Attached files
file | filename |
---|---|
EX-31.1 - EXHIBIT 31.1 CERTIFICATION - BRIGHTLANE CORP. | exhibit_311apg.htm |
EX-32.1 - EXHIBIT 32.1 CERTIFICATION - BRIGHTLANE CORP. | exhibit_321apg.htm |
EX-31.2 - EXHIBIT 31.2 CERTIFICATION - BRIGHTLANE CORP. | exhibit_312apg.htm |
EXCEL - IDEA: XBRL DOCUMENT - BRIGHTLANE CORP. | Financial_Report.xls |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2011
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________to ________
Commission File Number: 000-53943
BONANZA GOLD CORP.
(Exact name of registrant as specified in its charter)
Nevada |
| 20-8560967 |
(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
Columbia Tower
701 Fifth Avenue, Office 4263
Seattle, WA 98104
(Address of principal executive offices) (Zip Code)
(602) 553-1190
(Registrants telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
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 [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes [X] No [ ]
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 definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer | [ ] | Accelerated filer | [ ] |
Non-accelerated filer | [ ] | Smaller reporting company | [X] |
(Do not check if a smaller reporting company) |
|
|
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]
As of August 12, 2011, the registrant had 1,248,005 shares of common stock outstanding.
TABLE OF CONTENTS
| Page |
PART I |
|
Item 1. Financial Statements | F-1 |
Item 2. Managements Discussion and Analysis or Plan of Operation | 1 |
Item 3 Quantitative and Qualitative Disclosures About Market Risk | 3 |
Item 4 Controls and Procedures | 4 |
|
|
PART II |
|
Item 1. Legal Proceedings | 4 |
Item IA. Risk Factors | 4 |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 4 |
Item 3. Defaults Upon Senior Securities | 4 |
Item 4. Removed and Reserved | 4 |
Item 5. Other Information | 4 |
Item 6. Exhibits | 5 |
FINANCIAL INFORMATION
Item 1. Financial Statements.
BONANZA GOLD CORP.
(AN EXPLORATION STAGE COMPANY)
INDEX TO FINANCIAL STATEMENTS
JUNE 30, 2011
Balance Sheets as of June 30, 2011 and December 31, 2010 | F-2 |
|
|
Statements of Operations for the Six Months Ended |
|
June 30, 2011 and 2010, and Cumulative from Inception | F-3 |
|
|
Statement of Stockholders Deficit for the Period |
|
from Inception Through June 30, 2011 | F-4 |
|
|
Statements of Cash Flows for the Six Months Ended |
|
June 30, 2011And 2010 and Cumulative from Inception | F-5 |
|
|
Notes to Financial Statements | F-6 |
F-1
BONANZA GOLD CORP. | ||||||
(FORMERLY COLD GIN CORPORATION) | ||||||
(AN EXPLORATION STAGE COMPANY) | ||||||
BALANCE SHEETS (unaudited) | ||||||
At June 30, 2011 and DECEMBER 31, 2010 | ||||||
|
|
|
|
|
|
|
|
|
|
| June 30, |
| December 31, |
|
|
|
| 2011 |
| 2010 |
|
| ASSETS |
|
|
|
|
Current Assets |
|
|
|
| ||
| Cash and cash equivalents | $ | - | $ | - | |
|
|
|
|
|
|
|
Mineral Properties, net |
| 18,000 |
| - | ||
|
|
|
|
|
|
|
TOTAL ASSETS | $ | 18,000 | $ | - | ||
|
|
|
|
|
|
|
|
| LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
LIABILITIES |
|
|
|
| ||
Current Liabilities |
|
|
|
| ||
| Accounts Payable | $ | 5,818 | $ | 7,509 | |
| Accrued Interest |
| - |
| - | |
| Notes payable - affiliate |
| - |
| - | |
| Due to Shareholder |
| 152,768 |
| 95,945 | |
| Note Payable - current portion |
| - |
| 800,000 | |
| Total current liabilities |
| 158,586 |
| 903,454 | |
|
|
|
|
|
|
|
Long-Term Liabilities |
|
|
|
| ||
| Note Payable |
| - |
| 200,000 | |
| Total long-term liabilities |
| - |
| 200,000 | |
|
|
|
|
|
|
|
TOTAL LIABILITIES |
| 158,586 |
| 1,103,454 | ||
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES (Notes 2, 4, and 5) |
|
|
|
| ||
|
|
|
|
|
|
|
STOCKHOLDERS' DEFICIT |
|
|
|
| ||
| Common stock, par $0.001, 250,000,000 shares authorized, 187,400,000 and |
|
|
| ||
| 188,700,000 shares issued and outstanding |
| 187,400 |
| 188,700 | |
| Paid in capital |
| (110,495) |
| (115,620) | |
| Deficit accumulated during the development stage |
| (217,491) |
| (1,176,534) | |
|
|
|
|
|
|
|
TOTAL STOCKHOLDERS' DEFICIT |
| (140,586) |
| (1,103,454) | ||
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ | 18,000 | $ | - | ||
|
|
|
|
|
|
|
| The accompanying notes to the consolidated financial statements are an integral part of these statements. |
F-2
BONANZA GOLD CORP. | ||||||||||||
(FORMERLY COLD GIN CORPORATION) | ||||||||||||
(AN EXPLORATION STAGE COMPANY) | ||||||||||||
STATEMENTS OF OPERATIONS (unaudited) | ||||||||||||
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2011 and 2010 | ||||||||||||
