASB ASC 825, Financial Instruments, which allows companies to choose to measure eligible financial instruments and certain other items at fair value that are not required to be measured at fair value. The Company has not elected the fair value option for any eligible financial instruments. Stock Based Compensation The Company has adopted the provisions of FASB ASC 718, “ Stock Compensation ” (“ASC 718”), which establishes accounting for equity instruments exchanged for employee services. Under the provisions of ASC 718, stock-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity grant). New shares of the Company’s common stock will be issued for any options exercised. Mineral Properties Mineral property acquisition costs are capitalized when incurred and will be amortized using the units-of-production method over the estimated life of the reserve following the commencement of production. If a mineral property is subsequently abandoned or impaired, any capitalized costs will be expensed in the period of abandonment or impairment. Acquisition costs include cash consideration and the fair market value of shares issued on the acquisition of mineral properties. Net proceeds from the sale of royalties are deducted from the carrying value of the mineral properties. Exploration Costs Exploration costs, which include maintenance, development and exploration of mineral claims, are expensed as incurred. When it is determined that a mineral deposit can be economically developed as a result of establishing proven and probable reserves, the costs incurred after such determination will be capitalized and amortized over their useful lives. To date, the Company has not established the commercial feasibility of its exploration prospects; therefore, all exploration costs are being expensed. Property and Equipment Equipment is recorded at cost less accumulated depreciation. All equipment is depreciated over its estimated useful life at the following annual rates: Computer equipment 30% declining balance Equipment 20% declining balance Long-Lived Assets In accordance with ASC 360, “Property, Plant, and Equipment”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount exceeds fair value. Reclamation and Environmental Obligation The Company follows the provisions of ASC 440, “Asset Retirement and Environmental Obligations”, which establishes the standards for the initial measurement and subsequent accounting for obligations associated with the sale, abandonment, or other disposal of F-8 long-lived tangible assets ar ising from the acquisition, construction or development and for normal operations of such assets. The Company’s asset retirement obligations are further described in Note 7 . Net Loss per Share Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of shares outstanding during each period. Diluted loss per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. For the years ended June 30, 2020 and 2019, the shares of common stock equivalents related to outstanding stock options have not been included in the diluted per share calculation as they are anti-dilutive as the Company has recorded a net loss from continuing operations for each year. Leases The Company determines if an arrangement is, or contains, a lease at the inception date. Operating leases are included in Other assets, non-current with related liabilities included in Accrued liabilities and Other long-term liabilities . Assets under finance leases, which primarily represent property and equipment, are included in Property, plant and equipment, net with related liabilities in debt, current and debt, non-current on the Consolidated Balance Sheet. Operating lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. We use our estimated incremental borrowing rate in determining the present value of lease payments. Variable components of the lease payments such as maintenance costs are expensed as incurred and not included in determining the present value. Our lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense is recognized on a straight-line basis over the lease term. Currently, the Company does not have any leases with terms greater than 12 months. Revenue Recognition The Company adopted Accounting Standards Code Topic 606, “Revenue from Contracts with Customers” (“Topic 606”) with a date of initial application of July 1, 2018. As a result of this adoption, the Company has changed its accounting policy for revenue recognition. Revenue is measured based on the amount of consideration that is expected to be received by the Company for providing goods or services under a contract with a customer, which is initially estimated with pricing specified in the contract and adjusted primarily for sales returns, discounts and other credits at contract inception then updated each reporting period. The Company recognizes revenue when persuasive evidence of a contract with a customer exists and a performance obligation is identified and satisfied as the customer obtains control of the goods or services. Revenue is recognized net of any taxes collected from customers and subsequently remitted to governmental authorities. When the Company performs shipping and handling activities