sagebrushform10q063011.htm

Dated: August 22, 2011

/s/ Sheldon Finkel

Shelly Finkel

Chief Executive Officer (Principal Executive Officer)

0001469299-11-000493.txt : 20110822 0001469299-11-000493.hdr.sgml : 20110822 20110822165441 ACCESSION NUMBER: 0001469299-11-000493 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20110630 FILED AS OF DATE: 20110822 DATE AS OF CHANGE: 20110822 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Sagebrush Gold Ltd. CENTRAL INDEX KEY: 0001432196 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE & VIDEO TAPE PRODUCTION [7812] IRS NUMBER: 260657736 STATE OF INCORPORATION: NV FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-150462 FILM NUMBER: 111050352 BUSINESS ADDRESS: STREET 1: 1640 TERRACE WAY CITY: WALNUT CREEK STATE: CA ZIP: 94597 BUSINESS PHONE: 925-930-6338 MAIL ADDRESS: STREET 1: 1640 TERRACE WAY CITY: WALNUT CREEK STATE: CA ZIP: 94597 FORMER COMPANY: FORMER CONFORMED NAME: Empire Sports & Entertainment Holdings Co. DATE OF NAME CHANGE: 20101005 FORMER COMPANY: FORMER CONFORMED NAME: Excel Global, Inc. DATE OF NAME CHANGE: 20080411 10-Q 1 sagebrushform10q063011.htm SAGEBRUSH FORM 10-Q 06/30/11 sagebrushform10q063011.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2011

o TRANSITION REPORT UNDER SECTION 13 OR 15 (D) OF THE EXCHANGE ACT

For the transition period from __________ to __________

COMMISSION FILE NUMBER: 333-150462

Sagebrush Gold Ltd.

(Name of Registrant as specified in its charter)

Nevada	26-0657736
(State or other jurisdiction of	(I.R.S. Employer
incorporation of organization)	Identification No.)

1640 TERRACE WAY, WALNUT CREEK CA 94597

(Address of principal executive office)

(925) 930-6338

(Registrant’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o	Accelerated filer	o

Non-accelerated filer (Do not check if smaller reporting company)	o	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yeso Nox

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. 37,095,805 shares of common stock are issued and outstanding as of August 22, 2011.

SAGEBRUSH GOLD LTD. AND SUBSIDIARIES

(FORMERLY THE EMPIRE SPORTS AND ENTERTAINMENT HOLDINGS CO.)

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2011

TABLE OF CONTENTS

		Page No.
PART I. - FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements
	Condensed Consolidated Balance Sheets as of June 30, 2011 (Unaudited) and December 31, 2010	F-2
	Condensed Consolidated Statements of Operations for the Six and Three Months Ended June 30, 2011 (Unaudited) and for the Period from February 10, 2010 (Inception) to June 30, 2010 and Three Months Ended June 30, 2010 (Unaudited)	F-3
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2011 (Unaudited) and for the Period from February 10, 2010 (Inception) to June 30, 2010 (Unaudited)	F-4
	Notes to Unaudited Condensed Consolidated Financial Statements	F-5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	36
Item 4.	Controls and Procedures.	36

PART II - OTHER INFORMATION
Item 1.	Legal Proceedings.	37
Item 1A.	Risk Factors.	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	37
Item 3.	Default upon Senior Securities.	37
Item 4.	(Removed and Reserved)	37
Item 5.	Other Information.	37
Item 6.	Exhibits.	38

F-1

SAGEBRUSH GOLD LTD. AND SUBSIDIARIES

(FORMERLY THE EMPIRE SPORTS AND ENTERTAINMENT HOLDINGS CO.)

CONDENSED CONSOLIDATED BALANCE SHEETS

		IN US$
		June 30,		December 31,
		2011		2010
		(Unaudited)		( Note 1)

CURRENT ASSETS:
Cash and cash equivalents	$	1,867,422	$	509,550
Restricted cash - current portion		2,745,216		560,000
Accounts receivable, net		225,000		293,990
Note and loan receivable		33,500		123,544
Loan receivable - related party		459,270		-
Advances, participation guarantees, and other receivables, net		52,142		526,296
Prepaid expenses		2,616,863		143,106
Deferred financing cost		590,790		-

Total Current Assets		8,590,203		2,156,486

OTHER ASSETS:
Restricted cash - long-term portion		500,000		500,000
Property and equipment, net		33,443		33,524
Advances - net of current portion		-		49,153
Deposits		58,509		38,509

Total Other Assets - Net		591,952		621,186

Total Assets	$	9,182,155	$	2,777,672

LIABILITIES AND STOCKHOLDERS' EQUITY


CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	349,813	$	101,329
Note payable, net of debt discount		1,684,210		-
Note payable - related party, net of debt discount		1,684,210		-
Convertible promissory notes, net of debt discount		265,342		-
Convertible promissory note - related party, net of debt discount		40,822		-
Due to related party		3,071		-

Total Liabilities		4,027,468		101,329

Commitments and Contingencies

STOCKHOLDERS' EQUITY :
Convertible Preferred stock ($.0001 Par Value; 50,000,000 Shares Authorized;
Series A, 750,000 and none issued and outstanding as of
June 30, 2011 and December 31, 2010, respectively)		75		-
Convertible Preferred stock ($.0001 Par Value; 8,000,000 Shares Authorized;
Series B, 800,000 and none issued and outstanding as of
June 30, 2011 and December 31, 2010, respectively)		800		-
Common stock ($.0001 Par Value; 500,000,000 Shares Authorized;
37,095,805 and 22,135,805 shares issued and outstanding as of
June 30, 2011 and December 31, 2010, respectively)		3,709		2,213
Additional paid-in capital		11,101,972		4,749,678
Accumulated deficit		(5,740,333)		(2,075,548)
Other comprehensive loss - cumulative foreign currency translation adjustment		(10,768)		-

Total Sagebrush Gold Ltd. Equity		5,355,455		2,676,343

Non-Controlling Interest in Subsidiary		(200,768)		-

Total Stockholders' Equity		5,154,687		2,676,343

Total Liabilities and Stockholders' Equity	$	9,182,155	$	2,777,672

See accompanying notes to unaudited condensed consolidated financial statements.

F-2

SAGEBRUSH GOLD LTD. AND SUBSIDIARIES

(FORMERLY THE EMPIRE SPORTS AND ENTERTAINMENT HOLDINGS CO.)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	IN US $
										For the Period from
	Three Months Ended			Three Months Ended			Six Months Ended			February 10, 2010 (Inception)
	June 30, 2011			to June 30, 2010			June 30, 2011			to June 30, 2010
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)

Net revenues	$	36,136		$	214,584		$	327,336		$	214,584

Operating expenses:
Cost of revenues		4,475			135,332			194,391			135,332
Sales and marketing expenses		327,877			103,160			337,791			109,685
Live events expenses		91,062			131,419			181,243			202,366
Compensation and related taxes		396,496			75,833			749,207			120,833
Consulting fees		223,375			261,591			411,235			265,591
General and administrative expenses		489,082			129,473			836,636			174,783

Total operating expenses		1,532,367			836,808			2,710,503			1,008,590

Loss from operations		(1,496,231	)		(622,224	)		(2,383,167	)		(794,006	)

OTHER INCOME (EXPENSES):
Interest expense and other finance costs,
net of interest income of $25,682		(1,021,348	)		-			(1,422,774	)		-

Total other (expense) - net		(1,021,348	)		-			(1,422,774	)		-


Net loss available to common stockholders	$	(2,517,579	)	$	(622,224	)	$	(3,805,941	)	$	(794,006	)

Less: Net loss attributable to non-controlling interest		200,768			-			200,768			-

Net loss attributable to Sagebrush Gold Ltd.	$	(2,316,811	)	$	(622,224	)	$	(3,605,173	)	$	(794,006	)

NET LOSS PER COMMON SHARE:
Basic and Diluted	$	(0.08	)	$	(0.03	)	$	(0.14	)	$	(0.06	)

WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - Basic and Diluted		28,758,138			19,256,904			25,718,458			12,379,437

See accompanying notes to unaudited condensed consolidated financial statements.

F-3

SAGEBRUSH GOLD LTD. AND SUBSIDIARIES

(FORMERLY THE EMPIRE SPORTS AND ENTERTAINMENT HOLDINGS CO.)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	IN US $
				For the Period from
	Six Months Ended			February 10, 2010 (Inception) to
	June 30, 2011			June 30, 2010
CASH FLOWS FROM OPERATING ACTIVITIES:	(Unaudited)			(Unaudited)

Net loss attributable to Sagebrush Gold Ltd.	$	(3,605,173	)	$	(794,006	)
Adjustments to reconcile net loss to net cash
(used in) operating activities:
Depreciation		4,053			2,088
Bad debts		60,794			-
Amortization of promotional advances		8,643			14,364
Amortization of debt discounts and deferred financing cost		1,308,794			-
Amortization of prepaid expense in connection
with the issuance of common stock issued for prepaid services		116,665			-
Contributed officer services		-			90,000
Non-controlling interest		(200,768	)		-
Common stock issued for services		-			240,000
Stock-based compensation		400,375			46,667
Changes in operating assets and liabilities:
Restricted cash - current portion		(2,185,216	)		-
Accounts receivable		8,196			(37,684	)
Advances, participation guarantees, and other receivables, net		454,962			(337,250	)
Prepaid expenses		(2,310,422	)		-
Deferred financing cost		(25,000	)		-
Deposits		(20,000	)		(40,269	)
Accounts payable and accrued expenses		226,734			58,882

NET CASH USED IN OPERATING ACTIVITIES		(5,757,363	)		(757,208	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Advances on note and loan receivable		(18,500	)		(25,000	)
Advances on loan receivable - related party		(375,726	)		-
Collection on note receivable		25,000			-
Cash acquired from acquisition of business		2,000,100			-
Purchase of property and equipment		(3,972	)		(32,708	)

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		1,626,902			(57,708	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock to founders		-			100
Proceeds from sale of common stock, net of issuance cost		246,000			1,541,230
Proceeds from loan payable		-			160,000
Proceeds from note payable - related party		2,250,000			468,500
Proceeds from note payable		2,250,000			-
Proceeds from convertible promissory note - related party		100,000			-
Proceeds from convertible promissory notes		650,000			-
Collection on subscription receivable		30			-
Payments on related party advances		-			(88,869	)
Proceeds from related party advances		3,071			163,364

NET CASH PROVIDED BY FINANCING ACTIVITIES		5,499,101			2,244,325

EFFECT OF EXCHANGE RATE ON CASH		(10,768	)		-

NET INCREASE IN CASH AND CASH EQUIVALENTS		1,357,872			1,429,409

CASH AND CASH EQUIVALENTS- beginning of period		509,550			-

CASH AND CASH EQUIVALENTS- end of period	$	1,867,422		$	1,429,409

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest	$	4,771		$	-
Income taxes	$	-		$	-

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Issuance of common stock for payment of loans payable	$	-		$	360,000
Carrying value of assumed assets, liabilities and certain promotion
rights agreement contributed from Golden Empire, LLC	$	-		$	(30,551	)
Common stock issued for prepaid services	$	280,000		$	-
Beneficial conversion feature and debt discount in connection with the
issuance of convertible promissory notes	$	750,000		$	-
Debt discount in connection with the issuance of the credit facility
agreement and notes payable	$	1,800,000		$	-
Deferred financing cost in connection with the issuance of the credit facility
agreement and notes payable	$	900,000		$	-

See accompanying notes to unaudited condensed consolidated financial statements.

F-4

SAGEBRUSH GOLD LTD. AND SUBSIDIARIES

(FORMERLY THE EMPIRE SPORTS AND ENTERTAINMENT HOLDINGS CO.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Sagebrush Gold Ltd. (the “Company”), formerly The Empire Sports & Entertainment Holdings Co., formerly Excel Global, Inc. (the “Shell”), was incorporated under the laws of the State of Nevada on August 2, 2007. We operated as a web-based service provider and consulting company. In September 2010, we changed our name to The Empire Sports & Entertainment Holdings Co, which was subsequently changed to Sagebrush Gold Ltd. on May 16, 2011.

On September 29, 2010, the Company entered into a Share Exchange Agreement (the “Exchange Agreement”) with The Empire Sports & Entertainment, Co., a privately held Nevada corporation incorporated on February 10, 2010 (“Empire”), and the shareholders of Empire (the “Empire Shareholders”). Upon closing of the transaction contemplated under the Exchange Agreement (the “Exchange”), the Empire Shareholders transferred all of the issued and outstanding capital stock of Empire to the Company in exchange for shares of common stock of the Company. Such Exchange caused Empire to become a wholly-owned subsidiary of the Company.

At the closing of the Exchange, each share of Empire’s common stock issued and outstanding immediately prior to the closing of the Exchange was exchanged for the right to receive one share of the Company’s common stock. Accordingly, an aggregate of 19,602,000 shares of the Company’s common stock were issued to the Empire Shareholders. Additionally, pursuant to the Agreement of Conveyance, Transfer of Assets and Assumption of Obligations (the “Conveyance Agreement”), the Company’s former officers and directors cancelled 17,596,603 of the Company’s common stock they owned. Such shares were administratively cancelled subsequent to the Exchange pursuant to the Conveyance Agreement (see below). After giving effect to the cancellation of shares, the Company had a total of 2,513,805 shares of common stock outstanding immediately prior to Closing. After the Closing, the Company had a total of 22,115,805 shares of common stock outstanding, with the Empire Shareholders owning 89% of the total issued and outstanding shares of the Company's common stock.

On October 8, 2010, the Company administratively entered into a series of agreements with the purpose of transferring certain of the residual assets and liabilities which were owned by the Shell with which the Company did a reverse merger on September 29, 2010. These agreements were effectively consummated on the date of reverse merger. The agreements transferred certain assets and liabilities in connection with a website business to the former shareholders of the Shell in exchange for 17,596,603 shares of the Company's common stock. Management believes that the fair value of the shares received for those assets and liabilities was not material. The shares were cancelled immediately upon receipt.

Prior to the Exchange, the Company was a shell company with no business operations.

The Exchange is being accounted for as a reverse-merger and recapitalization. Empire is the acquirer for financial reporting purposes and the Company is the acquired company. Consequently, the assets and liabilities and the operations that will be reflected in the historical financial statements prior to the Exchange will be those of Empire and will be recorded at the historical cost basis of Empire, and the consolidated financial statements after completion of the Exchange will include the assets and liabilities of the Company and Empire, historical operations of Empire and operations of the Company from the closing date of the Exchange.

Empire was incorporated in Nevada on February 10, 2010 to succeed to the business of its predecessor company, Golden Empire, LLC (“Golden Empire”), which was formed and commenced operations on November 30, 2009. Empire is principally engaged in the production and promotion of music and sporting events. The Company assumed all assets, liabilities and certain promotion rights agreements entered into by Golden Empire at carrying value of ($30,551) which approximated fair value on February 10, 2010. Golden Empire ceased operations on that date. The results of operations for the period from January 1, 2010 to February 9, 2010 of Golden Empire were not material. As a result of the Exchange, Empire became a wholly-owned subsidiary of the Company and the Company succeeded to the business of Empire as its sole line of business.

A newly-formed wholly-owned subsidiary, EXCX Funding Corp., a Nevada corporation was formed in January 2011 for the purpose of entering into a Credit Facility Agreement in February 2011 (see Note 4).

F-5

SAGEBRUSH GOLD LTD. AND SUBSIDIARIES

(FORMERLY THE EMPIRE SPORTS AND ENTERTAINMENT HOLDINGS CO.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

On April 26, 2011, a shareholder agreement (the “Shareholder Agreement”) was executed and entered into between Empire, Concert International Inc. (“CII”) and Capital Hoedown Inc. (“Capital Hoedown”). Pursuant to the Shareholder Agreement, Empire has the right to select two directors, and CII has the right to select one director of Capital Hoedown. Based on the Shareholder Agreement, Empire owns 66.67% and CII owns 33.33% of the corporate joint venture (see Note 8). Contemporaneously with the execution of the Shareholder Agreement, Empire issued a revolving demand loan to CII and Denis Benoit, up to a maximum amount of $500,000. Additionally, Empire issued a revolving demand loan to the Company’s majority owned subsidiary, Capital Hoedown Inc., up to a maximum amount of $4,000,000 which bears 10% interest per annum and payable on the earlier of the termination date on January 15, 2012 or upon demand by Empire. Such loan to the Company’s majority owned subsidiary, Capital Hoedown Inc., is considered an intercompany transaction and as such is eliminated at consolidation.

On May 16, 2011, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Secretary of State of the State of Nevada in order to change its name to “Sagebrush Gold Ltd.” from “The Empire Sports & Entertainment Holdings Co.”

On May 24, 2011, the Company entered into four limited liability company membership interests purchase agreements (the “Agreements”) with the owners of Arttor Gold LLC (“Arttor Gold”). Each of the owners of Arttor Gold, (the “Members”) sold their interests in Arttor Gold in privately negotiated sales resulting in the Company acquiring 100% of Arttor Gold. Pursuant to the Agreements, the Company issued 8,000,000 shares of preferred stock, designated Series B Convertible Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock”) and 13,000,000 shares of Common Stock in exchange for 100% membership interests in Arttor Gold. Each share of Series B Convertible Preferred Stock is convertible into one share each of the Company’s common stock. Assuming the conversion into Common Stock of the Series B Preferred Stock, the Company has an additional 21,000,000 shares of its Common Stock, on a fully-diluted basis, outstanding following the transaction. As a result of this transaction, on May 24, 2011, Arttor Gold became a wholly-owned subsidiary of the Company. Arttor Gold (an exploration stage company), a Nevada limited liability company, was formed and organized on April 28, 2011. Arttor Gold operates as a U.S. based junior gold exploration and mining company.

A newly-formed wholly-owned subsidiary, Noble Effort Gold, LLC, a Nevada corporation was formed in June 2011.

Basis of presentation

The consolidated condensed financial statements are prepared in accordance with generally accepted accounting principles in the United States of America ("US GAAP") and present the financial statements of the Company, its wholly-owned subsidiaries and a subsidiary with a majority voting interest of approximately 67% (33% is owned by non-controlling interests). In the preparation of consolidated financial statements of the Company, intercompany transactions and balances are eliminated and net earnings are reduced by the portion of the net earnings of subsidiaries applicable to non-controlling interests. All adjustments (consisting of normal recurring items) necessary to present fairly the Company's financial position as of June 30, 2011, and the results of operations and cash flows for the six months ended June 30, 2011 have been included. The results of operations for the six months ended June 30, 2011 are not necessarily indicative of the results to be expected for the full year. The accounting policies and procedures employed in the preparation of these consolidated condensed financial statements have been derived from the audited financial statements of the Company for the period ended December 31, 2010, which are contained in Form 10-K as filed with the Securities and Exchange Commission on March 15, 2011. The consolidated balance sheet as of December 31, 2010 was derived from those financial statements.

Use of estimates

In preparing the condensed consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the condensed consolidated balance sheet, and revenues and expenses for the period then ended. Actual results may differ significantly from those estimates. Significant estimates made by management include, but are not limited to, allowance for bad debts, the useful life of property and equipment, the fair values of certain promotional contracts and the assumptions used to calculate fair value of options granted, beneficial conversion on notes payable, common stock issued for services and common stock issued in connection with an acquisition.

F-6

SAGEBRUSH GOLD LTD. AND SUBSIDIARIES

(FORMERLY THE EMPIRE SPORTS AND ENTERTAINMENT HOLDINGS CO.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Non-controlling Interests in Consolidated Financial Statements

In December 2007, the FASB issued ASC 810-10-65, “Non-controlling Interests in Consolidated Financial Statements, an amendment of Accounting Research Bulletin No. 51,” (“SFAS No. 160”). This statement clarifies that a non-controlling (minority) interest in a subsidiary is an ownership interest in the entity that should be reported as equity in the consolidated financial statements. It also requires consolidated net income to include the amounts attributable to both the parent and non-controlling interest, with disclosure on the face of the consolidated income statement of the amounts attributed to the parent and to the non-controlling interest. This statement is effective for fiscal years beginning after December 15, 2008, with presentation and disclosure requirements applied retrospectively to comparative financial statements. In accordance with ASC 810-10-45-21, those losses attributable to the parent and the non-controlling interest in subsidiary may exceed their interests in the subsidiary’s equity. The excess and any further losses attributable to the parent and the non-controlling interest shall be attributed to those interests even if that attribution results in a deficit non-controlling interest balance. As of June 30, 2011, the Company recorded a deficit non-controlling interest balance of $200,768 in connection with our majority-owned subsidiary, Capital Hoedown Inc. as reflected in the accompanying consolidated balance sheets.

Cash and cash equivalents

The Company considers all highly liquid investments with a maturity of three months or less when acquired to be cash equivalents. The Company places its cash with a high credit quality financial institution. The Company’s account at this institution is insured by the Federal Deposit Insurance Corporation ("FDIC") up to $250,000. In addition to the basic insurance deposit coverage, the FDIC is providing temporary unlimited coverage for non-interest bearing transaction accounts through December 31, 2012. At June 30, 2011, the Company has reached bank balances exceeding the FDIC insurance limit by approximately $835,000. To reduce its risk associated with the failure of such financial institution, the Company evaluates at least annually the rating of the financial institution in which it holds deposits.

Fair value of financial instruments

The carrying amounts reported in the balance sheet for cash and cash equivalents, restricted cash, accounts receivable, other receivables, prepaid expenses, accounts payable and accrued expenses approximate their estimated fair market value based on the short-term maturity of these instruments. The Company did not identify any other assets or liabilities that are required to be presented on the condensed consolidated balance sheets at fair value in accordance with the accounting guidance.

Restricted cash

The Company considers cash that is held as a compensating balance for letter of credit arrangements, cash held in escrow and funds that will be exclusively used for certain music and sporting events as restricted cash.

Restricted cash – current and long term portion, consisted of the following:

	June 30, 2011		December 31, 2010
Letter of credit arrangements – current portion	$	560,000	$	560,000
Letter of credit arrangements – long-term portion		500,000		500,000
Cash held in escrow		487,649		-
Funds to be used for a particular event		1,697,567		-
	$	3,245,216	$	1,060,000

Letter of credit arrangements were held primarily in certificates of deposit to be used as security in accordance with the terms of the employment agreements with the Company’s Chief Executive Officer and Executive Vice President. The letter of credit may be reduced after six months, and after each six month period thereafter, in increments of $250,000. Restricted cash long-term portion represents the amount that may be reduced after 1 year.

F-7

SAGEBRUSH GOLD LTD. AND SUBSIDIARIES

(FORMERLY THE EMPIRE SPORTS AND ENTERTAINMENT HOLDINGS CO.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounts receivable

The Company has a policy of reserving for accounts receivable based on its best estimate of the amount of probable credit losses in its existing accounts receivable. The Company periodically reviews its accounts receivable to determine whether an allowance is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of an account may be in doubt. Account balances deemed to be uncollectible are charged to bad debt expense after all means of collection have been exhausted and the potential for recovery is considered remote. At June 30, 2011 and December 31, 2010, management determined that an allowance was necessary which amounted to $131,225 and $30,500, respectively. The Company recorded bad debt expense of $60,794 for the six months ended June 30, 2011 and $0 for the prior period ended June 30, 2010.

Property and equipment

Property and equipment are carried at cost. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. Depreciation is calculated on a straight-line basis over the estimated useful life of the assets, generally one to five years.

Impairment of long-lived assets

Long-lived assets of the Company are reviewed for impairment whenever events or circumstances indicate that the carrying amount of assets may not be recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. The Company did not consider it necessary to record any impairment charges for the six months ended June 30, 2011 and for the period from February 10, 2010 (inception) to June 30, 2010.

Income taxes

The Company accounts for income taxes in accordance with Accounting Standards Codification (“ASC”) Topic 740, Income Taxes. Under ASC Topic 740, deferred tax assets are recognized for future deductible temporary differences and for tax net operating loss and tax credit carry-forwards, and deferred tax liabilities are recognized for temporary differences that will result in taxable amounts in future years. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the periods in which the deferred tax asset or liability is expected to be realized or settled. A valuation allowance is provided to offset the net deferred tax asset if, based upon the available evidence, management determines that it is more likely than not that some or all of the deferred tax asset will not be realized.

ASC Topic 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740, also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company may, from time to time, be assessed interest and/or penalties by taxing jurisdictions, although any such assessments historically have been minimal and immaterial to its financial results. The Company’s Federal tax returns for 2010 are still open. In the event the Company has received an assessment for interest and/or penalties, it has been classified in the statements of operations as other general and administrative costs.

Revenue recognition

The Company records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured.

In accordance with ASC Topic 605-45 “Revenue Recognition – Principal Agent Considerations”, the Company reports revenues for transactions in which it is the primary obligor on a gross basis and revenues in which it acts as an agent on and earns a fixed percentage of the sale on a net basis, net of related costs. Credits or refunds are recognized when they are determinable and estimable.

The Company earns revenue primarily from live event ticket sales, participation guarantee fees, sponsorship, advertising, concession fees, promoter and advisory services fees, television rights fee and pay per view fees for events broadcast on television or cable.

F-8

SAGEBRUSH GOLD LTD. AND SUBSIDIARIES

(FORMERLY THE EMPIRE SPORTS AND ENTERTAINMENT HOLDINGS CO.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

The following policies reflect specific criteria for the various revenue streams of the Company:

Revenue from ticket sales is recognized when the event occurs. Advance ticket sales and event-related revenues for future events are deferred until earned, which is generally once the events are conducted. The recognition of event-related expenses is matched with the recognition of event-related revenues.

·	Revenue from participation guarantee fee, sponsorship, advertising, television/cable distribution agreements, promoter and advisory service agreements is recognized in accordance with the contract terms, which are generally at the time events occur.

·	Revenue from the sale of products is recognized at the point of sale at the live event concession stands.

The following table provides data regarding the source of our net revenues:

	For the Six Months Ended June 30, 2011					For the period from February 10, 2010 (Inception) to June 30, 2010

	$		% of Total			$		% of Total
Live events – promoter’s fee and related revenues		314,764		96	%		80,195		37	%
Television rights fee		-		-			101,889		47	%
Advertising – sponsorships		12,572		4	%		32,500		15	%
Total		327,336		100	%		214,584		100	%

Cost of revenues and prepaid expenses

Costs related to live events are recognized when the event occurs. Event costs paid prior to an event are capitalized to prepaid expenses and then charged to expense at the time of the event. Cost of other revenue streams are recognized at the time the related revenues are realized. Prepaid expenses of $2,616,863 and $143,106 at June 30, 2011 and December 31, 2010, respectively, consist primarily of costs paid for future events which will occur within a year, such as cost paid for a music event that will occur in August 2011. Prepaid expenses also include prepayments of insurance, public relation services and other administrative expenses which are being amortized over the terms of the agreements.

Concentrations of credit risk and major customers

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. Management believes the financial risks associated with these financial instruments are not material. The Company places its cash with high credit quality financial institutions. The Company maintains its cash in bank deposit accounts that, at times, may exceed Federally insured limits.

For the six months ended June 30, 2011, we recognized revenues from promoter and advisory fee from live events of $314,764 from four companies that accounted for 15%, 29%, 25%, and 29%, respectively, of our total net revenues. For the period from February 10, 2010 (Inception) to June 30, 2010, we recognized revenues from television rights fee of $101,889 from one company that accounted for 48% of our total net revenues. At June 30, 2011, one customer accounted for 100% of accounts receivable. At December 31, 2010, two customers accounted for 95% of accounts receivable.

F-9

SAGEBRUSH GOLD LTD. AND SUBSIDIARIES

(FORMERLY THE EMPIRE SPORTS AND ENTERTAINMENT HOLDINGS CO.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Advances, participation guarantees and other receivables

Advances receivable represent cash paid in advance to athletes for their training. The Company has the right to offset the advances against the amount payable to such athletes for their future sporting events. The amounts advanced under such arrangements are short-term in nature. Promotional advances represents signing bonuses paid to athletes upon signing the promotional agreements with the Company. Promotional advances are amortized over the terms of the promotional agreements, generally from three to four years. During the six months ended June 30, 2011, amortization of these promotional advances amounted to $8,643 which is included under the caption of live events expenses in the accompanying condensed consolidated statements of operations. Other receivables consist primarily of interest receivables. The carrying amount of the assigned promotional advances of $59,612 were allocated to retained earnings as a result of the Separation agreement entered into between the Company and the former president of the Company on March 28, 2011 in accordance with ASC 505-30 “Treasury Stock” (see Note 7).

	June 30, 2011		December 31, 2010
Advances receivable	$	-	$	13,250
Promotional advances – current portion		-		34,572
Promotional advances – long-term portion		-		49,153
Refundable advance		-		205,000
Participation guarantees, net of allowance		-		255,000
Other receivables		52,142		18,474
	$	52,142	$	575,449

Advertising

Advertising is expensed as incurred and is included in sales and marketing expenses on the accompanying condensed consolidated statement of operations. For the six months ended June 30, 2011, advertising expense totaled $268,073. For the period from February 10, 2010 (inception) to June 30, 2010, advertising expense totaled $20,745.

