Transfer Agent
On June 1, 2008, the Company engaged Transfer Online, Inc. to serve in the capacity of transfer agent. Their mailing address and telephone number Transfer Online, Inc., 317 SW Alder Street, 2
nd
Floor, Portland, OR 97201 - Phone is (503) 227-2950.
Up to 100,000,000 shares of common stock are being offered by this prospectus, all of which are being registered for sale for the account of the Selling Shareholder and include the following:
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79,000,000 shares of common stock issuable upon the conversion of a Secured Convertible Promissory Note issued to Tonaquint, Inc. on October 1, 2012.
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21,000,000 shares of common stock issuable upon the exercise of an outstanding Warrant to the Holder Tonaquint, Inc. in conjunction with the Secured Convertible Promissory Note dated October 1, 2012.
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Each of the transactions by which the Selling Shareholder acquired its securities from us was exempt under the registration provisions of the Securities Act.
The 100,000,000 shares of common stock referred to above are being registered in that the holder of the note and the warrant may convert the entire note to shares and may exercise the warrant. This registration will permit public sales of the shares, and the Selling Shareholder will be able to offer the shares for resale from time to time pursuant to this prospectus. The Selling Shareholder may also sell, transfer or otherwise dispose of all or a portion of its shares in transactions exempt from the registration requirements of the Securities Act or pursuant to another effective registration statement covering those shares. We may from time to time include additional Selling Shareholders in supplements or amendments to this prospectus
The Selling Shareholder has not had a material relationship with us within the past three years other than as a result of acquisition of our shares or other securities.
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission. The Selling Shareholder’s percentage of ownership of our outstanding shares could be as much as 30.1% based upon 331,656,125 shares of common stock outstanding as of November 15, 2012.
Conversion of principal and interest under the Secured Convertible Promissory Note:
The Holder of the Secured Convertible Promissory Note (Note) shall be entitled to convert any portion of the outstanding balance owed to Holder into validly issued, fully paid and non-assessable shares of common stock calculated using the conversion rate. The conversion price is $0.05, subject to adjustment as provided in the Note. The number of conversion shares issuable upon conversion of any portion of the outstanding balance pursuant to the Note shall be determined by dividing (x) the applicable conversion amount by (y) the conversion price. The conversion price, as of any conversion date or other date of determination, is $0.05, subject to adjustment as provided in the Note. The conversion by the Holder of any portion of the outstanding balance owed to Holder shall only be exercisable in five (5) tranches that correspond to actual advances of funds by Holder to the company in the same sequence as funds were advanced under the terms of this Note.
The Note shall not be convertible by the Holder hereof, and the company shall not affect any conversion of the Note or otherwise issue any shares of common stock, to the extent that the Holder together with any of its affiliates would beneficially own in excess of 4.99% of the common stock outstanding, provided that (i) if we fail to transfer conversion shares to Holder using the DWAC system upon conversion, the term “4.99%” shall be replaced in the preceding sentence with “9.99%” at such time as the market capitalization of the common stock is less than $3,000,000.00, but (ii) if all of the DWAC eligible conditions are then satisfied, the term “4.99%” shall be replaced in the preceding sentence with “9.99%” only at such time as the market capitalization of the common stock is less than $1,500,000.00. The term “Market Capitalization of the Common Stock” is defined as the product equal to the dollar volume-weighted average price (VWAP) which is, for purposes of conversion under the Note, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported by OTC Markets Inc. of the Common Stock for the immediately preceding thirty (30) Trading Days multiplied by the aggregate number of outstanding shares of Common Stock as reported on the Company’s most recently filed Form 10-Q or Form 10-K.
Conversion of Warrant to Common Stock:
Prior to the effective date of this registration statement, the Holder may elect a cashless exercise of the Warrant for any Warrant shares and receive a number of shares of common stock equal to (i) the excess of the Current Market Value (the Market Price of the common stock multiplied by the number of exercise shares specified in the applicable notice of exercise) over the aggregate exercise price of the exercise shares, divided by (ii) the conversion price as it may be adjusted from time to time under the terms of the Note. When this registration statement becomes effective and at all times during which such registration statement remains effective, Holder may no longer elect a “cashless” exercise of the Warrant.
The Warrant exercise price shall be $0.075 per share of common stock, as the same may be adjusted from time to time pursuant to the terms and conditions of the Warrant or the Note. The current market price of the common stock shall mean the higher of: (a) the closing price of the common stock on the issue date; and (b) the VWAP (average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported by OTC Markets Inc. of the common stock for the immediately preceding thirty (30) trading days multiplied by the aggregate number of outstanding shares of common stock as reported in our most recently filed Form 10-Q or Form 10-K) of the common stock for the trading day that is two (2) trading days prior to the exercise date.
The Warrant shall not be convertible by the Holder, and the company shall not affect any conversion of the Warrant or otherwise issue any shares of common stock, to the extent that the Holder together with any of its affiliates would beneficially own in excess of 4.99% of the common stock outstanding, provided that (i) if the company fails to transfer conversion shares to Holder using the DWAC system upon conversion, the term “4.99%” shall be replaced in the preceding sentence with “9.99%” at such time as the Market Capitalization of the common stock is less than $3,000,000.00, but (ii) if all of the DWAC eligible conditions are then satisfied, the term “4.99%” shall be replaced in the preceding sentence with “9.99%” only at such time as the Market Capitalization of the common stock is less than $1,500,000.00. The term “Market Capitalization of the common stock” is the product equal to the dollar volume-weighted average price (VWAP) which is, for purposes of conversion under the Warrant, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported by OTC Markets Inc. of the common stock for the immediately preceding thirty (30) trading days multiplied by the aggregate number of outstanding shares of common stock as reported on the company’s most recently filed Form 10-Q or Form 10-K.
PLAN OF DISTRIBUTION
The Selling Shareholder of our common stock and any of their pledges, assignees and successors-in-interest may, from time to time, sell any or all of their shares of common stock on the principal market or any other stock exchange, market or trading facility on which the shares are traded or in private transactions at negotiated prices. The Selling Shareholder may use any one or more of the following methods when selling shares:
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ordinary brokerage transactions and transactions in which the broker-dealer solicits Buyers;
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block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
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purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
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an exchange distribution in accordance with the rules of the applicable exchange;
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privately negotiated transactions;
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settlement of short sales entered into after the date of this prospectus;
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broker-dealers may agree with the Selling Shareholder to sell a specified number of such shares at a stipulated price per share;
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a combination of any such methods of sale;
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through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; or
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any other method permitted pursuant to applicable law.
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The Selling Shareholder may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus. Broker-dealers engaged by the Selling Shareholder may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Shareholder (or, if any broker-dealer acts as agent for the Buyer of shares, from the Buyer) in amounts to be negotiated. The Selling Shareholder does not expect these commissions and discounts relating to its sales of shares to exceed what is customary in the types of transactions involved.
In connection with the sale of our common stock or interests therein, the Selling Shareholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume. The Selling Shareholders may also sell shares of our common stock short and deliver these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The Selling Shareholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The Selling Shareholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales and may have civil liability under Sections 11 and 12 of the Securities Act for any omissions or misstatements in this prospectus and the registration statement of which it is a part. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. The Selling Shareholders have informed us that it does not have any agreement or understanding, directly or indirectly, with any person to distribute the common stock.
The Selling Shareholders will bear all the expenses and fees in connection with the registration of the shares. The Selling Shareholders will bear all brokerage or underwriting discounts or commissions paid to broker-dealers in connection with the sale of their shares. We have agreed to indemnify the Selling Shareholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
Because the Selling Shareholders may be deemed to be “underwriters” within the meaning of the Securities Act, the Selling Shareholders will be subject to the prospectus delivery requirements of the Securities Act. In addition, any securities covered by this prospectus that qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus. The Selling Shareholders have advised us that they have not entered into any agreements, understandings or arrangements with any underwriter or broker-dealer regarding the sale of the resale shares. There is no underwriter or coordinating broker acting in connection with the proposed sale of the resale shares by the Selling Shareholders.
We agreed to keep this prospectus effective until the earlier of (i) the date on which the shares may be resold by the Selling Shareholders without registration and without regard to any volume limitations by reason of Rule 144(e) under the Securities Act or any other rule of similar effect or (ii) all of the shares have been sold pursuant to the prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale shares will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale shares may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
Under applicable rules and regulations under the 1934 Act, any person engaged in the distribution of the resale shares may not simultaneously engage in market making activities with respect to our common stock for a period of two business days prior to the commencement of the distribution. In addition, the Selling Shareholders will be subject to applicable provisions of the 1934 Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of shares of our common stock by the Selling Shareholders or any other person. We will make copies of this prospectus available to the Selling Shareholders and have informed them of the need to deliver a copy of this prospectus to each Buyer at or prior to the time of the sale.
LITIGATION
On October 30, 2012 we learned that former President and CEO, Scott Geisler, filed suit against the company on September 20, 2012, in the Circuit Court of the Sixth Judicial District in the State of Florida. The company has not yet been served with the summons and complaint or filed an answer. Mr. Geisler asserts that the company is in default with respect to payments under a Settlement and Mutual Release Agreement entered into upon his resignation as an officer and director of the Company and effective June 8, 2012. Mr. Geisler claims monetary damages “in excess of $15, 000,” attorneys’ fees; court costs and seeks the issuance of a warrant for the cashless exercise of 7,500,000 shares of common stock that is provided for under the Settlement and Mutual Release Agreement. We have engaged legal counsel to represent the company in this dispute and counsel has identified defenses to the claims and setoffs. We are optimistic that a settlement of the dispute will be reached in the near future without having a materially adverse effect on our financial condition or results of operations.
We are currently not involved in any other litigation that we believe could have a materially adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our company’s or our company’s subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect except the following matters.
LEGAL MATTERS
Ronald J. Logan Esq. will pass upon the validity of the shares of common stock offered by the selling stockholders under this prospectus.
EXPERTS
The financial statements of Bonanza Goldfields Corporation as of June 30, 2012 and 2011 and the years then ended and for the period from March 6, 2008 (inception) to June 30, 2012 have been audited by
GBH CPAs, PC
, an independent registered public accounting firm, as set forth in its report, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission a registration statement on Form S-1, together with any amendments and related exhibits, under the Securities Act, with respect to our shares of common stock offered by this prospectus. The registration statement contains additional information about us and our shares of common stock that the selling stockholders are offering in this prospectus.
We file annual, quarterly and current reports and other information with the Securities and Exchange Commission under the Securities Exchange Act. Our Securities and Exchange Commission filings are available to the public over the Internet at the Securities and Exchange Commission’s website at http://www.sec.gov. Access to these electronic filings is available as soon as practicable after filing with the Securities and Exchange Commission. You may also read and copy any document we file at the Securities and Exchange Commission’s public reference room located at 100 F Street, N.E., Washington, D.C. 20549. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further information on the public reference rooms and their copy charges. You may also request a copy of those filings, excluding exhibits, from us at no cost. Any such request should be addressed to us at: 2415 East Camelback Road, Suite 700, Phoenix, AZ 85016, Attention: Michael Stojsavljevich, Chief Executive Officer.