AND FROM THE PERIOD FROM AUGUST 7, 2006 (INCEPTION) TO JUNE 30, 2011 | ||||||||||||
| ||||||||||||
|
|
|
| Three Months Ended June 30, 2011 |
| Three Months Ended June 30, 2010 |
| Six Months Ended June 30, 2011 |
| Six Months Ended June 30, 2010 |
| From Inception (August 7, 2006) to June 30, 2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE | $ | - |
| - |
|
| $ | - | $ | - | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
|
| ||
Selling, general and administrative |
| 18,734 |
| 4,031 |
| 45,132 |
| 6,099 |
| 216,994 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
NET OPERATING LOSS |
| (18,734) |
| (4,031) |
| (45,132) |
| (6,099) |
| (216,994) | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER EXPENSES |
| - |
| - |
| - |
| - |
| (497) | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS BEFORE INCOME TAXES |
| (18,734) |
| (4,031) |
| (45,132) |
| (6,099) |
| (217,491) | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
PROVISION FOR INCOME TAXES |
| - |
| - |
| - |
| - |
| - | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS | $ | (18,734) |
| (4,031) |
| (45,132) | $ | (6,099) | $ | (217,491) | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Number of Shares Outstanding |
| 187,400,000 |
| 68,000,000 |
| 187,400,000 |
| 68,000,000 |
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss Per Share |
| (0.00) |
| (0.00) |
| (0.00) |
| (0.00) |
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes to the consolidated financial statements are an integral part of these statements. |
F-3
BONANZA GOLD CORP. | |||||
(FORMERLY COLD GIN CORPORATION) | |||||
(AN EXPLORATION STAGE COMPANY) | |||||
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) (unaudited) | |||||
AS AT June 30, 2011 | |||||
| |||||
| Common Stock | Amount | Additional Paid in Capital | (Deficit) Accumulated During Development Stage | Stockholders Equity (Deficit) |
Beginning balance, August 7, 2006 | - | $ - | $ - | $ - | $ - |
Common stock issued | 127,500,000 | 850 | 1,000 | - | 1,850 |
Net (loss) for the period | - | - | - | (1,750) | (1,750) |
|
|
|
|
|
|
Balance December 31, 2006 | 127,500,000 | $ 850 | $ 1,000 | $ (1,750) | $ 100 |
Net income (loss) for the year | - | - | - | (2,382) | (2,382) |
|
|
|
|
|
|
Balance December 31, 2007 | 127,500,000 | $ 850 | $ 1,000 | $ - | $ (2,282) |
Shares Issued for cash | 75,000,000 | $ 500 | $ 49,500 | - | $ 50,000 |
Shares issued for services | 1,500,000 | $ 10 | $ 990 | - | $ 1,000 |
Net income (loss) for the year | - | - | - | (44,375) | (44,375) |
|
|
|
|
|
|
Balance December 31, 2008 | 204,000,000 | $ 1,360 | $ 51,490 | $ (47,564) | $ 4,343 |
Net (loss) for the year | - | - | - | (24,356) | (24,356) |
|
|
|
|
|
|
Balance December 31, 2009 | 204,000,000 | $ 1,360 | $ 51,490 | $ (72,863) | $ (20,013) |
Conversion of debt to contributed capital | - | - | $ 18,560 | - | 18,560 |
Cancellation of shares | (16,800,000) | (112) | $ 112 | - | - |
Shares issued for mineral property acquisition | 750,000 | 5 | $ 830 | - | 835 |
Shares issued for mineral property acquisition | 750,000 | 5 | $ 830 | - | 835 |
Stock split 1 to 50 | - | 187,442 | $ (187,442) | - | - |
Net loss - December 31,2010 |
|
|
| (1,103,671) | (1,103,671) |
|
|
|
|
|
|
Balance December 31, 2010 | 188,700,000 | $ 188,700 | $ (115,620) | $ (1,176,534) | $ (1,103,454) |
|
|
|
|
|
|
Cancellation of shares issued for mineral property acquisition | (1,500,000) | (1,500) | $ 1,500 | - | - |
Removing Impairment |
|
| $ (4,175) | 1,004,175 | 1,000,000 |
Shares issued for mineral property acquisition | 200,000 | 200 | $ 7,800 | - | 8,000 |
Net loss - June 30, 2011 |
|
|
| $ (45,132) | $ (45,132) |
|
|
|
|
|
|
Balance June 30, 2011 | 187,400,000 | $ 187,400 | $ (110,495) | $ (217,491) | $ (140,586) |
|
|
|
|
|
|
The accompanying notes to the consolidated financial statements are an integral part of these statements. |
F-4
BONANZA GOLD CORP. | ||||||||||
(FORMERLY COLD GIN CORPORATION) | ||||||||||
(AN EXPLORATION STAGE COMPANY) | ||||||||||
STATEMENTS OF CASH FLOWS (unaudited) | ||||||||||
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2011 AND 2010 | ||||||||||
AND FROM THE PERIOD FROM AUGUST 7, 2006 (INCEPTION) TO JUNE 30, 2011 | ||||||||||
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Six Months Ended June 30, 2011 |
| Six Months Ended June 30, 2010 |
|
| From inception (August 7, 2006) to June 30, 2011 |
|
Cash (used in) operating activities: |
|
|
|
|
|
|
|
| ||
| Net (loss) for the period | $ | (45,132) | $ | (6,099) |
| $ | (217,491) |
