Attached files
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EX-32.1 - EXHIBIT 32.1 - BRIGHTLANE CORP. | ex32_1apg.htm |
EX-31.1 - EXHIBIT 31.1 - BRIGHTLANE CORP. | ex31_1apg.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 September 30, 2013
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: 000-54027
BONANZA GOLD CORP.
(Exact name of registrant as specified in its charter)
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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)
(206) 262-7461
(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) |
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|
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 November 12, 2013, the registrant had 6,123,005 shares of common stock outstanding.
TABLE OF CONTENTS
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PART I |
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Item 1. Financial Statements | 3 |
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations | 12 |
Item 3 Quantitative and Qualitative Disclosures About Market Risk | 14 |
Item 4 Controls and Procedures | 14 |
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PART II |
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Item 1. Legal Proceedings | 15 |
Item IA. Risk Factors | 15 |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 15 |
Item 3. Defaults Upon Senior Securities | 15 |
Item 4. Mine Safety Disclosures | 15 |
Item 5. Other Information | 15 |
Item 6. Exhibits | 16 |
2
FINANCIAL INFORMATION
Item 1. Financial Statements.
BONANZA GOLD CORP.
(AN EXPLORATION STATE COMPANY)
INDEX TO CONDENSED UNAUDITED FINANCIAL STATEMENTS
SEPTEMBER 30, 2013
3
BONANZA GOLD CORP. | |||||||
(AN EXPLORATION STATE ENTITY) | |||||||
CONDENSED BALANCE SHEETS | |||||||
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| September 30, |
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| December 31, |
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| 2013 |
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| 2012 |
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| (Unaudited) |
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| ASSETS |
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Current Assets |
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| Cash and cash equivalents | $ | 12,608 |
| $ | 10,698 | |
| Total current assets |
| 12,608 |
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| 10,698 | |
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Equipment, net of accumulated depreciations of $1,028 and $301, respectively |
| 1,879 |
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| 2,605 | ||
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Website, net of accumulated amortization of $0 |
| 14,225 |
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| 10,913 | ||
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Mineral Properties, net |
| - |
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| 1,854,770 | ||
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TOTAL ASSETS | $ | 28,712 |
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| 1,878,985 | ||
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| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
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LIABILITIES |
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Current Liabilities |
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| Accounts Payable | $ | 32,946 |
| $ | 28,290 | |
| Note Payable - current portion |
| - |
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| 200,000 | |
| Total current liabilities |
| 32,946 |
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| 228,290 | |
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Long-Term Liabilities |
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| Note Payable |
| - |
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| 1,455,732 | |
| Total long-term liabilities |
| - |
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| 1,455,732 | |
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TOTAL LIABILITIES |
| 32,946 |
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| 1,684,022 | ||
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COMMITMENTS AND CONTINGENCIES (NOTE 7) |
| - |
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| - | ||
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STOCKHOLDERS' EQUITY (DEFICIT) |
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| Common stock, par $0.001, 250,000,000 shares authorized, 6,123,005 and 6,148,005 shares issued and outstanding at September 30, 2013 and December 31, 2012, respectively |
| 6,123 |
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| 6,148 | |
| Additional paid in capital |
| 907,690 |
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| 907,690 | |
| Stock payable |
| 125,000 |
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| - | |
| Deficit accumulated during the exploration state |
| (1,042,929) |
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| (718,875) | |
| Accumulated other comprehensive income (loss) |
| (118) |
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TOTAL STOCKHOLDERS' EQUITY (DEFICT) |
| (4,234) |
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| 194,963 | ||
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ | 28,712 |
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| 1,878,985 | ||
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The accompanying notes to the condensed unaudited financial statements are an integral part of these statements. | |||||||
