Attached files

file filename
EX-23.1 - Pershing Gold Corp.q1100891_ex23-1.htm
EX-21.1 - Pershing Gold Corp.q1100891_ex21-1.htm
As filed with the Securities and Exchange Commission on December 6, 2012.
 
SEC File No. 333-179073


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
 
FORM S-1/A
 
(Amendment No. 3)
 
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
____________________
 
PERSHING GOLD CORPORATION
(Exact name of registrant as specified in its charter)

Nevada
1000
26-0657736
(State or other jurisdiction of
incorporation or organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer Identification No.)
 
1658 Cole Boulevard
Building 6-Suite 210
Lakewood, CO 80401
(877) 705-9357
(Address, including zip code, and telephone number,
including area code, of registrant’s principal executive offices)
 
Stephen Alfers
President and Chief Executive Officer
1658 Cole Boulevard
Building 6-Suite 210
Lakewood, CO 80401
(877) 705-9357
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
 
Copies of all communications, including communications sent to agent for service, should be sent to:
Harvey J. Kesner, Esq.
61 Broadway, 32nd Floor
New York, New York 10006
Telephone: (212) 930-9700
Fax: (212) 930-9725
 
Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.
 
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box.  x
 
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   o
 
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   o
 
 
 

 
 
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
(Check one):
 
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
o
Smaller reporting company
x
(Do not check if a smaller reporting company)
     
 
CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities to be Registered
Amount to be Registered (1)
Proposed Maximum
Offering Price per Share
Proposed Maximum
Aggregate Offering Price
Amount of
Registration Fee
Common stock, par value $.0001 per share (2)
91,324,590
$0.35(3)
$31,963,606.50
$4,359.84*
Common stock, par value $.0001 per share underlying warrants
914,688
$0.35(3)
$320,140.80
$43.67*
Total
 92,239,278
$0.35(3)
$32,283,747.30
$4,403.51*
 
(1)
Pursuant to Rule 416 (b) under the Securities Act, the shares of common stock offered hereby also include an indeterminate number of additional shares of Common stock as may from time to time become issuable by reason of stock splits or stock dividends.
(2)
The shares of common stock will be offered under the secondary offering prospectus relating to resales by the selling stockholders of the shares of common stock issued to such selling stockholders.
(3)
Estimated solely for the purpose of calculating the registration fee, and based upon the average of the bid and ask price of the registrant’s common stock as reported on the OTC Markets’ OTCQB on December 4, 2012, in accordance with Rule 457(c) under the Securities Act.
 
*Previously Paid
 
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
 
 
 
 


 
 
The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
 
SUBJECT TO COMPLETION, DATED DECEMBER 6, 2012
 
92,239,278 Shares
 
 
PERSHING GOLD CORPORATION
 
Common Stock
_________________
 
This prospectus relates to the sale by the selling stockholders identified in this prospectus of up to 92,239,278 shares of our common stock, par value $0.0001 per share, which includes 914,688 shares of common stock issuable upon the exercise of outstanding warrants. On July 22, 2011 we agreed to file this registration statement under the Securities Act of 1933 to register the 76,095,215 shares of our common stock issued to Continental Resources Group, Inc. (“Continental”), which is expected to distribute such registered shares to its shareholders as part of its plan of liquidation. Continental owns 76,095,215 shares, or approximately 28.54% of our issued and outstanding common stock. Additional shares registered hereunder are being registered pursuant to registration obligations with the holders.
 
The prices at which the selling stockholders may sell shares will be determined by the prevailing market price for the shares or in privately negotiated transactions. We will not receive any proceeds from the sale of these shares by the selling stockholders. All expenses of registration incurred in connection with this offering are being borne by us, but all selling and other expenses incurred by the selling stockholders will be borne by the selling stockholders.
 
Our common stock is quoted on the regulated quotation service of the OTC Markets’ OTCQB under the symbol “PGLC.OB”. On December 5, 2012, the last reported sale price of our common stock as reported on the OTCQB was $0.35 per share.
 
Investing in our common stock is highly speculative and involves a high degree of risk. You should carefully consider the risks and uncertainties in the section entitled “Risk Factors” beginning on page 4 of this prospectus before making a decision to purchase our stock.
 
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
 
The date of this prospectus is                 , 2012
 
 
 

 
 
TABLE OF CONTENTS
 
 
You should rely only on the information contained in this prospectus. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer to sell these securities in any jurisdiction where an offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.
 
 
 

 
 
 
The following summary highlights information contained elsewhere in this prospectus. It may not contain all the information that may be important to you. You should read this entire prospectus carefully, including the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operation,” and our historical financial statements and related notes included elsewhere in this prospectus. As used in this prospectus, unless otherwise specified, references to the “Company,” “we,” “our” and “us” refer to Pershing Gold Corporation and, unless otherwise specified, its subsidiaries.
 
 Overview
 
We are a gold and precious metals exploration company pursuing exploration and development opportunities primarily in Nevada. We are currently focused on exploration at our Relief Canyon properties in Pershing County in northwestern Nevada. None of our properties contain proven and probable reserves, and all of our activities on all of our properties are exploratory in nature. To date, we have not generated any revenues from our mining operations.
 
For the year ended December 31, 2011, we reported a net loss of approximately ($24.6) million. We reported a net loss of approximately ($5.1) million for the quarter ended September 30, 2012 and approximately ($45.6) million for the nine months ended September 30, 2012. We expect to incur significant losses into the foreseeable future and our monthly “burn rate” for general and administrative costs (including all employee salaries, public company expenses and consultants) is approximately $500,000. Our monthly burn rate for all costs during each month of the fourth quarter 2012 is expected to be approximately $700,000 (including exploration and facilities recommissioning). We will need to obtain additional funding to fund operations and exploration beginning in January 2013.
 
 Business Strategy
 
Our business strategy is to acquire and advance precious metals exploration properties. We seek properties with known mineralization that are in an advanced stage of exploration and have previously undergone some drilling but are under-explored, which we believe we can advance quickly to increase value. We are currently focused on exploration on the Relief Canyon properties, commencing mining at Relief Canyon Mine, and recommissioning the Relief Canyon gold processing facility. We acquired the former Relief Canyon Mine property in August 2011, which includes a processing plant that could be used in mining operations. We began an exploration drilling program in 2011 that we plan to continue. We expanded our Relief Canyon property position in 2012 significantly with the acquisition of approximately 22,000 acres of unpatented mining claims and other property interests in the Pershing Pass area. We refer to our combined land position of approximately 25 square miles along the Humboldt Range, both north and south of the Relief Canyon Mine area as the “Relief Canyon expansion properties”. We refer to the Relief Canyon Mine property and Relief Canyon expansion properties collectively as the “Relief Canyon properties”. We continue drilling to expand the Relief Canyon Mine deposit and aim to obtain a National Instrument 43-101 technical report during the first quarter of 2013.
 
Our 2012 exploration program is nearly complete. We spent approximately $4.8 million on exploration activities during the nine months ended September 30, 2012 and anticipate spending approximately $0.4 million for the remainder of 2012. We will require external funding not only to pursue our exploration program but also to maintain our operations beginning in 2013. Our forecasted total costs for exploration in 2013 are $3.6 million.
 
In addition to our exploration program, we are preparing to recommission the gold processing facility on the Relief Canyon Mine site, which is currently in a care and maintenance status. We expect the cost to recommission the facility will be approximately $2.6 million, and our goal is to have it recommissioned by the end of 2013.
 
Our estimated total cost for 2013 of exploration, permitting, landholding, facilities recommissioning and general and administrative is approximately $13 million, which includes the 2013 exploration and recommissioning amounts described above, and in more detail below.
 
We intend to continue to acquire additional mineral targets in Nevada and elsewhere in locations where we believe we have the potential to quickly expand and advance known mineralization and the potential to discover new deposits. We will require external funding to pursue our exploration programs. There is no assurance we will be able to raise capital on acceptable terms or at all.
 
If, through our exploration program, we discover an area that may be able to be profitably mined for gold, we would focus most of our activities on determining whether that is feasible, including further delineation of the location, size and economic feasibility of a potential orebody. If our efforts are successful, we anticipate that we would seek additional capital through debt or equity financing to fund further development, or that we would sell or lease the rights to mine to a third party or enter into joint venture or other arrangements. There is no assurance that we could obtain additional capital or a willing third party.
 
 
1

 
 
Relief Canyon Properties
 
The Relief Canyon properties contain approximately 24,000 acres and are comprised of approximately 1,000 unpatented mining claims, 118 millsites and private lands. We commenced our Phase I drilling program at the Relief Canyon Mine property in September 2011; this program was designed to test conceptual targets as well as the continuity and grade of mineralized zones found by previous operators.
 
We have three initiatives at our Relief Canyon properties:
 
 1. Relief Canyon Mine
 
The main objective of the Company is to expand the existing deposit and commence mining at the existing Relief Canyon Mine. We completed the final phase of drilling for 2012 with an additional 83 holes comprising approximately 27,300 feet. This drilling was on land adjacent to the current deposit in order to extend and upgrade the existing deposit. We have drilled a total of 123 drill holes comprising approximately 58,000 feet at Relief Canyon Mine. We are also completing baseline geologic mapping of the mine pits.
 
We spent approximately $4.3 million on exploration activities at the Relief Canyon Mine during the nine months ended September 30, 2012 and anticipate spending approximately $0.4  million for the remainder of 2012. Our exploration plan for 2013 is to continue to concentrate our resources on the Relief Canyon Mine in order to refine our understanding of the deposit. We currently estimate that full year 2013 exploration costs at Relief Canyon Mine will be approximately $3.0 million. This amount is subject to change and also subject to receiving adequate external financing. If we do not receive adequate financing we will have to curtail our exploration and also delay or cancel commencement of mining at Relief Canyon Mine.
 
Our target is to produce gold in 2014 from newly mined ore, gold-bearing materials on the dumps, and/or toll ores from other properties. The reopening of the Relief Canyon Mine is dependent on obtaining sufficient external funding, the receipt of permits, and expansion of the deposit as a result of our exploration efforts above the water table. Additional permitting will be needed to mine the deposit below the water table. There is no guarantee that we will produce gold in 2014 or at all.
 
 2. Relief Canyon Expansion Properties
 
We are conducting generative exploration on the Relief Canyon expansion properties. In 2012, we generated targets through surface sampling, mapping, and geophysics at three specific projects in our Relief Canyon expansion properties: Pershing Pass, Pershing Packard, and South Relief. These areas are shown on our map on page 26.
 
Through November 2012 we drilled four holes comprising approximately 3,000 feet and performed soil sampling, and geochemical and geophysical testing to identify new drill-ready targets. This cost approximately $500,000. Approximately $50,000 of the remainder of the 2012 exploration budget is expected to be spent at the Relief Canyon expansion properties. Our exploration plan for 2013 is to continue to generate targets for future exploration – our goal is to generate four drill-ready targets per year. We currently estimate that full year 2013 exploration costs will be $600,000. This amount would decrease if we do not receive adequate financing, or increase if we have very good exploration results and receive adequate financing. If we do not receive adequate external financing we will have to curtail, postpone or cancel exploration activities.
 
Because the Relief Canyon expansion properties are at an early stage of exploration, it will take at least several years to perform sufficient exploration to determine whether these properties contain mineable reserves that could be put into production in the future. Exploration costs in future years may increase or decrease depending on results and available funding.
 
We consider expenditures on our Relief Canyon expansion properties to have a lower priority than expenditures on the Relief Canyon Mine property. If we do not receive adequate funding, we would reduce, postpone or cancel expenditures at our Relief Canyon expansion properties before reducing, postponing or cancelling exploration activity at Relief Canyon Mine.
 
 3. Recommissioning Relief Canyon Processing Facility
 
In June 2012 we began to prepare the Relief Canyon heap leach processing facility for recommissioning. The Relief Canyon processing facility was completed in 2008, is fully permitted, and is currently in a care and maintenance status.
 
We plan to amend the permits for this facility to authorize processing of ores from sites outside of Relief Canyon Mine and to add a gold recovery (strip) circuit. If there are delays in obtaining the permit to leach ores from other sites, we would only be able to leach ores from the Relief Canyon Mine. If we make a future discovery of mineable reserves at the Relief Canyon expansion properties, we would seek an amendment to the permits for the Relief Canyon processing facility to expand the capacity of the leach pad and ponds to accommodate additional ore. If there are delays in obtaining the permit to add the gold recovery system, we would sell gold-loaded carbon to another facility that would recover/strip the gold.
 
 
2

 
 
In order to recommission the facility, from now through the end of 2013 we anticipate our activities will include construction on the site such as building a lab facility and core shack, engineering, design and construction of the pollution control devices for the strip circuit, improving the computer system, and purchasing equipment such as crusher repair parts and start up supplies like lime and cyanide. Once recommissioned and amended permits received, the Relief Canyon heap leach processing facility would be available to process newly mined ores from the Relief Canyon Mine, previously leached heaps, gold-bearing waste rocks on existing waste rock dumps, as well as materials from other mines. We expect the total cost to recommission the facility will be approximately $2.6 million, and our goal is to have it recommissioned by the end of 2013. If we are unable to raise adequate external funding we would reduce or cancel this recommissioning activity.
 
We consider expenditures on recommissioning the Relief Canyon processing facility to have a lower priority than expenditures on Relief Canyon Mine. If we do not receive adequate funding, we would reduce, postpone or cancel expenditures at our Relief Canyon processing facility before reducing, postponing or cancelling exploration activity Relief Canyon Mine.
 
Events Subsequent to September 30, 2012
 
Director and Management Changes
 
In November 2012, we appointed Alex Morrison to our board of directors. In addition, further to Pershing’s decision to bring its finance and accounting function inside the company, we designated Eric Alexander, our Vice President of Finance and Controller, as principal financial officer and principal accounting officer. The board of directors accepted the resignations of Adam Wasserman as Chief Financial Officer and David Rector as Treasurer, Vice President of Administration and Finance and member of the board of directors. Mr. Rector will remain as an employee of the Company to assist with transition matters and other projects until the end of 2012.
 
Private Placement
 
On December 3, 2012, we completed a private offering of common stock to accredited investors, including one of our directors, in which we sold an aggregate of 9,469,548 shares of common stock and warrants for the purchase of 3,787,819 shares of common stock for an aggregate purchase price of $3,124,950. The purchase price for one share of common stock and a warrant to acquire 0.40 of a share of common stock was $0.33. The warrants are exercisable immediately at an exercise price of $0.50 per share and will expire on December 7, 2015.
 
Property Disposition
 
In order to focus our efforts on the Relief Canyon properties, in May 2012, we sold our North Battle Mountain Mineral Prospect and Red Rock Mineral Prospect gold exploration properties, and all of our uranium exploration properties.
 
Financial Results
 
We reported a net loss of approximately ($24.6) million for the year ended December 31, 2011 as compared to a net loss of approximately ($2.0) million for the period from February 10, 2010 (inception) to December 31, 2010. We reported a net loss of approximately ($45.6) million for the nine months ended September 30, 2012 as compared to a net loss of approximately ($20.3) million for the nine months ended September 30, 2011. We expect to incur significant losses into the foreseeable future and our monthly “burn rate” for general and administrative costs (including all employee salaries, public company expenses and consultants) is approximately $500,000. Our monthly burn rate for all costs during each month of the fourth quarter 2012 is expected to be $700,000 (including exploration and facilities recommissioning). We will spend approximately $5.2 million on exploration in 2012, and our estimated exploration costs for 2013 are approximately $3.6 million. If we are unable to raise external funding, and eventually generate significant revenues from our claims and properties, we will not be able to earn profits or continue operations. We have no production history upon which to base any assumption as to the likelihood that we will prove successful, and it is uncertain that we will generate any operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail.
 
Corporate Information
 
We were incorporated in Nevada on August 2, 2007 under the name “Excel Global, Inc.” and operated as a web-based service provider and consulting company. On September 27, 2010, we changed our name to “The Empire Sports & Entertainment Holdings Co.” and commenced the promotion and production of sports and entertainment events as our sole line of business which we operated until September 1, 2011 when we exited the sports and entertainment business. We began acquiring mining exploration properties in May 2011, and on May 16, 2011, we changed our name to “Sagebrush Gold Ltd.” and on February 27, 2012 to “Pershing Gold Corporation” due to our focus on exploration for gold in Pershing County, Nevada.
 
Our principal executive offices are located at 1658 Cole Boulevard, Building 6-Suite 210, Lakewood, CO 80401 and our telephone number is 877-705-9357.
 
 
3

 
 
 
Common stock offered by the selling stockholders:
 
92,239,278 shares, consisting of 76,095,215 shares issued to Continental in connection with the purchase of substantially all of its assets, 15,229,375 shares subject to registration rights obligations of the Company and 914,688 shares of common stock underlying warrants to purchase shares of the Company’s common stock which are subject to certain registration rights obligations.
Common stock outstanding before this offering:
 
266,592,027 (1)
Common stock outstanding after this offering
 
267,506,715 (2)
Use of proceeds:
 
We will not receive any proceeds from the sale of shares in this offering by the selling stockholders.
OTC Bulletin Board symbol:
 
PGLC.OB
Risk factors:
 
You should carefully consider the information set forth in this prospectus and, in particular, the specific factors set forth in the “Risk Factors” section beginning on page 4 of this prospectus before deciding whether or not to invest in shares of our common stock.
 

(1)   The number of outstanding shares before the offering is based upon 266,592,027  shares outstanding as of December 3, 2012 and excludes:
  •
35,298,000 shares of common stock issuable upon the exercise of outstanding options; and
  •
16,255,779 shares of common stock issuable upon the exercise of outstanding warrants.
   
(2)   The number of outstanding shares after the offering is based upon 266,592,027 shares outstanding as of December 3, 2012 and 914,688 shares of common stock offering for resale hereunder upon exercise of certain outstanding warrants and excludes:
  •
35,298,000 shares of common stock issuable upon the exercise of outstanding options; and
  •
15,341,091 shares of common stock issuable upon the exercise of outstanding warrants.
 
 
This prospectus contains forward-looking statements. The use of any statements containing the words “anticipate,” “intend,” “believe,” “estimate,” “project,” “expect,” “plan,” “should” or similar expressions are intended to identify such statements. Such statements include statements regarding our expectations, hopes, beliefs or intentions regarding the future, including but not limited to statements regarding our financing, market, strategy, competition, development plans (including acquisitions and expansion), revenues, operations, and compliance with applicable laws. Forward-looking statements involve certain risks and uncertainties, and actual results may differ materially from those discussed in any such statement. Factors that could cause actual results to differ materially from such forward-looking statements include, but are not limited to, risks and uncertainties related to: anticipated expenditures and costs in our operations; planned exploration activities and the anticipated outcome of such exploration activities; our ability to obtain financing to fund our estimated expenditure and capital requirements; the establishment and estimates of mineral reserves and resources; the grade of mineral reserves and resources; plans and anticipated timing for obtaining permits and licenses for our properties; anticipated liquidity to meet expected operating costs and capital requirements; estimates of environmental liabilities; factors expected to impact our results of operations; and risks related to development, bonding, permitting, construction, other activities related to mine development; significant increases or decreases in gold prices; metallurgy, processing, access, availability of materials, equipment, supplies and water; results of pending and future feasibility studies; and other factors, many of which are beyond our control, including those additional risks as described in the following section “Risk Factors”. All forward-looking statements in this document are made as of the date hereof, based on information available to us as of the date hereof, and we assume no obligation to update any forward-looking statement.
 
 
Investing in our common stock involves a high degree of risk. Before investing in our common stock you should carefully consider the following risks, together with the financial and other information contained in this prospectus. If any of the following risks actually occurs, our business, prospects, financial condition and results of operations could be adversely affected. In that case, the trading price of our common stock would likely decline and you may lose all or a part of your investment.
 
 RISKS RELATING TO OUR BUSINESS
 
 We have no proven or probable reserves on our properties and we do not know if our properties contain any gold or other minerals that can be mined at a profit.
 
The properties on which we have the right to explore for gold and other minerals are not known to have any deposits of gold or other minerals which can be mined at a profit (as to which there can be no assurance). Whether a gold or other mineral deposit can be mined at a profit depends upon many factors. Some but not all of these factors include: the particular attributes of the deposit, such as size, grade and proximity to infrastructure; operating costs and capital expenditures required to start mining a deposit; the availability and cost of financing; the price of the gold or other mineral which is highly volatile and cyclical; and government regulations, including regulations relating to prices, taxes, royalties, land use, importing and exporting of minerals and environmental protection. We are also obligated to pay production royalties on certain of our mining activities, including a net smelter royalty of 2% on production from our Relief Canyon Gold assets acquired during 2011, which would increase our costs of production and make our ability to operate profitably more difficult.
 
 
4

 
 
We are an exploration stage company and have only recently commenced exploration activities on our claims. We reported a net loss for the year ended December 31, 2011 and subsequent quarters to date, and expect to incur operating losses for the foreseeable future.
 
Our evaluation of our Relief Canyon properties are primarily based on historical exploration data. In addition, our exploration programs are in their early stages. Accordingly, we are not yet in a position to estimate expected amounts of minerals, yields or values or evaluate the likelihood that our business will be successful. We have not earned any revenues from mining operations. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the mineral properties that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to exploration, and additional costs and expenses that may exceed current estimates. Prior to completion of our exploration stage, we anticipate that we will incur increased operating expenses without realizing any revenues. We reported a net loss of approximately ($24.6) million for the year ended December 31, 2011 as compared to a net loss of approximately ($2.0) million for the period from February 10, 2010 (inception) to December 31, 2010. We reported a net loss of approximately ($5.1) million for the quarter ended September 30, 2012 and approximately ($45.6) million for the nine months ended September 30, 2012. We expect to incur significant losses into the foreseeable future and our monthly “burn rate” for general and administrative costs (including all employee salaries, public company expenses and consultants) is approximately $500,000. Our monthly burn rate for all costs during each month of the fourth quarter 2012 is expected to be approximately $700,000 (including exploration and facilities recommissioning). We will spend approximately $5.2 million on exploration in 2012, and our estimated exploration costs for 2013 are $3.6 million. Our estimated facility recommissioning costs for 2013 are $2.6 million. If we are unable to raise external funding, and eventually generate significant revenues from our claims and properties, we will not be able to earn profits or continue operations. We have no production history upon which to base any assumption as to the likelihood that we will prove successful, and it is uncertain that we will generate any operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail.
 
Exploring for gold and other minerals is inherently speculative, involves substantial expenditures, and is frequently non-productive.
 
Mineral exploration (currently our only business), and gold exploration in particular, is a business that by its nature is very speculative. There is a strong possibility that we will not discover gold or any other minerals which can be mined or extracted at a profit. Even if we do discover gold or other deposits, the deposit may not be of the quality or size necessary for us or a potential purchaser of the property to make a profit from actually mining it. Few properties that are explored are ultimately developed into producing mines. Unusual or unexpected geological conditions, fires, flooding, explosions, cave-ins, landslides and the inability to obtain suitable or adequate machinery, equipment or labor are just some of the many risks involved in mineral exploration programs and the subsequent development of gold deposits.
 
The mining industry is capital intensive and we may be unable to raise necessary funding.
 
We estimate that we will require approximately $2.1 million to operate and explore during the fourth quarter of 2012. These expenses include approximately $1.5 million for general and administrative costs, $400,000 for exploration, and $175,000 for permitting and property maintenance costs. Our estimated total cost for 2013 for exploration, permitting, landholding, facilities recommissioning and for general and administrative costs is approximately $13 million. We will need to obtain additional funding to fund operations and exploration. We may be unable to secure additional financing on terms acceptable to us, or at all. Our inability to raise additional funds on a timely basis could prevent us from achieving our business objectives and could have a negative impact on our business, financial condition, results of operations and the value of our securities. If we raise additional funds by issuing additional equity or convertible debt securities, the ownership of existing stockholders may be diluted and the securities that we may issue in the future may have rights, preferences or privileges senior to those of the current holders of our common stock. Such securities may also be issued at a discount to the market price of our common stock, resulting in possible further dilution to the book value per share of common stock. If we raise additional funds by issuing debt, we could be subject to debt covenants that could place limitations on our operations and financial flexibility.
 
Unanticipated problems or delays in recommissioning our gold processing facility may negatively affect our operations.
 
If our processing facility recommissioning plans are threatened or delayed because we are unable to finance it or for other reasons, our business may experience a substantial setback. Prolonged problems may fatally threaten the commercial viability of our planned facilities. Moreover, the occurrence of significant unforeseen conditions or events in connection with the processing facility may require us to re-examine the thoroughness of our due diligence and planning processes. Any change to management’s evaluation of the viability of the project could have a material adverse effect on our business, consolidated financial condition or results of operations.
 
 
5

 
 
Projected recommissioning and financing costs for the processing facility may also increase to a level that would make these facilities too expensive to recommission or unprofitable to operate. Currently we expect the total cost to recommission the facility will be approximately $2.6 million. Contractors, engineering firms, construction firms and equipment suppliers also receive requests and orders from other companies and, therefore, we may not be able to secure their services or products on a timely basis or on acceptable financial terms. We may suffer significant delays or cost overruns as a result of a variety of factors, such as increases in the prices or materials, permitting delays, shortages of workers or materials, transportation constraints, adverse weather, equipment failures, fires, damage to or destruction of property and equipment, environmental damage, unforeseen difficulties or labor issues, any of which could delay or prevent us from commencing operations. Any of these factors could have a material adverse effect on our business, consolidated financial conditions or results of operations.
 
We are a junior exploration company with no operating mining activities and we may never have any mining activities in the future.
 
Our business is exploring for gold and, to a lesser extent, other minerals. If we discover commercially exploitable gold or other deposits, we will not be able to make any money from mining activities unless the gold or other deposits are actually mined, or we sell our interest. Accordingly, we will need to seek additional capital through debt or equity financing, find some other entity to mine our properties or operate our facilities on our behalf, enter into joint venture or other arrangements with a third party, or sell or lease the property our rights to mine to third parties. Mine development projects typically require a number of years and significant expenditures during the development phase before production is possible. Such projects could experience unexpected problems and delays during development, construction and mine start-up. Mining operations in the United States are subject to many different federal, state and local laws and regulations, including stringent environmental, health and safety laws. If and when we assume operational responsibility for mining on our properties, it is possible that we will be unable to comply with current or future laws and regulations, which can change at any time. It is possible that changes to these laws will be adverse to any potential mining operations. Moreover, compliance with such laws may cause substantial delays and require capital outlays in excess of those anticipated, adversely affecting any potential mining operations. Our future mining operations, if any, may also be subject to liability for pollution or other environmental damage. It is possible that we will choose to not be insured against this risk because of high insurance costs or other reasons.
 
We have a short operating history, have only lost money and may never achieve any meaningful revenue.
 