| |
|
|
|
|
|
|
|
|
|
|
|
Adjustments to Reconcile Net Loss to Net Cash Used in |
|
| ||||||||
Operating Activities: |
|
|
|
|
|
|
|
| ||
| Common stock issued for services |
| - |
| - |
|
| - |
| |
| Impairment of mineral properties |
| - |
| - |
|
| - |
| |
Changes in Assets and Liabilities |
|
|
|
|
|
|
|
| ||
| Increase in accounts payable |
| (1,691) |
| - |
|
| 5,818 |
| |
| Increase (decrease) in accrued interest |
| - |
| 810 |
|
| - |
| |
Net cash (used in) operating activities |
| (46,823) |
| (5,289) |
|
| (211,673) |
| ||
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities: |
|
|
|
|
|
|
|
| ||
| Proceeds from notes payable - shareholders |
| 56,823 |
| 90 |
|
| 152,768 |
| |
| Proceeds from sale of common stock |
| 8,000 |
| - |
|
| 76,905 |
| |
| Proceeds from notes payable |
| - |
| 5,198 |
|
| - |
| |
Net Cash Provided by Financing Activities |
| 64,823 |
| 5,288 |
|
| 229,673 |
| ||
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from investing Activities: |
|
|
|
|
|
|
|
| ||
| Mineral Properties |
| (18,000) |
| - |
|
| (18,000) |
| |
Net cash (used in) Investing Activities |
| (18,000) |
| - |
|
| (18,000) |
| ||
|
|
|
|
|
|
|
|
|
|
|
Net Decrease in Cash and Cash Equivalents |
| - |
| (1) |
|
| - |
| ||
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents - Beginning |
| - |
| 5 |
|
| - |
| ||
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents - End | $ | - | $ | 4 |
| $ | - |
| ||
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures: |
|
|
|
|
|
|
|
| ||
| Cash paid for interest | $ | - | $ | - |
| $ | - |
| |
| Cash paid for income taxes | $ | - | $ | - |
| $ | - |
| |
Supplemental Non-Cash Investing and Financing Information |
|
|
| |||||||
| Conversion of related party and affiliate notes payable |
|
|
| ||||||
| and accrued interest to contributed capital | $ | - | $ | - |
| $ | 18,560 |
| |
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes to the consolidated financial statements are an integral part of these statements. |
F-5
NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Business
Bonanza Gold Corp. (we the Company or the Registrant) was incorporated under the laws of the State of Delaware in December 2006 under the name Cold Gin Corporation. Effective December 10, 2010, we transitioned our business focus from that of a developer of Internet media for martial arts to a company engaged in the exploration and mining of minerals. On December 27, 2010, we entered into an Agreement and Plan of Reorganization with Bonanza Gold Corp., a wholly-owned subsidiary of the Company, pursuant to which we merged with and into Bonanza Gold Corp, with Bonanza Gold Corp. being the surviving corporation.
The Company is currently in the exploration stage. All activities of the Company to date relate to its organization, initial funding and share issuances.
Exploration Stage Company
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles related to exploration stage companies. An exploration-stage company is one in which planned principal operations have not commenced or if its operations have commenced, there has been no significant revenues there from.
Basis of Presentation
The financial statements of the Company have been prepared on the accrual basis and in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars. In the opinion of management, these interim financial statements include all adjustments necessary in order to make them not misleading.
Accounting Basis
The Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America (GAAP accounting). The Company has adopted a December 31 fiscal year end.
Cash and Cash Equivalents
The Company considers all highly liquid investments with the original maturities of three months or less to be cash equivalents. The Company had $0 of cash as of June 30, 2011 and December 31, 2010.
Income Taxes
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition
The Company recognizes revenue when products are fully delivered or services have been provided and collection is reasonably assured.
Stock-Based Compensation
Stock-based compensation is accounted for at fair value in accordance with ASC Topic 718. To date, the Company has not adopted a stock option plan and has not granted any stock options.
Basic Income (Loss) Per Share
Basic income (loss) per share is calculated by dividing the Companys net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Companys net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There are no such common stock equivalents outstanding as of June 30, 2011.
