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0001137855
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<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS
OF PRESENTATION</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Pacific Gold Corp. (“Pacific Gold”) was originally
incorporated in Nevada on December 31, 1996 under the name of Demand Financial International, Ltd.  On October 3, 2002, Demand
Financial International, Ltd. changed its name to Blue Fish Entertainment, Inc.  On August 5, 2003, the name was changed to
Pacific Gold Corp. Pacific Gold is engaged in the identification, acquisition, and development of prospects believed to have gold
mineralization. Pacific Gold through its subsidiaries currently owns claims, property and leases in Nevada and Colorado.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><u>Basis of Presentation</u></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">These consolidated financial statements and related notes
are presented in accordance with accounting principles generally accepted in the United States, and the rules of the Securities
and Exchange Commission (“SEC”), are expressed in U.S dollars, and should be read in conjunction with the audited financial
statements and notes thereto contained in Pacific Gold’s Annual Report filed with the SEC on Form 10-K. The Company’s
fiscal year-end is December 31. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary
for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected
herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full
year. Notes to the financial statements, which would substantially duplicate the disclosure contained in the audited financial
statements for 2011 as reported in the Form 10-K have been omitted.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><u>Principle of Consolidation</u></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The consolidated financial statements include all of the
accounts of Pacific Gold Corp. and its wholly-owned subsidiaries, Nevada Rae Gold, Inc., Fernley Gold, Inc., Pilot Mountain Resources,
Inc. and Pacific Metals Corp. All significant inter-company accounts and transactions have been eliminated.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><u>Reclassification of Accounts</u></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Certain accounts in the prior period have been reclassified
to conform to the March 31, 2012 financial statements presentation.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><u>Significant Accounting Principles</u></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><u>Use of Estimates and Assumptions</u>  </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The preparation of financial statements in conformity with
accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions
that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities
known to exist as of the date the financial statements are published, and (iii) the reported amount of net sales, expenses
and costs recognized during the periods presented. Adjustments made with respect to the use of estimates often relate to improved
information not previously available. Uncertainties with respect to such estimates and assumptions are inherent in the preparation
of financial statements; accordingly, actual results could differ from these estimates.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><u>Cash and Cash Equivalents</u>  </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">For purposes of the statement of cash flows, Pacific Gold
considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.  The
Company has no cash in excess of FDIC federally insured limits as of March 31, 2012.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><u>Revenue Recognition</u>  </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Pacific Gold recognizes revenue from the sale of gold when
persuasive evidence of an arrangement exists, services have been rendered, the sales price is fixed or determinable, and collection
is reasonably assured, which is determined when it places a sale order of gold from its inventory on hand with the refinery.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><u>Accounts Receivable/Bad Debt</u>   </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The allowance for doubtful accounts is maintained at a level
sufficient to provide for estimated credit losses based on evaluating known and inherent risks in the receivables portfolio.  Management
evaluates various factors including expected losses and economic conditions to predict the estimated realization on outstanding
receivables. As of March 31, 2012, and December, 31, 2011 there was no allowance for bad debts</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><u>Inventories</u></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Inventories are stated at the lower of average cost or net
realizable value.  Costs included are limited to those directly related to mining.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The major classes of inventories as of March 31, 2012 and
December 31, 2011 were:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table align="center" cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse; font: 9pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="line-height: 115%; font-size: 8.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8.5pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>March 31,</b></p>
<p style="font: 8.5pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2012</b></p></td>
<td style="line-height: 115%; font-size: 8.5pt; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8.5pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p>
<p style="font: 8.5pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2011</b></p></td></tr>
<tr style="vertical-align: bottom; background-color: #F3F3F3">
<td style="width: 56%; line-height: 115%">Finished Goods</td>
<td style="width: 2%; line-height: 115%">$</td>
<td style="width: 20%; line-height: 115%; text-align: right">- </td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%">$</td>
<td style="width: 19%; line-height: 115%; text-align: right">- </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%">Stockpile Ore</td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">249,156 </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">288,982 </td></tr>
<tr style="vertical-align: bottom; background-color: #F3F3F3">
<td style="line-height: 115%">Total</td>
<td style="border-bottom: black 2.25pt double; line-height: 115%">$</td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">249,156 </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%">$</td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">288,982 </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><u>Property and Equipment</u></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Property and equipment are valued at cost.  Additions
are capitalized and maintenance and repairs are charged to expense as incurred. Gains and losses on dispositions of equipment are
reflected in operations.  Depreciation is provided using the straight-line method over the estimated useful lives of the assets,
which are 2 to 10 years.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><u>Mineral Rights</u></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">All mine-related costs, other than acquisition costs, are
expensed prior to the establishment of proven or probable reserves. Reserves designated as proven and probable are supported by
a final feasibility study, indicating that the reserves have had the requisite geologic, technical and economic work performed
and are legally extractable at the time of reserve determination.  Once proven or probable reserves are established, all development
and other site-specific costs are capitalized.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Capitalized development costs and production facilities are
depleted using the units-of-production method based on the estimated gold which can be recovered from the ore reserves processed.