| *On January 5, 2011, the Company enacted a 1 to 150 reverse stock split |
4
BONANZA GOLD CORP. | ||||||||||||
(AN EXPLORATION STATE ENTITY) | ||||||||||||
CONDENSED STATEMENTS OF OPERATIONS | ||||||||||||
(UNAUDITED) | ||||||||||||
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| From Inception |
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| Three Months Ended September 30, |
| Nine Months Ended September 30, |
| (August 7, 2006) to September 30, | ||||
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| 2013 |
| 2012 |
| 2013 |
| 2012 |
| 2013 |
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REVENUE | $ | - | $ | - | $ | - | $ | - | $ | - | ||
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OPERATING EXPENSES |
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Selling, general and administrative |
| 33,289 |
| 84,123 |
| 126,954 |
| 234,811 |
| 1,814,362 | ||
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NET OPERATING LOSS |
| (33,289) |
| (84,123) |
| (126,954) |
| (234,811) |
| (1,814,362) | ||
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OTHER INCOME |
| 7,280 |
| - |
| - |
| 9 |
| 999,430 | ||
OTHER EXPENSE |
| (137) |
| - |
| (52,465) |
| - |
| (52,465) | ||
INTEREST EXPENSE |
| - |
| (248) |
| (144,635) |
| (248) |
| (175,532) | ||
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NET INCOME (LOSS) BEFORE INCOME TAXES |
| (26,145) |
| (84,371) |
| (324,054) |
| (235,050) |
| (1,042,929) | ||
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PROVISION FOR INCOME TAXES |
| - |
| - |
| - |
| - |
| - | ||
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NET LOSS | $ | (26,145) | $ | (84,371) | $ | (324,054) | $ | (235,050) | $ | (1,042,929) | ||
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OTHER COMPREHENSIVE INCOME (LOSS) |
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| Foreign currency translation gain (loss) |
| (118) |
| - |
| (118) |
| - |
| (118) | |
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TOTAL COMPREHENSIVE INCOME (LOSS) | $ | (26,263) | $ | (84,371) | $ | (324,172) | $ | (235,050) | $ | (1,043,047) | ||
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Net Loss Per Share: basic and diluted | $ | (0.00) | $ | (0.02) | $ | (0.05) | $ | (0.05) |
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Weighted Average Number of Shares Outstanding: basic and diluted | 6,123,005 |
| 5,387,280 |
| 6,123,005 |
| 4,610,680 |
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The accompanying notes to the condensed unaudited financial statements are an integral part of these statements. | ||||||||||||
*On January 5, 2011, the Company enacted a 1 to 150 reverse stock split |
5
BONANZA GOLD CORP. | ||||||||
(AN EXPLORATION STATE ENTITY) | ||||||||
CONDENSED STATEMENTS OF CASH FLOWS | ||||||||
(UNAUDITED) | ||||||||
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| From Inception |
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| (August 7, 2006) to |
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| Nine Months Ended September 30, |
| September 30, | ||
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| 2013 |
| 2012 |
| 2013 |
Cash (used in) operating activities: |
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| Net loss for the period | $ | (324,054) | $ | (235,050) | $ | (1,042,929) | |
Adjustments to Reconcile Net Loss to Net Cash Used in |
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Operating Activities: |
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| Common stock issued for services |
| - |
| - |
| 1,000 | |
| Impairment of mineral properties |
| - |
| - |
| 1,011,670 | |
| Gain (Loss) on disposal of mineral properties |
| 59,745 |
| - |
| (940,265) | |
| Depreciation expense |
| 726 |
| 59 |
| 1,028 | |
| Amortization of discount on note payable |
| 144,268 |
| - |
| 174,917 | |
Changes in Assets and Liabilities |
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| Prepaid expenses |
| - |
| (512) |
| - | |
| Accounts payable |
| 4,655 |
| (8,445) |
| 32,946 | |
| Accrued interest |
| - |
| - |
| - | |
Net cash used in operating activities |
| (114,660) |
| (243,948) |
| (761,633) | ||
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Cash Flows from investing Activities: |
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| Equipment |
| - |
| (2,906) |
| (2,906) | |
| Website |
| (3,312) |
| - |
| (14,225) | |
| Mineral Properties |
| (5,000) |
| (47,280) |
| (72,280) | |
Net cash used in Investing Activities |
| (8,312) |
| (50,186) |
| (89,411) | ||
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Cash Flows from Financing Activities: |
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| Advances from directors |
| - |
| - |
| 166,900 | |
| Proceeds from notes payable - affiliate |
| - |
| - |
| 200 | |
| Payments on notes payable |
| - |
| (150,000) |
| (150,180) | |
| Proceeds from stock payable |
| 125,000 |
| - |
| 125,000 | |
| Proceeds from sale of common stock |
| - |
| 460,000 |
| 721,850 | |
Net Cash Provided by Financing Activities |
| 125,000 |
| 310,000 |
| 863,770 | ||
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Effect of Exchange Rate changes on cash and cash equivalents |
| (118) |
| - |
| (118) | ||
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Net Decrease in Cash and Cash Equivalents |
| 1,910 |
| 15,866 |
| 12,608 | ||
Cash and Cash Equivalents - Beginning |
| 10,698 |