F-6
Comprehensive Income
The Company has established standards for reporting and display of comprehensive income, its components and accumulated balances. When applicable, the Company would disclose this information on its Statement of Stockholders Equity. Comprehensive income comprises equity except those resulting from investments by owners and distributions to owners. The Company has not had any significant transactions that are required to be reported in comprehensive income.
Recent Accounting Pronouncements
Bonanza does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Companys results of operations, financial position or cash flow.
NOTE 2 EMPLOYMENT AGREEMENTS
On June 24, 2011 the Company appointed Mr. Craig Russell to its board of directors. There was no arrangement or understanding between Mr. Russell and any person pursuant to which he was selected as a director.
There have been no transactions since the beginning of the Companys last fiscal year, or any currently proposed transaction, or series of similar transactions, to which the Company was or is to be a party, in which Mr. Russell had or will have a direct or indirect material interest.
Other than as specified herein and the Companys agreement to nominate Mr. Russell to its slate of directors at the next annual meeting of stockholders, there was no arrangement or understanding between Mr. Russell and any other person pursuant to which Mr. Russell was selected as a director of the Company.
NOTE 3 MINERAL PROPERTIES
On December 8, 2010, the Company acquired mineral properties that consisted of an undivided 100% interest in 2 patented claims, 6 federal claims and 25 prospects comprising 660 acres near Kingman, Arizona in exchange for 5,000 shares on a presplit basis of the Companys common stock and a promissory note in the amount of $1,000,000.
The Company was required to pay $200,000 within 3 months of the closing of the definitive agreement, $200,000 within 6 months of the closing, $200,000 within 9 months of the closing, $200,000 within 12 months of the closing and an additional $200,000 within 15 months of the closing of the definitive agreement.
On April 29, 2011, the Company executed an asset purchase agreement for the acquisition of certain assets from Independent Resources, Inc. (the Seller) pursuant to which the Company acquired an undivided interest in six (6) mineral claims representing 1002.16 ha that has been staked and recorded as MTO Cell Claims (the Assets). The property is located east of Harrison Lake and northwest of Hope in southwestern British Columbia. The Company acquired the Assets from the Seller for Ten Thousand Dollars (US$10,000.00), which was funded by a loan from the Chief Executive Officer to the Company.
On May 19, 2011, the Company executed a termination agreement with Precious Metals Exploration, Ltd. (Precious Metals), pursuant to which the parties terminated all payment obligations under the two asset purchase agreements pursuant to which the Company had acquired (i) an undivided interest in 2 patented claims, 6 federal claims and 25 prospects comprising 660 acres near Kingman, Arizona (the Arizona Assets) and (ii) a 75% interest in and to three mining concessions in the project area known as Monte de El Favor in Jalisco, Mexico (the Mexican Assets). The Company and Precious Metals also executed an assignment agreement, dated May 19, 2011, pursuant to which the Company assigned the Arizona Assets and the Mexican Assets to Precious Metals.
On June 30, 2011, the Company executed a Property Purchase Agreement (the Agreement) for the acquisition of certain property from United Copper Holdings Ltd. (the Seller) pursuant to which the Company acquired a 75% interest in 28 lode claims and approximately 560 acres. The property is located in Okanogan County, State of Washington (the Assets). The Company acquired the Assets from the Seller in exchange for 200,000 shares of its common stock (the Shares), which will be issued to the Seller as follows: (i) 100,000 Shares will be issued upon the closing of the Agreement; (ii) 50,000 Shares will be issued within 6 months of the closing of the Agreement; and (iii) 50,000 Shares will be issued within 12 months of the closing of the Agreement. In addition, the Seller will retain a 5% Net Smelter Returns Royalty on the gross mineral production.
Pursuant to the terms of the Agreement, the Company agreed to provide a work commitment (the Work Commitment) for the Assets of $1,000,000 over a 2-year period and the Company will be entitled to earn a further 25% interest in the Assets after $500,000 of the Work Commitment is expended. The Company also agreed to grant to the Seller an additional 200,000 Shares upon discovery of a 25 million ton copper deposit within the Work Commitment period.
F-7
The parties further agreed to enter into a consulting agreement for a one-year term with an option to renew for an additional one year pursuant to which the Seller will act as a consulting prospector, engineer or financial consultant to the Company and will be solely responsible to lead activities related to the Assets. The amounts to be paid to the Seller as consulting fees will be applied against the Work Commitment. The Agreement also provides that the parties will enter into a joint venture agreement after the Company earns the additional 25% interest.
We believe that an expanded exploration and drilling program is currently our best option for increasing the value of our Company. However, we have no revenues, our stock has no trading volume, and we believe our stock price does not reflect the true value of our Company. These factors limit our ability to obtain financing. Therefore, in an effort to generate revenue to continue our operations we have acquired two properties in British Columbia and the State of Washington. While, due to the lack of capital, we have not commenced such exploitation program at this time, we have the legal and functional capability to do so, including the required exploitation permits.
At June 30, 2011, we had not yet obtained sufficient funding to commence exploration on these properties, we had not yet received any revenues, and we had a working capital deficit. Our auditors had determined there was sufficient doubt about our ability to operate as a going concern.