after the customer obtains control of the goods, the Company accounts for the costs as fulfillment costs which are included in cost of revenues, as allowed under Topic 606. Convertible Debt The Company reviews the terms of its convertible notes payable to determine whether to account for any portion of the proceeds towards the conversion feature. In general, when the convertible notes instrument has the following characteristics and terms no portion of the proceeds from the issuance shall be accounted for as attributable to the conversion feature: a) is convertible into common stock of the Company at a specified price at the option of holder; b) the debt is sold at a price or has value at issuance not significantly in excess of the face amount; c) an interest rate that is lower than the Company could establish for nonconvertible debt; d) an initial conversion price that is greater than the fair value of the common stock at time of issuance and; e) a conversion price that does not decrease except pursuant to antidilution provisions. When proceeds are not attributable to the conversion features of the debt, the Company records the entire amount as a liability. If the fair value option is not elected, the Company will reduce the initial carrying amount of the debt by any direct and incremental issuance costs paid to third parties that are associated with the convertible debt issuance. F-9 The Company also reviews the terms of its convertible note s payable to determine whether there are embedded derivatives, included the embedded conversion option, that are required to be bifurcated and accounted for as individual derivative financial instruments. In circumstances where convertible debt contains e mbedded derivatives that are to be separated from the host contracts, the total proceeds received are first allocated to the fair value of the derivative financial instruments determined using the binomial model. The remaining proceeds, if any, are then a llocated to the debenture cost contracts, usually resulting in those instruments being recorded at a discount from their principal amount. This discount is accreted over the expected life of the instruments to profit (loss) using the effective interest me thod. The debenture host contracts are subsequently recorded at amortized cost at each reporting date, using the effective interest method. The embedded derivatives are subsequently recorded at fair value at each reporting date, with changes in fair value recognized in profit (loss). Income Taxes Income taxes are determined using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the 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 period that includes the enactment date. In addition, a valuation allowance is established to reduce any deferred tax asset for which it is determined that it is more likely than not that some portion of the deferred tax asset will not be realized. Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted FASB ASC 740 as of its inception. Pursuant to FASB ASC 740 the Company is required to compute tax asset benefits for net operating losses carried forward. Potential benefits of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future periods; and accordingly is offset by a valuation allowance. FIN No.48 prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of tax positions taken in tax returns. To the extent interest and penalties may be assessed by taxing authorities on any underpayment of income tax, such amounts would be accrued and classified as a component of income tax expense in our Consolidated Statements of Operations and Comprehensive Loss. The Company elected this accounting policy, which is a continuation of our historical policy, in connection with our adoption of FIN 48. Note 2. Recent Accounting Guidance In February 2016, the FASB issued ASU No. 2016-02, Leases. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. These changes will be effective for the Company's fiscal year beginning July 1, 2019. The Company adoption of this guidance on July 1, 2019 did not have a material effect on the Company's consolidated financial position, results of operations, cash flows and related disclosures. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses. The changes will be effective for the Company’s fiscal year beginning July 1, 2020. Among other things, these amendments require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The Company is currently evaluating the potential impact. The Company is currently evaluating the potential impact of implementing these changes on the Company's consolidated financial position, results of operations, and cash flows. In January 2017, the FASB issued ASU No. 2017 -04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. These changes will be effective for the Company’s fiscal year beginning July 1, 2021. These amendments eliminate Step 2 from the goodwill impairment test. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The amendments also eliminate the requirements for any reporting unit with zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is F-10 necessary. The Co mpany is currently evaluating the potential impact of implementing these changes on the Company’s consolidated financial position, results of operation, and cash flows. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement. These changes will be effective for the Company’s fiscal year beginning July 1, 2020. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted. The Company is currently evaluating the potential impact of implementing these changes on the Company's consolidated financial position, results of operations, and cash flows. In December 2019, the FASB issued ASU 2019-2, “Income Taxes – Simplifying the Accounting for Income Taxes (Topic 740)” which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 will be effective for interim and annual periods beginning after December 15, 2020 (January 1, 2021 for the Company). Early adoption is permitted. The Company is currently evaluating the impact the adoption of ASU 2019-12 will have on its consolidated financial statements. Note 3. Fair Value Measurements Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization with the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC 820 are described below: Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 Inputs that are both significant to the fair value measurement and unobservable. The following table sets forth the Company’s financial assets and liabilities measured at fair value by level within the fair value hierarchy. As required by ASC 820, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Fair Value at June 30, 2020 June 30, 2019 Assets Total Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 5,434,081 5,434,081 — — $ 463,690 The Company’s cash and cash equivalents are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. The cash and cash equivalents that are valued based on quoted market prices in active markets are primarily comprised of commercial paper, short-term certificates of deposit and U.S. Treasury securities. Note 4. Non-Cash Transactions During the year-ended June 30, 2020, the Company the Company issued 1,096,791 shares to Ausenco Engineering USA South Inc. (“Ausenco”) in exchange for services valued at $976,144 to complete a feasibility study at its Grassy Mountain Project. The shares are being held in escrow until Ausenco delivers a feasibility study on Grassy Mountain to the Company. F-11 During the year-ended June 30, 2020, the Company issued 161,217 shares of Common Stock for payment of interest accrued and owing at Decemb er 31, 2019 on its outstanding 2023 Secured Convertible Notes . During the comparative year-ended June 30, 2019, the Company did not enter into any non-cash activities. Note 5. Capital Stock Authorized Capital Authorized capital stock consists of 50,000,000 common shares with par value of $0.01 per common share (2019- 50,000,000 common shares with par value $0.01 per common share). During the year-ended June 30, 2020, the Company issued 1,096,791 shares at a value of $0.89 per share to Ausenco in exchange for services to complete a feasibility study at its Grassy Mountain Project (Note 4) . The Company also issued 161,217 shares for payment of interest accrued and owing at December 31, 2019 (Note 4 and 6). During the year-ended June 30, 2020, the Company issued 4,807,700 shares at a price of $1.04 per share for gross proceeds of $5.0 million. Share issuance costs were $0.43 million for net proceeds of $4.57 million. During the year ended June 30, 2020, the Company issued 372,742 shares at an average approximate price of $1.17 for gross proceeds of $436,783. Share issuance costs, including one-time transaction costs and commissions were $124,265 for net proceeds of $312,518. During the year-ended June 30, 2019, the Company issued 2,400,000 units at $1.25 per unit for aggregate proceeds of $3 million. Share issuance costs were $0.09 million for net proceeds of $2.91 million. Each unit consists of one share of common stock and one warrant to purchase one-half of a share of common stock. Each warrant will have a two year term and will be exercisable at the following exercise prices: in the first year at $1.30 per share and in the second year at $1.50 per share. Also during the year ended June 30, 2019, the Company issued 1,045,000 shares from the exercising of warrants for gross proceeds of $0.96 million. At June 30, 2020 there were 32,958,404 common shares issued and outstanding (June 30, 2019 – 26,519,954 common shares). Warrants A summary of warrant exercisable into common stock as of June 30, 2020, and changes during year ended is presented below: Warrants Weighted Average Exercise Price Weighted- Average Remaining Contractual Term (Years) Aggregate Intrinsic Value ($) Outstanding at July 1, 2019 1,200,000 $ 1.40 1.03 — Issued — — — — Exercised — — — — Outstanding at June 30, 2020 1,200,000 $ 1.40 0.03 — F-12 Stock Options and Stock Based Compensation Paramount’s 2015 and 2016 Stock Incentive and Compensation Plan, which is shareholder-approved, permits the grant of share options and shares to its employees for up to 2.169 million shares of common stock. Option awards are generally granted with an exercise price equal to the market price of Paramount’s stock at the date of grant and have contractual lives of 5 years. To