| 14,367 |
| - | ||
Cash and Cash Equivalents - End | $ | 12,608 |
| 30,233 |
| 12,608 | ||
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Supplemental disclosures: |
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| Cash paid for interest | $ | - | $ | 248 | $ | 248 | |
| Cash paid for income taxes | $ | - | $ | - | $ | - | |
Supplemental Non-Cash Investing and Financing Information |
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| Common stock issued for acquisition of mineral properties | $ | - | $ | - | $ | 19,635 | |
| Note payable issued for acquisition of mineral properties | $ | - | $ | 1,950,000 | $ | 1,950,000 | |
| Discount on non-interest bearing note payable | $ | 144,268 | $ | 30,649 | $ | 174,917 | |
| Conversion of related party debt | $ | - | $ | - | $ | 18,560 | |
| Forgiveness of shareholder's loan | $ | - | $ | - | $ | 152,768 | |
| Cancellation of note payable in connection with disposal of mineral property agreement | $ | 1,800,000 | $ | - | $ | 2,800,000 | |
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The accompanying notes to the condensed unaudited financial statements are an integral part of these statements. |
6
BONANZA GOLD CORP.
(AN EXPLORATION STATE ENTITY)
NOTES TO THE CONDENSED UNAUDITED FINANCIAL STATEMENTS
SEPTEMBER 30, 2013
NOTE 1 ORGANIZATION AND BASIS OF PRESENTATION
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.
Basis of Presentation
The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America. The accompanying interim unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information in accordance with 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 the Companys opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine month period ended September 30, 2013 are not necessarily indicative of the results for the full years. While management of the Company believes that the disclosures presented herein are adequate and not misleading, these interim financial statements should be read in conjunction with the audited combined financial statements and the footnotes thereto for the periods ended December 31, 2012 filed in its annual report on Form 10-K. The Company is currently in the exploration state. All activities of the Company to date relate to its organization, initial funding and share issuances. The accompanying financial statements have been prepared in accordance with generally accepted accounting principles related to exploration state companies. An exploration-state 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.
NOTE 2 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 $1,042,929 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 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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.
Exploration State Entity
The Company follows FASB ASC 915, Development Stage Entities. The Company is still devoting substantially all of its efforts on establishing the business and its planned principal operations have not commenced. All losses accumulated since inception have been considered as part of the Company's development stage activities.
Cash and Cash Equivalents
For the purpose of the financial statements cash equivalents include all highly liquid investments with maturity of three months or less. Cash and cash equivalents were $12,608 and $10,698 at September 30, 2013 and December 31, 2012, respectively.
7
Mineral properties
The Company follows ASC 930, Extractive Activities Mining, for its mineral properties. Mineral properties and related mineral rights acquisition costs are capitalized pending determination of whether the drilling has found proved reserves. If a mineral ore body is discovered, capitalized costs will be amortized on a unit-of-production basis following the commencement of production. Otherwise, capitalized acquisition costs are expensed when it is determined that the mineral property has no future economic value. General exploration costs and costs to maintain rights and leases, including rights of access to lands for geophysical work and salaries, equipment, and supplies for geologists and geophysical crews are expensed as incurred. When it is determined that a mining deposit can be economically and legally extracted or produced based on established proven and probable reserves, further exploration costs and development costs as well as interest costs relating to exploration and development projects that require greater than six (6) months to be readied for their intended use incurred after such determination will be capitalized. The establishment of proven and probable reserves is based on results of final feasibility studies which indicate whether a property is economically feasible. Upon commencement of commercial production, capitalized costs will be transferred to the appropriate asset categories and amortized on a unit-of-production basis. Capitalized costs, net of salvage values, relating to a deposit which is abandoned or considered uneconomic for the foreseeable future will be written off. The sale of a partial interest in a proved property is accounted for as a cost recovery and no gain or loss is recognized as long as this treatment does not significantly affect the unit-of-production amortization rate. A gain or loss will be recognized for all other sales of proved properties and will be classified in other operating revenues. Maintenance and repairs are charged to expense, and renewals and betterments are capitalized to the appropriate property and equipment accounts.