FINANCIAL STATEMENTS
Bonanza Goldfields Corporation
Index to Financial Statements
Annual Financial Statements:
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Report of Independent Registered Public Accounting Firm
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F-2
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Balance Sheets
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F-3
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Statements of Operations
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F-4
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Statements of Stockholders’ Deficit
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F-5
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Statements of Cash Flows
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F-6
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Notes to Financial Statements
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F-7
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Interim Financial Statements (unaudited):
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Balance Sheets
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F-23
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Statements of Operations
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F-24
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Statements of Cash Flows
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F-25
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Notes to Financial Statements
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F-26
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Bonanza Goldfields Corporation
(An Exploration Stage Company)
Phoenix, Arizona
We have audited the accompanying balance sheets of Bonanza Goldfields Corporation (an exploration stage company) as of June 30, 2012 and 2011, and the related statements of operations, stockholders’ deficit and cash flows for the years then ended and for the period from March 6, 2008 (inception) to June 30, 2012. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. The financial statements for the period from March 6, 2008 (inception) through June 30, 2010 were audited by other auditors whose reports expressed unqualified opinions on those statements. The financial statements for the period from March 6, 2008 (date of inception) to June 30, 2010 include total revenues and net loss of $0 and $3,105,540, respectively. Our opinion on the statements of operations, stockholders' deficit and cash flows for the period from March 6, 2008 (date of inception) through June 30, 2010, insofar as it relates to amounts for prior periods through June 30, 2010, is based solely on the reports of other auditors.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bonanza Goldfields Corporation as of June 30, 2012 and 2011, and the results of its operations and its cash flows for the years then ended and for the period from March 6, 2008, (inception) to June 30, 2012, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses and has an accumulated deficit at June 30, 2012. These factors raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ GBH CPAs, PC
GBH CPAs, PC
www.gbhcpas.com
Houston, Texas
September 27, 2012
BONANZA GOLDFIELDS CORPORATION
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(An Exploration Stage Company)
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BALANCE SHEETS
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June 30,
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2012
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2011
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ASSETS:
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CURRENT ASSETS
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Cash
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$
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85,623
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|
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$
|
23,306
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Prepaid expenses
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20,200
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|
-
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Total current assets
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105,823
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23,306
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Property and equipment, net
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43,767
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7,250
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Mining claims
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250,000
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250,000
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TOTAL ASSETS
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$
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399,590
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$
|
280,556
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LIABILITIES AND STOCKHOLDERS' DEFICIT:
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CURRENT LIABILITIES:
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Accounts payable and accrued liabilities
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$
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41,967
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|
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$
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93,342
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Accrued interest
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|
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43,409
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27,098
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Accounts payable and accrued liabilities - related party
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18,000
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|
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76,316
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Disputed payable
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293,450
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|
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|
-
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Common stock payable
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38,000
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|
-
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Deferred liabilities
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60,000
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50,000
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Convertible note payable
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76,875
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53,000
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Notes payable, net of discount of $0 and $29,430
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594,699
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520,269
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TOTAL LIABILITIES
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1,166,400
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820,025
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CONTINGENCIES AND COMMITMENTS
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STOCKHOLDERS' DEFICIT:
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Series A Preferred stock, $0.0001 par value, 20,000,000 shares authorized;
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0 and 3,000,000 issued and outstanding as of
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June 30, 2012 and 2011, respectively
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-
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300
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Common stock, $0.0001 par value, 500,000,000 shares authorized;
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320,862,680 and 278,507,916 issued and outstanding as of
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June 30, 2012 and 2011, respectively
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32,086
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|
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27,851
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Additional paid-in capital
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5,807,958
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4,947,879
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Deficit accumulated during exploration stage
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(6,606,854
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)
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(5,515,499
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)
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TOTAL STOCKHOLDERS' DEFICIT
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(766,810
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)
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(539,469
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)
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
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$
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399,590
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$
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280,556
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The accompanying notes are an integral part of these financial statements.
BONANZA GOLDFIELDS CORPORATION
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(An Exploration Stage Company)
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STATEMENTS OF OPERATIONS
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FOR THE YEARS ENDED JUNE 30, 2012 AND 2011 AND
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THE PERIOD FROM MARCH 6, 2008 (INCEPTION) THROUGH JUNE 30, 2012
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For the Period
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from March 6, 2008
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(inception) through
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2012
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2011
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June 30, 2012
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REVENUE
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$
|
-
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$
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-
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$
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-
|
|
OPERATING EXPENSES:
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|
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|
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General and administrative
|
|
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768,056
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|
|
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1,411,239
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|
|
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2,510,179
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Exploration expense
|
|
|
66,282
|
|
|
|
106,782
|
|
|
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249,320
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Impairment of mining claims
|
|
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-
|
|
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615,700
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|
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714,700
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Impairment of other assets
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|
|
-
|
|
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|
32,122
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|
|
|
32,122
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Total operating expenses
|
|
|
834,338
|
|
|
|
2,165,843
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|
|
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3,506,321
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OTHER EXPENSES:
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|
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Interest expense
|
|
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192,517
|
|
|
|
94,832
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|
|
|
2,886,749
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Loss on settlement of litigation
|
|
|
59,000
|
|
|
|
-
|
|
|
|
59,000
|
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Loss on settlement of accounts payable
|
|
|
5,500
|
|
|
|
27,514
|
|
|
|
33,014
|
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Loss on debt conversion
|
|
|
-
|
|
|
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121,770
|
|
|
|
121,770
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Total other expense
|
|
|
257,017
|
|
|
|
244,116
|
|
|
|
3,100,533
|
|
|
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|
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|
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NET LOSS
|
|
$
|
(1,091,355
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)
|
|
$
|
(2,409,959
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)
|
|
$
|
(6,606,854
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
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NET LOSS PER COMMON SHARE:
|
|
|
|
|
|
|
|
|
|
|
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|
Basic and diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding, basic and diluted
|
|
|
298,840,858
|
|
|
|
156,100,500
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
BONANZA GOLDFIELDS CORPORATION
|
(An Exploration Stage Company)
|
STATEMENT OF STOCKHOLDER' DEFICIT
|
FOR THE YEAR ENDED JUNE 30, 2012
|
AND FOR THE PERIOD FROM MARCH 6, 2008 (INCEPTION) THROUGH JUNE 30, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
Preferred Stock
|
|
|
Common Stock
|
|
|
Paid-in
|
|
|
Accumulated
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE AT MARCH 6, 2008
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
6,997,900
|
|
|
|
700
|
|
|
|
69,279
|
|
|
|
-
|
|
|
|
69,979
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for cash
|
|
|
-
|
|
|
|
-
|
|
|
|
3,302,100
|
|
|
|
330
|
|
|
|
84,670
|
|
|
|
-
|
|
|
|
85,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options issued
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,500
|
|
|
|
-
|
|
|
|
2,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(103,723
|
)
|
|
|
(103,723
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE AT JUNE 18, 2008
|
|
|
-
|
|
|
|
-
|
|
|
|
10,300,000
|
|
|
|
1,030
|
|
|
|
156,449
|
|
|
|
(103,723
|
)
|
|
|
53,756
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward split
|
|
|
-
|
|
|
|
-
|
|
|
|
61,800,000
|
|
|
|
6,180
|
|
|
|
(6,180
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial conversion feature
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,108,000
|
|
|
|
-
|
|
|
|
2,108,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option valuation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
59,399
|
|
|
|
-
|
|
|
|
59,399
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,283,997
|
)
|
|
|
(2,283,997
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE AT JUNE 18, 2009
|
|
|
-
|
|
|
|
-
|
|
|
|
72,100,000
|
|
|
|
7,210
|
|
|
|
2,317,668
|
|
|
|
(2,387,720
|
)
|
|
|
(62,842
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for interest expense
|
|
|
-
|
|
|
|
-
|
|
|
|
11,932,260
|
|
|
|
1,193
|
|
|
|
495,567
|
|
|
|
-
|
|
|
|
496,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for debt conversion
|
|
|
-
|
|
|
|
-
|
|
|
|
1,897,878
|
|
|
|
190
|
|
|
|
60,262
|
|
|
|
-
|
|
|
|
60,452
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock cancelled
|
|
|
-
|
|
|
|
-
|
|
|
|
(14,000,000
|
)
|
|
|
(1,400
|
)
|
|
|
1,400
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial conversion feature
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(33,172
|
)
|
|
|
-
|
|
|
|
(33,172
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(717,820
|
)
|
|
|
(717,820
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE AT JUNE 30, 2010
|
|
|
-
|
|
|
|
-
|
|
|
|
71,930,138
|
|
|
|
7,193
|
|
|
|
2,841,725
|
|
|
|
(3,105,540
|
)
|
|
|
(256,622
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for mining claim
|
|
|
-
|
|
|
|
-
|
|
|
|
41,700,000
|
|
|
|
4,170
|
|
|
|
454,530
|
|
|
|
-
|
|
|
|
458,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for services
|
|
|
-
|
|
|
|
-
|
|
|
|
10,800,000
|
|
|
|
1,080
|
|
|
|
87,860
|
|
|
|
-
|
|
|
|
88,940
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued without proper authorization
|
|
|
-
|
|
|
|
-
|
|
|
|
86,000,000
|
|
|
|
8,600
|
|
|
|
976,500
|
|
|
|
-
|
|
|
|
985,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for accounts payable conversion
|
|
|
-
|
|
|
|
-
|
|
|
|
4,780,000
|
|
|
|
478
|
|
|
|
41,586
|
|
|
|
-
|
|
|
|
42,064
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for cash
|
|
|
-
|
|
|
|
-
|
|
|
|
34,000,000
|
|
|
|
3,400
|
|
|
|
171,600
|
|
|
|
-
|
|
|
|
175,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for debt conversion
|
|
|
-
|
|
|
|
-
|
|
|
|
20,520,000
|
|
|
|
2,052
|
|
|
|
197,598
|
|
|
|
-
|
|
|
|
199,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued with note
|
|
|
-
|
|
|
|
-
|
|
|
|
5,000,000
|
|
|
|
500
|
|
|
|
47,887
|
|
|
|
-
|
|
|
|
48,387
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for equipment
|
|
|
-
|
|
|
|
-
|
|
|
|
3,777,778
|
|
|
|
378
|
|
|
|
35,994
|
|
|
|
-
|
|
|
|
36,372
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A Preferred stock issued for compensation
|
|
|
3,000,000
|
|
|
$
|
300
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial conversion feature
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
42,599
|
|
|
|
-
|
|
|
|
42,599
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,409,959
|
)
|
|
|
(2,409,959
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE AT JUNE 30, 2011
|
|
|
3,000,000
|
|
|
|
300
|
|
|
|
278,507,916
|
|
|
|
27,851
|
|
|
|
4,947,879
|
|
|
|
(5,515,499
|
)
|
|
|
(539,469
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for cash
|
|
|
-
|
|
|
|
-
|
|
|
|
55,904,764
|
|
|
|
5,590
|
|
|
|
553,410
|
|
|
|
-
|
|
|
|
559,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for account payables conversion
|
|
|
-
|
|
|
|
-
|
|
|
|
750,000
|
|
|
|
75
|
|
|
|
7,425
|
|
|
|
-
|
|
|
|
7,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stocks cancelled by David Janney, former officer
|
|
|
(3,000,000
|
)
|
|
|
(300
|
)
|
|
|
(20,000,000
|
)
|
|
|
(2,000
|
)
|
|
|
2,300
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for services
|
|
|
-
|
|
|
|
-
|
|
|
|
2,200,000
|
|
|
|
220
|
|
|
|
19,880
|
|
|
|
-
|
|
|
|
20,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for settlement of litigation
|
|
|
-
|
|
|
|
-
|
|
|
|
2,500,000
|
|
|
|
250
|
|
|
|
29,250
|
|
|
|
-
|
|
|
|
29,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for interest expense
|
|
|
-
|
|
|
|
-
|
|
|
|
1,000,000
|
|
|
|
100
|
|
|
|
14,900
|
|
|
|
-
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Extinguishment of debt
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
19,327
|
|
|
|
-
|
|
|
|
19,327
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants and options
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
138,587
|
|
|
|
-
|
|
|
|
138,587
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial conversion feature
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
75,000
|
|
|
|
-
|
|
|
|
75,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,091,355
|
)
|
|
|
(1,091,355
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE AT JUNE 30, 2012
|
|
|
-
|
|
|
$
|
-
|
|
|
|
320,862,680
|
|
|
$
|
32,086
|
|
|
$
|
5,807,958
|
|
|
$
|
(6,606,854
|
)
|
|
$
|
(766,810
|
)
|
The accompanying notes are an integral part of these financial statements.
