As
filed with the Securities and Exchange Commission on September 23, 2015.
Registration
No. 333–192317
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
________________
POST-EFFECTIVE
AMENDMENT NO. 1 TO FORM S-1 ON
FORM
S-3*
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
________________
PERSHING
GOLD CORPORATION
(Exact
name of registrant as specified in its charter)
Nevada |
26-0657736 |
(State
or other jurisdiction of incorporation or organization) |
(I.R.S.
Employer Identification No.) |
1658
Cole Boulevard
Building
6- Suite 210
Lakewood,
Colorado 80401
720-974-7254
(Address,
including zip code, and telephone number,
including
area code, of registrant’s principal executive offices)
Stephen
Alfers
1658
Cole Boulevard
Building
6- Suite 210
Lakewood,
Colorado 80401
720-974-7254
(Name,
address, including zip code, and
telephone
number, including area code, of agent for service)
With
Copies To:
Deborah
J. Friedman |
Davis
Graham & Stubbs LLP |
1550
Seventeenth Street, Suite 500 |
Denver,
Colorado 80202 |
(303)
892-9400 |
APPROXIMATE
DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time after the effective date of this registration statement
as determined by market conditions.
If
the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please
check the following box. ¨
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, other than securities offered only in connection with dividend or interest reinvestment plans, check
the following box. þ
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. ¨
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. ¨
If
this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become
effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. ¨
If
this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register
additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following
box. ¨
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 ¨ |
Accelerated
filer ¨ |
Non-accelerated
filer ¨ |
Smaller
reporting company þ |
|
(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 |
Proposed
maximum offering price per security |
Proposed
maximum aggregate offering price |
Amount
of registration fee |
Common
Stock, par value $0.0001 per share |
1,421,884
(1)(2)(3) |
(4) |
(4) |
(4) |
|
|
|
|
|
| (1) | 25,754,423
shares of the Registrant’s common stock were originally registered in Registration
Statement No. 333-192317 on Form S-1, declared effective by the Securities and Exchange
Commission on May 2, 2014. On June 18, 2015, the Registrant completed a reverse stock
split at a ratio of 1-for-18 and this reflects the post-split adjustment to the number
of shares. |
| (2) | Pursuant
to Rule 416(b) under the Securities Act of 1933, as amended, 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. |
| (3) | 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. |
| (4) | All
filing fees payable in connection with the registration of the shares of common stock
were previously paid in connection with the filing of Registration Statement No. 333-192317. |
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, as amended, or until the Registration Statement shall
become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
*EXPLANATORY
NOTE
This
Post-Effective Amendment No. 1 to Form S-1 on Form S-3 (the “Post-Effective Amendment”) is being filed to convert
the Registration Statement on Form S-1 (File No. 333-192317) (the “Original Registration Statement”) into a Registration
Statement on Form S-3. The Original Registration Statement registered the resale of 25,754,423 shares of Pershing Gold Corporation
common stock, par value $0.0001 per share (the “Common Stock”) by certain selling shareholders. All filing fees payable
in connection with the registration of the shares of Common Stock were previously paid in connection with the filing of the Original
Registration Statement. On June 18, 2015, Pershing Gold Corporation completed a reverse stock split of its Common Stock at a ratio
of 1-for-18. Thus, the 25,754,423 shares originally covered on the Original Registration Statement has now become 1,421,884 shares.
No additional securities are being registered under this Post-Effective Amendment. The Original Registration Statement was declared
effective by the Securities and Exchange Commission on May 2, 2014. Since the effectiveness of the Original Registration Statement,
the Registrant has become eligible to file on Form S-3. Accordingly, we hereby amend the Original Registration Statement
by filing this Post-Effective Amendment with respect to a total of 1,421,884 shares of Common Stock.
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 SEPTEMBER 23, 2015
PROSPECTUS
1,421,884
Shares
PERSHING
GOLD CORPORATION
Common
Stock
PROSPECTUS
This
prospectus relates to the sale by the selling stockholders identified in this prospectus of up to 1,421,884 shares of our common
stock, par value $0.0001 per share, of which (i) 585,432 shares have been issued, or are issuable, to holders of Series E
Convertible Preferred Stock upon conversion, (ii) 338,539 shares are issuable upon exercise of the warrants that were issued
to purchasers of the Series E Convertible Preferred Stock, and (iii) 308,519 shares of common stock held by Barry Honig,
and 189,394 shares of common stock held by GRQ Consultants, Inc. 401K, an affiliate of Mr. Honig. The shares related
to the Series E Preferred Stock are being registered pursuant to registration obligations with purchasers in that offering.
All
of the shares of common stock offered by this prospectus are being sold by the selling stockholders. It is anticipated that the
selling stockholders will sell these shares of common stock from time to time in one or more transactions, in negotiated transactions
or otherwise, at prevailing market prices or at prices otherwise negotiated (see the section entitled “Plan of Distribution”
beginning on page 22 of this prospectus). 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 traded on the Nasdaq Stock Market under the symbol “PGLC.” On September 21, 2015, the last reported
sales price of our common stock on the Nasdaq Stock Market was $4.25 per share. The applicable prospectus supplement will contain
information, where applicable, as to any other listing on the Nasdaq Stock Market or any securities exchange of the securities
covered by the prospectus supplement.
The
securities offered in this prospectus involve a high degree of risk. You should carefully consider the matters set forth
in “Risk Factors” on page 8 of this prospectus or incorporated by reference herein in determining
whether to purchase our securities.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities,
or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The
date of this prospectus is ___, 2015.
TABLE
OF CONTENTS
As
used in this prospectus, the terms “Pershing,” “we,” “our,” “ours” and “us”
may, depending on the context, refer to Pershing Gold Corporation or to one or more of Pershing Gold Corporation’s consolidated
subsidiaries or to Pershing Gold Corporation and its consolidated subsidiaries, taken as a whole.
ABOUT
THIS PROSPECTUS
You
should rely only on the information provided in this prospectus, including the information incorporated by reference. We have
not authorized anyone to provide you with additional or different information. If anyone provides you with additional, different
or inconsistent information, you should not rely on it. You should assume that the information contained in this prospectus, as
well as information contained in a document that we have previously filed or in the future will file with the SEC and incorporate
by reference in this prospectus, is accurate only as of the date of this prospectus, or the document containing that information,
as the case may be. Our financial condition or business may have changed since that date.
WHERE
YOU CAN FIND MORE INFORMATION
We
file and furnish annual, quarterly and current reports and other information, including proxy statements, with the SEC. You may
read and copy any document we file or furnish with the SEC at the SEC's Public Reference Room located at 100 F Street, N.E.,
Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the
Public Reference Room. Our SEC filings are available to the public on the SEC's website at www.sec.gov. Our SEC filings
are also available through the “Investor Relations” section of our website at www.pershinggold.com.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
The
SEC allows us to “incorporate by reference” information into this prospectus and any accompanying prospectus supplement,
which means that we can disclose important information to you by referring you to other documents filed separately with the SEC.