The provision for depreciation, depletion and amortization (DD&A) of mineral properties is calculated on a property-by-property basis using the unit-of-production method. Taken into consideration in the calculation of DD&A are estimated future dismantlement, restoration and abandonment costs, which are net of estimated salvage values. Upon becoming fully amortized, the related cost and accumulated amortization are removed from the accounts.
To date, the Company has not established the commercial feasibility of any exploration prospects; therefore, all general exploration costs, if any, are being expensed.
Basic Income (Loss) Per Share.
The Company computes basic and diluted earnings per share amounts in accordance with ASC Topic 260, Earnings 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. In a loss year, dilutive common equivalent shares are excluded from the loss per share calculation, as the effect would be anti-dilutive.
Recently Issued Accounting Pronouncements
Except for rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of grandfathered standards, the FASB Accounting Standards Codification (ASC) is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company.
We have reviewed the FASB issued Accounting Standards Update (ASU) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporations reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.
NOTE 4 WEBSITE
Website totaled $14,225 and $10,913 at September 30, 2013 and December 31, 2012. Costs represent expenses incurred in the application and infrastructure development phase. These capitalized costs are amortized on a straight-line basis, 15 year useful life, based on analysis of pertinent factors that include obsolescence and technology. Additionally, management reviews for impairment annually. Amortization will begin when the website is present on the internet.
NOTE 5 MINERAL PROPERTIES
On April 29, 2011, the Company executed an asset purchase agreement for the acquisition of certain assets from Independent Resources, Inc. pursuant to which the Company acquired an undivided interest in six (6) mineral claims representing 1002.16 ha
8
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 $10,000, which was funded by a loan from the Chief Executive Officer to the Company at that time.
United Copper Holdings Ltd.
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 was to be issued to the Seller as follows: (i) 100,000 Shares were issued upon the closing of the Agreement; (ii) 50,000 Shares to be issued within 6 months of the closing of the Agreement; and (iii) 50,000 Shares are to 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.
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.
On May 3, 2013, the Company and United Copper Holdings Ltd (United Copper) agreed to terminate the purchase agreement dated June 30, 2011 relating to the 28 Lode claims located in Okanogan County, Washington (the Agreement). It was agreed that United Copper would retain all payments it had received under the Agreement, that no further payments would be required under the Agreement as all outstanding payments due were forgiven and that the Company would return to United Copper the property and any recorded claims it had previously acquired from United Copper. Additionally, $18,000 was removed from Mineral Properties Held for Disposal, net.
Century Copper LLC
On February 28, 2012, the Company executed a Property Purchase Agreement (the Agreement) for the acquisition of certain property from Century Copper LLC (the Seller) pursuant to which the Company acquired a 100% interest in 1 patented mining claim and 26 lode mining claims located in Pinal County, State of Arizona (the Assets). The Company acquired the Assets from the Seller for a purchase price of $2,000,000 which was to be payable as follows: (i) Fifty Thousand Dollars ($50,000) for the Zellweger Patented Claim, of which (x) Ten Thousand Dollars ($10,000) was previously paid upon execution of a letter of intent between the parties; and (y) Forty Thousand Dollars ($40,000) was paid upon execution of the agreement; and (ii) One Million Nine Hundred Fifty Thousand Dollars ($1,950,000) was to be payable over a ten year period, of which (x) One Hundred Fifty Thousand Dollars ($150,000) was paid on or before February 28, 2012; and (ii) Two Hundred Thousand Dollars ($200,000) is to be paid annually thereafter commencing on February 28, 2013 until the total amount is paid or the agreement is mutually terminated. The note was non-interest bearing (see NOTE 6). The Company also agreed to issue 1,000,000 shares of its common stock (the Shares), which were to be issued to the Seller as follows: i) 250,000 of its shares were to be issued within 4 months of closing of the definitive agreement, ii) 250,000 of its shares were to be issued within 8 months of the closing of the definitive agreement, iii) 250,000 of its shares were to be issued within 12 months of the closing of the definitive agreement, and iv) 250,000 of its shares were to be issued within 18 months of the closing of the definitive agreement. None of the shares were issued. In addition, the Seller was to retain; i) a 5% Net Smelter Returns Royalty on the 26 mining claims included in the property, ii) a 2% Net Smelter Returns Royalty on the gross mineral production patented mining claim. In addition, we agreed to provide a work commitment for the property of One Million Dollars ($1,000,000) over five (5) years and were to grant the seller an additional One Million (1,000,000) shares of post-split common stock upon discovery of a twenty-five million (25,000,000) ton copper deposit on said property.