 There has been no change to the estimate of proven and probable reserves. Lease development costs for non-producing properties
are amortized over their remaining lease term if limited.  Maintenance and repairs are charged to expense as incurred.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><u>Impairment of Long-Lived Assets</u></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The Company reviews the carrying value of its long-lived
assets annually or whenever events or changes in circumstances indicate that the historical cost-carrying value of an asset may
no longer be appropriate. Pacific Gold assesses recoverability of the carrying value of the asset by estimating the undiscounted
future net cash flows, which depend on estimates of metals to be recovered from proven and probable ore reserves, and also identified
resources beyond proven and probable reserves, future production costs and future metals prices over the estimated remaining mine
life.  If undiscounted cash flows are less that the carrying value of a property, an impairment loss is recognized based upon
the estimated expected future net cash flows from the property discounted at an interest rate commensurate with the risk involved.
 If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference
between the asset’s carrying value and fair value.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The fair value of an asset retirement obligation is recognized
in the period in which it is incurred if a reasonable estimate of fair value can be made.  The present value of the estimated
asset retirement costs is capitalized as part of the carrying amount of the long-lived asset.  For Pacific Gold, asset retirement
obligations primarily relate to the abandonment of ore-producing property and facilities.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font-size: 10pt">We review the carrying value
of our interest in each mineral claim on a quarterly basis to determine whether impairment has incurred in accordance with ASC
360</font><font style="font-size: 12pt"> </font><font style="font-size: 10pt"><i>Accounting for the Impairment or Disposal of Long-Lived
Assets</i>.Where information and conditions suggest impairment, we write-down these properties to net recoverable amount, based
on estimated discounted future cash flows. Our estimate of gold price, mineralized materials, operating capital, and reclamation
costs are subject to risks and uncertainties affecting the recoverability of our investment in property, plant, and equipment.
Although we have made our best estimate of these factors based on current conditions, it is possible that changes could occur in
the near term that could adversely affect our estimate of net cash flows expected to be generated from our operating properties
and the need for possible asset impairment write-downs.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Where estimates of future net operating cash flows are not
available and where other conditions suggest impairment, we assess if carrying value can be recovered from net cash flows generated
by the sale of the asset or other means.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><u>Income taxes</u></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">In accordance with ASC Topic 740, <i>Income Taxes </i>Pacific
Gold recognizes deferred tax assets and liabilities based on differences between the financial reporting and tax bases of assets
and liabilities using the enacted tax rates and laws that are expected to be in effect when the differences are expected to be
recovered.  Pacific Gold provides a valuation allowance for deferred tax assets for which it does not consider realization
of such assets to be more likely than not.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><u>Loss per Share</u></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The basic net loss per common share is computed by dividing
the net loss by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing
the net loss adjusted on an "as if converted" basis, by the weighted average number of common shares outstanding plus
potential dilutive securities.  For the Three Months ended March 31, 2012 potential dilutive securities had an anti-dilutive
effect and were not included in the calculation of diluted net loss per common share. As of March 31, 2012, the Company did not
have any potentially dilutive common stock equivalents.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><u>Advertising</u></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The Company’s policy is to expense advertising costs
as incurred. For the quarter ended March 31, 2012, and March 31, 2011 the Company incurred $58,265 and $1,246, respectively in
advertising costs.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><u>Environmental Remediation Liability</u></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The Company has posted a bond with the State of Nevada in
the amount required by the State of Nevada equal to the maximum cost to reclaim land disturbed in its mining process.  The
bond requires a quarterly premium to be paid to the State of Nevada Division of Minerals. The Company is current on all payments.
 Due to its investment in the bond and the close monitoring of the State of Nevada, the Company believes that it has adequately
mitigated any liability that could be incurred by the Company to reclaim lands disturbed in its mining process.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><u>Financial Instruments</u> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The Company’s financial instruments, when valued using
market interest rates, would not be materially different from the amounts presented in the consolidated financial statements.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><u>Convertible Debentures</u></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Convertible debt is accounted for under ASC 470, <i>Debt
– Debt with Conversion and Other Options</i>. The Company records a beneficial conversion feature (BCF) related to the issuance
of convertible debt that have conversion features at fixed or adjustable rates that are in-the-money when issued and records the
fair value of warrants issued with those instruments. The BCF for the convertible instruments is recognized and measured by allocating
a portion of the proceeds to warrants and as a reduction to the carrying amount of the convertible instrument equal to the intrinsic
value of the conversion features, both of which are credited to paid-in-capital. The Company calculates the fair value of warrants
issued with the convertible instruments using the Black-Scholes valuation method, using the same assumptions used for valuing employee
options for purposes of following ASC Topic 718, except that the contractual life of the warrant is used. Under these guidelines,