Net loss per common share

Net loss per common share is calculated in accordance with ASC Topic 260: Earnings Per Share (“ASC 260”). Basic loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. The computation of diluted net loss per share does not include dilutive common stock equivalents in the weighted average shares outstanding as they would be anti-dilutive. As of June 30, 2011, potential shares of common stock could arise from 2,600,000 stock options, 8,750,000 shares of convertible preferred stock and 750,000 shares equivalents issuable pursuant to embedded conversion features which could potentially dilute future earnings per share. For the period from February 10, 2010 (inception) to June 30, 2010, there were 2,800,000 options which could potentially dilute future earnings per share.

F-10

SAGEBRUSH GOLD LTD. AND SUBSIDIARIES

(FORMERLY THE EMPIRE SPORTS AND ENTERTAINMENT HOLDINGS CO.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

The following table sets forth the computation of basic and diluted loss per share:

	Six month period ended June 30, 2011			For the Period from February 10, 2010 to June 30, 2010
Numerator:
Net loss attributable to Sagebrush Gold Ltd.	$	(3,605,173	)	$	(794,006	)

Denominator:
Denominator for basic loss per share
(weighted-average shares)		25,718,458			12,379,437

Denominator for dilutive loss per share
(adjusted weighted-average)		37,818,458			15,179,437

Basic and diluted loss per share from continuing operations	$	(0.14	)	$	( 0.06	)

The following sets forth the computation of weighted-average common shares outstanding basic and diluted for the period ended June 30:

	June 30, 2011	June 30, 2010
Weighted-average common shares oustanding (Basic)	25,718,458	12,379,437

Weighted-average common stock
Equivalents
Stock options	2,600,000	2,800,000
Convertible preferred stock	8,750,000	-
Convertible promissory notes -
Embedded conversion feature	750,000	-

Weighted-average common shares outstanding (Diluted)	37,818,458	15,179,437

Stock-based compensation

Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the consolidated condensed financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting date.

F-11

SAGEBRUSH GOLD LTD. AND SUBSIDIARIES

(FORMERLY THE EMPIRE SPORTS AND ENTERTAINMENT HOLDINGS CO.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Related parties

Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all related party transactions.

The Company considers Denis Benoit a related party, as executive officer of Capital Hoedown, Inc. Commencing in November 2010 the Company advanced funds to Mr. Benoit personally, and subsequently to a joint venture, which as a result of Mr. Benoit’s position as an executive officer may constitute a violation of Section 402 of the Sarbanes Oxley Act of 2002 (“SOX”). Certain of the funds loaned may have been utilized for non joint venture expenses of Mr. Benoit or a predecessor entity (see Note 2).

Recent accounting pronouncements

In June 2009, the FASB issued ASC Topic 810-10, “Amendments to FASB Interpretation No. 46(R)”. This updated guidance requires a qualitative approach to identifying a controlling financial interest in a variable interest entity (“VIE”), and requires ongoing assessment of whether an entity is a VIE and whether an interest in a VIE makes the holder the primary beneficiary of the VIE. ASC Topic 810-10 is effective for annual reporting periods beginning after November 15, 2009.

In July 2010, the FASB issued ASU No. 2010-20, “Receivables (Topic 310): Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses”. ASU 2010-20 requires additional disclosures about the credit quality of a company’s loans and the allowance for loan losses held against those loans. Companies will need to disaggregate new and existing disclosures based on how it develops its allowance for loan losses and how it manages credit exposures. Additional disclosure is also required about the credit quality indicators of loans by class at the end of the reporting period, the aging of past due loans, information about troubled debt restructurings, and significant purchases and sales of loans during the reporting period by class. The new guidance is effective for interim and annual periods beginning after December 15, 2010. Management anticipates that the adoption of these additional disclosures will not have a material effect on the Company’s financial position or results of operations.

Other accounting standards that have been issued or proposed by the FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

NOTE 2 –NOTES AND LOANS RECEIVABLE

On June 28, 2010, the Company loaned $25,000 to an unrelated party in exchange for a demand promissory note. The note was due on demand and bore interest at 6% per annum. The borrower had the option of paying the principal sum to the Company in advance in full or in part at any time without premium or penalty. In February 2011, the borrower paid the principal amount of this promissory note.

Between December 2010 and June 2011, the Company loaned $33,500 of demand promissory notes to an athlete. The notes are due on demand and are non-interest bearing. However unpaid principal after the lender’s demand shall accrue interest at 5% per annum until paid.

F-12

SAGEBRUSH GOLD LTD. AND SUBSIDIARIES

(FORMERLY THE EMPIRE SPORTS AND ENTERTAINMENT HOLDINGS CO.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

NOTE 2 –NOTES AND LOANS RECEIVABLE (continued)

In November 2010, Empire loaned a total of $18,000 to Denis Benoit, the president of CII, in exchange for promissory notes. CII owns 33.33% of the issued and outstanding shares of Capital Hoedown (see Note 8). The notes are due on August 31, 2011 and bear interest at 4% per annum. The borrower shall have the option of paying the principal sum to Empire prior to the due date without penalty. Empire loaned to CII and Denis Benoit, up to a maximum amount of $500,000 in the form of a revolving demand loan executed on April 26, 2011. The revolving demand loan bears 10% interest per annum and is payable on the earlier of the termination date, on January 15, 2012, or upon demand by Empire. As of June 30, 2011, loan receivable from CII and Denis Benoit (related parties) totaled $459,270 (including the $18,000 above). The Company recorded interest receivable of $17,881 from such loans and was included in other receivables as of June 30, 2011. Additionally, Empire issued a revolving demand loan to Capital Hoedown, up to a maximum amount of $4,000,000 which bears 10% interest per annum and payable on the earlier of the termination date on January 15, 2012 or upon demand by Empire. This loan is exclusively for the operations and management of Capital Hoedown, Inc. As of June 30, 2011, Empire has advanced a total of $2,525,332 to the Company’s majority owned subsidiary, Capital Hoedown. Such loan to Capital Hoedown is considered an intercompany transaction and as such is eliminated at consolidation.

NOTE 3 – PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

	Estimated Life	June 30, 2011 (Unaudited)			December 31, 2010
Furniture and fixtures	5 years	$	14,057		$	14,057
Office and computer equipments	5 years		25,117			21,145
Leasehold improvements	5 years		7,250			7,250
			46,424			42,452
Less: accumulated depreciation			(12,981	)		(8,928	)

		$	33,443		$	33,524

For the six months ended June 30, 2011, depreciation expense amounted to $4,053. For the period from February 10, 2010 (inception) to June 30, 2010, depreciation expense amounted to $2,088.

NOTE 4 – NOTES PAYABLE

In February 2011, the Company and its wholly-owned subsidiaries, Empire and EXCX Funding Corp. (collectively the “Borrowers”), entered into a credit facility agreement (the “Credit Facility Agreement”) with two lenders, whereby one of the lenders is the Company’s Co-Chairman of the Board of Directors. The credit facility consists of a loan pursuant to which $4.5 million can be borrowed on a senior secured basis. The indebtedness under the loan facility will be evidenced by a promissory note payable to the order of the lenders. The loan shall be used exclusively to fund the costs and expenses of certain music and sporting events (the “Events”) as agreed to by the parties. The notes bear interest at 6% per annum and mature on January 31, 2012, subject to acceleration in the event the Borrowers undertake third party financing. In addition to the 6% interest, the Borrower shall also pay all interest, fees, costs and expenses incurred by lenders in connection with the issuance of this loan facility. Pursuant to the Credit Facility Agreement, the Borrowers entered into a Master Security Agreement, Collateral Assignment and Equity Pledge with the lenders whereby the Borrowers collaterally assigned and pledged to lenders, and granted to lenders a present, absolute, unconditional and continuing security interest in, all of the property, assets and equity interests of the Company as defined in such agreement. Furthermore, in connection with the Credit Facility Agreement, the Lenders entered into a Contribution and Security Agreement (the “Contribution Agreement”) with the Company’s Chief Executive Officer, Sheldon Finkel, pursuant to which Sheldon Finkel agreed to pay or reimburse the lenders the pro rata portion (1/3) of any net losses from Events and irrevocably pledged to lenders a certain irrevocable letter of credit dated in June 2010 in favor of Sheldon Finkel. As consideration for the extension of credit pursuant to the Credit Facility Agreement, the Borrowers are obligated to pay a fee equal to 15% of the initial loan commitment of $4.5 million (the “Preferred Return Fee”) of which the Company’s Chief Executive Officer, Sheldon Finkel, shall receive a pro-rata portion (1/3). The Preferred Return Fee shall be payable if at all, only out of the net profits from the Events. Accordingly, the Company shall record the

F-13

SAGEBRUSH GOLD LTD. AND SUBSIDIARIES

(FORMERLY THE EMPIRE SPORTS AND ENTERTAINMENT HOLDINGS CO.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

NOTE 4 – NOTES PAYABLE (continued)

Preferred Return Fee upon attaining net profits from the Events. The Company also agreed to issue to the lenders and Sheldon Finkel an aggregate of 2,250,000 shares of the Company’s newly designated Series A Preferred Stock, convertible into one share each of the Company’s common stock. The Company valued the 2,250,000 Series A Preferred Stock at the fair market value of the underlying common stock on the date of grant at $1.20 per share or $2,700,000 and recorded a debt discount of $1,800,000 and deferred financing cost of $900,000 which are being amortized over the term of the notes. Such deferred financing cost represents the 750,000 Series A Preferred Stock issued to Sheldon Finkel for guaranteeing one-third of the net losses and assignment of that certain irrevocable letter of credit, as described above. On May 4, 2011, 1,500,000 of these preferred shares were converted into common stock. Although the amount cannot be reasonably estimated at this time, management believes that revenues from the Events will not exceed its costs and accordingly the Company will be indebted to the Lenders, including the Co-Chairman of the Company, and the Credit Facility Agreement may be in default after accounting for the revenues from the Events. As a result, the obligations under the Contribution Agreements will become obligations of the parties thereto to each other. As of June 30, 2011, accrued interest and fees on these notes amounted to $123,514.

At June 30, 2011, note payable consisted of the following:

Note payable $ 2,250,000

Less: debt discount (565,790)

--------------------------

Note payable, net $ 1,684,210

===============

At June 30, 2011, note payable – related party consisted of the following:

Note payable – related party $ 2,250,000

Less: debt discount – related party (565,790)

--------------------------

Note payable - related party, net $ 1,684,210

===============

For the six months ended June 30, 2011, amortization of debt discount and deferred financing cost amounted to $736,330 and is included in interest expense. As of June 30, 2011, deferred financing cost amounted to $565,790 in connection with the issuance of Series A Preferred Stock issued to Sheldon Finkel for guaranteeing one-third of the net losses and assignment of that certain irrevocable letter of credit.

NOTE 5 – CONVERTIBLE PROMISSORY NOTES

On February 1, 2011, the Company raised $750,000 in consideration for the issuance of convertible promissory notes from various investors, including $100,000 from the Company’s Co-Chairman of the Board of Directors. The convertible promissory notes bear interest at 5% per annum and are convertible into shares of the Company’s common stock at a fixed rate of $1.00 per share. The convertible promissory notes are due on February 1, 2012. In connection with these convertible promissory notes, the Company issued 750,000 shares of the Company’s common stock. The Company valued these common shares at the fair market value on the date of grant. The funds are required to be held in escrow and may be released only in order to assist the Company in paying third party expenses, which may include activities related to broadening the Company’s shareholder base through shareholder awareness campaigns and other activities.

In accordance with ASC 470-20-25, the convertible promissory notes were considered to have an embedded beneficial conversion feature because the effective conversion price was less than the fair value of the Company’s common stock. In addition the Company allocated the proceeds received from such financing transaction to the convertible promissory note and the detached 750,000 shares of the Company’s common stock on a relative fair value basis in accordance with ASC 470 -20 “Debt with Conversion and Other Options”. Therefore the portion of proceeds allocated to the convertible debentures and the detached common stock amounted to $750,000 and was determined based on the relative fair values of each instruments at the time of issuance. Consequently the Company recorded a debt discount of $750,000 which is limited to the amount of proceeds and is being amortized over the term of the convertible promissory notes. The Company evaluated whether or not the convertible promissory notes contain embedded conversion features, which meet the definition of derivatives under ASC 815-15 “Accounting for Derivative Instruments and Hedging Activities” and related interpretations. The Company concluded that since the convertible promissory notes have a fixed conversion price of

F-14

SAGEBRUSH GOLD LTD. AND SUBSIDIARIES

(FORMERLY THE EMPIRE SPORTS AND ENTERTAINMENT HOLDINGS CO.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

NOTE 5 – CONVERTIBLE PROMISSORY NOTES (continued)

$1.00, the convertible promissory notes are not considered derivatives. As of June 30, 2011, accrued interest on these convertible promissory notes amounted to $15,437.

At June 30, 2011, convertible promissory notes consisted of the following:

Convertible promissory notes $ 650,000

Less: debt discount (384,658)

--------------------------

Convertible promissory notes, net $ 265,342

===============

At June 30, 2011, convertible promissory note – related party consisted of the following:

Convertible promissory note – related party $ 100,000

Less: debt discount (59,178)

--------------------------

Convertible promissory notes – related party, net $ 40,822

===============

For the six months ended June 30, 2011, amortization of debt discount amounted to $306,164 and is included in interest expense.

NOTE 6 – RELATED PARTY TRANSACTIONS

Note payable - related party

In February 2011, the Company and its wholly-owned subsidiaries, entered into a Credit Facility Agreement with two lenders, whereby one of the lenders is the Company’s Co-Chairman of the Board of Directors. The credit facility consists of a loan pursuant to which $4.5 million can be borrowed on a senior secured basis. The Company’s Co-Chairman funded $2,250,000 to the Company under this Credit Facility Agreement (see Note 4). Furthermore, in connection with the Credit Facility Agreement, the lenders entered into a Contribution Agreement with the Company’s Chief Executive Officer, Sheldon Finkel, pursuant to which Sheldon Finkel agreed to pay or reimburse the lenders the pro rata portion (1/3) of any net losses from Events and irrevocably pledged to lenders a certain irrevocable letter of credit dated in June 2010 in favor of Sheldon Finkel. The Company also agreed to issue to the lenders and Sheldon Finkel an aggregate of 2,250,000 shares of the Company’s newly designated Series A Preferred Stock, convertible into one share each of the Company’s common stock. As consideration for the extension of credit pursuant to the Credit Facility Agreement, the borrowers are obligated to pay a fee equal to 15% of the initial loan commitment of $4.5 million of which the Company’s Chief Executive Officer, Sheldon Finkel, shall receive a pro-rata portion (1/3). The Preferred Return Fee shall be payable if at all, only out of the net profits from the Events. On May 4, 2011, the holders of 1,500,000 shares of Series A Preferred Stock converted their shares into 1,500,000 shares of Common Stock. One of the holders is the Company’s Co-Chairman of the Board of Directors.

Convertible promissory note - related party

F-15

SAGEBRUSH GOLD LTD. AND SUBSIDIARIES

(FORMERLY THE EMPIRE SPORTS AND ENTERTAINMENT HOLDINGS CO.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

NOTE 6 – RELATED PARTY TRANSACTIONS (continued)

Loan receivable – related party

The Company considers Denis Benoit a related party, as executive officer of Capital Hoedown, Inc. Commencing in November 2010 Empire advanced funds to Mr. Benoit personally, and subsequently to a joint venture, which as a result of Mr. Benoit’s position as an executive officer may constitute a violation of Section 402 of the Sarbanes Oxley Act of 2002 (“SOX”). Certain of the funds loaned may have been utilized for non joint venture expenses of Mr. Benoit or a predecessor entity (see Note 2).

The loan to a related party, if in violation of Sarbanes-Oxley Act of 2002, including Section 402’s prohibition against personal loans to directors and executive officers, either directly or indirectly, could subject us to possible criminal, civil or administrative sanctions, penalties, or investigations, in addition to potential private securities litigation. Violations of the Sarbanes-Oxley Act of 2002 could result in significant penalties, including censure, cease and desist orders, revocation of registration and fines. It is also possible that the criminal penalties could exist, although criminal penalties require a related violation to have been willful, and not the result of an innocent mistake, negligence or inadvertence. In the end, it is possible that we could face any of these potential penalties or results, and any action by administrative authorities, whether or not ultimately successful, could have a material and adverse effect upon our reputation and business.

NOTE 7 – STOCKHOLDERS’ EQUITY

Common Stock

In February 2011, the Company issued 200,000 shares of the Company’s common stock in connection with a one year public relations and consulting agreement. The Company valued these common shares at the fair market value on the date of grant at $1.40 per share or $280,000. Accordingly, the Company recognized stock based consulting expense of $116,665 and prepaid expense of $163,335 during the six months ended June 30, 2011.

In March 2011, the Company entered into a Separation Agreement and General Release (the “Settlement Agreement”) with the former president of the Company. Pursuant to the Settlement Agreement, the former President, Mr. Cohen returned 900,000 shares of the Company’s common stock for cancellation and sold 1,200,000 shares of the Company’s common stock he owned to one or more purchasers who are accredited investors on the closing date (the “Closing”). At the Closing, the proceeds from the private sale of the 1,200,000 shares were distributed for payment and reimbursement of various fees and obligations outstanding to the Company, a certain vendor, the Company’s Co-Chairman of the Board of Directors and $115,000 to Mr. Cohen. The Closing occurred in April 2011 (see Note 8). In addition, Mr. Cohen’s employment agreement was terminated and the parties exchanged releases. In addition, at the Closing, the Company and Mr. Cohen agreed to: (i) assignments of certain boxing promotional rights agreements (subject to any required consents or approvals), and (ii) various profit sharing agreements with respect to certain of the boxing promotional rights agreements under which Mr. Cohen may elect to continue as the promoter of the boxers named therein. In connection with the return of the 900,000 shares of common stock, the Company valued the cancelled shares at $59,612 which represents the carrying amount of

the assigned promotional advances and was allocated to retained earnings as a result of the Separation agreement entered into between the Company and the former president of the Company on March 28, 2011 in accordance with ASC 505-30 “Treasury Stock”.

In April 2011, the Company sold an aggregate of 410,000 shares of common stock at a purchase price of $0.60 per share which generated gross proceeds of $246,000.

On May 4, 2011, the holders of 1,500,000 shares of Series A Preferred Stock converted their shares into 1,500,000 shares of Common Stock. One of the holders is the Company’s Co-Chairman of the Board of Directors. The Company valued these common shares at par value.

F-16

SAGEBRUSH GOLD LTD. AND SUBSIDIARIES

(FORMERLY THE EMPIRE SPORTS AND ENTERTAINMENT HOLDINGS CO.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

NOTE 7 – STOCKHOLDERS’ EQUITY (continued)

On May 24, 2011, the Company entered into four limited liability company membership interests purchase agreements with the owners of Arttor Gold. Each of the owners of Arttor Gold, (the “Members”) sold their interests in Arttor Gold in privately negotiated sales resulting in the Company acquiring 100% of Arttor Gold. Pursuant to the Agreements, the Company issued 8,000,000 shares of preferred stock, designated Series B Convertible Preferred Stock, and 13,000,000 shares of Common Stock in exchange for 100% membership interests in Arttor Gold. The issuance of 13,000,000 shares of common stock and issuance of 8,000,000 shares of Series B convertible preferred stock were valued at $2,000,130 which primarily represents the cash acquired and assumed liabilities of $21,750 from Arttor Gold. Each share of Series B Convertible Preferred Stock is convertible into one share each of the Company’s common stock.

Common Stock Options

On September 29, 2010, the Company’s Board of Directors and stockholders adopted the 2010 Stock Incentive Plan (the “2010 Plan”). Under the 2010 Plan, options may be granted which are intended to qualify as Incentive Stock Options under Section 422 of the Internal Revenue Code of 1986 (the "Code") or which are not intended to qualify as Incentive Stock Options thereunder. In addition, direct grants of stock or restricted stock may be awarded. The 2010 Plan has reserved 2,800,000 shares of common stock for issuance. Upon the closing of the Exchange, the Company has outstanding options to purchase 2,800,000 shares of the Company’s common stock under the 2010 Plan which represents an exchange of 2,800,000 options previously granted prior to the reverse merger and recapitalization with similar terms as discussed below.

On June 1, 2010, the Company granted an aggregate of 1,850,000 10-year options to purchase shares of common stock at $0.60 per share which vests one-third at the end of each three years to three officers of the Company. The 1,850,000 options were valued on the grant date at $0.60 per option or a total of $1,110,000 using a Black-Scholes option pricing model with the following assumptions: stock price of $0.60 per share (based on recent sales of the Company’s common stock in a private placement), volatility of 209% (estimated using volatilities of similar companies), expected term of 6.5 years, and a risk free interest rate of 3.29%. For the six months ended June 30, 2011, the Company recorded stock-based compensation expense of $155,000.

The Company granted 250,000 10-year options to purchase shares of common stock entered at $0.60 per share to the Company’s Executive Vice President in connection with his one year employment agreement commencing on October 1, 2010. The options vest and become exercisable in equal installments of the first three anniversaries of the effective date. The 250,000 options were valued on the grant date at $0.60 per option or a total of $150,000 using a Black-Scholes option pricing model with the following assumptions: stock price of $0.60 per share (based on recent sales of the Company’s common stock in a private placement), volatility of 209% (estimated using volatilities of similar companies), expected term of 6.5 years, and a risk free interest rate of 2.75%. For the six months ended June 30, 2011, the Company recorded stock-based compensation expense of $25,000.

On March 29, 2011, the Company granted an aggregate of 350,000 10-year options to purchase shares of common stock at $1.01 per share which vests one-third at the end of each three years to an officer and two employees of the Company. The 350,000 options were valued on the grant date at $1.01 per option or a total of $353,500 using a Black-Scholes option pricing model with the following assumptions: stock price of $1.01 per share, volatility of 202%, expected term of 6.5 years, and a risk free interest rate of 3.47%. For the six months ended June 30, 2011, the Company recorded stock-based compensation expense of $25,250.

At June 30, 2011, there was a total of $869,417 of unrecognized compensation expense related to these non-vested option-based compensation arrangements.

On June 1, 2010, the Company granted an aggregate of 950,000 10-year options to purchase shares of common stock at $0.60 per share which vests one third at the end of each three years to four consultants of the Company. The Company marked to market these options at June 30, 2011 using the fair market value of the stock on that date at $1.14 per share. The Black-Scholes option pricing model used for this valuation had the following assumptions: stock price of $1.14 per share, volatility of 202%, expected term of approximately nine years, and a risk free interest rate of 3.47%. For the six months ended June 30, 2011, the Company recorded stock-based consulting expense of $135,625.

F-17

SAGEBRUSH GOLD LTD. AND SUBSIDIARIES

(FORMERLY THE EMPIRE SPORTS AND ENTERTAINMENT HOLDINGS CO.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

NOTE 7 – STOCKHOLDERS’ EQUITY (continued)

On May 31, 2011, pursuant to a termination acknowledgement letter, the Company agreed to grant a former employee 50,000 10-year options to purchase shares of common stock at $1.01 per share. The 50,000 options were valued on the grant date at $1.19 per option or a total of $59,500 using a Black-Scholes option pricing model with the following assumptions: stock price of $1.19 per share, volatility of 205%, expected term of 6.5 years, and a risk free interest rate of 3.05%. For the six months ended June 30, 2011, the Company recorded stock-based compensation expense of $59,500.

During the six months ended June 30, 2011, 650,000 options were forfeited in accordance with the termination of employee relationships.

A summary of the stock options as of June 30, 2011 and changes during the period are presented below:


	Number of Options and Warrants			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
Balance at beginning of year		2,850,000		$	0.60		9.45
Granted		400,000			1.03		10.0
Exercised		-			-		-
Forfeited		(650,000	)		0.63		9.20
Cancelled		-			-		-
Balance outstanding at the end of period		2,600,000		$	0.66		9.07

Options exercisable at end of period		-		$	-
Options expected to vest		2,600,000
Weighted average fair value of options granted during the period				$	1.03

Stock options outstanding at June 30, 2011 as disclosed in the above table have approximately $995,000 intrinsic value at the end of the period.

NOTE 8 – COMMITMENTS AND CONTINGENCIES

Operating Lease

In March 2010, the Company signed a five year lease agreement for office space which will expire in March 2015. The lease requires the Company to pay a monthly base rent of $5,129 plus a pro rata share of operating expenses. The base rent is subject to annual increases beginning on April 1, 2011 as defined in the lease agreement. Future minimum rental payments required under these operating leases are as follows:

Period ending June 30:
2012		63,828
2013		65,709
2014		67,638
2015		51,849
	$	249,024

Rent expense was $34,653 for the six months ended June 30, 2011. Rent expense was $5,042 for the period from February 10, 2010 (inception) to June 30, 2010.

F-18

SAGEBRUSH GOLD LTD. AND SUBSIDIARIES

(FORMERLY THE EMPIRE SPORTS AND ENTERTAINMENT HOLDINGS CO.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

NOTE 8 – COMMITMENTS AND CONTINGENCIES (continued)

Consulting Agreement

On January 17, 2011, the Company entered into a one year Advertising and Promotional Services Agreement with a consultant. The consultant will provide planning, developing and implementing promotional campaigns for the Company. The Consultant is entitled to cash compensation of $30,000 per month. This agreement may be terminated by the Company with or without cause upon written notice 60 days following the date of this agreement.

Employment Agreement

In March 2011, the Company entered into a Separation Agreement and General Release with the former president of the Company. Pursuant to the Settlement Agreement, the former President, Mr. Cohen returned 900,000 shares of the Company’s common stock for cancellation and sold 1,200,000 shares of the Company’s common stock he owned to one or more purchasers who are accredited investors on the closing date. In addition, Mr. Cohen’s employment agreement was terminated and the parties exchanged releases. The closing of the proceeds from the private sale of the 1,200,000 shares occurred in April 2011 in connection with the Separation Agreement and General Release with the former president of the Company. The Company received a total of $77,250 for reimbursement of certain costs and expenses on the closing date pursuant to this agreement and such amount has been applied against live events expenses in the accompanying consolidated statements of operations.

Production Agreement

In November 2010, the Company entered into a letter agreement with a sports network programming company, whereby the Company will supply 12 fully produced and broadcast episodes of boxing matches each month beginning January 2011. The Company will pay the sports network programming company distribution fees of $16,500 per episode for a total of $198,000. In March 2011, both parties agreed to terminate this agreement. The Company did not incur any expenses from this agreement.

Management Fee Agreement

Contemporaneously with the execution of the Shareholder Agreement on April 26, 2011, the Company entered into a management service agreement with CII and a management fee of $100,000 (in Canadian dollars) shall be paid to CII each year such country music festival event is produced. The management fee will be paid in eight equal monthly installments of $12,500 and will cover the salaries of the manager and general office overhead.

Joint Venture Arrangement

In February 2011, a new entity was formed and organized in preparation and in connection with a proposed joint venture. Empire had entered into a non-binding joint venture term sheet in December 2010 whereby it outlines the material terms and conditions of a proposed joint venture to be entered into between Empire and Concerts International, Inc (see Note 2). Under the terms of this non-binding joint venture term sheet, the parties formed an entity, Capital Hoedown, Inc., to operate an annual country music festival. This Shareholder Agreement was executed and entered into between Empire, CII and Capital Hoedown on April 26, 2011. Based on the Shareholder Agreement, Empire owns 66.67% and CII owns 33.33% of the issued and outstanding shares of Capital Hoedown.

Royalty Agreement

On May 24, 2011, the Company, through its subsidiary, Arttor Gold, entered into two lease agreements with F.R.O.G. Consulting, LLC, an affiliate of one of the former members of Arttor Gold, for the Red Rock Mineral Property and the North Battle Mountain Mineral Prospect. The leases grant the exclusive right to explore, mine and develop gold, silver, palladium, platinum and other minerals on the properties for a term of ten (10) years and may be renewed in ten (10) year increments. The terms of the Leases may not exceed ninety-nine (99) years. The Company may terminate these leases at any time.

The Company is required under the terms of our property lease to make annual lease payments. The Company is also required to make annual claim maintenance payments to Federal Bureau of Land Management and to the county in which its property is located in order to maintain its rights to explore and, if warranted, to develop its property. If the Company fails to meet these obligations, it will lose the right to explore for gold on its property.