The information incorporated by reference is considered part of this prospectus, and information filed with the SEC subsequent
to this prospectus and prior to the termination of the particular offering referred to in such prospectus supplement will automatically
be deemed to update and supersede this information. We incorporate by reference into this prospectus and any accompanying prospectus
supplement the documents listed below (excluding any portions of such documents that have been “furnished” but not
“filed” for purposes of the Exchange Act):
| · | Annual
Report on Form 10-K for the fiscal year ended December 31, 2014; |
| · | Quarterly
Reports on Form 10-Q for the quarters ended March 31, 2015 and June 30, 2015; |
| · | Current
Reports on Form 8-K filed on January 20, 2015, February 10, 2015, April 13,
2015, April 27, 2015, June 12, 2015, June 22, 2015 and June 29, 2015 to the extent
“filed” and not “furnished” pursuant to Section 13(a) of the
Exchange Act; and |
| · | The
description of our common stock set forth in our registration statement on Form 8-A filed
on July 1, 2015, and any amendment or report filed for the purpose of updating such description. |
We
also incorporate by reference all documents we subsequently file with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act after the initial filing of the registration statement of which this prospectus is a part (including prior to
the effectiveness of the registration statement) and prior to the termination of the offering. Any statement in a document incorporated
by reference in this prospectus will be deemed to be modified or superseded to the extent a statement contained in this prospectus
or any other subsequently filed document that is incorporated by reference in this prospectus modifies or supersedes such statement.
Unless
specifically stated to the contrary, none of the information that we disclose under Items 2.02 or 7.01 or corresponding information
furnished under Item 9.01 or included as an exhibit of any Current Report on Form 8-K that we may from time to time furnish to
the SEC will be incorporated by reference into, or otherwise included in, this prospectus.
We
will provide without charge upon written or oral request, a copy of any or all of the documents which are incorporated by reference
into this prospectus. Requests should be directed to:
Pershing
Gold Corporation
Attention: Corporate Secretary
1658 Cole Boulevard
Building 6 – Suite 210
Lakewood, Colorado 80401
Except
as provided above, no other information, including information on our internet site, is incorporated by reference in this prospectus.
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Some
information contained in or incorporated by reference into this registration statement on Form S-3 may contain forward-looking
statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. These statements include
statements relating to our plans to complete our thorough economic study of Relief Canyon, advance our 2015 drilling program and
further permitting and mine planning for the Relief Canyon mine, expectations and the timing and budget for exploration and monetization
of our Relief Canyon properties, our planned expenditures for the rest of 2015, our expected cash needs, and statements concerning
our financial condition, business and operating strategies and operating and legal risks.
We
use the words “anticipate,” “continue,” “likely,” “estimate,” “expect,”
“may,” “could,” “will,” “project,” “should,” “believe”
and similar expressions to identify forward-looking statements. Statements that contain these words discuss our future expectations
and plans, or state other forward-looking information. Although we believe the expectations and assumptions reflected in those
forward-looking statements are reasonable, we cannot assure you that these expectations and assumptions will prove to be correct.
Our actual results could differ materially from those expressed or implied in these forward-looking statements as a result of
various factors described in this registration statement on Form S-3, including:
| · | Risks
relating to the 2015 exploration efforts to expand the Relief Canyon deposit, determining
the feasibility and economic viability of commencing mining, our ability to fund future
exploration costs or purchase additional equipment, and our ability to obtain or amend
the necessary permits, consents, or authorizations needed to advance expansion of the
deposit; |
| · | Risk
relating to our target of commencing gold production following the completion of a thorough
economic study, including the feasibility and economic viability of commencing gold production,
our ability to develop an economically feasible operating plan, our ability to obtain
sufficient external funding, and our ability to obtain the necessary permits and permit
amendments; |
| · | Risks
related to the Relief Canyon properties other than the Relief Canyon Mine, including
our ability to advance gold exploration, discover any deposits of gold of other minerals
which can be mined at a profit, maintain our unpatented mining claims and millsites,
commence mining, obtain and maintain any necessary permits, consents, or authorizations
needed to continue exploration, and raise the necessary capital to finance exploration
and potential expansion; |
| · | Our
ability to acquire additional mineral targets; |
| · | Our
ability to obtain additional external funding; |
| · | Our
ability to achieve any meaningful revenue; |
| · | Our
ability to engage or retain geologists, engineers, consultants and other key management
and mining personnel necessary to successfully operate and grow our business; |
| · | The
volatility of the market price of our common stock or our intention not to pay any cash
dividends in the foreseeable future; |
| · | Changes
in any federal, state or local laws and regulations or possible challenges by third parties
or contests by the federal government that increase costs of operation or limit our ability
to explore on certain portions of our property; |
| · | Continuing
decreases in the market price for gold and economic and political events affecting the
market prices for gold and other minerals which may be found on our exploration properties;
and |
| · | The
factors set forth under “Risk Factors” beginning on page 8 of
this registration statement on Form S-3. |
Many
of these factors are beyond our ability to control or predict. Although we believe that the expectations reflected in our forward-looking
statements are based on reasonable assumptions, such expectations may prove to be materially incorrect due to known and unknown
risk and uncertainties. You should not unduly rely on any of our forward-looking statements. These statements speak only as of
the date of this registration statement on Form S-3. Except as required by law, we are not obligated to publicly release
any revisions to these forward-looking statements to reflect future events or developments. All subsequent written and oral forward-looking
statements attributable to us and persons acting on our behalf are qualified in their entirety by the cautionary statements contained
in this section and elsewhere in this registration statement on Form S-3.
OUR
BUSINESS
Overview
We
are a gold and precious metals exploration company pursuing exploration, development and mining opportunities primarily in Nevada.
We are currently focused on exploration at our Relief Canyon properties in Pershing County in northwestern Nevada and, if economically
feasible, commencing mining at the Relief Canyon Mine. None of our properties contain proven and probable reserves, and all of
our activities on our properties are exploratory in nature.
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.
Relief
Canyon Mine Property
Our
Relief Canyon property rights currently total approximately 25,000 acres and are comprised of approximately 948 owned unpatented
mining claims, 120 owned millsite claims, 172 leased unpatented mining claims, and 2,235 acres of leased and 2,770 acres of subleased
private lands. As currently defined by exploration drilling, most of the Relief Canyon deposit is located on property
that is subject to a 2% net smelter return production royalty, with a portion of the deposit located on property subject
to net smelter return production royalties totaling 4.5%. The rest of the property is subject, under varying circumstances,
to net smelter return production royalties ranging from 2% to 5%.
Since
acquisition of the Relief Canyon Mine property, our exploration efforts have been focused primarily on expanding the known Relief
Canyon Mine deposit. Our 2011–2013 exploration drilling programs expanded the deposit. We began a drilling program in 2014
which we completed in early 2015. In this program, we drilled a total of 134 holes, for approximately 74,000 feet, for the purpose
of extending and upgrading the current deposit. The 2014 drill results, which include some gold intercepts at significantly higher
grades than the average historic grade of the Relief Canyon deposit of approximately one gram per ton, were viewed as positive,
and we expect to expand on these results in our 2015 drilling program. We began our 2015 drilling program in May 2015, which is
focused on expanding the high-grade zones in the North Target Area where high-grade gold intercepts were recently encountered,
as well as expanding the resource to the southwest, northeast, and to the west with step-out drilling from known zones of gold
mineralization. Since we acquired Relief Canyon, we have drilled a total of 376 drill holes comprising approximately 203,000 feet
at the Relief Canyon Mine property.
In
July 2015, we reported the following update of our estimate of mineralized material at the Relief Canyon deposit, calculated at
a gold price assumption of $1,200 per ounce and a cut-off grade of 0.005 ounces of gold per ton.
Tons |
|
|
Average gold grade
(ounces per ton) |
|
|
37,335,000 |
|
|
|
0.020 |
|
“Mineralized
material” as used in this registration statement on Form S-3, although permissible under the Securities and Exchange Commission
(“SEC”) Guide 7, does not indicate “reserves” by SEC standards. We cannot be certain that
any part of the Relief Canyon deposit will ever be confirmed or converted into SEC Industry Guide 7 compliant “reserves.” Investors
are cautioned not to assume that all or any part of the mineralized material will be confirmed or converted into reserves or that
mineralized material can be economically or legally extracted.