On February 21, 2013, the Company notified Century Copper LLC of the termination of its agreement with Century Copper LLC dated February 28, 2012 (the Agreement) pursuant to which the Company acquired certain property known as the Kelvin Project, consisting of one (1) patented mining claim (the Zellweger Patented Claim) and twenty-six (26) lode mining claims (the Kelvin Prospect Claims) in Sections 8, 9 and 17, Township 4 South, Range 13 East, G.&S.R.B.&M., Pinal County, Arizona. In accordance with the termination provisions contained in the Agreement, Century Copper LLC retained the Two Hundred Thousand Dollars ($200,000) cash payment previously made to it, all documents conveying title claims to the property were released to Century Copper LLC and the Company has no further obligations under the Agreement. Effective with the
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termination of the Agreement, the Company was relieved of the $1,800,000 Note Payable to Century Copper and (NOTE 6) no longer has the obligation to issue the One Million (1,000,000) of post-split shares of common stock. Additionally, $1,836,770 was removed from Mineral Properties Held for Disposal, net.
NOTE 6 NOTE PAYABLE
The note payable was incurred in February 2012 (see NOTE 5), in the amount of $1,950,000 for the purchase of a mineral property. The note was payable in annual installments of $200,000 each February, matures in February 2021 and bears no interest. The note was discounted using the Companys effective borrowing rate of 2.04%. The total discount on the note was $174,917 which will be amortized over the life of the note.
In February 2013, the note payable was cancelled in connection with the cancellation of the Property Purchase Agreement with Century Copper LLC; thereby removing the current portion of $200,000 and the long-term portion of $1,455,732. Due to the cancellation, the Company recognized the remaining discount of $144,268 during the quarter ended March 31, 2013. The amount was recorded as interest expense.
NOTE 7 SHAREHOLDERS EQUITY
Common Stock
The Company has authorized 250,000,000 common shares with a par value of $0.001 per share. Each common share entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.
There were 6,123,005 and 6,148,005 common shares issued and outstanding at September 30, 2013 and December 31, 2012.
During the nine months ended September 30, 2013, the Company received $125,000 to issue 625,000 Units of the Companys unregistered Securities at a price of $0.20 per Unit. As of September 30, 2013 there were 625,000 unissued shares for which payment was received. Each Unit consists of one share of common stock of the Company and one common share purchase warrant subject to adjustment. One Warrant shall be non-transferable and shall entitle the holder thereof to purchase one share of common stock of the Company, as presently constituted, for a period of three (3) years commencing from the closing, at a price per Warrant Share of $1.25 per Warrant Share. To date no stock has been issued in connection with such transaction as the Company is waiting to receive completed documentation of the subscribed amount before issuing any stock. The $125,000 was recorded as a stock payable as no shares have been issued.
Warrants
As of September 30, 2013, the Company has issued 5,175,000 warrants that are exercisable and remain outstanding.
The Company has no stock option plan or other potentially dilutive securities as of September 30, 2013 or December 31, 2012 and thus anti-dilution issues are not applicable.