We acquired all of our property interests during the past 15 months. Our operating history consists of starting our exploration activities. We have no income-producing activities from mining or exploration. We have already lost money because of the expenses we have incurred in acquiring the rights to explore on our property and conducting our exploration activities. Exploring for gold and other minerals or resources is an inherently speculative activity. There is a strong possibility that we will not find any commercially exploitable gold or other deposits on our property. Because we are an exploration company, we may never achieve any meaningful revenue.
 
We must make annual lease payments, advance royalty and royalty payments and claim maintenance payments or we will lose our rights to our property.
 
We are required under the terms of our property interests to make annual lease payments starting in 2014 and advance royalty and royalty payments each year. We are also required to make annual claim maintenance payments to the U.S. Bureau of Land Management (“BLM”) and pay a fee to Pershing County in order to maintain our rights to explore and, if warranted, to develop our unpatented mining claims. If we fail to meet these obligations, we will lose the right to explore for gold and other minerals on our property. Our total estimated annual property maintenance costs payable to the BLM for all of the unpatented mining claims and millsites in the Relief Canyon area in 2012 are approximately $160,000, which will remain approximately the same unless we acquire or dispose of some unpatented mining claims. Our total annual costs payable to county authorities is approximately $12,000. Our lease payments, advance royalty and royalty payments and claim maintenance payments are described above under “Business and Properties”.
 
Our business is subject to extensive environmental regulations which may make exploring, mining or related activities prohibitively expensive, and which may change at any time.
 
All of our operations are subject to extensive environmental regulations which can substantially delay exploration and make exploration expensive or prohibit it altogether. We may be subject to potential liabilities associated with the pollution of the environment and the disposal of waste products that may occur as the result of exploring and other related activities on our properties, including our plan to process gold at our processing facility. We may have to pay to remedy environmental pollution, which may reduce the amount of money that we have available to use for exploration or other activities, and adversely affect our financial position. If we are unable to fully remedy an environmental problem, we might be required to suspend operations or to enter into interim compliance measures pending the completion of the required remedy. If a decision is made to mine our properties and we retain any operational responsibility for doing so, our potential exposure for remediation may be significant, and this may have a material adverse effect upon our business and financial position. We have not purchased insurance for potential environmental risks (including potential liability for pollution or other hazards associated with the disposal of waste products from our exploration activities) and such insurance may not be available to us on reasonable terms or at a reasonable price. All of our exploration and, if warranted, development activities may be subject to regulation under one or more local, state and federal environmental impact
 
 
6

 
 
analyses and public review processes. It is possible that future changes in applicable laws, regulations and permits or changes in their enforcement or regulatory interpretation could have significant impact on some portion of our business, which may require our business to be economically re-evaluated from time to time. These risks include, but are not limited to, the risk that regulatory authorities may increase bonding requirements beyond our financial capability. Inasmuch as posting of bonding in accordance with regulatory determinations is a condition to the right to operate under all material operating permits, increases in bonding requirements could prevent operations even if we are in full compliance with all substantive environmental laws. We have been required to post substantial bonds under various laws relating to mining and the environment and may in the future be required to post further bonds to pursue additional activities. For example, we must provide BLM and the Nevada Division of Environmental Protection Bureau of Mining Regulation and Reclamation (“NDEP”) additional financial assurance (reclamation bonds) to guarantee reclamation of any new surface disturbance required for drill roads, drill sites, or mine expansion. We have provided BLM and NDEP a reclamation bond in the amount of approximately $4.6 million that covers both the exploration and mining features at the Relief Canyon Mine property, including the three open-pit mines and associated waste rock disposal areas, the mineral processing facilities, ancillary facilities, and the exploration roads and drill pads. Our preliminary estimate of the likely amount of additional financial assurance to conduct exploration is approximately $190,000. Our preliminary estimate of the likely amount of additional financial assurance to recommence mining operations is $75,000. See “Business and Properties – Relief Canyon Properties – Environmental Permitting Requirements” for additional information regarding our environmental permitting budget. We may be unable or unwilling to post such additional bonds which could prevent us from realizing any commercial mining success or commencing mining activities.
 
The government licenses and permits which we need to explore on our property may take too long to acquire or cost too much to enable us to proceed with exploration. In the event that we discover commercially exploitable deposits, we may face substantial delays and costs associated with securing the additional government licenses and permits which we will need to mine on our property which could preclude our ability to develop the mine. We are also seeking to amend the permit for our existing gold processing facility, which may be delayed.
 
Exploration activities usually require the granting of permits from various governmental agencies. For example, exploration drilling on unpatented mining claims requires a permit to be obtained from the United States Bureau of Land Management, which may take several months or longer to grant the requested permit. Depending on the size, location and scope of the exploration program, additional permits may also be required before exploration activities can be undertaken. Prehistoric or Indian grave yards, threatened or endangered species, archeological sites or the possibility thereof, difficult access, excessive dust and important nearby water resources may all result in the need for additional permits before exploration activities can commence. In addition, we are seeking amendments to our permits for our gold processing facility, in order to leach ores from other sites, and to add a gold recovery (stripping) system to the facility. If there are delays in obtaining the permit to leach ores from other sites, we would only be able to leach ores from the Relief Canyon Mine. If we make a future discovery of mineable reserves at the Relief Canyon expansion properties, we would seek an amendment to the permits for the Relief Canyon processing facility to expand the capacity of the leach pad and ponds to accommodate additional ore. If there are delays in obtaining the permit to add the gold recovery system, we would sell gold-loaded carbon to another facility that would recover/strip the gold. We estimate the cost of amending these permits will be less than $10,000. As with all permitting processes, there is the risk that unexpected delays and excessive costs may be experienced in obtaining required permits. The needed permits may not be granted, or may be granted in an acceptable timeframe or cost too much. Delays in or our inability to obtain necessary permits will result in unanticipated costs, which may result in serious adverse effects upon our business.
 
 The value of our property is subject to volatility in the price of gold and any other deposits we may seek or locate.
 
Our ability to obtain additional and continuing funding, and our profitability if and when we commence mining operations or sell our rights to mine, will be significantly affected by changes in the market price of gold and other mineral deposits. Gold and other minerals’ prices fluctuate widely and are affected by numerous factors, all of which are beyond our control. The price of gold may be influenced by:
 
 
fluctuation in the supply of, demand and market price for gold;
 
mining activities of our competitors;
 
sale or purchase of gold by central banks and for investment purposes by individuals and financial institutions;
 
interest rates;
 
currency exchange rates;
 
inflation or deflation;
 
fluctuation in the value of the United States dollar and other currencies;
 
global and regional supply and demand, including investment, industrial and jewelry demand; and
 
political and economic conditions of major gold or other mineral-producing countries.
 
 
7

 
 
The price of gold and other minerals have fluctuated widely in recent years, and a decline in the price of gold or other minerals could cause a significant decrease in the value of our property, limit our ability to raise money, and render continued exploration and development of our property impracticable. If that happens, then we could lose our rights to our property or be compelled to sell some or all of these rights. Additionally, the future development of our mining properties beyond the exploration stage is heavily dependent upon the level of gold prices remaining sufficiently high to make the development of our property economically viable.
 
Our property title may be challenged. We are not insured against any challenges, impairments or defects to our mining claims or title to our other properties.
 
Our property is comprised primarily of unpatented lode mining claims and millsites located and maintained in accordance with the federal General Mining Law of 1872. Unpatented lode mining claims and millsites are unique U.S. property interests and are generally considered to be subject to greater title risk than other real property interests because the validity of unpatented mining claims and millsites is often uncertain. This uncertainty arises, in part, out of the complex federal and state laws and regulations with which the owner of an unpatented mining claim or millsite must comply in order to locate and maintain a valid claim. If we discover mineralization that is close to the claim boundaries, it is possible that some or all of the mineralization may occur outside the boundaries. In such a case we would not have the right to extract those minerals. The uncertainty resulting from not having a title search or having the claims surveyed on our properties leaves us exposed to potential title defects. Defending any challenges to our property title would be costly, and may divert funds that could otherwise be used for exploration activities and other purposes. For example, on February 7, 2012, the Company obtained a copy of a complaint filed in the United States District Court for the Southern District of New York (the “Complaint”) entitled Relief Gold Group, Inc., v Sagebrush Gold Ltd, Gold Acquisition Corp. (“GAC”), Barry C. Honig, and David S. Rector (12 civ 0952). Relief Gold alleges various causes of action including breach of contract, intentional interference with contract, intentional interference with prospective business relationship/economic relations, misappropriation of trade secrets and unjust enrichment, related to the Company’s acquisition on August 30, 2011 of the assets of the Relief Canyon Mine pursuant to Chapter 11 of the Bankruptcy Code. Relief Gold seeks money damages and to enjoin Sagebrush, Honig, Rector and GAC from exercising its rights and privileges gained or acquired as a result of any alleged unlawful conduct, including any management rights over GAC or the assets acquired by GAC as a result of the alleged wrongful conduct of the other defendants. Relief Gold further seeks to disgorge the profits, benefits and any other advantages gained by reason of the alleged unlawful conduct.
 
In addition, unpatented lode mining claims and millsites are always subject to possible challenges by third parties or contests by the federal government, which, if successful, may prevent us from exploiting our discovery of commercially extractable gold. Challenges to our title may increase our costs of operation or limit our ability to explore on certain portions of our property. We are not insured against challenges, impairments or defects to our property title.
 
Possible amendments to the General Mining Law could make it more difficult or impossible for us to execute our business plan.
 
In recent years, the U.S. Congress has considered a number of proposed amendments to the General Mining Law, as well as legislation that would make comprehensive changes to the law. Although no such legislation has been adopted to date, there can be no assurance that such legislation will not be adopted in the future. If adopted, such legislation could, among other things, (i) adopt the limitation on the number of millsites that a claimant may locate, discussed below, (ii) impose time limits on the effectiveness of plans of operation that may not coincide with mine life, (iii) impose more stringent environmental compliance and reclamation requirements on activities on unpatented mining claims and millsites, (iv) establish a mechanism that would allow states, localities and Native American tribes to petition for the withdrawal of identified tracts of federal land from the operation of the General Mining Law, (v) allow for administrative determinations that mining would not be allowed in situations where undue degradation of the federal lands in question could not be prevented, and (vi) impose royalties on gold and other mineral production from unpatented mining claims or impose fees on production from patented mining claims. Further, it could have an adverse impact on earnings from our operations, could reduce estimates of any reserves we may establish and could curtail our future exploration and development activity on our unpatented claims.
 
Our ability to conduct exploration, development, mining and related activities may also be impacted by administrative actions taken by federal agencies. With respect to unpatented millsites, for example, the ability to use millsites and their validity has been subject to greater uncertainty since 1997. In November of 1997, the Secretary of the Interior (appointed by President Clinton) approved a Solicitor’s Opinion which concluded that the General Mining Law imposed a limitation that only a single five-acre millsite may be claimed or used in connection with each associated and valid unpatented or patented lode mining claim. Subsequently, however, on October 7, 2003, the new Secretary of the Interior (appointed by President Bush) approved an Opinion by the Deputy Solicitor which concluded that the mining laws do not impose a limitation that only a single five-acre millsite may be claimed in connection with each associated unpatented or patented lode mining claim. Current federal regulations do not include the millsite limitation. There can be no assurance, however, that the Department of the Interior will not seek to re-impose the millsite limitation at some point in the future.
 
 
8

 
 
In addition, a consortium of environmental groups has filed a lawsuit in the United District Court for the District of Columbia against the Department of the Interior, the Department of Agriculture, the Bureau of Land Management, or BLM, and the USFS, asking the court to order the BLM and USFS to adopt the five-acre millsite limitation. That lawsuit also asks the court to order the BLM and the USFS to require mining claimants to pay fair market value for their use of the surface of federal lands where those claimants have not demonstrated the validity of their unpatented mining claims and millsites. If the plaintiffs in that lawsuit were to prevail, that could have an adverse impact on our ability to use our unpatented millsites for facilities ancillary to our exploration, development and mining activities, and could significantly increase the cost of using federal lands at our properties for such ancillary facilities.
 
Market forces or unforeseen developments may prevent us from obtaining the supplies and equipment necessary to explore for gold and other minerals.
 
Gold exploration and mineral exploration in general, is a very competitive business. Competitive demands for contractors and unforeseen shortages of supplies and/or equipment could result in the disruption of our planned exploration activities. Current demand for exploration drilling services, equipment and supplies is robust and could result in suitable equipment and skilled manpower being unavailable at scheduled times for our exploration program. Fuel prices are extremely volatile as well. We will attempt to locate suitable equipment, materials, manpower and fuel if sufficient funds are available. If we cannot find the equipment and supplies needed for our various exploration programs, we may have to suspend some or all of them until equipment, supplies, funds and/or skilled manpower become available. Any such disruption in our activities may adversely affect our exploration activities and financial condition.
 
Our directors and executive officers lack significant experience or technical training in exploring for precious and base metal deposits and in developing mines.
 
Our directors and executive officers lack significant experience or technical training in exploring for precious and base metal deposits and in developing mines. Accordingly, our management may not be fully aware of many of the specific requirements related to working within this industry. Their decisions and choices may not take into account standard engineering or managerial approaches that mineral exploration companies commonly use. Consequently, our operations, earnings, and ultimate financial success could suffer irreparable harm due to some of our management’s lack of experience in the mining industry.
 
We may not be able to maintain the infrastructure necessary to conduct exploration activities.
 
Our exploration activities depend upon adequate infrastructure. Reliable roads, bridges, power sources and water supply are important factors which affect capital and operating costs. Unusual or infrequent weather phenomena, sabotage, government or other interference in the maintenance or provision of such infrastructure could adversely affect our exploration activities and financial condition.
 
Our exploration activities may be adversely affected by the local climate or seismic events, which could prevent us from gaining access to our property year-round.
 
Earthquakes, heavy rains, snowstorms, and floods could result in serious damage to or the destruction of facilities, equipment or means of access to our property, or may otherwise prevent us from conducting exploration activities on our property. There may be short periods of time when the unpaved portion of the access road is impassible in the event of extreme weather conditions or unusually muddy conditions. During these periods, it may be difficult or impossible for us to access our property, make repairs, or otherwise conduct exploration activities on them.
 
RISKS RELATING TO OUR ORGANIZATION AND COMMON STOCK
 
We have relied on a certain stockholder to provide significant investment capital to fund our operations.
 
We have in the past relied on cash infusions primarily from Frost Gamma Investments Trust (“Frost Gamma”). During the year ended December 31, 2011, Frost Gamma provided approximately $5,000,000 to us to fund operations in consideration for the issuance of certain of our securities. Curtailment of cash investments by Frost Gamma could detrimentally impact our cash availability and our ability to fund its operations.
 
Our principal shareholder, officers and directors own a substantial interest in our voting stock and investors will have limited voice in our management.
 
Our principal shareholders Continental and Frost Gamma, as well as our officers and directors, in the aggregate beneficially own in excess of approximately 61.59% of our outstanding common stock, including shares of common stock issuable upon exercise or conversion within 60 days of the date of this filing. Currently, Continental owns 76,095,215 shares, or 28.54% of our common stock, and our officers and directors beneficially own 40,767,542 shares, or 14.49% of our common stock. Additionally, the holdings of our officers and directors may increase in the future upon vesting or other maturation of exercise rights under any of the convertible securities they may hold or in the future be granted or if they otherwise acquire additional shares of our common stock.
 
 
9

 
 
As a result of their ownership and positions, our principal shareholder, directors and executive officers collectively are able to influence all matters requiring shareholder approval, including the following matters:
 
 
election of our directors;
 
amendment of our articles of incorporation or bylaws; and
 
effecting or preventing a merger, sale of assets or other corporate transaction.
 
In addition, their stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of the Company, which in turn could reduce our stock price or prevent our shareholders from realizing a premium over our stock price.
 
The price disparities between the price of our common stock and the price of the common stock of our principal shareholder may cause insiders to trade in our common stock.
 
Our principal shareholder, Continental, owns 76,095,215 shares of our common stock and intends to distribute those shares to its shareholders subsequent to such time that the SEC declares the Registration Statement, of which this prospectus forms a part, effective. As a result of the price disparities that may arise from time to time between the price of our common stock and the price of the common stock of Continental, we believe that, from time to time, investors may seek to participate in transactions based upon these pricing disparities and buy, sell, short or hedge shares of our common stock or shares of common stock of Continental. Such transactions should not be viewed as indicative of the success of our business or of our future prospects. A member of our Board of Directors is a shareholder of Continental, and has stated that he may acquire or dispose of shares and undertake additional transactions in the outstanding securities of Continental.
 
Our director owns a significant stake in our principal shareholder, and as a result may be able to exert influence over this shareholder, which could result in a conflict of interest.
 
Currently, Continental, our principal shareholder, owns 76,095,215 shares, or 28.54%, of our common stock, which it intends to distribute to its shareholders as part of its plan of liquidation. Barry Honig, a member of our board of directors, is the largest shareholder of Continental and beneficially owns 12,194,236 shares, or 12.8%, of Continental. In addition, 3,535,000 shares of Continental are owned by various Uniform Transfer to Minor Act accounts for which Mr. Honig’s father is custodian for the benefit of Mr. Honig’s minor children. Mr. Honig exercises no investment or voting power and disclaims beneficial ownership of the shares owned by accounts for which his father is custodian. In addition, 150,000 shares are owned by Alan Honig. Although Mr. Barry Honig disclaims beneficial ownership of such shares, if aggregated, the percent of class represented by the aggregate amount beneficially owned and the excluded shares would be 16.69% of Continental’s issued and outstanding shares. Such amounts are excluded from Mr. Honig’s beneficial ownership amounts reported herein. We are subject to the reporting requirements of federal securities laws, and compliance with such requirements can be expensive and may divert resources from other projects, thus impairing our ability to grow.
 
We are subject to the information and reporting requirements of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and other federal securities laws, including compliance with the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”).
 
The costs of preparing and filing annual and quarterly reports and other information with the Securities and Exchange Commission and furnishing audited reports to stockholders will cause our expenses to be higher than they would have been if we were privately held. These costs for the year ended December 31, 2011 were approximately $604,000 and we anticipate incurring costs relating to being a public company of $800,000 for the year ending December 31, 2012.
 
It may be time consuming, difficult and costly for us to develop, implement and maintain the internal controls and reporting procedures required by the Sarbanes-Oxley Act. We may need to hire additional financial reporting, internal controls and other finance personnel in order to develop and implement appropriate internal controls and reporting procedures.
 
If we fail to establish and maintain an effective system of internal control, we may not be able to report our financial results accurately or to prevent fraud. Any inability to report and file our financial results accurately and timely could harm our reputation and adversely impact the trading price of our common stock.
 
Effective internal control is necessary for us to provide reliable financial reports and prevent fraud. If we cannot provide reliable financial reports or prevent fraud, we may not be able to manage our business as effectively as we would if an effective control environment existed, and our business and reputation with investors may be harmed. As a result, our small size and any current internal control deficiencies may adversely affect our financial condition, results of operation and access to capital. Management has determined that our internal audit function is significantly deficient due to insufficient qualified resources to perform internal audit functions. During our assessment of the effectiveness of internal control over financial reporting as of December 31, 2011, management identified significant deficiency related to (i) our internal audit functions, and (ii) a lack of segregation of duties within accounting functions. 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 any policies and procedures may deteriorate.
 
 
10

 
 
Public company compliance may make it more difficult to attract and retain officers and directors.
 
The Sarbanes-Oxley Act and rules implemented by the Securities and Exchange Commission have required changes in corporate governance practices of public companies. As a public company, we expect these rules and regulations to increase our compliance costs in 2012 and beyond and to make certain activities more time consuming and costly. As a public company, we also expect that these rules and regulations may make it more difficult and expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as executive officers, and to maintain insurance at reasonable rates, or at all.
 
 Because we became public by a reverse merger, we may not be able to attract the attention of major brokerage firms.
 
There may be risks associated with us becoming public through a “reverse merger.” Securities analysts of major brokerage firms may not provide coverage of us since there is no incentive to brokerage firms to recommend the purchase of our common stock. No assurance can be given that brokerage firms will, in the future, want to conduct any offerings on our behalf.
 
Our stock price may be volatile.
 
The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including the following:
 
 
results of operations and exploration efforts;
 
fluctuation in the supply of, demand and market price for gold;
 
our ability to obtain working capital financing;
 
additions or departures of key personnel;
 
limited “public float” in the hands of a small number of persons whose sales or lack of sales could result in positive or negative pricing pressure on the market price for our common stock;
 
our ability to execute our business plan;
 
sales of our common stock and decline in demand for our common stock;
 
regulatory developments;
 
economic and other external factors;
 
investor perception of our industry or our prospects; and
 
period-to-period fluctuations in our financial results.
 
In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock. As a result, you may be unable to resell your shares at a desired price.
 
We have not paid cash dividends in the past and do not expect to pay dividends in the future. Any return on investment may be limited to the value of our common stock.
 
We have never paid cash dividends on our common stock and do not anticipate doing so in the foreseeable future. The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting us at such time as our board of directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if our stock price appreciates.
 
There is currently a very limited trading market for our common stock and we cannot ensure that one will ever develop or be sustained.
 
Our shares of common stock are very thinly traded, only a small percentage of our common stock is available to be traded and is held by a small number of holders and the price, if traded, may not reflect our actual or perceived value. There can be no assurance that there will be an active market for our shares of common stock either now or in the future. The market liquidity will be dependent on the perception of our operating business, among other things. We may, in the future, take certain steps, including utilizing investor awareness campaigns, press releases, road shows and conferences to increase awareness of our business and any steps that we might take to bring us to the awareness of investors may require we compensate consultants with cash and/or stock. There can be no assurance that there will be any awareness generated or the results of any efforts will result in any impact on our trading volume. Consequently, investors may not be able to liquidate their investment or liquidate it at a price that reflects the value of the business and trading may be at an inflated price relative to the performance of our company due to, among other things, availability of sellers of our shares. If a market should develop, the price may be highly volatile. Because there may be a low price for our shares of common stock, many brokerage firms or clearing firms may not be willing to effect transactions in the securities or accept our shares for deposit in an account. Even if an investor finds a broker willing to effect a transaction in the shares of our common stock, the combination of brokerage commissions, transfer fees, taxes, if any, and any other selling costs may exceed the selling price. Further, many lending institutions will not permit the use of low priced shares of common stock as collateral for any loans.
 
 
11

 
 
We anticipate having our common stock continue to be quoted for trading on the OTC Bulletin Board or the OTCQB; however, we cannot be sure that such quotations will continue. As soon as is practicable, we anticipate applying for listing of our common stock on the NYSE MKT or other national securities exchange, assuming that we can satisfy the initial listing standards for such exchange. We currently do not satisfy the initial listing standards, and cannot ensure that we will be able to satisfy such listing standards or that our common stock will be accepted for listing on any such exchange. Should we fail to satisfy the initial listing standards of such exchanges, or our common stock is otherwise rejected for listing and remain listed on the OTC Bulletin Board or OTCQB or suspended from the OTC Bulletin Board or OTCQB, the trading price of our common stock could suffer and the trading market for our common stock may be less liquid and our common stock price may be subject to increased volatility.
 
Our common stock is deemed a “penny stock,” which would make it more difficult for our investors to sell their shares.
 
Our common stock is subject to the “penny stock” rules adopted under Section 15(g) of the Exchange Act. The penny stock rules generally apply to companies whose common stock is not listed on the NASDAQ Stock Market or other national securities exchange and trades at less than $4.00 per share, other than companies that have had average revenue of at least $6,000,000 for the last three years or that have tangible net worth of at least $5,000,000 ($2,000,000 if the company has been operating for three or more years). These rules require, among other things, that brokers who trade penny stock to persons other than “established customers” complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances. Many brokers have decided not to trade penny stocks because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. If we remain subject to the penny stock rules for any significant period, it could have an adverse effect on the market, if any, for our securities. If our securities are subject to the penny stock rules, investors will find it more difficult to dispose of our securities.
 
Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.
 
If our stockholders sell substantial amounts of our common stock in the public market or upon the expiration of any statutory holding period, under Rule 144, or upon expiration of lock-up periods applicable to outstanding shares, or issued upon the exercise of outstanding options or warrants, it could create a circumstance commonly referred to as an “overhang” and in anticipation of which the market price of our common stock could fall. The existence of an overhang, whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional financing through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.
 
Exercise of options or warrants may result in substantial dilution to existing shareholders.
 
If the price per share of our common stock at the time of exercise of any options or warrants or conversion of any other convertible securities is in excess of the various exercise or conversion prices of such convertible securities, exercise or conversion of such convertible securities would have a dilutive effect on our common stock. As of the date hereof, we had reserved shares issuable upon exercise of (i) options to purchase 35,298,000 shares of our common stock and (ii) warrants to purchase 16,255,779 shares of our common stock.  Further, any additional financing that we secure may require the granting of rights, preferences or privileges senior to those of our common stock and which result in additional dilution of the existing ownership interests of our common stockholders.
 
Our articles of incorporation allow for our board to create new series of preferred stock without further approval by our stockholders, which could adversely affect the rights of the holders of our common stock.
 
Our board of directors has the authority to fix and determine the relative rights and preferences of preferred stock. Our board of directors also has the authority to issue preferred stock without further stockholder approval. As a result, our board of directors could authorize the issuance of a series of preferred stock that would grant to holders the preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to the holders of common stock and the right to the redemption of the shares, together with a premium, prior to the redemption of our common stock. In addition, our board of directors could authorize the issuance of a series of preferred stock that has greater voting power than our common stock or that is convertible into our common stock, which could decrease the relative voting power of our common stock or result in dilution to our existing stockholders.
 
 
12

 
 
 
The selling stockholders will receive all of the proceeds from the sale of the shares offered by them under this prospectus. We will not receive any proceeds from the sale of the shares by the selling stockholders covered by this prospectus.
 
 
Our common stock commenced trading on August 20, 2009 and was quoted on the OTC Bulletin Board under the symbol EXCX.OB from June 23, 2009 through May 31, 2011. Prior to August 20, 2009, there was no active market for our common stock. Our common stock has traded under the symbol SAGE.OB from June 1, 2011, until March 26, 2012. On March 26, 2012, our symbol was changed to PGLC.OB. The following table sets forth the high and low bid prices for the periods indicated as reported on the OTC Markets' OTCQB. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not necessarily represent actual transactions.
 