We
are continuing the 2015 drilling program and plan to incorporate the results of the 2015 drilling program into a further updated
mineralized material estimate. We plan to conduct a thorough economic study on Relief Canyon which should provide estimates of
potential production rates, cash costs, all-in-sustaining costs, mine life and other key factors. We expect to consider a plan
to commence mining and processing based on this economic study.
If
we were to decide to pursue the commencement of production at Relief Canyon, additional external financing would be required.
Although the Relief Canyon Mine currently has an available leach pad and processing facility and we have senior mine and processing
personnel in place, we would be required to obtain mining equipment (which could be through purchase, lease, contract mining or
a combination of these), hire employees for the mine and the processing plant, purchase materials and supplies, commence mining,
leaching and processing activities, and continue these activities as well as the corporate activities currently conducted for
a number of months until sufficient positive cash flow is produced by gold sales to fund all of these ongoing activities. The
economic study will include estimates of the amounts of additional external financing required and the time period required prior
to achieving sufficient positive cash flow, at assumed gold prices and operating parameters, to fund these expenditures and our
operations on an ongoing basis.
Additional
external financing could be obtained by the sale of equity or debt securities, asset sales, project or product financing or strategic
alternatives, which could include third party purchasers of an interest in the Relief Canyon Mine or other projects or business
combinations which could include a sale of the mine or the Company. There are no assurances that we will be successful in raising
sufficient financing to commence production at Relief Canyon or to continue our business.
During
the remainder of 2015, we plan to focus primarily on completing an economic study on the proposed mine, advancing our 2015 drilling
program, advancing permit applications related primarily to potential mine expansions and continuing work to develop an economically
feasible mining and processing plan. We estimate that costs for these activities for the remainder of 2015, not including general
and administrative costs, will total approximately $4.0 million.
Corporate
Information
Our
principal executive offices are located at 1658 Cole Boulevard, Building 6-Suite 210, Lakewood, CO 80401 and our telephone
number is 720-974-7254. We maintain a website at www.pershinggold.com, which contains information about us. Our website and the
information contained in and connected to it are not a part of this prospectus.
THE
OFFERING
Common
stock offered by the selling stockholders: |
|
1,421,884
shares (1) |
|
|
|
Total shares of
common stock outstanding on September 17, 2015: |
|
21,707, 671 |
|
|
|
Shares of common
stock to be issued upon conversion of 1,487 outstanding shares of Series E Convertible Preferred Stock: |
|
292,094 |
|
|
|
Shares of common
stock to be issued upon exercise of outstanding $7.20 warrants issued in connection with the Series E Convertible
Preferred Stock: |
|
338,539 |
|
|
|
Total common
stock assumed outstanding before this offering: |
|
22,338,304 (2) |
|
|
|
Common stock
assumed outstanding after this offering: |
|
22,338,304 (2) |
|
|
|
Use of proceeds: |
|
We will not
receive any proceeds from the sale of shares in this offering by the selling stockholders. |
|
|
|
Nasdaq: |
|
PGLC |
|
|
|
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 8 of this prospectus before deciding whether or not to invest in shares of our
common stock. |
(1) The
shares of common stock include (i) 585,432 shares of common stock issued or issuable to holders of Series E Convertible
Preferred Stock upon conversion, (ii) 338,539 shares of common stock issuable to holders of the warrants that were issued
in connection with the Series E Convertible Preferred Stock upon exercise of the warrants and (iii) 497,913 shares of
common stock held by Barry Honig or GRQ Consultants, Inc. 401K.
(2) The
number of shares assumed outstanding before and after the offering is based upon 21,707,671 shares currently outstanding, which
includes 293,338 shares previously issued upon conversion of Series E Convertible Preferred Stock, plus (i) 292,094
shares of common stock assumed to have been issued upon conversion of the outstanding shares of Series E Convertible Preferred
Stock and (ii) 338,539 shares of common stock assumed to have been issued upon exercise of the warrants issued in connection
with the Series E Convertible Preferred Stock and excludes:
| · | 1,811,121 shares
of common stock issuable upon the exercise of outstanding options; |
| · | 2,689,215 shares
of common stock issuable upon the exercise of outstanding warrants which are not registered
hereunder; |
| · | 1,559,256
shares of common stock issuable upon conversion of Series E Preferred Stock which are
not registered hereunder; and |
| · | 785,826 shares
of common stock issuable pursuant to restricted stock units. |
RISK
FACTORS
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
value 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 do not contain mineral reserves and we do not know
if any deposits of gold or other minerals can be mined at a profit. 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 minerals 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 mineral production, including a net smelter royalty
of 2% or 2.5% on production from most of our Relief Canyon Mine property, which would increase our costs of production and make
our ability to operate profitably more difficult. We are also obligated to pay a net smelter royalty of up to 5% on production
from some of our claims and lands.
We
are an exploration stage company and have only recently commenced exploration activities on our claims. We reported a net loss
for the six months ended June 30, 2015 and the year ended December 31, 2014, and expect to incur operating losses for the
foreseeable future.
Our
evaluation of our Relief Canyon Mine property is primarily based on historical production data and on new exploration data that
we have developed since 2011, supplemented by historical exploration data. Our plans for recommencing mining and processing activities
at the Relief Canyon Mine property are in their early stages and preliminary, as are our exploration programs on the Relief Canyon
expansion properties. 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 and commencement of mining activities that we plan to undertake. These potential
problems include, but are not limited to, unanticipated problems relating to exploration, costs and expenses that may exceed current
estimates and the requirement for external funding to continue our business. 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
$(8.1) million for the six months ended June 30, 2015. We reported a net loss of approximately $(16.5) million for the year ended
December 31, 2014. We expect to incur significant losses into the foreseeable future. Our monthly burn rate for all costs
during 2014 was approximately $1.1 million, including $575,000 for general and administrative costs (including all employee salaries,
public company expenses, consultants, and land holdings costs) and $525,000 for exploration activities. We expect, based on our
current preliminary budget, our monthly burn rate for all costs in 2015 to be approximately $1.1 million (including approximately
$500,000 for general and administrative costs and $575,000 for exploration, permitting, and other Relief Canyon Mine activities),
which may increase as our plans develop. We expect to require additional external financing to fund operations and exploration
by mid-2016. 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.
We may not be able to establish mineral reserves on our properties or be able to mine any gold or any other minerals on a profitable
basis. 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
spent approximately $13.4 million on our business and exploration during the year ended December 31, 2014 and $12.7 million
during the six months ended June 30, 2015 (of which $6.0 million was related to the transaction with Newmont USA Limited (“Newmont”),
as discussed below in “Business and Properties – Relief Canyon Property – Property History” and “Management’s
Discussion and Analysis of Financial Condition and Results of Operation – Overview”). Our estimated total cost for
2015 for exploration, permitting, landholding and for general and administrative costs is approximately $12.9 million. If, following
the completion of a thorough economic study, we decide to pursue the commencement of production at Relief Canyon, additional external
financing would be required. In addition, even if we do not decide to pursue the commencement of production at Relief Canyon,
we will be required to raise additional funds in order to finance our operations by mid-2016. We may be unable to secure additional
financing on terms acceptable to us, or at all. Our inability to raise additional funds would prevent us from achieving our business
objectives and would 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.
If
we decide to pursue the commencement of mining and processing activities at Relief Canyon, unanticipated problems or delays may
negatively affect our business and financial condition.