NOTE 8 COMMITMENTS AND CONTINGENCIES
United Copper Holdings LLC
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 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. This Agreement has been terminated as of May 3, 2013
Century Copper LLC
Pursuant to the terms of the Agreement dated February 28, 2012 to purchase a property located in Pinal County, State of Arizona, the Company agreed to provide a work commitment (the Work Commitment) for the Assets of $1,000,000 over a 5-year period. The Company also agreed to grant to the Seller an additional One Million (1,000,000) post-split Shares upon discovery of a twenty five million (25,000,000) ton copper deposit on said property. This Agreement has been terminated as of February 21, 2013.
NOTE 9 INCOME TAXES
The Company has not recognized an income tax benefit for its operating losses generated based on uncertainties concerning its ability to generate taxable income in future periods. The tax benefit for the periods presented is offset by a valuation allowance
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established against deferred tax assets arising from the net operating losses and other temporary differences, the realization of which could not be considered more likely than not. In future periods, tax benefits and related deferred tax assets will be recognized when management considers realization of such amounts to be more likely than not. As of September 30, 2013 the Company has incurred a loss of $1,042,954 resulting in a net operating loss carryforward for income tax purposes. Net operating losses begin expiring in 2026. The loss results in a deferred tax asset of approximately $354,600 at the effective statutory rate. The deferred tax asset has been off-set by an equal valuation allowance.
NOTE 10 SUBSEQUENT EVENTS
Management has evaluated subsequent events through the date the financial statements were issued. Based on our evaluation no events have occurred requiring adjustment or disclosure.
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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
The following analysis of our financial condition and results of operations for the period January 1, 2013 through September 30, 2013 should be read in conjunction with the 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, 2012 and the other information set forth in our Annual Report on Form 10-K for the year ended December 31, 2012 filed with the Securities and Exchange Commission on April 15, 2013. 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 April 15, 2013, and as amended on October 25, 2013.
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 January 5, 2011.
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. In May 2013, we assigned the property located in Okanogan County, State of Washington 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 February 2012 we acquired one (1) patented mining claim (the Zellweger Patented Claim) and twenty-six (26) lode mining claims (the Kelvin Prospect Claims) in Sections 8, 9 and 17, Township 4 South, Range 13 East, G.&S.R.B.&M., Pinal County, Arizona. In February 2013, we assigned the property located in Pinal County, Arizona 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. While, due to the lack of capital, we have not commenced any exploration program at this time, we have the legal and functional capability to do so, including the required exploration permits when we obtain suitable properties.
Results of Operations
Working Capital
| September 30, 2013 $ | December 31, 2012 $ |
Current Assets | 12,608 | 10,698 |
Current Liabilities | 32,946 | 228,290 |
Working Capital Deficiency | (20,338) | (217,592) |
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Cash Flows
| September 30, 2013 $ | September 30, 2012 $ |
Cash Flows used in Operating Activities | (114,660) | (243,948) |
Cash Flows used in Investing Activities | (8,312) | (50,186) |
Cash Flows from Financing Activities | 125,000 | 310,000 |
Net change in Cash During Period | 1,910 | 15,866 |
Results of Operations for the three months ended September 30, 2013 and September 30, 2012.
For the three months ended September 30, 2013 as compared to the three months September 30, 2012, total revenues were $0 and $0, respectively; and net losses were $26,145 and $84,371, respectively. The net losses were attributable to operating expenses of $33,289 for the three months ended September 30, 2013 as compared to $84,123 in operating expenses for the same period in 2012. The decrease in total expenses in the current period, were primarily due to decreases in payroll expenses, consultant fees, and travel expenses as compared to the same period in 2012.
Results of Operations for the nine months ended September 30, 2013 and September 30, 2012.
For the nine months ended September 30, 2013 as compared to the nine months September 30, 2012, total revenues were $0 and $0, respectively; and net losses were $324,079 and $235,051, respectively. The net losses were attributable to operating expenses of $126,954, mineral property write off of 52,465, and interest expense of 144,635 for the nine months ended September 30, 2013 as compared to $234,812 in operating expenses for the same period in 2012. The increased expenses were incurred mainly due to loss on disposal of mineral property and the amortization of the discount on the note payable associated with the cancel property purchase agreement.
Liquidity and Capital Resources
At September 30, 2013 we had cash or cash equivalents of $12,608 and had a working capital deficit of $20,338. At September 30, 2013 our assets consisted of the cash described above, IT equipment of $1,879, and website of $14,255.