F-19

SAGEBRUSH GOLD LTD. AND SUBSIDIARIES

(FORMERLY THE EMPIRE SPORTS AND ENTERTAINMENT HOLDINGS CO.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

NOTE 8 – COMMITMENTS AND CONTINGENCIES (continued)

Until production is achieved, the Company’s lease payments (deemed “advance minimum royalties”) consist of an initial payment of $5,000 upon signing of each lease, followed by annual payments according to the following schedule for each lease:

Due Date of Advance Minimum Royalty Payment	Amount of Advance Minimum Royalty Payment
1st Anniversary	$	15,000
2nd Anniversary	$	35,000
3rd Anniversary	$	45,000
4th Anniversary	$	80,000
5th Anniversary and annually thereafter during the term of the lease	The greater of $100,000 or the U.S. dollar equivalent of 90 ounces of gold

In the event that the Company produces gold or other minerals from these leased, the Company’s lease payments will be the greater of (i) the advance minimum royalty payments according to the table above, or (ii) a production royalty equal to 3% of the gross sales price of any gold, silver, platinum or palladium that we recover and 1% of the gross sales price of any other minerals that the Company recovers. The Company has the right to buy down the production royalties on gold, silver, platinum and palladium by payment of $2,000,000 for the first one percent (1%). All advance minimum royalty payments constitute prepayment of production royalties to FROG, on an annual basis. If the total dollar amount of production royalties due within a calendar year exceed the dollar amount of the advance minimum royalty payments due within that year, the Company may credit all uncredited advance minimum royalty payments made in previous years against fifty percent (50%) of the production royalties due within that year. The Leases also requires the Company to spend a total of $100,000 on work expenditures on each property for the period from lease signing until December 31, 2012 and $200,000 on work expenditures on each property per year in 2013 and annually thereafter.

The Company is required to make annual claim maintenance payments to the Bureau of Land Management and to the counties in which its property is located. If the Company fails to make these payments, it will lose its rights to the property. As of the date of this Report, the annual maintenance payments are approximately $151 per claim, consisting of payments to the Bureau of Land Management and to the counties in which the Company’s properties are located. The Company’s property consists of an aggregate of 305 lode claims. The aggregate annual claim maintenance costs are currently approximately $46,000.

On July 15, 2011, the Company (the “Lessee”) entered into amended and restated lease agreements for the Red Rock Mineral Property and the North Battle Mountain Mineral Prospect by and among Arthur Leger (the “Lessor”) and F.R.O.G. Consulting, LLC (the “Payment Agent”) (collectively the “Parties”) in order to carry out the original intentions of the Parties and to correct the omissions and errors in the original lease, dated May 24, 2011. In the original lease, the Parties intended to identify Arthur Leger as the owner and lessor of the Red Rock Mineral Property and the North Battle Mountain Mineral Prospect and to designate the Payment Agent as the entity responsible for collecting and receiving all payments on behalf of Lessor. Lessor is the sole member of the Payment Agent and owns 100% of the outstanding membership interests of the Payment Agent. All other terms and conditions of the original lease remain in full force and effect. Lessor is the Chief Geologist of Arttor Gold.

F-20

SAGEBRUSH GOLD LTD. AND SUBSIDIARIES

(FORMERLY THE EMPIRE SPORTS AND ENTERTAINMENT HOLDINGS CO.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

NOTE 8 – COMMITMENTS AND CONTINGENCIES (continued)

Litigation

On January 24, 2011, Shannon Briggs filed suit against Gregory D. Cohen, Sheldon Finkel, Barry Honig, The Empire Sports & Entertainment Co., and The Empire Sports & Entertainment Holdings Co. in the Supreme Court (the “Court”) of the State of New York, County of New York (Case No. 100 938/11). The plaintiff was a heavyweight boxer who had entered into a promotional agreement which had been assigned to The Empire Sports & Entertainment Co. The plaintiff brought the suit against the defendants asserting professional boxing and non-professional boxing related claims for breach of fiduciary duties, unjust enrichment, conversion and breach of contract. The suit did not specify the amount of damages being sought. The basis of the plaintiff’s claims stem primarily on his allegation that the Company failed to pay Briggs’ purse for his heavyweight title fight in Germany in October 2010, and that Briggs’ ownership interest in a New Jersey limited liability company named Golden Empire LLC was wrongly diluted by the actions of the Company. The Company disputes the plaintiff’s allegations. On February 10, 2010, the Company filed a motion to compel arbitration of the plaintiff’s professional boxing related claims and to dismiss the plaintiff’s non-professional boxing related claims. On May 4, 2011, the Court entered an order compelling arbitration of the plaintiff’s professional boxing claims against Empire and stayed the action against all other defendants, pending the conclusion of such arbitration. This stay included a stay of all of the plaintiff’s Non-Boxing Claims against all of the defendants. On May 6, 2011, Briggs filed a motion for leave to reargue before the Court, which requested that the Court reconsider its decision compelling arbitration. The Company filed papers with the Court opposing the motion for reargument. On June 23, 2011, the Court entered an order denying Brigg’s motion for reargument. As of the date hereof, no arbitration proceeding has been commenced

NOTE 9 - ACQUISITION OF ARTTOR GOLD LLC

On May 24, 2011, the Company entered into four limited liability company membership interests purchase agreements with the owners of Arttor Gold. Each of the owners of Arttor Gold, sold their interests in Arttor Gold in privately negotiated sales resulting in the Company acquiring 100% of Arttor Gold. Pursuant to the Agreements, the Company issued 8,000,000 shares of preferred stock, designated Series B Convertible Preferred Stock, and 13,000,000 shares of Common Stock in exchange for 100% membership interests in Arttor Gold. Each share of Series B Convertible Preferred Stock is convertible into one share each of the Company’s common stock. As a result of this transaction, on May 24, 2011, Arttor Gold became a wholly-owned subsidiary of the Company. Arttor Gold, a Nevada limited liability company, was formed and organized on April 28, 2011.

The purchase consideration included 8,000,000 shares of preferred stock, designated Series B Convertible Preferred Stock and 13,000,000 shares of Common Stock. The issuance of 13,000,000 shares of common stock and issuance of 8,000,000 shares of Series B convertible preferred stock were valued at $2,000,100 which primarily represents the cash acquired and assumed liabilities of $21,750 from Arttor Gold. Each share of Series B Convertible Preferred Stock is convertible into one share each of the Company’s common stock.

The Company accounted for the acquisition utilizing the purchase method of accounting in accordance with ASC 805 “Business Combinations”. The Company is the acquirer for accounting purposes and Arttor Gold is the acquired company. Accordingly, the Company applied push–down accounting and adjusted to fair value all of the assets and liabilities directly on the financial statements of the subsidiary, Arttor Gold. The net purchase price, including acquisition costs paid by the Company, was allocated to assets acquired and liabilities assumed on the records of the Company as follows:

Current assets (including cash of $2,000,100)	$	2,000,130

Liabilities assumed		(21,750	)

Net purchase price	$	1,978,380

F-21

SAGEBRUSH GOLD LTD. AND SUBSIDIARIES

(FORMERLY THE EMPIRE SPORTS AND ENTERTAINMENT HOLDINGS CO.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

NOTE 9 - ACQUISITION OF ARTTOR GOLD LLC (continued)

Unaudited pro forma results of operations data as if the Company and Arttor Gold had occurred as of February 10, 2010, the inception date, are as follows:


	The Company and Arttor Gold For the six months ended June 30, 2011			The Company and Arttor Gold from February 10, 2010 (Inception Date) to June 30, 2010
Pro forma revenues	$	327,336		$	214,584
Pro forma loss from operations		(2,404,817	)		(794,006	)
Pro forma net loss		(3,827,591	)		(794,006	)
Pro forma loss per share	$	(0.15	)	$	(0.06	)
Pro forma diluted loss per share	$	(0.15	)	$	(0.06	)

Pro forma data does not purport to be indicative of the results that would have been obtained had these events actually occurred at inception date or February 10, 2010 and is not intended to be a projection of future results.

NOTE 10 - REPORTABLE SEGMENT

ASC Topic 280 requires use of the "management approach" model for segment reporting. The management approach model is based on the way a company's management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company. During the six months ended June 30, 2011, the Company operated in two reportable business segments - (1) the sports and entertainment and (2) the resource exploration. The Company's reportable segments, although integral to the success of the others, offer distinctly different products and services. The Company did not have any reportable segments in the 2010 period. Information with respect to these reportable business segments for the six months ended June 30, 2011 is as follows:

Revenues:
Sports and entertainment	$	327,336
Resource exploration		-
		327,336
Depreciation:
Sports and entertainment		4,053
Resource exploration		-
		4,053
Interest expense:
Sports and entertainment		1,126,221
Resource exploration		-
Other (a)		322,235
		1,448,456
Net (loss) attributable to Sagebrush Gold Ltd.:
Sports and entertainment		(2,271,913	)
Resource exploration		(67,151	)
Other (a)		(1,266,109	)
		(3,605,173	)
Total Assets:
Sports and entertainment	$	6,337,932
Resource exploration		1,723,487
Other (a)		1,120,736
	$	9,182,155

(a)	The Company does not allocate any general and administrative expenses to its reportable segments, because these activities are managed at a corporate level.

F-22

SAGEBRUSH GOLD LTD. AND SUBSIDIARIES

(FORMERLY THE EMPIRE SPORTS AND ENTERTAINMENT HOLDINGS CO.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

NOTE 11 – SUBSEQUENT EVENTS

On July 18, 2011, the Company borrowed $2,000,000 from Continental Resources Group, Inc. (“Continental”) and issued them an unsecured 6% promissory note. The Note matures six months from the date of issuance. On July 18, 2011, the Company advanced the $2,000,000 to a third party in connection with the potential purchase of certain mining and mineral assets.

On July 22, 2011, the Company, Continental Resources Acquisition Sub, Inc., the Company’s wholly-owned subsidiary (“Acquisition Sub”), and Continental Resources Group, Inc., entered into an asset purchase agreement (the “Purchase Agreement”) and closed the Asset Sale, as defined, pursuant to which Acquisition Sub purchased substantially all of the assets of Continental (the “Asset Sale”) in consideration for (i) shares of the Company’s common stock (the “Shares”) which shall be equal to eight Shares for every 10 shares of Continental’s common stock outstanding; (ii) the assumption of the outstanding warrants to purchase shares of Continental’s common stock such that the Company shall deliver to the holders of Continental’s warrants, warrants to purchase shares of the Company’s common stock (the “Warrants”) which shall be equal to one Warrant to purchase eight shares of the Company’s common stock for every warrant to purchase ten shares Continental’s common stock outstanding at an exercise price equal to such amount as is required pursuant to the terms of the outstanding warrants, and (iii) the assumption of Continental’s 2010 Equity Incentive Plan and all options granted and issued thereunder such that the Company shall deliver to Continental’s option holders, options (the “Options”) to purchase an aggregate of such number of shares of the Company’s common stock issuable under the Company’s equity incentive plan which shall be equal to one option to purchase eight shares of the Company’s common stock for every option to purchase 10 shares of Continental’s common stock outstanding with a strike price equal to such amount as is required pursuant to the terms of the outstanding option. The exercise price of the Warrants and the strike price of the Options shall be determined and certified by an officer of the Company. Upon the closing of the Asset Sale, Acquisition Sub assumed the Assumed Liabilities (as defined in the Purchase Agreement) of Continental. As of August 22, 2011, the Company has not issued the Shares discussed above. Under the terms of the Warrants, in the event of a Fundamental Transaction, warrant holders have the right to demand they be paid in cash the value of such warrants provided notice is given within 30 days of such Fundamental Transaction.

Under the terms of the Purchase Agreement, the Company purchased from Continental substantially all of Continental’s assets, including, but not limited to, 100% of the outstanding shares of common stock of Continental’s wholly-owned subsidiaries (CPX Uranium, Inc., Green Energy Fields, Inc., and ND Energy, Inc.) as defined in the Purchase Agreement. The acquired assets include approximately $13 million of cash.

The Purchase Agreement constitutes a plan of reorganization within the meaning of Treasury Regulations Section 1.368-2(g) and constitutes a plan of liquidation of Continental. Continental is expected to liquidate on or prior to July 1, 2012. The Company has agreed to file a registration statement under the Securities Act of 1933(the “Securities Act”) in connection with liquidation of Continental no later than (i) 30 days of the closing date of the Asset Sale or (ii) such date that Continental delivers to the Company its audited financial statements for the fiscal year ended March 31, 2011. Continental will subsequently distribute the registered Shares to its shareholders as part of its liquidation. The Company agreed to use its best efforts to cause such registration to be declared effective within 12 months following the closing date of the Asset Sale. The Company has agreed to pay liquidated damages of 1% per month, up to a maximum of 5%, in the event that the Company fails to file or is unable to cause the registration statement to be declared effective.

Effective as of August 8, 2011, the Board of Directors of the Company elected David Rector as director to serve on the Board. Mr. Rector is currently the President of the Company and, in addition to being a member of the Board, will continue to serve in such capacity.

F-23

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Forward-Looking Statements

This Report on Form 10-Q and other written and oral statements made from time to time by us may contain so-called “forward-looking statements,” all of which are subject to risks and uncertainties. Forward-looking statements can be identified by the use of words such as “expects,” “plans,” “will,” “forecasts,” “projects,” “intends,” “estimates,” and other words of similar meaning. One can identify them by the fact that they do not relate strictly to historical or current facts. These statements are likely to address our growth strategy, financial results and product and development programs. One must carefully consider any such statement and should understand that many factors could cause actual results to differ from our forward looking statements. These factors may include inaccurate assumptions and a broad variety of other risks and uncertainties, including some that are known and some that are not. No forward looking statement can be guaranteed and actual future results may vary materially.

Information regarding market and industry statistics contained in this Report is included based on information available to us that we believe is accurate. It is generally based on industry and other publications that are not produced for purposes of securities offerings or economic analysis. We have not reviewed or included data from all sources, and cannot assure investors of the accuracy or completeness of the data included in this Report. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and the additional uncertainties accompanying any estimates of future market size, revenue and market acceptance of products and services. We do not assume any obligation to update any forward-looking statement. As a result, investors should not place undue reliance on these forward-looking statements.

Recent Events

The Empire Sports & Entertainment Holdings Co. (the “Company”), formerly Excel Global, Inc. (the “Shell”), was incorporated under the laws of the State of Nevada on August 2, 2007. We operated as a web-based service provider and consulting company. In September 2010, we had changed our name to The Empire Sports & Entertainment Holdings Co. On May 16, 2011, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Secretary of State of the State of Nevada in order to change its name to “Sagebrush Gold Ltd.” from “The Empire Sports & Entertainment Holdings Co.”

On September 29, 2010, we entered into a Share Exchange Agreement (the “Exchange Agreement”) with The Empire Sports & Entertainment, Co., a privately held Nevada corporation incorporated on February 10, 2010 (“Empire”), and the shareholders of Empire (the “Empire Shareholders”). Upon closing of the transaction contemplated under the Exchange Agreement (the “Exchange”), the Empire Shareholders transferred all of the issued and outstanding capital stock of Empire to the Company in exchange for shares of common stock of the Company. Such Exchange caused Empire to become a wholly-owned subsidiary of the Company.

At the closing of the Exchange, each share of Empire’s common stock issued and outstanding immediately prior to the closing of the Exchange was exchanged for the right to receive one share of the Company’s common stock. Accordingly, an aggregate of 19,602,000 shares of the Company’s common stock were issued to the Empire Shareholders. Additionally, pursuant to the Agreement of Conveyance, Transfer of Assets and Assumption of Obligations (the “Conveyance Agreement”), the Company’s former officers and directors cancelled 17,596,603 of the Company’s common stock they owned. Such shares were administratively cancelled subsequent to the Exchange pursuant to the Conveyance Agreement (see below). After giving effect to the cancellation of shares, we had a total of 2,513,805 shares of common stock outstanding immediately prior to Closing. After the Closing, we had a total of 22,115,805 shares of common stock outstanding, with the Empire Shareholders owning 89% of the total issued and outstanding shares of the Company's common stock.

On October 8, 2010, we administratively entered into a series of agreements with the purpose of transferring certain of the residual assets and liabilities which were owned by the Shell whereby we did a reverse merger on September 29, 2010. These agreements were effectively consummated on the date of reverse merger. The agreements transferred certain assets and liabilities in connection with a website business to the former shareholders of the Shell in exchange for 17,596,603 shares of the Company's common stock. We believe that the fair value of the shares received for those assets and liabilities was not material. The shares were cancelled immediately upon receipt.

Prior to the Exchange, we were a shell company with no business operations.

A newly-formed wholly-owned subsidiary, EXCX Funding Corp., a Nevada corporation was formed in January 2011 for the purpose of entering into a Credit Facility Agreement in February 2011.

On April 26, 2011, a shareholder agreement (the “Shareholder Agreement”) was executed and entered into between Empire, Concerts International, Inc. (“CII”) and Capital Hoedown, Inc. (“Capital Hoedown”) whereby Empire has the right to select two directors, and CII has the right to select one director. Based on the Shareholder Agreement, Empire owns 66.67% and CII owns 33.33% of the corporate joint venture. Contemporaneously with the execution of the Shareholder Agreement, Empire issued a revolving demand loan to CII and Denis Benoit, up to a maximum amount of $500,000. Additionally, Empire issued a revolving demand loan to Capital Hoedown, up to a maximum amount of $4,000,000 which bears 10% interest per annum and payable on the earlier of the termination date on January 15, 2012 or upon demand by Empire. This loan is exclusively for the operations and management of Capital Hoedown, Inc. As of June 30, 2011 we have advanced a total of $2,525,332 to our majority owned subsidiary, Capital Hoedown. Such loan to Capital Hoedown is considered an intercompany transaction and as such is eliminated at consolidation. In order to fund these commitments, the Company (along with its subsidiaries), borrowed $4.5 million from the lenders. Each lender loaned $2.5 million to the Company. One of the lenders is the Co-Chairman of the Company’s Board of Directors.

The Company considers Denis Benoit, a director and the President of Capital Hoedown, a related party. Commencing in November 2010 Empire advanced funds to Mr. Benoit personally, and subsequently to a joint venture, which as a result of Mr. Benoit’s position as an executive officer may constitute a violation of Section 402 of the Sarbanes Oxley Act of 2002 (“SOX”). Certain of the funds loaned may have been utilized for non joint venture expenses of Mr. Benoit or a predecessor entity.

On May 24, 2011, we entered into four limited liability company membership interests purchase agreements (the “Agreements”) with the owners of Arttor Gold. Each of the owners of Arttor Gold , sold their interests in Arttor Gold in privately negotiated sales resulting in the Company acquiring 100% of Arttor Gold. Prior to the sale our President, David Rector, owned approximately 9.5% of Arttor Gold. 2,000,000 shares of our Common Stock were issued to Mr. Rector. Arthur Leger, the Company’s Chief Geologist, also received 2,000,000 shares of Common Stock in exchange for his approximate 9.5% membership interest in Arttor Gold. Arttor Gold leases from Mr. Leger certain claims in the State of Nevada which the Company intends to explore, and Arttor Gold also holds approximately $2,000,000 of cash acquired by the Company at closing.

Pursuant to the Agreements, in addition to 2,000,000 shares of Common Stock issued to each of Mr. Rector and Mr. Leger (4,000,000 total), the Company issued an additional 8,000,000 shares of a class of preferred stock, designated Series B Convertible Preferred Stock and 9,000,000 shares of Common Stock (including 7,000,000 shares of Common Stock to its principal investor Frost Gamma Investments Trust). Assuming the conversion into Common Stock of the Series B Preferred Stock, the Company has an additional 21,000,000 shares of its Common Stock, on a fully-diluted basis, outstanding following the transaction.

Each share of Series B Preferred Stock is convertible into one share of Common Stock, and has a liquidation preference equal to $0.0001 per share. Shares of Common Stock issued pursuant to the Agreements are subject to lockup agreements which restrict certain sales, transfers and assignments for a period of 24 months unless there has occurred a change of control of the Company, the Board terminates the lockup provisions or a minimum of 1,000,000 ounces of gold deposits are removed from the Arttor lease properties. The lockup agreements do not apply to shares of Common Stock underlying the Series B Preferred Stock. Upon termination of the lockup period with respect to the Arttor Gold Agreements, similar prior lockup agreements with other shareholders of the Company in effect on the closing date are also required to be terminated.

Also on May 24, 2011 and prior to the closing of the limited liability company membership interests purchase agreements, the Members adopted the Amended and Restated Operating Agreement of Arttor Gold. The Operating Agreement provides that Arttor Gold be managed by the Members and that the Members may appoint an officer or officers to manage the business of Arttor Gold. No Member may transfer any portion of his or its interest in Arttor Gold without the unanimous written consent of all of the Members, provided, however, that any Member may transfer all or any portion of his or its membership interest to any other Member. The owners of the majority of the membership interests shall determine the timing, form and amount of distributions, which shall be made to the Members pro rata in accordance with their respective ownership interests.

We will, as a result, be engaged in two primary lines of business, through separate subsidiaries, consisting of resource exploration and sports and entertainment.

The Purchase Agreement constitutes a plan of reorganization within the meaning of Treasury Regulations Section 1.368-2(g) and constitutes a plan of liquidation of Continental. Continental is expected to liquidate on or prior to July 1, 2012. The Company has agreed to file a registration statement under the Securities Act of 1933 in connection with liquidation of Continental no later than (i) 30 days of the closing date of the Asset Sale or (ii) such date that Continental delivers to the Company its audited financial statements for the fiscal year ended March 31, 2011. Continental will subsequently distribute the registered Shares to its shareholders as part of its liquidation. The Company agreed to use its best efforts to cause such registration to be declared effective within 12 months following the closing date of the Asset Sale. The Company has agreed to pay liquidated damages of 1% per month, up to a maximum of 5%, in the event that the Company fails to file or is unable to cause the registration statement to be declared effective.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Significant estimates made by management include, but are not limited to, the useful life of property and equipment, the fair values of certain promotional contracts and the assumptions used to calculate fair value of options granted and common stock issued for services.

Management believes the following critical accounting policies affect the significant judgments and estimates used in the preparation of the financial statements.

Principles of Consolidation

The condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America and present the financial statements of the Company, our wholly-owned subsidiaries and a subsidiary with a majority voting interest of approximately 67% (33% is owned by non-controlling interests). In the preparation of our consolidated financial statements, intercompany transactions and balances are eliminated and net earnings are reduced by the portion of the net earnings of subsidiaries applicable to non-controlling interests.

Revenue Recognition

We follow the guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 605-10-S99 “Revenue Recognition Overall – SEC Materials”. We record revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured.

We, in accordance with ASC Topic 605-45 “Revenue Recognition – Principal Agent Considerations” report revenues for transactions in which it is the primary obligor on a gross basis and revenues in which it acts as an agent on and earns a fixed percentage of the sale on a net basis, net of related costs. Credits or refunds are recognized when they are determinable and estimable.

We earn revenue primarily from live event ticket sales, participation guarantee fees, sponsorship, advertising, concession fees, promoter and advisory services fees, television rights fee and pay per view fees for events broadcast on television or cable.

The following policies reflect specific criteria for our various revenue streams:

●

Revenue from participation guarantee fees, sponsorship, advertising, television/cable distribution agreements, promoter and advisory service agreements is recognized in accordance with the contract terms, which are generally at the time events occur.

●

Revenue from the sale of products is recognized at the point of sale at the live event concession stands.

Stock-Based Compensation

Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC 718 also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain.

We record compensation expense based on the fair value of the award at the reporting date. The awards to consultants and other third-parties are then revalued, or the total compensation is recalculated based on the then current fair value, at each subsequent reporting date.

Accounts Receivable

We have a policy of reserving for questionable accounts based on our best estimate of the amount of probable credit losses in our existing accounts receivable. We periodically review our accounts receivable to determine whether an allowance is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of an account may be in doubt. Account balances deemed to be uncollectible are charged to bad debt expense after all means of collection have been exhausted and the potential for recovery is considered remote.

Advances, participation guarantees and other receivables

Advances receivable represent cash paid in advance to athletes for their training. We have the right to offset the advances against the amount payable to such athletes for their future sporting events. The amounts advanced under such arrangements are short-term in nature. Promotional advances represents signing bonuses paid to athletes upon signing the promotional agreements with the Company. Also included in this caption was a receivable for a participation guarantee and other receivables at June 30, 2011.

Cost of revenues and prepaid expenses

Costs related to live events are recognized when the event occurs. Event costs paid prior to an event are capitalized to prepaid expenses and then charged to expense at the time of the event. Cost of other revenue streams are recognized at the time the related revenues are realized. Prepaid expenses consist primarily of costs paid for future events which will occur within a year, such as cost paid for a music event that will occur in August 2011. Prepaid expenses also include prepayments of insurance, public relation services and other administrative expenses which are being amortized over the terms of the agreements.

Property and equipment

Property and equipment are carried at cost. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. We examine the possibility of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. Depreciation is calculated on a straight-line basis over the estimated useful life of the assets, generally one to five years.

Long-Lived Assets

We review for impairment whenever events or circumstances indicate that the carrying amount of assets may not be recoverable, pursuant to guidance established in ASC 360-10-35-15, “Impairment or Disposal of Long-Lived Assets”. We recognize an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value.

Recent Accounting Pronouncements

In June 2009, the FASB issued ASC Topic 810-10, “Amendments to FASB Interpretation No. 46(R)”. This updated guidance requires a qualitative approach to identifying a controlling financial interest in a variable interest entity (“VIE”), and requires ongoing assessment of whether an entity is a VIE and whether an interest in a VIE makes the holder the primary beneficiary of the VIE. It is effective for annual reporting periods beginning after November 15, 2009. The adoption of ASC Topic 810-10 did not have a material impact on the results of operations and financial condition.

Other accounting standards that have been issued or proposed by the FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption.

Results of Operations

Our business began on November 30, 2009. We were incorporated in Nevada on February 10, 2010 to succeed to the business of the predecessor company, Golden Empire, LLC (“Golden Empire”), which was formed and commenced operations on November 30, 2009. We assumed all assets, liabilities and certain promotion rights agreements entered into by Golden Empire at carrying value which approximated fair value on February 10, 2010. Golden Empire ceased operations on that date. The results of operations for the period from January 1, 2010 to February 9, 2010 of Golden Empire were not material.

For the Six Months Ended June 30, 2011 and for the period from February 10, 2010 (inception) to June 30, 2010.

Net Revenues

Revenue from live and televised events, consisting primarily of promoter’s fees and sponsorships, was $327,336 for the six months ended June 30, 2011 as compared to $214,584 for the period from February 10, 2010 (inception) to June 30, 2010. Net revenues for the three and six months ended June 30, 2011 (decreased) increased approximately (83%) and 53%, respectively as compared to the three months ended June 30, 2010 and the period from February 10, 2010 (Inception) to June 30, 2010. The increase in net revenues during the six months ended June 30, 2011 was primarily attributable to an increase in advisory service fee of $50,000 and participation guarantee fees of $97,364 from certain sporting events that occurred during such period. The decrease in net revenues during the three months ended June 30, 2011 was primarily attributable to a decrease in production of sporting events as compared to the prior period after the resignation of our former President in March 2011.

The following table provides data regarding the source of our net revenues:

	For the Six Months Ended June 30, 2011					For the period from February 10, 2010 (Inception) to June 30, 2010

	$		% of Total			$		% of Total
Live events – promoter’s fee and related revenues		314,764		96	%		80,195		37	%
Television rights fee		-		-			101,889		47	%
Advertising – sponsorships		12,572		4	%		32,500		15	%
Total		327,336		100	%		214,584		100	%

	For the Three Months Ended June 30, 2011					For the Three Months Ended to June 30, 2010

	$		% of Total			$		% of Total
Live events – promoter’s fee and related revenues		36,136		100	%		80,195		37	%
Television rights fee		-		-			101,889		47	%
Advertising – sponsorships		-		-			32,500		15	%
Total		36,136		100	%		214,584		100	%

For the six months ended June 30, 2011, we recognized revenues from promoter and advisory fee from live events of approximately $320,000 from four companies that accounted for 15%, 29%, 25%, and 29%, respectively, of our total net revenues. For the period from February 10, 2010 (Inception) to June 30, 2010, we recognized revenues from television rights fee of approximately $102,000 from one company that accounted for 48% of our total net revenues.