NOTE 4 DUE TO SHAREHOLDERS
A shareholder who is our current Chief Executive Officer provided advances to fund operations. The advances are unsecured, non-interest bearing and due on demand. The amounts due to the shareholder were $152,768 and $95,945 as of June 30, 2011 and December 31, 2010, respectively.
NOTE 5 CAPITAL STOCK
The total number of shares of capital stock which the Company shall have authority to issue is 250,000,000 common shares with a par value of $.001. As part of the change in control, the Company cancelled 112,000 shares on July 8, 2010. Additionally as part of the change in control the former shareholder agreed to forgive debts outstanding to them totaling $18,560 which have been recorded as contributed capital.
The Company agreed to issue 5,000 and 5,000 shares on a pre-split basis of common stock in connection with the two mineral property acquisitions discussed in Note 2, in addition to other future stock issuances. The shares were valued at $0.167 per share. The Company also agreed to make various payments under note obligations incurred in connection with the property acquisition, none of which were paid. Further to the execution of the termination agreement dated May 19, 2011 the above note payable is no longer due. In addition the agreed 5,000 and 5,000 shares on a pre-split basis of common stock in connection with the two mineral property acquisitions discussed in Note 2 were cancelled.
On December 27, 2010, we entered into an Agreement and Plan of Reorganization with Bonanza Gold Corp., a wholly-owned subsidiary of the Company, pursuant to which we merged with and into Bonanza Gold Corp, with Bonanza Gold Corp. being the surviving corporation. In connection with the merger each outstanding share of our common stock was exchanged for one hundred fifty shares of the common stock of the Nevada entity.
On January 5, 2011, the Bonanza enacted a 1 to 150 reverse stock split of the Companys common stock and increased the authorized shares of common stock to 250,000,000
The Company had 187,200,000 shares of common stock issued and outstanding as of June 30, 2011.
NOTE 6 COMMITMENTS AND CONTINGENCIES
An officer has provided office services without charge. There is no obligation for the officer to continue this arrangement. Such costs are immaterial to the financial statements and accordingly are not reflected herein. The officers and directors are involved in other business activities and most likely will become involved in other business activities in the future.
Pursuant to the terms of the Agreement dated June 30, 2011 to purchase a property located in Okanogan County, State of Washington, the Company agreed to provide a work commitment (the Work Commitment) for the Assets of $1,000,000 over a 2-year period.
NOTE 7 INCOME TAXES
For the six months ended June 30, 2011, the Company has incurred net losses and, therefore, has no tax liability. The net deferred tax asset generated by the loss carry-forward has been fully reserved. The cumulative net operating loss carry-forward is approximately $217,491 at June 30, 2011, and will expire beginning in the year 2026.
F-8
The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows:
|
|
|
|
| 2011 | 2010 |
|
|
|
|
|
|
|
Deferred tax asset attributable to |
|
|
|
| ||
Net operating loss carryover |
|
| $ 73,947 | $ 23,949 | ||
Valuation allowance |
|
|
| (73,947) | (23,949) | |
|
|
|
|
|
|
|
Net deferred tax asset |
|
|
| $ - | $ - | |
|
|
|
|
|
|
|
Due to the change in ownership provisions of the Tax Reform Act of 1986, use of the net operating loss carry forwards for Federal income tax reporting purposes are subject to annual limitations.
NOTE 8 RELATED PARTY TRANSACTIONS
A shareholder provided advances to fund operations. The advances are unsecured, non-interest bearing and due on demand. The amounts due to the shareholder were $152,768 and $95,945 as of June 30, 2011 and December 31, 2010, respectively.
NOTE 9 GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, the Company incurred losses of $217,491 since its inception, has not yet produced revenues from operations, and has a working capital deficit. These factors raise substantial doubt about the Company's ability to continue as a going concern.
The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event that the Company cannot continue as a going concern. Management anticipates that it will be able to raise additional working capital through the issuance of stock and through additional loans and advances from investors.
The ability of the Company to continue as a going concern is dependent upon the Companys ability to attain a satisfactory level of profitability and obtain suitable and adequate financing. There can be no assurance that management's plan will be successful.
NOTE 10 SUBSEQUENT EVENTS
On July 8, 2011, The Company issued to one investor 150,000 Units (each unit being comprised of one share of the Companys common stock and a warrant exercisable over a three year period for 15,000 shares of common stock at an exercise price of $1.25 per share). The Units were sold at a price of $.20 per Unit for an aggregate proceeds of $30,000.
The offer and sale of the foregoing securities was made solely to one accredited investor and in reliance upon and pursuant to the exemptions from registration provided by Regulation S of the Securities Act of 1933, as amended.
F-9
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
The following analysis of our consolidated financial condition and results of operations for the period January 1, 2011 through June 30, 2011 should be read in conjunction with the consolidated financial statements, including footnotes, and other information presented elsewhere in this Report on Form 10-Q and the risk factors and the financial statements for the year ended December 31, 2010 and the other information set forth in our Annual Report on Form 10-K for the year ended December 31, 2010 filed with the Securities and Exchange Commission on March 31, 2011. In addition to historical information, the following discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Where possible, we have tried to identify these forward looking statements by using words such as anticipate, believe, intends, or similar expressions. Our actual results could differ materially from those anticipated by the forward-looking statements due to important factors and risks including, but not limited to, those set forth under Risk Factors in Part I, Item 1A of our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2011.