If
we were to decide to pursue the commencement of mining and processing activities at Relief Canyon, additional external financing
would be required. Although the Relief Canyon Mine currently has an available leach pad and processing facility and we have
senior mine and processing personnel in place, we would be required to obtain mining equipment (which could be through purchase,
lease, contract mining or a combination of these), hire employees for the mine and the processing plant, purchase materials and
supplies, commence mining, leaching and processing activities, and continue these activities as well as the corporate activities
currently conducted for a number of months until sufficient positive cash flow is produced by gold sales to fund all of these
ongoing activities. We may suffer significant delays or cost overruns as a result of a variety of factors, such as increases in
the prices of materials, mining or processing problems, unanticipated variations in mined materials, shortages of workers or materials,
transportation constraints, adverse weather, equipment failures, fires, damage to or destruction of property and equipment, environmental
problems, unforeseen difficulties or labor issues, any of which could delay or prevent us from commencing or ramping up mining
and processing. If our start-up were prolonged or delayed or our costs were higher than anticipated, we could be unable to obtain
sufficient funds to cover the additional costs, and our business could experience a substantial setback. Prolonged problems could
have a material adverse effect on our business, consolidated financial condition or results of operations and threaten our viability.
We
are a junior exploration company with no mining activities and we may never have any mining activities in the future.
Our
primary 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 or 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 a history of losses and may never achieve any meaningful revenue.
We
acquired all of our property interests since August 2011. Our operating history consists of our exploration activities. We
have no income-producing activities from mining or exploration, and have a history of losses stemming from the acquisition of
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 and there is no assurance we will be able to develop an economically feasible operating
plan for the Relief Canyon Mine. There is a strong possibility that we will not find any other 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 the leases covering some of our property interests to make annual lease payments 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 annual property maintenance costs payable to the BLM for all of the unpatented mining claims and millsites
in the Relief Canyon area in 2014 were approximately $205,000, and we expect our annual maintenance costs to be approximately
$205,000 in 2015. Our lease payments, advance royalty and royalty payments and claim maintenance payments are described below
under “Business and Properties”.
Our
business is subject to extensive environmental regulations that 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 that 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 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
a substantial bond under various laws relating to mining and the environment and may in the future be required to post a larger
bond 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. In March 2015, we increased the amount
of our reclamation bond with BLM and the NDEP to approximately $5.6 million, which is currently approximately $108,000 in excess
of the current coverage requirement, to reclaim land disturbed in our exploration and mining operations. Approximately $5.5 million
of our reclamation bond covers both exploration and mining 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, and approximately $12,500 covers exploration on the Relief Canyon expansion properties. The remaining $108,000 of
financial assurance can be used to satisfy, or partially satisfy, future bonding requirements for exploration or mining. Our preliminary
estimate of the likely amount of additional financial assurance for future exploration is approximately $100,000, although we
expect periodic increases due to effects of inflation. Our preliminary estimate of the likely amount of additional financial assurance
to recommence mining operations is $600,000, which may increase as our mining plans are finalized and reviewed by the applicable
agencies.
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 conclude that the Relief Canyon Mine deposit can be profitably mined, or
discover other commercially exploitable deposits, we may face substantial delays and costs associated with securing the additional
government licenses and permits that could preclude our ability to develop the mine. For example, we seek to amend the permits
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 BLM, 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 graves, 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 plan to seek amendments to our permits for our Relief Canyon gold processing facility to add a gold recovery (stripping)
system to the facility. If we conclude that the Relief Canyon deposit can be profitably mined, we would seek amendments to the
BLM Plan of Operations and the NDEP Reclamation permit to increase the size of the Relief Canyon open pit-mines and waste rock
storage areas. If the minable material exceeds 21 million tons, the current capacity of the leach pad, we would also need to seek
an amendment of the processing facility to expand the capacity of the leach pad and ponds to accommodate additional material.
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 annual cost of holding these permits will be approximately $35,000, and the
cost to amend these permits to authorize potential future mining including mining beneath the water table will total about $1.2
million, which is based on preliminary estimates and may increase as our mining plans are finalized. As with all permitting processes,
there is substantial uncertainty about when and if the permits will be issued. 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 could be challenged by third
parties, which could result in protracted litigation that could cause substantial delays, or may be granted in an unacceptable
timeframe or cost too much. Additionally, proposed mineral exploration and mining projects can become controversial and be opposed
by nearby landowners and communities, which can substantially delay and interfere with the permitting process. Delays in or inability
to obtain necessary permits would result in unanticipated costs, which may result in serious adverse effects upon our business.
The
value of our property and any other deposits we may seek or locate is subject to volatility in the price of gold.
Our
ability to obtain additional and continuing funding, and our profitability if and when we commence mining 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; |
| · | currency
exchange rates; |
| · | 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. |
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 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. Moreover, 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 on lands that we do not control. In such a case we would not have the right to extract those minerals. We do not
have title reports or opinions covering all of our Relief Canyon properties. The uncertainty resulting from not having title opinions
for all of our Relief Canyon properties or having detailed claim surveys on all of our properties leaves us exposed to potential
title defects. Defending challenges to our property title would be costly, and may divert funds that could otherwise be used for
exploration activities and other purposes.
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 any 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, if it includes concepts that have been
part of previous legislative proposals, could, among other things, (i) adopt the limitation on the number of millsites that
a claimant may use, 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, (vi) impose royalties on gold and other mineral production from unpatented mining claims
or impose fees on production from patented mining claims, and (vii) impose a fee on the amount of material displaced at a mine.
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 that 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 November 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.
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 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.
Most
of our directors and executive officers lack significant experience or technical training in exploring for precious and base metal
deposits and in developing mines. Accordingly, although our Senior Vice President has significant experience and expertise in
environmental permitting and regulatory matters for developing and operating mines and our Chief Operating Officer has significant
experience with mine operations, our management may not be fully aware of many of the other 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 that 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 certain stockholders 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”) and one of
the Company’s directors, Barry Honig. During the year ended December 31, 2012, Frost Gamma provided approximately $4.6
million in consideration for the issuance of certain of our securities. In the year ended December 31, 2013, Mr. Honig
provided approximately $5.6 million to us in consideration for the issuance of shares of the Company’s Series E
Preferred Stock. Additionally, Mr. Honig and Frost Gamma provided approximately $1.9 million and $150,000, respectively,
to us in consideration for the issuance of shares of common stock and warrants to purchase shares of common stock in July 2014
private placements. Mr. Honig also invested $150,000 in a private placement of our common stock in October 2014 and $2.5 million
in the April 2015 private placement. Curtailment of cash investments by Frost Gamma or Barry Honig could detrimentally impact
our cash availability and our ability to fund our operations.
Our
principal stockholders, officers and directors own a substantial interest in our voting securities, and investors may have limited
voice in our management.
Our
principal stockholders, Frost Gamma, Barry Honig and Levon Resources Ltd. (“Levon Resources”), as well as our officers
and directors, own, in the aggregate, approximately 50% of our voting securities, including shares of common stock issuable upon
the conversion of our Series E preferred stock. As of September 17, 2015, Frost Gamma owned 3,037,369, or approximately 13%, of
our voting securities, Levon Resources owned 1,954,366, or approximately 8%, of our voting securities, and Mr. Honig, who is a
director, owned 5,583,779, or approximately 24%, of our voting securities. As of that date, our officers and directors, including
Mr. Honig, own 6,785,549, or approximately 29%, of our voting securities. Additionally, the holdings of our officers and directors
may increase in the future upon exercise of options, warrants or convertible securities they may hold or be granted in the future
or if they otherwise acquire additional shares of our common stock, including through grants under our employee benefit plans.