Operating Expenses

Total operating expenses for the six months ended June 30, 2011 as compared to the period from February 10, 2010 (inception) to June 30, 2010. The operating expenses consisted of the following:

	Six months ended June 30, 2011		Period from February 10, 2010 (inception) to June 30, 2010
Cost of revenues	$	194,391	$	135,332
Sales and marketing		337,791		109,685
Live events expenses		181,243		202,366
Compensation expense and related taxes		749,207		120,833
Consulting fees		411,235		265,591
General and administrative		836,636		174,783
Total	$	2,710,503	$	1,008,590

Total operating expenses for the three months ended June 30, 2011 as compared to the three months ended June 30, 2010. The operating expenses consisted of the following:

	Three months ended June 30, 2011		Three months ended June 30, 2010
Cost of revenues	$	4,475	$	135,332
Sales and marketing		327,877		103,160
Live events expenses		91,062		131,419
Compensation expense and related taxes		396,496		75,833
Consulting fees		223,375		261,591
General and administrative		489,082		129,473
Total	$	1,532,367	$	836,808

Total operating expenses for the three months ended June 30, 2011 were $1,532,367, an increase of $695,559, or approximately 83%, from total operating expenses for the comparable the three months ended June 30, 2010 of $836,808. Total operating expenses for the six months ended June 30, 2011 were $2,710,503, an increase of $1,701,913, or approximately 169%, from total operating expenses for the period from February 10, 2010 (inception) to June 30, 2010 of $1,008,590. This increase is primarily attributable to:

	●	Cost of revenues: Cost of revenues for live event production was $194,391 for six month periods ended June 30, 2011 as compared to $135,332 for the period from February 10, 2010 (inception) to June 30, 2010. Cost of revenues for live event production was $4,475 for three month periods ended June 30, 2011 as compared to $135, 332 for the three month periods ended June 30, 2010. Live event production costs consist principally of fighters’ purses, production cost of live events, venue rental and related live events expenses. The increase of $59,059 or 44% in cost of revenues reflects the effects of increase net revenues during the six months ended June 30, 2011. The decrease of $130,857 or 97% in cost of revenues reflects the effects of decrease in production of sporting events as compared to the prior period after the resignation of our former President in March 2011.We expect cost of revenues for live events to increase for the remainder of our current fiscal year as we promote more music and sporting events more specifically with the upcoming country music festival in August 2011.

	●	Sales and marketing: For the six month periods ended June 30, 2011, sales and marketing expense was $337,791 as compared to $109,685 for the period from February 10, 2010 (inception) to June 30, 2010. For the three month periods ended June 30, 2011, sales and marketing expense was $327,877 as compared to $103,160 for the three month periods ended June 30, 2010. The increase of $228,106 or 208% and $224,717 or 218% for the six and three month periods, respectively, was primarily due to our majority owned subsidiary Capital Hoedown, Inc. Sales and marketing expenses primarily consist of marketing, advertising and promotion expenses directly and indirectly related to live events. Such increase is primarily attributable to our promotions of our upcoming country music festival in August 2011. Indirect expenses consist of internet and print advertising.

●

Live events expenses: For the six month periods ended June 30, 2011, live events expenses was $181,243 as compared to $202,366 for the period from February 10, 2010 (inception) to June 30, 2010. For the three month periods ended June 30, 2011, live events expenses was $91,062 as compared to $131,419 for the three month periods ended June 30, 2010. Live events operations expenses consist primarily of wages and consultants’ fees related to day-to-day administration of the Company’s live events, fighter recruiting and signing bonuses. The decrease in both periods reflects the effects of decrease in production of sporting events as compared to the prior periods after the resignation of our former President in March 2011.

●

Compensation expense and related taxes: Compensation expense includes salaries and stock-based compensation to our employees. For the six months ended June 30, 2011, and for the period from February 10, 2010 (inception) to June 30, 2010, compensation expense and related taxes were $749,207 and $120,833. The increase of $628,374 or 520% and $320,663 or 423% for the six and three months period, respectively, were primarily attributable to the hiring of our executive employees and additional support staff in June 2010 and the recognition of stock-based compensation expense of $264,750 which is attributable to stock options granted to our chief executive officer, executive vice president and two directors.

●

Consulting fees: For six month period ended June 30, 2011, we incurred consulting fees of $411,235 as compared to $265,591 for the period from February 10, 2010 (inception) to June 30, 2010. For three month period ended June 30, 2011, we incurred consulting fees of $223,375 as compared to $261,591 for the three month period ended June 30, 2010. These were primarily attributable to the issuance of our common stock for services rendered to a consultant for investor relations and advisory services of $116,665 and payment of approximately $102,000 in connection with investor relation and consulting agreements during the six month period ended June 30, 2011. This increase is also primarily attributable to stock-based compensation expense of $135,625 which is attributable to stock options granted to two consultants for the six month period ended June 30, 2011.

●

General and administrative expenses: For the six month period ended June 30, 2011 and for the period from February 10, 2010 (inception) to June 30, 2010, general and administrative expenses consisted of the following:

	Six months ended June 30, 2011		Period from February 10, 2010 (inception) to June 30, 2010
Rent	$	34,353	$	5,042
Professional fees		419,416		16,325
Telephone		24,477		3,498
Travel/Entertainment		61,256		123,862
Depreciation		4,053		2,088
Bad debts		60,794		-
Insurance expense		35,702		-
Management fees		76,747		-
Other general and administrative		119,838		23,968
Total	$	836,636	$	174,783

●

General and administrative expenses: For the three month period ended June 30, 2011 and for the three month period ended June 30, 2010, general and administrative expenses consisted of the following:

	Three months ended June 30, 2011		Three Months Ended June 30, 2010
Rent	$	17,049	$	1,802
Professional fees		266,667		16,325
Telephone		14,412		1,303
Travel/Entertainment		18,962		88,286
Depreciation		2,093		2,042
Insurance expense		12,233		-
Management fees		76,747		-
Other general and administrative		80,919		19,715
Total	$	489,082	$	129,473

The overall increase of $661,853 or 379% and $359,609 or 278% for the six and three months period, respectively, in general and administrative expenses is primarily related to an increase in accounting, auditing and legal fees in connection with our SEC filings. We also incurred legal fees in connection with litigation matters and general business matters related to our majority owned subsidiary, Capital Hoedown Inc. The overall increase in general and administrative expenses is also primarily attributable to an increase in operations and the expected overall growth in our business. Our general and administrative expenses during the period from February 10, 2010 (inception) to June 30, 2010 were much lower as we were in our early stages of our operations.

Loss from Operations

We reported a loss from operations of $2,383,167 and $794,006 respectively for the six months ended June 30, 2011 and for the period from February 10, 2010 (inception) to June 30, 2010. We reported a loss from operations of $1,496,231 and $622,224 respectively for the three months ended June 30, 2011 and 2010.

Other Income (Expenses)

Total other income (expense) was ($1,422,774) and $0, respectively, for the six months ended June 30, 2011 and for the period from February 10, 2010 (inception) to June 30, 2010. Total other income (expense) was ($1,021,348) and $0, respectively, for the three months ended June 30, 2011 and for the three months ended June 30, 2010. The increase is primarily attributable to:

●	$25,682 of interest income for the six months ended June 30, 2011 attributable to our certificates of deposit and interest receivable from loans receivable.
●	$1,448,456 in interest expense for the six months ended June 30, 2011. Such increase is primarily attributable to the amortization of debt discounts and deferred financing cost on promissory notes of $1,308,794 and interest on notes payable and convertible promissory notes issued during 1st quarter of fiscal 2011.

Net Loss

As a result of these factors, we reported a net loss attributable to Sagebrush Gold Ltd. of $3,605,173 for the six months ended June 30, 2011 which translates to basic and diluted net loss per common share of $0.14, as compared to a net loss attributable to Sagebrush Gold Ltd. of $794,006 for the period from February 10, 2010 (inception) to June 30, 2010, which translates to basic and diluted net loss per common share of $0.06. We reported a net loss attributable to Sagebrush Gold Ltd. of $2,316,811 for the three months ended June 30, 2011 which translates to basic and diluted net loss per common share of $0.08, as compared to a net loss attributable to Sagebrush Gold Ltd. of $622,224 for the three months ended June 30, 2010, which translates to basic and diluted net loss per common share of $0.03.

We reported net loss attributable to non-controlling interest of $200,768 during the three and six months ended June 30, 2011.

Liquidity and Capital Resources

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Our net revenues are not sufficient to fund our operating expenses. At June 30, 2011, we had a cash balance of $1,867,422 and a working capital of $4,562,735. During the six months ended June 30, 2011, we received proceeds of $5,250,000 from issuance of notes payable and convertible promissory notes which we expect to utilize to fund certain of our operating expenses, pay our obligations, and grow our Company. In April 2011, we also received gross proceeds of $246,000 from the sale of our stocks for operating capital purposes. On July 22, 2011, we entered into an asset purchase agreement Continental Resources Group, Inc., whereby the Company, through our wholly-owned subsidiary, Continental Resources Acquisition Sub, Inc., purchased from Continental substantially all of Continental’s assets, including, but not limited to, 100% of the outstanding shares of common stock of Continental’s wholly-owned subsidiaries (CPX Uranium, Inc., Green Energy Fields, Inc., and ND Energy, Inc.) as defined in the agreement. The acquired assets include approximately $13 million of cash. On July 18, 2011, we borrowed $2,000,000 from Continental and issued them an unsecured 6% promissory note. The note matures six months from the date of issuance. On July 18, 2011, the Company advanced the $2,000,000 to a third party in connection with the potential purchase of certain mining and mineral assets.

We currently have no material commitments for capital expenditures. We may be required to raise additional funds, particularly if we are unable to generate positive cash flow as a result of our operations. We estimate that based on current plans and assumptions, that our available cash will be sufficient to satisfy our cash requirements under our present operating expectations, without further financing, for up to 12 months. Other than our current working capital, we presently have no other alternative source of working capital. We may not have sufficient working capital to fund the expansion of our operations and to provide working capital necessary for our ongoing operations and obligations after 12 months. While we are attempting to increase revenues, it has not been significant enough to support our daily operations. We may need to raise significant additional capital to fund our future operating expenses, pay our obligations, and grow our Company. We do not anticipate we will be profitable in 2011. Therefore our future operations will be dependent on our ability to secure additional financing. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. The trading price of our common stock and a downturn in the U.S. equity and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. The inability to obtain additional capital may restrict our ability to grow and may reduce our ability to continue to conduct business operations. If we are unable to obtain additional financing, we will likely be required to curtail our marketing and development plans and possibly cease our operations.

Operating activities

Net cash flows used in operating activities for the six months ended June 30, 2011 amounted to $5,757,363and was primarily attributable to our net loss attributable to Sagebrush Gold Ltd. of $3,605,173, offset by depreciation of $4,053, bad debts of $60,794, amortization of promotional advances of $8,643, amortization of debt discount and deferred financing cost of $1,308,794, amortization of prepaid services of $116,665, and stock-based compensation of $400,375 and add-back of total changes in assets and liabilities of $3,850,746 and non-controlling interest of $200,768. These changes in assets and liabilities is primarily attributable to an increase in restricted cash – current portion for a total of $2,185,216, prepaid expenses of $2,310,422, accounts payable and accrued expenses of $226,734 and decrease in advances, participation guarantees, and other receivables of $454,962.

Net cash flows used in operating activities for the period from February 10, 2010 (inception) to June 30, 2010 amounted to $757,208 and was primarily attributable to our net losses of $794,006, offset by depreciation of $2,088, amortization of deferred compensation $14,364, contributed officer services of $90,000, stock based compensation of $286,667, and add-back of total changes in assets and liabilities of $356,281.

Investing activities

Net cash used in investing activities for the six months ended June 30, 2011 was $1,626,902 and represented an investment in note and loans receivable of $394,226 and the purchase of property and equipment of $3,972 offset by collection on note receivable of $25,000 and cash acquired from acquisition of business of $2,000,100.

Net cash used in investing activities for the period from February 10, 2010 (inception) to June 30, 2010 was $57,708 and represented the purchase of property and equipment of $32,708 and investment in note and loans receivable of $25,000.

Financing activities

Net cash flows provided by financing activities was $5,499,101 for the six months ended June 30, 2011. We received net proceeds from the issuance of notes payable and convertible promissory notes from both related and unrelated parties of $5,250,000 and net proceeds from sales of our stock of $246,000.

Net cash flows provided by financing activities was $2,244,325 for the period from February 10, 2010 (Inception) to June 30, 2010. We received net proceeds from sale of common stock of $1,541,230, proceeds from issuance of founders’ shares $100, proceeds from loans and note payable of $628,500, advances from a related party of $163,364 and offset by payments on related party advances of $88,869.

Contractual Obligations

We have certain fixed contractual obligations and commitments that include future estimated payments. Changes in our business needs, cancellation provisions, changing interest rates, and other factors may result in actual payments differing from the estimates. We cannot provide certainty regarding the timing and amounts of payments. We have presented below a summary of the most significant assumptions used in our determination of amounts presented in the tables, in order to assist in the review of this information within the context of our consolidated financial position, results of operations, and cash flows.

The following table summarizes our contractual obligations as of June 30, 2011, and the effect these obligations are expected to have on our liquidity and cash flows in future periods:

	Payments Due By Period
	Total		Less than 1 year		1-3 Years		4-5 Years		5 Years +
Contractual Obligations:
Note payable	$	2,250,000	$	2,250,000	$	-	$	-	$	-
Note payable – related party		2,250,000		2,250,000		-		-		-
Convertible promissory notes		650,000		650,000		-		-		-
Convertible promissory note - related party		100,000		100,000		-		-		-
Royalty agreement – minimum payments		1,550,000		-		190,000		360,000		1,000,000
Operating lease		249,024		63,828		185,196		-		-

Total Contractual Obligations	$	7,049,024	$	5,313,828	$	375,196	$	360,000	$	1,000,000

Joint Venture Arrangement

In February 2011, a new entity was formed and organized in preparation and in connection with a proposed joint venture. Empire entered into a non-binding joint venture term sheet in December 2010 whereby it outlines the material terms and conditions of a proposed joint venture to be entered into between Empire and Concerts International, Inc. Under the terms of this non-binding joint venture term sheet, the parties formed an entity, Capital Hoedown, Inc., to operate an annual country music festival. This Shareholder Agreement was executed and entered into between Empire, CII and Capital Hoedown on April 26, 2011. Based on the Shareholder Agreement, Empire owns 66.67% and CII owns 33.33% of the issued and outstanding shares of Capital Hoedown. Contemporaneously with the execution of the Shareholder Agreement, Capital Hoedown entered into a management service agreement with CII and Denis Benoit, owner of CII, whereby a management fee of $100,000 (in Canadian dollars) shall be paid to CII each year such country music festival event is produced. The management fee will be paid in eight equal monthly installments of $12,500 and will cover the salaries of the manager and general office overhead. On April 26, 2011, Empire issued a revolving demand loan to CII and Denis Benoit up to a maximum amount of $500,000. Additionally, on April 26, 2011, Empire issued a revolving demand loan to Capital Hoedown up to a maximum amount of $4,000,000. These funds are exclusively for the operation and management of Capital Hoedown. Empire is entitled to interest of 10% per annum under these revolving demand loans and shall be payable on the earlier of January 15, 2012 or upon demand by Empire.

Royalty Agreement

On May 24, 2011, the Company, through its subsidiary, Arttor Gold, entered into two lease agreements with F.R.O.G. Consulting, LLC (“FROG”), an affiliate of one of the former members of Arttor Gold, for the Red Rock Mineral Property and the North Battle Mountain Mineral Prospect. The leases grant the exclusive right to explore, mine and develop gold, silver, palladium, platinum and other minerals on the properties for a term of ten (10) years and may be renewed in ten (10) year increments. The terms of the Leases may not exceed ninety-nine (99) years. The Company may terminate these leases at any time.

Due Date of Advance Minimum Royalty Payment	Amount of Advance Minimum Royalty Payment
1st Anniversary	$	15,000
2nd Anniversary	$	35,000
3rd Anniversary	$	45,000
4th Anniversary	$	80,000
5th Anniversary and annually thereafter during the term of the lease	The greater of $100,000 or the U.S. dollar equivalent of 90 ounces of gold

Off-Balance Sheet Arrangements

Since our inception, we have not engaged in any off-balance sheet arrangements, including the use of structured finance, special purpose entities or variable interest entities.

Recent Accounting Pronouncements

In June 2009, the FASB issued ASC Topic 810-10, “Amendments to FASB Interpretation No. 46(R)”. This updated guidance requires a qualitative approach to identifying a controlling financial interest in a variable interest entity (“VIE”), and requires ongoing assessment of whether an entity is a VIE and whether an interest in a VIE makes the holder the primary beneficiary of the VIE. It is effective for annual reporting periods beginning after November 15, 2009. The adoption of ASC Topic 810-10 did not have a material impact on the results of operations and financial condition.

In July 2010, the FASB issued ASU No. 2010-20, “Receivables (Topic 310): Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses”. ASU 2010-20 requires additional disclosures about the credit quality of a company’s loans and the allowance for loan losses held against those loans. Companies will need to disaggregate new and existing disclosures based on how it develops its allowance for loan losses and how it manages credit exposures. Additional disclosure is also required about the credit quality indicators of loans by class at the end of the reporting period, the aging of past due loans, information about troubled debt restructurings, and significant purchases and sales of loans during the reporting period by class. The new guidance is effective for interim- and annual periods beginning after December 15, 2010. Management anticipates that the adoption of these additional disclosures will not have a material effect on the Company’s financial position or results of operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not required for smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures.

We maintain “disclosure controls and procedures,” as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

With respect to the quarterly period ended June 30, 2011, under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures. Based upon this evaluation, the Company’s management has concluded that certain disclosure controls and procedures were not effective as of June 30, 2011 due to the Company’s limited internal resources and lack of ability to have multiple levels of transaction review.

There is personal loan to an executive officer and director of our subsidiary which we believe may be a violation of Section 402 of the Sarbanes-Oxley Act of 2002. This loan was made in conjunction with formation of a joint venture in which the borrower became an executive officer of the Company and thereafter more funds were advanced. The Company does not presently know to what extent the funds were utilized for personal expenses or expenses that pre dated the joint venture. The loan has not been repaid although the Company is evaluating severing its relationship with the joint venture partner and requiring the amount be repaid but there is no assurance that the borrower will have resources sufficient to repay.

Management is currently evaluating remediation plans for the above control deficiencies. Accordingly, we concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls nor that future violations can be prevented. As a result of the material weaknesses described above, management has concluded that the Company did not maintain effective internal control over financial reporting as of June 30, 2011 based on criteria established.

Management is in the process of determining how best to change our current system and implement a more effective system to insure that information required to be disclosed in this quarterly report on Form 10-Q has been recorded, processed, summarized and reported accurately. Our management acknowledges the existence of this problem, and intends to developed procedures to address them to the extent possible given limitations in financial and manpower resources. While management is working on a plan, no assurance can be made at this point that the implementation of such controls and procedures will be completed in a timely manner or that they will be adequate once implemented.

Changes in Internal Controls.

There have been no changes in the Company’s internal control over financial reporting during the six months ended June 30, 2011 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

On January 24, 2011, Shannon Briggs filed suit against Gregory D. Cohen, Sheldon Finkel, Barry Honig, The Empire Sports & Entertainment Co., and The Empire Sports & Entertainment Holdings Co. in the Supreme Court (the “Court”) of the State of New York, County of New York (Case No. 100 938/11). The plaintiff was a heavyweight boxer who had entered into a promotional agreement which had been assigned to The Empire Sports & Entertainment Co. The plaintiff brought the suit against the defendants asserting professional boxing and non-professional boxing related claims for breach of fiduciary duties, unjust enrichment, conversion and breach of contract. The suit did not specify the amount of damages being sought. The basis of the plaintiff’s claims stem primarily on his allegation that the Company failed to pay Briggs’ purse for his heavyweight title fight in Germany in October 2010, and that Briggs’ ownership interest in a New Jersey limited liability company named Golden Empire LLC was wrongly diluted by the actions of the Company. The Company disputes the plaintiff’s allegations. On February 10, 2010, the Company filed a motion to compel arbitration of the plaintiff’s professional boxing related claims and to dismiss the plaintiff’s non-professional boxing related claims. On May 4, 2011, the Court entered an order compelling arbitration of the plaintiff’s professional boxing claims against The Empire and stayed the action against all other defendants, pending the conclusion of such arbitration. This stay included a stay of all of the plaintiff’s Non-Boxing Claims against all of the defendants. On May 6, 2011, Briggs filed a motion for leave to reargue before the Court, which requested that the Court reconsider its decision compelling arbitration. The Company filed papers with the Court opposing the motion for reargument. On June 23, 2011, the Court entered an order denying Brigg’s motion for reargument. As of the date hereof, no arbitration proceeding has been commenced.

ITEM 1A. RISK FACTORS.

Not required for smaller reporting companies.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

On May 4, 2011, we issued an aggregate of 1,500,000 shares of common stock to certain accredited investors, including the Co-Chairman of our Board of Directors, in connection with the conversion of 1,500,000 shares of Series A Preferred Stock. The shares were issued in a transaction that was exempt from the registration requirements of the Securities Act pursuant to Section 4(2) of the Securities Act, which exempts transactions by any issuer not involving a public offering.

On May 6, 2011, we completed a private offering (the “Offering”) of common stock to certain accredited investors. Pursuant to the subscription agreements accepted in the Offering, we issued and sold an aggregate of 410,000 shares of restricted Common Stock for an aggregate purchase price of $246,000. The shares were issued in a transaction that was exempt from the registration requirements of the Securities Act pursuant to Section 4(2) of the Securities Act, which exempts transactions by any issuer not involving a public offering.

On May 24, 2011, the Company entered into four limited liability company membership interests purchase agreements with the owners of Arttor Gold. Pursuant to the Agreements, the Company issued 8,000,000 shares of Series B Convertible Preferred Stock and 13,000,000 shares of Common Stock to the owners of Arttor Gold, including our President David Rector and chief geologist Arthur Leger. Each share of Series B Convertible Preferred Stock is convertible into one share of the Company’s common stock. The shares were issued in a transaction that was exempt from the registration requirements of the Securities Act pursuant to Section 4(2) of the Securities Act, which exempts transactions by any issuer not involving a public offering.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. (REMOVED AND RESERVED).

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS

3.1	Certificate of Amendment of Articles of Incorporation (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 19, 2011)
3.2	Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 31, 2011)
10.1	Form of Membership Interests Sale Agreement (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 31, 2011)
10.2	Frost Gamma Investments Trust Letter Agreement (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 31, 2011)
10.3	Amended and Restated Operating Agreement of Arttor Gold LLC (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 31, 2011)
10.4	North Battle Mountain Mineral Prospect Lease (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 31, 2011)
10.5	Red Rock Mineral Prospect Lease (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 31, 2011)
10.6	Amended and Restated North Battle Mountain Mineral Prospect Lease*
10.7	Amended and Restated Red Rock Mineral Prospect Lease*
10.8	Form of Subscription Agreement (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 13, 2011)
21.1	List of Subsidiaries*
31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
31.2	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

* Filed herein

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Sagebrush Gold Ltd.

Date: August 22, 2011	By:	/s/ Sheldon Finkel
		Sheldon Finkel
		Chief Executive Officer (Principal Executive Officer)
Date: August 22, 2011	By:	/s/ Adam Wasserman
		Adam Wasserman
		Chief Financial Officer (Principal Financial and Accounting Officer)

EX-10.6 2 sagebrushex106.htm AMENDED AND RESTATED NORTH BATTLE MOUNTAIN MINERAL PROSPECT LEASE sagebrushex106.htm

Exhibit 10.6

AMENDED AND RESTATED NORTH BATTLE MOUNTAIN MINERAL LEASE

THIS AMENDED AND RESTATED MINERAL LEASE (hereinafter “Amended and Restated Lease” or “Lease”) is made and entered into on the 15th day of July, 2011 (the “Effective Date”) by and among Arthur Leger (the “Lessor”), F.R.O.G. Consulting, LLC (the “Payment Agent”) and Arttor Gold LLC (the “Lessee”) (collectively the “Parties”).

RECITALS

WHEREAS, the Payment Agent and the Lessee entered into that certain North Battle Mountain Mineral Lease, dated May 24, 2011 (the “Original Lease”) with respect to certain properties owned by Lessor or in which Lessor has an interest, all as more particularly described in Exhibit “A” attached hereto and made a part hereof, and any additions thereto under Article 8 (hereinafter called the “North Battle Mountain Mineral Prospect”);

WHEREAS, the Lessor is the sole member of the Payment Agent and owns 100% of the outstanding membership interests of the Payment Agent;

WHEREAS, the Original Lease incorrectly identified the Payment Agent as the owner and lessor of the North Battle Mountain Mineral Prospect and did not include the Lessor as a party thereto;

WHEREAS, the Parties intended that the Original Lease identify the Lessor as the owner and lessor of the North Battle Mountain Mineral Prospect and that the Original Lease designate the Payment Agent as the entity responsible for collecting and receiving all payments with respect to the North Battle Mountain Mineral Prospect on behalf of Lessor;

WHEREAS, the Lessee made certain payments in the aggregate amount of $5,000 to the Payment Agent (the “Original Lease Signing Fee”) upon the signing of the Original Lease;

WHEREAS, the Parties wish to enter into this Amended and Restated Lease in order to carry out the intentions of the Parties and to correct the omissions and errors in the Original Lease; and

WHEREAS, the Parties acknowledge the payment of the Original Lease Signing Fee by Lessee to the Payment Agent and desire that the Original Lease Signing Fee be applied towards that amount of the Advance Minimum Royalty Payment (as defined below) due upon the signing of this Amended and Restated Lease.

NOW, THEREFORE, in consideration of the mutual benefits to be enjoyed by Lessor, Payment Agent and Lessee pursuant to this Lease, the Parties hereby agree as follows:

1. Grant, Reservation. Lessor, for and in consideration of the royalties hereinafter reserved and of the agreements of Lessee herein contained, to the extent vested with legal right to do so, hereby grants, demises, leases and lets exclusively unto Lessee, except for Lessor’s right of inspection, the North Battle Mountain Mineral Prospect, for the purpose of, including, but not limited to, surveying, sampling, investigating, exploring for, prospecting for, drilling for, developing, mining by any method (whether or not now known and including, but not limited to, open pit, strip, underground and solution methods), producing, saving, taking, milling, treating, transporting, stockpiling, handling and marketing all minerals or any valuable products of any nature whatsoever in, on or under the North Battle Mountain Mineral Prospect, including, but not limited to, any ores, concentrates, dore ingots, bullion, carbon, precipitates, slag or any other material produced from the North Battle Mountain Mineral Prospect which contain any recoverable valuable product of any nature, but excluding oil, gas, hydrocarbons and geothermal resources (hereinafter called “Leased Substances”), together with all of Lessor’s rights, privileges, water rights (if any) and easements (if any) useful for Lessee’s operations hereunder on the North Battle Mountain Mineral Prospect and adjacent lands, including, but not limited to, the rights to look for, test, work, mine, excavate, raise, clean, stockpile on the North Battle Mountain Mineral Prospect only, carry away and sell Leased Substances, to excavate pits, to sink shafts, make, use and occupy openings, adits, tunnels, raises, rooms, stopes, slopes, winzes and underground passages (now existing or hereafter opened), strip seams, lodes, veins and beds, and erect, use and maintain on the North Battle Mountain Mineral Prospect such buildings, tipples, headframes, refineries, gasification plants, power plants, engines, machinery, appliances, devices, walls, wells, presently appurtenant (if any) or newly established water rights, roadways, housing, railroad tracks, shops, ditches, dams, ponds, reservoirs, pipes, power communication lines and, without limitation except as may be required by duly authorized regulatory agencies or governments, all other necessary structures and facilities (hereinafter “Improvements”). From time to time, Lessee may relocate all or any part of said Improvements as Lessee may deem desirable or necessary in its operations on the North Battle Mountain Mineral Prospect. Provided, however, that Lessor shall be notified in writing by certified or registered mail of Lessee’s intention to make such relocation at least twenty (20) days prior to commencing such relocation unless an emergency condition exists.

There is reserved to the Lessor the right, subject to governmental approval, to a mutually acceptable reasonable portion of the surface on the North Battle Mountain Mineral Prospect for the purpose of locating an inspection station to exercise Lessor’s rights hereunder.

2. Term, Rule Against Perpetuities and Severability of Paragraphs. Subject to the other provisions herein contained, this Lease shall remain in force for a “Term” of ten (10) years from the Effective Date hereof and renewable by Lessee in ten (10) year increments thereafter provided that there is production of one or more Leased Substances from the North Battle Mountain Mineral Prospect, or any operations permitted hereunder are being conducted on the North Battle Mountain Mineral Prospect at the time of renewal or this Lease is continued in force by reason of any of the provisions hereof, provided, however, the term of this Lease shall not exceed ninety-nine (99) years in any event. During any period of extension beyond the first ten (10) years of the Term all of the terms and conditions of this Lease shall remain in full force and effect.

The Term of this Lease is not intended to violate the Rule Against Perpetuities. In the event the Term of this Lease is determined to violate the Rule Against Perpetuities by a Court of competent jurisdiction, the Term shall, by this Article 2, be automatically reduced to the maximum number of years determined to comply with the Rule Against Perpetuities. Each of the Articles in this Lease is severable from each of the other Articles in this Lease. In the event an Article in this Lease is determined to be invalid, void, or unenforceable, then all remaining Articles shall remain in full force and effect. In the further event that this Article 2 is construed in such a manner as to eliminate a definitive Term of this Lease, then the parties agree that the Term shall be a reasonable period of time sufficient to accomplish the purposes of this Lease.

3. Funds for Payment; Advance Minimum Royalty; Royalty Credit; Amount of Royalties Paid; Dollar Equivalent.

3.A. Payment Funds. Any and all payments required to be paid to Lessor pursuant to the terms of this Lease shall be paid to the Payment Agent and such payments shall be made in U.S. currency, or as in-kind payments in accord with Article 4, Production Royalty.