the Company allocates the value of the proceeds received from a convertible debt transaction between the conversion feature and
any other detachable instruments (such as warrants) on a relative fair value basis. The allocated fair value is recorded as a debt
discount or premium and is amortized over the expected term of the convertible debt to interest expense. For a conversion price
change of a convertible debt issue, the additional intrinsic value of the debt conversion feature, calculated as the number of
additional shares issuable due to a conversion price change multiplied by the previous conversion price, is recorded as additional
debt discount and amortized over the remaining life of the debt.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The Company accounts for modifications of its Embedded Conversion
Features (ECF’s) in accordance with ASC 470-50, <i>Debt – Modifications and Exchanges,</i> which requires the modification
of a convertible debt instrument that changes the fair value of an embedded conversion feature and the subsequent recognition of
interest expense or the associated debt instrument when the modification does not result in a debt extinguishment pursuant to ASC
470-50-40<i>, Debt – Modification and Exchanges – Extinguishment of debt</i>.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><u>Equity Instruments Issued with Registration Rights Agreement
</u></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The Company accounts for these penalties as contingent liabilities,
in accordance with ASC Topic 450, <i>Contingencies</i>. Accordingly, the Company recognizes a liability when it becomes probable
that they will be incurred and amounts are reasonably estimable.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><u>Derivative Liability Related to Convertible Notes and
Warrants</u></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The derivative liability related to convertible notes and
warrants arises because the conversion price of the Company’s convertible notes is discounted from the market price of the
Company’s common stock. Thus, the number of shares that may be issued upon conversion of such notes is indeterminate, which
gives rise to the possibility that the Company may not be able to fully settle its convertible note and warrant obligations by
the issuance of common stock.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The derivative liability related to convertible notes and
warrants is adjusted to fair value as of each date that a note is converted or a warrant is exercised, as well as at each reporting
date, using the Black-Scholes pricing model. Any change in fair value between reporting dates that arises because of changes in
market conditions is recognized as a gain or loss. To the extent the derivative liability is reduced as a consequence of the conversion
of notes or the exercise of warrants, such reduction is recognized as additional paid-in capital as of the conversion or exercise
date.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><u>Stock based compensation </u></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The Company accounts for stock-based compensation in accordance
with ASC Topic 718, <i>Compensation – Stock Compensation</i>. which requires that the fair value compensation cost relating
to share-based payment transactions be recognized in financial statements.   Share-based compensation cost is measured
at the grant date, based on the fair value of the award, and is recognized over the employee’s requisite service period,
which is generally the vesting period.   The fair value of the Company’s stock options is estimated using a Black-Scholes
option valuation model. There were no stock options granted during the three months ended March 31, 2012.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><u>Recently issued accounting pronouncements</u></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Recent accounting updates that the Company has adopted or
that will be required to adopt in the future are summarized below.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">On January 1, 2011, the Company adopted updates issued by
the Financial Accounting Standards Board (FASB) to the authoritative hierarchy of GAAP. These changes establish the FASB Accounting
Standards CodificationTM (ASC) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental
entities in the preparation of financial statements in conformity with GAAP. Rules and interpretive releases of the Securities
and Exchange Commission (“SEC”) under authority of federal securities laws are also sources of authoritative GAAP for
SEC registrants. The FASB will no longer issue new standards in the form of Statements, FASB Staff Positions, or Emerging Issues
Task Force Abstracts; instead the FASB will issue Accounting Standards Updates. Accounting Standards Updates will not be authoritative
in their own right as they will only serve to update the Codification. These changes and the Codification itself do not change
GAAP. Other than the manner in which new accounting guidance is referenced, the adoption of these changes had no impact on the
Consolidated Financial Statements.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The Company does not expect the adoption of any other
recently issued accounting pronouncements to have a significant impact on its results of operations, financial position or cash
flow.</font></p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">NOTE 2 - INTERIM FINANCIAL STATEMENTS</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The accompanying interim unaudited condensed financial statements
have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions
to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements. In our opinion, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period
ended March 31, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.
For further information, refer to the financial statements and footnotes thereto included in our Annual Report on Form 10-K for
the fiscal year ended December 31, 2011.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">NOTE 3 – PLANT AND EQUIPMENT</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The Company wrote off $9,893 of equipment during the three
months ended March 31, 2012.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">During the year ended December 31, 2011, the Company reviewed
its equipment requirements and modified its plant.  The Company purchased equipment for a total cost of $66,972, and disposed
of redundant equipment for total proceeds of $14,500.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">On September 30, 2011, the Company sold all of its plant
and equipment at the Black Rock Canyon Mine to its subsidiary, Nevada Rae Gold, Inc. The sale of the assets was recorded at net
book value, and no gains or losses were incurred as a result of the sale. The intercompany transaction was eliminated on consolidation.