BONANZA GOLDFIELDS CORPORATION
|
(An Exploration Stage Company)
|
STATEMENTS OF CASH FLOWS
|
FOR THE YEARS ENDED JUNE 30, 2012 AND 2011
|
AND FOR THE PERIOD FROM MARCH 6, 2008 (INCEPTION) THROUGH JUNE 30, 2012
|
|
|
|
|
|
|
|
|
For the Period
|
|
|
|
|
|
|
|
|
|
from March 6, 2008
|
|
|
|
|
|
|
|
|
|
(inception) through
|
|
|
|
2012
|
|
|
2011
|
|
|
June 30, 2012
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,091,355
|
)
|
|
$
|
(2,409,959
|
)
|
|
$
|
(6,606,854
|
)
|
Adjustments to reconcile net loss to net cash
used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
483
|
|
|
|
-
|
|
|
|
483
|
|
Impairment of mining claims
|
|
|
-
|
|
|
|
615,700
|
|
|
|
714,700
|
|
Impairment of other assets
|
|
|
-
|
|
|
|
32,122
|
|
|
|
32,122
|
|
Stock-based compensation
|
|
|
213,887
|
|
|
|
1,116,939
|
|
|
|
1,477,254
|
|
Amortization of debt discount
|
|
|
119,930
|
|
|
|
68,957
|
|
|
|
2,287,366
|
|
Common stock issued for interest expense
|
|
|
7,300
|
|
|
|
-
|
|
|
|
504,060
|
|
Loss on settlement of litigation
|
|
|
59,000
|
|
|
|
-
|
|
|
|
59,000
|
|
Loss on settlement of accounts payable
|
|
|
5,500
|
|
|
|
27,514
|
|
|
|
33,014
|
|
Loss on conversion of notes payable
|
|
|
-
|
|
|
|
121,770
|
|
|
|
121,770
|
|
Extinguishment of debt
|
|
|
-
|
|
|
|
-
|
|
|
|
19,327
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets
|
|
|
(12,500
|
)
|
|
|
-
|
|
|
|
(12,500
|
)
|
Accounts payable and accrued expenses
|
|
|
(36,891
|
)
|
|
|
97,386
|
|
|
|
85,129
|
|
Accrued expenses - related party
|
|
|
(38,989
|
)
|
|
|
76,316
|
|
|
|
18,000
|
|
Disputed payable
|
|
|
221,250
|
|
|
|
-
|
|
|
|
221,250
|
|
Deferred liabilities
|
|
|
10,000
|
|
|
|
50,000
|
|
|
|
60,000
|
|
Net cash used in operating activities
|
|
|
(542,385
|
)
|
|
|
(203,255
|
)
|
|
|
(985,879
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Investment in mining equipment
|
|
|
(33,173
|
)
|
|
|
(50,000
|
)
|
|
|
(149,000
|
)
|
Purchase of intangible asset
|
|
|
-
|
|
|
|
-
|
|
|
|
(36,173
|
)
|
Net cash used in investing activities
|
|
|
(33,173
|
)
|
|
|
(50,000
|
)
|
|
|
(185,173
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Repayment of notes payable
|
|
|
(58,000
|
)
|
|
|
-
|
|
|
|
(58,000
|
)
|
Proceeds from notes payable
|
|
|
50,000
|
|
|
|
101,300
|
|
|
|
355,800
|
|
Proceeds from convertible note payable
|
|
|
76,875
|
|
|
|
-
|
|
|
|
129,875
|
|
Proceeds from the sale of common stock
|
|
|
569,000
|
|
|
|
175,000
|
|
|
|
829,000
|
|
Net cash provided by financing activities
|
|
|
637,875
|
|
|
|
276,300
|
|
|
|
1,256,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCREASE (DECREASE) IN CASH
|
|
|
62,317
|
|
|
|
23,045
|
|
|
|
85,623
|
|
CASH, BEGINNING OF PERIOD
|
|
|
23,306
|
|
|
|
261
|
|
|
|
-
|
|
CASH, END OF PERIOD
|
|
$
|
85,623
|
|
|
$
|
23,306
|
|
|
$
|
85,623
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
47,100
|
|
|
$
|
2,500
|
|
|
$
|
555,974
|
|
Income taxes paid
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONCASH INVESTING AND FINANCING TRANSACTIONS:
|
|
|
|
|
|
Extinguishment of debt
|
|
$
|
19,327
|
|
|
$
|
-
|
|
|
$
|
19,327
|
|
Notes issued to acquire mining claims
|
|
$
|
-
|
|
|
$
|
357,000
|
|
|
$
|
357,000
|
|
Common stocks issued to prepay interest
|
|
$
|
7,700
|
|
|
$
|
-
|
|
|
$
|
7,700
|
|
Common stocks issued for note modification
|
|
$
|
-
|
|
|
$
|
48,387
|
|
|
$
|
48,387
|
|
Common stocks issued to acquire mining claim
|
|
$
|
-
|
|
|
$
|
458,700
|
|
|
$
|
458,700
|
|
Common stock issued for fixed assets
|
|
$
|
7,500
|
|
|
$
|
36,372
|
|
|
$
|
43,872
|
|
Common stock issued for conversion of debt
|
|
$
|
-
|
|
|
$
|
126,267
|
|
|
$
|
138,332
|
|
Common stock to be issued for settlement of litigation
|
|
$
|
29,500
|
|
|
$
|
-
|
|
|
$
|
29,500
|
|
Common stock to be issued for note extension
|
|
$
|
15,500
|
|
|
$
|
-
|
|
|
$
|
15,500
|
|
The accompanying notes are an integral part of these financial statements.
BONANZA GOLDFIELDS CORPORATION
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - DESCRIPTION OF BUSINESS AND GOING CONCERN
Bonanza Goldfields Corp. (the “Company”) was incorporated under the laws of the State of Nevada on March 6, 2008. The Company’s fiscal year ends on June 30. The Company is in the process of acquiring mineral properties or claims located in the State of Arizona. The recoverability of amounts from the properties or claims will be dependent upon the discovery of economically recoverable reserves, confirmation of the Company's interest in the underlying properties and/or claims, the ability of the Company to obtain necessary financing to satisfy the expenditure requirements under the property and/or claim agreements and to complete the development of the properties and/or claims, and upon future profitable production or proceeds for the sale thereof.
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America which contemplate continuation of the Company as a going concern. However, the Company has a working deficit and has not generated revenues since inception. During the year ended June 30, 2012, the Company incurred a net loss of $1,091,355 and as of June 30, 2012 has an accumulated deficit of $6,606,854. Further, the Company has inadequate working capital to maintain or develop its operations, and is dependent upon funds from private investors and the support of certain stockholders. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. In this regard, Management is planning to raise any necessary additional funds through loans or additional sales of its common stock. There is no assurance that the Company will be successful in raising additional capital.
The Company's ability to meet its obligations and continue as a going concern is dependent upon its ability to obtain additional financing, achievement of profitable operations and/or the discovery, exploration, development and sale of mining reserves. The Company cannot reasonably be expected to earn revenue in the exploration stage of operations. Although the Company plans to pursue additional financing, there can be no assurance that the Company will be able to secure financing when needed or to obtain such financing on terms satisfactory to the Company, if at all.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and (iii) the reported amount of net sales and expenses recognized during the periods presented. Adjustments made with respect to the use of estimates often relate to improved information not previously available. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of financial statements; accordingly, actual results could differ from these estimates.
Management evaluates these estimates and assumptions on a regular basis. Actual results could differ from those estimates.
Exploration Stage Enterprise
The Company's financial statements are prepared pursuant to SEC guidance and Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 915, Development Stage Entities, as it devotes substantially all of its efforts to acquiring and exploring mining interests that will eventually provide sufficient net profits to sustain the Company’s existence.
Mineral property rights
All direct costs related to the acquisition of mineral property rights are capitalized. Exploration costs are charged to operations in the period incurred until such time as it has been determined that a property has economically recoverable reserves, at which time subsequent exploration costs and the costs incurred to develop a property are capitalized. The Company reviews the carrying values of its mineral property rights whenever events or changes in circumstances indicate that their carrying values may exceed their estimated net recoverable amounts. An impairment loss is recognized when the carrying value of those assets is not recoverable and exceeds its fair value. As of June 30, 2012, management has determined that there was no impairment loss required as compared to impairment loss of $615,700 required on June 30, 2011.
At such time as commercial production may commence, depletion of each mining property will be provided on a unit-of-production basis using estimated proven and probable recoverable reserves as the depletion base. In cases where there are no proven or probable reserves, depletion will be provided on the straight-line basis over the expected economic life of the mine.
Impairment of Long-Lived Assets
Long-lived assets, such as property, plant, and equipment, and purchased intangibles, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Goodwill and other intangible assets are tested for impairment. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. As of June 30, 2011, management has determined that there was impairment loss required of $647,822. There was no impairment loss required for June 30, 2012.
Asset Retirement Obligations
The Company had no operating properties at June 30, 2012, but the Company’s mineral properties will be subject to standards for mine reclamation that are established by various governmental agencies. For these non-operating properties, the Company accrues costs associated with environmental remediation obligations when it is probable that such costs will be incurred and they are reasonably estimable. Costs of future expenditures for environmental remediation are not discounted to their present value. Such costs are based on management's current estimate of amounts that are expected to be incurred when the remediation work is performed within current laws and regulations.
It is reasonably possible that due to uncertainties associated with defining the nature and extent of possible environmental contamination, application of laws and regulations by regulatory authorities, and changes in remediation technology, the ultimate cost of remediation and reclamation could change in the future. The Company continually reviews its accrued liabilities for such remediation and reclamation costs as evidence becomes available indicating that its remediation and reclamation liability has changed.
The Company recognizes the fair value of a liability for an asset retirement obligation in the period in which it is incurred, if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the associated long-lived assets and depreciated over the lives of the assets on a units-of-production basis. Reclamation costs are accreted over the life of the related assets and are adjusted for changes resulting from the passage of time and changes to either the timing or amount of the original present value estimate on the underlying obligation. There were asset retirement obligations as of June 30, 2012 as there are presently no underlying obligations.
Property and Equipment
Property and equipment is recorded at cost and depreciated over the estimated useful lives of the assets using principally the straight-line method. When items are retired or otherwise disposed of, income is charged or credited for the difference between net book value and proceeds realized thereon. Ordinary maintenance and repairs are charged to expense as incurred, and replacements and betterments are capitalized.
The range of estimated useful lives used to calculated depreciation for principal items of property and equipment are as follow:
Asset Category
|
|
Depreciation/
Amortization Period
|
Furniture and Fixture
|
|
5 Years
|
Office equipment
|
|
3 Years
|
Leasehold improvements
|
|
5 Years
|
Income Taxes
Deferred income taxes are provided based on the provisions of ASC Topic 740,
Income Taxes
, to reflect the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
The Company follows a two-step approach to ultimately recognize and measure uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not, that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount, which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating the Company's tax positions and tax benefits, which may require periodic adjustments. At June 30, 2012, the Company did not record any liabilities for uncertain tax positions.
Concentration of Credit Risk
The Company maintains its operating cash balances in banks in Phoenix, Arizona. The Federal Depository Insurance Corporation (“FDIC”) insures accounts at each institution up to $250,000.
Share-Based Compensation
The measurement of the cost of services received in exchange for an award of an equity instrument is based on the grant-date fair value of the award. Compensation cost is recognized when the event occurs. The Black-Scholes option-pricing model is used to estimate the fair value of options granted.