3.B. Advance Minimum Royalty. Lessee shall pay to the Payment Agent, the advance minimum royalties due to the Lessor in the amount and at the times listed below (each, an “Advance Minimum Royalty Payment”); provided, however, that if this Lease is terminated prior to the due date for the payment of any such Advance Minimum Royalty Payment, Lessee shall have no obligation to make any further Advance Minimum Royalty Payments, the due dates of which occur after such termination.

Due Date	Amount of Advance Minimum Royalty Amount
On signing	$5,000
1st Anniversary	$15,000
2nd Anniversary	$35,000
3rd Anniversary	$45,000
4th Anniversary	$80,000
5th Anniversary and annually thereafter during the Term of the Lease	The greater of $100,000 or the U.S. Dollar Equivalent (as defined below) of 90 ounces of gold

If this Lease is terminated for any reason, including but not limited to, partial payment or nonpayment after thirty (30) days written notice as provided in Article 6 at any time during the calendar year, Lessee shall be obligated to pay the full amount of Advance Minimum Royalty Payment as required to be paid in this Article 3.B during the calendar year of the termination, and for any prior calendar years during the term of this Lease for which Advance Minimum Royalty Payments have not been paid.

The Lessor and the Payment Agent hereby acknowledge the Payment Agent’s receipt of the Original Lease Signing Fee in June 2011 and hereby agree that Lessee’s payment of the Original Lease Signing Fee fully relieves Lessee of the obligation to pay the Advance Minimum Royalty Payment amount due on the signing of this Amended and Restated Lease.

3.C. Royalty Credit for Advance Minimum Royalty Payments Paid. All Advance Minimum Royalty Payments paid by Lessee to the Payment Agent or Lessor shall constitute prepayment of and advance against Production Royalties (as defined in Article 4) thereafter accruing to Lessor under Article 4 during the term of this Lease. Within any one (1) calendar year, Lessee may use one hundred percent (100%) of that calendar year’s Advance Minimum Royalty Payment as credit against Production Royalties due Lessor within that calendar year. If the total dollar amount of Production Royalties due Lessor within that calendar year exceed the dollar amount of the Advance Minimum Royalty Payment due Lessor within that calendar year, Lessee can credit all uncredited Advance Minimum Royalty Payments made in previous years against fifty percent (50%) of the Production Royalties due Lessor within that calendar year.

3.D. Amount of Royalties Paid. The royalties payable by Lessee to the Payment Agent under this Lease shall be the greater of either:

(1) the Advance Minimum Royalty, as provided in Article 3.B hereof; or

(2) the Production Royalty determined in accordance with Article 4 hereof less any credit under Article 3.C hereof.

3.E. U.S. Dollar Equivalent. For the purpose of this Lease, the “U.S. Dollar Equivalent” referred to in Article 3 shall be for gold that is at least ninety-nine and ninety-five one-hundredths percent (99.95%) pure, and shall be determined by the average of the London afternoon fixing as published in the Wall Street Journal (or its recognized successor in the publication of gold and silver quotations) for the third calendar quarter preceding January 1 of the year in which the Advance Minimum Royalty payment is due. If, however, gold payment clauses are declared to be unenforceable or violations of public policy, then the “U.S. Dollar Equivalent” shall be for silver that is ninety-nine and nine-tenths percent (99.9%) pure.

The method of calculating the “U.S. Dollar Equivalent” for Advance Minimum Royalty silver shall be the same as that for calculating the “U.S. Dollar Equivalent” using gold above in Article 3, using the appropriate base price for silver.

4. Production Royalty; Stockpiling of Leased Substances. Lessee shall pay the Payment Agent a royalty (“Production Royalty”) for all Commercially Recoverable Valuable Product(s) (as defined below) contained in the Leased Substances sold or deemed sold from the North Battle Mountain Mineral Prospect. Commercially Recoverable Valuable Product(s) shall be defined, for the purposes of this Lease, as any valuable product(s) contained in Leased Substances which are 1) sold to a buyer, 2) deemed sold by production of dore under this Article 4, or 3) deemed sold per subsequent agreement to this Lease, such as a commingling agreement.

Lessee shall pay the Payment Agent a Production Royalty of three percent (3%) of the dollar value or gross sales price of any Commercially Recoverable Valuable Product of gold, silver, platinum or palladium contained in Leased Substances sold or deemed sold from the North Battle Mountain Mineral Prospect and one percent (1%) of the gross sales price of any other Commercially Recoverable Valuable Product contained in Leased Substances sold or deemed sold from the North Battle Mountain Mineral Prospect. The Production Royalty due Lessor shall be calculated, as applicable, using the provisions of Articles 4.A(1), Article 4.A(2), or Article 4.A(3). Production Royalty shall be calculated on the amounts of Commercially Recoverable Valuable Products contained in Leased Substances before any deductions whatsoever excepting only the deduction for any royalty credit under Article 3.C, and federal royalties based upon the production of Commercially Recoverable Products.

4A1. Whenever gold, silver, platinum or palladium are recovered from Leased Substances in the form of dore ingots produced from 1) minesite pours or 2) pours at custom recovery facilities (which provide recovery services only and do not purchase the recovered products), such pours will be a deemed sale and Lessee shall pay to the Payment Agent a Production Royalty as set out in Article 4. The dollar value (the “Dollar Value”) of the ounces of gold, silver, platinum or palladium (“Precious Metals”) contained in the dore shall be calculated as described below.

The dollar value of any given Precious Metal produced in dore during a calendar quarter shall be the average price per troy ounce of that Precious Metal for the calendar quarter multiplied by the sum of troy ounces of the given Precious Metal contained in dore produced during the calendar quarter as shown on the Refiner’s Settlement documents pertaining to the dore. Such average price is defined as the arithmetic mean of the daily London afternoon fixing for the calendar quarter. If two or more dore bars produced from the North Battle Mountain Mineral Prospect are shipped together to the refinery and those dore bars are refined together, resulting in one settlement, the Precious Metal price used to determine the dollar value of the Production Royalty will be a weighted average, and calculated as follows:

weighted average precious metal price = v + v

1 2

w + w

1 2

where v equals the weight of each dore bar in Troy ounces (as determined from samples of the dore collected prior to shipment to the refinery) multiplied by the fineness, expressed as a decimal fraction, of that dore bar (as determined from samples of the dore collected prior to shipment to the refinery) multiplied by the cash base price per Troy ounce assigned to that dore bar, as defined above. w is equal to the weight of each dore bar in Troy ounces (as determined from samples of the dore collected prior to shipment to the refinery) multiplied by the fineness of that dore bar (as determined from samples of the dore collected prior to shipment to the refinery).

Lessee shall report to Lessor within five (5) days of a dore pour the date, identification of the facilities used to pour, weight of the pour and disposition of the dore pour. Lessee shall deliver to Lessor a Dore Pour Report, providing the information in the form shown below within five (5) days of the dore pour.

DORE POUR REPORT

Pour No.

Date:

Time:

Weight (ounces)

Pour Facility Location

1. Source (property)

2. Operator (Lessee)

3. Owner

4. Royalty (for example, 5% of gross sales price)

5. Intended destination of dore (refinery or other facility as indicated)

NOTE: within five (5) days of this pour date, an exact copy (Xerox or carbon paper) will be sent by Express Mail to Arthur R. Leger, 2338 Sunrise Drive, Reno, Nevada 89509.

Signature of refiner (person in charge of making pour)

Lettered name

Lettered title

Signature of person witnessing pour

Lettered name

Lettered title

4.A(2). With the specific exceptions of Commercially Recoverable Valuable Products of gold, silver, platinum or palladium contained in dore under subsection 4.A(1) of this Lease, Lessee shall pay a Production Royalty on all Commercially Recoverable Valuable Products of gold, silver, platinum or palladium contained in Leased Substances which are sold or deemed sold from the North Battle Mountain Mineral Prospect. The Production Royalty under this subsection 4.A(2) shall be calculated as the percentage of the gross sales price received by Lessee as shown on the buyer’s settlement sheet as follows:

For gold, silver, platinum or palladium produced from the Property: three percent (3.0%)

For minerals other than gold, silver, platinum or palladium produced from the Property: one percent (1.0%)

4A(3). Lessee shall pay a Production Royalty on all Commercially Recoverable Valuable Products contained in Leased Substances, other than gold, silver, platinum or palladium, which are sold or deemed sold from the North Battle Mountain Mineral Prospect. The Production Royalty under this subsection 4.A(3) shall be calculated on the gross sales price received by Lessee as shown on the buyer’s settlement sheet using the percentages set out above.

4.B. In the event the United States or other public authority imposes the payment of any new royalty on production from the North Battle Mountain Mineral Prospect, whether a gross, net smelter returns, net proceeds or similar type of royalty, the dollar amount of such imposed royalty or, if applicable, the gold, silver, platinum or palladium equivalent of such imposed royalty shall be deducted from the Dollar Value of the ounces of gold, silver, platinum and palladium contained in the dore under Section 4.A(l) or the buyer’s settlement sheet under Section 4.A(2), as applicable, before the Production Royalty is calculated. In no event shall Lessor’s Production Royalty be reduced below one percent (1.0%) of the Dollar Value of dore as calculated in accordance with Article 4.A or gross sales price for Commercially Recoverable Valuable Products of gold, silver, platinum or palladium removed, commingled or sold from the North Battle Mountain Mineral Prospect, as it would have been calculated without deduction of any new royalty by the United States or other public authority.

4.C. In addition to the Production Royalties payable under Article 4.A, Lessee shall pay to the Payment Agent as Production Royalty hereunder a like percentage of the gross amount paid before any deductions whatsoever of any bonus, subsidy, or similar payment or allowance made for whatever reason to Lessee by any governmental agency, ore buyer or others with respect to any production, transport or sale of Leased Substances hereunder. Gains and losses experienced by Lessee from speculative “Trading Activities” as described herein are exempted from this provision.

4.D. Payment of Production Royalty, other than Production Royalty taken in kind by the Payment Agent, shall be made by Lessee to the Payment Agent within one hundred fifty (150) days of minesite dore pour or within one hundred twenty (120) days of delivery of Leased Substances to a third party, whichever is earlier. Each pour or delivery of materials to a third party shall be identified in a statement with supporting documents attached sufficient for calculation of contained Leased Substances and royalty in a format compatible with industry standards.

Royalty from separate pours, deliveries and sales may be combined and paid quarterly. Such payment shall be accompanied by a summary “Quarterly Royalty Statement” which clearly identifies the various components of the Royalty Payment and their separate values together with the supporting documents (e.g. pour reports, Refiner’s Settlement Sheets and statements, recovery facility settlements, etc.).

4.E. Lessor shall have the right and option to direct payment of Production Royalties to the Payment Agent in kind in the form in which Lessee sells such Leased Substances. On or before October 1st of each calendar year, Lessor shall give Lessee written notice whether Lessor elects to take its Production Royalty in kind throughout the following calendar year. If Lessor fails to give such notice for the first calendar year in which it is eligible to take its Production Royalty in kind, Lessor shall be deemed to have elected not to take its Production Royalty in kind for that calendar year. If Lessor fails to give such notice by October 1st of any subsequent year, the election then in effect will continue throughout the following calendar year. Each election to take or not to take its Production Royalty in kind shall remain in effect for calendar year increments and all persons or entities constituting the Lessor shall be required to make the same election whether or not to take in kind.

If Lessee enters into an agreement for the sale of Leased Substances from the North Battle Mountain Mineral Prospect, it shall not include in such agreement sale of that portion of the Leased Substances which Lessor has the right to take in kind, without the prior written consent of Lessor.

If Lessor elects to take its Production Royalty in kind, and if Leased Substances shipped to third parties include Lessor’s in kind share, such shipment shall be shipped in the joint names of Lessor and Lessee in a manner which identifies their respective interests. Lessee shall make necessary prior arrangements so that Lessor’s in-kind interest in the Leased Substances shipped to a refiner shall be recognized by the refiner. If Lessor elects to take its Production Royalty in kind, Lessor shall bear all risks associated with taking its Production Royalty in kind, and shall bear all additional costs incurred by Lessee as a result of Lessor’s taking in kind, such as increased costs due to separate pourings, storage, insurance, security, transportation and monitoring. Lessor shall have the right to inspect procedures used by Lessee to make payment in kind, and at its option, Lessor, or its agent, shall have the right to be present to observe sampling and splitting procedures and review all records and procedures related to division of Leased Substances for the purpose of taking in kind. Lessee shall have the right, exercisable in its sole and exclusive discretion, to select its refinery.

In the event the purchaser of any of the Leased Substances produced and sold by Lessee hereunder shall be owned or controlled by Lessee, the purchase agreement(s) covering such Leased Substances shall be commercially fair and shall provide that the price to be received by Lessee therefor shall be commercially fair and shall not be less than the price currently received by other sellers of Leased Substances of like quality and quantity who sell to the nearest independent refinery or smelter in the market area where such Leased Substances are ordinarily sold. For the purpose of this Article 4, “owned and controlled” shall mean that Lessee holds sufficient interest in the purchaser to substantially direct its operations on a continuing basis.

4.F. Production Royalty payments (dollar or in-kind) to the Payment Agent shall be accompanied by a statement, including but not limited to, smelter or refinery settlement sheets, agreements, invoices, or their equivalent, showing in reasonable detail the computation and derivation of such payment. If Lessee provides the accounting to support royalty payments in a columnar form, Lessee shall provide Lessor with a legend which explains the meaning of the heading of each column and a sample of one of the royalty calculations so Lessor can confirm Lessee’s royalty calculations.

Lessor shall have the legal right to monitor and confirm in an ongoing and timely fashion that Lessee has kept correct and legible records in a minerlike fashion of all matters related to timely Production Royalty payments under this Lease. Lessee acknowledges and agrees it will provide Lessor with copies of all documentation reasonably necessary for the Lessor to verify accurate and timely payment of Production Royalty by the Lessee. Further, Lessee agrees it shall provide Lessor the right at all reasonable times to make inspections upon five (5) business days’ prior notice or with less notice at the option of the mine manager of all of the Lessee’s facilities used in mineral production or accounting for production under this Lease.

These inspections shall be allowed as long as they are reasonably related to the Lessor’s purpose of verification of accurate and timely payment under this Lease.

4.G. Lessee shall have the right to sell or refrain from selling Commercially Recoverable Valuable Products in any manner it may elect. Lessee shall have the right to engage in forward sales, future trading or commodity options trading and other price hedging, price protection, gold and silver loans, financing and speculative arrangements which may involve the possible delivery of Commercially Recoverable Valuable Products but does not result in the actual sale and delivery of Commercially Recoverable Valuable Products (“Trading Activities”). Lessee’s trading activities shall not include any part of Lessor’s share of production or serve to defer or postpone payment of Lessor’s production royalties. Lessor and the Payment Agent acknowledge that the proceeds of Trading Activities shall not be considered part of or included in the amounts paid to the Payment Agent for the purpose of determining the production royalties and Lessor and the Payment Agent shall not be entitled to participate in the proceeds, or be obligated to share in any losses, generated by any Trading Activities.

4.H. Lessee may stockpile Leased Substances on the North Battle Mountain Mineral Prospect only after giving Lessor notice of Lessee’s intention to do so, which notice shall specify the date such stockpiling is to commence and the proposed location of the stockpile on the Lessor’s property. Stockpiling of Leased Substances in locations other than on the North Battle Mountain Mineral Prospect is prohibited without Lessor’s written consent. For the purposes of this Lease “stockpile” shall mean storage of mined Leased Substances containing valuable product(s) at or in excess of Lessee’s operating process cutoff grade for that product which is metallurgically amenable to the process in use by Lessee in association with the North Battle Mountain Mineral Prospect. Lessee shall keep full, complete and minerlike records of the grade and quantity of Leased Substances so stockpiled, and Lessee shall provide such information to Lessor within thirty (30) days of determining such information.

4.I. Royalty Buydown. Lessee shall have the right to buy down the production royalty payable under the provisions of this Article 4 for the following amounts:

First one percent (1.0%) two million dollars ($2,000,000)

The remaining two percent (2.0%) production royalty on gold, silver, platinum, or palladium shall not be purchasable by Lessee. The one percent (1.0%) royalty applicable to all other minerals shall not be purchasable by Lessee.

1.	Committed Work Expenditures and Work Requirement.

5A. Work Requirement. In order to keep this Lease in effect, Lessee shall be required to perform yearly work expenditures in each year for exploration, development and mining of the North Battle Mountain Mineral Prospect as described below. The yearly work expenditure items qualified as fulfilling the work requirement shall be limited to all costs incurred in actual work on the North Battle Mountain Mineral Prospect in drilling, trenching, excavation, mining, road building, surveying, environmental studies and permitting costs incurred directly on or related to the North Battle Mountain Mineral Prospect, mapping, and geological, geochemical and geophysical programs conducted on the North Battle Mountain Mineral Prospect, as well as assaying and metallurgical testing of ores extracted from the North Battle Mountain Mineral Prospect which may be conducted at appropriate facilities off the North Battle Mountain Mineral Prospect. Expenditures shall include wages and salaries paid to engineers, geologists, laborers and technicians for the actual time spent in exploration, development and mining of the North Battle Mountain Mineral Prospect. Direct overhead, such as lodging, meals and travel expenses (but expressly excluding any charge for office or administrative expenses) shall be limited to twenty percent (20%) of the yearly work requirement.

Lessee shall fully comply with 43 C.F.R. Sec. 3809 regulations (Surface Management of Public Lands under the U. S. Mining Laws) or with 36 C.F.R. Sec. 228 (regulations concerning use of the surface of Forest Service Lands) and any amendments or revisions thereto. In the event assessment work requirements are reinstated, Lessee shall submit an exploration plan, if required, on a date which will give the Bureau of Land Management or Forest Service sufficient time for Lessee to execute such plan and satisfy the yearly work requirement.

In the event assessment work requirements are reinstated, if Lessee fails to gain Bureau of Land Management or Forest Service approval for any work plan, it shall be excused from expenditures for that portion of that year’s work requirement which is disapproved, it being understood and agreed that any portion of the yearly work requirement which is not expended because of Bureau of Land Management or Forest Service disapproval shall be added to the succeeding year’s annual work requirement. It is further mutually understood and agreed that annual assessment work requirements shall not be so excused unless permission to defer annual assessment work requirements has been granted to Lessee by the (Bureau of Land Management or other) appropriate government agency, in which case Lessee shall file all documents required to maintain the North Battle Mountain Mineral Prospect in good standing with the county and the Bureau of Land Management prior to August 31 of each year and provide Lessor with proof of such filing prior to November 1st of each year.

MINIMUM YEARLY WORK EXPENDITURES

Lessee shall expend the following amounts (the “Required Work Expenditures”) on work on the property annually:

2011-2012 - $100,000 physical work which would be cumulative

2013 and thereafter - $200,000 which includes $150,000 physical work

All Required Work Expenditures are to be spent annually and must always include all fees and claim maintenance costs at a minimum. In the event Lessee is precluded from performing Work, as required in this Article 5, as a result of the failure of a governmental entity to issue required permits, the provisions set forth in Article 7 shall become applicable. In such a case, the remaining Work Requirement Expenditures required to meet the annual work commitment shall be deferred and carried forward until the permit is issued. Upon permit issuance all deferred work requirements and Work Requirement Expenditures shall be performed. If funds are expended in excess of the annual Work Requirement Expenditures, funds in excess of the fees and claim maintenance costs may be credited to subsequent Work Requirement Expenditures, provided, however, annual claim maintenance fees and costs shall always be paid by Lessee.

On or before March 1st of each year that this Lease is in effect and the first year subsequent to termination, Lessee shall provide Lessor with an organized, legible written narrative report, including table of contents and list of any exhibits to the report, which shall describe the operations conducted on the North Battle Mountain Mineral Prospect during the prior calendar year. With the report shall be furnished legible true copies of all reports and records made for the North Battle Mountain Mineral Prospect, including, but not limited to, lithologic drilling logs and assays, maps, cross-sections, assays, metallurgical tests, ore reserve calculations and geological reports pertaining to the North Battle Mountain Mineral Prospect. Records shall include computer data files, if any, and instructions to recover them, in addition to but not as replacements for other reports and records. The report shall include a legend for all symbols used on maps, cross-sections, drill logs, columnar presentations, and any other form of document which requires a legend to make it comprehensible and useful. With the report shall be furnished an up-to-date legible drill hole location map or maps at appropriate scales such that the collar locations and designations of all holes are clearly identified. Such maps shall be compiled and furnished on an annual basis to depict the locations and current status of all known drill holes in North Battle Mountain Mineral Prospect. Upon Lessor’s request and if available, Lessee shall provide copies of the above data in reproducible form such as mylars or sepias. It is agreed between Lessor and Lessee that during the Term of this Lease, Lessor shall keep all information furnished to Lessor by Lessee strictly confidential and Lessor or any other person to whom Lessor furnishes such information at such time as it becomes permissible to do so shall specifically indemnify and save harmless Lessee from any action resulting from reliance upon such information furnished to Lessor by Lessee.

Lessee shall provide to the Lessor its interpretive data, reports and information. However, all such interpretive data shall be delivered to the Lessor with an express written disclaimer as to its completeness or accuracy, and the written disclaimer must accompany any interpretive data that the Lessor discloses to a third party. The disclaimer shall be generally as follows:

Lessee does not make any representation or warranty, express or implied, of any kind or nature whatsoever with respect to the accuracy, reliability or completeness of this information or matter. Any use of, or reliance upon, this information or matter by any person, firm or corporation shall be at his or its sole risk, liability and responsibility.

Prior to March 1st of each year that this Lease is in effect and the first year subsequent to termination, Lessee shall provide Lessor documentation from Lessee’s accounting records of the expenditures claimed as minimum yearly work requirements upon the North Battle Mountain Mineral Prospect. At reasonable times and places, during normal business hours, Lessor shall have access to, with a minimum of five (5) business days’ advance notice given by Lessor, the original invoices and any other records pertinent and necessary for substantiating the compliance of Lessee with the provisions of this Lease.

6. Manner of Payment. All payments to be made by Lessee to the Payment Agent hereunder, except Production Royalty payments where in-kind payment is made pursuant to Article 4, shall be made by mailing or delivering cash, check drawn on the company’s account, or a cashier’s or certified check to the Payment Agent’s address as set forth in Article 21 hereof, on or before the date such payment shall be required to be made hereunder; provided, however, that the Advance Minimum Royalty shall be paid between January 1 and January 15 of each year. If Lessee fails to pay or shall incorrectly pay all of any payment or some portion of any payment due hereunder, this Lease shall terminate absolutely if Lessee, within thirty (30) days after receipt of written notice from the Lessor or the Payment Agent to Lessee of its error or failure with respect to such payment, shall fail to rectify the same. All payments not timely received by the Payment Agent shall (if thereafter accepted by the Payment Agent pursuant to the terms of this Lease) be accompanied with interest from the date due until the date paid at the Bank of America (or its recognized successor) prime rate plus two percent (2%) in effect on the date the payment was due.

7. Lessor’s Title

A. It is mutually understood and agreed that this Lease is granted only under such title as Lessor may now hold or hereafter acquire. Lessee may investigate and in Lessor’s name take any action it deems necessary to remedy any defects of title to the North Battle Mountain Mineral Prospect. Lessor agrees to cooperate with Lessee in investigating and remedying any such defects in title; however, in the event that Lessor shall hereafter be divested of such title, Lessor shall not be liable for any damages sustained by Lessee. Additionally, Lessor shall not be liable in damages or otherwise, on account of Lessee’s possession thereof being destroyed or interrupted. Lessee’s only remedy in the event of failure of Lessor’s title is specified in the last sentence of Article 8.D below.

B. It is understood and agreed that in the event of adverse claim or claims affecting mining claims comprising the North Battle Mountain Mineral Prospect or the land covered thereby, Lessee shall be under no obligation to defend title, nor to contribute to the defense of title thereto, and it is specifically understood in such event that Lessor shall be under no obligation to defend title.

C. Concerning possible conflicts with unpatented mining claims of third parties, neither party is under a specific obligation of title defense; Lessor leases merely whatever title it might have in such area of conflict. To the extent that Lessee desires to enter an area of conflict and endeavor to prove upon the title to Lessor’s claims, Lessee does so at its own risk and expense. Lessor represents that it has no knowledge of claims of third parties. Nothing in this agreement is intended nor shall it be construed to require that Lessee pay Production Royalty to the Payment Agent or the Lessor for mineral production from property which is determined not to belong to Lessor.

D. It is expressly agreed that Lessor does not warrant title to the North Battle Mountain Mineral Prospect. To the best of Lessor’s knowledge, all of the claims listed in Exhibit “A” for the Mineral Prospect were located, monumented and recorded with the appropriate government entities as required by law and have been continuously maintained since location or relocation by assessment work or payment of claim maintenance fees and filing/recording of evidentiary documents as required by law. Lessor does, however, represent that the North Battle Mountain Mineral Prospect is free and clear of all liens and encumbrances, including any leases, rights, or licenses granted to third parties by, through, or under Lessor, except taxes not yet payable and matters of record in Lander County, Nevada, if any; the consummation of this Lease will not result in or constitute a default or an event that, with notice or lapse of time or both, would be a default, breach or violation of any contract, commitment or arrangement to which Lessor is a party or by which it is bound; provided, however, that the unpatented mining claims constituting the North Battle Mountain Mineral Prospect are acknowledged to be subject to the paramount title of the United States. Lessee’s sole and exclusive remedy for any breach or default by Lessor under this Article 8.D is to terminate this Lease and release its possession of the North Battle Mountain Mineral Prospect.

E. Lessor shall not create, permit or suffer any liens or encumbrances, reservations, restrictions and easements on the North Battle Mountain Mineral Prospect unless expressly subordinated to Lessee’s rights hereunder; that Lessee may, at its option, discharge such claims and thereby be subrogated to any liens or encumbrances on the North Battle Mountain Mineral Prospect as to all rights of the holder thereof, and Lessee may recover any amounts so paid from any amounts otherwise due to Lessor.

8. New Mining Claims. Either party hereto shall have the right at any time to locate mining claims in the vicinity of the North Battle Mountain Mineral Prospect, provided however, if either Lessor or Lessee should located any additional load claims either within the exterior (peripheral) boundaries of the claims forming the Subject Claims or an area of one mile from the exterior boundaries (the “Area of Interest”), any additional claims located by Lessor or Lessee within the Area of Interest shall be subject to this Lease.

A. If such mining claim is located by Lessor, then Lessor shall, within thirty (30) days of recording the same with the appropriate county, give Lessee written notice thereof setting forth the description of such mining claim and the facts upon which Lessor bases its conclusions that Leased Substances might exist therein. Within forty-five (45) days after receipt of such notice, Lessee shall have the right to reject any interest in such mining claim by giving Lessor written notice of such rejection; if not so rejected, Exhibit “A” hereto shall be modified and amended by Lessee to incorporate such mining claim in the North Battle Mountain Mineral Lease within fifteen (15) days of acceptance of such claim or claims by Lessee.

B. If any portion of a claim located by either Lessor or Lessee lies within the North Battle Mountain Mineral Prospect Boundary, the entire claim shall become a part of the North Battle Mountain Mineral Prospect, and Exhibit “A” shall be modified and amended by Lessee to include such mining claim in accord with Article 9.

C. If Lessor locates mining claims within the boundary area and subsequently offers such mining claims to Lessee, if Lessee accepts those claims, it will pay actual expenses incurred by Lessor in connection with the acquisition.

This Article 8 shall not apply to mining claims or other properties that are presently owned or are acquired in good faith by Lessor or Lessee from third parties. Any modification or amendment to Exhibit “A” hereto as herein provided shall not serve in any manner to extend the North Battle Mountain Mineral Prospect boundary. In the event Exhibit “A” is amended pursuant to this Article 8, Lessee may record an amended Exhibit “A” in accordance with the provisions of Article 32.

9. Claim Rental, Fee/Assessment Work - Unpatented Mining Claims. During the Term of this Lease, subject to the provision of Section 16, Lessee agrees to timely pay all fees and to file and record documents and to perform all work necessary to hold and maintain the mining claims subject to this Lease in good standing, provided that such work is required pursuant to then current federal or state laws and regulations.