better align the interests of its key executives and employees with those of its shareholders a significant portion of those share option awards will vest contingent upon meeting certain stock price appreciation performance goals. Option and share awards provide for accelerated vesting if there is a change in control (as defined in the employee share option plan). During the year-ended June 30, 2020, the Company granted 690,000 stock options to employees, directors and consultants with a strike price of $1.00. Each option carries a 5 year term. Options received by senior management and directors will vest and become exercisable on achieving the following performance conditions: 1) ½ upon the completion of the Grassy Mountain Project feasibility study and 2) ½ on the issuance of mining permits for the Grassy Mountain Project by the State of Oregon. Options received by employees and consultants will vest and become exercisable as follows: 1/3 on the first anniversary of the date of grant, 1/3 on the second anniversary of the date of grant and 1/3 on the third anniversary of the date of grant. There were no option granted for the year-ended June 30, 2019. The fair value for these options was calculated using the Black-Scholes option valuations method. The weighted average assumptions used for the fiscal years ending June 30, 2020 and 2019 were as follows: 2020 2019 Weighted average risk-free interest rate 1.60 % N/A Weighted-average volatility 61.00 % N/A Expected dividends 0.00 N/A Weighted average expected term (years) 5 N/A Weighted average fair value $ 0.39 N/A A summary of option activity under the Stock Incentive and Compensation Plan as of June 30, 2020, and changes during the year then ended is presented below. Options Options Weighted Average Exercise Price Weighted-Average Remaining Contractual Term (In Years) Aggregate Intrinsic Value ($) Outstanding at July 1, 2019 1,568,995 $ 1.50 1.95 $ — Granted 690,000 $ 1.00 $ 4.47 $ 165,600 Exercised — — — — Forfeited or expired 1,015,000 $ 1.53 $ 0.05 $ — Outstanding at June 30, 2020 1,243,995 $ 1.20 3.63 $ 165,600 Exercisable at June 30, 2020 300,003 $ 1.39 2.71 $ — A summary of the status of Paramount’s non-vested options as of June 30, 2020 and changes during the year ended June 30, 2020 is presented below. Non-vested Options Options Weighted- Average Grant-Date Fair Value Nonvested at July 1, 2019 340,660 $ 0.79 Granted 690,000 0.38 Vested 66,668 0.74 Forfeited 20,000 0.74 Nonvested at June 30, 2020 943,992 $ 0.51 As of June 30, 2020 and 2019, there was $153,802 and $108,003 respectively of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the employee share option plan. That cost is expected to be recognized F-13 over a weighted-average period of 1.05 years. The total fair value of s hares vested during the years ended June 30, 2020 and 2019 , was $ 202,121 and $ nil , respectively. Note 6. Debt Convertible Debt June 30, 2020 June 30, 2019 Current Non-Current Current Non-Current 2019 Secured Convertible Notes $ — $ 5,477,690 $ — $ — Less: unamortized discount and issuance costs — (221,462 ) — — $ — $ 5,256,228 $ — $ — In September 2019, the Company completed a private offering of 5,478 Senior Secured Convertible Notes (“2019 Convertible Notes”) at $975 per $1,000 face amount due in 2023. Each 2019 Convertible Note will bear an interest rate of 7.5% per annum, payable semi-annually. The principal amount of the 2019 Convertible Notes will be convertible at a price of $1.00 per share of Paramount common stock. Unamortized discount and issuance costs of $275,883 will be amortized as an additional interest expense over the four-year term of the 2019 Convertible Notes. During the year-ended June 30, 2020, the Company amortized $54,421 of discount and issuance costs. At any point after the second anniversary of the issuance of the convertible notes, Paramount may force conversion if the share price of its common stock remains above $1.75 for 20 consecutive trading days. The convertible notes are secured by a lien on all assets of the Company and the Company is required to maintain a working capital balance of $250,000. On May 5, 2020, the Company was granted a loan (the “PPP Loan”) from Wells Fargo Bank, N.A. in the amount of $35,628 pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act, which was enacted March 27, 2020. The PPP Loan which was in the form of a Promissory Note matures on May 3, 2022 and bears interest at a rate of 0.98% per annum, payable monthly commencing on November 1, 2020. The Note many be prepaid by the Company at any time prior to maturity with no prepayment penalties. Under the terms of the PPP, certain amounts of the PPP Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. Note 7. Mineral Properties The Company has capitalized acquisition costs on mineral properties as follows: June 30, 2020 June 30, 2019 Sleeper $ 24,147,585 $ 23,869,404 Grassy Mountain 23,185,728 23,185,728 $ 47,333,313 $ 47,055,132 Sleeper: Sleeper is located in Humbolt County, Nevada approximately 26 miles northwest of the town of Winnemucca. The Sleeper Gold Mine consists of 2,322 unpatented mining claims totaling approximately 38,300 acres. During the year-ended June 