Basic and Diluted Net Loss Per Common Share
Net loss per common share was computed by dividing the net loss by the weighted average number of common shares outstanding during the period. The weighted average number of shares was calculated by taking the number of shares outstanding and weighting them by the amount of time that they were outstanding. Diluted net loss per share for the Company is the same as basic net loss per share, as during period where a net loss is reported, the inclusion of common stock equivalents would be antidilutive.
At June 30, 2012 and 2011, common stock equivalents consisted of warrants to purchase 25,500,000 and 6,000,000 shares of common stock, respectively.
Fair Value of Financial Instruments
The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties other than in a forced sale or liquidation.
The carrying amounts of the Company’s financial instruments, including cash, accounts payable and accrued liabilities, accrued interest and related party payable, approximate fair value due to their most maturities.
Reclassifications
Certain amounts have been reclassified to conform to the current period presentation for comparative purposes.
Recent Accounting Pronouncements
The Company’s management does not believe that any recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying financial statements.
NOTE 3 – MINING CLAIMS
The following is a detail of mining claims at June 30, 2012 and 2011:
|
|
June 30, 2012
|
|
|
June 30, 2011
|
|
Midas Placer Mining Claim (fully impaired)
|
|
$
|
565,700
|
|
|
$
|
565,700
|
|
Tarantula Mining Claim
|
|
|
250,000
|
|
|
|
250,000
|
|
Osiris Gold Joint Venture (fully impaired)
|
|
|
50,000
|
|
|
|
50,000
|
|
Total mining and equipment activity
|
|
|
865,700
|
|
|
|
865,700
|
|
Accumulated impairment of mining claims
|
|
|
(615,700
|
)
|
|
|
(615,700
|
)
|
Total Mining Claims
|
|
$
|
250,000
|
|
|
$
|
250,000
|
|
The Company has impaired all claims except for the Tarantula (Hull Lode) mining claim.
During the year ended June 30, 2012, the Company learned that the title of Midas Placer Claim which the Company purchased from Global Minerals, Inc., was never transferred to the Company. The Company did not record any adjustment during the year ended June 30, 2012 as the Midas Placer Mining Claim was fully impaired during fiscal year 2011.
NOTE 4 – NOTES PAYABLE
The Company had the following notes payable outstanding as of June 30, 2012 and June 30, 2011:
|
|
June 30, 2012
|
|
|
June 30, 2011
|
|
|
|
|
|
|
|
|
Gold Exploration LLC (a)
|
|
$
|
52,699
|
|
|
$
|
52,699
|
|
Dated - June 1, 2008
|
|
|
|
|
|
|
|
|
Venture Capital International (b)
|
|
|
12,000
|
|
|
|
12,000
|
|
Dated – March 30, 2009
|
|
|
|
|
|
|
|
|
Venture Capital International (c)
|
|
|
17,000
|
|
|
|
17,000
|
|
Dated - May 7, 2009
|
|
|
|
|
|
|
|
|
Advantage Systems Enterprises Limited (d)
|
|
|
17,000
|
|
|
|
17,000
|
|
Dated – July 3, 2009
|
|
|
|
|
|
|
|
|
Advantage Systems Enterprises Limited (e)
|
|
|
10,000
|
|
|
|
10,000
|
|
Dated – August 7, 2009
|
|
|
|
|
|
|
|
|
Venture Capital International (f)
|
|
|
10,000
|
|
|
|
10,000
|
|
Dated – October 15, 2009
|
|
|
|
|
|
|
|
|
Venture Capital International (g)
|
|
|
7,000
|
|
|
|
7,000
|
|
Dated – October 27,2009
|
|
|
|
|
|
|
|
|
Advantage Systems Enterprises Limited (h)
|
|
|
25,000
|
|
|
|
25,000
|
|
Dated – November 9, 2009
|
|
|
|
|
|
|
|
|
Venture Capital International (i)
|
|
|
5,000
|
|
|
|
5,000
|
|
Dated – November 23, 2009
|
|
|
|
|
|
|
|
|
Strategic Relations Consulting, Inc. (j)
|
|
|
15,000
|
|
|
|
15,000
|
|
Dated – March 31, 2010
|
|
|
|
|
|
|
|
|
Summit Technology Corporation, Inc. (k)
|
|
|
2,000
|
|
|
|
7,000
|
|
Dated November 22, 2010
|
|
|
|
|
|
|
|
|
Gold Exploration LLC (l)
|
|
|
97,000
|
|
|
|
97,000
|
|
Dated – July 29, 2010
|
|
|
|
|
|
|
|
|
Freedom Boat, LLC (m)
|
|
|
250,000
|
|
|
|
250,000
|
|
Dated February 7, 2011
|
|
|
|
|
|
|
|
|
Asher Enterprises, Inc. – Convertible Note (n)
|
|
|
-
|
|
|
|
53,000
|
|
Dated April 6, 2011
|
|
|
|
|
|
|
|
|
Dr. Linh Nguyen (o)
|
|
|
25,000
|
|
|
|
25,000
|
|
Dated May 23, 2011
|
|
|
|
|
|
|
|
|
Charles Chapman (p)
|
|
|
50,000
|
|
|
|
-
|
|
Dated December 27, 2011
|
|
|
|
|
|
|
|
|
Leroy Steury (q)
|
|
|
76,875
|
|
|
|
-
|
|
Dated March 12, 2012
|
|
|
|
|
|
|
|
|
Total Notes payable
|
|
$
|
671,574
|
|
|
$
|
602,699
|
|
Less: current portion of long-term debt
|
|
|
(671,574
|
)
|
|
|
(573,269
|
)
|
Less: discount applicable to Freedom Boat, LLC Note
|
|
|
-
|
|
|
|
(29,430
|
)
|
Long-term debt
|
|
$
|
-
|
|
|
$
|
-
|
|
(a) The Company entered into a purchase agreement to purchase mining claims with Gold Exploration LLC in the amount of $99,000 on June 1, 2008. The Company paid $15,000 in cash and issued a note for $84,000 with an interest rate of 12% for the remaining balance. Pursuant to the purchase agreement, $7,000 should be paid each 90 days until the full principal balance plus accrued interest is paid off. As of June 30, 2012 and 2011 the Company principal and interest payable to Gold Exploration LLC for this note is $65,346 and $59,022, respectively. This note is presently in default.
(b) On March 30, 2009, the Company issued a $12,000 demand promissory note to Venture Capital International, Inc. The note is due on demand with an interest rate of 5%. As of June 30, 2012 and 2011, the Company principal and interest payable to Venture Capital International, Inc. related to this note is $13,932 and $13,332, respectively.
(c) On May 7, 2009, the Company issued a $17,000 demand promissory note to Venture Capital International, Inc. The note is due on demand and has an interest rate of 5%. As of June 30, 2012 and 2011, principal and interest payable to Venture Capital International, Inc. related to this note is $19,648 and $18,798, respectively.
(d) On July 3, 2009, the Company issued a $17,000 demand promissory note to Advantage Systems Enterprise Limited. The note is due on demand with an interest rate of 5%. As of June 30, 2012 and 2011, principal and interest payable to Advantage Systems Enterprise Limited related to this note is $19,550 and $18,700, respectively.
(e) On August 7, 2009, the Company issued a $10,000 demand promissory note to Advantage Systems Enterprises Limited. The note is due on demand with an interest rate of 5%. As of June 30, 2012 and 2011, principal and interest payable to Advantage Systems Enterprise Limited, Inc. related to this note is $11,448 and $10,948, respectively.
(f) On October 15, 2009, the Company issued a $10,000 demand promissory note to Venture Capital International. The note is due on demand with an interest rate of 5%. As of June 30, 2012 and 2011, principal and interest payable to Venture Capital International related to this note is $11,353 and $10,853, respectively.
(g) On October 27, 2009, the Company issued a $7,000 demand promissory note to Venture Capital. The note is due on demand with an interest rate of 5%. As of June 30, 2012 and 2011, principal and interest payable to Venture Capital International related to this note is $7,936 and $7,586, respectively.
(h) On November 9, 2009, the Company issued a $25,000 demand promissory note to Advantage Systems Enterprise Limited. The note is due on demand with an interest rate of 5%. As of June 30, 2012 and 2011, principal and interest payable to Advantage Systems Enterprise Limited related to this note is $28,322 and $27,072, respectively.
(i) On November 23, 2009, the Company issued a $5,000 demand promissory note to Venture Capital International. The note is due on demand with an interest rate of 5%. As of June 30, 2012 and 2011, principal and interest payable to Venture Capital International related to this note is $5,650 and $5,400, respectively.
(j) On March 31, 2010, the Company issued a $15,000 demand promissory note to Strategic Relations Consulting, Inc. The note is due on demand with an interest rate of 5%. As of June 30, 2012 and 2011 principal and interest payable to Strategic Relations Consulting, Inc. related to this note is $16,689 and $15,939, respectively.
(k) On November 22, 2010, the Company issued a $7,000 demand promissory note to Summit Technologies Corporation, Inc. The note is due on demand with an interest rate of 5%. As of June 30, 2012 and 2011, principal and interest payable to Strategic Relations Consulting, Inc. related to this note is $2,311 and $7,211, respectively.
All of the above demand promissory notes issued by the Company were unsecured.
(l) On July 29, 2010, the Company issued 8,300,000 common shares to Gold Exploration LLC, valued at $83,000 (or $0.01 per share) based upon the closing price of the Company’s stock on the date the agreement was executed, to partially repay $10,000 of principal on the promissory note held by Gold Exploration LLC initially issued to Global Mineral Resources Corporation. This payment of common stock reduced the outstanding balance of the note held by Gold Exploration LLC to $97,000. The Company recognized a loss on debt conversion of $73,000. During fiscal year 2012, the note holder called the balance of the note and demanded payment although the agreement states the note is not due until 2015. The note holder indicated that the note was in default because the Company failed to maintain the Midas Placer Mining Claim, collateral which secured the note. Pursuant to the note agreement, the note should accrue interest at 12% when due or declared due. The note is classified as a current liability on the balance sheets. As of June 30, 2012 and 2011, principal and interest payable to Gold Exploration LLC related to this note is $108,640 and $97,000, respectively.
(m) On February 7, 2011, the Company issued a $250,000 promissory note with an interest rate of 12% per annum to Freedom Boat LLC (“Freedom Boat”). Payment of $2,500 is due monthly from July 5, 2011 through December 5, 2011 with a final payment of interest and principal of $260,000 due on February 7, 2012. Freedom Boat also has a right to royalties under certain conditions. The note is secured by the Hull Lode claim, the West Acre Hull tract, property held by David Janney, former officer, and 10,000,000 of the Company’s common shares currently held in escrow. Proceeds from the note were used to purchase the Tarantula Mining Claim from Judgetown, LLC. As of June 30, 2012 and 2011, the remaining principal owed was $250,000. As of June 30, 2012, the Company has prepaid interest to Freedom Boat LLC of $7,500. This note is presently in default but the Company is negotiating with the holder for an extension of this note.
(n) The Company entered into a convertible promissory note with Asher Enterprises, Inc. on April 6, 2011 in the amount of $53,000. The note was due and payable on January 9, 2012 with an interest rate of 8%. The note is convertible into 53,127,506 common shares by the holder. In September 2011, the Company paid $63,125 to satisfy all of the outstanding principal and accrued interest. $10,125 was recorded as interest expense.
(o) The Company entered into a demand promissory note with Linh B. Ngnyen on May 23, 2011 in the amount of $25,000. The note is due on demand with an interest rate of 5%. As of June 30, 2012 and 2011, principal and interest payable to Linh B. Ngnyen related to this note is $26,377 and $25,127, respectively.