If during the term of this Lease, federal rules and regulations are changed to require the performance of assessment work in addition to payment of claim rental fees on unpatented mining claims, Lessee agrees to timely perform labor or make improvements on or for the benefit of each of the unpatented mining claims comprising the North Battle Mountain Mineral Prospect (hereinafter “Assessment Work”). Lessee further agrees that said labor or improvements made to satisfy the annual assessment work shall be performed only upon the claims lying within the North Battle Mountain Mineral Prospect and work performed on contiguous claims lying outside the boundary of the North Battle Mountain Mineral Prospect covered by this Lease shall not be used to satisfy such requirement. Lessee shall perform assessment work in accordance with good mining practices and all applicable state and federal mining laws, statutes, rules and regulations and shall provide Lessor with basic documentation to substantiate labor affidavits. The parties hereto agree to cooperate to the fullest extent to enable Lessee to comply with the requirements of this Article 9 to prepare, record and file in a timely manner all required proofs of assessment work or Notices of Intention to Hold in the manner required by applicable law. Lessee shall record Notices of Intention to Hold and Affidavits of Assessment Work with the County and file Notices of Intention to Hold and Affidavits of Assessment Work with the Bureau of Land Management office having jurisdiction in a timely fashion. Lessee shall provide Lessor with record-stamped copies of county recorded documents and file-stamped copies of Bureau of Land Management filed documents no later than fifteen (15) days prior to the due date of such recordation and filing.

Lessee shall have the right, upon thirty (30) days’ notice, to give notice to Lessor in writing that the claim or claims specified in said notice shall no longer be subject to this Lease; and upon giving of such notice, and provided such notice is given at least sixty (60) days prior to the end of the claim rental/assessment year, such claim or claims shall be deemed stricken from this Lease, and Lessee’s responsibilities and obligations for claim rental fee/assessment work and other fees, filing and recording duties as to said claim or claims shall end. In the event that such notice is given less than sixty (60) days prior to the end of the rental fee/assessment year, the Lessee shall perform all work necessary to hold and maintain such claims for the then current rental/assessment year. Notwithstanding the release of any claim or claims from the operation thereof, this Lease shall continue in full force and effect with respect to all parts of the North Battle Mountain Mineral Prospect not specified in such notice. Further, such release shall not cause or result in any diminution of Lessee’s obligations regarding confidentiality, Advance Minimum Royalty, Production Royalty or Work Requirements described below. Lessee shall, at the time of giving such notice, provide Lessor with all data regarding work which has been done for that year by or for Lessee upon any of such claims so released.

In the event Lessee shall terminate this Lease in its entirety prior to the end of the then current claim rental/assessment year, Lessee shall be obligated to pay claim rental fees and/or perform assessment work, pay all fees and perform all necessary filing and recording for the following claim rental/assessment year as to each of the claims then subject to this Lease, unless such termination is at least sixty (60) days prior to the end of the then current claim rental/assessment year. In any event, Lessee shall be responsible for obligations incurred prior to such termination and those which survive in accord with Article 12.

10. Relocation and Amendment of Unpatented Mining Claims. Subject to the prior written consent of Lessor, which consent shall not be unreasonably withheld, Lessee, in the name of Lessor, shall have the right, but not the obligation, to amend the locations of any one or more of the mining claims included within the North Battle Mountain Mineral Prospect and Lessor agrees to execute promptly any documents necessary for that purpose. If the location of any such mining claim was for any reason defective, Lessee shall have the right, but shall not be required, to locate such defective mining claim or claims in the name of Lessor for the purpose of curing such defect. In order to insure that Lessor agrees with Lessee’s plan to cure perceived defects in title, Lessor shall be notified in writing by certified or registered mail at least twenty (20) days prior to Lessee’s commencing with relocation or amendment unless an emergency exists and time is of the essence.

11. Liens. Lessee shall pay in full for all labor performed upon or material furnished to the North Battle Mountain Mineral Prospect and shall keep the whole thereof free and clear from any and all liens of whatsoever nature or kind created by Lessee, except for Lessee’s grant of a security interest for financial purposes under Article 22; provided, however, that if Lessee, in good faith, disputes the validity or amount of any claim, lien or liability assessed against it with respect to the North Battle Mountain Mineral Prospect, Lessee shall not be required to pay or discharge the same until the amount and validity thereof have been finally determined upon the condition that Lessee obtains a bond within fifteen (15) days of receiving notice of said lien as is provided by N.R.S. Section 108.2413, et seq. and as amended, to effect the release of said lien. However, in no event shall Lessee allow or permit title to the North Battle Mountain Mineral Prospect to be lost, jeopardized or otherwise unreasonably encumbered as a result of its non-payment of any claim, lien or liability for which Lessee is responsible. Lessee shall notify Lessor immediately, either by telegram or facsimile transmission followed by hard copy, on the occasion of being served notice of any lien regardless of whether Lessee disputes the validity of the lien for any reason. It is mutually agreed that concurrent with execution of the Lease, Lessor and Lessee will execute and acknowledge a “Notice of Non-Responsibility for Labor or Materials Furnished Mineral Prospect” which Lessor shall file with the Lander County Recorder in compliance with N.R.S. 108.234 and as amended. When the recorded copy of the “Notice of Non-Responsibility” has been received by Lessor, it shall furnish a copy of same to the Lessee which Lessee shall post within ten (10) days and keep posted upon the North Battle Mountain Mineral Prospect during the Term of this Lease.

12. Laws and Regulations - Indemnification of Lessor. It is the policy of Lessor to comply fully and in all respects with all environmental, reclamation and land use permitting regulations and laws. Lessor represents that it has no knowledge of any conditions on the North Battle Mountain Mineral Prospect existing prior to the Effective Date of this agreement which constitute violation of any laws or regulations including, but not limited to, environmental, reclamation and land use permitting regulations. Lessee’s responsibility for reclamation or acceptance of environmental and permitting liabilities on the North Battle Mountain Mineral Prospect shall be limited specifically to any disturbance that may be caused by Lessee’s own activities on the North Battle Mountain Mineral Prospect and Lessee agrees to indemnify and hold Lessor harmless from and against such liability. Lessee shall not reclaim any pre-FLPMA access without the prior written consent of Lessor. Liability for reclamation of all disturbances existing on the North Battle Mountain Mineral Prospect prior to the Effective Date shall be the exclusive responsibility of Lessor and Lessor agrees to indemnify and hold Lessee harmless from and against such liability. Lessee shall at all times and its own expense comply in all respects with all county, state and federal laws, statutes, ordinances, rules and regulations relating to Lessee’s actions under this Lease on or about the North Battle Mountain Mineral Prospect. Lessee shall also at all times and at its own expense timely pay any and all fees or costs required to be paid to any governmental agency to keep the title to the mining claims in good standing.

Lessee shall provide workmen’s compensation insurance and such other insurance to cover its personnel and all of its operations upon the North Battle Mountain Mineral Prospect in the amount and form as may be required by applicable law. At Lessor’s written request, Lessee shall provide Lessor with copies of the declarations page of all such policies as may be in effect (from time to time). Lessee assumes full and sole responsibility for the operation and direction of the work done under this Lease on the North Battle Mountain Mineral Prospect and no employee or agent furnished by Lessee shall under any circumstances be deemed to be an employee or agent of Lessor and Lessee shall indemnify and hold Lessor harmless of and from any and all claims, demands or liabilities arising out of or in connection with the operations or activities of Lessee hereunder and Lessee shall acquire a comprehensive general liability insurance policy covering such operations and activities with limits of not less than two million dollars ($2,000,000.00) for each accident or occurrence. Lessee shall provide Lessor with written proof of compliance prior to commencing operations on the North Battle Mountain Mineral Prospect. Lessee shall provide Lessor with copies of such insurance policy, certificate or rider naming Lessor as an additional insured on such policy within fifteen (15) days of the date of execution of this Lease. Nothing in this agreement is intended nor shall it be construed as to require the Lessee to indemnify and hold Lessor harmless of and from any claim, demand or liability arising out of or in connection with the operations or activities of Lessor or the activities of operators other than Lessee on the property prior to the execution of this agreement.

Lessee shall notify Lessor verbally within twenty-four (24) hours after the occurrence of any event on the property which poses a substantial risk of environmental liability and shall give Lessor detailed notification in writing within ten (10) days. Such occurrence will include but shall not be limited to cyanide or other toxic chemical or mineral leaks, spills or contaminations or any episode or occurrence resulting in killing of wildlife which was caused by said spills, leaks or contaminations.

Lessee shall provide Lessor with copies of all plans, maps and all other documents submitted in compliance with government regulations and all agreements with any government agency pertaining to the North Battle Mountain Mineral Prospect, including but not limited to, Notices of Intent to Operate, Plans of Operation, Environmental Impact Statements, reclamation statements, and all government agency communications sent to any such agency or received by Lessee from any such agency which are related to such submissions or agreements, within thirty (30) days of sending to or receiving from the government agency such material. In the event any government agency requires the filing of a bond to insure Lessee’s performance, Lessee agrees to provide such bond at its own cost and expense.

13. Taxes. During the Term of this Lease, Lessee shall timely pay all taxes levied or assessed against the North Battle Mountain Mineral Prospect, all taxes levied or assessed against Lessee’s personal property or improvements, all taxes levied or assessed against any improvements presently on the North Battle Mountain Mineral Prospect, and all taxes levied or assessed upon the operations which are related to disposition of Leased Substances by Lessee on or in relation to the North Battle Mountain Mineral Prospect, exclusive of any taxes levied, assessed or measured on the royalty paid to Payment Agent as agent for the Lessor. Lessor or Payment Agent, as applicable, shall, within fifteen (15) days of receipt, transmit to Lessee any notices or documents pertaining to any such taxes which are the responsibility of Lessor or Payment Agent to pay. If Lessor or Payment Agent fail to pay any taxes payable by Lessor or Payment Agent, other than taxes levied, assessed or measured on royalty paid to Lessor or Payment Agent, which pertain to the North Battle Mountain Mineral Prospect, unless Lessor or Payment Agent is contesting the same, Lessee may at its option pay Lessor’s or Payment Agent’s proportionate share of taxes when due and may deduct all such sums from subsequent payments to be made to Payment Agent hereunder. Each party shall have the right to contest in the courts or otherwise the validity or amount of any taxes or assessments which the respective party may be required to pay hereunder if it deems the same unlawful, unjust, unequal or excessive or to take such other steps or proceedings as it may deem necessary to secure a cancellation, reduction, readjustment or equalization thereof before it shall be required to pay the same. In the event of termination of this Lease, taxes, which are the responsibility of Lessee but will be the responsibility of Lessor or Payment Agent after termination, shall be prorated on the relevant tax year basis.

It is mutually agreed that Lessor and Payment Agent shall be solely responsible for payment of their own taxes attributable to Advance Minimum Royalty payments or Production Royalty payments under this agreement.

14. Default. If Lessor considers that Lessee has not complied with any of the covenants, conditions or obligations hereunder, whether express or implied, Lessor shall notify Lessee, in writing, by certified mail, setting out specifically in what respects it is claimed that Lessee has breached this Lease. The receipt of such notice by Lessee and the lapse of thirty (30) days thereafter, without Lessee’s curing or commencing and diligently pursuing such action which is necessary to cure the alleged breaches shall be a default hereunder. Upon such default, Lessor may, at its option, terminate this Lease. Whether or not Lessor so terminates this Lease, Lessor has all of its rights and remedies under the law and this Lease with respect to such default.

Notwithstanding any contrary provision in the foregoing paragraph, if Lessee fails to make any of the payments due under Articles 3, 4, 6 or 10 herein within thirty (30) days after receipt of notice of such failure from Lessor, this Lease shall terminate absolutely; provided, however, that any termination for whatever reason shall not excuse Lessee from performing all obligations incurred under the terms of this Lease prior to such termination.

In the event that Lessee, in good faith, contests the default by court action within thirty (30) days after receipt of such notice by Lessee, and Lessee continues to pay the payments required and perform the other obligations of this Lease, this Lease shall not be terminated until a final decision has been reached that a default exists; Lessee shall have thirty (30) days within which to cure or commence and diligently pursue such actions necessary to cure the default or such other reasonable time as the parties shall mutually agree or the court shall determine.

In the event of termination under this Article 15, Lessee shall have the right to remove, pursuant to Article 17, its property and equipment from the North Battle Mountain Mineral Prospect, as hereinafter provided, but only after Lessee has performed all of its accrued obligations under this Lease. Until such performance by Lessee, Lessor shall have a lien upon all of Lessee’s property and improvements located on the North Battle Mountain Mineral Prospect.

15. Termination.

A. Partial Termination by Lessee. Lessee shall have the right, from time to time and at any time, to terminate this Lease as to any portion of the North Battle Mountain Mineral Prospect by giving written notice to Lessor specifying the portion of the North Battle Mountain Mineral Prospect to which such termination applies. New claims located by Lessor after the effective date of this Lease and within the perimeter of a contiguous block of terminated claims (fractions and open ground) shall not be subject to the area of interest provisions set forth in Exhibit A. Upon the effective date of such notice, as set forth in Article 21 hereof, all right, title and interest of Lessee hereunder shall terminate as to the portion of the North Battle Mountain Mineral Prospect specified in such notice and thereafter the term North Battle Mountain Mineral Prospect” shall be deemed to refer to only the portions of the North Battle Mountain Mineral Prospect remaining subject to this Lease. Upon such termination, Lessee shall have no further obligations concerning the portion of the North Battle Mountain Mineral Prospect to which such termination applies, except as to obligations (1) the due dates or incurrence of which occur prior to such termination, (2) are created pursuant to obligations in Articles 13 and 17 hereof relating to the condition of the North Battle Mountain Mineral Prospect, or (3) are otherwise required to be performed by Lessee subsequent to termination. Promptly following such termination, Lessee shall deliver to Lessor a quitclaim deed, in recordable form, quitclaiming to Lessor all right, title and interest of Lessee to that portion of the North Battle Mountain Mineral Prospect to which such partial termination applies. No partial termination under this Article 16 shall, however, cause a reduction in the amounts of any of the Advance Minimum Royalty and Production Royalty payments set forth in Article 3 and 4 or the Work Requirements set forth in Article 5.

B. Complete Termination by Lessee. Lessee may terminate this Lease by surrender of the Subject Claims to Lessor at any time. Such surrender shall be accomplished by delivering or mailing to Lessor a special warranty deed describing the Subject Claims and warranting against nay persons claiming any interest in the Subject Claims by, through or under Lessee. Such surrender shall terminate Lessee’s leasehold rights in the Subject Claims and shall relieve Lessee of all obligations provided herein which have not accrued prior to the date of surrender; provided that no surrender shall relieve Lessee of any of the following obligations:

(i) performance of assessment work and/or paying claim maintenance fees to the BLM and filing of required affidavits attending thereto for the then current assessment year if the surrender occurs after July 1 of such year, with respect to the Subject Claims and any newly located unpatented claims which may become a part of the Subject Claims as set forth in Article 8;

(ii) performance of all reclamation, remedial and/or restoration work as may be required by applicable laws or regulations resulting from activities of Lessee under this Lease; and

(iii) to the extent not previously furnished, the furnishing to Lessor of copies of all factual data in Lessee’s possession to the work conducted by it on the Subject Claims including assays, ore tests, surveys, exploration, development and mining records.

16. Removal of Improvements; Condition of Mineral Prospect. Whenever this Lease shall be terminated in whole or in part, for any reason whatsoever, Lessee shall deliver up the terminated portion of the North Battle Mountain Mineral Prospect to Lessor in reasonably good and safe condition and in compliance with all laws, statutes, ordinances, rules, regulations, permits and plans of operation. Lessee shall, however, subject to any laws, rules or regulations which may be applicable at the time and the requirements of Articles 13 and 17, have the right to remove any or all of the Improvements placed by it on or within the terminated portion of the North Battle Mountain Mineral Prospect; provided, however, Lessee shall leave in place all track, pipe, including any improvements which were affixed to the property for the purpose of using the water rights, timber, chutes and ladders without any warranty as to condition or fitness for use except for the Lessee’s duties to secure openings as set forth in the last sentence of this Article 17. Within thirty (30) days after complete termination, Lessee shall assign to Lessor any assignable water rights acquired and perfected by Lessee during the Term of this Lease which are situated on the North Battle Mountain Mineral Prospect and any water rights which are situated off the North Battle Mountain Mineral Prospect but which were acquired for the purpose of conducting work on the North Battle Mountain Mineral Prospect. Lessee shall have the right to effect the removal of such improvements, other than those specified above to be left in place, prior to such termination of this Lease or within one hundred twenty (120) days thereafter with the specific exceptions of property and Improvements on which Lessor has a lien pursuant to Article 15, and property and Improvements required for Lessee to fulfill its obligations to government entities or under the Lease which survive termination of the Lease. Any improvements not removed prior to termination or within three hundred sixty-five (365) days following such termination shall be deemed affixed to the terminated portion of the North Battle Mountain Mineral Prospect and shall become and remain the property of the Lessor, except property and Improvements which have been left in place in order for Lessee to fulfill its obligations which survive this Lease. Lessee shall have three hundred sixty-five (365) days after satisfaction of a given obligation to remove equipment and improvements required in connection with fulfillment of that obligation and policy. In the event of termination under Article 15, Lessee shall have three hundred sixty-five (365) days to remove its property and Improvements after Lessor has released any lien on them. Upon partial or complete termination, Lessor shall retain title to all water rights acquired and perfected by Lessee during the Term of this Lease which are situated on the North Battle Mountain Mineral Prospect and any water rights which are situated off the North Battle Mountain Mineral Prospect but which were acquired for the purpose of conducting work on the North Battle Mountain Mineral Prospect, improvements, stockpiles, dumps and tailings, including heap leach remnants, generated from mining and treating ores from or on the North Battle Mountain Mineral Prospect.

Within one hundred eighty (180) days after the partial or complete termination, Lessee shall comply, or shall be in the process of diligently and in good faith complying with all applicable environmental, restoration and reclamation laws, statutes, ordinances, rules, regulations, permits and plans of operation pertaining to the North Battle Mountain Mineral Prospect. Lessee is solely responsible for any governmental requirements and liability related to Lessee’s operations and actions under this Lease and even if the Lessee has complied with governmental requirements and has completed the restoration work to the satisfaction of government agencies upon termination of the Lease, if a governmental agency shall require some additional work at a future date resulting from Lessee’s operations on the North Battle Mountain Mineral Prospect, the Lessee shall be liable to perform same. Lessee shall indemnify and hold Lessor harmless from any such responsibility. Further, within one hundred eighty (180) days of partial or complete termination, Lessee shall secure all openings in accordance with federal and state regulations to eliminate access by the public to any and all shafts, mines, tunnels, adits, winzes, man ways, excavations, air lines, and/or vent tubes after consulting with Lessor regarding Lessor’s requirements for access.

17. Books and Accounts. Lessee shall maintain on a current basis complete and accurate records and books of account in accordance with generally accepted accounting principles consistently applied covering all matters necessary to the proper computation of the Production Royalties described in Article 4 hereof and the proof of having made approved yearly expenditures under Article 5 hereof. True copies of said records and books of account shall be kept either in the vicinity of the North Battle Mountain Mineral Prospect, elsewhere within the State of Nevada or at Lessee’s principal executive offices, at Lessee’s option, and shall be open to inspection by Lessor, Payment Agent or its authorized agents with a minimum five (5) business days’ advance notice or with shorter notice at the discretion of the mine manager at any reasonable time during normal business hours, provided such inspections do not unduly interfere with or hamper the managerial or accounting staffs of Lessee. Within sixty (60) days after the end of each calendar year during the term hereof, Lessee shall furnish to Lessor or Payment Agent an unaudited “Year-End Statement” showing the amount of Production Royalties paid to Payment Agent by Lessee during said year and the basis thereof. All statements so furnished shall be conclusively presumed true and correct after the expiration of twelve (12) months from the date of receipt by Lessor and Payment Agent, unless within said twelve (12) month period Lessor or Payment Agent give written notice of exception to Production Royalty computations or the listing which shows the description and extent of yearly work expenditures, specifying with particularity the components excepted to and the grounds for such exception. Lessor shall be entitled to an annual independent audit of the matters covered by said statement, at Lessor’s sole expense, provided Lessor selects for such audit an accounting firm of recognized standing, at least one of whose members is a member of the American Institute of Certified Public Accountants.

18. Data Inspection. Lessee shall furnish Lessor with copies of any agreements (including, but not limited to, haulage, milling, refining, extracting, and ore and concentrate purchase agreements), and any amendments thereto, which in any way relate to the determination of Production Royalties and Work Expenditures under this Lease. Said documents shall be furnished by Lessee to Lessor within thirty (30) days after executing such agreements or amendments. This article shall not obligate Lessee to furnish consulting and employment agreements, software and technology licensing agreements and any other agreements under which Lessee is obligated to maintain confidentiality or which constitute Lessee’s trade secret information. Lessee shall furnish Lessor with copies of all settlement sheets or statements which in any way relate to the sale or other disposition of Leased Substances produced from the North Battle Mountain Mineral prospect within thirty (30) days after receiving such sheets or statements. Lessee shall furnish Lessor with full, true and accurate information in response to any request with respect to the condition of mine workings on the North Battle Mountain Mineral Prospect, or with respect to the grade, quantity or quality of Leased Substances found in drilling, exposed in mining the North Battle Mountain Mineral Prospect or mined, processed or shipped by Lessee.

Lessee shall keep full and accurate records of all operations conducted on the North Battle Mountain Mineral Prospect, including assays, drilling records, drill hole location maps and mine maps which shall be open to inspection by Lessor or Lessor’s agent with a minimum five (5) business days’ advance notice given by Lessor or its authorized agents or with shorter notice at the discretion of the mine manager during regular business hours and upon reasonable notice with the provision that copies of any of these materials shall on request be furnished to Lessor by Lessee at Lessor’s expense. If records of operations are being stored and maintained as computer files, computer-ready copies of the computer files and instructions to retrieve data from them shall be furnished to Lessor by Lessee upon Lessor’s request and at Lessor’s expense. Such computer files shall be in addition to and not as replacements for hard copies of data which shat available for inspection and study on media other than computer files. Lessor, at Lessor’s risk and expense, shall have the right to enter upon and into all parts of the North Battle Mountain Mineral Prospect from time to time, and at all reasonable times and hours with a minimum five business days’ advance notice given by Lessor or its authorized agents or with shorter notice at the discretion of the mine manager, for the purpose of inspecting or surveying the same, or taking reasonable samples of Leased Substances therefrom. Lessee agrees to prepare chiptrays sequentially soon after acquisition of chip samples and as drilling progresses. It is Lessor’s responsibility to provide adequate storage facilities for chiptrays and splits of all rotary cuttings provided to Lessor and Lessor and Lessee agree to cooperate in taking reasonable steps necessary to insure that drill core, chiptrays and drill cuttings, chiptrays and/or core will not be exposed to the weather or be accessible to intrusion or vandalism by the public. Lessee agrees to give Lessor adequate advance warning of the need for storage space for large quantities of drill cuttings and chiptrays. Lessee shall not be obligated to provide separate chiptrays for Lessor. Lessor hereby indemnifies and agrees to hold Lessee harmless from and against liability arising from personal injury, death or property damage when such is caused by Lessor’s actions on the North Battle Mountain Mineral Prospect.

If this Lease is terminated for any reason, Lessee shall, within thirty (30) days thereafter furnish Lessor with legible, true copies of all exploration and development data generated by Lessee in its exploration and/or development of the North Battle Mountain Mineral Prospect which has not been previously delivered to Lessor including, but not limited to, legible copies of drilling logs, assay results, survey information, maps and cross-sections including geologic interpretive data including reproducible mylars or sepias which may have been prepared by Lessee. If data calculations from the North Battle Mountain Mineral Prospect are stored as computer files, computer-ready copies of the files and instructions to retrieve the data contained in them shall be furnished to Lessor. Delivery of such computer files does not excuse or release Lessee from delivering all the other data required under this Lease. Drill hole chiptrays and/or core samples shall be included as data and transported to Lessor’s designated storage facility. Lessor shall not disclose to the public during the term of this Lease, without a prior written consent of Lessee, information furnished to or made available to Lessor by Lessee regarding any portion of North Battle Mountain Mineral Prospect while such portion is subject to the terms of this Lease except as may be required by law or securities rules or regulations.

Promptly following execution of this Lease, and at anytime during the Term hereof, Lessor shall make available to Lessee, at Lessee’s sole expense, copies of all technical, title and recording information and data relating to the North Battle Mountain Mineral Prospect in the possession of Lessor.

19. Commingling. As a matter of policy, the Lessor does not permit ores or other materials containing Leased Substances from its properties to be commingled with such materials from other properties. However, Lessor and Lessee mutually agree that if commingling is objectively reasonable and necessary for the development of a viable mining operation or demonstrable economic benefit to a mining operation, they will work together in good faith to devise language which will permit commingling of ores from the North Battle Mountain Mineral Prospect with those from adjacent lands, provided such language requires Lessee to provide production records sufficient to demonstrate monies are being distributed properly. Such language shall be incorporated into a mutually acceptable Accountability Procedure for Commingling, which shall comply with industry standards, and shall be agreed upon prior to commingling of any ores from the North Battle Mountain Mineral Prospect.

The Accountability Procedure shall specify methods and procedures to determine reasonably precise and accurate estimated quantities of Commercially Recoverable Valuable Products to be commingled prior to actual commingling, methods and procedures to track commingled Commercially Recoverable Valuable Products through Lessee’s operations, and procedures to reconcile actual recovered Valuable Products with pre-commingling estimates. The Accountability Procedure shall include provisions for periodic internal metallurgical audits with results to be routinely furnished to Lessor and shall include provisions for external metallurgical audits at Lessor’s or Lessee’s request, including procedures for selection of metallurgical auditors acceptable to both parties and a formula to determine which party pays for an external audit.

20. Notices. Unless otherwise herein provided, notice or payment hereunder shall be deemed sufficiently given or made when personally delivered or on the third day after deposit in the United States mail, first class, postage prepaid, registered or certified, return receipt requested, and addressed as follows:

TO LESSOR:

Arthur R. Leger

2338 Sunrise Drive

Reno, Nevada 89509

Fax: (775) 827-6312

TO PAYMENT AGENT:

F.R.O.G. Consulting, LLC

2338 Sunrise Drive

Reno, Nevada 89509

Fax: (775) 827-6312

TO LESSEE:

Arttor Gold LLC

1640 Terrace Way

Walnut Creek, California 94597

Fax: (646) 349-2761

or to such other person or address as either party may designate by proper written notice.

21. Force Majeure. Except for the payments and the time requirements with respect thereto set forth in Articles 3, 4, 6, 9,10, 13, 14 and 19 hereof, whenever the time for performance of any act hereunder is limited and the performance thereof is hindered, prevented or delayed by any factor or circumstance beyond the reasonable control of Lessee and which Lessee is obliged to perform and which Lessee could not have avoided by the timely use of due diligence and adequate planning, such as acts of God, fire, floods, strike or labor troubles, breakage of machinery, inability to obtain necessary materials, supplies or labor, interruptions in delivery or transportation, shortage of railroad cars, insurrections or mob violence, regulations, orders or requirements of the government, embargoes, war or other disabling causes, whether similar or different, then the time for the performance of any such act or obligation shall be extended for a period equal to the time between Lessee’s notification of existence and the termination of the force majeure. Lessee shall immediately notify Lessor in writing of the existence of a force majeure, and Lessee shall use due diligence to remove the force majeure and shall promptly notify Lessor when the declaration of force majeure is terminated. It is expressly understood that litigation or arbitration in which Lessee is a party shall not constitute a condition of force majeure hereunder.

22. Assignment; Sublease; Joint Operations; Transfers. The subject matter of this Lease includes unpatented mining claims. The parties recognize the uncertain and tenuous nature of title to unpatented mining claims. Further, the parties recognize the critical importance of complying with state and federal regulations and statutes in preserving said title. The parties expressly agree that part of the material consideration for this agreement is Lessor’s confidence in Lessee’s ability and commitment to perform its duties hereunder, such duties include but are not limited to performance of annual assessment work and perfection of proof thereof as provided in Article 10; development of all necessary exploration, operation, reclamation and bonding plans as provided in Article 5; compliance with all local, state and federal laws, statutes, ordinances, rules and regulations as provided in Article 12, payment of all taxes as provided in Article 13; and application of the highest level of its professional, technical and financial ability and willingness to explore and operate the North Battle Mountain Mineral Prospect in compliance with all of the terms of the Lease, all of which are necessary to protect the North Battle Mountain Mineral Lease.

Lessee expressly agrees that it shall not assign, sublease, enter a joint operating agreement, or otherwise transfer all or any part of its rights or duties under this Lease without performance of the following express conditions:

Prior to execution of any documents effecting such a transfer, Lessee shall provide Lessor with a copy of the proposed transfer documents together with all exhibits and attachment thereto not less than fifteen (15) days prior to Lessee’s execution thereof.

Lessee shall not execute any transfer documents or obligate itself to make any such transfer without obtaining the prior written consent of Lessor. Lessor agrees that its prior written consent to any such transfer shall not be unreasonably withheld. Lessor’s rejection of Lessee’s request for consent to a proposed transfer shall not be deemed unreasonable if the proposed transfer would have material adverse effect on Lessor’s rights in the North Battle Mountain Mineral Prospect or Lessor’s rights under this Lease. Within fifteen (15) days after Lessor’s receipt of the proposed transfer documents, Lessor shall inform Lessee that Lessor consents to the transfer or rejects Lessee’s request for consent to the transfer. If Lessor does not within fifteen (15) days after Lessor’s receipt of a copy of the proposed transfer documents notify Lessee of Lessor’s decision, Lessor shall be deemed to have irrevocably released and waived Lessor’s right to require Lessor’s consent to the propose transfer. If within fifteen (15) days after Lessor’s receipt of a copy of the proposed transfer documents Lessor notifies Lessee that Lessor rejects Lessee’s request for consent to the proposed transfer, Lessor shall deliver with Lessor’s notice a detailed written statement of Lessor’s reasons for rejection of Lessee’s request for consent to the proposed transfer.