Company Overview
The Company was incorporated under the laws of the State of Delaware in December 2006 under the name Cold Gin Corporation. On December 27, 2010, we entered into an Agreement and Plan of Reorganization with Bonanza Gold Corp., a wholly-owned subsidiary of the Company, pursuant to which we merged with and into Bonanza Gold Corp, with Bonanza Gold Corp. being the surviving corporation. In connection with the reincorporation merger we changed our domicile from Delaware to Nevada, our name to Bonanza Gold Corp. and each outstanding share of our common stock was exchanged for one hundred fifty shares of the common stock of the Nevada entity. Thereafter, our trading market experienced some unusual activity. In an effort to stabilize the market, we effectuated a 150:1 reverse stock split on March 4, 2011.
We were initially established to become a developer of Internet media content for mixed martial arts fans and consumers. Due to a change of control that occurred in August 2010, we abandoned the martial arts business. Accordingly, results from operations related to the martial arts business have been reclassified from current operations to that of discontinued operations. Effective December 10, 2010, we transitioned our business focus to that of a developer of Internet media for martial arts to a company engaged in the exploration and mining of minerals.
The Companys management has experience in the field of mineral exploration and intends to continue to invest resources into our exploration and drilling program, and intends to extend the campaign over the next several years. Depending upon our ability to obtain sufficient funding, we may also acquire additional properties for exploration. In addition, assuming sufficient funding, we plan to engage an internationally recognized mining and geological consultancy firm to assist us in our drilling efforts.
We believe that an expanded exploration and drilling program is currently our best option for increasing the value of our Company. However, we have no revenues, our stock has limited trading volume, and we believe our stock price does not reflect the true value of our Company. These factors limit our ability to obtain financing. In December 2010, in an effort to generate revenue to continue our operations, we acquired two properties, one located in Arizona and the other in Mexico. In April 2011, we acquired an undivided interest in six mineral claims located in southwestern British Columbia. In May 2011, we assigned the property located in Arizona and the property located in Mexico back to the original owner that had sold us the properties in exchange for a termination of all of our payment obligations for such assets. In June 2011 we acquired a 75% interest in 28 lode claims and approximately 560 acres in Okanogan County, State of Washington. While, due to the lack of capital, we have not commenced any exploitation program at this time, we have the legal and functional capability to do so, including the required exploitation permits.
Recent Developments
On April 29, 2011, we executed an asset purchase agreement for the acquisition of certain assets from Independent Resources, Inc. (the Seller) pursuant to which we acquired an undivided interest in six (6) mineral claims representing 1002.16 ha that has been staked and recorded as MTO Cell Claims (the Assets). The property is located east of Harrison Lake and northwest of Hope in southwestern British Columbia. We acquired the Assets from the Seller for Ten Thousand Dollars (US$10,000.00), which was funded by a loan from the Chief Executive Officer to the Company.
On May 19, 2011, we executed a termination agreement with Precious Metals Exploration, Ltd. (Precious Metals), pursuant to which the parties terminated all payment obligations under the two asset purchase agreements, dated December 10, 2010, pursuant to which we had acquired (i) an undivided interest in 2 patented claims, 6 federal claims and 25 prospects comprising 660 acres near Kingman, Arizona (the Arizona Assets) and (ii) a 75% interest in and to three mining concessions in the project area known as Monte de El Favor in Jalisco, Mexico (the Mexican Assets). We also executed an assignment agreement with Precious Metals, dated May 19, 2011, pursuant to which we assigned the Arizona Assets and the Mexican Assets to Precious Metals.
On June 30, 2011, we executed a Property Purchase Agreement (the Property Purchase Agreement) for the acquisition of certain property from United Copper Holdings Ltd. (the United Copper) pursuant to which we acquired a 75% interest in 28 lode claims and approximately 560 acres. The property is located in Okanogan County, State of Washington (the Washington Assets). We acquired the Washington Assets
1
from United Copper in exchange for 200,000 shares of its common stock (the Shares), which will be issued to United Copper as follows: (i) 100,000 Shares will be issued upon the closing of the Property Purchase Agreement; (ii) 50,000 Shares will be issued within 6 months of the closing of the Property Purchase Agreement; and (iii) 50,000 Shares will be issued within 12 months of the closing of the Property Purchase Agreement. In addition, United Copper will retain a 5% Net Smelter Returns Royalty on the gross mineral production.
Pursuant to the terms of the Property Purchase Agreement, we agreed to provide a work commitment (the Work Commitment) for the Washington Assets of $1,000,000 over a 2-year period and we will be entitled to earn a further 25% interest in the Washington Assets after $500,000 of the Work Commitment is expended. We also agreed to grant to United Copper an additional 200,000 Shares upon discovery of a 25 million ton copper deposit within the Work Commitment period.