Year Ended December 31, 2010
 
High
   
Low
 
1st Quarter Ended March 31, 2010
 
$
0.32
   
$
0.22
 
2nd Quarter Ended June 30, 2010
 
$
0.32
   
$
0.32
 
3rd Quarter Ended September 30, 2010
 
$
0.58
     
0.32
 
4th Quarter Ended December 31, 2010
 
$
2.00
     
0.58
 
 
Year Ended December 31, 2011
 
High
   
Low
 
1st Quarter Ended March 31, 2011
 
$
3.00
   
$
0.60
 
2nd Quarter Ended June 30, 2011
 
$
1.56
   
$
0.80
 
3rd Quarter Ended September 30, 2011
 
$
1.30
   
$
0.78
 
4th Quarter Ended December 31, 2011
 
$
1.00
   
$
0.43
 
 
Year Ended December 31, 2012
 
High
   
Low
 
1st Quarter Ended March 31, 2012
 
$
0.97
   
$
0.36
 
2nd Quarter Ended June 30, 2012
 
$
0.62
   
$
0.25
 
3rd Quarter Ended September 30, 2012
 
$
0.46
   
$
0.30
 
 
All per share amounts are retroactively adjusted for our dividend of an additional 1.51380043 shares of common stock on each share of our common stock outstanding on September 22, 2010. The record date for issuance of the dividend was September 26, 2010 for holders of record of the Company’s securities as of September 26, 2010. Unless otherwise stated, all share amounts referenced in this filing are adjusted to reflect this dividend.
 
The last reported sales price of our common stock on the OTC Market’s OTCQB on December 5, 2012, was $0.35 per share.
 
Holders
 
As of December 5, 2012, there were 156 holders of record of our common stock.
 
Dividend Policy
 
In the past, we have not declared or paid cash dividends on our common stock, and we do not intend to pay any cash dividends on our common stock. Rather, we intend to retain future earnings (if any) to fund the operation and expansion of our business and for general corporate purposes. Subject to legal and contractual limits, our board of directors will make any decision as to whether to pay dividends in the future.
 
Securities Authorized for Issuance under Equity Compensation Plans
 
On September 29, 2010, our board of directors and stockholders adopted the 2010 Equity Incentive Plan, pursuant to which 2,800,000 shares of our common stock are reserved for issuance as awards to employees, directors, consultants, advisors and other service providers. The purpose of the 2010 Equity Incentive Plan is to provide an incentive to attract and retain directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such persons in our development and financial success. Under the 2010 Equity Incentive Plan, we are authorized to issue incentive stock options intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended, non-qualified stock options, restricted stock, stock appreciation rights, performance unit awards and stock bonus awards. The 2010 Equity Incentive Plan will be administered by our board of directors until such time as such authority has been delegated to a committee of the board of directors.
 
 
13

 
 
On February 9, 2012, our board of directors and stockholders adopted the 2012 Equity Incentive Plan, pursuant to which 40,000,000 shares of our common stock are reserved for issuance as awards to employees, directors, consultants, advisors and other service providers. The purpose of the 2012 Equity Incentive Plan is to provide an incentive to attract and retain directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such persons in our development and financial success. Under the 2012 Equity Incentive Plan, we are authorized to issue incentive stock options intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended, non-qualified stock options, restricted stock, stock appreciation rights, performance unit awards and stock bonus awards. The 2012 Equity Incentive Plan will be administered by our board of directors until such time as such authority has been delegated to a committee of the board of directors.
 
Equity Compensation Plan Information:
 
Plan Category
 
Number of securities to be issued upon exercise of outstanding options, warrants and rights
(a)
   
Weighted-average exercise price of outstanding options warrants and rights
(b)
   
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(c)
 
                   
Equity compensation plans approved by security holders
   
33,250,000
     
0.50
     
0
 
Equity compensation plans not approved by security holders
   
     
     
 
Total
   
33,250,000
     
0.50
     
0
(1)
 
(1) Represents 0 shares of common stock remaining available for issuance under the 2010 Plan and 0 shares of common stock remaining available for issuance under the 2012 Plan.
 
 
The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this prospectus. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including but not limited to those set forth under “Risk Factors”, “Special Note Regarding Forward-Looking Statements” and in other parts of this prospectus.
 
Organizational Background
 
We were incorporated under the name “Excel Global, Inc.” under the laws of the State of Nevada on August 2, 2007. We operated as a web-based service provider and consulting company. In September 2010, we changed our name to “The Empire Sports & Entertainment Holdings Co.” On May 16, 2011, we changed our name to “Sagebrush Gold Ltd.” from “The Empire Sports & Entertainment Holdings Co.” On February 27, 2012, we changed our name to “Pershing Gold Corporation.”
 
Our business strategy and plan of operations are described in “Business and Properties – Business Strategy” and “Business and Properties – Relief Canyon Properties – 2012 Exploration Program”.
 
During 2012, we reduced our debt, consolidated our equity capitalization by reducing the amount of preferred stock and warrants outstanding, and sold our non-core gold and uranium exploration properties in order to focus on exploration at our Relief Canyon properties in Pershing County in northwestern Nevada. A summary of notable transactions during the past two years, including our transition from a sports and entertainment business to a gold and precious metals exploration company, follows.
 
 
14

 
 
Internal Audit Assessment
 
Management has determined that our internal audit function is significantly deficient due to insufficient qualified resources to perform internal audit functions. During our assessment of the effectiveness of internal control over financial reporting as of December 31, 2011, management identified significant deficiency related to (i) our internal audit functions, and (ii) a lack of segregation of duties within accounting functions. 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 any policies and procedures may deteriorate. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, we will implement procedures to assure that the initiation of transactions, the custody of assets and the recording of transactions will be performed by separate individuals. We believe that the foregoing steps will remediate the significant deficiency identified above, and we will continue to monitor the effectiveness of these steps and make any changes that our management deems appropriate.
 
Overview
 
During the first quarter of 2012, our management decided to focus on exploration at our Relief Canyon properties and to reduce our interests in or divest our other exploration properties. Subsequently, we acquired additional properties to expand our Relief Canyon properties and completed the divestiture of exploration properties not related to Relief Canyon. An overview of our financial results during the third quarter 2012 is provided below. For information regarding our exploration program, please see “Business and Properties-2012 and 2013 Exploration and Facilities Recommissioning Programs”.
 
Events Subsequent to September 30, 2012
 
Recent Director and Management Changes
 
In November 2012, we appointed Alex Morrison to our board of directors. In addition, further to Pershing’s decision to bring its finance and accounting function inside the company, we designated Eric Alexander, our Vice President of Finance and Controller, as principal financial officer and principal accounting officer. The board of directors accepted the resignations of Adam Wasserman as Chief Financial Officer and David Rector as Treasurer, Vice President of Administration and Finance and member of the board of directors. Mr. Rector will remain as an employee of the Company to assist with transition matters and other projects until the end of 2012.
 
Private Placement

On December 3, 2012, we completed a private offering of common stock to accredited investors, including one of our directors, in which we sold an aggregate of 9,469,548 shares of common stock and warrants for the purchase of 3,787,819 shares of common stock for an aggregate purchase price of $3,124,950. The purchase price for one share of common stock and a warrant to acquire 0.40 of a share of common stock was $0.33. The warrants are exercisable immediately at an exercise price of $0.50 per share and will expire on December 7, 2015.
 
Results of Operations
 
Nine Months Ended September 30, 2012 and September 30, 2011
 
In September 2011, we decided to discontinue our sports and entertainment business and to focus on gold exploration. Prior periods have been restated in the Company’s consolidated financial statements and related footnotes to conform to this presentation and all transactions relating to our sports and entertainment business are included in discontinued operations.
 
For the results of continuing operations discussed below, we compare the results from operations for the three month period ended September 30, 2012 to the results of operations for the three month period ended September 30, 2011 and for the nine month period ended September 30, 2012 to the results of operations for the nine month period ended September 30, 2011.
 
Net Revenues
 
We are an exploration stage company with no operations and generated no revenues for the three and nine months ended September 30, 2012 and 2011.
 
Operating Expenses
 
Total operating expenses for the three months ended September 30, 2012 as compared to the three months ended September 30, 2011, were approximately $5.4 million and $4.6 million, respectively. The $0.8 million increase in operating expenses for the three month period ended September 30, 2012 includes approximately $2.4 million of compensation expense related primarily to stock based compensation expense of approximately $2.0 million and other expenses for hiring our executive and management employees and support staff; $1.8 million in exploration expense on our Relief Canyon properties, $0.8 million in general and administrative expenses primarily for public company expenses and litigation and $0.4 million in consulting fees primarily related to financing and investor relations matters.
 
Total operating expenses for the nine months ended September 30, 2012 as compared to the nine months ended September 30, 2011, were approximately $27.2 million and $5.9 million, respectively. The $21.3 million increase in operating expenses for the nine month period ended September 30, 2012 includes approximately $17.2 million of compensation expense related primarily to stock based compensation expense of $15.7 million and other expenses for hiring our executive and management employees and support staff; $4.8 million in exploration expense on our Relief Canyon properties, North Battle Mountain and Red Rock properties; $3.1 million in general and administrative expenses primarily for public company expenses and litigation and $2.0 million in consulting fees primarily related to financing and investor relations matters.
 
Operating Loss from Continuing Operations
 
We reported an operating loss from continuing operations of approximately $5.4 million and $4.6 million, respectively, for the three months ended September 30, 2012 and 2011. We reported an operating loss from continuing operations of approximately $27.2 million and $5.9 million, respectively, for the nine months ended September 30, 2012 and 2011. The increases in operating losses were due to the increases in operating expenses described above.
 
 
15

 
 
Other Income (Expenses)
 
Total other income (expense) was approximately $0.4 million and $(9.9) million for the three months ended September 30, 2012 and 2011, respectively. The change is primarily attributable to transactions during the prior three month period associated with the $4.8 million of settlement expenses in connection with the issuance of common stock for the cancellation of our warrants originally issued to Continental warrant holders, derivative related expenses of approximately $3.5 million, interest expense of $1.7 million; offset in part by $0.4 million of realized gain from the sale of our available for sale securities.
 
Total other expense was approximately $18.3 million and $11.4 million for the nine months ended September 30, 2012 and 2011, respectively. The increase is primarily attributable to $11.0 million in interest expense attributable to the amortization of debt discounts and deferred financing cost of approximately $8.0 million of convertible notes converted on March 30, 2012 and interest expense in connection with the issuance of common stock and warrants pursuant to a note modification agreement, $4.9 million of settlement expense in connection with the cancellation of warrants originally issued to Continental warrant holders, and $4.8 million due to the conversion of the $8.0 million senior convertible notes to our common stock and Series D Cumulative Convertible Preferred Stock and $1.5 million increase in fair value of derivative liability on the $8.0 million senior convertible notes, offset in part by $0.8 million realized gain from sale of our available for sale securities, $0.9 million income resulting from the consideration paid by Amicor in its Option to acquire our uranium exploration properties and $2.5 million other income resulting from the consideration received from the sale of gold exploration properties to Valor Gold.
 
Net Loss
 
As a result of the operating expense and other income (expense) discussed above, we reported a net loss of approximately ($5.1) million for the three months ended September 30, 2012 as compared to a net loss of ($16.5) million for the three months ended September 30, 2011. We reported a net loss of approximately ($45.6) million for the nine months ended September 30, 2012 as compared to a net loss of ($20.3) million for the nine months ended September 30, 2011.
 
 For the year ended December 31, 2011 and the period from February 10, 2010 (inception) to December 31, 2010.
 
Overview
 
Acquisition of Uranium Properties. On July 22, 2011, the Company, Continental Resources Acquisition Sub, Inc., our wholly-owned subsidiary, and Continental entered into an asset purchase agreement and, through Acquisition Sub, closed on the purchase of substantially all of the assets of Continental in consideration for (i) shares of the Company’s common stock equal to a ratio of eight Shares for every 10 shares of Continental’s common stock outstanding; (ii) the assumption of the outstanding warrants to purchase shares of Continental’s common stock (the “Continental Warrants” at a ratio equal to one Warrant to purchase eight shares of our common stock for every Continental Warrant to purchase ten shares Continental’s common stock outstanding at an exercise price equal to such amount as is required pursuant to the terms of the outstanding warrants, and (iii) the assumption of Continental’s 2010 Equity Incentive Plan and all options granted and issued thereunder such that we shall deliver to Continental’s option holders, options to purchase an aggregate of such number of shares of our common stock issuable under our equity incentive plan equal to one option to purchase eight shares of our common stock for every option to purchase 10 shares of Continental’s common stock outstanding with a strike price equal to such amount as is required pursuant to the terms of the outstanding option. The exercise price of the Warrants and the strike price of the Options shall be determined and certified by an officer of the Company. Upon the closing of the Asset Sale, Acquisition Sub assumed the Assumed Liabilities (as defined in the Purchase Agreement) of Continental. After giving effect to the foregoing, we issued 76,095,215 shares of our Common Stock, warrants to purchase 41,566,999 shares of our common stock (the “Company Warrants”), and 2,248,000 stock options following this transaction. Consequently, the issuance of 76,095,215 shares of the Company’s common stock to Continental accounted for approximately 67% of the total issued and outstanding stocks of the Company as of July 22, 2011 and we became a majority owned subsidiary of Continental, the Parent Company. As of December 31, 2011, Continental held a 53.30% interest in the Company.
 
Under the terms of the Purchase Agreement, we purchased from Continental substantially all of Continental’s assets, including, but not limited to, 100% of the outstanding shares of common stock of Continental’s wholly-owned subsidiaries (Green Energy and ND Energy).
 
The Purchase Agreement constitutes a plan of reorganization within the meaning of Treasury Regulations Section 1.368-2(g) and constitutes a plan of liquidation of Continental. We agreed to file a registration statement under the Securities Act of 1933 in connection with liquidation of Continental no later than 30 days following the later of the of (i) the closing date of the Asset Sale or (ii) such date that Continental delivers to the Company its audited financial statements for the fiscal year ended March 31, 2011. Continental will subsequently distribute the registered shares to its shareholders as part of its liquidation, subsequent to such time that such registration statement is declared effective by the SEC. We agreed to use our best efforts to cause such registration to be declared effective within 12 months following the closing date of the asset sale. Continental was expected to liquidate on or prior to July 1, 2012 however, such registration statement filed by us has not been declared effective and as a result, Continental was unable to liquidate prior to July 2012. In August 2012, we entered into an Amendment Agreement with Continental and Acquisition Sub whereby the parties agreed to amend the Asset Purchase Agreement to remove the liquidated damages provision associated with our registration rights obligations.
 
 
16

 
 
Acquisition of Pershing Pass.  On August 30, 2011, we acquired gold exploration claims in Pershing County, near Lovelock, Nevada known as the Relief Canyon Mine, consisting of mining and mill-style claims and related facilities through our wholly owned subsidiary Gold Acquisition Corp. The purchase price for the properties consisted of $12,000,000 of cash and $8,000,000 senior secured convertible promissory notes pursuant to an Order of the Bankruptcy Court approving the sale of real and personal property pursuant to Section 363 of Chapter 11 of the Bankruptcy Code.
 
Disposition of Sports and Entertainment Business. On September 1, 2011, we exited the sports and entertainment business and disposed of our Empire Sports & Entertainment Co. subsidiary pursuant to a Stock Purchase Agreement. We will no longer be engaged in or pursue agreements with artists or athletes for sports and entertainment promotion and events, and are focusing our activities exclusively on our new business segment, gold and previous metals exploration, as a junior exploration company.
 
Net Revenues
 
Our business began on November 30, 2009. On September 1, 2011, we exited the sports and entertainment business and disposed of our Empire Sports & Entertainment Co. subsidiary pursuant to a Stock Purchase Agreement. Accordingly, we are an exploration stage company as defined in ASC 915 “Development Stage Entities” and have generated no revenues to date.
 
Operating Expenses
 
Total operating expenses for the year ended December 31, 2011 as compared to the period from February 10, 2010 (inception) to December 31, 2010 was $12,236,753 and $751,265, respectively, an increase of 11,485,488 or 1,529%. The operating expenses consisted of the following:
 
 
 
Year ended
December 31, 2011
   
Period from
February 10, 2010
(inception) to
December 31, 2010
 
Compensation expense and related taxes
 
$
1,425,451
   
$
228,333
 
Exploration cost
   
2,298,090
     
 
Consulting fees
   
6,475,520
     
354,090
 
General and administrative
   
2,037,692
     
168,842
 
Total
 
$
12,236,753
   
$
751,265
 
 
Compensation expense and related taxes: For the year ended December 31, 2011, and for the period from February 10, 2010 (inception) to December 31, 2010, compensation expense and related taxes were $1,425,451 and $228,333, respectively. Compensation expense and related taxes increased by $1,197,118 or 524% for the year end period. The increase during the year ended December 31, 2011, was primarily attributable to the hiring of our executive employees and additional support staff for our Arttor Gold and Gold Acquisition subsidiaries between June 2011 and September 2011, the recognition of stock-based compensation expense of $405,778 which is attributable to stock options granted to our former chief executive officer, former executive vice president, two directors and former employees, and the recognition of stock-based compensation expense of $626,443 which represents the portion of the vested replacement employee option awards attributable to post-combination services related to the assumption of the stock options of Continental.
Explorations costs: For the year ended December 31, 2011, exploration costs were $2,298,090, an increase of $2,298,090, which includes costs of lease, exploration, carrying and retaining unproven mineral lease properties. We have chosen to expense all exploration costs as incurred given that it is still in the exploration stage. Such exploration costs were for expenses incurred for the Red Rock Mineral Property, the North Battle Mountain Mineral Prospect and Relief Canyon Mine. We did not have a comparable expense during the period from February 10, 2010 (inception) to December 31, 2010.
 
 
17

 
 
 
Consulting fees: For the year ended December 31, 2011, we incurred consulting fees of $6,475,520 as compared to $354,090 for the period from February 10, 2010 (inception) to December 31, 2010, an increase of $6,121,430 or 1,729%. These increases were primarily attributable to the issuance of our common stock for services rendered to a consultant for investor relations and advisory services of $1,117,500, and payment of approximately $1,425,000 in connection with investor relation and consulting agreements during the year ended December 31, 2011. This increase is also primarily attributable to stock-based compensation expense of $238,625 which is related to stock options granted to two consultants, amortization of prepaid consulting services (acquired from Continental) amounting to $1,737,111 in connection with investor relation and consulting agreements, and the recognition of stock-based compensation expense of $1,608,994 which represents the portion of the vested replacement warrant awards attributable to post-combination services from consultants related to the assumption of the stock warrants of Continental for the year ended December 31, 2011.
 
General and administrative expenses: For the year ended December 31, 2011 and for the period from February 10, 2010 (inception) to December 31, 2010, general and administrative expenses consisted of the following:
 
   
Year ended
December 31, 2011
   
Period from
February 10, 2010
(inception) to
December 31, 2010
 
Rent
 
$
56,583
   
$
35,584
 
Professional fees
   
683,125
     
100,106
 
Bad debts expense
   
500,000
     
 
Travel/Entertainment
   
195,661
     
9,113
 
Depreciation
   
325,928
     
8,928
 
Insurance expense
   
79,832
     
10,526
 
Other general and administrative
   
196,563
     
4,585
 
Total
 
$
2,037,692
   
$
168,842
 
 
The overall increase of $1,868,850 or 1,107% and for the year ended December 31, 2011 as compared to the prior period, in general and an administrative expense is primarily related to an increase in accounting, auditing and legal fees in connection with our SEC filings. We also incurred legal fees in connection with litigation matters and general business matters. Additionally, depreciation increased by $317,000 due to the increase in depreciation of our property and equipment as a result of the acquisition of Relief Canyon Mine and bad debts expense increased by $500,000 related to our note receivable issued to Concert International, Inc. The overall increase in general and administrative expenses is also primarily attributable to an increase in operations and the expected overall growth in our business. Our general and administrative expenses during the period from February 10, 2010 (inception) to December 31, 2010 were much lower as we were in our early stages of our operations.
 
Operating Loss from Continuing Operations
 
We reported an operating loss from continuing operations of ($12,236,853) and ($751,265) respectively for the year ended December 31, 2011 and for the period from February 10, 2010 (inception) to December 31, 2010.
 
Other Income (Expenses)
 
Total other expense was $9,232,810 and $0 for the year ended December 31, 2011 and for the period from February 10, 2010 (inception) to December 31, 2010, respectively. The increase is primarily attributable to:
 
 
$5,964,485 in interest expense (net of interest income of $19,376) for the year ended December 31, 2011. Such increase is primarily attributable to the amortization of debt discounts and deferred financing cost on promissory notes of $5,233,317, interest expense of $230,192 in connection with the conversion of notes payable and interest on notes payable and convertible promissory notes issued during fiscal 2011.
 
$5,198,206 derivative expense and $6,902,806 decrease in fair value of derivative liability for the year ended December 31, 2011. We have determined that the terms of the $8 million convertible notes issued to Platinum and Lakewood include a down-round provision under which the conversion price could be affected by future equity offerings undertaken by us, thus such convertible instrument is accounted for as derivative liability and adjusted to fair value through earnings at each reporting date.
 
$4,799,000 settlement expense for the year ended December 31, 2011. On October 3, 2011, the Company, Continental and each of the holders of the Continental Warrants that exercised their Put Right, entered into an Agreement and Release in which we agreed to issue a total of 5,350,000 shares in exchange for the cancellation of 4,280,000 stock warrants to purchase shares of the Company’s common stock (equivalent to 5,350,000 Continental warrants) in connection with the settlement of the Put Rights. Thus the increase is primarily attributable to $4,761,500 in settlement expense which was based on the fair market value of the shares on October 3, 2011.
 
Between November 2011 and December 31, 2011, we have sold mining and drilling equipment with a net book value worth $407,369 to third parties for a sales price of $233,339 realizing a loss on sale of assets of ($174,030). As of December 31, 2011, $99,908 of the sales proceeds was collected in January 2012.
 
 
18

 
 
Discontinued Operations
 
In September 2011, we decided to discontinue our sports and entertainment business. As a result, we will no longer be engaged in or pursue agreements with artists or athletes for sports and entertainment promotion and events, and will focus our activities exclusively on our new business segment, gold exploration as a junior exploration company. Accordingly, all transactions relating to our sports and entertainment business are included in discontinued operations.
 
   
December 31, 2011
   
December 31, 2010
 
Revenues (4)
 
$
3,041,329
   
$
906,639
 
Cost of sales (5)
   
5,060,393
     
444,648
 
Gross (loss) profit
   
(2,019,064
)
   
461,991
 
Operating and other non-operating expenses
   
(2,191,837
)
   
(1,733,223
)
                 
Loss from discontinued operations
 
$
(4,210,901
)
 
$
(1,271,232
)
 
The following table sets forth for the year ended December 31, 2011 and for the period from February 10, 2010 (inception) to December 31, 2010, indicated selected financial data of the Company’s discontinued operations of its sports and entertainment business.
 
On September 1, 2011, we disposed of Empire pursuant to the Stock Purchase Agreement (“SPA”) by and between the Company, Empire and CII. Prior to the purchase, CII was the owner of a 33 1/3% minority interest with Empire in Capital Hoedown, Inc., an Ontario corporation, formed to undertake an event held during August 2011. Pursuant to the SPA, the Company agreed to sell to CII its Empire subsidiary, including the 66.67% equity ownership interest in Capital Hoedown, for $500,000 payable on March 31, 2012 pursuant to a senior promissory note issued by CII to the Company which bears interest at 8% per annum. As a result, on September 1, 2011, Empire and Capital Hoedown are no longer considered subsidiaries of the Company. Such disposal is included in loss from discontinued operations during the year ended December 31, 2011 and is calculated as follows:
 
Consideration received in connection with the SPA:
     
Promissory note from CII
 
$
500,000
 
Total consideration received
   
500,000
 
         
Add: net liabilities of former subsidiaries on September 1, 2011 assumed by CII
   
622,528
 
Gain on disposal of discontinued operations, net of tax
   
1,122,528
 
Loss from discontinued operations
   
(4,210,901)
 
Total loss from discontinued operations, net of tax
 
$
(3,088,373)
 
 
Net Loss
 
As a result of these factors, we reported a net loss ($24,556,772) for the year ended December 31, 2011 as compared to a net loss of ($2,022,497) for the period from February 10, 2010 (inception) to December 31, 2010.
 
Basic and diluted, loss from continuing operations per share was ($0.31) for the year ended December 31, 2011. Basic and diluted, loss from continuing operations per share was ($0.04) for the period from February 10, 2010 (inception) to December 31, 2010.
 
Basic and diluted, loss from discontinued operations per share was ($0.04) for the year ended December 31, 2011. Basic and diluted, loss from discontinued operations per share was ($0.07) for the period from February 10, 2010 (inception) to December 31, 2010.
 
We reported net income (loss) attributable to non-controlling interest of ($1,164) and $0 during the year ended December 31, 2011 and for the period from February 10, 2010 (inception) to December 31, 2010.
 
 
19

 
 
Off-Balance Sheet Arrangements
 
Since our inception, we have not engaged in any off-balance sheet arrangements, including the use of structured finance, special purpose entities or variable interest entities.
 
Liquidity and Capital Resources
 
At September 30, 2012 we had approximately $1.5 million cash and cash equivalents.
 
Our 2012 exploration program is nearly complete. We spent approximately $4.8 million on exploration activities during the nine months ended September 30, 2012 and anticipate spending approximately $0.4 million for the remainder of 2012. Although we expect to have the funds necessary to execute the remainder of our 2012 exploration program, we will require external funding not only to pursue our exploration program but also to maintain our operations beginning in January 2013. Our forecasted total costs for exploration in 2013 are $3.6 million with approximately $3.0 million expected to be spent to expand the deposit and move toward commencing mining at the Relief Canyon Mine property and $0.6 million to be spent on exploration at the Relief Canyon expansion properties.
 
In addition to our exploration program, we are preparing to recommission the gold processing facility on the Relief Canyon Mine site, which is currently in a care and maintenance status. We expect the cost to recommission the facility will be approximately $2.6 million, and our goal is to have it recommissioned by the end of 2013.
 
Our estimated total cost for 2013 of exploration, permitting, landholding, facilities recommissioning and general and administrative is approximately $13 million. As explained in “Prospectus Summary – Relief Canyon Properties” and “Business and Properties—Relief Canyon Properties—2012 and 2013 Exploration and Facilities Recommissioning Program”, currently our main objective is to expand the existing deposit and recommence mining from the existing Relief Canyon Mine. We consider exploration expenditures at our Relief Canyon expansion properties and recommissioning the Relief Canyon processing facility to have a lower priority than exploration expenditures at Relief Canyon Mine. If we do not receive adequate funding we would reduce, postpone, or cancel expenditures at our Relief Canyon expansion properties and Relief Canyon processing facility before reducing, postponing, or cancelling exploration activity at Relief Canyon Mine. If financing is not available, we would be required to preserve our cash by reducing exploration activities at Relief Canyon Mine and general and administrative expenses, and possibly cease operations.
 
We will require funding for the entirety of the amount that we spend in 2013. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. The trading price of our common stock and a downturn in the U.S. equity and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. The inability to obtain additional capital may restrict our ability to grow and may reduce our ability to continue to conduct business operations. If we are unable to obtain additional financing, we will likely be required to curtail our development plans and possibly cease our operations.
 