Lessee shall expressly guarantee performance of all of the duties of Lessee under this Lease whether said duties accrue before or after transfer of the Lease by Lessee. Said guarantee shall be express in the documents which effect such sale, loan, sublease, assignment joint venture agreement or other transfer, and no refusal by Lessor to consent to any transfer shall be unreasonable if Lessee fails or refuses to guarantee the obligations of the transferee in the same instrument, or if the same instrument does not obligate the transferee to be bound by the terms and conditions of this Lease to the same extent as the transferor (Lessee). If the transfer is the grant of a security interest in or other encumbrance of all or any part of Lessor’s interest hereunder in order to secure a loan to Lessee, the instrument documenting the transfer shall recite that it is subject to the terms and conditions of this Lease and that upon any foreclosure of or other enforcement of rights in the encumbrance the foreclosing party shall assume the position of Lessee hereunder and shall comply with and be bound by all terms and conditions of this Lease. No transfer by Lessee hereunder shall relieve Lessee from any obligation which accrued or attached prior to the effective date of the transfer.

Lessee agrees that this Article 22 shall be expressly incorporated, and not incorporated by reference, in any sale, assignment, sublease, joint operation agreement, or other document effecting such a transfer, and in any and all subsequent sales, assignments, subleases, joint operating agreements, or any other documents effecting a transfer of its rights or duties under this Lease.

It is expressly agreed that should Lessee enter into any sale, loan instrument, assignment, sublease, joint operating agreement or other transfer of Lessee’s rights or duties hereunder without prior performance of conditions A, B, C and D listed immediately above, such transfer shall be void and such transfer shall constitute a material breach of this Lease by Lessee.

Lessor agrees that its prior written consent to any such transfer shall not be unreasonably withheld. Lessor may without any consent and without any prior notice to Lessee sell, encumber or otherwise transfer its rights under this Lease. Lessor shall deliver a true and correct copy of any documents evidencing such a sale, encumbrance or transfer to Lessee within fifteen (15) days after execution thereof.

Lessee agrees to provide Lessor, after its written consent thereto, with a counterpart original of any sale, loan instrument, assignment, sublease, joint venture agreement, or other transfer documents complete with all supporting documents, attachments, and exhibits within fifteen (15) days after execution thereof.

23. Right of First Refusal. In the event Lessor shall receive an offer form a third party (the “Offeror”) to purchase the North Battle Mountain Mineral Prospect which Lessor wishes to accept, Lessor shall provide written notice thereof to Lessee indicating the name and address of the Offeror and the price and terms of payments proposed by the Offerer (the “Notice of Offer to Purchase”). For a period of sixty (60) days after the mailing of such notice, the Lessee shall have the right to purchase the North Battle Mountain Mineral Prospect at the price and on the terms specified in the Notice of Offer to Purchase.

24. Governing Law. This Lease shall be governed by the laws of the State of Nevada and in any litigation action between Lessor and Lessee, the parties shall submit to the jurisdiction of the courts of Nevada with a venue in Reno, Nevada.

25. Press Releases by Lessee. On the date of Lessee’s making or issuing any public announcement, press release or similar publicity or disclosure with respect to this Lease, a full, true and accurate copy of the publicity release shall be sent to the Lessor. For any disclosure required by law, rule, regulation or ordinance, the disclosing party shall advise the other part of such disclosure and send the other party a full, true and accurate copy thereof.

26. Titles of Articles. The titles to the Articles hereof have been inserted for convenience only. Such titles are not to be considered as limiting or expanding or modifying in any other fashion the language of the Article following the same.

27. Attorneys’ Fees. The prevailing party in any litigation or other form of dispute resolution mutually acceptable to the parties hereto concerning this Lease shall be entitled to its reasonable attorneys’ fees and court costs.

28. No Waiver. No waiver by either party of any right herein shall be construed as a waiver of any such right in the future or any other right in this Lease.

29. Binding Effect. Subject to the provisions of Article 22, this Lease shall extend to and be binding upon and every benefit hereof shall inure to the parties hereto, their respective heirs, executors, administrators, successors and assigns.

30. Memorandum. Lessee, Lessor and Payment Agent shall execute a Memorandum of this Lease in a recordable form under the laws of the State of Nevada to give notice to third parties of the rights granted hereunder. Either party may record such memorandum. Neither of the parties hereto shall or may record this Lease.

31. Obligation of Good Faith. All obligations and covenants set forth in this Lease shall be subject to an obligation of good faith by Lessor, Payment Agent and Lessee in the performance or enforcement thereof. It is mutually understood and agreed that “Good Faith” means honesty in fact in the conduct or transaction concerned.

32. Sole Agreement; Time of Essence. This Lease constitutes the sole understanding of the parties with respect to the subject matter hereof. All prior written or oral agreements or understandings, including the Original Lease, between the parties hereto are incorporated in and superseded by this Lease.

No modification or alteration of the terms of this Lease shall be binding unless such modification or alteration shall be in writing and executed subsequent to the date hereof by Lessee, Payment Agent and Lessor. In the event such modification or alteration alters the rights granted hereunder, the parties may execute an amended Memorandum of this Lease in a recordable form sufficient under the laws of the State of Nevada to provide notice to third parties. Time is of the essence of this Lease.

33. Further Assurances. Lessor, Payment Agent and Lessee agree that they shall take from time to time such actions and execute such additional instruments as may be reasonably necessary or convenient to implement and carry out the intent and purpose of this Lease.

34. Authority. Lessor and Payment Agent hereby represent and warrant that Arthur R. Leger has the necessary power and authority, on his own behalf and on behalf of the Payment Agent, to lawfully authorize the execution and delivery of this Lease and the other instruments to be executed and delivered in connection herewith and to undertake the performance of their obligations hereunder. This Lease, and the other instruments to be executed and delivered in connection herewith when executed and delivered by Lessor and/or Payment Agent, as applicable, shaIl constitute valid and binding obligations enforceable against them in accordance with their respective terms, and will not result in any violation of laws applicable thereto.

[Signature page follows]

IN WITNESS WHEREOF, the parties hereto have duly executed this Lease as of the day and year first above written.

LESSOR: ARTHUR LEGER		ARTTOR GOLD LLC

By:		By:
Name:	Arthur Leger	Name:	David Rector
		Title:	Manager

PAYMENT AGENT: F.R.O.G. Consulting, LLC		By:
			David Rector, President
By:		Name:	Sagebrush Gold, Ltd,
Name:	Arthur Leger	Title:	Member
Title:	President

EX-10.7 3 sagebrushex107.htm AMENDED AND RESTATED RED ROCK MINERAL PROSPECT LEASE sagebrushex107.htm

Exhibit 10.7

AMENDED AND RESTATED RED ROCK MINERAL LEASE

RECITALS

WHEREAS, the Payment Agent and the Lessee entered into that certain Red Rock Mineral Lease, dated May 24, 2011 (the “Original Lease”) with respect to certain properties owned by Lessor or in which Lessor has an interest, all as more particularly described in Exhibit “A” attached hereto and made a part hereof, and any additions thereto under Article 8 (hereinafter called the “Red Rock Mineral Prospect”);

WHEREAS, the Lessor is the sole member of the Payment Agent and owns 100% of the outstanding membership interests of the Payment Agent;

WHEREAS, the Original Lease incorrectly identified the Payment Agent as the owner and lessor of the Red Rock Mineral Prospect and did not include the Lessor as a party thereto;

WHEREAS, the Parties intended that the Original Lease identify the Lessor as the owner and lessor of the Red Rock Mineral Prospect and that the Original Lease designate the Payment Agent as the entity responsible for collecting and receiving all payments with respect to the Red Rock Mineral Prospect on behalf of Lessor;

WHEREAS, the Lessee made certain payments in the aggregate amount of $5,000 to the Payment Agent (the “Original Lease Signing Fee”) upon the signing of the Original Lease;

WHEREAS, the Parties wish to enter into this Amended and Restated Lease in order to carry out the intentions of the Parties and to correct the omissions and errors in the Original Lease; and

NOW, THEREFORE, in consideration of the mutual benefits to be enjoyed by Lessor, Payment Agent and Lessee pursuant to this Lease, the Parties hereby agree as follows:

1. Grant, Reservation. Lessor, for and in consideration of the royalties hereinafter reserved and of the agreements of Lessee herein contained, to the extent vested with legal right to do so, hereby grants, demises, leases and lets exclusively unto Lessee, except for Lessor’s right of inspection, the Red Rock Mineral Prospect, for the purpose of, including, but not limited to, surveying, sampling, investigating, exploring for, prospecting for, drilling for, developing, mining by any method (whether or not now known and including, but not limited to, open pit, strip, underground and solution methods), producing, saving, taking, milling, treating, transporting, stockpiling, handling and marketing all minerals or any valuable products of any nature whatsoever in, on or under the Red Rock Mineral Prospect, including, but not limited to, any ores, concentrates, dore ingots, bullion, carbon, precipitates, slag or any other material produced from the Red Rock Mineral Prospect which contain any recoverable valuable product of any nature, but excluding oil, gas, hydrocarbons and geothermal resources (hereinafter called “Leased Substances”), together with all of Lessor’s rights, privileges, water rights (if any) and easements (if any) useful for Lessee’s operations hereunder on the Red Rock Mineral Prospect and adjacent lands, including, but not limited to, the rights to look for, test, work, mine, excavate, raise, clean, stockpile on the Red Rock Mineral Prospect only, carry away and sell Leased Substances, to excavate pits, to sink shafts, make, use and occupy openings, adits, tunnels, raises, rooms, stopes, slopes, winzes and underground passages (now existing or hereafter opened), strip seams, lodes, veins and beds, and erect, use and maintain on the Red Rock Mineral Prospect such buildings, tipples, headframes, refineries, gasification plants, power plants, engines, machinery, appliances, devices, walls, wells, presently appurtenant (if any) or newly established water rights, roadways, housing, railroad tracks, shops, ditches, dams, ponds, reservoirs, pipes, power communication lines and, without limitation except as may be required by duly authorized regulatory agencies or governments, all other necessary structures and facilities (hereinafter “Improvements”). From time to time, Lessee may relocate all or any part of said Improvements as Lessee may deem desirable or necessary in its operations on the Red Rock Mineral Prospect. Provided, however, that Lessor shall be notified in writing by certified or registered mail of Lessee’s intention to make such relocation at least twenty (20) days prior to commencing such relocation unless an emergency condition exists.

There is reserved to the Lessor the right, subject to governmental approval, to a mutually acceptable reasonable portion of the surface on the Red Rock Mineral Prospect for the purpose of locating an inspection station to exercise Lessor’s rights hereunder.

2. Term, Rule Against Perpetuities and Severability of Paragraphs. Subject to the other provisions herein contained, this Lease shall remain in force for a “Term” of ten (10) years from the Effective Date hereof and renewable by Lessee in ten (10) year increments thereafter provided that there is production of one or more Leased Substances from the Red Rock Mineral Prospect, or any operations permitted hereunder are being conducted on the Red Rock Mineral Prospect at the time of renewal or this Lease is continued in force by reason of any of the provisions hereof, provided, however, the term of this Lease shall not exceed ninety-nine (99) years in any event. During any period of extension beyond the first ten (10) years of the Term all of the terms and conditions of this Lease shall remain in full force and effect.

3. Funds for Payment; Advance Minimum Royalty; Royalty Credit; Amount of Royalties Paid; Dollar Equivalent.

3.B Advance Minimum Royalty. Lessee shall pay to the Payment Agent, the advance minimum royalties due to the Lessor in the amounts and at the times listed below (each, an “Advance Minimum Royalty Payment”); provided, however, that if this Lease is terminated prior to the due date for the payment of any such Advance Minimum Royalty Payment, Lessee shall have no obligation to make any further Advance Minimum Royalty Payments, the due dates of which occur after such termination.

Due Date	Amount of Advance Minimum Royalty Amount
On signing	$5,000
1st Anniversary	$15,000
2nd Anniversary	$35,000
3rd Anniversary	$45,000
4th Anniversary	$80,000
5th Anniversary and annually thereafter during the Term of the Lease	The greater of $100,000 or the U.S. Dollar Equivalent (as defined below) of 90 ounces of gold

3.C. Royalty Credit for Advance Minimum Royalty Payments Paid. All Advance Minimum Royalty Payments paid by Lessee to the Payment Agent shall constitute prepayment of and advance against Production Royalties (as defined in Article 4) thereafter accruing to Lessor under Article 4 during the term of this Lease. Within any one (1) calendar year, Lessee may use one hundred percent (100%) of that calendar year’s Advance Minimum Royalty Payment as credit against Production Royalties due Lessor within that calendar year. If the total dollar amount of Production Royalties due Lessor within that calendar year exceed the dollar amount of the Advance Minimum Royalty Payment due Lessor within that calendar year, Lessee can credit all uncredited Advance Minimum Royalty Payments made in previous years against fifty percent (50%) of the Production Royalties due Lessor within that calendar year.

3.D. Amount of Royalties Paid. The royalties payable by Lessee to the Payment Agent under this Lease shall be the greater of either:

(1) the Advance Minimum Royalty, as provided in Article 3.B hereof; or

(2) the Production Royalty determined in accordance with Article 4 hereof less any credit under Article 3.C hereof.

4. Production Royalty; Stockpiling of Leased Substances. Lessee shall pay the Payment Agent a royalty (“Production Royalty”) for all Commercially Recoverable Valuable Product(s) (as defined below) contained in the Leased Substances sold or deemed sold from the Red Rock Mineral Prospect. Commercially Recoverable Valuable Product(s) shall be defined, for the purposes of this Lease, as any valuable product(s) contained in Leased Substances which are 1) sold to a buyer, 2) deemed sold by production of dore under this Article 4, or 3) deemed sold per subsequent agreement to this Lease, such as a commingling agreement.

Lessee shall pay the Payment Agent a Production Royalty of three percent (3%) of the dollar value or gross sales price of any Commercially Recoverable Valuable Product of gold, silver, platinum or palladium contained in Leased Substances sold or deemed sold from the Red Rock Mineral Prospect and one percent (1%) of the gross sales price of any other Commercially Recoverable Valuable Product contained in Leased Substances sold or deemed sold from the Red Rock Mineral Prospect. The Production Royalty due Lessor shall be calculated, as applicable, using the provisions of Articles 4.A(1), Article 4.A(2), or Article 4.A(3). Production Royalty shall be calculated on the amounts of Commercially Recoverable Valuable Products contained in Leased Substances before any deductions whatsoever excepting only the deduction for any royalty credit under Article 3.C, and federal royalties based upon the production of Commercially Recoverable Products.

The dollar value of any given Precious Metal produced in dore during a calendar quarter shall be the average price per troy ounce of that Precious Metal for the calendar quarter multiplied by the sum of troy ounces of the given Precious Metal contained in dore produced during the calendar quarter as shown on the Refiner’s Settlement documents pertaining to the dore. Such average price is defined as the arithmetic mean of the daily London afternoon fixing for the calendar quarter. If two or more dore bars produced from the Red Rock Mineral Prospect are shipped together to the refinery and those dore bars are refined together, resulting in one settlement, the Precious Metal price used to determine the dollar value of the Production Royalty will be a weighted average, and calculated as follows:

weighted average precious metal price = v + v

1 2

w + w

1 2

DORE POUR REPORT

Pour No.

Date:

Time:

Weight (ounces)

Pour Facility Location

1. Source (property)

2. Operator (Lessee)

3. Owner

4. Royalty (for example, 5% of gross sales price)

5. Intended destination of dore (refinery or other facility as indicated)

NOTE: within five (5) days of this pour date, an exact copy (Xerox or carbon paper) will be sent by Express Mail to Arthur R. Leger, 2338 Sunrise Drive, Reno, Nevada 89509.

Signature of refiner (person in charge of making pour)

Lettered name

Lettered title

Signature of person witnessing pour

Lettered name

Lettered title

4.A(2). With the specific exceptions of Commercially Recoverable Valuable Products of gold, silver, platinum or palladium contained in dore under subsection 4.A(1) of this Lease, Lessee shall pay a Production Royalty on all Commercially Recoverable Valuable Products of gold, silver, platinum or palladium contained in Leased Substances which are sold or deemed sold from the Red Rock Mineral Prospect. The Production Royalty under this subsection 4.A(2) shall be calculated as the percentage of the gross sales price received by Lessee as shown on the buyer’s settlement sheet as follows:

For gold, silver, platinum or palladium produced from the Property: three percent (3.0%)

For minerals other than gold, silver, platinum or palladium produced from the Property: one percent (1.0%)

4A(3). Lessee shall pay a Production Royalty on all Commercially Recoverable Valuable Products contained in Leased Substances, other than gold, silver, platinum or palladium, which are sold or deemed sold from the Red Rock Mineral Prospect. The Production Royalty under this subsection 4.A(3) shall be calculated on the gross sales price received by Lessee as shown on the buyer’s settlement sheet using the percentages set out above.

4.B. In the event the United States or other public authority imposes the payment of any new royalty on production from the Red Rock Mineral Prospect, whether a gross, net smelter returns, net proceeds or similar type of royalty, the dollar amount of such imposed royalty or, if applicable, the gold, silver, platinum or palladium equivalent of such imposed royalty shall be deducted from the Dollar Value of the ounces of gold, silver, platinum and palladium contained in the dore under Section 4.A(l) or the buyer’s settlement sheet under Section 4.A(2), as applicable, before the Production Royalty is calculated. In no event shall Lessor’s Production Royalty be reduced below one percent (1.0%) of the Dollar Value of dore as calculated in accordance with Article 4.A or gross sales price for Commercially Recoverable Valuable Products of gold, silver, platinum or palladium removed, commingled or sold from the Red Rock Mineral Prospect, as it would have been calculated without deduction of any new royalty by the United States or other public authority.

If Lessee enters into an agreement for the sale of Leased Substances from the Red Rock Mineral Prospect, it shall not include in such agreement sale of that portion of the Leased Substances which Lessor has the right to take in kind, without the prior written consent of Lessor.

These inspections shall be allowed as long as they are reasonably related to the Lessor’s purpose of verification of accurate and timely payment under this Lease.

4.H. Lessee may stockpile Leased Substances on the Red Rock Mineral Prospect only after giving Lessor notice of Lessee’s intention to do so, which notice shall specify the date such stockpiling is to commence and the proposed location of the stockpile on the Lessor’s property. Stockpiling of Leased Substances in locations other than on the Red Rock Mineral Prospect is prohibited without Lessor’s written consent. For the purposes of this Lease “stockpile” shall mean storage of mined Leased Substances containing valuable product(s) at or in excess of Lessee’s operating process cutoff grade for that product which is metallurgically amenable to the process in use by Lessee in association with the Red Rock Mineral Prospect. Lessee shall keep full, complete and minerlike records of the grade and quantity of Leased Substances so stockpiled, and Lessee shall provide such information to Lessor within thirty (30) days of determining such information.

4.I. Royalty Buydown. Lessee shall have the right to buy down the production royalty payable under the provisions of this Article 4 for the following amounts:

First one percent (1.0%) two million dollars ($2,000,000)

1.	Committed Work Expenditures and Work Requirement.

5A. Work Requirement. In order to keep this Lease in effect, Lessee shall be required to perform yearly work expenditures in each year for exploration, development and mining of the Red Rock Mineral Prospect as described below. The yearly work expenditure items qualified as fulfilling the work requirement shall be limited to all costs incurred in actual work on the Red Rock Mineral Prospect in drilling, trenching, excavation, mining, road building, surveying, environmental studies and permitting costs incurred directly on or related to the Red Rock Mineral Prospect, mapping, and geological, geochemical and geophysical programs conducted on the Red Rock Mineral Prospect, as well as assaying and metallurgical testing of ores extracted from the Red Rock Mineral Prospect which may be conducted at appropriate facilities off the Red Rock Mineral Prospect. Expenditures shall include wages and salaries paid to engineers, geologists, laborers and technicians for the actual time spent in exploration, development and mining of the Red Rock Mineral Prospect. Direct overhead, such as lodging, meals and travel expenses (but expressly excluding any charge for office or administrative expenses) shall be limited to twenty percent (20%) of the yearly work requirement.

In the event assessment work requirements are reinstated, if Lessee fails to gain Bureau of Land Management or Forest Service approval for any work plan, it shall be excused from expenditures for that portion of that year’s work requirement which is disapproved, it being understood and agreed that any portion of the yearly work requirement which is not expended because of Bureau of Land Management or Forest Service disapproval shall be added to the succeeding year’s annual work requirement. It is further mutually understood and agreed that annual assessment work requirements shall not be so excused unless permission to defer annual assessment work requirements has been granted to Lessee by the (Bureau of Land Management or other) appropriate government agency, in which case Lessee shall file all documents required to maintain the Red Rock Mineral Prospect in good standing with the county and the Bureau of Land Management prior to August 31 of each year and provide Lessor with proof of such filing prior to November 1st of each year.

MINIMUM YEARLY WORK EXPENDITURES

Lessee shall expend the following amounts (the “Required Work Expenditures”) on work on the property annually:

2011-2012 - $100,000 physical work which would be cumulative

2013 and thereafter - $200,000 which includes $150,000 physical work

On or before March 1st of each year that this Lease is in effect and the first year subsequent to termination, Lessee shall provide Lessor with an organized, legible written narrative report, including table of contents and list of any exhibits to the report, which shall describe the operations conducted on the Red Rock Mineral Prospect during the prior calendar year. With the report shall be furnished legible true copies of all reports and records made for the Red Rock Mineral Prospect, including, but not limited to, lithologic drilling logs and assays, maps, cross-sections, assays, metallurgical tests, ore reserve calculations and geological reports pertaining to the Red Rock Mineral Prospect. Records shall include computer data files, if any, and instructions to recover them, in addition to but not as replacements for other reports and records. The report shall include a legend for all symbols used on maps, cross-sections, drill logs, columnar presentations, and any other form of document which requires a legend to make it comprehensible and useful. With the report shall be furnished an up-to-date legible drill hole location map or maps at appropriate scales such that the collar locations and designations of all holes are clearly identified. Such maps shall be compiled and furnished on an annual basis to depict the locations and current status of all known drill holes in Red Rock Mineral Prospect. Upon Lessor’s request and if available, Lessee shall provide copies of the above data in reproducible form such as mylars or sepias. It is agreed between Lessor and Lessee that during the Term of this Lease, Lessor shall keep all information furnished to Lessor by Lessee strictly confidential and Lessor or any other person to whom Lessor furnishes such information at such time as it becomes permissible to do so shall specifically indemnify and save harmless Lessee from any action resulting from reliance upon such information furnished to Lessor by Lessee.

Prior to March 1st of each year that this Lease is in effect and the first year subsequent to termination, Lessee shall provide Lessor documentation from Lessee’s accounting records of the expenditures claimed as minimum yearly work requirements upon the Red Rock Mineral Prospect. At reasonable times and places, during normal business hours, Lessor shall have access to, with a minimum of five (5) business days’ advance notice given by Lessor, the original invoices and any other records pertinent and necessary for substantiating the compliance of Lessee with the provisions of this Lease.

6. Manner of Payment. All payments to be made by Lessee to the Payment Agent hereunder, except Production Royalty payments where in-kind payment is made pursuant to Article 4, shall be made by mailing or delivering cash, check drawn on the company’s account, or a cashier’s or certified check to the Payment Agent’s address as set forth in Article 21 hereof, on or before the date such payment shall be required to be made hereunder; provided, however, that the Advance Minimum Royalty shall be paid between January 1 and January 15 of each year. If Lessee fails to pay or shall incorrectly pay all of any payment or some portion of any payment due hereunder, this Lease shall terminate absolutely if Lessee, within thirty (30) days after receipt of written notice from Lessor or the Payment Agent to Lessee of its error or failure with respect to such payment shall fail to rectify the same. All payments not timely received by the Payment Agent shall (if thereafter accepted by Lessor pursuant to the terms of this Lease) be accompanied with interest from the date due until the date paid at the Bank of America (or its recognized successor) prime rate plus two percent (2%) in effect on the date the payment was due.

7. Lessor’s Title

A. It is mutually understood and agreed that this Lease is granted only under such title as Lessor may now hold or hereafter acquire. Lessee may investigate and in Lessor’s name take any action it deems necessary to remedy any defects of title to the Red Rock Mineral Prospect. Lessor agrees to cooperate with Lessee in investigating and remedying any such defects in title; however, in the event that Lessor shall hereafter be divested of such title, Lessor shall not be liable for any damages sustained by Lessee. Additionally, Lessor shall not be liable in damages or otherwise, on account of Lessee’s possession thereof being destroyed or interrupted. Lessee’s only remedy in the event of failure of Lessor’s title is specified in the last sentence of Article 8.D below.

B. It is understood and agreed that in the event of adverse claim or claims affecting mining claims comprising the Red Rock Mineral Prospect or the land covered thereby, Lessee shall be under no obligation to defend title, nor to contribute to the defense of title thereto, and it is specifically understood in such event that Lessor shall be under no obligation to defend title.

D. It is expressly agreed that Lessor does not warrant title to the Red Rock Mineral Prospect. To the best of Lessor’s knowledge, all of the claims listed in Exhibit “A” for the Mineral Prospect were located, monumented and recorded with the appropriate government entities as required by law and have been continuously maintained since location or relocation by assessment work or payment of claim maintenance fees and filing/recording of evidentiary documents as required by law. Lessor does, however, represent that the Red Rock Mineral Prospect is free and clear of all liens and encumbrances, including any leases, rights, or licenses granted to third parties by, through, or under Lessor, except taxes not yet payable and matters of record in Lander County, Nevada, if any; the consummation of this Lease will not result in or constitute a default or an event that, with notice or lapse of time or both, would be a default, breach or violation of any contract, commitment or arrangement to which Lessor is a party or by which it is bound; provided, however, that the unpatented mining claims constituting the Red Rock Mineral Prospect are acknowledged to be subject to the paramount title of the United States. Lessee’s sole and exclusive remedy for any breach or default by Lessor under this Article 8.D is to terminate this Lease and release its possession of the Red Rock Mineral Prospect.

E. Lessor shall not create, permit or suffer any liens or encumbrances, reservations, restrictions and easements on the Red Rock Mineral Prospect unless expressly subordinated to Lessee’s rights hereunder; that Lessee may, at its option, discharge such claims and thereby be subrogated to any liens or encumbrances on the Red Rock Mineral Prospect as to all rights of the holder thereof, and Lessee may recover any amounts so paid from any amounts otherwise due to Lessor.

8. New Mining Claims. Either party hereto shall have the right at any time to locate mining claims in the vicinity of the Red Rock Mineral Prospect, provided however, if either Lessor or Lessee should located any additional load claims either within the exterior (peripheral) boundaries of the claims forming the Subject Claims or an area of one mile from the exterior boundaries (the “Area of Interest”), any additional claims located by Lessor or Lessee within the Area of Interest shall be subject to this Lease.

A. If such mining claim is located by Lessor, then Lessor shall, within thirty (30) days of recording the same with the appropriate county, give Lessee written notice thereof setting forth the description of such mining claim and the facts upon which Lessor bases its conclusions that Leased Substances might exist therein. Within forty-five (45) days after receipt of such notice, Lessee shall have the right to reject any interest in such mining claim by giving Lessor written notice of such rejection; if not so rejected, Exhibit “A” hereto shall be modified and amended by Lessee to incorporate such mining claim in the Red Rock Mineral Lease within fifteen (15) days of acceptance of such claim or claims by Lessee.

B. If any portion of a claim located by either Lessor or Lessee lies within the Red Rock Mineral Prospect Boundary, the entire claim shall become a part of the Red Rock Mineral Prospect, and Exhibit “A” shall be modified and amended by Lessee to include such mining claim in accord with Article 9.

This Article 8 shall not apply to mining claims or other properties that are presently owned or are acquired in good faith by Lessor or Lessee from third parties. Any modification or amendment to Exhibit “A” hereto as herein provided shall not serve in any manner to extend the Red Rock Mineral Prospect boundary. In the event Exhibit “A” is amended pursuant to this Article 8, Lessee may record an amended Exhibit “A” in accordance with the provisions of Article 32.