(p) On December 27, 2011, the Company issued a $50,000 promissory note to Mr. Charles Chapman. The note was due on February 15, 2012 with an interest rate of 12%. Pursuant to the note agreement, Mr. Chapman has the right to receive 500,000 shares of the Company’s common stock in lieu of interest payments. On December 28, 2011, the Company issued 500,000 shares valued at $4,000 in lieu of the interest. On March 19, 2012, the note agreement was amended to extend the due date to May 15, 2012. Pursuant to the amendment, the Company agreed to issue an additional 500,000 common shares valued at $15,500 which was recorded as debt discount and fully amortized during fiscal year 2012. As of June 30, 2012, the 500,000 common shares related to the March 19, 2012 amendment have not been issued and is recorded as stock payable of $15,500. On May 16, 2012, the Company entered into a second amendment to extend the loan to November 15, 2012. Pursuant to the second amendment, the Company will issue 100,000 shares of its common stock per month for a period of six months in lieu of interest. As of June 30, 2012, the Company has issued 500,000 common shares valued at $11,000, within which, $7,700 is recorded as prepaid interest.
(q) On March 12, 2012, the Company issued a $75,000 convertible note to Mr. Leroy Steury. The note was due on June 12, 2012 with an interest rate of 10%. Mr. Leroy Steury has the right to receive 7.5 million shares of common stock in lieu of unpaid principal and interest before June 17, 2012. The Company recorded a beneficial conversion feature of $75,000 which was fully amortized during fiscal year 2012. On June 13, 2012, the Company amended the agreement to include the accrued interest of $1,875 on the $75,000 in the principal and extended the note to September 13, 2012. On September 17, 2012, the Company entered into the second amendment to extend the note to December 17, 2012.
NOTE 5 - EQUITY
Common Stock
On March 31, 2011, the Company increased the authorized common shares to 500,000,000.
Preferred Stock
On June 14, 2011, the Company authorized 20,000,000 shares of Series A Preferred Stock at $0.0001 par value. The Preferred Stock contains certain rights, preferences, privileges, restrictions and other characteristics. Specifically, the Preferred Stock has 100 votes per share, whereas, each share of Common Stock has 1 vote. Preferred Stock holders may vote with holders of the Company’s Common Stock on all matters which common stockholders may vote. On June 14, 2011, the Company issued 3,000,000 preferred shares valued at $300 to its former CEO/CFO. In August 2011, the former CEO/CFO returned those shares as a result of his resignation from the Company. The preferred shares were then cancelled.
Year ended June 30, 2012
In the year ended June 30, 2012, the Company issued 55,904,764 common shares for $559,000 in cash. Within the 55,904,764 shares issued, 7,000,000 shares were issued to an investor with a right to sell the shares back to the Company at an interest rate of 12% after April 11, 2012. On April 12, 2012, the holder waived the right to sell the 7,000,000 shares back. As consideration, the Company issued the investor warrants to purchase 2,500,000 shares of the Company’s common stock at $0.02 per share. The warrants expire on October 11, 2013 and have a fair value of $66,330 on the grant date. Proceeds of $56,000 from this issuance originally recorded as refundable subscriptions have been reclassified to additional paid-in capital.
In June 2012, the Company received $10,000 for a common stock subscription. Those shares have not been issued and the cash received is recorded under common stock payable as of June 30, 2012.
On September 23, 2011, the Company issued 750,000 shares of common stock valued at $7,500 to settle a payable to purchase equipment valued at $2,000. The Company recorded a $5,500 loss on settlement of accounts payable related to this transaction.
During September 2011, as a result of the resignation of David Janney, former Chief Executive Officer and Chief Financial Officer of the Company, Mr. Janney surrendered 20,000,000 common shares and 3,000,000 preferred shares of the Company. These shares were then cancelled and the Company recorded an adjustment to additional paid-in capital of $2,300. Additional paid-in capital was also increased by $19,327 to write off the accrued compensation payable to Mr. Janney initially recorded in prior periods.
During year ended June 30, 2012, the Company issued 2,200,000 shares of common stock to its director, officer and consultants for services valued at $20,100.
During year ended June 30, 2012, the Company issued 1,000,000 shares of common stock for interest payments on a note held by Mr. Charles Chapman. The shares were valued at $15,000.
On February 26, 2012, the Company issued 2,500,000 shares to David Janney, former officer, pursuant to a settlement agreement. See Note 10.
On March 19, 2012, the Company agreed to issue 500,000 shares to a note holder pursuant to an amendment to a note agreement. See Note 4 (p). The shares were valued at $15,500 based on the grant date market price of the stock. Those shares have not been issued and are recorded under common stock payable as of June 30, 2012.
On October 25, 2011 and November 4, 2011, the Company granted its interim CFO, Mr. Peng Foo and an investor relations consultant, Mr. Jack Chow, 1,000,000 and 3,000,000 shares, respectively. Those shares, valued at $42,700, have not been issued and are recorded as disputed payable as of June 30, 2012.
On May 8, 2012, the Company entered into an employment agreement with Mr. Michael Stallings where the Company agreed to issue 500,000 shares of common stock. The 500,000 shares of common stock were valued at $12,500 based on the market price of grant date and were recorded as stock payable as of June 30, 2012.
Year ended June 30, 2011
On July 29, 2010, the Company issued 8,300,000 common shares valued at $83,000 (or $0.01 per share) based upon the closing price of the Company’s stock on the date the agreement was executed to Gold Exploration LLC towards a $10,000 payment on the promissory note for the Global Mineral Resources Corporation mining claim acquisition note held by Gold Exploration LLC. This payment of common stock reduced the outstanding balance with Gold Exploration LLC to $97,000 effective September 16, 2010, and the Company recognized a loss on debt conversion of $73,000.
On August 7, 2010, the Company purchased a 160 acre placer mining claim from Global Mineral Resources Corporation. As partial consideration for the transaction, the Company transferred 41,700,000 restricted common shares valued at $458,700 or $0.011 per share based upon the closing price of the Company’s stock on the date the transaction was executed.
On November 22, 2010, the Company granted 7,220,000 common shares valued at $54,150 (or $0.0075 per share) based on the market price of the Company’s common stock on the date of grant to Summit Technology Corporation, Inc. in satisfaction of outstanding debt. The conversion of debt reduced the corresponding notes payable and accrued interest payable by $28,880, and the Company recognized a loss on debt conversion of $25,270.
On February 7, 2011, the Company granted 5,000,000 common shares valued at $48,387 to Freedom Boat as compensation for modification of their note payable with the company. This note was discount by $48,387 based on the fair value of common stock issued as part of the note. As of June 30, 2011, $18,957 of this discount had been amortized over the remaining life of the note.
On February 17, 2011, the Company granted 5,000,000 common shares valued at $62,500 (or $0.0125 per share) based on the market price of the Company’s common stock on the date of grant to Pop Holdings, Inc. in satisfaction of outstanding debt. The conversion of debt reduced the note payable and accrued interest payable by $39,000 and the Company recognized a loss on debt conversion of $23,500.
On May 9, 2011, the Company granted 4,780,000 common shares valued at $42,064 (or $0.0088 per share) based on the market price of the Company’s common stock on the date of grant to Michael Cao in satisfaction of outstanding accounts payable. The share issuance satisfied $14,550 in accounts payables, and the Company recognized a loss on settlement of accounts payable of $27,514.
In the year ended June 30, 2011, the Company issued 34,000,000 common shares at a fair value quoted market price on the date of grant for $175,000 in cash.
In the year ended June 30, 2011, the Company issued 3,777,778 common shares at a fair value quoted market price on the date of grant for $36,372 in the purchase of fixed assets.
In the year ended June 30, 2011, the Company issued 10,800,000 common shares for services at a fair value quoted market price on the date of grant for $88,940 and expensed that as stock issued for services.
In addition to the shares issued for services as noted above, the Company recorded non-cash stock compensation totaling $985,100 for 86,000,000 shares originally thought to have been issued related to conversion of debt.
In October 2011, management learned that the prior CEO/CFO failed to have entity level controls, lacked segregation of duties, among many other internal control deficiencies. The Company believes that the prior CEO/CFO concealed these matters from the professional advisors until those advisors requested David Janney for additional documentation in which Mr. Janney acknowledged the following to the new Management and independent legal counsel:
a)
|
December 9, 2010: Tucker Financial Services, Inc. received 12,000,000 common shares alleged to be exempt from registration under Rule 144 of the Securities Act of 1933 (although new management believes that such exemption was not available) for the conversion of $2,900 of debt.
|
b)
|
January 24, 2011; Tucker Financial Services, Inc. received 12,000,000 common shares alleged to be exempt from registration under Rule 144 of the Securities Act of 1933 (although new management believes that such exemption was not available) for the conversion of $2,900 of debt.
|
c)
|
February 16, 2011: Stock Loan Solutions received 12,000,000 common shares alleged to be exempt from registration under Rule 144 of the Securities Act of 1933 (although new management believes that such exemption was not available) for the conversion of $2,900 of debt.
|
d)
|
February 22, 2011: Nicolas Sprung of Tucker Financial Services, Inc. received 12,000,000 common shares alleged to be exempt from registration under Rule 144 of the Securities Act of 1933 (although new management believes that such exemption was not available) for the conversion of $2,900 of debt.
|
e)
|
April 18, 2011: Euroline Clearing Corporation received 7,000,000 common shares alleged to be exempt from registration under Rule 144 of the Securities Act of 1933 (although new management believes that such exemption was not available) for the conversion of $2,900 of debt.
|
f)
|
April 18, 2011: Enavest International S.A., received 7,000,000 common shares alleged to be exempt from registration under Rule 144 of the Securities Act of 1933 (although new management believes that such exemption was not available) for the conversion of $2,900 of debt.
|
g)
|
April 18, 2011: Vanilla Sky, S.A. received 7,000,000 common shares alleged to be exempt from registration under Rule 144 of the Securities Act of 1933 (although new management believes that such exemption was not available) for the conversion of $2,900 of debt.
|
h)
|
June 28, 2011: Scott Geisler received 17,000,000 common shares alleged to be exempt from registration under Rule 144 of the Securities Act of 1933 (although new management believes that such exemption was not available) for the conversion of $2,900 of debt.
|
NOTE 6 – STOCK-BASED COMPENSATION
Effective June 18, 2008, the Board of Directors of the Company approved the 2008 Stock Option and Restricted Stock Plan (the "2008 Plan"). The Plan reserves 1,000,000 shares of common stock for grants of incentive stock options, nonqualified stock options, warrants and restricted stock awards to employees, non-employee directors and consultants performing services for the Company. Options and warrants granted under the Plan have an exercise price equal to or greater than the fair market value of the underlying common stock at the date of grant and become exercisable based on a vesting schedule determined at the date of grant. The options expire 2 years from the date of grant whereas warrants generally expire 5 years from the date of grant. Restricted stock awards granted under the Plan are subject to a vesting period determined at the date of grant.
On June 6, 2011, the Board of Directors of the Company amended the 2008 Plan to increase the reserved grant shares from 1,000,000 common shares to 25,000,000 common shares. On August 17, 2012, the Board of Directors of the Company amended the 2008 Plan to increase the authorized shares to be granted from 25,000,000 to 35,000,000.
The cost of all employee stock options, as well as other equity-based compensation arrangements, is reflected in the financial statements over the vesting period based on the estimated fair value of the awards.