We have no revenues and do not expect to have revenues for at least the remainder of 2012 and 2013. Therefore our future operations are dependent on our ability to secure additional external funding or through financing activities. Funding may not be available on acceptable terms or at all.
 
Contractual Obligations
 
We have certain fixed contractual obligations and commitments that include future estimated payments. Changes in our business needs, cancellation provisions, changing interest rates, and other factors may result in actual payments differing from the estimates. We cannot provide certainty regarding the timing and amounts of payments. We have presented below a summary of the most significant assumptions used in our determination of amounts presented in the tables, in order to assist in the review of this information within the context of our consolidated financial position, results of operations, and cash flows.
 
 
20

 
 
The following table summarizes our contractual obligations as of September 30, 2012, and the effect these obligations are expected to have on our liquidity and cash flows in future periods:
 
   
Payments Due By Period
 
Contractual Obligations:
 
Total
   
Less than 1 year
   
1-3 Years
   
4-5 Years
   
6-10 Years
 
Note payable– related party
 
$
519,750
   
$
519,750
   
$
   
$
   
$
 
Note payable- unrelated party
   
90,225
     
5,759
     
63,349
     
21,117
     
 
Office lease agreement – Lakewood, Colorado
   
118,205
     
11,054
     
107,151
     
     
 
Work and direct drilling commitment under the 2006 Mineral lease agreement with Newmont*
   
4,500,000
     
     
1,000,000
     
1,000,000
     
2,500,000
 
                                         
Total Contractual Obligations
 
$
5,228,180
   
$
536,563
   
$
1,170,500
   
$
1,021,117
   
$
2,500,000
 
 
*Starting in June 2014, we will be required to spend $0.5 million annually on exploration expenditures or pay Newmont rental payments of $10 per acre per year. The rental payments will escalate by 5% per year. Under the current terms of the 2006 Mineral lease agreement, the annual rental starting in 2014, if we elected not to or failed to incur at least $0.5 million in exploration expenditures per year, would be approximately $0.1 million.
 
Changes in Significant Accounting Policies
 
We did not adopt any new accounting standards during the quarter ended September 30, 2012 nor were there any new accounting pronouncements during the period that would have an impact on our financial position or results of operation.
 
Critical Accounting Policies and Estimates
 
The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Significant estimates made by management include, but are not limited to, the useful life of property and equipment, the fair values of certain promotional contracts and the assumptions used to calculate fair value of options granted and common stock issued for services.
 
Management believes the following critical accounting policies affect the significant judgments and estimates used in the preparation of the financial statements.
 
Principles of Consolidation
 
The condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America and present the financial statements of the Company and our wholly-owned subsidiaries. In the preparation of our consolidated financial statements, intercompany transactions and balances are eliminated and net earnings are reduced by the portion of the net earnings of subsidiaries applicable to non-controlling interests.
 
Use of estimates
 
In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the condensed consolidated balance sheet, and revenues and expenses for the period then ended. Actual results may differ significantly from those estimates. Significant estimates made by management include, but are not limited to, allowance for bad debts, the useful life of property and equipment, the fair values of certain promotional contracts and the assumptions used to calculate fair value of options granted and derivative liability, beneficial conversion of convertible notes payable, capitalized mineral rights, asset valuations, common stock issued for services and common stock issued in connection with an acquisition.
 
Stock-Based Compensation
 
Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC 718 also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain.
 
We record compensation expense based on the fair value of the award at the reporting date. The awards to consultants and other third-parties are then revalued, or the total compensation is recalculated based on the then current fair value, at each subsequent reporting date.
 
 
21

 
 
Property and Equipment
 
Property and equipment are carried at cost. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. We examine the possibility of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. Depreciation is calculated on a straight-line basis over the estimated useful life of the assets, generally one to twenty five years.
 
Mineral Property Acquisition and Exploration Costs
 
Costs of lease, exploration, carrying and retaining unproven mineral lease properties are expensed as incurred. The Company has chosen to expense all mineral exploration costs as incurred given that it is still in the exploration stage. Once the Company has identified proven and probable reserves in its investigation of its properties and upon development of a plan for operating a mine, it would enter the development stage and capitalize future costs until production is established. When a property reaches the production stage, the related capitalized costs will be amortized, using the units-of-production method over the estimated life of the probable-proven reserves. When the Company has capitalized mineral properties, these properties will be periodically assessed for impairment of value and any diminution in value. To date, the Company has not established the commercial feasibility of any exploration prospects; therefore, all costs are being expensed.
 
ASC 930-805, states that mineral rights consist of the legal right to explore, extract, and retain at least a portion of the benefits from mineral deposits. Mining assets include mineral rights. Acquired mineral rights are considered tangible assets under ASC 805. ASC 805 requires that mineral rights be recognized at fair value as of the acquisition date. As a result, our direct costs to acquire mineral rights are initially capitalized as tangible assets. Mineral rights include costs associated with acquiring patented and unpatented mining claims. If proven and probable reserves are established for the property and it has been determined that a mineral property can be economically developed, costs will be amortized using the units-of-production method over the estimated life of the probable reserve. For mineral rights in which proven and probable reserves have not yet been established, we assess the carrying values for impairment at the end of each reporting period and whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
 
Long-Lived Assets
 
We review for impairment whenever events or circumstances indicate that the carrying amount of assets may not be recoverable, pursuant to guidance established in ASC 360-10-35-15, “Impairment or Disposal of Long-Lived Assets”. We recognize an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value.
 
 Recent Accounting Pronouncements
 
In May 2011, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS” (“ASU No. 2011-04”). ASU No. 2011-04 provides guidance which is expected to result in common fair value measurement and disclosure requirements between U.S. GAAP and IFRS. It changes the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. It is not intended for this update to result in a change in the application of the requirements in Topic 820. The amendments in ASU No. 2011-04 are to be applied prospectively. ASU No. 2011-04 is effective for public companies for interim and annual periods beginning after December 15, 2011. Early application is not permitted. This update does not have a material impact on the Company’s consolidated financial statements.
 
In June 2011, the FASB issued ASU No. 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income” (“ASU No. 2011-05”). In ASU No. 2011-05, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. The amendments in ASU No. 2011-05 do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. They also do not change the presentation of related tax effects, before related tax effects, or the portrayal or calculation of earnings per share. The amendments in ASU No. 2011-05 should be applied retrospectively. The amendment is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. Early adoption is permitted, because compliance with the amendments is already permitted. The amendments do not require any transition disclosures. This update does not have a material impact on the Company’s consolidated financial statements.
 
 
22

 
 
In September 2011, the FASB issued ASU No. 2011-08 – Intangibles – Goodwill and Other (ASC Topic 350) – Testing of Goodwill for Impairment. This ASU simplifies how entities test goodwill for impairment. The amendments under this ASU permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. If an entity concludes that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, it would not be required to perform the two-step impairment test for that reporting unit. This ASU is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. This update does not have a material impact on the Company’s consolidated financial statements.
 
On December 31, 2011, the FASB issued ASU No. 2011-11, “Disclosures about Offsetting Assets and Liabilities”, which requires new disclosures about balance sheet offsetting and related arrangements. For derivatives and financial assets and liabilities, the ASU requires disclosure of gross asset and liability amounts, amounts offset on the balance sheet, and amounts subject to the offsetting requirements but not offset on the balance sheet. The ASU is effective for annual reporting periods beginning on or after January 1, 2013. The Company is currently evaluating the impact, if any, that these updates will have on its financial condition, results of operations and cash flows. This update is not expected to have a material impact on the Company’s consolidated financial statements.
 
Other accounting standards that have been issued or proposed by the FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption.
 
 
23

 
 
 
Overview
 
We are a gold and precious metals exploration company pursuing exploration and development opportunities primarily in Nevada. We are currently focused on exploration at our Relief Canyon properties in Pershing County in northwestern Nevada. None of our properties contain proven and probable reserves, and all of our activities on all of our properties are exploratory in nature.
 
Our principal offices are located in Lakewood, Colorado at 1658 Cole Boulevard, Building No. 6, Suite 210, Lakewood, Colorado 80401 and we have an exploration office at 1055 Cornell, Lovelock, Nevada 89419. Our telephone number is 877-705-9357.
 
Corporate Structure
 
We operate our business directly and also through our wholly-owned subsidiary, Gold Acquisition Corp., a Nevada corporation. Gold Acquisition Corp. owns and is conducting exploration on the Relief Canyon Mine property and is recommissioning related plant and equipment. Pershing Gold Corporation owns directly and plans to explore the Relief Canyon expansion properties adjacent to the Relief Canyon Mine. In addition, our wholly-owned subsidiary Pershing Royalty Company, a Delaware corporation, is described below under “Recent Developments – Disposition of Red Rock, North Battle and Centerra Properties,” and our wholly-owned subsidiary EXCX Funding Corp., a Nevada corporation, is party to a credit agreement described in “Certain Relationships And Related Transactions”.
 
Business Strategy
 
Our business strategy is to acquire and advance precious metals exploration properties. We seek properties with known mineralization that are in an advanced stage of exploration and have previously undergone some drilling but are under-explored, which we believe we can advance quickly to increase value. We are currently focused on exploration on the Relief Canyon properties, commencing mining at Relief Canyon Mine and recommissioning the Relief Canyon gold processing facility. We acquired the former Relief Canyon Mine property in August 2011, which includes a processing plant that could be used to process gold from mining operations. We began an exploration drilling program in 2011 that continues in 2012. We expanded our Relief Canyon property position in 2012 significantly with the acquisition of approximately 22,000 acres of unpatented mining claims in the Pershing Pass area.” We refer to our combined land position of approximately 25 square miles along the Humboldt Range, both north and south of the Relief Canyon Mine area as the “Relief Canyon expansion properties”. We refer to the Relief Canyon Mine property and Relief Canyon expansion properties collectively as the “Relief Canyon properties”. We continue drilling to expand the Relief Canyon Mine deposit and aim to obtain a National Instrument 43-101 technical report during the first quarter of 2013.
 
Our 2012 exploration program is nearly complete. We spent approximately $4.8 million on exploration activities during the nine months ended September 30, 2012 and anticipate spending approximately $0.4 million for the remainder of 2012. Although we expect to have the funds necessary to execute the remainder of our 2012 exploration program, we will require external funding not only to pursue our exploration program but also to maintain our operations beginning in 2013. Our forecasted total costs for exploration in 2013 are $3.6 million.
 
In addition to our exploration program, we are preparing to recommission the gold processing facility on the Relief Canyon Mine site, which is currently in a care and maintenance status. We expect the cost to recommission the facility will be approximately $2.6 million, and our goal is to have it recommissioned by the end of 2013.
 
Our estimated total cost for 2013 of exploration, permitting, landholding, facilities recommissioning and general and administrative is approximately $13 million, which includes the 2013 exploration and recommissioning amounts described above, and in more detail below.
 
We intend to continue to acquire additional mineral targets in Nevada and elsewhere at locations where we believe we have the potential to quickly expand and advance known mineralization and the potential to discover new deposits. We will require external funding to pursue our exploration programs. There is no assurance we will be able to raise capital on acceptable terms or at all.
 
If, through our exploration program, we discover an area that may be able to be profitably mined for gold, we would focus most of our activities on determining whether that is feasible, including further delineation of the location, size and economic feasibility of a potential orebody. If our efforts are successful, we anticipate that we would seek additional capital through debt or equity financing to fund further development, or that we would sell or lease the rights to mine to a third party or enter into joint venture or other arrangements. There is no assurance that we could obtain additional capital or a willing third party.
 
 
24

 
 
Recent Developments
 
As part of our focus on the Relief Canyon properties in Pershing County, Nevada, we have completed several transactions since the beginning of 2012 that have focused our efforts on Relief Canyon, added significantly to our Relief Canyon property position and improved our financial position.
 
Acquisition of Additional Properties
 
On March 1, 2012, we purchased approximately 9,700 acres of unpatented mining claims from Silver Scott Mines, Inc. for a total purchase price of $550,000. We refer to these mining claims as the Pershing Pass property. The Pershing Pass property is located to the south of the Relief Canyon mine property.
 
On April 5, 2012, we acquired rights to approximately 13,300 acres of unpatented mining claims and private lands adjacent to the Relief Canyon Mine property from Victoria Gold Corporation. Approximately 8,900 acres of the lands acquired from Victoria Gold Corporation are a leasehold interest comprised of unpatented mining claims and private lands subject to a 2006 lease and sublease with Newmont USA Ltd., which we refer to as the Newmont Leased property. In the transaction with Victoria Gold, we acquired a total of 283 unpatented mining claims owned by Victoria Gold; 221 of these claims are outside of the Newmont Leased property, 62 claims are within the area of interest described in the 2006 lease and sublease. Victoria Gold has reserved a 2% net smelter return production royalty on the 221 unpatented mining claims that it owned outside of the Newmont Leased property. The purchase price for the 13,300 acres we acquired from Victoria Gold Corporation was: (i) $2.0 million in cash, (ii) 10 million shares of our common stock, (iii) warrants to purchase five million shares of our common stock at $0.60 per share, exercisable at any time on or prior to April 5, 2014, and (iv) the 2% net smelter return royalty.
 
Disposition of Uranium Properties
 
On January 26, 2012, we entered into an Option Agreement with Amicor whereby Amicor acquired the option to purchase certain uranium properties and claims from us for a purchase price of $10.00 in consideration for the issuance of (i) 10,000,000 shares of Amicor’s common stock and (ii) a six month promissory note in the aggregate principal amount of $1,000,000. As of June 11, 2012, Amicor had repaid $930,000 towards the principal balance of the Note and Pershing continues to hold an aggregate of 3,073,333 shares of Amicor’s common stock.
 
On June 11, 2012, upon the exercise by Amicor of the Option, we assigned to Amicor our wholly owned subsidiary, Continental Resources Acquisition Sub, Inc., which is the owner of 100% of the issued and outstanding common stock of each of Green Energy (which is the owner of 100% of the issued and outstanding common stock of CPX Uranium, Inc.) and ND Energy. Additionally, ND Energy and Green Energy hold a majority of the outstanding membership interests of Secure Energy LLC. As a result of the assignment of Continental Resources Acquisition Sub, Inc., we divested all of our uranium assets, none of our current operations are focused on uranium exploration and we do not plan to pursue exploration for uranium.
 
Disposition of Red Rock, North Battle and Centerra Properties
 
On May 24, 2012, we entered into a merger agreement with Valor Gold Corp., Valor Gold Acquisition Corp and Red Battle Corp., our newly formed wholly owned subsidiary, which owns 100% of the outstanding membership interests of each of Arttor Gold and Noble Effort. Pursuant to the terms of the merger, Red Battle Corp. merged with and into Valor Gold Acquisition Corp., causing Red Battle Corp. (and, accordingly, Arttor Gold and Noble Effort) to become Valor Gold Corp.’s wholly owned subsidiaries. Arttor Gold and Noble Effort are the leaseholders to the Red Rock, North Battle and Centerra leases. In connection with the merger with Valor Gold Corp., Mr. Leger, the lessor of the Red Rock and North Battle properties leased by Arttor, granted our newly formed, wholly owned subsidiary, Pershing Royalty Company, a non-participating, non-executory perpetual royalty of one percent (1%) of the net smelter returns from all “Valuable Minerals” (as defined in the governing NSR Agreement) mined and removed from the claims.
 
 Relief Canyon Properties
 
The Relief Canyon properties are presently our exclusive area of focus. The Relief Canyon properties contain approximately 24,000 acres and are comprised of approximately 1,000 unpatented mining claims, 118 millsites and private lands.
 
The below map shows the location of the Relief Canyon properties, which include the Relief Canyon Mine property owned by Gold Acquisition Corp., our wholly owned subsidiary, and the Relief Canyon expansion properties held directly by Pershing Gold Corporation. The map also shows the mining claims and private lands that comprise the Newmont Lease property that are subject to the Area of Interest (AOI) defined in the 2006 Newmont lease and sublease.
 
 
25

 
 
 
The Relief Canyon properties are located about 100 miles northeast of Reno, Nevada. The nearest town is Lovelock, Nevada, approximately 15 miles west-southwest from the Relief Canyon Mine property, which can be reached from both Reno and Lovelock on U.S. Interstate 80. The Relief Canyon Mine property is reached from Lovelock by travelling approximately seven miles northeast on I-80 to the Coal Canyon Exit (Exit No. 112), then about 10 miles southeast on Coal Canyon Road (State Route 857, a paved road maintained by Pershing County) to Packard Flat, and then north on a gravel road for two miles. All of the Relief Canyon properties can be accessed by unpaved roads from the Relief Canyon Mine property.
 
Rock Formations and Mineralization. The Relief Canyon properties are located in Pershing County, Nevada at the southern end of the Humboldt Range. The range is underlain by a sequence of late Paleozoic- to Mesozoic-age volcanic and sedimentary rocks. Gold-bearing rocks at the Relief Canyon properties are primarily developed within breccia zones along the contact between the Grass Valley and Cane Springs Formations. Source: Nevada Composite Magnetic Anomaly Map, Nevada, USGS, 2006 by Mine Development Associates dated May 1, 2010.
 
Maintenance of Unpatented Claims at Relief Canyon. In order to maintain ownership of the unpatented mining claims and millsites at the Relief Canyon properties, we are required to make annual claim maintenance payments of $140 per claim or millsite to the U.S. Bureau of Land Management (“BLM”), and to record a notice of intent to hold in the county records, along with county recording fees of $10.50 per claim. Our total estimated property maintenance costs for all of the unpatented mining claims and millsites in the Relief Canyon area in 2012 is $169,183.
 
Environmental Permitting Requirements. On unpatented claims with federally-owned surface, a “Notice of Intent” must be filed with the BLM for all activities involving the disturbance of five acres (two hectares) or less of the surface. A Notice of Intent includes details on the company submitting the notice, maps of the proposed disturbance, equipment to be utilized, the general schedule of operations, a calculation of the total disturbance anticipated, and a detailed reclamation plan and budget. A bond in US currency is required to ensure reclamation and the amount will be determined by the estimated costs to reclaim and re-vegetate the disturbed acreage. The Notice does not have an approval process associated with it but the bond calculation does have to be approved in writing by BLM before work can proceed. It is not necessary to file a Notice of Intent prior to work on private land.
 
 
26

 
 
Measurement of land disturbance is cumulative, and once five acres total has been disturbed and remains unreclaimed in one project area, a “Plan of Operations” must be filed and approved by the BLM before additional work can take place. This too requires a cash bond along with a reclamation plan.
 
Our 2012 exploration permitting and reclamation bonding budget is approximately $228,304. Our estimated 2013 exploration permitting and reclamation bonding budget is $908,500.
 
We have an authorized Plan of Operations from the BLM and a reclamation permit from the Nevada Division of Environmental Protection/Bureau of Mining Regulation and Reclamation (“NDEP”) that includes exploration drilling at the Relief Canyon Mine property. These permits authorize the 2012 exploration drilling program. Future exploration activities may require amendments to these permits. Additionally, a new NDEP reclamation permit will be obtained for future exploration activities on the private lands within the Newmont Leased properties. We also anticipated that one or more new permits will be required from BLM for exploration work on our unpatented mining claims in the Pershing Pass area south of the Relief Canyon Mine property.
 
In addition to the exploration permitting and reclamation bonding budget described above, we also have a mine permitting and reclamation bonding budget. Our 2012 mine permitting and reclamation bonding budget is approximately $284,270. Our estimated 2013 mine permitting and reclamation bonding budget is $560,000.
 
We have provided BLM and NDEP a reclamation bond in the amount of approximately $4.6 million that covers both the exploration and mining features at the Relief Canyon Mine property, including the three open-pit mines and associated waste rock disposal areas, the mineral processing facilities, ancillary facilities, and the exploration roads and drill pads. We will have to provide BLM and NDEP additional financial assurance to guarantee reclamation of any new surface disturbance required to expand the mine or to conduct an expanded exploration drilling program. The mine permitting and reclamation bonding budget numbers presented above include the estimated increases to our reclamation bonding obligation. Our preliminary estimate of the likely amount of additional financial assurance for our exploration activities is approximately $190,000. Our preliminary estimate of the likely amount of additional financial assurance to re-start the mine is $75,000. These amounts are included in the above budgets.
 
Resumption of mining at Relief Canyon Mine may also require amendments to the BLM Plan of Operations and the NDEP reclamation permit. We anticipate that the existing permits can be amended to authorize mining above the water table; however, securing the necessary permits may take longer or cost more than anticipated. We expect BLM may need to prepare an Environmental Assessment prior to approving mining above the water table. Additional permitting would be required in the future to mine below the water table. BLM may need to prepare an Environmental Impact Statement to evaluate the impacts associated with mining below the water table.
 
The Relief Canyon heap leach processing facility is fully permitted. We plan to amend the permit for this facility to authorize processing of ores from other sites outside of the Relief Canyon Mine. We also plan to seek an additional permit to add a gold recovery (strip) circuit to the heap leach facility. We estimate the cost of amending these permits will be less than $10,000.
 
2011 Exploration Program. We commenced our Phase I drilling program at the Relief Canyon Mine property in September 2011; this program was designed to test conceptual targets as well as the continuity and grade of mineralized zones found by previous operators. Our 2011 drill program consisted of eight core holes and five reverse circulation drill holes totaling approximately 12,400 feet to test the North, Southwest and Range Front targets in the Relief Canyon Mine area. In the North Target, we drilled six holes totaling approximately 5,600 feet; in the Southwest Target, we drilled two holes totaling approximately 1,800 feet; and in the Range Front Target, we drilled five holes totaling approximately 4,900 feet. The cost of our 2011 drill program was approximately $1.2 million.
 
The 2011 exploration program delineated additional drilling targets in these areas that we pursued in our 2012 exploration program and plan to continue to explore further in 2013.
 
2012 and 2013 Exploration and Facilities Recommissioning Programs.
 
We have three initiatives at our Relief Canyon properties:
 
 
27

 
 
1. Relief Canyon Mine
 
The main objective of the Company is to expand the existing deposit and commence mining at the existing Relief Canyon Mine. We completed the final phase of drilling for 2012 with an additional 83 holes comprising approximately 27,300 feet. This drilling was on land adjacent to the current deposit in order to extend and upgrade the existing deposit. We have drilled a total of 123 drill holes comprising approximately 58,000 feet at Relief Canyon Mine. We are also completing baseline geologic mapping of the mine pits.
 
We spent approximately $4.3 million on exploration activities at the Relief Canyon Mine during the nine months ended September 30, 2012 and anticipate spending approximately $0.4  million for the remainder of 2012. Our exploration plan for 2013 is to continue to concentrate our resources on the Relief Canyon Mine in order to refine our understanding of the deposit. We currently estimate that full year 2013 exploration costs at Relief Canyon Mine will be approximately $3.0 million. This amount is subject to change and also subject to receiving adequate external financing. If we do not receive adequate financing we will have to curtail our exploration and also delay or cancel commencement of mining at Relief Canyon Mine.
 
Our target is to produce gold in 2014 from newly mined ore, gold-bearing materials on the dumps, and/or toll ores from other properties. The reopening of the Relief Canyon Mine is dependent on obtaining sufficient external funding, the receipt of permits, and expansion of the deposit as a result of our exploration efforts above the water table. Additional permitting will be needed to mine the deposit below the water table. There is no guarantee that we will produce gold in 2014 or at all.
 
2. Relief Canyon Expansion Properties
 
We are conducting generative exploration on the Relief Canyon expansion properties. In 2012, we generated targets through surface sampling, mapping, and geophysics at three specific projects in our Relief Canyon expansion properties: Pershing Pass, Pershing Packard, and South Relief. These areas are shown on our map on page 26.
 
Through November 2012 we drilled four holes comprising approximately 3,000 feet and performed soil sampling, and geochemical and geophysical testing to identify new drill-ready targets. This cost approximately $500,000. Approximately $50,000 of the remainder of the 2012 exploration budget is expected to be spent at the Relief Canyon expansion properties. Our exploration plan for 2013 is to continue to generate targets for future exploration – our goal is to generate four drill-ready targets per year. We currently estimate that full year 2013 exploration costs will be $600,000. This amount would decrease if we do not receive adequate financing, or increase if we have very good exploration results and receive adequate financing. If we do not receive adequate external financing we will have to curtail, postpone or cancel exploration activities.
 
Because the Relief Canyon expansion properties are at an early stage of exploration, it will take at least several years to perform sufficient exploration to determine whether these properties contain mineable reserves that could be put into production in the future. Exploration costs in future years may increase or decrease depending on results and available funding.
 
We consider expenditures on our Relief Canyon expansion properties to have a lower priority than expenditures on the Relief Canyon Mine property. If we do not receive adequate funding, we would reduce, postpone or cancel expenditures at our Relief Canyon expansion properties before reducing, postponing or cancelling exploration activity at Relief Canyon Mine.
 
3. Recommissioning Relief Canyon Processing Facility
 
In June 2012 we began to prepare the Relief Canyon heap leach processing facility for recommissioning. The Relief Canyon processing facility was completed in 2008, is fully permitted, and is currently in a care and maintenance status.
 
We plan to amend the permits for this facility to authorize processing of ores from sites outside of Relief Canyon Mine and to add a gold recovery (strip) circuit. If there are delays in obtaining the permit to leach ores from other sites, we would only be able to leach ores from the Relief Canyon Mine. If we make a future discovery of mineable reserves at the Relief Canyon expansion properties, we would seek an amendment to the permits for the Relief Canyon processing facility to expand the capacity of the leach pad and ponds to accommodate additional ore. If there are delays in obtaining the permit to add the gold recovery system, we would sell gold-loaded carbon to another facility that would recover/strip the gold.
 
In order to recommission the facility, from now through the end of 2013 we anticipate our activities will include construction on the site such as building a lab facility and core shack, engineering, design and construction of the pollution control devices for the strip circuit, improving the computer system, and purchasing equipment such as crusher repair parts and start up supplies like lime and cyanide. Once recommissioned and amended permits received, the Relief Canyon heap leach processing facility would be available to process newly mined ores from the Relief Canyon Mine, previously leached heaps, gold-bearing waste rocks on existing waste rock dumps, as well as materials from other mines. We expect the total cost to recommission the facility will be approximately $2.6 million, and our goal is to have it recommissioned by the end of 2013. If we are unable to raise adequate external funding we would reduce or cancel this recommissioning activity.
 
 
28

 
 
We consider expenditures on recommissioning the Relief Canyon processing facility to have a lower priority than expenditures on Relief Canyon Mine. If we do not receive adequate funding, we would reduce, postpone or cancel expenditures at our Relief Canyon processing facility before reducing, postponing or cancelling exploration activity Relief Canyon Mine.
 
Additional information regarding the Relief Canyon properties follows.
 