If during the term of this Lease, federal rules and regulations are changed to require the performance of assessment work in addition to payment of claim rental fees on unpatented mining claims, Lessee agrees to timely perform labor or make improvements on or for the benefit of each of the unpatented mining claims comprising the Red Rock Mineral Prospect (hereinafter “Assessment Work”). Lessee further agrees that said labor or improvements made to satisfy the annual assessment work shall be performed only upon the claims lying within the Red Rock Mineral Prospect and work performed on contiguous claims lying outside the boundary of the Red Rock Mineral Prospect covered by this Lease shall not be used to satisfy such requirement. Lessee shall perform assessment work in accordance with good mining practices and all applicable state and federal mining laws, statutes, rules and regulations and shall provide Lessor with basic documentation to substantiate labor affidavits. The parties hereto agree to cooperate to the fullest extent to enable Lessee to comply with the requirements of this Article 9 to prepare, record and file in a timely manner all required proofs of assessment work or Notices of Intention to Hold in the manner required by applicable law. Lessee shall record Notices of Intention to Hold and Affidavits of Assessment Work with the County and file Notices of Intention to Hold and Affidavits of Assessment Work with the Bureau of Land Management office having jurisdiction in a timely fashion. Lessee shall provide Lessor with record-stamped copies of county recorded documents and file-stamped copies of Bureau of Land Management filed documents no later than fifteen (15) days prior to the due date of such recordation and filing.

Lessee shall have the right, upon thirty (30) days’ notice, to give notice to Lessor in writing that the claim or claims specified in said notice shall no longer be subject to this Lease; and upon giving of such notice, and provided such notice is given at least sixty (60) days prior to the end of the claim rental/assessment year, such claim or claims shall be deemed stricken from this Lease, and Lessee’s responsibilities and obligations for claim rental fee/assessment work and other fees, filing and recording duties as to said claim or claims shall end. In the event that such notice is given less than sixty (60) days prior to the end of the rental fee/assessment year, the Lessee shall perform all work necessary to hold and maintain such claims for the then current rental/assessment year. Notwithstanding the release of any claim or claims from the operation thereof, this Lease shall continue in full force and effect with respect to all parts of the Red Rock Mineral Prospect not specified in such notice. Further, such release shall not cause or result in any diminution of Lessee’s obligations regarding confidentiality, Advance Minimum Royalty, Production Royalty or Work Requirements described below. Lessee shall, at the time of giving such notice, provide Lessor with all data regarding work which has been done for that year by or for Lessee upon any of such claims so released.

10. Relocation and Amendment of Unpatented Mining Claims. Subject to the prior written consent of Lessor, which consent shall not be unreasonably withheld, Lessee, in the name of Lessor, shall have the right, but not the obligation, to amend the locations of any one or more of the mining claims included within the Red Rock Mineral Prospect and Lessor agrees to execute promptly any documents necessary for that purpose. If the location of any such mining claim was for any reason defective, Lessee shall have the right, but shall not be required, to locate such defective mining claim or claims in the name of Lessor for the purpose of curing such defect. In order to insure that Lessor agrees with Lessee’s plan to cure perceived defects in title, Lessor shall be notified in writing by certified or registered mail at least twenty (20) days prior to Lessee’s commencing with relocation or amendment unless an emergency exists and time is of the essence.

11. Liens. Lessee shall pay in full for all labor performed upon or material furnished to the Red Rock Mineral Prospect and shall keep the whole thereof free and clear from any and all liens of whatsoever nature or kind created by Lessee, except for Lessee’s grant of a security interest for financial purposes under Article 22; provided, however, that if Lessee, in good faith, disputes the validity or amount of any claim, lien or liability assessed against it with respect to the Red Rock Mineral Prospect, Lessee shall not be required to pay or discharge the same until the amount and validity thereof have been finally determined upon the condition that Lessee obtains a bond within fifteen (15) days of receiving notice of said lien as is provided by N.R.S. Section 108.2413, et seq. and as amended, to effect the release of said lien. However, in no event shall Lessee allow or permit title to the Red Rock Mineral Prospect to be lost, jeopardized or otherwise unreasonably encumbered as a result of its non-payment of any claim, lien or liability for which Lessee is responsible. Lessee shall notify Lessor immediately, either by telegram or facsimile transmission followed by hard copy, on the occasion of being served notice of any lien regardless of whether Lessee disputes the validity of the lien for any reason. It is mutually agreed that concurrent with execution of the Lease, Lessor and Lessee will execute and acknowledge a “Notice of Non-Responsibility for Labor or Materials Furnished Mineral Prospect” which Lessor shall file with the Lander County Recorder in compliance with N.R.S. 108.234 and as amended. When the recorded copy of the “Notice of Non-Responsibility” has been received by Lessor, it shall furnish a copy of same to the Lessee which Lessee shall post within ten (10) days and keep posted upon the Red Rock Mineral Prospect during the Term of this Lease.

12. Laws and Regulations - Indemnification of Lessor. It is the policy of Lessor to comply fully and in all respects with all environmental, reclamation and land use permitting regulations and laws. Lessor represents that it has no knowledge of any conditions on the Red Rock Mineral Prospect existing prior to the Effective Date of this agreement which constitute violation of any laws or regulations including, but not limited to, environmental, reclamation and land use permitting regulations. Lessee’s responsibility for reclamation or acceptance of environmental and permitting liabilities on the Red Rock Mineral Prospect shall be limited specifically to any disturbance that may be caused by Lessee’s own activities on the Red Rock Mineral Prospect and Lessee agrees to indemnify and hold Lessor harmless from and against such liability. Lessee shall not reclaim any pre-FLPMA access without the prior written consent of Lessor. Liability for reclamation of all disturbances existing on the Red Rock Mineral Prospect prior to the Effective Date shall be the exclusive responsibility of Lessor and Lessor agrees to indemnify and hold Lessee harmless from and against such liability. Lessee shall at all times and its own expense comply in all respects with all county, state and federal laws, statutes, ordinances, rules and regulations relating to Lessee’s actions under this Lease on or about the Red Rock Mineral Prospect. Lessee shall also at all times and at its own expense timely pay any and all fees or costs required to be paid to any governmental agency to keep the title to the mining claims in good standing.

Lessee shall provide workmen’s compensation insurance and such other insurance to cover its personnel and all of its operations upon the Red Rock Mineral Prospect in the amount and form as may be required by applicable law. At Lessor’s written request, Lessee shall provide Lessor with copies of the declarations page of all such policies as may be in effect (from time to time). Lessee assumes full and sole responsibility for the operation and direction of the work done under this Lease on the Red Rock Mineral Prospect and no employee or agent furnished by Lessee shall under any circumstances be deemed to be an employee or agent of Lessor and Lessee shall indemnify and hold Lessor harmless of and from any and all claims, demands or liabilities arising out of or in connection with the operations or activities of Lessee hereunder and Lessee shall acquire a comprehensive general liability insurance policy covering such operations and activities with limits of not less than two million dollars ($2,000,000.00) for each accident or occurrence. Lessee shall provide Lessor with written proof of compliance prior to commencing operations on the Red Rock Mineral Prospect. Lessee shall provide Lessor with copies of such insurance policy, certificate or rider naming Lessor as an additional insured on such policy within fifteen (15) days of the date of execution of this Lease. Nothing in this agreement is intended nor shall it be construed as to require the Lessee to indemnify and hold Lessor harmless of and from any claim, demand or liability arising out of or in connection with the operations or activities of Lessor or the activities of operators other than Lessee on the property prior to the execution of this agreement.

Lessee shall provide Lessor with copies of all plans, maps and all other documents submitted in compliance with government regulations and all agreements with any government agency pertaining to the Red Rock Mineral Prospect, including but not limited to, Notices of Intent to Operate, Plans of Operation, Environmental Impact Statements, reclamation statements, and all government agency communications sent to any such agency or received by Lessee from any such agency which are related to such submissions or agreements, within thirty (30) days of sending to or receiving from the government agency such material. In the event any government agency requires the filing of a bond to insure Lessee’s performance, Lessee agrees to provide such bond at its own cost and expense.

13. Taxes. During the Term of this Lease, Lessee shall timely pay all taxes levied or assessed against the Red Rock Mineral Prospect, all taxes levied or assessed against Lessee’s personal property or improvements, all taxes levied or assessed against any improvements presently on the Red Rock Mineral Prospect, and all taxes levied or assessed upon the operations which are related to disposition of Leased Substances by Lessee on or in relation to the Red Rock Mineral Prospect, exclusive of any taxes levied, assessed or measured on the royalty paid to the Payment Agent, as agent for the Lessor. Lessor or the Payment Agent, as applicable, shall, within fifteen (15) days of receipt, transmit to Lessee any notices or documents pertaining to any such taxes which are the responsibility of Lessor or the Payment Agent to pay. If Lessor or the Payment Agent fail to pay any taxes payable by Lessor or the Payment Agent, other than taxes levied, assessed or measured on royalty paid to Lessor or the Payment Agent, which pertain to the Red Rock Mineral Prospect, unless Lessor or the Payment Agent is contesting the same, Lessee may at its option pay Lessor’s or the Payment Agent’s proportionate share of taxes when due and may deduct all such sums from subsequent payments to be made to the Payment Agent hereunder. Each party shall have the right to contest in the courts or otherwise the validity or amount of any taxes or assessments which the respective party may be required to pay hereunder if it deems the same unlawful, unjust, unequal or excessive or to take such other steps or proceedings as it may deem necessary to secure a cancellation, reduction, readjustment or equalization thereof before it shall be required to pay the same. In the event of termination of this Lease, taxes, which are the responsibility of Lessee but will be the responsibility of Lessor or the Payment Agent after termination, shall be prorated on the relevant tax year basis.

It is mutually agreed that Lessor and the Payment Agent shall be solely responsible for payment of their own taxes attributable to Advance Minimum Royalty payments or Production Royalty payments under this agreement.

In the event of termination under this Article 15, Lessee shall have the right to remove, pursuant to Article 17, its property and equipment from the Red Rock Mineral Prospect, as hereinafter provided, but only after Lessee has performed all of its accrued obligations under this Lease. Until such performance by Lessee, Lessor shall have a lien upon all of Lessee’s property and improvements located on the Red Rock Mineral Prospect.

15. Termination.

A. Partial Termination by Lessee. Lessee shall have the right, from time to time and at any time, to terminate this Lease as to any portion of the Red Rock Mineral Prospect by giving written notice to Lessor specifying the portion of the Red Rock Mineral Prospect to which such termination applies. New claims located by Lessor after the effective date of this Lease and within the perimeter of a contiguous block of terminated claims (fractions and open ground) shall not be subject to the area of interest provisions set forth in Exhibit A. Upon the effective date of such notice, as set forth in Article 21 hereof, all right, title and interest of Lessee hereunder shall terminate as to the portion of the Red Rock Mineral Prospect specified in such notice and thereafter the term Red Rock Mineral Prospect” shall be deemed to refer to only the portions of the Red Rock Mineral Prospect remaining subject to this Lease. Upon such termination, Lessee shall have no further obligations concerning the portion of the Red Rock Mineral Prospect to which such termination applies, except as to obligations (1) the due dates or incurrence of which occur prior to such termination, (2) are created pursuant to obligations in Articles 13 and 17 hereof relating to the condition of the Red Rock Mineral Prospect, or (3) are otherwise required to be performed by Lessee subsequent to termination. Promptly following such termination, Lessee shall deliver to Lessor a quitclaim deed, in recordable form, quitclaiming to Lessor all right, title and interest of Lessee to that portion of the Red Rock Mineral Prospect to which such partial termination applies. No partial termination under this Article 16 shall, however, cause a reduction in the amounts of any of the Advance Minimum Royalty and Production Royalty payments set forth in Article 3 and 4 or the Work Requirements set forth in Article 5.

(ii) performance of all reclamation, remedial and/or restoration work as may be required by applicable laws or regulations resulting from activities of Lessee under this Lease; and

16. Removal of Improvements; Condition of Mineral Prospect. Whenever this Lease shall be terminated in whole or in part, for any reason whatsoever, Lessee shall deliver up the terminated portion of the Red Rock Mineral Prospect to Lessor in reasonably good and safe condition and in compliance with all laws, statutes, ordinances, rules, regulations, permits and plans of operation. Lessee shall, however, subject to any laws, rules or regulations which may be applicable at the time and the requirements of Articles 13 and 17, have the right to remove any or all of the Improvements placed by it on or within the terminated portion of the Red Rock Mineral Prospect; provided, however, Lessee shall leave in place all track, pipe, including any improvements which were affixed to the property for the purpose of using the water rights, timber, chutes and ladders without any warranty as to condition or fitness for use except for the Lessee’s duties to secure openings as set forth in the last sentence of this Article 17. Within thirty (30) days after complete termination, Lessee shall assign to Lessor any assignable water rights acquired and perfected by Lessee during the Term of this Lease which are situated on the Red Rock Mineral Prospect and any water rights which are situated off the Red Rock Mineral Prospect but which were acquired for the purpose of conducting work on the Red Rock Mineral Prospect. Lessee shall have the right to effect the removal of such improvements, other than those specified above to be left in place, prior to such termination of this Lease or within one hundred twenty (120) days thereafter with the specific exceptions of property and Improvements on which Lessor has a lien pursuant to Article 15, and property and Improvements required for Lessee to fulfill its obligations to government entities or under the Lease which survive termination of the Lease. Any improvements not removed prior to termination or within three hundred sixty-five (365) days following such termination shall be deemed affixed to the terminated portion of the Red Rock Mineral Prospect and shall become and remain the property of the Lessor, except property and Improvements which have been left in place in order for Lessee to fulfill its obligations which survive this Lease. Lessee shall have three hundred sixty-five (365) days after satisfaction of a given obligation to remove equipment and improvements required in connection with fulfillment of that obligation and policy. In the event of termination under Article 15, Lessee shall have three hundred sixty-five (365) days to remove its property and Improvements after Lessor has released any lien on them. Upon partial or complete termination, Lessor shall retain title to all water rights acquired and perfected by Lessee during the Term of this Lease which are situated on the Red Rock Mineral Prospect and any water rights which are situated off the Red Rock Mineral Prospect but which were acquired for the purpose of conducting work on the Red Rock Mineral Prospect, improvements, stockpiles, dumps and tailings, including heap leach remnants, generated from mining and treating ores from or on the Red Rock Mineral Prospect.

Within one hundred eighty (180) days after the partial or complete termination, Lessee shall comply, or shall be in the process of diligently and in good faith complying with all applicable environmental, restoration and reclamation laws, statutes, ordinances, rules, regulations, permits and plans of operation pertaining to the Red Rock Mineral Prospect. Lessee is solely responsible for any governmental requirements and liability related to Lessee’s operations and actions under this Lease and even if the Lessee has complied with governmental requirements and has completed the restoration work to the satisfaction of government agencies upon termination of the Lease, if a governmental agency shall require some additional work at a future date resulting from Lessee’s operations on the Red Rock Mineral Prospect, the Lessee shall be liable to perform same. Lessee shall indemnify and hold Lessor harmless from any such responsibility. Further, within one hundred eighty (180) days of partial or complete termination, Lessee shall secure all openings in accordance with federal and state regulations to eliminate access by the public to any and all shafts, mines, tunnels, adits, winzes, man ways, excavations, air lines, and/or vent tubes after consulting with Lessor regarding Lessor’s requirements for access.

17. Books and Accounts. Lessee shall maintain on a current basis complete and accurate records and books of account in accordance with generally accepted accounting principles consistently applied covering all matters necessary to the proper computation of the Production Royalties described in Article 4 hereof and the proof of having made approved yearly expenditures under Article 5 hereof. True copies of said records and books of account shall be kept either in the vicinity of the Red Rock Mineral Prospect, elsewhere within the State of Nevada or at Lessee’s principal executive offices, at Lessee’s option, and shall be open to inspection by Lessor, the Payment Agent or its authorized agents with a minimum five (5) business days’ advance notice or with shorter notice at the discretion of the mine manager at any reasonable time during normal business hours, provided such inspections do not unduly interfere with or hamper the managerial or accounting staffs of Lessee. Within sixty (60) days after the end of each calendar year during the term hereof, Lessee shall furnish to Lessor or the Payment Agent an unaudited “Year-End Statement” showing the amount of Production Royalties paid to Lessor or the Payment Agent by Lessee during said year and the basis thereof. All statements so furnished shall be conclusively presumed true and correct after the expiration of twelve (12) months from the date of receipt by Lessor and Payment Agent, unless within said twelve (12) month period Lessor or the Payment Agent give written notice of exception to Production Royalty computations or the listing which shows the description and extent of yearly work expenditures, specifying with particularity the components excepted to and the grounds for such exception. Lessor shall be entitled to an annual independent audit of the matters covered by said statement, at Lessor’s sole expense, provided Lessor selects for such audit an accounting firm of recognized standing, at least one of whose members is a member of the American Institute of Certified Public Accountants.

18. Data Inspection. Lessee shall furnish Lessor with copies of any agreements (including, but not limited to, haulage, milling, refining, extracting, and ore and concentrate purchase agreements), and any amendments thereto, which in any way relate to the determination of Production Royalties and Work Expenditures under this Lease. Said documents shall be furnished by Lessee to Lessor within thirty (30) days after executing such agreements or amendments. This article shall not obligate Lessee to furnish consulting and employment agreements, software and technology licensing agreements and any other agreements under which Lessee is obligated to maintain confidentiality or which constitute Lessee’s trade secret information. Lessee shall furnish Lessor with copies of all settlement sheets or statements which in any way relate to the sale or other disposition of Leased Substances produced from the Red Rock Mineral prospect within thirty (30) days after receiving such sheets or statements. Lessee shall furnish Lessor with full, true and accurate information in response to any request with respect to the condition of mine workings on the Red Rock Mineral Prospect, or with respect to the grade, quantity or quality of Leased Substances found in drilling, exposed in mining the Red Rock Mineral Prospect or mined, processed or shipped by Lessee.

Lessee shall keep full and accurate records of all operations conducted on the Red Rock Mineral Prospect, including assays, drilling records, drill hole location maps and mine maps which shall be open to inspection by Lessor or Lessor’s agent with a minimum five (5) business days’ advance notice given by Lessor or its authorized agents or with shorter notice at the discretion of the mine manager during regular business hours and upon reasonable notice with the provision that copies of any of these materials shall on request be furnished to Lessor by Lessee at Lessor’s expense. If records of operations are being stored and maintained as computer files, computer-ready copies of the computer files and instructions to retrieve data from them shall be furnished to Lessor by Lessee upon Lessor’s request and at Lessor’s expense. Such computer files shall be in addition to and not as replacements for hard copies of data which shat available for inspection and study on media other than computer files. Lessor, at Lessor’s risk and expense, shall have the right to enter upon and into all parts of the Red Rock Mineral Prospect from time to time, and at all reasonable times and hours with a minimum five business days’ advance notice given by Lessor or its authorized agents or with shorter notice at the discretion of the mine manager, for the purpose of inspecting or surveying the same, or taking reasonable samples of Leased Substances therefrom. Lessee agrees to prepare chiptrays sequentially soon after acquisition of chip samples and as drilling progresses. It is Lessor’s responsibility to provide adequate storage facilities for chiptrays and splits of all rotary cuttings provided to Lessor and Lessor and Lessee agree to cooperate in taking reasonable steps necessary to insure that drill core, chiptrays and drill cuttings, chiptrays and/or core will not be exposed to the weather or be accessible to intrusion or vandalism by the public. Lessee agrees to give Lessor adequate advance warning of the need for storage space for large quantities of drill cuttings and chiptrays. Lessee shall not be obligated to provide separate chiptrays for Lessor. Lessor hereby indemnifies and agrees to hold Lessee harmless from and against liability arising from personal injury, death or property damage when such is caused by Lessor’s actions on the Red Rock Mineral Prospect.

If this Lease is terminated for any reason, Lessee shall, within thirty (30) days thereafter furnish Lessor with legible, true copies of all exploration and development data generated by Lessee in its exploration and/or development of the Red Rock Mineral Prospect which has not been previously delivered to Lessor including, but not limited to, legible copies of drilling logs, assay results, survey information, maps and cross-sections including geologic interpretive data including reproducible mylars or sepias which may have been prepared by Lessee. If data calculations from the Red Rock Mineral Prospect are stored as computer files, computer-ready copies of the files and instructions to retrieve the data contained in them shall be furnished to Lessor. Delivery of such computer files does not excuse or release Lessee from delivering all the other data required under this Lease. Drill hole chiptrays and/or core samples shall be included as data and transported to Lessor’s designated storage facility. Lessor shall not disclose to the public during the term of this Lease, without a prior written consent of Lessee, information furnished to or made available to Lessor by Lessee regarding any portion of Red Rock Mineral Prospect while such portion is subject to the terms of this Lease except as may be required by law or securities rules or regulations.

Promptly following execution of this Lease, and at anytime during the Term hereof, Lessor shall make available to Lessee, at Lessee’s sole expense, copies of all technical, title and recording information and data relating to the Red Rock Mineral Prospect in the possession of Lessor.

19. Commingling. As a matter of policy, the Lessor does not permit ores or other materials containing Leased Substances from its properties to be commingled with such materials from other properties. However, Lessor and Lessee mutually agree that if commingling is objectively reasonable and necessary for the development of a viable mining operation or demonstrable economic benefit to a mining operation, they will work together in good faith to devise language which will permit commingling of ores from the Red Rock Mineral Prospect with those from adjacent lands, provided such language requires Lessee to provide production records sufficient to demonstrate monies are being distributed properly. Such language shall be incorporated into a mutually acceptable Accountability Procedure for Commingling, which shall comply with industry standards, and shall be agreed upon prior to commingling of any ores from the Red Rock Mineral Prospect.

TO LESSOR:

Arthur R. Leger

2338 Sunrise Drive

Reno, Nevada 89509

Fax: (775) 827-6312

TO PAYMENT AGENT:

F.R.O.G. Consulting, LLC

2338 Sunrise Drive

Reno, Nevada 89509

Fax: (775) 827-6312

TO LESSEE:

Arttor Gold LLC

1640 Terrace Way

Walnut Creek, California 94597

Fax: (646) 349-2761

or to such other person or address as either party may designate by proper written notice.

22. Assignment; Sublease; Joint Operations; Transfers. The subject matter of this Lease includes unpatented mining claims. The parties recognize the uncertain and tenuous nature of title to unpatented mining claims. Further, the parties recognize the critical importance of complying with state and federal regulations and statutes in preserving said title. The parties expressly agree that part of the material consideration for this agreement is Lessor’s confidence in Lessee’s ability and commitment to perform its duties hereunder, such duties include but are not limited to performance of annual assessment work and perfection of proof thereof as provided in Article 10; development of all necessary exploration, operation, reclamation and bonding plans as provided in Article 5; compliance with all local, state and federal laws, statutes, ordinances, rules and regulations as provided in Article 12, payment of all taxes as provided in Article 13; and application of the highest level of its professional, technical and financial ability and willingness to explore and operate the Red Rock Mineral Prospect in compliance with all of the terms of the Lease, all of which are necessary to protect the Red Rock Mineral Lease.

Lessee shall not execute any transfer documents or obligate itself to make any such transfer without obtaining the prior written consent of Lessor. Lessor agrees that its prior written consent to any such transfer shall not be unreasonably withheld. Lessor’s rejection of Lessee’s request for consent to a proposed transfer shall not be deemed unreasonable if the proposed transfer would have material adverse effect on Lessor’s rights in the Red Rock Mineral Prospect or Lessor’s rights under this Lease. Within fifteen (15) days after Lessor’s receipt of the proposed transfer documents, Lessor shall inform Lessee that Lessor consents to the transfer or rejects Lessee’s request for consent to the transfer. If Lessor does not within fifteen (15) days after Lessor’s receipt of a copy of the proposed transfer documents notify Lessee of Lessor’s decision, Lessor shall be deemed to have irrevocably released and waived Lessor’s right to require Lessor’s consent to the propose transfer. If within fifteen (15) days after Lessor’s receipt of a copy of the proposed transfer documents Lessor notifies Lessee that Lessor rejects Lessee’s request for consent to the proposed transfer, Lessor shall deliver with Lessor’s notice a detailed written statement of Lessor’s reasons for rejection of Lessee’s request for consent to the proposed transfer.

23. Right of First Refusal. In the event Lessor shall receive an offer form a third party (the “Offeror”) to purchase the Red Rock Mineral Prospect which Lessor wishes to accept, Lessor shall provide written notice thereof to Lessee indicating the name and address of the Offeror and the price and terms of payments proposed by the Offerer (the “Notice of Offer to Purchase”). For a period of sixty (60) days after the mailing of such notice, the Lessee shall have the right to purchase the Red Rock Mineral Prospect at the price and on the terms specified in the Notice of Offer to Purchase.

28. No Waiver. No waiver by either party of any right herein shall be construed as a waiver of any such right in the future or any other right in this Lease.

30. Memorandum. Lessee, the Payment Agent, and Lessor shall execute a Memorandum of this Lease in a recordable form under the laws of the State of Nevada to give notice to third parties of the rights granted hereunder. Either party may record such memorandum. Neither of the parties hereto shall or may record this Lease.

31. Obligation of Good Faith. All obligations and covenants set forth in this Lease shall be subject to an obligation of good faith by Lessor, the Payment Agent and Lessee in the performance or enforcement thereof. It is mutually understood and agreed that “Good Faith” means honesty in fact in the conduct or transaction concerned.

No modification or alteration of the terms of this Lease shall be binding unless such modification or alteration shall be in writing and executed subsequent to the date hereof by Lessee, the Payment Agent and Lessor. In the event such modification or alteration alters the rights granted hereunder, the parties may execute an amended Memorandum of this Lease in a recordable form sufficient under the laws of the State of Nevada to provide notice to third parties. Time is of the essence of this Lease.

33. Further Assurances. Lessor, the Payment Agent and Lessee agree that they shall take from time to time such actions and execute such additional instruments as may be reasonably necessary or convenient to implement and carry out the intent and purpose of this Lease.

34. Authority. Lessor and the Payment Agent hereby represent and warrant that Arthur R. Leger has the necessary power and authority, on his own behalf and on behalf of the Payment Agent, to lawfully authorize the execution and delivery of this Lease and the other instruments to be executed and delivered in connection herewith and to undertake the performance of their obligations hereunder. This Lease, and the other instruments to be executed and delivered in connection herewith when executed and delivered by Lessor and/or the Payment Agent, as applicable, shaIl constitute valid and binding obligations enforceable against them in accordance with their respective terms, and will not result in any violation of laws applicable thereto.

[Signature page follows]

IN WITNESS WHEREOF, the parties hereto have duly executed this Lease as of the day and year first above written.

LESSOR: ARTHUR LEGER		ARTTOR GOLD LLC

By:		By:
Name:	Arthur Leger	Name:	David Rector
		Title:	Manager

PAYMENT AGENT: F.R.O.G. Consulting, LLC		By:
			David Rector, President
By:		Name:	Sagebrush Gold, Ltd,
Name:	Arthur Leger	Title:	Member
Title:	President

EX-21.1 4 sagebrushex211.htm LIST OF SUBSIDIARIES sagebrushex211.htm

Exhibit 21.1

SUBSIDIARIES OF SAGEBRUSH GOLD LTD.

The following is a list of subsidiaries of Sagebrush Gold Ltd.:

	Subsidiary	Jurisdiction of Organization
	The Empire Sports & Entertainment, Co.	Nevada
	EXCX Funding Corp.	Nevada
	Capital Hoedown, Inc. (66.67% Ownership)	Ontario, Canada
	Arttor Gold, LLC.	Nevada
	Noble Effort Gold LLC	Nevada
	Continental Resources Acquisition Sub, Inc.	Florida

EX-31.1 5 sagebrushex311.htm CERTIFICATION OF CHIEF EXECUTIVE OFFICER sagebrushex311.htm

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Sheldon Finkel, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Sagebrush Gold Ltd.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly for the period in which this quarterly report is being prepared;
	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies and material weaknesses in the design or operation of internal controls which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

EX-31.2 6 sagebrushex312.htm CERTIFICATION OF CHIEF FINANCIAL OFFICER sagebrushex312.htm

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Adam Wasserman, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Sagebrush Gold Ltd.;

	a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly for the period in which this quarterly report is being prepared;
	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

EX-32.1 7 sagebrushex321.htm CERTIFICATION OF CHIEF EXECUTIVE OFFICER sagebrushex321.htm

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Sagebrush Gold Ltd. (the “Company”) on Form 10-Q for the period ended June 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Shelly Finkel, chief executive officer of the Company, certifies, pursuant to 18 U.S.C. section 1350 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 22, 2011	By:	/s/ Sheldon Finkel
		Shelly Finkel Chief Executive Officer (Principal Executive Officer)

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2 8 sagebrushex322.htm CERTIFICATION OF CHIEF FINANCIAL OFFICER sagebrushex322.htm

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Sagebrush Gold Ltd. (the “Company”) on Form 10-Q for the period ended June 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Adam Wasserman, chief financial officer of the Company, certifies, pursuant to 18 U.S.C. section 1350 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 22, 2011	By:	/s/ Adam Wasserman
		Adam Wasserman Chief Financial Officer (Principal Financial and Accounting Officer)