As
a result of their ownership and positions, our principal stockholder, directors and executive officers collectively may be able
to influence all matters requiring stockholder 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 stockholders from realizing a premium over our
stock price.
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, and the listing rules of the Nasdaq Stock Market.
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 years ended December 31, 2013 and December 31, 2014 were approximately $900,000 and $900,000,
respectively. We expect these costs and costs associated with our listing on the Nasdaq Stock Market for 2015 to be approximately
$800,000.
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 of our small size, any current internal control
deficiencies may adversely affect our financial condition, results of operation and access to capital. At December 31, 2012,
management reported significant deficiencies related to (i) our internal audit functions, and (ii) a lack of segregation
of duties within accounting functions. Although as of December 31, 2014, management has concluded that our internal
control over financial reporting is effective, there can be no assurance that our internal control over financial reporting will
remain effective.
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, our compliance costs increased in 2014 and we expect these rules and
regulations to further increase our compliance costs 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.
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 our operations and exploration efforts; |
| · | fluctuation
in the supply of, demand and market price for gold; |
| · | our
ability to obtain additional 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.
Volatility
in the price of our common stock may subject us to securities litigation.
As
discussed above, the market for our common stock is characterized by significant price volatility when compared to seasoned issuers,
and we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. In the
past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in
the market price of its securities. We may in the future be the target of similar litigation. Securities litigation could result
in substantial costs and liabilities and could divert management's attention and resources.
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 limited trading market for our common stock and we cannot ensure that one will ever develop or be sustained.
Although
the Company’s common stock is currently quoted on the NASDAQ Global Market, there is limited trading activity. The
Company can give no assurance that an active market will develop, or if developed, that it will be sustained. If an
investor acquires shares of the Company’s common stock, the investor may not be able to liquidate the Company’s shares
should there be a need or desire to do so. 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 of our common
stock is limited and may be dependent on the market perception of our 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.
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 the exercise of outstanding options or warrants, it could create a circumstance commonly
referred to as an “overhang” in anticipation of which the market price of our common stock could decline. The existence
of an overhang, whether or not sales have occurred or are occurring, also could make it more difficult for us 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.
Conversion
of preferred stock and exercise of options or warrants may result in substantial dilution to existing stockholders.
Conversions
of our Series E Preferred stock presently owned by our principal shareholders and others and exercise of options and warrants
would have a dilutive effect on our common stock. As of September 17, 2015, we have reserved (i) 1,851,350 shares of our
common stock that are issuable upon conversion of our Series E Preferred Stock at a conversion rate of one share of Series
E Preferred Stock for approximately 196.429 shares of common stock, (ii) 1,811,121 shares of our common stock that are
issuable upon exercise of options to purchase our common stock, (iii) 3,027,754 shares of our common stock that are issuable
upon exercise of warrants to purchase our common stock, and (iv) 785,826 shares of our common stock that are issuable upon
vesting of restricted stock units. Further, any additional financing that we secure is likely to require the sale of additional
common stock and the granting of rights, preferences or privileges senior to those of our common stock and will result in additional
dilution of the existing ownership interests of our common stockholders.
Our
issuance of additional shares of common stock or securities convertible into common stock in exchange for services or to repay
debt would dilute the proportionate ownership and voting rights of existing stockholders and could have a negative impact on the
market price of our common stock.
Our
board of directors may generally issue shares of common stock or securities convertible into common stock to pay for debt or services,
without further approval by our stockholders based upon such factors that our board of directors may deem relevant at that time.
We have, in the past, issued securities for debt to reduce our obligations. We have also issued securities as payment for services.
It is likely that we will issue additional securities to pay for services and reduce debt in the future. We cannot give you any
assurance that we will not issue additional shares of common stock or securities convertible into common stock under circumstances
we may deem appropriate at the time.
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.
The
elimination of monetary liability against our directors, officers and employees under our articles of incorporation and the existence
of indemnification rights to our directors, officers and employees may result in substantial expenditures by our Company and may
discourage lawsuits against our directors, officers and employees.
Our
articles of incorporation contain provisions which eliminate the liability of our directors for monetary damages to our Company
and stockholders. Our bylaws also require us to indemnify our officers and directors. We may also have contractual indemnification
obligations under our agreements with our directors, officers and employees. The foregoing indemnification obligations could result
in our Company incurring substantial expenditures to cover the cost of settlement or damage awards against directors, officers
and employees that we may be unable to recoup. These provisions and resultant costs may also discourage our Company from bringing
a lawsuit against directors, officers and employees for breaches of their fiduciary duties, and may similarly discourage the filing
of derivative litigation by our stockholders against our directors, officers and employees even though such actions, if successful,
might otherwise benefit our Company and stockholders.
Anti-takeover
provisions may impede the acquisition of our Company.
Certain
provisions of the Nevada General Corporation Law have anti-takeover effects and may inhibit a non-negotiated merger or other business
combination. These provisions are intended to encourage any person interested in acquiring us to negotiate with, and to obtain
the approval of, our board of directors in connection with such a transaction. However, certain of these provisions may discourage
a future acquisition of us, including an acquisition in which the stockholders might otherwise receive a premium for their shares.
As a result, stockholders who might desire to participate in such a transaction may not have the opportunity to do so.
USE
OF PROCEEDS
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.
SELLING
STOCKHOLDERS
Up
to 1,421,884 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. The shares underlying the Series E Preferred Stock and the warrants received in connection
with the issuance of the Series E Preferred Stock are being registered pursuant to registration rights obligations of the
Company. Of the shares of common stock being sold by Mr. Honig and his affiliate, the GRQ Consultants Inc. 401K, (i) 165,000
shares were purchased from a predecessor to the Company, and 27,778 shares from an affiliate of the predecessor, in June 2010,
(ii) 18,518 shares were purchased in September 2010 on conversion of debt owed by the Company to Mr. Honig, (iii) 41,667
shares were issued in February 2011 in connection with a transaction in which Mr. Honig lent money to the Company, (iv) 55,556
shares were purchased in November 2011 from another investor in a private transaction, and (v) 189,394 shares were purchased
in December 2012 in a private placement by the Company to Mr. Honig and other investors.
The
1,421,884 shares of our common stock consists of (i) 585,432 shares have been issued, or are issuable, to holders of Series E
Convertible Preferred Stock upon conversion, (ii) 338,539 shares are issuable upon exercise of the warrants that were issued
to purchasers of the Series E Convertible Preferred Stock (iii) 308,519 shares of common stock held by Barry Honig,
and 189,394 shares of common stock held by GRQ Consultants, Inc. 401K, an affiliate of Mr. Honig.
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
1,421,884 shares of common stock are being registered to permit public resales 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 who are transferees, pledgees or other successors in interest to the listed 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. Unless otherwise indicated in the footnotes to the table below: (i) subject to community property laws
where applicable, the selling stockholders, to our knowledge, have sole voting and investment power with respect to the shares
beneficially owned by them; (ii) none of the selling stockholders are broker-dealers, or are affiliates of a broker-dealer;
and (iii) the selling stockholders have not had a material relationship with us within the past three years.