Relief Canyon Mine Property
 
Through our wholly-owned subsidiary, Gold Acquisition Corp., we own 84 unpatented lode mining claims and 118 unpatented millsites at the Relief Canyon Mine property. The property includes the Relief Canyon Mine and gold processing facility, currently in a care and maintenance status. The Relief Canyon Mine includes three open pit mines, heap leach pads comprised of six cells, two solution ponds and a cement block constructed adsorption desorption-recovery (ADR) solution processing circuit. The ADR type process plant consists of four carbon columns, acid wash system, stripping vessel, and electrolytic cells. The process facility was completed in 2008 and produced gold until 2009 by Firstgold Corp. The facilities are generally in good condition.
 
Adequate line power is available to the site to operate the existing process facility and ancillary facilities. There is a generator onsite to provide power for the crusher and a backup generator that could provide 100% of the required power for process facility and heap leach operation in the event of power outages. Sufficient water rights to operate the facility have been appropriated with two operating and permitted wells serving current needs.
 
Title and Ownership Rights. The Relief Canyon Mine property was most recently owned and operated by Firstgold Corp. Firstgold Corp. ceased operations at Relief Canyon in 2009 and filed for bankruptcy in January 2010. On December 17, 2010, the Court entered its Order Authorizing And Approving: (1) Sale Of Real Property And Certain Personal Property Assets Pursuant To 11 U.S.C. §363 Free And Clear Of Liens, Claims, and Interests; and (2) Assumption and Assignment Of Executory Contracts and Unexpired Leases Under 11 U.S.C. § 365; and (3) Related Relief entered December 17, 2010 (the “Sale Order”), pursuant to which Platinum Long Term Growth LLC (“Platinum”) was approved as the successful “back up bidder” for certain assets including the Relief Canyon Mine. On August 30, 2011, pursuant to the Sale Order, the Company (through a wholly owned subsidiary) purchased 100% of the Relief Canyon Mine property and related assets for an aggregate purchase price of $12.0 million cash paid at closing and $8.0 million of senior Notes issued to former creditors of Firstgold Corp. The Notes were redeemed in March 2012 as described above under “Recent Developments”.
 
The Relief Canyon Mine property is burdened by a production royalty equal to 2% of net smelter returns payable to Battle Mountain Gold Exploration LLC (now owned by Royal Gold).
 
History of Previous Operations. Gold was first discovered on the property by the Duval Corp. in 1979. Subsequent exploration was performed by various companies including Lacana Mining, Santa Fe Gold Corp., and Pegasus Gold Inc. Firstgold Corp. acquired the property in 1995 and explored and produced gold periodically from 1995 until 2009. Because gold has been produced on the Relief Canyon Mine property, it has “known mineralization”.
 
Newmont Leased Property
 
As discussed above under “—Recent Developments”, in early April 2012, we acquired Victoria Gold Corp’s interests in approximately 13,300 acres comprised of mining claims owned by Victoria Gold Corp. and a leasehold interest in mining claims and private lands pursuant to a 2006 lease and sublease with Newmont. The western edge of the south pit of Relief Canyon Mine is on a section of the private land within the Newmont Leased property. Sporadic exploration has previously occurred on the property and there are a few old workings on portions of the properties.
 
Title and Ownership Rights. Approximately 283 unpatented lode mining claims covering about 5,660 acres were located and owned directly by Victoria Resources (US) Inc., a wholly-owned subsidiary of Victoria Gold Corp., prior to our purchase. Victoria Gold has reserved a 2% net smelter return production royalty on the 221 claims which are located outside the area of interest related to the Newmont Leased properties, discussed below.
 
We acquired our interest in approximately 8,900 acres of the property by acquiring Victoria Gold’s rights under the 2006 Minerals Lease and Sublease with Newmont. The Newmont Leased properties consist of 155 unpatented lode mining claims owned by Newmont comprising approximately 2,800 acres, approximately 4,900 acres of privately-owned fee minerals leased by Newmont from the owners, and 62 unpatented mining claims that were owned by Victoria within the Newmont Leased property and area of interest. The private lands have been leased by Newmont pursuant to three separate agreements (collectively, the “Underlying Mineral Leases”): (i) a Minerals Lease dated August 17, 1987 (the “1987 Minerals Lease”), between Southern Pacific Land Company and SFP Minerals Corporation (predecessor-in-interest to Newmont); (ii) a Mining Lease dated June 1, 1994 (the “1994 Mining Lease”), between The Atchison, Topeka and Santa Fe Railway Company and Santa Fe Pacific Gold Corporation (predecessor-in-interest to Newmont); and (iii) a Mining Lease dated March 23, 1999 (the “1999 Mining Lease”), between Nevada Land & Resource Company, LLC (successor-in-interest to the lessors) and Santa Fe Pacific Gold corporation (predecessor-in-interest to Newmont).
 
 
29

 
 
Newmont is the lessee and New Nevada Resources LLC (“NNR”), successor-in-interest to Nevada Land & Resource Company, LLC, is the lessor under the 1987 Minerals Lease and the 1994 and 1999 Mining Leases. The terms of the Underlying Mineral Leases expire in 2012, 2014 and 2019, respectively. Newmont’s position is that the 1987 Minerals Lease will not expire in 2012 because the exploration activities that we and other mining companies with leasehold interests on other lands subject to the 1987 Minerals Lease are conducting cause the lease to remain in effect.
 
In order to maintain the 2006 Minerals Lease and Sublease with Newmont, we were required to spend approximately $0.8 million in direct drilling expenses on lands within the Newmont Leased properties by June 15, 2012 and we will be required to spend $1.0 million in exploration expenses in 2013. We have satisfied the 2012 direct drilling work commitment, as explained below under “Status of Work Commitment”. Under the current terms of the Newmont agreement, failure to satisfy the exploration expenditures in 2013 could result in forfeiture of the lease and sublease. Starting in 2014, we will be required to spend $0.5 million on exploration expenditures or pay Newmont rental payments of $10 per acre per year. The rental payments will escalate by 5% per year. Under the current terms of the 2006 Minerals Lease and Sublease, the annual rental for 2014, if we elected not to or failed to incur at least $0.5 million in exploration expenditures, would be approximately $0.1 million. We are also required to reimburse Newmont for advance royalty payments made by Newmont to the lessor each year under the underlying leases. For 2012 and 2013, that reimbursement amount is $2,800.
 
Under the 2006 Minerals Lease and Sublease, if we decide to commence mine construction activities in anticipation of mining on any portion of the properties covered thereby (i.e., the properties subject to the area of interest shown on the above map of the Relief Canyon properties), we are required to notify Newmont and provide Newmont with a copy of a positive feasibility study covering the property on which we intend to commence production, as well as additional information. Newmont has the right at any time until we deliver a positive feasibility study on the Newmont Leased property that is subject to the Newmont area of interest (shown on the map on page 26) and for a period of 90 days thereafter either (i) to elect to enter into a joint venture agreement with us covering all of the Newmont Leased properties and governing the development of the Newmont Leased properties going forward, which we refer to as the “Venture Option”, in which case Newmont is required to reimburse us for 250% of the expenditures incurred since March 29, 2006, and with respect to which Newmont will have a 51% participating interest and we will have a 49% participating interest, or (ii) if Newmont does not elect the Venture Option, to convey the Newmont Leased properties to us, reserving the 3% to 5% sliding scale net smelter returns royalty discussed in the following paragraph, and to receive a $1.5 million production bonus on the commencement of commercial production. The Relief Canyon Mine properties held by Gold Acquisition Corp. and 221 of the 283 unpatented mining claims acquired from Victoria Gold are not subject to the 2006 Minerals Lease and Sublease, including the Newmont area of interest.
 
Pursuant to the 2006 Minerals Lease and Sublease, we are subject to a 3% to 5% net smelter royalty tied to the gold price in the event Newmont elects not to pursue the Venture Option and quitclaims the claims and leased lands to us. The 5% net smelter royalty would apply if the monthly average gold price is equal to or greater than $400 per ounce. In addition, we are subject to a 2.5% net smelter returns royalty payable to the lessor, NNR, on approximately 800 acres of the Newmont Leased properties under the 1994 Mining Lease and a 3.5% net smelter returns royalty payable to the lessor, NNR, on approximately 495 acres of the Newmont Leased properties under the 1999 Mining Lease; these royalties offset the Newmont royalty down to 2%.
 
Status of Work Commitment. We completed our 2012 and a portion of the 2013 annual work commitment pursuant to our lease and sublease with Newmont by drilling 23 core holes and performing geophysical surveys on the private lands and mining claims we sublease and lease from Newmont. The map on page 26 shows the private lands and mining claims within the area of interest “AOI” on which the work commitment must be spent. The amounts we have spent and plan to spend on the Newmont work commitment are included in the exploration amounts disclosed above and below in the Relief Canyon Mine and Relief Canyon expansion properties exploration amounts (see “Prospectus Summary- Relief Canyon Properties” and “Business and Properties- Relief Canyon Properties- 2012 and 2013 Exploration and Facilities Recommissioning Program”.
 
Pershing Pass Property
 
We acquired the Pershing Pass property from Silver Scott Mines, Inc. in March 2012. Pershing Pass consists of 489 unpatented lode mining claims (30 of which were acquired in February 2012) covering approximately 9,700 acres. Silver Scott Mines, Inc. located the claims and was the sole owner of the Pershing Pass property prior to our purchase. There is evidence of historic mining activity in a few locations on the Pershing Pass property.
 
Employees
 
We currently have 17 full-time employees and two part-time employees. We believe that our relations with our employees are good. In the future, if our activities grow, we may hire personnel on an as-needed basis. For the foreseeable future, we plan to engage geologists, engineers and other consultants as necessary.
 
 
30

 
 
Compliance with Government Regulation
 
Various levels of governmental controls and regulations address, among other things, the environmental impact of mineral exploration operations and establish requirements for reclamation of mineral exploration properties after exploration operations have ceased. With respect to the regulation of mineral exploration, legislation and regulations in various jurisdictions establish performance standards, air and water quality emission standards and other design or operational requirements for various aspects of the operations, including health and safety standards. Legislation and regulations also establish requirements for reclamation and rehabilitation of mining properties following the cessation of operations and may require that some former mining properties be managed for long periods of time after mining activities have ceased.
 
Our exploration activities are subject to various levels of federal and state laws and regulations relating to protection of the environment, including requirements for closure and reclamation of mineral exploration properties. Some of the laws and regulations include the Clean Air Act, the Clean Water Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Emergency Planning and Community Right-to-Know Act, the Endangered Species Act, the Federal Land Policy and Management Act, the National Environmental Policy Act, the Resource Conservation and Recovery Act, and related state laws in Nevada. Additionally, much of our property is subject to the federal General Mining Law of 1872, which regulates how mining claims on federal lands are located and maintained.
 
The State of Nevada, where we intend to focus our mineral exploration efforts, requires mining projects to obtain a Nevada State Reclamation Permit pursuant to the Mined Land Reclamation Act (the “Nevada MLR Act”), which establishes reclamation and financial assurance requirements for all mining operations in the state. New and expanding facilities are required to provide a reclamation plan and financial assurance to ensure that the reclamation plan is implemented upon completion of operations. The Nevada MLR Act also requires reclamation plans and permits for exploration projects that will result in more than five acres of surface disturbance on private lands.
 
As discussed above, we have an authorized Plan of Operations from the BLM and a Reclamation Permit NDEP, which authorizes our 2012 drilling program at Relief Canyon. In addition, we plan to secure a new NDEP Reclamation Permit in order to conduct exploration activities on the private lands leased and subleased from Newmont. We plan to apply for additional required permits to conduct our exploration programs as necessary. These permits would be obtained from either the BLM or the NDEP. Obtaining such permits will require the posting of additional bonds for subsequent reclamation of disturbances caused by exploration. Delays in the granting of permits or permit amendments are not uncommon, and any delays in the granting of permits may adversely affect our exploration activities.
 
We do not anticipate discharging water into active streams, creeks, rivers, lakes because there are no bodies of water near the Relief Canyon project area. We also do not anticipate disturbing any endangered species or archaeological sites or causing damage to our property. Re-contouring and re-vegetation of disturbed surface areas will be completed pursuant to the applicable permits. The cost of reclamation work varies according to the degree of physical disturbance. It is difficult to estimate the future cost of compliance with environmental laws since the full nature and extent of our future activities cannot be determined at this time.
 
Corporate Information
 
Headquarters – Lakewood, Colorado
 
We maintain a 2,390 square foot office suite at 1658 Cole Boulevard, Building 6, Suite 210, Lakewood, CO 80401, that consists of five offices, one conference room, a reception area, kitchen, patio, and telecom/server/file room. This lease also includes access to an on-site storage space. The term of the lease is from February 15, 2012 through April 30, 2015. We pay rental payments of $3,685 per month. Our telephone number is 877-705-9357.
 
Lovelock Office/Mine Facilities – Lovelock, Nevada
 
The Relief Canyon Mine is comprised of two facilities. The first is an office building located in Lovelock, Nevada that is used for administrative and regional tasks. This office includes facilities for the accounting personnel, GIS, geology and environmental personnel. The mine site consists of an open pit gold mine that is currently in a care and maintenance status. The mine site contains equipment and support facilities for the ongoing exploration and development work at the site. The processing facilities include a 10,000 ton per day crushing equipment, and processing facilities newly built for the mine in 2008. Also onsite are administrative, warehouse and maintenance facilities, comparable to other similarly sized mines in the area. The mine and processing facility is located on BLM-administered ground and is located approximately 24 miles NNE of Lovelock, Nevada.
 
The Company believes that the facilities outlined above are adequate to support our current needs.
 
 
31

 
 
Company History
 
Golden Empire, LLC, a New Jersey limited liability company, was formed and commenced operations on November 30, 2009 and was principally engaged in the production and promotion of music and sporting events. The Empire Sports & Entertainment, Co. was a privately held corporation incorporated in Nevada on February 10, 2010 to succeed to the business of Golden Empire, LLC. On February 10, 2010, The Empire Sports & Entertainment, Co. assumed all assets, liabilities and certain promotion rights agreements entered into by Golden Empire LLC and Golden Empire LLC ceased operations on that date.
 
We were incorporated in Nevada on August 2, 2007 under the name “Excel Global, Inc.” and operated as a web-based service provider and consulting company. On September 27, 2010, we changed our name to “The Empire Sports & Entertainment Holdings Co.” and on September 29, 2010, we entered into a share exchange agreement with The Empire Sports & Entertainment, Co. and the shareholders of The Empire Sports & Entertainment, Co. Pursuant to the share exchange agreement, the shareholders transferred to us all of the issued and outstanding capital stock of The Empire Sports & Entertainment, Co. As a result of this share exchange, The Empire Sports & Entertainment, Co. became our wholly-owned subsidiary.
 
Immediately following the share exchange, we transferred all of our pre-share exchange operating assets and liabilities to our former wholly owned subsidiary, Excel Global Holdings, Inc., a Nevada corporation, and transferred all of Excel Global Holdings, Inc.’s outstanding capital stock to our then-majority stockholders in exchange for cancellation of shares of our common stock held by such stockholders. After the share exchange and the divestiture of our pre-share exchange operating assets and liabilities we succeeded to the business of The Empire Sports & Entertainment, Co., which was our sole line of business until September 1, 2011 when we exited the sports and entertainment business and disposed of our subsidiary Empire Sports & Entertainment Co.
 
Legal Proceedings
 
Relief Gold
 
Relief Gold Group, Inc., v Sagebrush Gold Ltd, Gold Acquisition Corp., Barry C. Honig, and David S. Rector (12 civ 0952)
 
On February 7, 2012, the Company obtained a copy of a complaint filed in the United States District Court for the Southern District of New York (the “Complaint”) entitled Relief Gold Group, Inc., v Sagebrush Gold Ltd, Gold Acquisition Corp., Barry C. Honig, and David S. Rector (12 civ 0952). Relief Gold alleges various causes of action including breach of contract, intentional interference with contract, intentional interference with prospective business relationship/economic relations, misappropriation of trade secrets and unjust enrichment, related to the Company’s acquisition on August 30, 2011 of the assets of the Relief Canyon Mine pursuant to Chapter 11 of the Bankruptcy Code. Relief Gold seeks money damages and to enjoin Sagebrush, Honig, Rector and GAC from exercising its rights and privileges gained or acquired as a result of any alleged unlawful conduct, including any management rights over GAC or the assets acquired by GAC as a result of the alleged wrongful conduct of the other defendants. Relief Gold further seeks to disgorge the profits, benefits and any other advantages gained by reason of the alleged unlawful conduct. On September 18, 2012, a stipulation and order to transfer the case to the Northern District of Nevada was filed and the case was transferred to said court.
 
The Company disputes the allegations in the Complaint and believes the Complaint to be wholly without merit and intends vigorously to defend the claims. On or about February 29, 2012, Gold Acquisition Corp. commenced an adversary proceeding in the United States Bankruptcy Court for the District of Nevada against FirstGold, Terence Lynch and Relief Gold Group, and moved, by order to show cause, for a preliminary injunction and temporary restraining order staying the prosecution of the above-referenced action pending in the Southern District. The motion for a preliminary injunction was denied on or about March 15, 2012. The Company served and filed its Answer to the Complaint on May 24, 2012, in which it denied the material allegations of the Complaint and asserted a number of affirmative defenses.
 
Gold Acquisition Corp., v FirstGold Corp. et al (Case No. 12-05013-GWZ)
 
On or about February 29, 2012, Gold Acquisition Corp. ("GAC") commenced an adversary proceeding in the United States Bankruptcy Court for the District of Nevada against FirstGold, Terence Lynch and Relief Gold Group, and moved, by order to show cause, for a preliminary injunction and temporary restraining order staying the prosecution of the above-referenced action pending in the Southern District. The motion for a preliminary injunction was denied on or about March 15, 2012. Firstgold filed a motion to dismiss the complaint on April 23, 2012. On June 27, 2012, the Court ordered a "stand still" of this litigation, effectively staying any further action, until December 12, 2012.
 
GAC also filed a Motion for Order to Show Cause in Firstgold’s main bankruptcy action Case No. 10-50215-GWZ requesting that the court require Firstgold to complete documentation for conveyance of property. That motion was granted on or about February 28, 2012.
 
 
32

 
 
Briggs
 
On January 24, 2011, Shannon Briggs filed suit against Gregory D. Cohen, Sheldon Finkel, Barry Honig, The Empire Sports & Entertainment Co., and The Empire Sports & Entertainment Holdings Co. in the Supreme Court of the State of New York, County of New York (Case No. 100 938/11).
 
On December 1, 2011, the Company entered into a settlement agreement with Shannon Briggs pursuant to which Mr. Briggs and the Company agreed to settle all claims and exchange releases. Under the terms of the settlement the Company agreed to: (i) the termination of that certain Lockup Agreement dated as of July 22, 2010 permitting sale of 400,000 shares of the Company’s common stock which were transferred by Mr. Briggs in a privately negotiated transaction; (ii) payment to Mr. Briggs of $37,500; and (iii) assignment of the Company’s right to certain proceeds from future boxing matches. The parties agreed to the discontinuation of all legal proceedings and dismissal of the arbitration commenced by Mr. Briggs.
 
AQR
 
On August 24, 2011, AQR Opportunistic Premium Offshore Fund, L.P. (“AQR Offshore”) filed a complaint against the Company in the United States District Court for the Southern District of New York (Case No. 11CIV5933). The plaintiff sought to enforce it rights under a warrant to purchase shares of common stock (the “Warrant”) of Continental Resources Group, Inc. (“Continental”). On July 22, 2011, the Company acquired all of the assets of Continental through its wholly owned subsidiary Continental Resources Acquisition Sub, Inc. and assumed Continental’s entire obligation under the Warrant in connection with the asset purchase agreement. The plaintiff alleged that the Company breached certain of its obligations under Section 5(f) of the Warrant by refusing to purchase the Warrant for the Black Scholes value thereof. The plaintiff sued for damages of approximately $128,000 plus attorneys’ fees and costs. The Company disputed the material allegations of the complaint. On September 23, 2011, the Company entered into a mutual release agreement (the “Release Agreement”) with Continental, AQR Offshore, CNH Diversified Opportunities Master Account, L.P. (“CNH”), AQR Funds-AQR Diversified Arbitrage Fund (“AQR Diversified”) and Advanced Series Trust, acting solely on behalf of AST Academic Strategies Asset Allocation Portfolio (“AST” and, together with AQR Offshore, CNH and AQR Diversified, the “Claimants”). The Release Agreement provides that the Company and Continental, on the one hand, and the Claimants, on the other hand, release each other from all claims, actions, and damages they may have against each other for any reason relating to the Company, Continental, the Claimants or any of their respective subsidiaries arising from the beginning of the world to the date and time of the Release Agreement. Simultaneously with the execution of the Release Agreement, AQR Offshore delivered to counsel for the Company a Stipulation of Dismissal, executed by counsel for the Claimants, dismissing its complaint, and filed the Stipulation of Dismissal with the Court.
 
 
33

 
 
 
The following table sets forth information regarding the members of our board of directors and our officers. All directors hold office for one-year terms until the election and qualification of their successors. Officers are appointed by the board of directors and serve at the discretion of the board.
 
Name
 
Age
 
Position with the Company
         
Stephen Alfers
 
66
 
Chief Executive Officer, President and Chairman
         
Eric Alexander
 
46
 
Vice President Finance and Controller
         
Alex Morrison
 
49
 
Director
         
Barry Honig
 
40
 
Director
 
Stephen Alfers, Chief Executive Officer, President and Chairman, was appointed as our Chief Executive Officer and Chairman on February 9, 2012. Mr. Alfers was appointed as our President on August 6, 2012. Mr. Alfers served as the President and Chief of U.S. Operations of Franco-Nevada Corporation from 2010 to 2011 and its Vice President (Legal) from 2007 to 2009. Mr. Alfers served as President of Franco-Nevada US Corporation, the wholly owned subsidiary of Franco-Nevada Corporation, from 2010 to 2011. Mr. Alfers served as the President and Chief Executive Officer of NewWest Gold Corporation, a publicly-traded Canadian corporation listed on the Toronto Stock Exchange, from 2006 to 2007. Mr. Alfers also served on the Board of Directors of NewWest Gold Corporation from 2005 to 2007. Mr. Alfers served as President and Chief Executive Officer of the NewWest Resources Group from 2001 to 2005 and President and Chief Executive Officer of NewWest Gold Corporation, a privately-held Delaware Corporation, from 2005 to 2006. Mr. Alfers was the founder and managing partner of Alfers & Carver LLC from 1995 to 2001, a boutique natural resources law firm. Mr. Alfers has also been the President of Alfers Mining Consulting since 2007. Mr. Alfers received a J.D. from the University of Virginia, an M.A. in Monetary Policy and Public Finance from the University of Denver and a B.A. in Economics from the University of Denver. Mr. Alfers was chosen to be a director of the Company based on his extensive mining industry and operational experience, and his mining industry legal expertise.
 
Eric Alexander, Vice President Finance and Controller, joined Pershing in September 2012. Prior to joining us, Mr. Alexander was the Corporate Controller for Sunshine Silver Mines Corporation, a privately held mining company with exploration and pre-development properties in Idaho and Mexico, from March 2011 to August 2012. He was Manager with Hein & Associates LLP from July 2010 to March 2011. He was also the Corporate Controller for Golden Minerals Company (successor to Apex Silver Mines Limited), a US and Canadian publicly traded international mining company with operations and exploration activities in South America and Mexico from July 2007 to May 2010. In addition to working in industry he also held the position of Senior Manager with the public accounting firm KPMG LLP, focusing on mining and energy clients. Mr. Alexander has a B.S. in Business Administration (concentrations in Accounting and Finance) from the State University of New York at Buffalo and is also a licensed CPA.
 
Alexander G. Morrison, Director, is a mining executive, chartered accountant and certified public accountant with over 26 years of experience in the mining industry. He currently serves on the boards of Detour Gold Corporation and Taseko Mines Limited. Mr. Morrison has held senior executive positions at a number of mining companies, most recently serving as Vice President and Chief Financial Officer of Franco-Nevada Corporation from 2007 to 2010. From 2002 to 2007, Mr. Morrison held increasingly senior positions at Newmont Mining Corporation, including Vice President, Operations Services and Vice President, Information Technology. Prior to that, Mr. Morrison was Vice President and Chief Financial Officer of NovaGold Resources, Inc. and Vice President and Controller at Homestake Mining Company and held senior financial positions at Phelps Dodge Corporation and Stillwater Mining Company. In addition, periodically between 2007 and the present, Mr. Morrison has performed financial consulting services for mining companies. Mr. Morrison began his career with PricewaterhouseCoopers LLP after obtaining his Bachelor of Arts in Business Administration from Trinity Western University. Mr. Morrison was selected to serve as our director due to his extensive mining resource and business experience and his financial expertise.
 
Barry Honig, Director, was appointed as our Co-Chairman on September 29, 2010 and served as our Chairman from September 2, 2011 to February 9, 2012. Since January 2004, Mr. Honig has been the President of GRQ Consultants, Inc., and is a private investor and consultant to early stage companies. Mr. Honig’s expertise includes early stage company capital restructuring, debt financing, capital introductions, and mergers and acquisitions. Mr. Honig sits on the board of several private companies. In addition. Mr. Honig has served as a director of Chromadex Corporation since October 2011 and served as the Co-Chairman of InterCLICK, Inc. from August 2007 through December 2011. Mr. Honig was appointed the co-Chairman of Chromadex Corp. on October 14, 2011. Mr. Honig was selected to serve as our director due to his extensive knowledge of the capital markets, his judgment in assessing business strategies and accompanying risks, and his expertise with emerging growth companies.
 
There are no family relationships among the executive officers and directors.
 
 
34

 
 
Board Committees
 
Audit Committee. We intend to establish an audit committee of the board of directors once we have satisfied the other initial listing standards for listing our common stock on the NYSE MKT or another national exchange. The audit committee will consist of independent directors, of which at least one director will qualify as a qualified financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. The audit committee’s duties will be to recommend to our board of directors the engagement of independent auditors to audit our financial statements and to review our accounting and auditing principles. The audit committee will review the scope, timing and fees for the annual audit and the results of audit examinations performed by the internal auditors and independent public accountants, including their recommendations to improve the system of accounting and internal controls. The audit committee will at all times be composed exclusively of directors who are, in the opinion of our board of directors, free from any relationship that would interfere with the exercise of independent judgment as a committee member and who possess an understanding of financial statements and generally accepted accounting principles.
 
Compensation Committee. We intend to establish a compensation committee of the board of directors once we have satisfied the other initial listing standards for listing our common stock on the NYSE MKT or another national exchange. The compensation committee will review and approve our salary and benefits policies, including compensation of executive officers. The compensation committee will also administer our stock option plans and recommend and approve grants of stock options under such plans.
 
Compensation Committee Interlocks and Insider Participation
 
During the fiscal year ended December 31, 2011, all executive officer compensation was determined by our board of directors, who included Mr. Honig, Mr. Rector (appointed August 8, 2011 and resigned on November 20, 2012), Mr. Finkel (resigned September 2, 2011) and Mr. Cohen (resigned March 29, 2011).
 