We further agreed to enter into a consulting agreement with United Copper for a one-year term with an option to renew for an additional one year pursuant to which United Copper will act as a consulting prospector, engineer or financial consultant to us and will be solely responsible to lead activities related to the Washington Assets. The amounts to be paid to United Copper as consulting fees will be applied against the Work Commitment. The Property Purchase Agreement also provides that we will enter into a joint venture agreement with United Copper after we earn the additional 25% interest.
On June 24, 2011 Mr. Craig Russell was appointed to our board of directors.
Critical Accounting Policies
Management believes that the critical accounting policies and estimates discussed below involve the most complex management judgments due to the sensitivity of the methods and assumptions necessary in determining the related asset, liability, revenue and expense amounts. Specific risks associated with these critical accounting policies are discussed throughout this MD&A, where such policies have a material effect on reported and expected financial results. For a detailed discussion of the application of these and other accounting policies, refer to the individual Notes to the Financial Statements for the quarterly period ended June 30, 2011.
Revenue Recognition
The Company recognizes revenues when products are shipped or services are delivered to customers, pricing is fixed or determinable, and collection is reasonably assured. Net revenues include product sales net of returns and allowances.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Estimates are based on historical experience, management expectations for future performance, and other assumptions as appropriate. Key areas affected by estimates include the assessment of the recoverability of long-lived assets, which is based on such factors as estimated future cash flows. We re-evaluate estimates on an ongoing basis; therefore, actual results may vary from those estimates.
Fair Values of Financial Instruments
The carrying values of cash, accounts receivable, accounts payable and accrued expenses approximate the fair values of these instruments due to their short-term nature. The carrying amount for borrowings under the financing agreement approximates fair value because of the variable market interest rates charged for these borrowings. We adopted SFAS No. 157, Fair Value Measurements (ASC 820-10), for financial assets and financial liabilities in the first quarter of fiscal 2009, which did not have an impact on our financial statements.
In accordance with FASB Staff Position (FSP FAS) 157-2, Effective Date of FASB Statement No. 157, we deferred application of SFAS No. 157 until January 1, 2010, the beginning of our fiscal year, in relation to nonrecurring nonfinancial assets and nonfinancial liabilities including goodwill impairment testing, asset retirement obligations, long-lived asset impairments and exit and disposal activities. As of June 30, 2011 the application of SFAS 157 had no impact on our financial statements.
Concentration of Credit Risk
Financial instruments, which potentially subject us to concentrations of credit risk, consist of cash and cash equivalents and accounts receivable. We place our cash with high quality financial institutions and at times may exceed the FDIC insurance limit. We extend credit based on an evaluation of the customers financial condition, generally without collateral. Exposure to losses on receivables is principally dependent on each customers financial condition. We monitor our exposure for credit losses and maintain allowances for anticipated losses, as required.
2
Recently Issued Accounting Standards
For a discussion of the adoption and potential impacts of recently issued accounting standards, refer to the Recent Accounting Pronouncements section of Note 1, Organization and Summary of Significant Accounting Policies, in the Notes to Financial Statements.
Plan of Operations
We are developing a gold and metals exploration company. Lynn Harrison, our Chief Executive Officer, President, Chief Financial Officer, Secretary and Treasurer, has experience in the precious metals industry. During 2009 and 2010 she managed and developed networks of special metals groups (manufacturer and engineers) for UK Metals Technology Centre. Her primary responsibilities were the management of relationships and collaboration between metallurgists, businesses, academics and founders. The Company plans to leverage her vast knowledge of the industry to acquire properties for exploration. We recently acquired an undivided interest in six mineral claims located in southwestern British Columbia for our mineral exploration activity and a 75% interest in 28 lode claims and approximately 560 acres in Okanogan County, State of Washington and intend to commence exploration activities, upon receipt of additional financing.
Off Balance Sheet Arrangements
There are no off balance sheet arrangements.
Results of Operations for the Three and Six Months Ended June 30, 2011 and 2010
To date we have had no revenue. For the six-month period ended June 30, 2011 we incurred operating expenses of $45,132, as compared to $6,099 for the same period ended June 30, 2010. For the three-month period ended June 30, 2011, we incurred operating expenses of $18,734, as compared to $4,031 for the same period ended June 30, 2010. The increased expenses were incurred due to increased legal and audit fees incurred in connection with the addition of new mining properties and other expenses associated with regulation compliance. We anticipate incurring further increased expenses once we begin exploration activities and will require additional funding to support our working capital needs.
Liquidity and Capital Resources
At June 30, 2011 we had no cash or cash equivalents and had a working capital deficit of ($158,586). At June 30, 2011, our only assets were our mineral properties which had a net value of $18,000. During this quarter we acquired two new properties and assigned our interest in the Arizona Assets and Mexican Assets to the original owner of such assets in exchange for a termination of all of our payment obligations for such assets. Our current liabilities included amounts due to our Chief Executive Officer and principal shareholder of $152,768 for funds loaned for operations. This loan is unsecured, non-interest bearing and has no fixed term of repayment.