A summary of warrant activity for the year ended June 30, 2012 and 2011 is presented below:
|
|
|
|
|
Outstanding Options
|
|
|
|
Shares
Available for
Grant
|
|
|
Number of
Shares Granted
|
|
|
Weighted
Average
Exercise Price
|
|
|
Weighted Average
Remaining
Contractual Life
(years)
|
|
|
Aggregate
Intrinsic Value
|
|
June 30, 2010
|
|
|
1,000,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
$
|
-
|
|
Grants
|
|
|
|
|
|
|
6,000,000
|
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
|
Forfeitures
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
June 30, 2011
|
|
|
19,000,000
|
|
|
|
6,000,000
|
|
|
$
|
0.01
|
|
|
|
3.99
|
|
|
|
-
|
|
Grants
|
|
|
|
|
|
|
19,500,000
|
|
|
$
|
0.02
|
|
|
|
|
|
|
|
|
|
Forfeitures
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
June 30, 2012
|
|
|
9,500,000
|
|
|
|
25,500,000
|
|
|
$
|
0.02
|
|
|
|
3.72
|
|
|
|
120,000
|
|
The Company values all warrants using the Black-Scholes option-pricing model. Critical assumptions for the Black-Scholes option-pricing model include the market value of the stock price at the time of issuance, the risk-free interest rate corresponding to the term of the warrant, the volatility of the Company’s stock price, dividend yield on the common stock, as well as the exercise price and term of the warrant. The warrants are not subject to any form of vesting schedule and, therefore, are exercisable by the holders anytime at their discretion during the life of the warrant. No discounts were applied to the valuation determined by the Black-Scholes option-pricing model.
On November 4, 2011, the Company granted Mr. Jack Chow, consultant, 3,000,000 warrants to purchase common stock of the Company at a price of $0.01 per share. The warrants are fully vested, have a four-year expected life, and were valued at $29,814.
On August 23, 2011 and June 24, 2011, the Company granted Mr. Michael Cao, consultant, 6,000,000 and 6,000,000 warrants, respectively, to purchase common stock of the Company at a price of $0.01 per share. The warrants are fully vested, have a five-year expected life, and were valued at $42,600 and $42,599, respectively.
On May 8, 2012, the Company granted Mr. Peter Cao, a member of the Company’s Board of Directors, 8,000,000 options to purchase common stock of the Company at a price of $0.025 per share. The warrants are fully vested, have a five-year expected life, and were valued at $198,519.
The following inputs and assumptions were used in the option-pricing model:
|
Fiscal Year
2012
|
|
Fiscal Year
2011
|
|
Stock price on grant date
|
|
|
$
|
0.0071
|
|
Expected dividend yield
|
None
|
|
None
|
|
Volatility
|
238.96%~273.09
%
|
|
|
270.33
%
|
|
Weighted average risk free interest rate
|
0.77%~0.95
%
|
|
|
1.40
%
|
|
Weighted average expected life (in years)
|
4.00~5.00
|
|
|
4.00
|
|
NOTE 7 - INCOME TAXES
Deferred tax liabilities and assets are determined based on the difference between financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Temporary differences between taxable income reported for financial reporting purposes and income tax purposes are insignificant.
At June 30, 2012, the Company’s had net operating losses of approximately $4,141,107 which expire, if unused, in various years through 2029. Utilization of the net operation loss carry-forwards could be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code.
The Company fully reserved its deferred tax assets because, in the opinion of management, it is more likely than not that the benefits will not be realized based upon the earning history of the Company. The valuation allowance increased $350,580 for the year ended June 30, 2012.
The provision (benefit) for income taxes from continued operations for the year ended June 30, 2012 and 2011 consist of the following:
|
|
June 30, 2012
|
|
|
June 30, 2011
|
|
Current:
|
|
|
|
|
|
|
Federal
|
|
$
|
-
|
|
|
$
|
-
|
|
State
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
Deferred:
|
|
|
|
|
|
|
|
|
Federal
|
|
|
(271,581
|
)
|
|
|
(132,101
|
)
|
State
|
|
|
(78,999
|
)
|
|
|
(38,426
|
)
|
|
|
|
(350,580
|
)
|
|
|
(170,527
|
)
|
Valuation allowance
|
|
|
350,580
|
|
|
|
170,527
|
|
Provision (benefit) for income taxes, net
|
|
$
|
-
|
|
|
$
|
-
|
|
The difference between income tax expense computed by applying the federal statutory corporate tax rate and actual income tax expense is as follows:
|
|
June 30, 2012
|
|
|
June 30, 2011
|
|
|
|
|
|
|
|
|
Statutory federal income tax rate
|
|
|
34.0
|
%
|
|
|
34.0
|
%
|
State income taxes and other
|
|
|
9.0
|
%
|
|
|
9.0
|
%
|
Valuation allowance
|
|
|
(43.0
|
%)
|
|
|
(43.0
|
%)
|
Effective tax rate
|
|
|
-
|
|
|
|
-
|
|
Deferred income taxes result from temporary differences in the recognition of income and expenses for the financial reporting purposes and for tax purposes. The tax effect of these temporary differences representing deferred tax asset and liabilities result principally from the following:
|
|
June 30, 2012
|
|
|
June 30, 2011
|
|
|
|
|
|
|
|
|
Net operating loss carryforward
|
|
|
1,653,958
|
|
|
|
1,303,378
|
|
Valuation allowance
|
|
|
(1,653,958
|
)
|
|
|
(1,303,378
|
)
|
Deferred income tax asset
|
|
$
|
-
|
|
|
|
-
|
|
NOTE 8 – RELATED PARTY TRANSACTIONS
As of June 30, 2012 and 2011, the Company has payables to related parties of $18,000 and $76,316, respectively, for services provided.
During the year ended June 30, 2012, the Company incurred fees totaling $37,725 to Auric Resources International, Inc., a company controlled by a former director. The director resigned on July 20, 2012.
NOTE 9 – COMMITMENTS AND CONTINGENCIES
On May 8, 2012, the Company entered into an employment contract with Mr. Peter Cao, Chief Operating Officer. Pursuant to the agreement, the Company will pay monthly compensation of $1,000. Mr. Cao is also entitled to 2,000,000 common shares for the increase in the Company’s market value for every $15 million up to $100 million. Additionally, Mr. Cao was granted options to purchase a total of 8,000,000 common shares. Options for 4 million common shares are exercisable at $0.025 per share and vested immediately. After six months of Mr. Cao’s employment with the Company, additional options to purchase 4,000,000 shares at $0.025 per share will vest. The 8,000,000 options were valued at $198,519, which is being expensed over the vesting periods.
On May 10, 2012, the Company entered into a two-year employment contract with Mr. Scott Geisler, Chief Executive Officer. The agreement allows the immediate accrual of unpaid salary from August 29, 2011 at $100,000 per year. The Company also issued stock options to purchase a total of 17,000,000 common shares. Options for 8,500,000 common shares at an exercise price of $0.01 per share vested immediately. Additional options to purchase 8,500,000 common shares at an exercise price of $0.01 per share will vest in August 2012. The 17,000,000 options are valued at $507,862. These options have a term of 5 years and could be exercised on a cashless basis. On June 2, 2012, the Company entered into a mutual release agreement with Mr. Geisler. That mutual release agreement superseded the employment agreement dated May 10, 2012. Pursuant to the mutual release agreement, Mr. Geisler would receive $75,000 in the next 25 months commencing July 15, 2012, and 7,500,000 shares of the Company’s common stock. On June 1, 2012, Mr. Geisler resigned as Chief Executive Officer of the Company. The Company disputes both agreements as all information was not fully disclosed to the Board of Directors and was negotiated in bad faith. As of June 30, 2012, a disputed payable of $221,250 is recorded related to this mutual release agreement.
On June 19, 2012, the Board of Directors appointed Mr. Michael Stojsavljevich as the new Chief Executive Officer, secretary and a member of the Board of Directors. Mr. Stojsavljevich will receive $5,500 for the first two months and $11,000 per month from the third month of his employment. Mr. Stojsavljevich is entitled to 2,500,000 shares of common stock quarterly from July 1, 2012 and every quarter thereafter to a total of 10,000,000 shares.
The Company entered into a purchase agreement to purchase mining claims from Gold Exploration LLC in the amount of $99,000 on June 1, 2008. The agreement requires the Company to make royalty payments equal to 2% of the Net Smelter Returns (“NSR”) per year. The Company had no Net Smelter Returns for the year ended June 30, 2012 and no royalties were paid. The agreement does not have any commitment dates of when production is to begin.
On June 17, 2011, the Company signed a joint venture agreement with Osiris Gold, Inc., a Colorado Corporation, and Sial Exploration, Inc., a Colorado Corporation (collectively, the “Partners”). The Partners are actively involved with the exploration, development, and mining of mineral deposits in the regional southwest. The agreement involves a 1,351 acre mining claim in the historic Red Mountain Mining District of Colorado’s San Juan Mountains. The Company and its Partners agreed to form Red Mountain LLC to operate and manage the joint venture through a joint venture company. The Company will receive an initial 10% ownership interest in the joint venture company with the potential to increase that share to a maximum of 49%. Pursuant to the agreement, the Company shall make a payment of $50,000 upon the execution of the agreement, a payment of $800,000 on July 1, 2011, and another payment of $700,000 on August 1, 2011. $50,000 was paid in June 2011 and fully impaired during the fiscal year ended June 30, 2011. No additional payments that were scheduled have been paid. The Company has settled this agreement and paid the outstanding legal fees of $3,170 during the fiscal year ended June 30, 2012.
On February 7, 2011 the Company entered into a $250,000 promissory note agreement with Freedom Boat which bears interest rate at 12%. The agreement includes a royalty payment which includes 5% in royalty of its gross profits from gold extraction form the Tarantula Placer Mine and 5% royalty payment from Hull Placer Mine.
During the year ended June 30, 2011, prior management converted 80% of two notes from Venture Capital International for $12,000 dated March 30, 2009 and $17,000 dated May 7, 2009. 86,000,000 shares of common stock were issued to convert $23,200 in debt and $2,323 in accrued interest. The fair value of those shares was $985,100. The difference of $959,577 was expensed as compensation. The prior CEO/CFO requested that Venture Capital International assign those notes to Gustavo Cifuentes Palma. The Company was provided a signed debt purchase agreement purportedly executed by both Venture Capital International and Gustavo Cifuentes Palma dated November 2010. Gustavo Cifuentues Palma then assigned 10% of these notes each to Tucker Financial Services, Inc., Vanilly Sky, S.A., Stock Loan Solutions, Euroline Clearing Corporation, Enavest Internacional S.A., and Nicolas Sprung. In October 2011, the Company learned that the signatures on the original debt purchase agreement from Venture Capital International by Gustavo Cifuentes Palma were forgeries. The agreement was never executed by Venture Capital International and Venture Capital International was never paid for the debt purchase. Since the assignments have been deemed forgeries, the Company has recorded the stock issued as compensation and recorded compensation expense of $985,100. The Company is uncertain of the affiliation between the prior CEO/CFO and Gustavo Cifuentes Palma and if he had any knowledge of the forgeries.
On October 25, 2011, David Janney resigned from all positions he held at the Company, including but not limited to, Chief Executive Officer, Chief Financial Officer, Chairman and member of the Board of Directors, and Secretary. Scott Geisler was appointed Chief Executive Officer, President and Secretary of the Company. Pen-Mun Foo was appointed Chief Financial Officer of the Company.