Director or Officer Involvement in Certain Legal Proceedings
 
Our directors and executive officers were not involved in any legal proceedings as described in Item 401(f) of Regulation S-K in the past ten years.
 
Board Independence
 
We currently have three directors serving on our Board of Directors: Mr. Morrison, Mr. Honig and Mr. Alfers. We are not listed on a national securities exchange and, as such, are not subject to any director independence standards. Using the definition of independence set forth in the rules of the NYSE MKT, one of our directors would be considered an independent director of the Company.
 
Corporate Governance
 
Meetings and Committees of the Board of Directors
 
Our Board of Directors held two formal meetings during the year ended December 31, 2011.
 
We currently do not maintain any committees of the Board of Directors. Given our size and the development of our business to date, we believe that the board through its meetings can perform all of the duties and responsibilities which might be contemplated by a committee.
 
Except as may be provided in our bylaws, we do not currently have specified procedures in place pursuant to which whereby security holders may recommend nominees to the Board of Directors.
 
Board Leadership Structure and Role in Risk Oversight
 
Although we have not adopted a formal policy on whether the Chairman and Chief Executive Officer positions should be separate or combined, we have traditionally determined that it is in the best interests of the Company and its shareholders to partially combine these roles. Due to the small size of the Company, we believe it is currently most effective to have the Chairman and Chief Executive Officer positions partially combined.
 
Our Board of Directors is primarily responsible for overseeing our risk management processes. The Board of Directors receives and reviews periodic reports from management, auditors, legal counsel, and others, as considered appropriate regarding our company’s assessment of risks. The Board of Directors focuses on the most significant risks facing our company and our company’s general risk management strategy, and also ensures that risks undertaken by our company are consistent with the Board’s appetite for risk. While the Board oversees our company, our company’s management is responsible for day-to-day risk management processes. We believe this division of responsibilities is the most effective approach for addressing the risks facing our company and that our Board leadership structure supports this approach.
 
 
35

 
 
Code of Ethics
 
We have not yet adopted a Code of Ethics although we expect to as we develop our infrastructure and business.
 
Board Diversity
 
While we do not have a formal policy on diversity, our Board considers diversity to include the skill set, background, reputation, type and length of business experience of our Board members as well as a particular nominee’s contributions to that mix. Although there are many other factors, the Board seeks individuals with experience on public company boards as well as experience with advertising, marketing, legal and accounting skills.
 
Section 16(a) Beneficial Ownership Reporting Compliance
 
Section 16(a) of the Exchange Act requires our directors, executive officers, and persons who own more than 10% of our common stock to file reports of ownership and changes in ownership of our common stock with the SEC. Based on the information available to us during 2011, we believe that all applicable Section 16(a) filing requirements were met on a timely basis.
 
 
Summary Compensation Table
 
The following table summarizes the overall compensation earned over each of the past two fiscal years ended December 31, 2011 by (1) each person who served as our principal executive officer during fiscal 2011; and (2) our two most highly compensated executive officers as of December 31, 2011 with compensation during fiscal 2011 of $100,000 or more (the “Named Executive Officers”). The value attributable to any Option Awards and Stock Awards reflects the grant date fair values of stock awards calculated in accordance with FASB Accounting Standards Codification Topic 718. As described further in Note 11 – Stockholders’ Equity – Common Stock Options to our consolidated year-end financial statements, a discussion of the assumptions made in the valuation of these option awards and stock awards.
Name and Principal Position
 
Year
 
Salary ($)
   
Bonus ($)
   
Option Awards ($) (1)
   
Stock Awards ($)
   
All Other Compensation ($)
   
Total ($)
 
Gregory Cohen (2)
 
2011
   
45,000
     
     
     
     
19,000
(3)
   
64,000
 
Former President, Former Chief Operating Officer, Former Secretary and a former director
 
2010
   
90,000
     
     
360,000
(4)
   
     
     
450,000
 
Sheldon Finkel (5)
 
2011
   
312,500
     
     
     
     
     
312,500
 
Former Co-Chairman and Former Chief Executive Officer
 
2010
   
250,000
     
     
510,000
(6)
   
     
     
760,000
 
Peter Levy (7)
 
2011
   
112,500
     
     
252,500
(8)
   
     
     
365,000
 
Former Executive Vice President
 
2010
   
37,500
     
     
150,000
(9)
   
     
     
187,500
 
David Rector (10)
 
2011
   
87,500
     
20,000
     
     
     
     
107,500
 
Former President and director
 
2010
   
     
     
     
     
     
 
Stephen Alfers (11)
 
2011
   
     
     
     
     
     
 
Chief Executive Officer, President and Chairman
 
2010
   
     
     
     
     
     
 
Adam Wasserman (12)
 
2011
   
     
     
     
     
72,000
     
72,000
 
Former Chief Financial Officer
 
2010
   
     
     
     
12,000
     
29,250
     
41,250
 
 
 
36

 
 
 
(1)
Reflects the grant date fair values of stock awards calculated in accordance with FASB Accounting Standards Codification Topic 718 with the exception that the amount shown assumes no forfeitures.
 
(2)
Mr. Cohen served as our President, Chief Operating Officer and a Director from August 27, 2010 through March 29, 2011 and as our Secretary from September 29, 2010 through March 29, 2011.
 
(3)
Represents health benefits of $19,000.
 
(4)
These options were forfeited on March 29, 2011.
 
(5)
Mr. Finkel served as our Chief Executive Officer and Co-Chairman from May 10, 2010 through September 2, 2011.
 
(6)
On September 2, 2011, these options, together with 600,000 shares of common stock owned by Mr. Finkel, were pledged as collateral security for (i) the payment of monies by Mr. Finkel to Mr. Honig and to another shareholder and (ii) payment of certain receivables to us by a third party.
  
(7)
Mr. Levy served as our Executive Vice President from September 17, 2010 through December 31, 2011.
 
(8)
On December 31, 2011, all of the unvested options, which constituted two thirds of the options granted in 2010, were forfeited. The remaining vested options expired on March 31, 2012.
 
(9)
These options were forfeited on December 31, 2011.
 
(10)
Mr. Rector served as our President from May 12, 2011 to March 6, 2012 and as a director from August 8, 2011 to November 20, 2012.
 
(11)
Mr. Alfers was appointed Chief Executive Officer and Chairman on February 29, 2012 and President on March 6, 2012.
 
(12)
Mr. Wasserman served as our Chief Financial Officer from November 11, 2010 to November 19, 2012.
 
Agreements with Executive Officers
 
Gregory Cohen
 
On August 27, 2010 our former wholly owned subsidiary, The Empire Sports & Entertainment Co., entered into an employment agreement with Mr. Cohen, pursuant to which Mr. Cohen was to serve as our President and Chief Operating Officer for a term of three years. The Agreement provided that Mr. Cohen was to receive a salary of $180,000 per year and ten year options to purchase 600,000 shares of our common stock at an exercise price of $0.60 per share. The options were to vest in three equal installments on each of June 1, 2011, June 1, 2012 and June 1, 2013. The agreement provided for certain compensation and accelerated vesting of options upon termination and change of control.
 
On March 28, 2011, we entered into a separation agreement with Mr. Cohen and The Empire Sports & Entertainment Co. pursuant to which Mr. Cohen resigned from all of his positions with us and each of our subsidiaries and affiliates and agreed to the following:
 
 
delivery of 900,000 shares of our common stock owned by Mr. Cohen to us for cancellation;
 
sale of 1,200,000 shares of our common stock owned by Mr. Cohen to one or more purchasers and use of the proceeds from the sale for (i) payment of various outstanding fees and obligations outstanding and (ii) $115,000 to Mr. Cohen upon the satisfaction of certain conditions set forth in the agreement, including assignments of certain boxing promotional rights agreements (subject to any required consents or approvals), and various profit sharing agreements with respect to certain of the boxing promotional rights agreements under which Mr. Cohen may elect to continue as the promoter of the boxers named therein;
 
termination of all options, warrants and rights to any common stock, whether or not vested; and
  • 
payment of Mr. Cohen’s health benefits for a period of 12 months and reimbursement of certain expenses incurred by Mr. Cohen. 
 
Sheldon Finkel
 
On May 19, 2010 our former wholly owned subsidiary, The Empire Sports & Entertainment Co., entered into an employment agreement with Mr. Finkel, pursuant to which Mr. Finkel was to serve as our Chief Executive Officer for a term of three years. The Agreement provided that Mr. Finkel was to receive a salary of $500,000 per year and an annual bonus amount equal to ten percent of our audited net income. As set forth in the employment agreement, Mr. Finkel was entitled to subscribe for 1,252,000 shares of our common stock for consideration of $100,000, which stock was subject to repurchase by us upon the occurrence of certain events. Pursuant to the employment agreement, we secured and posted a letter of credit in the amount of $1,500,000 for the benefit of Mr. Finkel. Such letter of credit provided that it be drawn down by, and that the proceeds payable thereunder be paid to, Mr. Finkel in the event of a default by us with respect to Mr. Finkel’s employment agreement. We were permitted to reduce the letter of credit after six months, and after each six month period thereafter, in increments of $250,000.  Mr. Finkel was issued ten year options to purchase 400,000 shares of our common stock at an exercise price of $0.60 per share. The options were to vest in three equal installments on each of June 1, 2011, June 1, 2012 and June 1, 2013. The agreement provided that in the event of termination of employment by Mr. Finkel due to a material breach, Mr. Finkel was entitled to his base salary at the rate in effect at the time of the notice of termination and any bonus compensation through the last day of the then existing term.
 
 
37

 
 
On September 2, 2011, we entered into a separation agreement with Mr. Finkel, The Empire Sports & Entertainment Co., our wholly owned subsidiary EXCX Funding, Corp., our former 66.67% owned joint venture Capital Hoedown, Inc., Mr. Honig, Mr. Brauser and William Finkel, a designee of Sheldon Finkel. As set forth in the separation agreement, Mr. Finkel resigned from all of his positions with us and each of our subsidiaries and affiliates and agreed to the following:
 
sale of 1,950,000 shares of common stock owned by Mr. Finkel and his designee to Mr. Brauser for an aggregate purchase price of $150;
pledge of the options to purchase 400,000 shares of common stock (133,333 vested on June 1, 2011 and the remaining 266,667 vested immediately upon resignation) and Mr. Finkel’s remaining 600,000 shares of common stock as security for collection of certain outstanding receivables owed to us and certain outstanding funds owed to Mr. Honig and Mr. Brauser;
assignment of the current amount under the letter of credit, $1,000,000, to Mr. Honig and Mr. Brauser; and
termination all options, warrants and rights to any common stock, which were vested or not vested as of the date of the separation agreement, were terminated and of no further force or effect, except as set forth above.
 
Peter Levy
 
On September 17, 2010, our wholly owned subsidiary The Empire Sports & Entertainment Co. entered into an employment agreement with Mr. Levy, pursuant to which Mr. Levy agreed to serve as our Executive Vice President for a term of one year. Unless notice of non-renewal was provided sixty days prior to the end of the term, the term of employment was to be continued for an additional one year. The agreement provided that Mr. Levy was to receive a base salary of $150,000 per year and options to purchase 250,000 shares of our common stock at a per share exercise price of $0.60. The options were to vest and become exercisable in equal installments on each of October 1, 2011, October 1, 2012 and October 1, 2013.
 
In connection with Mr. Levy’s resignation on December 31, 2011, all unvested options, including options to purchase 250,000 shares at an exercise price of $1.01 that were issued in March 2011, were forfeited. All of Mr. Levy’s 88,333 vested options expired on March 31, 2012. It was agreed that Mr. Levy shall not receive any payments in connection with his resignation with the exception of any accrued but unpaid compensation.
 
Adam Wasserman
 
We entered into an engagement letter with Adam Wasserman in September 2010. Pursuant to the terms of this engagement letter, Mr. Wasserman was paid a monthly retainer fee of $4,000 for accounting services performed beginning October 2010 and a onetime fee of 20,000 shares of common stock upon execution of this agreement. We valued these common shares at the fair market value on the date of grant at $0.60 per share. On March 1, 2011, the retainer fee was increased to $6,000 per month. Mr. Wasserman agreed to act as our Chief Financial Officer. During fiscal year ended December 31, 2011 and 2010, fees amounted to $72,000 and $41,250, respectively. Mr. Wasserman resigned on November 19, 2012.
 
David Rector
 
David Rector served as our President from  May 12, 2011 to February 9, 2012. Mr. Rector served as the Vice President of Finance and Administration from February 9, 2012 to November 20, 2012. Mr. Rector is not party to an employment agreement with us. Under the terms of an oral agreement, we made periodic payments to Mr. Rector as compensation for his services to us as an officer and director. The amount of this compensation was determined from time to time by our board of directors, of which he was a member. From February 9, 2012 through his resignation on November 20, 2012, we paid Mr. Rector $15,417 per month for his services. Mr. Rector will remain as an employee of the Company to assist with transition matters and other projects until the end of 2012.
 
Stephen Alfers
 
On February 9, 2012, we entered into an employment agreement with Stephen Alfers, pursuant to which Mr. Alfers shall serve as our Chief Executive Officer until December 31, 2015, subject to renewal. Pursuant to the terms of his Employment Agreement, Mr. Alfers will be entitled to a base salary of $250,000 per year and was issued (i) 12,000,000 shares of the Company’s restricted common stock and (ii) an option to purchase 10,000,000 shares of the Company’s common stock with a term of ten years and an exercise price of $0.49 per share.
 
We agreed to undertake to register 3,000,000 shares of the restricted common stock with the Securities Exchange at which time 3,000,000 shares shall thereupon vest. 6,000,000 restricted shares (less any shares sooner vested upon registration with the SEC pursuant to the foregoing sentence) will vest on the earlier of (a) such date that the Company consummates a secondary public offering of its securities in which the Company receives gross proceeds of at least $7,000,000 or (b) one year from the date of the Employment Agreement; 3,000,000 shares shall vest two years from the date of the Employment Agreement; and (c) 3,000,000 shares shall vest three years from the date of the Employment Agreement.
 
 
38

 
 
Under his Employment Agreement, Mr. Alfers is entitled to receive an annual bonus if the Company meets or exceeds certain criteria adopted by the Board. The “Target Bonus” for Mr. Alfers for shall equal 100% of his annualized base salary for that year if target levels of performance for that year are achieved, with greater or lesser amounts paid for performance above and below such target. Mr. Alfers is entitled to receive a one-time bonus of $500,000 at the time of entering into the Employment Agreement.
 
Certain amounts payable to Mr. Alfers as compensation are subject to claw-back rights in the event of restatements of our financial information for a period of 3 years. In the case of any termination of Mr. Alfers’ employment due to Resignation Without Good Reason (as defined in the Employment Agreement) prior to the one year anniversary of the Employment Agreement, 50% of the initial bonus shall be required to be repaid to the Company.
 
Upon Mr. Alfers’ termination without Cause (as defined in the Employment Agreement), within six months prior to or twenty four months following a Change in Control or upon Mr. Alfers’ Resignation for Good Reason during a Change in Control Period (as such terms are defined in the Employment Agreement), we shall pay to Mr. Alfers (in addition to any Accrued Obligations as defined in the Employment Agreement), a lump sum in an amount equal to (x) three times (y) the sum of (i) Mr. Alfers’ base salary plus (ii) Mr. Alfers’ bonus. Additionally, any unvested equity awards that were granted prior to such Change in Control, including the awards described herein, shall fully and immediately vest.
 
On June 18, 2012, we issued options to purchase 5,000,000 shares of Common Stock at an exercise price of $0.34 per share to Mr. Alfers, which vest in full upon issuance. Additionally, on June 18, 2012, we issued a restricted stock grant of 5,000,000 shares of Common Stock to Mr. Alfers, which vest in three equal annual installments beginning one year from the date of issuance.
 
Eric Alexander
 
On November 21, 2012, we entered into a revised offer letter between the Company and Mr. Alexander, pursuant to which Mr. Alexander will have an annual salary of $175,000. In addition, in connection with his appointment, the Company granted Mr. Alexander 200,000 shares of the Company’s restricted stock pursuant to and subject to the terms of the Company’s 2012 Equity Incentive Plan. The shares vest as follows: 33.33% on November 30, 2013, 33.33% on November 30, 2014, and 33.34% on November 30, 2015.
 
Outstanding Equity Awards at Fiscal Year-End
 
The following table provides information on the holdings of stock options of the named executive officers at December 31, 2011. This table includes unexercised and unvested options awards. Each outstanding award is shown separately for each named officer.
 
   
Option Awards (1)
   
Number of Securities Underlying Unexercised Options
   
Number of Securities Underlying Unexercised and Unearned Options
   
Option Exercise
       
    (#)     (#)    
Price
     
 
Name
 
Exercisable
   
Unexercisable
   
($)
     
Date
                             
Sheldon Finkel (2)
    400,000 (3)         $ 0.60      
June 1, 2020
Peter Levy
    88,333 (4)         $ 0.60      
March 31, 2012
 
 
(1)
Mr. Cohen was issued ten-year options to purchase 600,000 shares of common stock at an exercise price of $0.60 per share on June 1, 2010. These options were to vest in three equal annual installments on each of June 1, 2011, June 1, 2012 and June 1, 2013. All vested and unvested options to purchase shares of common stock issued to Mr. Cohen were forfeited on March 29, 2011.
 
(2)
All options to purchase shares of common stock issued to Mr. Finkel were pledged as collateral security for (i) payment of monies by Mr. Finkel to Mr. Honig, our Chairman, and to another shareholder/lender to the Company and (ii) payment of certain receivables to us by a third party. The loan pursuant to which such options were pledged is currently subject to a claim of default and as a result such options may be subject to forfeiture. 
 
(3)
133,333 options vested on June 1, 2011 and the remaining options vested immediately upon Mr. Finkel’s resignation on September 2, 2011.
 
(4)
Mr. Levy was issued ten-year options to purchase 250,000 shares of common stock at an exercise price of $0.60 per share on October 1, 2010. These options were to vest in three equal annual installments on each of October 1, 2011, October 1, 2012 and October 1, 2013. Mr. Levy was issued ten-year options to purchase 250,000 shares of common stock at an exercise price of $1.01 per share on March 29, 2011. These options were to vest in three equal annual installments on each of March 29, 2012, March 29, 2013 and March 29, 2014. All unvested options to purchase shares of common stock issued to Mr. Levy were forfeited on December 31, 2011. Mr. Levy’s vested options expired on March 31, 2012.
 
 
39

 
 
2010 Equity Incentive Plan
 
On September 29, 2010, our board of directors and stockholders adopted the 2010 Equity Incentive Plan, pursuant to which 2,800,000 shares of our common stock are reserved for issuance as awards to employees, directors, consultants, advisors and other service providers. The purpose of the 2010 Equity Incentive Plan is to provide an incentive to attract and retain directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such persons in our development and financial success. Under the 2010 Equity Incentive Plan, we are authorized to issue incentive stock options intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended, non-qualified stock options, restricted stock, stock appreciation rights, performance unit awards and stock bonus awards. The 2010 Equity Incentive Plan will be administered by our board of directors until such time as such authority has been delegated to a committee of the board of directors.
 
 2012 Equity Incentive Plan
 
On February 9, 2012, our board of directors and stockholders adopted the 2012 Equity Incentive Plan, pursuant to which 40,000,000 shares of our common stock are reserved for issuance as awards to employees, directors, consultants, advisors and other service providers. The purpose of the 2012 Equity Incentive Plan is to provide an incentive to attract and retain directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such persons in our development and financial success. Under the 2012 Equity Incentive Plan, we are authorized to issue incentive stock options intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended, non-qualified stock options, restricted stock, stock appreciation rights, performance unit awards and stock bonus awards. The 2012 Equity Incentive Plan will be administered by our board of directors until such time as such authority has been delegated to a committee of the board of directors.
 
 Director Compensation
 
Except for the compensation granted to Mr. Cohen, Mr. Finkel and Mr. Rector as set forth above in the Summary Compensation Table, the employment agreement with Stephen Alfers, described above, and the options granted to Mr. Honig and Mr. Rector, as described below, we have not had compensation arrangements in place for members of our board of directors and have not finalized any plan to compensate directors in the future for their services as directors. We also have not finalized compensation plans for Mr. Morrison. We may develop a compensation plan for our directors in order to attract qualified persons and to retain them. We expect that the compensation arrangements may be comprised of a combination of cash and/or equity awards.
 
On October 1, 2010, we granted to Mr. Honig options to purchase 400,000 shares of common stock under the 2010 Equity Incentive Plan at an exercise price of $0.60 per share. The options vest in three equal installments on each of the first, second and third anniversary of the grant date.
 
On April 6, 2012, we entered into a consulting agreement with Mr. Honig pursuant to which Mr. Honig would provide certain consulting services relating to business development, corporate structure, strategic and business planning, selecting management and other functions reasonably necessary for advancing the business of the Company. The Consulting Agreement has an initial term of three years, subject to renewal. In consideration for the Services, we agreed to pay Mr. Honig the following consideration:
 
 
A ten-year option (to purchase 12,000,000 shares of our common stock, exercisable at $0.35 per share which shall be vested in full on the date of issuance;
 
On such date that we receive minimum gross proceeds of at least $5,000,000 due to the occurrence of a Triggering Event (as defined in the Consulting Agreement) or the combination of multiple Triggering Events, Mr. Honig shall receive a one -time payment of $200,000; and
 
Upon a Change in Control (as defined in the Consulting Agreement) of the Company, Mr. Honig shall receive a one-time payment of $500,000.
 
On June 18, 2012, we issued options to purchase 1,000,000 shares of Common Stock at an exercise price of $0.34 per share to Mr. Honig, which vested in full upon issuance. Additionally, on June 18, 2012, we issued a restricted stock grant of 3,000,000 shares of Common Stock to Mr. Honig, which vest in three equal annual installments beginning one year from the date of issuance
 
On June 18, 2012, we issued options to purchase 500,000 shares of Common Stock at an exercise price of $0.34 per share to Mr. Rector, which vest either (i) 25% on the date of issuance and 25% on each of December 31, 2012, December 31, 2013 and December 31, 2014, or, if earlier, (ii) upon the termination of the Mr. Rector’s employment by, and services as a director of, the Corporation without cause, or for reasons other than death, disability, normal or early retirement or good reason, in which case the options granted to Mr. Rector shall vest as of the later of the dates of his termination of employment by the Corporation and his termination of services as a director of the Corporation. Additionally, on June 18, 2012, we issued a restricted stock grant of 1,000,000 shares of Common Stock to Mr. Rector, which vest either (i) in three equal annual installments beginning one year from the date of issuance, or, if earlier, (ii) upon the termination of the Mr. Rector’s employment by, and services as a director of, the Corporation without cause, or for reasons other than death, disability, normal or early retirement or good reason, in which case the options granted to Mr. Rector shall vest as of the later of the dates of his termination of employment by the Corporation and his termination of services as a director of the Corporation.
 
 
40

 
 
 
Between December 2009 and June 2010, Mr. Honig, our former Chairman and current director, loaned us an aggregate of $498,935. These loans were not interest bearing and were due on demand. On June 30, 2010, we issued Mr. Honig 333,333 shares of our common stock in connection with the conversion of $200,000 of the loan amount. Also on June 30, 2010, we issued Mr. Honig a demand promissory note in the amount of $298,935 for the remainder of the unpaid loan balance. The promissory note accrued interest at the rate of 5% per year and was payable on the earlier of (i) on demand by Mr. Honig upon 30 days prior written notice to us or (ii) June 30, 2012. On September 1, 2010, we made a payment of $100,000 in cash towards this promissory note and issued a new convertible promissory note in the amount of $198,935 for the balance of the amount owed to Mr. Honig. The new convertible promissory note accrued interest at the rate of 5% per annum and was payable on the earlier of (i) on demand by Mr. Honig upon 30 days prior written notice to us or (ii) September 1, 2012. Mr. Honig had the right to convert the note into shares of our common stock at a conversion rate of $0.60 per share. We paid off the note in full on December 31, 2010 by paying Mr. Honig $200,000 in cash for the principal and interest due under the note.
 
From January 2010 to June 2010, Mr. Cohen, our former President, former Chief Operating Officer and a former director, loaned us $163,364 for operating expenses. The principal on the loans did not incur any interest and we repaid the loan amounts in full between March 2010 and July 2010.
 
On June 16, 2010, Mr. Honig advanced us $1,500,000 to use as collateral in connection with the $1,500,000 letter of credit agreement entered into between us and Mr. Finkel, our former Chief Executive Officer and Co-Chairman, pursuant to the terms of Mr. Finkel’s employment agreement. On August 5, 2010, we returned the $1,500,000 to Mr. Honig and used our own funds to post the collateral under the letter of credit agreement.
 
In November 2010, Denis Benoit, the president of Concerts International, Inc., the owner of 33.33% of our former majority owned subsidiary Capital Hoedown, Inc., and the president and a director of Capital Hoedown, Inc., issued $18,000 promissory notes to our former wholly owned subsidiary The Empire Sports & Entertainment, Co. at an interest rate of 4% per year. The notes were due on August 31, 2011. We sold The Empire Sports & Entertainment, Co. on September 1, 2011 and the amount owed is no longer on our books. From March 2010 through January 2011, we shared our office space pursuant to an informal sublease on a month to month basis with a company of which Mr. Cohen served as a director until January 2011. From February 2010 through December 31, 2010, this company reimbursed us $2,700 for our portion of total leasehold improvements costs, $8,508 for our portion of the security deposit and $12,117 for rent payments.
 
On February 1, 2011, in connection with a $750,000 private placement, we issued Mr. Honig 100,000 shares of our common stock and a $100,000 convertible promissory note. The note has an interest rate of 5% per year and is convertible into shares of our common stock at a conversion price of $1.00 per share. The note will mature on February 1, 2012. On October 31, 2011, we entered into an amendment agreement with Mr. Honig and other noteholders pursuant to which the conversion price of the notes was changed to $0.65 per share. All of the principal and interest were converted into shares of our common stock in October 2011.
 