These assets are being depreciated on a straight-line basis over 2 to 10 years depending on the estimated useful life of the asset.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8.35pt">Plant and equipment at March 31, 2012 and December
31, 2011 consisted of the following:</p>
<table align="center" cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse; font: 9pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="line-height: 115%; font-weight: bold">PLANT AND EQUIPMENT</td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8.5pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>March 31,</b></p>
<p style="font: 8.5pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2012</b></p></td>
<td style="line-height: 115%; font-size: 8.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8.5pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p>
<p style="font: 8.5pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2011</b></p></td></tr>
<tr style="vertical-align: bottom; background-color: #F3F3F3">
<td style="width: 67%; line-height: 115%">Building</td>
<td style="width: 2%; line-height: 115%">$</td>
<td style="width: 13%; line-height: 115%; text-align: right">795,355 </td>
<td style="width: 3%; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%">$</td>
<td style="width: 13%; line-height: 115%; text-align: right">795,355 </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%; text-indent: 7.7pt">Accumulated Depreciation</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">(528,123)</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">(507,311)</td></tr>
<tr style="vertical-align: bottom; background-color: #F3F3F3">
<td style="line-height: 115%">Equipment</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">905,382 </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">916,582 </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%; text-indent: 7.7pt">Accumulated Depreciation</td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">(692,135)</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">(679,837)</td></tr>
<tr style="vertical-align: bottom; background-color: #F3F3F3">
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%">$</td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">480,479 </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%">$</td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">524,789 </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">For the three months ended March 31, 2012 and March 31, 2011
depreciation expense was $34,417 and $39,905, respectively.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">NOTE 4 – MINERAL RIGHTS</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Mineral rights at March 31, 2012 and December 31, 2011 consisted
of the following:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table align="center" cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse; font: 9pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="line-height: 115%; font-weight: bold">MINERAL RIGHTS</td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8.5pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>March 31,</b></p>
<p style="font: 8.5pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2012</b></p></td>
<td style="line-height: 115%; font-size: 8.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8.5pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p>
<p style="font: 8.5pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2011</b></p></td></tr>
<tr style="vertical-align: bottom; background-color: #F3F3F3">
<td style="width: 68%; line-height: 115%">Nevada Rae Gold – Morris Land</td>
<td style="width: 1%; line-height: 115%">$</td>
<td style="width: 13%; line-height: 115%; text-align: right">221,119 </td>
<td style="width: 3%; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%">$</td>
<td style="width: 13%; line-height: 115%; text-align: right">221,119 </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%; text-indent: 7.3pt">Accumulated Depletion</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">(273)</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">(273)</td></tr>
<tr style="vertical-align: bottom; background-color: #F3F3F3">
<td style="line-height: 115%">Fernley Gold – Lower Olinghouse</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">126,267 </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">123,267 </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%">Pilot Mountain Resources – Project W</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">193,043 </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">193,043 </td></tr>
<tr style="vertical-align: bottom; background-color: #F3F3F3">
<td style="line-height: 115%">Pacific Metals – Graysill Claims</td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">33,255 </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">33,255 </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%">$</td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">573,411 </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%">$</td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">570,411 </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">As of March 31, 2012 and December 31, 2011 the amount allocated
to undeveloped mineral rights was $10,000.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">On February 10, 2011, our subsidiary Pilot Mountain Resources
Inc. entered into an Option and Asset Sale Agreement ("Agreement") with Pilot Metals Inc., a subsidiary of Black Fire
Minerals of Australia, whereby Pilot Metals has secured an option on the Project W Tungsten claims.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The basic monetary terms of the Agreement called for Pilot
Metals to pay PMR $50,000 for a 100 day due diligence period on the mining claims. The option payment was received on signing the
agreement and recorded as income. Within the initial 100 day option period, Pilot Metals had the right to exercise an additional
24 month option on the claims by paying a further $450,000. During the 24 month option period, Pilot Metals may conduct physical
due diligence work including sampling, drilling or any other work on the claims it deems necessary. The right for an additional
24 months option period was exercised and a payment of $450,000 was received on September 9, 2011 and recorded as income.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">At any point prior to the conclusion of the 24 month option
period, Pilot Metals may exercise an option and election to either purchase 100% of the claims, for $1,500,000, paid as three annual
installments of $500,000 each, and an additional $1,000,000 payment on the commencement of commercial mining operations, or Pilot
Metals may elect to enter into a joint venture with Pilot Mountain Resources for the mining claims by paying a further $1,000,000
to PMR paid as two annual $500,000 installments, with each company owning 50% of the joint venture. The payments made to PMR are
subject to a 15% royalty to Platoro West, Inc.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">NOTE 5 – SHAREHOLDER NOTE PAYABLE/RELATED PARTY TRANSACTIONS</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">On December 2, 2011, $1,000,000 in principal and $91,711
in accrued interest of an unsecured loan from a company owned by the Chief Executive Officer was assigned to a non- affiliate debt
holder, as discussed in Note 6 – Promissory Notes. As of March 31, 2012, Pacific Gold owes $1,223,031 in principal to a company
owned by the Chief Executive Officer. The amount due is represented by a promissory note accruing interest at 10% per year. The
note is due on January 2, 2013 and is convertible into shares of common stock of Pacific Gold at $0.05 per share. Interest expense
on the loan for the three months ended March 31, 2012 was $30,492. Including interest, the balance on the loan at March 31, 2012
was $1,362,044.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Pacific Gold owes its executives $185,927 and $203,434 in
short term notes payable reflected in the accrued expenses for the periods ended March 31, 2012 and December 31, 2011, respectively.