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 21,707,671 shares of common stock outstanding
as of September 17, 2015.
| |
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 | |
BARRY
HONIG (2) | |
| 7,109,634 | | |
| 308,519 | | |
| 6,801,115 | | |
| 28 | % |
GRQ
CONSULTANTS, INC. 401K (3) | |
| 3,451,326 | | |
| 189,394 | | |
| 3,261,932 | | |
| 14 | % |
ALPHA
CAPITAL ANSTALT (4) | |
| 101,000 | | |
| 101,000 | | |
| 0 | | |
| __ | % |
HUDSON
BAY MASTER FUND LTD (5) | |
| 77,967 | | |
| 77,967 | | |
| 0 | | |
| — | % |
IROQUOIS
MASTER FUND LTD (6) | |
| 23,568 | | |
| 13,467 | | |
| 10,101 | | |
| * | % |
X-CAL
USA, INC (7) | |
| 33,667 | | |
| 33,667 | | |
| 0 | | |
| — | % |
MELECHDAVID
INC (8) | |
| 51,345 | | |
| 26,574 | | |
| 24,771 | | |
| * | % |
STEPHEN
D. ALFERS (9) | |
| 1,596,822 | | |
| 26,310 | | |
| 1,570,512 | | |
| 7 | % |
OBERAL
INTERNATIONAL INC (10) | |
| 78,929 | | |
| 78,929 | | |
| 0 | | |
| — | % |
2035718
ONTARIO INC (11) | |
| 35,234 | | |
| 35,234 | | |
| 0 | | |
| — | % |
JFP
CORPORATION (12) | |
| 13,156 | | |
| 13,156 | | |
| 0 | | |
| — | % |
NACHUM
STEIN (13) | |
| 1,667 | | |
| 1,667 | | |
| 0 | | |
| — | % |
MICHAEL
BRAUSER (14) | |
| 854,667 | | |
| 53,146 | | |
| 801,521 | | |
| * | % |
AMERICAN
EUROPEAN INSURANCE COMPANY (15) | |
| 37,734 | | |
| 37,734 | | |
| 0 | | |
| — | % |
HSI
PARTNERSHIP (16) | |
| 1,667 | | |
| 1,667 | | |
| 0 | | |
| — | % |
ROYTOR
& CO. (17) | |
| 39,465 | | |
| 39,465 | | |
| 0 | | |
| — | % |
GRAHAM
MOYLAN (18) | |
| 2,895 | | |
| 2,895 | | |
| 0 | | |
| — | % |
PALLADIUM
CAPITAL ADVISORS, LLC (19) | |
| 4,467 | | |
| 4,467 | | |
| 0 | | |
| — | % |
BG
FUND LP (20) | |
| 23,334 | | |
| 23,334 | | |
| 0 | | |
| — | % |
CHRIS
CRUPI (21) | |
| 7,600 | | |
| 7,600 | | |
| 0 | | |
| — | % |
JOHN
PAPPAJOHN (22) | |
| 233,334 | | |
| 233,334 | | |
| 0 | | |
| — | % |
FOUR
KIDS INVESTMENT (23) | |
| 121,420 | | |
| 99,197 | | |
| 22,223 | | |
| * | % |
JONATHAN
HONIG (24) | |
| 649,552 | | |
| 13,161 | | |
| 636,391 | | |
| * | % |
| |
| | | |
| | | |
| | | |
| | |
TOTAL | |
| — | | |
| 1,421,884 | | |
| — | | |
| | |
*
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. |
| (i) | (a)
1,237,109 shares of common stock held by Mr. Honig, (b) options to purchase 744,444 shares
of common stock held for the account of Mr. Honig which may be exercised within 60 days,
(c) 652 shares of Series E Preferred Stock held by Mr. Honig which may be converted into
128,071 shares of common stock, and (d) warrants to purchase 66,343 shares of common
stock. |
| (ii) | (a)
2,056,368 shares of common stock, (b) 564,065 warrants to purchase shares of common stock,
and (c) 4,230 shares of Series E Preferred Stock which may be converted into 830,893
shares of common stock held by GRQ Consultants, Inc. 401K (“GRQ 401K”); 55,217
shares of common stock held by GRQ Consultants, Inc. (“GRQ Consultants”);
(a) 727,606 shares of common stock, (b) 2,070 shares of Series E Preferred Stock which
may be converted into 406,607 shares of common stock, and (c) warrants to purchase 112,274
shares of common stock held by GRQ Consultants, Inc. Roth 401K FBO Barry Honig (“GRQ
Roth 401K”); and (a) 27,778 shares of common stock, (b) 581 shares of Series E
Preferred Stock which may be converted into 114,125 shares of common stock and (c) warrants
to purchase 38,734 shares of common stock held by GRQ Consultants, Inc. Defined Benefit
Plan (“GRQ Defined Plan”). Mr. Honig is the trustee of GRQ 401K, GRQ Roth
401K and GRQ Defined Plan and President of GRQ Consultants, and, in such capacity, has
voting and dispositive power over the securities held by such entities. |
The
address for Mr. Honig is 555 S. Federal Highway, #450, Boca Raton, FL 33432.
| (3) | Includes
(i) 2,056,368 shares of common stock, (ii) 564,065 warrants to purchase shares of common
stock, and (iii) 4,230 shares of Series E Preferred Stock which may be converted into
830,893 shares of common stock held by GRQ Consultants, Inc. 401K (“GRQ 401K”).
Mr. Honig is the trustee of GRQ 401K, and, in such capacity, has voting and dispositive
power over the securities held by such entity. The address for GRQ 401K is 555 S. Federal
Highway, #450, Boca Raton, FL 33432. |
| (4) | Konrad
Ackermann has voting control and investment discretion over these shares of common stock
held by Alpha Capital Anstalt. The address for Alpha Capital Anstalt is c/o LII Financial
Services Corp., 510 Madison Avenue, 14th Floor, New York, New York 10022. |
| (5) | Hudson
Bay Capital Management LP, the investment manager of Hudson Bay Master Fund Ltd., has
voting and investment power over these shares of common stock. Sander Gerber is the managing
member of Hudson Bay Capital GP LLC, which is the general partner of Hudson Bay Capital
Management LP. Sander Gerber disclaims beneficial ownership over these shares of
common stock. The address for Hudson Bay Master Fund Ltd. is 777 Third Avenue, 30th Floor,
New York, New York 10017. |
| (6) | Iroquois
Capital Management L.L.C. (“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 Act of 1934, as amended) of the securities held by IMF.
The address for IMF is c/o Iroquois Capital Management L.L.C., 641 Lexington Avenue,
26th Floor, New York, New York 10022. |
| (7) | Paramount
Gold and Silver Corp. has voting control and investment discretion over these shares
of common stock held by X-Cal USA, Inc. The address for X-Cal USA, Inc.