On February 23, 2011, we, our former wholly owned subsidiary The Empire Sports & Entertainment, Co. and our wholly owned subsidiary EXCX Funding Corp. entered into a $4.5 million credit facility agreement with two lenders, Mr. Honig and Mr. Brauser, at the time a beneficial owner of over 5% of our issued and outstanding common stock. In connection with the credit facility agreement, each of Mr. Honig and Mr. Brauser loaned us and our subsidiaries $2.25 million pursuant to a 6% note that matures on January 31, 2012. The proceeds from the loan were to be used exclusively to fund the costs of a country music festival held in Ottawa, Canada on August 2011. In connection with the credit facility agreement, on February 23, 2011, the lenders entered into a contribution agreement with our former Chief Executive Officer and Co-Chairman, Mr. Finkel, pursuant to which Mr. Finkel agreed that, in the event that the music festival generated net losses, he would pay each of the lenders such amount so that the amount of net losses incurred by each lender would not exceed one third of the total amount of net losses. The contribution agreement also provided that Mr. Finkel would pledge to the lenders the proceeds from his $1,500,000 letter of credit. In connection with these transactions, we issued to each of Mr. Finkel, Mr. Honig and Mr. Brauser 750,000 shares of our Series A Convertible Preferred Stock, all of which have been converted into 750,000 shares of common stock prior to the date hereof. Between August 2011 and December 2011, we paid Mr. Honig a total of $1,688,250 and Mr. Brauser a total of $1,638,250. Mr. Brauser applied the remaining principal of $611,750 to purchase 1,529,375 units consisting of 1,529,375 shares of our common stock and warrants to purchase 764,688 shares of common stock. In March 2012, Mr. Honig agreed to extend the maturity date of such note up to February 1, 2013. In August 2012, Mr. Honig sold $42,000 in principal of the note to a third party. Also in August 2012, Mr. Finkel transferred 300,000 shares of the Company’s common stock to the third party holder in cancellation of such $42,000 note. The 300,000 shares of common stock held by Mr. Finkel were previously pledged as collateral for certain debts owed to the Company which was unable to be paid. Mr. Finkel, the Company and the $42,000 noteholder agreed that the 300,000 shares of Common Stock would be delivered to the noteholder in cancellation of the $42,000 assigned note and as cancellation of the debt previously collateralized by such shares. As of November 30, 2012, $486,250 of principal and $139,778 of accrued interest owed to Mr. Honig remains outstanding and we have not paid any of the interest on the note.
 
 
41

 
 
On April 26, 2011 our former majority owned subsidiary Capital Hoedown, Inc. entered into a management services agreement with Concert International, Inc., its minority owner, and Denis Benoit, the president and a director of Capital Hoedown, Inc. and the president and director of Concert International, Inc.  The agreement provided that Concert International, Inc. would provide Capital Hoedown, Inc. with management and administrative services, and make available the services of Mr. Benoit, in connection with an annual country music festival held in Ottawa, Ontario to be operated by Capital Hoedown, Inc. Capital Hoedown, Inc. paid Concert International, Inc. a management fee of CAD $100,000.
 
On April 26, 2011, our former wholly owned subsidiary The Empire Sports & Entertainment Co. made a revolving demand loan of up to $500,000 to Concert International, Inc. and Denis Benoit at an annual interest rate of 10%. The loan was payable on the earlier of January 15, 2012 or upon demand. We sold The Empire Sports & Entertainment, Co. on September 1, 2011 and the amount owed is no longer on our books.
 
On April 26, 2011, our former wholly owned subsidiary The Empire Sports & Entertainment Co. made a revolving demand loan of up to $4,000,000 to Concert International, Inc. at an annual interest rate of 10%. The loan was payable on the earlier of January 15, 2012 or upon demand. We sold The Empire Sports & Entertainment, Co. on September 1, 2011 and the amount owed is no longer on our books.
 
On May 24, 2011, we entered into limited liability company membership interests purchase agreements with each of the four members of Arttor Gold, pursuant to which we acquired 100% of Arttor Gold. Arttor Gold leases from Mr. Leger, our former Chief Geologist, certain claims in the State of Nevada which we are currently surveying or exploring. At the date of the sale, Arttor Gold held approximately $2,000,000 in cash that we acquired. Prior to the sale, our then- President and director Mr. Rector and Mr. Leger each owned 9.5% of Arttor Gold and our shareholder Frost Gamma owned 33.33% of Arttor Gold. As consideration for the membership interests, we issued 2,000,000 shares of common stock to Mr. Rector, 2,000,000 shares of common stock to Mr. Leger, 7,000,000 shares of common stock to Frost Gamma and 2,000,000 million shares of common stock and 8,000,000 shares of Series B Convertible Preferred Stock to the other owner of Arttor Gold.
 
On May 24, 2011, we entered into an agreement with Frost Gamma pursuant to which we agreed that in connection with any private offering completed within six months, we would make available to Frost Gamma Investments Trust the same terms (including terms related to anti-dilution price protection, registration rights, dividends and similar terms and provisions) provided to investors in such private placement with respect to the 7,000,000 shares of our common stock issued to Frost Gamma as consideration for its membership interests in Arttor Gold as described above.
 
On May 24, 2011, as a result of our acquisition of Arttor Gold we acquired two lease agreements with Mr. Leger for the Red Rock Mineral Prospect and the North Battle Mountain Mineral Prospect. The leases grant us the exclusive right to explore, mine and develop gold, silver, palladium, platinum and other minerals on the properties for a term of ten years and may be renewed in ten year increments. The terms of the leases may not exceed 99 years. Until production is achieved, our lease payments, or advance minimum royalties, consist of an initial payment of $5,000 per lease that was paid upon the signing of each lease and annual payments according to the following schedule for each lease:
 
Due Date of Advance
  Amount of Advance
Minimum Royalty Payment
 
Minimum Royalty Payment
1st Anniversary
  $15,000
2nd Anniversary
 
$35,000
3rd Anniversary
 
$45,000
4th Anniversary
 
$80,000
5th Anniversary and annually thereafter during the term of the lease
 
The greater of $100,000 or the U.S. dollar equivalent of 90 ounces of gold
 
In the event that that we produce gold or other minerals from minerals found on these properties, our lease payments will be the greater of (i) the advance minimum royalty payments according to the table above, or (ii) a production royalty equal to 3% of the gross sales price of any gold, silver, platinum or palladium that we recover and 1% of the gross sales price of any other minerals that we recover. We have the right to buy down the production royalties on gold, silver, platinum and palladium by payment of $2,000,000 for the first 1%. All advance minimum royalty payments constitute prepayment of production royalties on an annual basis. If the total dollar amount of production royalties due within a calendar year exceeds the dollar amount of the advance minimum royalty payments due within that year, we may credit all uncredited advance minimum royalty payments made in previous years against 50% of the production royalties due within that year. The leases also require that we spend a total of $100,000 on work expenditures on each property for the period from lease signing until December 31, 2012 and $200,000 on work expenditures on each property per year commencing in 2013 and annually thereafter. In May 2012, we sold the Red Rock and North Battle Mountain mineral properties and such leases were assumed by the buyer, Valor Gold Corp.
 
 
42

 
 
On July 18, 2011, we issued a $2,000,000 note to Continental, which became our majority shareholder on July 22, 2011. The note had an interest rate of 6% per year and a maturity date of January 18, 2011. On July 22, 2011, in connection with the asset purchase agreement, we acquired the $2,000,000 note which was payable to Continental and included the acquisition of the $2,000,000 note receivable as part of the purchase price allocation. Accordingly, the acquired note receivable was eliminated against the note payable on our financial statements.
 
On July 22, 2011, we acquired all of the assets of Continental in exchange for 76,095,215 shares of our common stock issued to Continental, warrants to purchase 41,566,999 shares of our common stock issued to Continental’s warrant holders, and options to purchase 2,248,000 shares of our common stock to Continental’s option holders. Mr. Honig is the largest shareholder of Continental and beneficially owns 12.8% of its issued and outstanding shares of common stock.
 
On September 1, 2011, we disposed of our wholly owned subsidiary The Empire Sports & Entertainment Co., including its 66.67% equity ownership interest in Capital Hoedown, Inc., pursuant to a stock purchase agreement by and among us, The Empire Sports & Entertainment Co. and Concerts International, Inc. for $500,000 payable on March 31, 2012 pursuant to an 8% promissory note. As of September 26, 2012, no portion of the principal or interest has been paid.
 
On September 2, 2011, we entered into a separation agreement with our former Chief Executive Officer and former Co-Chairman Sheldon Finkel, The Empire Sports & Entertainment Co., our wholly owned subsidiary EXCX Funding, Corp., Capital Hoedown, Inc., Mr. Honig, Mr. Brauser and William Finkel, a designee of Sheldon Finkel. As set forth in the separation agreement, Mr. Finkel resigned from all of his positions with us and each of our current and former subsidiaries and affiliates and agreed to the following:
 
cancellation of (i) 750,000 shares of common stock owned by Mr. Finkel and (ii) all unvested shares and options, other than 600,000 shares of common stock and outstanding options to purchase 400,000 shares of common stock;
sale of 1,950,000 shares of common stock owned by Mr. Finkel and his designee to Mr. Brauser for an aggregate purchase price of $150;
pledge of the options to purchase 400,000 shares of common stock and Mr. Finkel’s remaining 600,000 shares of common stock as security for collection of certain outstanding receivables owed to us and certain outstanding funds owed to Mr. Honig and Mr. Brauser;
assignment of the current amount under the letter of credit, $1,000,000, to Mr. Honig and Mr. Brauser; and
termination all options, warrants and rights to any common stock, which were vested or not vested as of the date of the separation agreement, were terminated and of no further force or effect, except as set forth above.
 
On September 23, 2011, we entered into a mutual release agreement with Continental and certain holders of Continental’s warrants who had demanded that we purchase certain warrants issued to them by Continental for the warrants’ Black Scholes Value. On August 24, 2011, one of the claimants had filed a complaint against us in the United States District Court for the Southern District of New York alleging breach of certain terms of the warrants and claiming damages of approximately $128,000 plus attorneys’ fees and costs. The release agreement provided that we and Continental, on the one hand, and the warrant holders, on the other hand, release each other from all claims, actions, and damages we may have against each other for any reason arising from the beginning of the world to the date and time of the release agreement.
 
On October 3, 2011, we entered into an agreement and release with Continental and certain holders of warrants issued by Continental in private placements, pursuant to which we agreed to issue to each holder two shares of our common stock for every $1.00 such warrant holders had invested in the private placements in exchange for cancellation of the warrants and waiver of ratchet anti-dilution protection from future offerings. We issued an aggregate of 5,350,000 shares in connection with this transaction.
 
On September 14, 2011 we issued a $1,715,604 secured convertible promissory note to Frost Gamma. The note has an interest rate of 9% per year and a conversion price of $0.50 per share. We and our wholly owned subsidiary Gold Acquisition Corp. are joint and several obligors under the note and the note is secured by all of our personal property and by a pledge of 100% of the issued and outstanding common stock of Gold Acquisition Corp. Principal and interest under the note are payable on the first business day of each month commencing on the later of (i) 30 months from the original date of issuance and (ii) 10 days following the payment and/or conversion in full of senior secured promissory notes we issued to unrelated third parties on August 30, 2011. The note was to be prepaid upon the occurrence of a Qualified Financing, as such term is defined in the note, of at least $1,715,604. Certain holders of our senior secured debt, including Mr. Honig who owns $561,750 of senior secured debt, agreed to subordinate our senior obligations to the prior payment of all obligations under this note. On October 31, 2011, following a Qualified Financing, we entered into a waiver agreement with Frost Gamma pursuant to which we prepaid $700,000 of the principal amount of this note and Frost Gamma waived prepayment of the balance of the principal. On March 30, 2012, the note was amended to allow for conversion into shares of Series D Preferred Stock. On March 30, 2012, the remaining $1,015,604 principal note and accrued interest was converted in full in consideration for 1,024,744 shares of Series D Preferred Stock. As an inducement to fully convert this note, Frost Gamma also received an additional 605,760 shares of our Series D Convertible Preferred Stock.
 
 
43

 
 
On September 29, 2011, we issued 3,284,396 shares of newly designated Series C Convertible Preferred Stock and warrants to purchase 9,853,188 shares of common stock at an exercise price of $0.60 per share for an aggregate purchase price of $3,284,396 to Frost Gamma. The warrants may be exercised until the second anniversary of issuance at a cash exercise price of $0.60 per share and may be exercised on a cashless basis at any time after the original date of issuance.
 
On October 4, 2011, Mr. Brauser converted 250,000 shares of Series B Convertible Preferred Stock into 250,000 shares of our common stock and on December 14, 2011, Mr. Brauser converted 750,000 shares of Series B Convertible Preferred Stock into 750,000 shares of our common stock. At such times, Mr. Brauser beneficially owned over 5% of our common stock.
 
On February 23, 2012, we issued 600,000 shares of our Series D Convertible Preferred Stock and warrants to purchase an aggregate of 5,250,000 shares of our common stock at an exercise price of $0.40 per share for an aggregate purchase price of $600,000 to Frost Gamma.
 
On March 29, 2012, Frost Gamma exercised certain warrants on a cashless basis and will receive 2,967,143 shares of our common stock (using a VWAP (as defined in such warrants) of $0.919 for this calculation) sixty one (61) days from the date of exercise.
 
On March 30, 2012, Frost Gamma fully converted certain indebtedness in the then current principal amount of $4,515,604 (which includes the $1,015,604 principal note discussed above) and accrued and unpaid interest thereon and received 4,546,345 shares of our Series D Convertible Preferred Stock. The conversion price was at $1.00 per share (the stated value of the Series D Convertible Preferred Stock). As an inducement to fully convert such indebtedness, Frost Gamma also received an additional 940,623 shares of our Series D Convertible Preferred Stock.
 
On April 6, 2012, we entered into a consulting agreement with our director, Barry Honig, pursuant to which Mr. Honig would provide certain consulting services relating to business development, corporate structure, strategic and business planning, selecting management and other functions reasonably necessary for advancing the business of the Company. The Consulting Agreement has an initial term of three years, subject to renewal. In consideration for the Services, the Company agreed to pay Mr. Honig the following consideration:
 
 
A ten-year option (to purchase 12,000,000 shares of the Company’s common stock, exercisable at $0.35 per share   which shall be vested in full on the date of issuance;
 
On such date that the Company receives minimum gross proceeds of at least $5,000,000 due to the occurrence of a Triggering Event (as defined in the Consulting Agreement) or the combination of multiple Triggering Events, Mr. Honig shall receive a one -time payment of $200,000; and
 
Upon a Change in Control (as defined in the Consulting Agreement) of the Company, Mr. Honig shall receive a one-time payment of $500,000.
 
Currently, Continental owns 76,095,215 shares, or approximately 28.58% of our common stock. From time to time since August 2011, we had advanced an aggregate of $350,000 to Continental for operating expenses.  As of the date hereof, approximately $518,000 remains outstanding. Barry Honig, a member of our board of directors, is the largest shareholder of Continental Resources Group, Inc. and beneficially owns  12,194,236 shares, or 12.8%, of Continental. In addition, 3,535,000 shares are owned by various Uniform Transfer to Minor Act accounts for which Mr. Honig’s father is custodian. Mr. Honig exercises no investment or voting power and disclaims beneficial ownership of the shares owned in the name of his father or by accounts for which his father is custodian. Although Mr. Honig disclaims beneficial ownership of such shares, if aggregated, the percent of class represented by the aggregate amount beneficially owned and the excluded shares would be 16.69% of Continental Resources Group, Inc.’s issued and outstanding shares.
 
On June 18, 2012, we issued options to purchase 5,000,000 shares of Common Stock at an exercise price of $0.34 per share to Stephen Alfers, our Chief Executive Officer, which vest in full upon issuance. Additionally, on June 18, 2012, we issued a restricted stock grant of 5,000,000 shares of Common Stock to Mr. Alfers, which vest in three equal annual installments beginning one year from the date of issuance.
 
On June 18, 2012, we issued options to purchase 1,000,000 shares of Common Stock at an exercise price of $0.34 per share to Barry Honig, our director, which vest in full upon issuance. Additionally, on June 18, 2012, we issued a restricted stock grant of 3,000,000 shares of Common Stock to Mr. Honig, which vest in three equal annual installments beginning one year from the date of issuance
 
 
44

 
 
On June 18, 2012, we issued options to purchase 500,000 shares of Common Stock at an exercise price of $0.34 per share to David Rector, our former Vice President of Finance and Administration and director, which vest either (i) 25% on the date of issuance and 25% on each of December 31, 2012, December 31, 2013 and December 31, 2014, or, if earlier, (ii) upon the termination of the Mr. Rector’s employment by, and services as a director of, the Corporation without cause, or for reasons other than death, disability, normal or early retirement or good reason, in which case the options granted to Mr. Rector shall vest as of the later of the dates of his termination of employment by the Corporation and his termination of services as a director of the Corporation. Additionally, on June 18, 2012, we issued a restricted stock grant of 1,000,000 shares of Common Stock to Mr. Rector, which vest either (i) in three equal annual installments beginning one year from the date of issuance, or, if earlier, (ii) upon the termination of the Mr. Rector’s employment by, and services as a director of, the Corporation without cause, or for reasons other than death, disability, normal or early retirement or good reason, in which case the options granted to Mr. Rector shall vest as of the later of the dates of his termination of employment by the Corporation and his termination of services as a director of the Corporation.
 
On June 19, 2012, we sold to Frost Gamma 1,562,500 shares of Common Stock at a per share price of $0.32 per share.
 
On June 19, 2012, we entered into a Conversion Agreement with Frost Gamma whereby Frost Gamma agreed to convert agreed to convert 3,284,396 shares of the our Series C Preferred Stock (representing 100% of our Series C Preferred Stock outstanding) into 10,263,738 shares of Common Stock and 6,086,968 shares of Series D Preferred Stock (representing 100% of our issued and outstanding Series D Preferred Stock) into 19,021,775 shares of Common Stock. In connection with, and as further consideration for, the foregoing conversion, we issued Frost Gamma an additional 3,000,000 shares of Common Stock. The Series C Preferred Stock and Series D Preferred Stock are governed by certain beneficial ownership blockers preventing the holder from converting such securities to the extent such conversion would cause the holder to beneficially hold in excess of 9.99% of our issued and outstanding Common Stock. Pursuant to the terms of the Conversion Agreement, Frost Gamma provided 61 days’ notice of the waiver of such beneficial ownership blockers and accordingly, Frost Gamma will only receive such number of shares as would cause it to beneficially own 9.99% of our Common Stock and will receive and beneficially own the balance of such shares of Common Stock in 61 days.
 
On August 20, 2012, we issued 27,490,513 shares of common stock to Frost Gamma, representing the balance of such shares issuable to Frost Gamma upon 61 days’ notice of the waiver of its beneficial ownership blocker, as described above.
 
In October 2012, the Company entered into an Assignment of Rights and Assumption of Obligation Agreement with Barry Honig whereby the Company assigned and transferred the rights arising under the Separation Agreement and General Release executed on March 28, 2011 and Agreement for Payment of Future Proceeds executed in April 2011 (collectively the “Separation Agreements”). The Separation Agreements were executed in connection with debts and obligations owed by Gregory Cohen, the former President of the Company. In consideration for the assumption by Mr. Honig of all obligations owned by the Company under the Separation Agreements, Mr. Honig shall reduce the outstanding principal note due to him by $33,500. The remaining outstanding principal note due to Mr. Honig amounted to $486,250 after the execution of such Assignment of Rights and Assumption of Obligation Agreement.
 
On November 21, 2012, we entered into a revised offer letter with Eric Alexander, our Vice President Finance and Controller, pursuant to which Mr. Alexander will have an annual salary of $175,000. In addition, in connection with his appointment, the Company granted Mr. Alexander 200,000 shares of the Company’s restricted stock pursuant to and subject to the terms of the Company’s 2012 Equity Incentive Plan. The shares vest as follows: 33.33% on November 30, 2013, 33.33% on November 30, 2014, and 33.34% on November 30, 2015.
 
On December 3, 2012, we sold 3,409,091 shares of common stock and warrants to purchase 1,363,637 shares of common stock to Barry Honig in a private placement, for a purchase price of $1,124,999.91. The warrants are exercisable immediately at an exercise price of $0.50 per share and will expire on December 7, 2015.
 
 
45

 
 
 
The following table sets forth information with respect to the beneficial ownership of our voting securities as of December 4, 2012 by:
 
 
each person known by us to beneficially own more than 5.0% of any class of our voting securities;
 
each of our directors;
 
each of our named executive officers; and
 
all of our directors and executive officers as a group.
 
The percentages of common stock beneficially owned are reported on the basis of regulations of the Securities and Exchange Commission governing the determination of beneficial ownership of securities. Under the rules of the Securities and Exchange Commission, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or to direct the voting of the security, or dispositive power, which includes the power to dispose of or to direct the disposition of the security. Except as indicated in the footnotes to this table, each beneficial owner named in the table below has sole voting and sole investment power with respect to all shares beneficially owned and each person’s address is c/o Pershing Gold Corporation, 1658 Cole Boulevard, Building No. 6, Suite 210, Lakewood, Colorado 80401.
 
As of December 4, 2012, we had 266,592,027 shares outstanding.
 
 
 
Common Stock (1)
 
Name and Address of Beneficial Owner
 
Shares Beneficially Owned
   
Percent of Class
 
5% Owners
           
Continental Resources Group, Inc. (2)
    76,095,215       28.54  
Frost Gamma Investments Trust (3)
    49,481,271       18.56  
Officers and Directors
               
Stephen Alfers
    15,000,000 (4)     5.33  
Eric Alexander
    0 (5)     0  
Barry Honig
    25,767,542 (6)     9.16  
Alex Morrison
    0       0  
Officers and Directors as a Group (Four persons)
    40,767,542       14.49  
 

(1)
Shares of common stock beneficially owned and the respective percentages of beneficial ownership of common stock assumes the exercise of all options, warrants and other securities convertible into common stock beneficially owned by such person or entity currently exercisable or exercisable within 60 days of December 4, 2012. In computing the number of shares beneficially owned and the percentage ownership, shares of common stock that may be acquired within 60 days of  December 4, 2012 pursuant to the exercise of options, warrants or convertible notes are deemed to be outstanding for that person. Such shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other person.
(2)
Joshua Bleak is the president of Continental Resources Group, Inc. and, in such capacity, has voting and dispositive power over the securities held for the account of Continental Resources Group, Inc.
(3)
Dr. Philip Frost is the trustee of Frost Gamma Investments Trust and, in such capacity, has voting and dispositive power over the securities held for the account of Frost Gamma Investments Trust.
(4)
Represents options to purchase 10,000,000 shares of the Common Stock with a strike price of $0.49 per share and options to purchase 5,000,000 shares of Common Stock with a strike price of $0.34 per share, which are exercisable within 60 days. Does not include a restricted stock grant of 17,000,000 shares of the Company’s common stock which will not vest within 60 days.
(5)
Does not include a restricted stock grant of 200,000 shares of the Company’s common stock which will not vest within 60 days.
(6)
Includes 5,843,333 shares of common stock held by Mr. Honig, 6,066,543 shares of common stock including warrants to purchase 1,363,637 shares of common stock) held by GRQ Consultants, Inc. 401K, 591,000 shares of common stock held by GRQ Consultants, Inc., options to purchase 266,666 shares of common stock with a strike price of $0.60 per share, options to purchase 12,000,000 shares of common stock with a strike price of 0.35 per share and options to purchase 1,000,000 shares of common stock with a strike price of $0.34 per share, held for the account of Mr. Honig which may be exercised within 60 days. Excludes options to purchase 133,334 shares of common stock which are not exercisable within 60 days and 3,000,000 shares of an unvested grant of restricted common stock which shall not be vested within 60 days. Mr. Honig is the trustee of GRQ 401K and President of GRQ Consultants, and, in such capacity, has voting and dispositive power over the securities held by GRQ 401K and GRQ Consultants.
 
 
46

 
 
 
Up to 92,239,278 shares of common stock are being offered by this prospectus, all of which are being registered for sale for the account of the selling stockholders and include the following:
 
 
76,095,215 shares of common stock issued to Continental Resources Group, Inc. in connection with the purchase of substantially all of its assets in July 2011;
     
 
15,229,375 shares of common stock subject to registration rights obligations by the Company; and
     
 
914,688 shares of common stock issuable upon the exercise of outstanding warrants subject to registration rights obligations of the Company.
 
Each of the transactions by which the selling stockholders acquired their securities from us was exempt under the registration provisions of the Securities Act.
 
The 92,239,278 shares of common stock referred to above are being registered to permit public sales of the shares, and the selling stockholders may offer the shares for resale from time to time pursuant to this prospectus. The selling stockholders may also sell, transfer or otherwise dispose of all or a portion of their shares in transactions exempt from the registration requirements of the Securities Act or pursuant to another effective registration statement covering those shares. We may from time to time include additional selling stockholders in supplements or amendments to this prospectus.
 
The table below sets forth certain information regarding the selling stockholders and the shares of our common stock offered by them in this prospectus. The selling stockholders have not had a material relationship with us within the past three years other than as described in the footnotes to the table below or as a result of acquisition of our shares or other securities. None of the following selling stockholders are registered broker-dealers or affiliated with registered broker dealers.
 
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission. The selling stockholders’ percentage of ownership of our outstanding shares in the table below is based upon 266,592,027 shares of common stock outstanding as of December 4, 2012.
 
   
Ownership Before Offering
   
Ownership After Offering (1)
 
Selling Stockholder
 
Number of shares of common stock beneficially owned
   
Number of shares offered
   
Number of shares of common stock beneficially owned
   
Percentage of common stock beneficially owned
 
Continental Resources Group, Inc. (2)
   
76,095,215
     
76,095,215
     
0
     
0
%
Iroquois Master Fund Ltd. (3)
   
654,545
     
200,000
     
454,545
     
*
 
Midsummer Ventures LP (4)
   
500,000
     
500,000
     
  0
     
 0
%
Michael Brauser
   
12,085,659
     
2,494,063
(5)
   
9,591,596
     
3.6
%
Frost Gamma Investments Trust (6)
   
49,481,271
     
1,562,500
     
47,918,771
     
18.0
%
Coeur d’Alene Mines Corporation (7)
   
10,937,500
     
10,937,500
     
  0
     
  0
%
Radical Capital (8)
   
450,000
     
450,000
(9)
   
  0
     
  0
%
TOTAL
   
     
92,239,278
     
  —
     
  —
 
 
* represents less than 1%.
 
 
(1)
Represents the amount of shares that will be held by the selling stockholders after completion of this offering based on the assumptions that (a) all shares registered for sale by the registration statement of which this prospectus is part will be sold and (b) that no other shares of our common stock beneficially owned by the selling stockholders are acquired or are sold prior to completion of this offering by the selling stockholders.
     
 
(2)
Mr. Bleak is the President of Continental Resources Group, Inc. and, in such capacity, has voting and dispositive power over the securities held for the account of Continental Resources Group, Inc.
     
 
(3)
Iroquois Capital Management LLC (“Iroquois Capital”) is the investment manager of Iroquois Master Fund Ltd. (“IMF”). Consequently, Iroquois Capital has voting control and investment discretion over securities held by IMF. As managing members of Iroquois Capital, Joshua Silverman and Richard Abbe make voting and investment decisions on behalf of Iroquois Capital in its capacity as investment manager to IMF. As a result of the foregoing, Mr. Silverman and Mr. Abbe may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange of 1934, as amended) of these securities held by IMF. Notwithstanding the foregoing, Mr. Silverman and Mr. Abbe disclaim such beneficial ownership.
     