30, 2020, the Company recorded a change in reclamation and environmental obligation of $278,181 (Note 8). This change in estimate is a result of completing certain reclamation activities in the year-ended June 30, 2020 that were expected to be completed in future periods. During the year-ended June 30, 2019, the Company sold to Franco Nevada U.S. Corporation (“Franco”) a two percent (2%) net smelter return royalty on minerals produced from its Sleeper Gold property for gross cash proceeds of $2,000,000. Net proceeds of the transaction of $1,927,659 decreased the carrying value of the Sleeper property. This decrease was offset by the change in reclamation and environmental obligation of $122,406 (Note 8). F-14 Grassy Mountain: The Grassy Mountain Project is located in Malheur County, Oregon, approximately 22 miles south of Vale, Oregon, and roughly 70 miles west of Boise, Idaho. It consists of 442 federal mining claims, 3 patented lode claims, and various leased fee land surface and surface/mineral rights, all totaling approximately 9,300 acres . Note 8. Reclamation and Environmental Obligation: The Company holds an insurance policy which is in effect until 2033 related to its Sleeper Gold Project. The policy covers reclamation costs up to an aggregate of $25 million in the event the Company’s bond is insufficient to cover any mandated reclamation obligations. As a part of its insurance program, the Company has funds in a commutation account which is used to reimburse reclamation costs and indemnity claims. The balance of the commutation account and reclamation bonds at June 30, 2020 is $695,041 (June 30, 2019 - $1,401,833). Reclamation and environmental costs are based principally on legal requirements. Management estimates costs associated with reclamation of mineral properties and properties under mine closure. On an ongoing basis the Company evaluates its estimates and assumptions; however, actual amounts could differ from those based on estimates and assumptions. The asset retirement obligation at the Sleeper Gold Project has been measured using the following variables: 1) Expected costs for earthwork, re-vegetation, in-pit water treatment, on-going monitoring, labor and management, 2) Inflation adjustment, and 3) Market risk premium. The sum of the expected costs by year is discounted using the Company’s credit adjusted risk free interest rate from the time it expects to pay the retirement obligation to the time it incurs the obligation. The reclamation and environmental obligation recorded on the balance sheet is equal to the present value of the estimated costs. The current undiscounted estimate of the reclamation costs for existing disturbances at the Sleeper Gold Project is $4,010,403 as required by U.S Bureau of Land Management and the Nevada Department of Environmental Protection. Assumptions used to compute the asset retirement obligations for the year ended June 30, 2020 for the Sleeper Gold Project included a credit adjusted risk free rate and inflation rate of 9.76% (2019 – 9.76%) and 1.6% (2019 – 1.6%), respectively. Expenses are expected to be incurred between the years 2019 and 2056. Changes to the Company’s reclamation and environmental obligation for the year ended June 30, 2020 are as follows: June 30, 2020 June 30, 2019 Balance at beginning of year $ 965,677 $ 1,072,551 Accretion expense 94,591 165,505 Payments (723,279 ) (394,785 ) Change in estimate of existing obligation 278,181 122,406 Balance at end of year $ 615,170 $ 965,677 The balance of the reclamation and environmental obligation of $615,170 (2019 - $965,677) is comprised of a current portion of $154,231 (2019 - $97,287) and a non-current portion of $460,939 (2019 - $868,390). F-15 Note 9 . Other Income The Company’s other income details were as follows: Year Ended Year Ended 2020 2019 Re-imbursement of reclamation costs $ 723,279 $ 394,785 Leasing of water rights to third party 5,631 5,520 Reimbursement of workers compensation insurance — 83 Total $ 728,910 $ 400,388 Note 10. Segmented Information Segmented information has been compiled based on the material mineral properties in which the Company performs exploration activities. Expenses and mineral property carrying values by material project for the year ended June 30, 2020: Exploration Expenses Land Holding Costs Mineral Properties As at June 30, 2020 Sleeper Gold Project $ 852,958 $ 423,508 $ 24,147,585 Grassy Mountain Project 3,348,180 169,470 23,185,728 $ 4,201,138 $ 592,978 $ 47,333,313 Expenses and mineral property carrying values by material project for the year ended June 30, 2019: Exploration Expenses Land Holding Costs Mineral Properties As at June 30, 2019 Sleeper Gold Project $ 836,371 $ 409,931 $ 23,869,404 Grassy Mountain Project 2,722,292 200,087 23,185,728 $ 3,558,663 $ 610,018 $ 47,055,132 Note 11. Income Taxes At June 30, 2020, the Company has net operating loss carry forwards of $48,984,744 (2019 - $43,150,088) expiring between the years 2020 and 2038 which are available to reduce future taxable income. Tax losses incurred after June 30, 2017 may be carried forward indefinitely. The tax effects of the significant components within the Company’s deferred tax