These short term notes are interest free and due on demand.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Pacific Gold owes $420,106 to related parties in short term
notes payable for the three months ended March 31, 2012. These short term notes are interest free and due on demand.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">NOTE 6 – PROMISSORY NOTES</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">During the three months ended March 31, 2012, the Company
received total proceeds of $243,000 from a non-affiliate. The notes agreements accrue interest at a rate of 10% per annum from
the date of the agreements. The principal and accrued interest is due on January 2, 2013.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">During the three months ended March 31, 2012 $250,000 in
principal and $137,102 in accrued interest on the promissory notes were assigned to a third party that is not affiliated with the
Company as discussed in Note 7.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">During the three months ended March 31, 2012 $250,000 in
principal was converted into 12,500,000 shares of common stock.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">As of March 31, 2012 Pacific Gold owes $1,021,819 in promissory
notes.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">A summary of the notes is as follows:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table align="center" cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse; font: 9pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; background-color: #F3F3F3">
<td style="width: 83%; line-height: 115%">Balance at January 1, 2011</td>
<td style="width: 3%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%">$</td>
<td style="width: 13%; line-height: 115%; text-align: right">90,000 </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%">Proceeds Received</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">807,427 </td></tr>
<tr style="vertical-align: bottom; background-color: #F3F3F3">
<td style="line-height: 115%">Promissory Note Assigned</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">1,000,000 </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%">Interest Accrued thru December 31, 2011</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">143,145 </td></tr>
<tr style="vertical-align: bottom; background-color: #F3F3F3">
<td style="line-height: 115%">Payments thru December 31, 2011</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">- </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%">Conversions thru December 31, 2011</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: windowtext 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: windowtext 1pt solid; line-height: 115%; text-align: right">(652,527)</td></tr>
<tr style="vertical-align: bottom; background-color: #F3F3F3">
<td style="line-height: 115%">Balance at December 31, 2011</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: windowtext 1pt solid; line-height: 115%">$</td>
<td style="border-bottom: windowtext 1pt solid; line-height: 115%; font-weight: bold; text-align: right">1,388,045 </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #F3F3F3">
<td style="line-height: 115%">Proceeds Received</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">243,000 </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%">Interest Accrued thru March 31, 2012</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">27,876 </td></tr>
<tr style="vertical-align: bottom; background-color: #F3F3F3">
<td style="line-height: 115%">Payments thru March 31, 2012</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">- </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%">Conversions thru March 31, 2012</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">(250,000)</td></tr>
<tr style="vertical-align: bottom; background-color: #F3F3F3">
<td style="line-height: 115%">Assignment of Promissory Note to Convertible Note thru March 31, 2012</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: windowtext 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: windowtext 1pt solid; line-height: 115%; text-align: right">(387,102)</td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%">Balance at March 31, 2012</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: windowtext 1pt solid; line-height: 115%">$</td>
<td style="border-bottom: windowtext 1pt solid; line-height: 115%; font-weight: bold; text-align: right">1,021,819 </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">NOTE 7 – FINANCING</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">On December 2, 2011, the Company agreed to the assignment
of $500,000 in principal amount of an outstanding note, which represents a portion of the note the Company issued to the original
debt holder on January 2, 2011.  The assignment was to a third party that is not affiliated with the Company.  In connection
with the assignment, the Company agreed to various modifications of the note for the benefit of the new holder, which enhance and
reset the conversion features of the note and change certain other basic terms of the note.  As a result of the amendments,
the note now (i) has a conversion rate of a 45% discount to the daily VWAP ( volume – weighted average price, which is a
measure of the average price the stock has traded over the trading horizon) price of the common stock based on a five day period
prior to the date of conversion, which rate will be subject to certain adjustments, (ii) has an annual interest rate of 12%, due
at maturity, (iii) has a new maturity date of December 2, 2012, (iv) permits prepayment only with a premium of 50% of the amount
being repaid, (v) has ratchet protection of the conversion anti-dilution provisions for all future issuances or potential issuances
of securities by the Company at less than the then conversion rate, and (vi) has additional default provisions, including additional
events of default and an default interest rate of 24.99%.  The Company has also agreed that the assigned debt will not be
subordinate to new debt, other than purchase money and similar debt, which may have the effect of limiting the company’s
access to additional debt capital while the note is outstanding.  Based on the above and without taking into account the conversion
of any of the interest to be earned or converted, the principal if fully converted represents the potential issuance of 50,000,000
shares, limited to a maximum conversion right at any one time to 4.99% of the then outstanding shares of common stock of the company.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">During the three months ended March 31, 2012, the Company
agreed to the assignment of an additional $250,000 in principal and $137,102 in accrued interest of outstanding promissory notes
to the third party under the same terms as discussed above. All convertible notes mature within a year of the notes issuance date.