 
(4)
Joshua Thomas and Michel Amsalem each may be deemed to have investment discretion and voting power over the shares held by Midsummer Ventures LP
 
 
47

 
 
 
(5)
Represents 1,729,375 shares of common stock and 764,688 shares of common stock underlying warrants.
     
 
(6)
Dr. Philip Frost is the trustee of Frost Gamma Investments Trust and in such capacity holds voting and dispositive power over shares held by Frost Gamma Investments Trust.
     
 
(7)
Mitchell Krebs and Frank Hanagarne, in their roles as Chief Executive Officer and Chief Financial Officer, respectively, may each be deemed to holds voting and dispositive power over the shares of the Company’s Common Stock held by Coeur d’Alene Mines Corporation.
     
 
(8)
Marcus New holds voting and dispositive power over the shares of the Company held by Radical Capital.
     
 
(9)
Represents 300,000 shares of the Company’s Common Stock and 150,000 shares of the Company’s Common Stock underlying warrants.
 
 
We are authorized to issue 500,000,000 shares of common stock and 50,000,000 shares of preferred stock. As of December 4, 2012, we have issued and outstanding securities on a fully diluted basis:
 
 
266,592,027 shares of common stock;
 
 
 
 
Warrants to purchase 16,255,779 shares of common stock; and
 
 
 
 
Options to purchase 35,298,000 shares of common stock.
 
Common Stock
 
The holders of our common stock are entitled to one vote per share. In addition, the holders of our common stock will be entitled to receive ratably such dividends, if any, as may be declared by our board of directors out of legally available funds; however, the current policy of our board of directors is to retain earnings, if any, for operations and growth. Upon liquidation, dissolution or winding-up, the holders of our common stock will be entitled to share ratably in all assets that are legally available for distribution. The holders of our common stock will have no preemptive, subscription, redemption or conversion rights. The rights, preferences and privileges of holders of our common stock will be subject to, and may be adversely affected by, the rights of the holders of any series of preferred stock, which may be designated solely by action of our board of directors.
 
Preferred Stock
 
Our board of directors is authorized, subject to any limitations prescribed by law, without further vote or action by our stockholders, to issue from time to time shares of preferred stock in one or more series. Each series of preferred stock will have such number of shares, designations, preferences, voting powers, qualifications and special or relative rights or privileges as shall be determined by our board of directors, which may include, among others, dividend rights, voting rights, liquidation preferences, conversion rights and preemptive rights.
 
Options
 
On September 29, 2010 our board of directors and stockholders adopted the 2010 Equity Incentive Plan, pursuant to which 2,800,000 shares of our common stock were reserved for issuance as awards to employees, directors, consultants and other service providers. These options have a term of ten years, are exercisable as to one third of the number of shares granted on each of the first, second and third anniversaries of the date of grant and exercise prices of $0.60 per share or $1.01 per share. Additional information about the 2010 Equity Incentive Plan and our issued and outstanding options is set forth in “Executive Compensation” section of this registration statement. In connection with our purchase of all of the assets of Continental Resources Group, Inc. on July 22, 2011, we issued options to purchase 2,248,000 shares of our common stock (450,000 of which were issued pursuant to the 2010 Equity Incentive Plan) to the option holders of Continental Resources Group, Inc. These options have a term of ten years, varied vesting schedules and an exercise price of $1.43 per share.
 
On February 9, 2012, our board of directors and stockholders adopted the 2012 Equity Incentive Plan, pursuant to which 40,000,000 shares of our common stock are reserved for issuance as awards to employees, directors, consultants, advisors and other service providers. On February 9, 2012, we authorized the issuance of an option to purchase 10,000,000 shares of our common stock with a term of ten years and an exercise price of $0.49 per share to our President and Chief Executive Officer. On March 6, 2012, the Company authorized the issuance of options to purchase an aggregate of 1,100,000 shares of our common stock at an exercise price of $0.45 per share pursuant to the 2012 Equity Incentive Plan. Such grants of restricted stock shall vest as follows: 25% on the date of issuance and 25% on each of 12/31/2012, 12/31/2013 and 12/31/2014. On April 6, 2012, we authorized for issuance an option to purchase 12,000,000 shares of the Company’s common stock under our 2012 Equity Incentive Plan to our director, exercisable at $0.35 per share which shall be vested in full on the date of issuance. These options have a term of 10 years.
 
 
48

 
 
On June 18, 2012, we issued ten year options to purchase 5,000,000 shares of Common Stock at an exercise price of $0.34 per share to Stephen Alfers, our Chief Executive Officer, which vest in full upon issuance. Additionally, on June 18, 2012, we issued a restricted stock grant of 5,000,000 shares of Common Stock to Mr. Alfers, which vest in three equal annual installments beginning one year from the date of issuance. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act of 1933 by virtue of Section 4(2) thereof, as a transaction by an issuer not involving a public offering.
 
On June 18, 2012, we issued ten year options to purchase 1,000,000 shares of Common Stock at an exercise price of $0.34 per share to Barry Honig, our director, which vest in full upon issuance. Additionally, on June 18, 2012, we issued a restricted stock grant of 3,000,000 shares of Common Stock to Mr. Honig, which vest in three equal annual installments beginning one year from the date of issuance. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act of 1933 by virtue of Section 4(2) thereof, as a transaction by an issuer not involving a public offering.
 
On June 18, 2012, we issued options to purchase 500,000 shares of Common Stock at an exercise price of $0.34 per share to David Rector, our former Vice President of Finance and Administration and director, which vest either (i) 25% on the date of issuance and 25% on each of December 31, 2012, December 31, 2013 and December 31, 2014, or, if earlier, (ii) upon the termination of the Mr. Rector’s employment by, and services as a director of, the Corporation without cause, or for reasons other than death, disability, normal or early retirement or good reason, in which case the options granted to Mr. Rector shall vest as of the later of the dates of his termination of employment by the Corporation and his termination of services as a director of the Corporation. Additionally, on June 18, 2012, we issued a restricted stock grant of 1,000,000 shares of Common Stock to Mr. Rector, which vest either (i) in three equal annual installments beginning one year from the date of issuance, or, if earlier, (ii) upon the termination of the Mr. Rector’s employment by, and services as a director of, the Corporation without cause, or for reasons other than death, disability, normal or early retirement or good reason, in which case the options granted to Mr. Rector shall vest as of the later of the dates of his termination of employment by the Corporation and his termination of services as a director of the Corporation. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act of 1933 by virtue of Section 4(2) thereof, as a transaction by an issuer not involving a public offering.
 
On June 18, 2012, we issued ten year options to purchase an aggregate of 2,200,000 shares of common stock at an exercise price of $0.34 per share to certain of our employees and consultants which vest 25% on the date of issuance and 25% on each of December 31, 2012, December 31, 2013 and December 31, 2014. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act of 1933 by virtue of Section 4(2) thereof, as a transaction by an issuer not involving a public offering.
 
Warrants
 
We currently have issued and outstanding warrants to purchase 16,255,779 shares of common stock. 124,560 of these warrants have a term of approximately 16 months and an exercise price of $0.60 per share, 3,580,000 of these warrants have a term of five years and an exercise prices ranging from $0.40 to $2.84 per share; 8,242,188 warrants have a term of two years and an exercise price of $0.60 per share. 400,000 warrants have a term of ten years and an exercise price of $0.45 per share. 3,909,031 warrants have a term of three years and are exercisable for $0.50 per share. The warrants are all exercisable immediately.
 
Registration Rights
 
As set forth in our July 22, 2011 asset purchase agreement with Continental and our former wholly owned subsidiary Continental Resources Acquisition Sub, Inc., we agreed to file the registration statement of which this prospectus forms a part, no later than September 11, 2011 and to use commercially reasonable efforts to cause such registration statement to be declared effective within 12 months following the closing date of the asset purchase. We agreed to make payments to Continental, as liquidated damages and not as a penalty, in an amount equal to 1% of the purchase price for every 30 day period (or pro rata portion thereof) up to a maximum of 5% of the purchase price following the Filing Date or the Effectiveness Deadline if (i) the registration statement was not filed on or before the Filing Date or (ii) the registration statement is not declared effective by the Securities and Exchange Commission on or before the Effectiveness Deadline. Such payments are to be made to Continental in cash or shares of common stock, at our option. In August 2012, the Company, Continental Resources Acquisition Sub, Inc. and Continental amended the Asset Purchase Agreement to remove the obligation to pay any liquidated damages related to the filing and effectiveness of this Registration Statement.
 
Following the consummation of the asset sale with Continental, certain holders of Continental’s Warrants that were received in connection with the private placement of Continental’s securities asserted certain rights against the Company under Section 5(f) of the Continental Warrants (the “Put Right”), which the Company disputed.
 
 
49

 
 
On October 3, 2011, the Company, Continental and each of the holders of the Continental Warrants that exercised their Put Right, entered into an Agreement and Release in which the Company agreed to issue to such holder 2 shares of the Company’s common stock for every $1.00 invested in Continental’s offering in exchange for cancellation of the Continental Warrants and waiver of ratchet anti-dilution protection from future offerings. A total of 5,350,000 shares were issued in connection with the settlement and such shares received piggy-back registration rights. Accordingly, 900,000 of such shares are being registered for resale hereunder.
 
We have agreed to file a registration statement with the Securities and Exchange Commission covering the resale of shares of common stock and shares of common stock underlying warrants issued in a private placement within 60 days of the final closing date of the private placement and to use our reasonable best efforts to cause such registration statement to be declared effective by the Securities and Exchange Commission within 120 days of the closing of the private placement.
 
We have also agreed to grant “piggy-back” registration rights to certain of our investors in our private placement pursuant to which, in the event we filed a registration statement with the SEC (subject to certain exclusions) we agreed to include, upon the request of certain investor, such investor’s shares of Common Stock for resale in such registration statement.
 
In connection with the June 19, 2012 private placement, we entered into a registration rights agreement with Coeur d’Alene Mines Corporation and Frost Gamma which provides Frost Gamma and Coeur d’Alene Mines Corporation, in the event the Company registers any of its equity securities under the Securities Act of 1933, as amended, the right to request the shares of Common Stock they purchased in such private placement to be included in such registration statement. Additionally, at any time after December 19, 2012, Coeur d’Alene Mines Corporation has the right to require the Company to file a registration statement in order to register the Common Stock it received in the private placement.
 
Transfer Agent
 
The transfer agent for our common stock is Action Stock Transfer Corp. located at 2469 E. Fort Union Blvd., Ste 214, Salt Lake City, UT 84121
 
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
 
There have been no changes in or disagreements with our accountants since our formation required to be disclosed pursuant to Item 304 of Regulation S-K, except those that have been previously reported in our filings with the Securities and Exchange Commission.
 
Indemnification of Directors and Officers
 
Nevada Revised Statutes Sections 78.7502 and 78.751 provide us with the power to indemnify any of our directors and officers. The director or officer must have conducted himself/herself in good faith and reasonably believe that his/her conduct was in, or not opposed to, our best interests. In a criminal action, the director, officer, employee or agent must not have had reasonable cause to believe his/her conduct was unlawful.
 
Under Revised Statutes Section 78.751, advances for expenses may be made by agreement if the director or officer affirms in writing that he/she believes he/she has met the standards and will personally repay the expenses if it is determined such officer or director did not meet the standards.
 
Our Articles of Incorporation provide that our officers and directors shall be indemnified and held harmless to the fullest extent legally permissible under the laws of the State of Nevada against all expenses, liability and loss (including attorneys’ fees, judgments, fines and amounts paid or to be paid in settlement) reasonably incurred or suffered by them in connection with any civil, criminal, administrative or investigative action, suit or proceeding related to their service as an officer or director. Such right of indemnification shall be a contract right which may be enforced in any manner desired by such person. We must pay the expenses of officers and directors incurred in defending a civil or criminal action, suit or proceeding as they are incurred and in advance of the final disposition of the action, suit or proceeding, upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that he is not entitled to be indemnified by us. Such right of indemnification shall not be exclusive of any other right which such directors or officers may have or hereafter acquire.
 
Our Articles of Incorporation provide that we may adopt bylaws to provide at all times the fullest indemnification permitted by the laws of the State of Nevada, and may purchase and maintain insurance on behalf of any of officers and directors. The indemnification provided in our Articles of Incorporation shall continue as to a person who has ceased to be a director, officer, employee or agent, and shall inure to the benefit of the heirs, executors and administrators of such person.
 
Our Bylaws provide that a director or officer shall have no personal liability to us or our stockholders for damages for breach of fiduciary duty as a director or officer, except for damages for breach of fiduciary duty resulting from (a) acts or omissions which involve intentional misconduct, fraud, or a knowing violation of law, or (b) the payment of dividends in violation of Nevada Revised Statutes Section 78.3900.
 
 
50

 
 
Disclosure of Commission Position on Indemnification for Securities Act Liabilities
 
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and persons controlling us, we have been advised that it is the Securities and Exchange Commission’s opinion that such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable.
 
 
This prospectus includes 76,095,215 shares of common stock offered by a selling stockholder, Continental. Continental purchased its securities pursuant to an Asset Purchase Agreement dated as of July 22, 2011 by and among the Company, Continental Resources Acquisition Sub, Inc. and Continental (the “APA”).
 
In accordance with Section 7.2 of the APA, which is incorporated by reference herein, Continental shall distribute its shares of the Company’s Common Stock to its shareholders pursuant to the plan of liquidation, which is contemplated by the APA. Such distribution will occur subsequent to the SEC declaring effective the Registration Statement on Form S-1 registering for resale the shares of our Common Stock held by Continental, of which this prospectus forms a part.
 
Continental intends to make a pro-rata distribution to holders of record of the common stock of Continental (the “Continental Record Holders”) of our shares of Common Stock held by Continental, which were acquired by Continental in connection with the APA. Presently, Continental, which has 95,119,018 shares of common stock outstanding, owns 76,095,215 shares of our common stock (out of 266,592,027 shares outstanding). We have informed Continental that we will make a cash payment, in lieu of issuing fractional shares, to the Continental Record Holders who would otherwise be entitled to receive fractional shares upon the distribution by Continental of its shares of the Company’s common stock. We will deliver such cash amount to Continental so that Continental will pay such cash amount directly to the Continental Record Holders at the time it makes its distribution to the Continental Record Holders. In addition, our Common Stock to be distributed to the Continental Record Holders (other than the fractional shares for which a cash payment will be made) may be placed in a statutory trust for the benefit of the Continental Record Holders entitled to receive such shares. Distribution of these shares will be made subsequent to registration of the shares by the Company or at such time as they may be distributed pursuant to an exemption from the registration requirements under the securities laws.
 
As a result, Continental will pay to each Continental Record Holder a pro-rata distribution of shares of our Common Stock owned by Continental, including the fractional cash amount to be paid to Continental by the Company, which would otherwise be paid by us to Continental Record Holders entitled to receive fractional shares of the Company’s Common Stock upon the pro-rata distribution of shares of the Company’s Common Stock owned by Continental.
 
The final distribution, including the payment of the fractional cash amount, is in complete cancellation of Continental’s common stock.
 
The selling stockholders (other than Continental, as described above) may, from time to time, sell any or all of their shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The selling stockholders may use any one or more of the following methods when selling shares:
 
 
ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
 
block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
 
purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
 
an exchange distribution in accordance with the rules of the applicable exchange;
 
privately negotiated transactions;
 
short sales;
 
broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share;
 
a combination of any such methods of sale; and
 
any other method permitted pursuant to applicable law.
 
The selling stockholders may also sell shares under Rule 144 under the Securities Act of 1933, as amended, if available, rather than under this prospectus.
 
Broker-dealers engaged by the selling stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The selling stockholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved. Any profits on the resale of shares of common stock by a broker-dealer acting as principal might be deemed to be underwriting discounts or commissions under the Securities Act of 1933, as amended. Discounts, concessions, commissions and similar selling expenses, if any, attributable to the sale of shares will be borne by a selling stockholder. The selling stockholders may agree to indemnify any agent, dealer or broker-dealer that participates in transactions involving sales of the shares if liabilities are imposed on that person under the Securities Act of 1933, as amended.
 
 
51

 
 
The selling stockholders may from time to time pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time under this prospectus after we have filed a supplement to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act, supplementing or amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus.
 
The selling stockholders also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus and may sell the shares of common stock from time to time under this prospectus after we have filed a supplement to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act, supplementing or amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus.
 
The selling stockholders and any broker-dealers or agents that are involved in selling the shares of common stock may be deemed to be “underwriters” within the meaning of the Securities Act of 1933, as amended, in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares of common stock purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.
 
We are required to pay all fees and expenses incident to the registration of the shares of common stock. We have agreed to indemnify the selling stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
 
The selling stockholders have advised us that they have not entered into any agreements, understandings or arrangements with any underwriters or broker-dealers regarding the sale of their shares of common stock, nor is there an underwriter or coordinating broker acting in connection with a proposed sale of shares of common stock by any selling stockholder. If we are notified by any selling stockholder that any material arrangement has been entered into with a broker-dealer for the sale of shares of common stock, if required, we will file a supplement to this prospectus. If the selling stockholders use this prospectus for any sale of the shares of common stock, they will be subject to the prospectus delivery requirements of the Securities Act.
 
The anti-manipulation rules of Regulation M under the Securities Exchange Act of 1934, as amended, may apply to sales of our common stock and activities of the selling stockholders.
 
 
Sichenzia Ross Friedman Ference LLP, New York, New York, will pass upon the validity of the shares of common stock offered by the selling stockholders under this prospectus.
 
 
The financial statements of Pershing Gold Corporation, formerly Sagebrush Gold Ltd., formerly The Empire Sports & Entertainment Holdings Co., and Subsidiary for the year ended December 31, 2011 and for the period from February 10, 2010 (Inception) to December 31, 2010 have been audited by KBL, LLP, an independent registered public accounting firm as set forth in its report, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
 
 
We have filed with the Securities and Exchange Commission a registration statement on Form S-1, together with any amendments and related exhibits, under the Securities Act, with respect to our shares of common stock offered by this prospectus. The registration statement contains additional information about us and our shares of common stock that the selling stockholders are offering in this prospectus.
 
We file annual, quarterly and current reports and other information with the Securities and Exchange Commission under the Securities Exchange Act. Our Securities and Exchange Commission filings are available to the public over the Internet at the Securities and Exchange Commission’s website at http://www.sec.gov. Access to these electronic filings is available as soon as practicable after filing with the Securities and Exchange Commission. You may also read and copy any document we file at the Securities and Exchange Commission’s public reference room located at 100 F Street, N.E., Washington, D.C. 20549. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further information on the public reference rooms and their copy charges. You may also request a copy of those filings, excluding exhibits, from us at no cost. Any such request should be addressed to us at: Cole Boulevard, Building No. 6, Suite 210, Lakewood, Colorado 80401, Attention: Stephen Alfers, President and Chief Executive Officer.
 
 
52

 
 
 
The following is a glossary of selected mining terms used in this prospectus that may be technical in nature:
 
breccia: a course grained clastic rock consisting of angular clasts supported by a fine grained ground mass
 
Cane Springs formation: a formation consisting of a thick bedded massive limestone, with local silty limestone units, the upper portion of which contains solution cavities and caves and is locally brecciated
 
Carlin-type: sediment-hosted disseminated gold deposits characterized by invisible (typically microscopic and/or dissolved) gold in pyrite and arsenopyrite, and named after the first large deposit of this composition found in the Carlin Unconformity, Nevada
 
exploration stage: a U.S. Security and Exchange Commission descriptive category applicable to public mining companies engaged in the search for mineral deposits and ore reserves and which are not either in the mineral development or the ore production stage
 
grade: The concentration of each ore metal in a rock sample, usually given as weight per volume. Where extremely low concentrations are involved, the concentration may be given in grams per ton (g/t). The grade of an ore deposit is calculated, often using sophisticated statistical procedures, as an average of the grades of a very large number of samples collected from throughout the deposit.
 
Grass Valley formation: a formation exceeding 600 meters in thickness consisting of a siliciclastic mudstone argillite and micaceous siltstone with lesser amounts of feldspathic quartz sandstone interstratified with mudstone
 
heap leach: a mineral processing method involving the crushing and stacking of an ore on an impermeable liner upon which solutions are sprayed to dissolve metals i.e. gold, copper etc.; the solutions containing the metals are then collected and treated to recover the metals
 
lode: a classic vein, ledge, or other rock in place between definite walls
 
millsite: Public lands which are non-mineral in character. Millsites may be located in connection with a placer or lode claim for mining and milling purposes or as an independent/custom mill site that is independent of a mining claim.
 
Phase I: initial exploration drilling program
 
unpatented mining claim: A mineral claim staked on federal or, in the case of severed mineral rights, private land (where the U.S. government has retained ownership of the locatable minerals) to which a deed from the U.S. government or other mineral title owner has not been received by the claimant. Unpatented claims give the claimant the exclusive right to explore for and to develop the underlying minerals and the right to use the surface for such purpose. However, the claimant does not own title to either the minerals or the surface, and the claim must include a discovery of valuable minerals to be valid and is subject to the payment of annual claim maintenance fees which are established by the governing authority of the land on which the claim is located.
 
 
53

 

 
   
Page
     
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
   
     
 
F-2
     
 
F-3
     
 
F-4
     
 
F-8
     
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
   
     
 
F-44
     
 
F-45
     
 
F-46
     
 
F-47
     
 
F-49
     
 
F-51
 
 
F-1

 
 
PERSHING GOLD CORPORATION AND SUBSIDIARIES
(FORMERLY SAGEBRUSH GOLD LTD.)
(AN EXPLORATION STAGE COMPANY)
 
   
September 30,
   
December 31,
 
   
2012
   
2011
 
   
(Unaudited)
       
ASSETS
               
CURRENT ASSETS:
               
Cash and cash equivalents
 
$
1,458,522
   
$
3,670,567
 
Marketable securities - trading securities
   
     
100,000
 
Notes receivable, net - (see Note 3)
   
500,000
     
 
Other receivables
   
8,835
     
113,241
 
Prepaid expenses - current portion
   
292,540
     
463,737
 
Deferred financing cost
   
     
50,919
 
Due from equity method investor (former Parent Company)
   
     
347,335
 
Assets of discontinued operations - current portion
   
     
61,050
 
                 
Total Current Assets
   
2,259,897
     
4,806,849
 
                 
NON - CURRENT ASSETS:
               
Prepaid expenses - long-term portion
   
     
37,759
 
Property and equipment, net - (see Note 6)
   
7,586,555
     
8,031,103
 
Mineral rights - (see Note 5)
   
16,786,912
     
8,501,071
 
Reclamation bond deposit - (see Note 5)
   
4,645,533
     
4,557,629
 
Deposits
   
3,884
     
51,000
 
                 
Total Non - Current Assets
   
29,022,884
     
21,178,562
 
                 
Total Assets
 
$
31,282,781
   
$
25,985,411
 
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
                 
CURRENT LIABILITIES:
               
Accounts payable and accrued expenses
 
$
1,116,214
   
$
821,111
 
Senior convertible promissory notes, net of debt discount - (see Note 7)
   
     
1,066,445
 
Convertible promissory note, net of debt discount - (see Note 8)
   
     
118,487
 
Note payable - current portion (see Note 9)
   
23,036
     
 
Note payable - related party, net of debt discount - (see Note 9)
   
519,750
     
510,832
 
Derivative liability - (see Note 10)
   
     
6,295,400
 
Liabilities of discontinued operation
   
     
21,622
 
                 
Total Current Liabilities
   
1,659,000
     
8,833,897
 
                 
LONG-TERM LIABILITIES:
               
Note payable - long term portion (see Note 9)
   
67,189
     
 
                 
Total Liabilities
   
1,726,189
     
8,833,897
 
                 
Commitments and Contingencies
               
                 
STOCKHOLDERS’ EQUITY :
               
Preferred stock, $0.0001 par value; 50,000,000 authorized - (see Note 12)
               
Convertible Series A Preferred stock ($.0001 Par Value; 2,250,000 Shares Authorized; none issued and outstanding as of September 30, 2012 and December 31, 2011, respectively)
   
     
 
Convertible Series B Preferred stock ($.0001 Par Value; 8,000,000 Shares Authorized; none issued and outstanding and 500,000 as of September 30, 2012 and December 31, 2011, respectively)
   
     
50
 
Convertible Series C Preferred stock ($.0001 Par Value; 3,284,396 Shares Authorized; none issued and outstanding and 3,284,396 as of September 30, 2012 and December 31, 2011, respectively)
   
     
328
 
Convertible Series D Preferred stock ($.0001 Par Value; 7,500,000 Shares Authorized; none issued and outstanding as of September 30, 2012 and December 31, 2011)
   
     
 
Common stock ($.0001 Par Value; 500,000,000 Shares Authorized; 256,619,449 and 142,773,113 shares issued and outstanding as of September 30, 2012 and December 31, 2011, respectively) - (see Note 12)
   
25,662
     
14,277
 
Additional paid-in capital
   
107,825,305
     
47,114,351
 
Accumulated deficit
   
(14,901,794
)
   
(14,901,794
)
Accumulated deficit since inception of exploration stage (September 1, 2011)
   
(63,392,581
)
   
(15,074,534
)
                 
Total Pershing Gold Corporation Equity
   
29,556,592
     
17,152,678
 
                 
Non-Controlling Interest in Subsidiary
   
     
(1,164
)
                 
Total Stockholders’ Equity
   
29,556,592
     
17,151,514
 
                 
Total Liabilities and Stockholders’ Equity
 
$
31,282,781
   
$
25,985,411
 
 
See accompanying notes to unaudited condensed consolidated financial statements.
 
 
F-2

 
 
PERSHING GOLD CORPORATION AND SUBSIDIARIES
(FORMERLY SAGEBRUSH GOLD LTD.)
(AN EXPLORATION STAGE COMPANY)
 
                           
For the Period from
 
                           
Inception of
 
                           
Exploration stage
 
   
For the Three Months Ended September 30,
   
For the Nine Months Ended September 30,
   
(September 1, 2011)
through
 
   
2012
   
2011
   
2012
   
2011
   
September 30, 2012
 
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
 
                               
Net revenues
 
$
   
$
   
$
   
$
   
$
 
                                         
Operating expenses:
                                       
Compensation and related taxes
   
2,433,209
     
464,307
     
17,244,155
     
761,208
     
18,326,234
 
Exploration cost
   
1,782,820
     
889,351
     
4,842,781
     
925,623
     
6,642,803
 
Consulting fees
   
416,956
     
2,889,958
     
2,021,529
     
3,298,693
     
7,592,708
 
General and administrative expenses
   
800,361
     
391,757
     
3,107,036
     
892,865
     
4,539,506
 
                                         
Total operating expenses
   
5,433,346
     
4,635,373
     
27,215,501
     
5,878,389