In October 2011, new management learned that the prior CEO/CFO failed to have entity level controls, lacked segregation of duties, among many other internal control deficiencies. The Company believes that the prior CEO/CFO concealed these matters from the professional advisors until those advisors requested David Janney for additional documentation in which Mr. Janney acknowledged the following to new management and independent legal counsel:
1.
|
The Company was informed that the prior CEO/CFO, created a series of promissory notes, such form of notes being provided by a lawyer named John Thomas, Esq. These promissory notes and documentation provided a signed assignment of two promissory notes with Venture Capital, Inc. a group from Switzerland. Over time, including discussions with the prior CEO/CFO, new management was able to directly contact a representative of Venture Capital who claims that its signatures on the notes and the later conversions to equity were forged. The alleged improper assignment orchestrated the issuance of converted allegedly improperly transferred debt for the following numbers of shares:
|
a)
|
December 9, 2010: Tucker Financial Services, Inc. received 12,000,000 common shares alleged to be exempt from registration under Rule 144 of the Securities Act of 1933 (although new management believes that such exemption was not available) for the conversion of $2,900 of debt.
|
b)
|
January 24, 2011; Tucker Financial Services, Inc. received 12,000,000 common shares alleged to be exempt from registration under Rule 144 of the Securities Act of 1933 (although new management believes that such exemption was not available) for the conversion of $2,900 of debt.
|
c)
|
February 16, 2011: Stock Loan Solutions received 12,000,000 common shares alleged to be exempt from registration under Rule 144 of the Securities Act of 1933 (although new management believes that such exemption was not available) for the conversion of $2,900 of debt.
|
d)
|
February 22, 2011: Nicolas Sprung of Tucker Financial Services, Inc. received 12,000,000 common shares alleged to be exempt from registration under Rule 144 of the Securities Act of 1933 (although new management believes that such exemption was not available) for the conversion of $2,900 of debt.
|
e)
|
April 18, 2011: Euroline Clearing Corporation received 7,000,000 common shares alleged to be exempt from registration under Rule 144 of the Securities Act of 1933 (although new management believes that such exemption was not available) for the conversion of $2,900 of debt.
|
f)
|
April 18, 2011: Enavest International S.A., received 7,000,000 common shares alleged to be exempt from registration under Rule 144 of the Securities Act of 1933 (although new management believes that such exemption was not available) for the conversion of $2,900 of debt.
|
g)
|
April 18, 2011: Vanilla Sky, S.A. received 7,000,000 common shares alleged to be exempt from registration under Rule 144 of the Securities Act of 1933 (although new management believes that such exemption was not available) for the conversion of $2,900 of debt.
|
h)
|
June 28, 2011: Scott Geisler received 17,000,000 common shares alleged to be exempt from registration under Rule 144 of the Securities Act of 1933 (although Mr. Geisler had no knowledge of the documentation provided by John Thomas was false) for the conversion of $2,900 of debt. On February 23, 2012, the Company cancelled the common shares and reissued based upon the original pricing of the shares.
|
All legal opinions related to these conversions, documentations, and issuances of shares alleged to be exempt from registration under Rule 144 of the Securities Act of 1933 were prepared by John Thomas, Esq.
2.
|
The prior CEO/CFO personally sent $39,000 to a cable company in the Dominican Republic in which current management has been informed that David Janney owns/controls this company. The Company settled this issue with David Janney in the settlement agreement discussed in Note 10.
|
3.
|
John Thomas signed various documents as a Board member of the Company, a position which he has never lawfully held, including the transaction with Asher Enterprises, Inc., pursuant to which Asher received 53,000,000 shares of Bonanza common stock which represented about thirty-two (32%) percent of the issued and outstanding shares of the Company in exchange for a $53,000 promissory note. Current management has negotiated the cash payment of this note and has cancelled the 53,000,000 common shares held in escrow.
|
In September 2011, David Janney created Board of Directors minutes dated June 15, 2011 for shares issued to employees of the company and included 1,000,000 shares issued to Frank Baumgartner. Mr. Baumgartner was never issued the common shares as new management could not find any documents to support such issuance and the Company does not intend to issue these 1,000,000 common shares to Frank Baumgartner.
On February 7, 2011, David Janney entered an agreement with Amazon Holding LLC to pay a finder’s fee for raising $250,000 in the acquisition of mining property. On January 19, 2012, Amazon Holding LLC demanded the Company to make the payment. The dispute is still pending but the Company believes that it is not possible that Amazon Holding LLC will prevail if a suit is filed against the Company according to this agreement.
NOTE 10– LOSS ON SETTLEMENT OF LITIGATION
On February 26, 2012, the Company entered into a settlement agreement with David Janney (our former CEO/CFO) for his actions related to wrongfully issued common stock of the Company, among many other things. The settlement agreement includes the following terms:
a.
|
The Company agreed to issue 5 million shares of restricted Bonanza Goldfields common stock to Mr. Janney as a form of compensation. The shares will be paid in two tranches. The first 2,500,000 shares should be issued upon the execution of the settlement and is issued on March 19, 2012. The second 2,500,000 shares were to be issued six months from the execution date of the settlement but have not been issued.
|
b.
|
The funds held in escrow by Christine Wright at the Wright Law Firm, P.A. on behalf of Freedom Boat, LLC for a loan under Mr. Janney’s name will be considered payment in full for Mr. Janney's return of 20,000,000 shares to the treasury on August 29, 2011.
|
c.
|
Mr. Janney agreed not to sell any more than 1,000,000 shares of his personal holdings of Bonanza Goldfields common stock in the open market in any thirty-day period.
|
d.
|
Mr. Janney agreed to return to the Company all of the Company’s property in his possession or in the possession of his family or agents including without limitation Bonanza's files and all documentation (and all copies thereof) dealing with the finances, operations and activities of the Company, its clients, employees or suppliers.
|
The Company recorded loss of $59,000 on this settlement during the year ended June 30, 2012.
During the year ended June 30, 2012, the Company learned that the title of Midas Placer Claim which the Company purchased from Global Minerals, Inc., a company controlled by Mr. David Janney, was never transferred to the Company. As such, the Company is currently in dispute with Mr. Janney.
NOTE 11 – SUBSEQUENT EVENTS
On July 27, 2012, the Company issued 7,500,000 common shares to Scott Geisler in accordance with his mutual release agreement with the Company. The shares were valued at $146,250. The shares issued are currently held in escrow and are not considered outstanding.
On July 31, 2012, the Company appointed Baoky Vu as a member of the Board of Directors and granted 1,000,000 shares of the Company’s common stock to Mr. Vu as a bonus, valued at $20,000.
On September 13, 2012, the Company entered into an agreement with Choice Capital Group, Inc. for Choice Capital Group to act as a transaction facilitator to acquire certain proprietary extraction technology. According the agreement, the Company shall escrow 20,000,000 common shares during the testing period of this technology.
On September 18, 2012, the Company entered into a mining claims lease agreement with Judgetown LLC (“Judgetown”) to lease 130.76 acres land located in Yavapai, Arizona for 2 years. Under the lease agreement, the Company has the option to purchase the mining claims for $1,500,000, with all lease payments over the 2-year lease subtracted from the $1,500,000. As initial consideration for the lease, the Company shall pay to Judgetown $100,000 within ninety days after October 15, 2012. After the first lease payments, the Company needs to pay Judgetown $30,000 every 3 months for the rest of the lease term.
INTERIM FINANCIAL STATEMENTS
BONANZA GOLDFIELDS CORPORATION
|
|
(An Exploration Stage Company)
|
|
BALANCE SHEETS
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
June 30,
|
|
|
|
2012
|
|
|
2012
|
|
ASSETS:
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
Cash
|
|
$
|
143,558
|
|
|
$
|
85,623
|
|
Prepaid expenses
|
|
|
-
|
|
|
|
20,200
|
|
Total current assets
|
|
|
143,558
|
|
|
|
105,823
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
41,554
|
|
|
|
43,767
|
|
|
|
|
|
|
|
|
|
|
Mining claims
|
|
|
250,000
|
|
|
|
250,000
|
|
TOTAL ASSETS
|
|
$
|
435,112
|
|
|
$
|
399,590
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT:
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
73,828
|
|
|
$
|
41,967
|
|
Accrued interest
|
|
|
50,276
|
|
|
|
43,409
|
|
Accounts payable and accrued liabilities - related party
|
|
|
-
|
|
|
|
18,000
|
|
Disputed payable
|
|
|
293,450
|
|
|
|
293,450
|
|
Common stock payable
|
|
|
298,000
|
|
|
|
38,000
|
|
Deferred liabilities
|
|
|
60,000
|
|
|
|
60,000
|
|
Convertible note payable
|
|
|
76,875
|
|
|
|
76,875
|
|
Notes payable
|
|
|
594,699
|
|
|
|
594,699
|
|
TOTAL LIABILITIES
|
|
|
1,447,128
|
|
|
|
1,166,400
|
|
|
|
|
|
|
|
|
|
|
CONTINGENCIES AND COMMITMENTS
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' DEFICIT:
|
|
|
|
|
|
|
|
|
Series A Preferred stock, $0.0001 par value, 20,000,000 shares authorized; none issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
Common stock, $0.0001 par value, 500,000,000 shares authorized; 331,656,125 and 320,862,680 issued and outstanding, respectively.
|
|
|
33,165
|
|
|
|
32,086
|
|
Additional paid-in capital
|
|
|
6,083,640
|
|
|
|
5,807,958
|
|
Subscription receivable
|
|
|
(37,500
|
)
|
|
|
-
|
|
Deficit accumulated during exploration stage
|
|
|
(7,091,321
|
)
|
|
|
(6,606,854
|
)
|
TOTAL STOCKHOLDERS' DEFICIT
|
|
|
(1,012,016
|
)
|
|
|
(766,810
|
)
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
$
|
435,112
|
|
|
$
|
399,590
|
|
The accompanying notes are an integral part of these financial statements.