The note issued on December 2, 2011 was fully converted into 46,228,854 shares of common stock.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">A summary of the carrying value of the note is as follows:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 9pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; font-size: 8.5pt; font-weight: bold"> </td>
<td nowrap="nowrap" colspan="2" style="vertical-align: bottom; line-height: 115%; font-size: 8.5pt; font-weight: bold; text-align: center">Note A</td>
<td style="vertical-align: top; line-height: 115%; font-size: 8.5pt; font-weight: bold"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; font-size: 8.5pt; font-weight: bold; text-align: center">Note B</td>
<td style="vertical-align: top; line-height: 115%; font-size: 8.5pt; font-weight: bold"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; font-size: 8.5pt; font-weight: bold; text-align: center">Note C</td>
<td style="vertical-align: top; line-height: 115%; font-size: 8.5pt; font-weight: bold"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; font-size: 8.5pt; font-weight: bold; text-align: center">Note D</td>
<td style="vertical-align: top; line-height: 115%; font-size: 8.5pt; font-weight: bold"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; font-size: 8.5pt; font-weight: bold; text-align: center">Total</td></tr>
<tr>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; font-size: 8.5pt; font-weight: bold"> </td>
<td nowrap="nowrap" colspan="2" style="vertical-align: bottom; line-height: 115%; font-size: 8.5pt; font-weight: bold; text-align: center">December 2,</td>
<td style="vertical-align: top; line-height: 115%; font-size: 8.5pt; font-weight: bold"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; font-size: 8.5pt; font-weight: bold; text-align: center">January 27,</td>
<td style="vertical-align: top; line-height: 115%; font-size: 8.5pt; font-weight: bold"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; font-size: 8.5pt; font-weight: bold; text-align: center">March 6,</td>
<td style="vertical-align: top; line-height: 115%; font-size: 8.5pt; font-weight: bold"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; font-size: 8.5pt; font-weight: bold; text-align: center">March 30,</td>
<td style="vertical-align: top; line-height: 115%; font-size: 8.5pt; font-weight: bold"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; font-size: 8.5pt; font-weight: bold; text-align: right"> </td></tr>
<tr>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; font-size: 8.5pt; font-weight: bold">Issuance Date</td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 1pt solid; vertical-align: bottom; line-height: 115%; font-size: 8.5pt; font-weight: bold; text-align: center">2011</td>
<td style="vertical-align: top; line-height: 115%; font-size: 8.5pt; font-weight: bold"> </td>
<td nowrap="nowrap" style="border-bottom: windowtext 1pt solid; vertical-align: bottom; line-height: 115%; font-size: 8.5pt; font-weight: bold; text-align: center">2012</td>
<td style="vertical-align: top; line-height: 115%; font-size: 8.5pt; font-weight: bold"> </td>
<td nowrap="nowrap" style="border-bottom: windowtext 1pt solid; vertical-align: bottom; line-height: 115%; font-size: 8.5pt; font-weight: bold; text-align: center">2012</td>
<td style="vertical-align: top; line-height: 115%; font-size: 8.5pt; font-weight: bold"> </td>
<td nowrap="nowrap" style="border-bottom: windowtext 1pt solid; vertical-align: bottom; line-height: 115%; font-size: 8.5pt; font-weight: bold; text-align: center">2012</td>
<td style="vertical-align: top; line-height: 115%; font-size: 8.5pt; font-weight: bold"> </td>
<td nowrap="nowrap" style="border-bottom: windowtext 1pt solid; vertical-align: bottom; line-height: 115%; font-size: 8.5pt; font-weight: bold; text-align: right"> </td></tr>
<tr style="background-color: #F3F3F3">
<td nowrap="nowrap" style="width: 53%; vertical-align: bottom; line-height: 115%">Face Value – Convertible Note</td>
<td nowrap="nowrap" style="width: 1%; vertical-align: bottom; line-height: 115%">$</td>
<td nowrap="nowrap" style="width: 8%; vertical-align: bottom; border-top: windowtext 1pt solid; line-height: 115%; text-align: right">500,000 </td>
<td style="width: 1%; vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="width: 8%; vertical-align: bottom; line-height: 115%; text-align: right">- </td>
<td style="width: 1%; vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="width: 9%; vertical-align: bottom; line-height: 115%; text-align: right">- </td>
<td style="width: 1%; vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="width: 9%; vertical-align: bottom; line-height: 115%; text-align: right">- </td>
<td style="width: 1%; vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="width: 8%; vertical-align: bottom; line-height: 115%; text-align: right">500,000 </td></tr>
<tr>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%">Add: Relative fair value of :</td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right"> </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right"> </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right"> </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right"> </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right"> </td></tr>
<tr style="background-color: #F3F3F3">
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%">Derivative Liability</td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">100,699 </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">- </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">- </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">- </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">100,699 </td></tr>
<tr>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%">Conversions to shares thru December 31, 2011</td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">(140,000)</td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">- </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">- </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">- </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">(400,000)</td></tr>
<tr style="background-color: #F3F3F3">
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%">Unamortized debt discount at December 31, 2011</td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">(329,425)</td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">- </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">- </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">- </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">(329,425)</td></tr>
<tr>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%">Accrued Interest to December 31, 2011</td>
<td nowrap="nowrap" style="border-bottom: windowtext 1pt solid; vertical-align: bottom; line-height: 115%"> </td>
<td nowrap="nowrap" style="border-bottom: windowtext 1pt solid; vertical-align: bottom; line-height: 115%; text-align: right">4,027 </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="border-bottom: windowtext 1pt solid; vertical-align: bottom; line-height: 115%; text-align: right">- </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="border-bottom: windowtext 1pt solid; vertical-align: bottom; line-height: 115%; text-align: right">- </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="border-bottom: windowtext 1pt solid; vertical-align: bottom; line-height: 115%; text-align: right">- </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="border-bottom: windowtext 1pt solid; vertical-align: bottom; line-height: 115%; text-align: right">4,027 </td></tr>