is 665 Anderson Street, Winnemucca, Nevada 89445. |
| (8) | Mark
Groussman has voting control and investment discretion over these shares of common stock
held by Melechdavid Inc. The address for Melechdavid Inc. is 100 S. Pointe Drive,
# 1405, Miami Beach, Florida 33139. |
| (9) | Stephen
Alfers is President, Chief Executive Officer, and Chairman of our Board of Directors
of the Company. |
| (10) | Tal
Schibler has voting control and investment discretion over these shares of common stock
held by Oberal International Inc. The address for Oberal International Inc. is
c/o Schibler Hovagemyan, CP 5740, CH-1211 Geneva 11, Switzerland. |
| (11) | Richard
Kung has voting control and investment discretion over the shares of common stock held
by 2035718 Ontario Inc. The address for 2035718 Ontario Inc. is 99 Denlow Blvd.,
Toronto, Ontario Canada M3B 1R1. |
| (12) | Richard
Patricio has voting control and investment discretion over these shares of common stock
held by JFP Corporation. The address for JFP Corporation is 1216 Whiteoaks Avenue,
Mississauga, Ontario Canada L5J 3B7. |
| (13) | The
address for Mr. Stein is 444 Madison Avenue, Suite 501, New York, New York
10022. |
| (14) | The
address for Mr. Brauser is 4400 Biscayne Blvd., Suite 850, Miami, Florida 33137. |
| (15) | Nachum
Stein has voting control and investment discretion over these shares of common stock
held by American European Insurance Company. The address for American European
Insurance Company is 444 Madison Avenue, Suite 501, New York, New York 10022. |
| (16) | Nachum
Stein has voting control and investment discretion over these shares of common stock
held by HSI Partnership. The address for HSI Partnership is 444 Madison Avenue,
Suite 501, New York, New York 10022. |
| (17) | The
address for Roytor & Co. is RBC Dexia Investor Services SEC Cage 155 Toronto, ON
Canada M5V 3L3. |
| (18) | The
address for Mr. Moylan is 117 Achesan Boulevard, Toronto, Ontario Canada M5C 2B6. |
| (19) | Joel
Padowitz has voting control and investment discretion over these shares of common stock
held by Palladium Capital Advisors, LLC (“Palladium”). Palladium is
a registered broker-dealer and received the shares of Series E Preferred Stock and warrants
which are convertible into and exercisable for the common stock registered hereunder
as underwriting compensation. The address for Palladium is 230 Park Avenue, Suite 539,
New York, New York 10169. |
| (20) | The
address for BG Fund LP is 18 King Street East, Suite 810, Toronto, ON Canada M5C
1C4. |
| (21) | The
address for Mr. Crupi is 2029 Rolling Brook Drive, Ottawa, Ontario Canada K1W 1C9. |
| (22) | The
address for Mr. Pappajohn is 2116 Financial Center, 666 Walnut Street, Des Moines, Iowa
50309. |
| (23) | The
address for Four Kids Investment is 17582 Bocaire Way, Boca Raton, FL 33487. |
| (24) | The
address for Jonathan Honig is 4263 NW 61st Lane, Boca Raton, FL 33496. |
PLAN
OF DISTRIBUTION
This
prospectus relates to the sale by the selling stockholders identified in this prospectus of up to 1,421,884 shares of our common
stock, par value $0.0001 per share.
Each
selling stockholder of the securities and any of their pledgees, assignees and successors-in-interest may, from time to time,
sell any or all of their securities covered hereby on the Nasdaq Stock Market or any other stock exchange, market or trading facility
on which the securities are traded or in private transactions. These sales may be at fixed or negotiated prices. A
selling stockholder may use any one or more of the following methods when selling securities:
| · | ordinary
brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
| · | block
trades in which the broker-dealer will attempt to sell the securities 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; |
| · | settlement
of short sales entered into after the effective date of the registration statement of
which this prospectus is a part; |
| · | in
transactions through broker-dealers that agree with the selling stockholders to sell
a specified number of such securities at a stipulated price per security; |
| · | through
the writing or settlement of options or other hedging transactions, whether through an
options exchange or otherwise; |
| · | a
combination of any such methods of sale; or |
| · | any
other method permitted pursuant to applicable law. |
The
selling stockholders may also sell securities under Rule 144 under the Securities Act, 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 securities,
from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an
agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case
of a principal transaction a markup or markdown in compliance with FINRA IM-2440.
In
connection with the sale of the securities or interests therein, the selling stockholders may enter into hedging transactions
with broker-dealers or other financial institutions, which may in turn engage in short sales of the securities in the course of
hedging the positions they assume. The selling stockholders may also sell securities short and deliver these securities
to close out their short positions, or loan or pledge the securities to broker-dealers that in turn may sell these securities. The
selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or create
one or more derivative securities which require the delivery to such broker-dealer or other financial institution of securities
offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus
(as supplemented or amended to reflect such transaction).
The
selling stockholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters”
within the meaning of the Securities Act 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 securities purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. Each selling stockholder has informed the Company that it does not
have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the securities. In
no event shall any broker-dealer receive fees, commissions and markups which, in the aggregate, would exceed eight percent (8%).
The
Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the securities. The
Company has agreed to indemnify the selling stockholders against certain losses, claims, damages and liabilities, including liabilities
under the Securities Act.
Because
selling stockholders may be deemed to be “underwriters” within the meaning of the Securities Act, they will be subject
to the prospectus delivery requirements of the Securities Act including Rule 172 thereunder. In addition, any
securities covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under
Rule 144 rather than under this prospectus. The selling stockholders have advised us that there is no underwriter or coordinating
broker acting in connection with the proposed sale of the resale securities by the selling stockholders.
The
resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities
laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and
is complied with.
Under
applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities
may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period,
as defined in Regulation M, prior to the commencement of the distribution. In addition, the selling stockholders will
be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M,
which may limit the timing of purchases and sales of securities of the common stock by the selling stockholders or any other person. We
will make copies of this prospectus available to the selling stockholders and have informed them of the need to deliver a copy
of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the
Securities Act).
DESCRIPTION
OF SECURITIES
Description
of Common Stock
We
are authorized to issue 200,000,000 shares of common stock, par value $0.0001 per share, and 50,000,000 shares of preferred stock.
As of September 17, 2015, we have issued and outstanding securities on a fully diluted basis:
| · | 21,707,671
shares of common stock (including 756,129 shares of restricted stock granted under our
equity incentive plans that have not yet vested); |
| · | 9,425
shares of Series E Convertible Preferred Stock, which are convertible into 1,851,350
shares of common stock; |
| · | Warrants
to purchase 3,027,754 shares of common stock; |
| · | Options
to purchase 1,811,121 shares of common stock; and |
| · | Restricted
stock units, which entitle the holders to receive 785,826 shares of common stock upon
vesting and upon the satisfaction of certain specified conditions. |
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.
Registration
Rights
In
connection with the August 2013 private placement, we entered into a registration rights agreement with the selling stockholders
which required the Company to file a registration statement under the Securities Act to register the resale of the common stock
issuable upon conversion of the Series E Convertible Preferred Stock and the exercise of the warrants. The registration
rights agreement also contains piggyback registration right requiring us to include such holders’ shares in future registration
statements that we may file. The registration statement of which this prospectus is a part provides for the resale by the
selling stockholders of the common stock issuable upon conversion of the Series E Convertible Preferred Stock and the exercise
of the warrants that were issued to purchasers of the Series E Convertible Preferred Stock.
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.
LEGAL
MATTERS
Davis
Graham & Stubbs LLP will pass upon the validity of the shares of common stock offered by the selling stockholders under
this prospectus.
EXPERTS
The
financial statements included in this reoffer prospectus have been so included in reliance on the report of KBL, LLP, an independent
registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.
You
should rely only on the information incorporated by reference or provided in this prospectus or any supplement to this prospectus.
We have authorized no one to provide you with different information. We are not making an offer of these securities in any state
where the offer is not permitted.
PART
II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item
14. Other Expenses of Issuance and Distribution.
The
following sets forth the expenses in connection with the issuance and distribution of the securities being registered hereby.
All amounts set forth below, other than the SEC registration fee are estimates.
SEC
Registration Fee** | |
$ | 2,239 | |
Legal
Fees and Expenses* | |
$ | 55,000 | |
Accountants
Fees and Expenses* | |
$ | 2,000 | |
Miscellaneous
Fees and Expenses* | |
$ | 25,000 | |
Total* | |
$ | 84,239 | |
___________________
| * | Estimated
solely for the purposes of this Item. Actual expenses may vary. |
Item
15. Indemnification of Officers and Directors.
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.