asset (liability) at June 30, 2020 and 2019 are as follows: United States 2020 2019 Mineral properties $ 1,206,528 $ 389,869 Asset retirement obligation 129,186 177,087 Stock options 356,189 313,519 Net operating losses 9,933,638 8,650,011 $ 10,936,166 $ 9,531,039 Valuation allowance (10,257,518 ) (9,531,039 ) Mineral properties $ (678,648 ) $ — Net deferred tax asset $ — $ — F-16 The income tax recovery differs from the amounts computed by applying statutory tax to pre-tax losses as a result of the following: 2020 2019 Income (Loss) before taxes $ (6,430,141 ) $ (5,970,048 ) US Statutory tax rate 21.00 % 21.00 % Expected income tax (recovery) (1,350,330 ) (1,253,710 ) Non-deductible items 2,426 2,190 Change in estimates (57,853 ) 7,671 Other items — — Change in tax rates — — Change in valuation allowance 1,405,757 1,243,849 Total income taxes (recovery) $ — $ — Current tax expense (recovery) — — Deferred tax expense (recovery) — — $ — $ — The potential tax benefits of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years. Accounting for uncertainty for Income Tax Income taxes are determined using assets and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the 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 period that includes the enactment date. In addition, a valuation allowance is established to reduce any deferred tax asset for which it is determined that it is more likely than not that some portion of the deferred tax asset will not be realized. Effective July 1, 2009, the Company adopted the interpretation for accounting for uncertainty in income taxes which was an interpretation of the accounting standard accounting for income taxes. This interpretation created a single model to address accounting for uncertainty in tax positions. This interpretation clarifies the accounting for income taxes, by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. As at June 30, 2020 and 2019, the Company’s consolidated balance sheets did not reflect a liability for uncertain tax positions, nor any accrued penalties or interest associated with income tax uncertainties. The Company is subject to income taxation at the federal and state levels. The Company is subject to US federal tax examinations for the tax years 2011 through 2020. Loss carryforwards generated or utilized in years earlier than 2011 are also subject to examination and adjustment. The Company has no income tax examinations in process. Note 12. Commitments and Contingencies: Lease Commitments The Company has an office premises leases that expires on June 30, 2021. The aggregate minimum rentals payable for this operating lease is as follows: Year Total Amount 2021 $ 10,575 During the year ended June 30, 2020, $46,885 was recognized as rent expense in the consolidated statements of operations and comprehensive loss. F-17 Other Commitments Paramount has an agreement to acquire 44 mining claims (“Cryla Claims”) covering 589 acres located immediately to the west of the proposed Grassy Mountain site from Cryla LLC. Paramount is obligated to make annual lease payments of $40,000 per year the first two years of the lease term and $60,000 per year thereafter with an option to purchase the Cryla Claims for $560,000 at any time. The term of the agreement is 25 years. In the event Paramount exercises its option to acquire the Cryla Claims, all annual payments shall be credited against a production royalty that will be based on a prevailing price of the metals produced from the Cryla Claims. The royalty rate ranges between 2% and 4% based on the daily price of gold. The agreement with Cryla can be terminated by Paramount at any time. Paramount made the annual lease payment of $60,000 as required by the agreement during the year ended June 30, 2020. The Cryla Claims are without known mineral reserves and there is no current exploratory work being performed. Paramount has an agreement with Nevada Select Royalty (“Nevada Select”) to purchase 100% in the Frost Project, which consists of 40 mining claims located approximately 12 miles west of its Grassy Mountain Project. A total consideration of $250,000 payable to Nevada Select will be based on certain events over time. Upon signing the agreement, Paramount made a payment of $10,000 to Nevada Select. Nevada Select will retain a 2% NSR on the Frost Claims and Paramount has the right to reduce the NSR to 1% for a payment of $1 million. All required payments under the agreement are up to date as of June 30, 2020. The Frost Claims are without known mineral reserves. Note 13. Subsequent Events Subsequent to June 30, 2020, the Company issued 595,281 shares at an average price of $1.33 per share and for gross proceeds of approximately $0.8 million. The Company also issued 183,395 at an average price of $1.12 per share for the payment of interest accrued and owing at June 30, 2020 for its outstanding convertible debt. Subsequent to June 30, 2020, 200 Senior Secured Convertible Notes were converted and as a result the Company issued 200,000 shares of its Common Stock. Subsequent to June 30, 2020, the Company issued 55,000 stock-options to purchase common stock at strike price of $1.23. The term of the options is 5 years. F-18