<tr style="background-color: #F3F3F3">
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%">Carrying amount of convertible note, net on December 31, 2011</td>
<td nowrap="nowrap" style="border-bottom: windowtext 2.25pt double; vertical-align: bottom; line-height: 115%">$</td>
<td nowrap="nowrap" style="border-bottom: windowtext 2.25pt double; vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right">135,301 </td>
<td style="vertical-align: top; line-height: 115%; font-weight: bold"> </td>
<td nowrap="nowrap" style="border-bottom: windowtext 2.25pt double; vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right">- </td>
<td style="vertical-align: top; line-height: 115%; font-weight: bold"> </td>
<td nowrap="nowrap" style="border-bottom: windowtext 2.25pt double; vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right">- </td>
<td style="vertical-align: top; line-height: 115%; font-weight: bold"> </td>
<td nowrap="nowrap" style="border-bottom: windowtext 2.25pt double; vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right">- </td>
<td style="vertical-align: top; line-height: 115%; font-weight: bold"> </td>
<td nowrap="nowrap" style="border-bottom: windowtext 2.25pt double; vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right">135,301 </td></tr>
<tr>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right"> </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right"> </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right"> </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right"> </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right"> </td></tr>
<tr style="background-color: #F3F3F3">
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%">Add: Face Value – Convertible Notes assigned</td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">- </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">150,000 </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">75,000 </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">162,102 </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">387,102 </td></tr>
<tr>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%">Add: Relative fair value of:</td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right"> </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right"> </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right"> </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right"> </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right"> </td></tr>
<tr style="background-color: #F3F3F3">
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%">Derivative Liability</td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">(100,699)</td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">235,407 </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">133,493 </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">294,731 </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">562,932 </td></tr>
<tr>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%">Discount amortization thru  March 31, 2012</td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">329,425 </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">- </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">- </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">- </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">329,425 </td></tr>
<tr style="background-color: #F3F3F3">
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%">Unamortized debt discount at March 31, 2012</td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">- </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">(112,706)</td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">(68,750)</td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">(162,102)</td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">(343,558)</td></tr>
<tr>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%">Interest Accrued thru March 31, 2012</td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">4,473 </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">3,015 </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">750 </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">- </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%; text-align: right">8,238 </td></tr>
<tr style="background-color: #F3F3F3">
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%">Conversions to shares thru March 31, 2012</td>
<td nowrap="nowrap" style="border-bottom: windowtext 1pt solid; vertical-align: bottom; line-height: 115%"> </td>
<td nowrap="nowrap" style="border-bottom: windowtext 1pt solid; vertical-align: bottom; line-height: 115%; text-align: right">(368,500)</td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="border-bottom: windowtext 1pt solid; vertical-align: bottom; line-height: 115%; text-align: right">- </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="border-bottom: windowtext 1pt solid; vertical-align: bottom; line-height: 115%; text-align: right">- </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="border-bottom: windowtext 1pt solid; vertical-align: bottom; line-height: 115%; text-align: right">- </td>
<td style="vertical-align: top; line-height: 115%"> </td>
<td nowrap="nowrap" style="border-bottom: windowtext 1pt solid; vertical-align: bottom; line-height: 115%; text-align: right">(368,500)</td></tr>
<tr>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%">Carrying amount of convertible notes, net on March 31, 2012</td>
<td nowrap="nowrap" style="border-bottom: windowtext 2.25pt double; vertical-align: bottom; line-height: 115%">$</td>
<td nowrap="nowrap" style="border-bottom: windowtext 2.25pt double; vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right">- </td>
<td style="vertical-align: top; line-height: 115%; font-weight: bold"> </td>
<td nowrap="nowrap" style="border-bottom: windowtext 2.25pt double; vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right">275,716 </td>
<td style="vertical-align: top; line-height: 115%; font-weight: bold"> </td>
<td nowrap="nowrap" style="border-bottom: windowtext 2.25pt double; vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right">140,493 </td>
<td style="vertical-align: top; line-height: 115%; font-weight: bold"> </td>
<td nowrap="nowrap" style="border-bottom: windowtext 2.25pt double; vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right">294,731 </td>
<td style="vertical-align: top; line-height: 115%; font-weight: bold"> </td>
<td nowrap="nowrap" style="border-bottom: windowtext 2.25pt double; vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right">710,940 </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">NOTE 8 – COMMON STOCK</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">For the three months ended March 31, 2012, 46,228,854 common
shares were issued for $360,000 in principal and $8,500 in accrued interest on the convertible note issued December 2, 2012.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">For the three months ended March 31, 2012, 12,500,000 shares
of common stock were issued for $250,000 in principal on the promissory note issued December 2, 2012.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">For the three months ended March 31, 2012, 3,000,000 shares