To date our sources of funding have been loans from our Chief Executive Officer and the sale of our equity securities. On July 8, 2011 we raised $30,000 from the sale to one investor of 150,000 shares of our common stock and a warrant exercisable over a three year period of time for 15,000 shares of common stock. We have incurred negative cash flow from operations since we started our business. We have spent, and expect to continue to spend, substantial amounts in connection with implementing our business strategy, including our planned exploration activities. Based on our current plans, we believe that our cash will not be sufficient to enable us to meet our planned operating needs in the next 12 months and we will need to raise additional funding.
Current and Future Financing Needs
The actual amount of funds we will need to operate is subject to many factors, some of which are beyond our control. We have based our estimate on assumptions that may prove to be wrong. We may need to obtain additional funds sooner or in greater amounts than we currently anticipate. Potential sources of financing include strategic relationships, public or private sales of our shares or debt and other sources. We may seek to access the public or private equity markets when conditions are favorable due to our long-term capital requirements. We do not have any committed sources of financing at this time, and it is uncertain whether additional funding will be available when we need it on terms that will be acceptable to us, or at all. If we raise funds by selling additional shares of common stock or other securities convertible into common stock, the ownership interest of our existing stockholders will be diluted. If we are not able to obtain financing when needed, we may be unable to carry out our business plan. As a result, we may have to significantly limit our operations and our business, financial condition and results of operations would be materially harmed.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable because the Company is a smaller reporting company.
3
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
The Company has adopted and maintains disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the reports filed under the Exchange Act, such as this quarterly report, is collected, recorded, processed, summarized and reported within the time periods specified in the rules of the SEC. The Companys disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to management to allow timely decisions regarding required disclosure. As required under Exchange Act Rule 13a-15, the Companys management, including the Chief Executive Officer and Principal Financial Officer, has conducted an evaluation of the effectiveness of disclosure controls and procedures as of the end of the period covered by this report. Inasmuch as we only have one individual serving as our officer and employee we have determined that the Company has, per se, inadequate controls and procedures over financial reporting due to the lack of segregation of duties despite the fact that the Company has very little operating activity. Management recognizes that its controls and procedures would be substantially improved if there was a greater segregation of the duties of Chief Executive Officer and Chief Financial Officer and as such is actively seeking to remediate this issue. Management believes that the material weakness in its controls and procedures referenced did not have an effect on our financial results. Based on that evaluation, the Chief Executive Office and Principal Financial Officer concluded that the disclosure controls and procedures are ineffective.
Changes in Internal Control
There have been no changes in internal controls over the financial reporting that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
We are not currently a party to any legal proceedings, and we are not aware of any proceeding pending or threatened against us by any governmental authority or other party.
Item 1A. Risk Factors.
Not applicable because the Company is a smaller reporting company.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
In connection with the purchase of the Washington Assets, the Company agreed to issue 100,000 shares of common stock to the Seller at the closing as part of the consideration for the purchase of the Washington Assets and an additional 50,000 shares of common stock on the six month and twelve month anniversary of the closing.
The offer and sale of the foregoing securities was made solely to one accredited investor and in reliance upon and pursuant to the exemptions from registration provided by Regulation S of the Securities Act.
On July 8, 2011, the Company issued to one investor 150,000 Units (each unit being comprised of one share of the Companys common stock and a warrant exercisable over a three year period for 15,000 shares of common stock at an exercise price of $1.25 per share). The Units were sold at a price of $.20 per Unit for an aggregate of $30,000.
The offer and sale of the foregoing securities was made solely to one accredited investor and in reliance upon and pursuant to the exemptions from registration provided by Regulation S of the Securities Act of 1933, as amended.
Item 3. Defaults upon Senior Securities.
None.
Item 4. (Removed and Reserved).
Item 5. Other Information.
None.
4
Item 6. Exhibits.
10.1 | Asset Purchase Agreement, dated April 29, 2011, by and between Bonanza Gold Corp. and Independent Resources Inc. (incorporated herein by reference to the Companys Current Report on Form 8-K filed with the Securities and Exchange Commission on May 5, 2011) |
|
|
10.2 | Termination Agreement, dated May 19, 2011, by and between the Company and Precious Metals Exploration, Ltd. (incorporated herein by reference to the Companys Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 23, 2011) |
|
|
10.3 | Assignment Agreement, dated May19, 2011, by and between the Company and Precious Metals Exploration, Ltd. (incorporated herein by reference to the Companys Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 23, 2011) |
|
|
10.4 | Property Purchase Agreement, dated June 30, 2011, by and between the Company and United Copper Holdings Ltd. (incorporated herein by reference to the Companys Current Report on Form 8-K filed with the Securities and Exchange Commission on July 5, 2011) |
|
|
31.1 | Certification pursuant to Rule 13a-14(a)/15d-14(a) (1) |
|
|
31.2 | Certification pursuant to Rule 13a-14(a)/15d-14(a) (1) |
|
|
32.1 | Certification pursuant to Section 1350 of the Sarbanes-Oxley Act of 2002 (1) |
(1) Filed herewith.
5
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
6