Item
16. Exhibits.
Exhibit
No. |
|
Description |
2.1 |
|
Share Exchange
Agreement dated as of September 29, 2010, by and among The Empire Sports & Entertainment Holdings Co., The Empire
Sports & Entertainment, Co. and the shareholders of The Empire Sports & Entertainment Co. (Incorporated
by reference to Exhibit 2.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission
on October 5, 2010) |
|
|
|
3.1 |
|
Amended
and Restated Articles of Incorporation, as amended by certificates of amendment dated May 16, 2011, February 27, 2012, and
December 11, 2014 (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the Securities
and Exchange Commission on October 4, 2010) |
|
|
|
3.2 |
|
Amended
and Restated Bylaws (Incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed with the Securities
and Exchange Commission on October 4, 2010) |
|
|
|
3.3 |
|
Certificate
of Designation for Series E (Incorporated by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q,
filed with the Securities and Exchange Commission on August 14, 2013) |
|
|
|
5.1 |
|
Opinion
of Davis Graham & Stubbs LLP* |
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|
|
23.1 |
|
Consent
of KBL, LLP** |
|
|
|
23.2 |
|
Consent
of Davis Graham & Stubbs LLP* |
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|
|
24.1 |
|
Power of
Attorney** |
*
Previously filed.
**
Filed herewith.
Item
17. Undertakings.
| (a) | The
undersigned registrant hereby undertakes: |
| (1) | To
file, during any period in which offers or sales are being made, a post-effective amendment
to this registration statement |
| (i) | To
include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; |
| (ii) | To
reflect in the prospectus any facts or events arising after the effective date of the
registration statement (or the most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities offered would not exceed
that which was registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent
no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation
of Registration Fee” table in the effective registration statement; |
| (iii) | To
include any material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such information in
the registration statement; |
Provided,
however, that paragraphs (a)(1)(i) and (a)(1)(ii) and (a)(1)(iii) of this section do not apply if the registration statement
is on Form S-3 or Form F-3 and the information required to be included in a post-effective amendment by those paragraphs is contained
in reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus
filed pursuant to Rule 424(b) that is part of the registration statement.
| (2) | That,
for the purpose of determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof. |
| (3) | To
remove from registration by means of a post-effective amendment any of the securities
being registered that remain unsold at the termination of the offering. |
| (4) | That,
for the purpose of determining liability under the Securities Act of 1933 to any purchaser: |
| (i) | Each
prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part
of the registration statement as of the date the filed prospectus was deemed part of
and included in the registration statement; and |
| (ii) | Each
prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part
of a registration statement in reliance on Rule 430B relating to an offering made pursuant
to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required
by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included
in the registration statement as of the earlier of the date such form of prospectus is
first used after effectiveness or the date of the first contract of sale of securities
in the offering described in the prospectus. As provided in Rule 430B, for liability
purposes of the issuer and any person that is at that date an underwriter, such date
shall be deemed to be a new effective date of the registration statement relating to
the securities in the registration statement to which that prospectus relates, and the
offering of such securities at that time shall be deemed to be the initial bona fide
offering thereof. Provided, however, that no statement made in a registration statement
or prospectus that is part of the registration statement or made in a document incorporated
or deemed incorporated by reference into the registration statement or prospectus that
is part of the registration statement will, as to a purchaser with a time of contract
of sale prior to such effective date, supersede or modify any statement that was made
in the registration statement or prospectus that was part of the registration statement
or made in any such document immediately prior to such effective date; or |
| (b) | The
undersigned registrant hereby undertakes that, for purposes of determining any liability
under the Securities Act of 1933, each filing of the registrant’s annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan’s annual report pursuant
to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof. |
| (c) | Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may be permitted
to directors, officers and controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such indemnification by it
is against public policy as expressed in the Act and will be governed by the final adjudication
of such issue. |
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City of Lakewood, State of Colorado on September 23,
2015.
|
PERSHING GOLD CORPORATION |
|
|
|
(Registrant) |
|
|
|
By: |
/s/ Stephen
Alfers |
|
|
Name: Stephen Alfers |
|
|
Title: President and Chief Executive
Officer |
POWER
OF ATTORNEY
Each
of the undersigned hereby constitutes and appoints Stephen Alfers and Eric Alexander, and each of them, the undersigned’s
true and lawful attorney-in-fact and agent, with full power of substitution, for the undersigned and in his name, place and stead,
to sign in any and all capacities (including, without limitation, the capacities listed below), the registration statement, any
and all amendments (including post-effective amendments) to the registration statement and any and all successor registration
statements of Pershing Gold Corporation, including any filings pursuant to Rule 462(b) under the Securities Act of 1933,
as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities
and Exchange Commission, and hereby grants to such attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and anything necessary to be done to enable Pershing Gold Corporation to comply with the provisions
of the Securities Act and all the requirements of the Securities and Exchange Commission, as fully to all intents and purposes
as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, or their or his or her substitute, or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature |
|
Title |
|
Date |
|
|
|
|
|
/s/
Stephen Alfers |
|
|
|
|
Stephen Alfers |
|
President, Chief
Executive Officer and Chairman |
|
September 23,
2015 |
|
|
(Principal
Executive Officer) |
|
|
|
|
|
|
|
/s/
Eric Alexander |
|
|
|
|
Eric Alexander |
|
Vice President
Finance and Controller |
|
September 23,
2015 |
|
|
(Principal
Financial and Accounting Officer) |
|
|
|
|
|
|
|
/s/
Barry Honig |
|
|
|
|
Barry Honig |
|
Director |
|
September 23,
2015 |
|
|
|
|
|
/s/
Alex Morrison |
|
|
|
|
Alex Morrison |
|
Director |
|
September 23,
2015 |
|
|
|
|
|
/s/
Edward Karr |
|
|
|
|
Edward Karr |
|
Director |
|
September 23,
2015 |
EXHIBIT
INDEX
Exhibit
No. |
Description |
2.1 |
Share Exchange Agreement dated as of
September 29, 2010, by and among The Empire Sports & Entertainment Holdings Co., The Empire Sports &
Entertainment, Co. and the shareholders of The Empire Sports & Entertainment Co. (Incorporated by reference
to Exhibit 2.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 5,
2010) |
|
|
3.1 |
Amended and Restated Articles of Incorporation,
as amended by certificates of amendment dated May 16, 2011, February 27, 2012, and December 11, 2014 (Incorporated by reference
to Exhibit 3.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 4,
2010) |
|
|
3.2 |
Amended and Restated Bylaws (Incorporated
by reference to Exhibit 3.2 to the Current Report on Form 8-K filed with the Securities and Exchange Commission
on October 4, 2010) |
|
|
3.3 |
Certificate of Designation for Series E
(Incorporated by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange
Commission on August 14, 2013) |
|
|
5.1 |
Opinion of Davis Graham & Stubbs
LLP* |
|
|
23.1 |
Consent of KBL, LLP** |
|
|
23.2 |
Consent of Davis Graham & Stubbs
LLP* |
|
|
24.1 |
Power of Attorney** |
*
Previously filed.
**
Filed herewith.
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
We hereby consent to the incorporation
by reference in this Registration Statement on Form S-3 of our report dated March 4, 2015 relating to the financial statements,
which appear in Pershing Gold Corporation’s Annual Report on Form 10-K for the year ended December 31, 2014. We also consent
to the reference to us under the heading “Experts” in such Registration Statement.
/s/ KBL, LLP
KBL, LLP
New York, NY
September 23, 2015
535 Fifth Avenue, 16th Floor, New York, NY 10017 |
212.785-9700 |
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