of common stock were issued for services valued at $30,000.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">In 2011, 2,000,000 common shares were issued as part of the
settlement payment of $60,000.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">In 2011, 13,050,580 common shares were issued for conversion
of Promissory notes for $652,527 in principal.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">In 2011, 15,590,954 common shares were issued for conversion
of the convertible note for $140,000 in principal.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">In 2011, 1,000,000 common stock shares were issued as a royalty
payment of $20,000 for rent on behalf of the Company’s subsidiary, Nevada Rae Gold.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">NOTE 9 – OPERATING LEASES</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The Company has leased approximately 440 acres of privately
owned land adjacent to its staked prospects from Corporate Creditors Committee LLC, by lease dated October 1, 2003. The Company
paid an advance royalty of $7,500 for the first year, which amount is increased by $2,500 in each of the next five years to be
$20,000 in the sixth year.  For the last four years of the lease, the advance royalty is $20,000 per year.  If the lease
is renewed, the annual advance royalty is $20,000.  The advance royalty is credited to and recoverable from the production
rental amounts. The royalty is the greater of a 4% net smelter royalty or $0.50 per yard of material processed. The lease is for
10 years with a renewal option for another 10 years.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">In 2011, Nevada Rae Gold (“NRG”) entered into
a lease agreement to lease a 100% interest in 45 mining claims covering approximately 2,000 acres in Lander County, Nevada. The
lease calls for NRG to pay the claim owners a gross royalty of 4% on gold sales or $0.50 per yard of gravels mined, whichever is
greater. NRG will be required to make annual minimum advance royalty payments of $20,000. The term of the lease is for 10 years
with an option for NRG to extend the term for a further 10 years.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The following is a schedule by years of future minimum lease
payments required under operating leases that have initial or remaining non-cancellable lease terms in excess of one year as of
March 31, 2012:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table align="center" cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse; font: 9pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1pt solid; line-height: 115%; font-size: 8.5pt; font-weight: bold">Year ended</td>
<td style="line-height: 115%; font-size: 8.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; line-height: 115%; font-size: 8.5pt; font-weight: bold; text-align: center">Total</td></tr>
<tr style="vertical-align: bottom; background-color: #F3F3F3">
<td style="width: 81%; line-height: 115%">December 31, 2012</td>
<td style="width: 4%; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%">$</td>
<td style="width: 13%; line-height: 115%; text-align: right">40,000</td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%">December 31, 2013</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">40,000</td></tr>
<tr style="vertical-align: bottom; background-color: #F3F3F3">
<td style="line-height: 115%">December 31, 2014</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">40,000</td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%">December 31, 2015</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">40,000</td></tr>
<tr style="vertical-align: bottom; background-color: #F3F3F3">
<td style="line-height: 115%">Thereafter</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">40,000</td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%">Total</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%">$</td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">200,000</td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Nevada Rae Gold has a lease for its mobile office at a cost
of approximately $407 per month. This lease was accounted for as an operating lease and will expire in July 2012. Rental expense
for the three months ended March 31, 2012 was $1,222.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">NOTE 10 – LEGAL PROCEEDINGS</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">On March 8, 2012, Pacific Gold Corp. (the “Company”)
received a complaint that was filed in the United States District Court in Newark New Jersey, Case number 2:12-cv-01285-ES-CLW
entitled Black Mountain Equities Inc. v. Pacific Gold Corp. The claimant seeks monetary damages of $445,090.90 based on an assertion
that the exercise price of a warrant, issued on February 27, 2007, that it holds, and that the claimant purchased just prior to
the warrants expiration, was not properly adjusted and that the Company's refusal to issue the shares underlying the warrant on
exercise of the warrant at the asserted adjusted price. The Company denies that there was a price adjustment as asserted by the
plaintiff and intends to defend itself vigorously in the action.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">NOTE 11 – GOING CONCERN</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The Company’s financial statements have been prepared
on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course
of business. As of March 31, 2012, the Company had an accumulated deficit of $28,567,445, negative working capital of $3,516,616,
and negative cash flows from operations of $340,965, raising substantial doubt about its ability to continue as a going concern.
During the quarter ended March 31, 2012, the Company financed its operations through the sale of securities and issuance of debt.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Management’s plan to address the Company’s ability
to continue as a going concern includes obtaining additional funding from the sale of the Company’s securities and establishing
revenues.  Although management believes that it will be able to obtain the necessary funding to allow the Company to remain
a going concern through the methods discussed above, there can be no assurances that such methods will prove successful. Should
we be unsuccessful, the Company may need to discontinue its operations.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">NOTE 12 – SUBSEQUENT EVENTS</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Subsequent to quarter end, the debenture holder of the convertible
note converted $175,000 in principal and $3,015 in accrued interest into 24,040,601 shares of common stock.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Subsequent to quarter end, the Company has agreed to the
assignments of additional $733,097 in principal amount of the promissory note to a third party investor. Subsequent to the assignments,
the Company has received additional proceeds of $725,000 from the promissory note holder.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Subsequent to quarter end, the Company has issued an additional
$129,000 in promissory note.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Subsequent to quarter end, the Company has purchased additional
equipment for a total of $34,229.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The company evaluated subsequent events through May 15, 2012,
the date the financial statements were issued.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0.1in"></p>
<p style="margin: 0pt"></p>