Our net cash used in operating activities for the nine months ended September 30, 2013 was $114,660 and was primarily the result of our net loss of $324,079. Our net cash used in operating activities for the nine months ended September 30, 2012 was $243,948 and was the result of our net loss of $235,050. Net cash used in investing activities for the nine months ended September 30, 2013 was $8,312, resulting from investment in our website in the amount of $3,312 and additional stake claims for our mineral properties in the amount of $5,000. Net cash used in investing activities for the nine months ended September 30, 2012 was $50,186, resulting from our investment in mineral properties for $47,280 and equipment of $2,906. Our cash provided by financing activities for the nine months ended September 30, 2013 was $125,000 from the proceeds of a stock subscription that we received. To date no stock has been issued in connection with such transaction and has been recorded as a stock payable. Our cash provided by financing activities for the nine months ended September 30, 2012 was $310,000 and consisted of $460,000 from the proceeds of the sale of our common stock offset by the payment of $150,000 for Note payables.
Our working capital deficiency at September 30, 2013 and December 31, 2012 was $20,338 and $217,592, respectively. The improvement of $197,254 was primarily attributable to $200,000 of current debt that was relieved with the Century Copper, LLC property termination described in Note 5.
The 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.
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Liquidity
We have no known demands or commitments and are not aware of any events or uncertainties as of September 30, 2013 that will result in or that are reasonably likely to materially increase or decrease our current liquidity.
Capital Resources.
We had no material commitments for capital expenditures as of September 30, 2013 and December 31, 2012.
Off Balance Sheet Arrangements.
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Critical Accounting Policies
We prepare our financial statements in conformity with GAAP, which requires management to make certain estimates and apply judgments. We base our estimates and judgments on historical experience, current trends and other factors that management believes to be important at the time the condensed financial statements are prepared. Due to the need to make estimates about the effect of matters that are inherently uncertain, materially different amounts could be reported under different conditions or using different assumptions. On a regular basis, we review our critical accounting policies and how they are applied in the preparation of our condensed financial statements.
While we believe that the historical experience, current trends and other factors considered support the preparation of our condensed financial statements in conformity with GAAP, actual results could differ from our estimates and such differences could be material.
For a full description of our critical accounting policies, please refer to Item 7, Managements Discussion and Analysis of Financial Condition and Results of Operations in our 2012 Annual Report on Form 10-K.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Not applicable because the Company is a smaller reporting company.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including our Principal Executive Officer who is also our Principal Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our Principal Executive Officer who is also our Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act"). Based upon that evaluation, our Principal Executive Officer who is also our Principal Financial Officer has concluded that our disclosure controls and procedures were not effective as of September 30, 2013, due to the material weaknesses resulting from the Board of Directors not currently having any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K, and controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements.
Changes in Internal Control over Financial Reporting
Our management has also evaluated our internal control over financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of our last evaluation.
The Company is not required by current SEC rules to include, and does not include, an auditor's attestation report. The Company's registered public accounting firm has not attested to Management's reports on the Company's internal control over financial reporting.
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Item 1. Legal Proceedings.
We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. To our knowledge, there are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
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.
1. Quarterly Issuances:
Other than as previously disclosed, we sold but did not issue any unregistered securities during the quarter.
We are obliged to issue 625,000 units of the Companys unregistered securities at a price of $0.20 per unit, for the $125,000 the Company has received during the nine months ended September 30, 2013. (note.7)
2. Subsequent Issuances:
Subsequent to the quarter, we did not issue any unregistered securities other than as previously disclosed.
Item 3. Defaults upon Senior Securities.
None.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information.
None.
Item 6. Exhibits.
31.1 | Certification pursuant to Rule 13a-14(a)/15d-14(a) (1) |
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32.1 | Certification pursuant to Section 1350 of the Sarbanes-Oxley Act of 2002 (1) |
(1) Filed herewith.
101 | Interactive Data File (Form 10-Q for the quarterly period ended September 30, 2012 furnished in XBRL). (1) |
101.INS | XBRL Instance Document |
101.SCH | XBRL Taxonomy Extension Schema Document |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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