BONANZA GOLDFIELDS CORPORATION
|
|
(An Exploration Stage Company)
|
|
STATEMENTS OF OPERATIONS
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Period
|
|
|
|
For the Three Months Ended
|
|
|
from March 6, 2008
|
|
|
|
September 30,
|
|
|
(inception) through
|
|
|
|
2012
|
|
|
2011
|
|
|
September 30, 2012
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
439,841
|
|
|
|
65,182
|
|
|
|
2,950,020
|
|
Exploration expense
|
|
|
20,684
|
|
|
|
27,701
|
|
|
|
270,004
|
|
Impairment of mining claims
|
|
|
-
|
|
|
|
-
|
|
|
|
714,700
|
|
Impairment of other assets
|
|
|
-
|
|
|
|
-
|
|
|
|
32,122
|
|
Total operating expenses
|
|
|
460,525
|
|
|
|
92,883
|
|
|
|
3,966,846
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
23,942
|
|
|
|
32,484
|
|
|
|
2,910,691
|
|
Loss on settlement of litigation
|
|
|
-
|
|
|
|
-
|
|
|
|
59,000
|
|
Loss on conversion of accounts payable
|
|
|
-
|
|
|
|
-
|
|
|
|
33,014
|
|
Loss on debt conversion
|
|
|
-
|
|
|
|
-
|
|
|
|
121,770
|
|
Total other expenses
|
|
|
23,942
|
|
|
|
32,484
|
|
|
|
3,124,475
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS
|
|
$
|
(484,467
|
)
|
|
$
|
(125,367
|
)
|
|
$
|
(7,091,321
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS PER COMMON SHARE:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
Weighted average common shares outstanding, basic and diluted
|
|
|
320,980,000
|
|
|
|
281,827,808
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
BONANZA GOLDFIELDS CORPORATION
|
(An Exploration Stage Company)
|
STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
|
|
For the Three Months Ended
September 30,
|
|
|
For the Period
from March 6, 2008
(inception) through
|
|
|
|
2012
|
|
|
2011
|
|
|
September 30, 2012
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(484,467
|
)
|
|
$
|
(125,367
|
)
|
|
$
|
(7,091,321
|
)
|
Adjustments to reconcile net loss to net cash
used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
2,213
|
|
|
|
121
|
|
|
|
2,696
|
|
Stock-based compensation
|
|
|
359,261
|
|
|
|
42,600
|
|
|
|
1,836,515
|
|
Impairment of mining claims
|
|
|
-
|
|
|
|
-
|
|
|
|
714,700
|
|
Impairment of other assets
|
|
|
-
|
|
|
|
-
|
|
|
|
32,122
|
|
Amortization of debt discount
|
|
|
-
|
|
|
|
12,196
|
|
|
|
2,287,366
|
|
Common stock issued for interest expense
|
|
|
-
|
|
|
|
-
|
|
|
|
504,060
|
|
Loss on settlement of litigation
|
|
|
-
|
|
|
|
-
|
|
|
|
59,000
|
|
Loss on settlement of accounts payable
|
|
|
-
|
|
|
|
-
|
|
|
|
33,014
|
|
Loss on conversion of notes payable
|
|
|
-
|
|
|
|
-
|
|
|
|
121,770
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets
|
|
|
20,200
|
|
|
|
-
|
|
|
|
7,700
|
|
Accounts payable and accrued liabilities
|
|
|
20,728
|
|
|
|
(53,224
|
)
|
|
|
52,984
|
|
Accounts payable and accrued liabilities - related party
|
|
|
-
|
|
|
|
(37,288
|
)
|
|
|
18,000
|
|
Disputed payable
|
|
|
-
|
|
|
|
-
|
|
|
|
293,450
|
|
Deferred liabilities
|
|
|
-
|
|
|
|
-
|
|
|
|
60,000
|
|
Net cash used in operating activities
|
|
|
(82,065
|
)
|
|
|
(160,962
|
)
|
|
|
(1,067,944
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in mining property
|
|
|
-
|
|
|
|
-
|
|
|
|
(149,000
|
)
|
Purchase of intangible asset
|
|
|
-
|
|
|
|
-
|
|
|
|
(36,173
|
)
|
Net cash used in investing activities
|
|
|
-
|
|
|
|
-
|
|
|
|
(185,173
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from notes payable
|
|
|
-
|
|
|
|
-
|
|
|
|
355,800
|
|
Repayments of notes payable
|
|
|
-
|
|
|
|
(53,000
|
)
|
|
|
(58,000
|
)
|
Proceeds from convertible notes payable
|
|
|
-
|
|
|
|
-
|
|
|
|
129,875
|
|
Proceeds from the sale of common stock
|
|
|
140,000
|
|
|
|
193,000
|
|
|
|
969,000
|
|
Net cash provided by financing activities
|
|
|
140,000
|
|
|
|
140,000
|
|
|
|
1,396,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCREASE (DECREASE) IN CASH
|
|
|
57,935
|
|
|
|
(20,962
|
)
|
|
|
143,558
|
|
CASH, BEGINNING OF PERIOD
|
|
|
85,623
|
|
|
|
23,306
|
|
|
|
-
|
|
CASH, END OF PERIOD
|
|
$
|
143,558
|
|
|
$
|
2,344
|
|
|
$
|
143,558
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
1,875
|
|
|
$
|
22,725
|
|
|
$
|
557,849
|
|
Income taxes paid
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONCASH INVESTING AND FINANCING TRANSACTIONS:
|
|
|
|
|
|
|
|
|
|
Extinguishment of debt
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
19,327
|
|
Notes issued to acquire mining claims
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
357,000
|
|
Common stock issued to prepay interest
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
7,700
|
|
Common stock issued for note modification
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
48,387
|
|
Common stock issued to acquire mining claims
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
458,700
|
|
Common stock issued for fixed assets
|
|
$
|
-
|
|
|
$
|
3,023
|
|
|
$
|
43,872
|
|
Common stock issued for conversion of debt
|
|
$
|
-
|
|
|
$
|
19,328
|
|
|
$
|
138,332
|
|
Common stock to be issued for settlement of litigation
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
29,500
|
|
Common stock to be issued for note extension
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
15,500
|
|
The accompanying notes are an integral part of these financial statements.
BONANZA GOLDFIELDS CORP.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - DESCRIPTION OF BUSINESS
Bonanza Goldfields Corp. (the “Company”) was incorporated under the laws of the State of Nevada on March 6, 2008 (Inception). The Company’s fiscal year ends on June 30. The Company is in the process of acquiring mineral properties or claims located in the State of Arizona. The recoverability of amounts from the properties or claims will be dependent upon the discovery of economically recoverable reserves, confirmation of the Company's interest in the underlying properties and/or claims, the ability of the Company to obtain necessary financing to satisfy the expenditure requirements under the property and/or claim agreements and to complete the development of the properties and/or claims, and upon future profitable production or proceeds for the sale thereof.
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America which contemplate continuation of the Company as a going concern. However, the Company has a working deficit and has not generated revenues since inception. During the three months ended September 30, 2012, the Company incurred a net loss of $484,467 and as of September 30, 2012, has an accumulated deficit of $7,091,321. Further, the Company has inadequate working capital to maintain or develop its operations, and is dependent upon funds from private investors and the support of certain stockholders. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. In this regard, Management is planning to raise any necessary additional funds through loans and additional sales of its common stock. There is no assurance that the Company will be successful in raising additional capital.
The Company's ability to meet its obligations and continue as a going concern is dependent upon its ability to obtain additional financing, achievement of profitable operations and/or the discovery, exploration, development and sale of mining reserves. The Company cannot reasonably be expected to earn revenue in the exploration stage of operations. Although the Company plans to pursue additional financing, there can be no assurance that the Company will be able to secure financing when needed or to obtain such financing on terms satisfactory to the Company, if at all.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission and should be read in conjunction with the audited financial statements and notes thereto contained elsewhere in this prospectus for the year ended June 30, 2012. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the unaudited interim financial statements that would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year as reported in the audited financial statements have been omitted.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and (iii) the reported amount of net sales and expenses recognized during the periods presented. Adjustments made with respect to the use of estimates often relate to improved information not previously available. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of financial statements; accordingly, actual results could differ from these estimates.
Management evaluates these estimates and assumptions on a regular basis. Actual results could differ from those estimates.
Exploration Stage Company
The Company's financial statements are prepared pursuant to SEC guidance and Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 915,
Development Stage Entities
, as it devotes substantially all of its efforts to acquiring and exploring mining interests that will eventually provide sufficient net profits to sustain the Company’s existence.
Mineral property rights
All direct costs related to the acquisition of mineral property rights are capitalized. Exploration costs are charged to operations in the period incurred until such time as it has been determined that a property has economically recoverable reserves, at which time subsequent exploration costs and the costs incurred to develop a property are capitalized. The Company reviews the carrying values of its mineral property rights whenever events or changes in circumstances indicate that their carrying values may exceed their estimated net recoverable amounts. An impairment loss is recognized when the carrying value of those assets is not recoverable and exceeds its fair value. As of September 30, 2012, management has determined that there was no impairment loss required for the three months then ended.
At such time as commercial production may commence, depletion of each mining property will be provided on a unit-of-production basis using estimated proven and probable recoverable reserves as the depletion base. In cases where there are no proven or probable reserves, depletion will be provided on the straight-line basis over the expected economic life of the mine.
Impairment of Long-Lived Assets
Long-lived assets, such as property, plant, and equipment, and purchased intangibles, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Goodwill and other intangible assets are tested for impairment. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Management has determined that there is no impairment loss required for the three months ended September 30, 2012.
Asset Retirement Obligations
The Company had no operating properties at September 30, 2012, but the Company’s mineral properties will be subject to standards for mine reclamation that are established by various governmental agencies. For these non-operating properties, the Company accrues costs associated with environmental remediation obligations when it is probable that such costs will be incurred and they are reasonably estimable. Costs of future expenditures for environmental remediation are not discounted to their present value. Such costs are based on management's current estimate of amounts that are expected to be incurred when the remediation work is performed within current laws and regulations.
It is reasonably possible that due to uncertainties associated with defining the nature and extent of possible environmental contamination, application of laws and regulations by regulatory authorities, and changes in remediation technology, the ultimate cost of remediation and reclamation could change in the future. The Company continually reviews its accrued liabilities for such remediation and reclamation costs as evidence becomes available indicating that its remediation and reclamation liability has changed.
The Company recognizes the fair value of a liability for an asset retirement obligation in the period in which it is incurred, if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the associated long-lived assets and depreciated over the lives of the assets on a units-of-production basis. Reclamation costs are accreted over the life of the related assets and are adjusted for changes resulting from the passage of time and changes to either the timing or amount of the original present value estimate on the underlying obligation. There were no asset retirement obligations as of September 30, 2012 as there are presently no underlying obligations.
Property and Equipment
Property and equipment is recorded at cost and depreciated over the estimated useful lives of the assets using principally the straight-line method. When items are retired or otherwise disposed of, income is charged or credited for the difference between net book value and proceeds realized thereon. Ordinary maintenance and repairs are charged to expense as incurred, and replacements and betterments are capitalized.
The range of estimated useful lives used to calculated depreciation for principal items of property and equipment are as follow:
Asset Category
|
|
Depreciation/
Amortization Period
|
Furniture and Fixture
|
|
5 Years
|
Office equipment
|
|
3 Years
|
Leasehold improvements
|
|
5 Years
|
Income Taxes
Deferred income taxes are provided, to reflect the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
The Company follows a two-step approach to ultimately recognize and measure uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not, that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount, which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating the Company's tax positions and tax benefits, which may require periodic adjustments. At September 30, 2012, the Company did not record any liabilities for uncertain tax positions.
Concentration of Credit Risk
The Company maintains its operating cash balances in banks in Phoenix, Arizona. The Federal Depository Insurance Corporation (“FDIC”) insures accounts at each institution up to $250,000.
Share-Based Compensation
The measurement of the cost of services received in exchange for an award of an equity instrument is based on the grant-date fair value of the award. Compensation cost is recognized when the event occurs. The Black-Scholes option-pricing model is used to estimate the fair value of options granted.
Basic and Diluted Net Loss Per Common Share
Net loss per common share was computed by dividing the net loss by the weighted average number of common shares outstanding during the period. The weighted average number of shares was calculated by taking the number of shares outstanding and weighting them by the amount of time that they were outstanding. Diluted net loss per share for the Company is the same as basic net loss per share, as during the period where a net loss is reported, the inclusion of common stock equivalents would be antidilutive and are therefore excluded from the calculation.
At September 30, 2012 and 2011, common stock equivalents consisted of warrants to purchase 25,500,000 and 12,000,000 shares of common stock, respectively.
Fair Value of Financial Instruments
The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties other than in a forced sale or liquidation.
The carrying amounts of the Company’s financial instruments, including cash, accounts payable and accrued liabilities, accrued interest and related party payable, approximate fair value due to their most maturities.
Certain prior year amounts have been reclassified to conform to the current period presentation for comparative purposes.
Recent Accounting Pronouncements
The Company’s management does not believe that any recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying financial statements.
NOTE 3 – MINING CLAIMS
The following is a detail of mining claims at September 30, 2012 and June 30, 2012:
|
|
September 30,
2012
|
|
|
June 30,
2012
|
|
Midas Placer Mining Claim (fully impaired)
|
|
$
|
565,700
|
|
|
$
|
565,700
|
|
Tarantula Mining Claim
|
|
|
250,000
|
|
|
|
250,000
|
|
Osiris Gold Joint Venture (fully impaired)
|
|
|
50,000
|
|
|
|
50,000
|
|
Total mining and equipment activity
|
|
|
865,700
|
|
|
|
865,700
|
|
Accumulated impairment of mining claims
|
|
|
(615,700
|
)
|
|
|
(615,700
|
)
|
Total Mining Claims
|
|
$
|
250,000
|
|
|
$
|
250,000
|
|
The Company has impaired all claims except for the Tarantula (Hull Lode) mining claim.
NOTE 4 – NOTES PAYABLE
The Company had the following notes payable outstanding as of September 30, 2012 and June 30, 2012:
|
|
|
|
|
|
|
|
|
|
|
September 30,
2012
|
|
|
June 30,
2012
|
|
Gold Exploration LLC (a)
|
|
|
|
|
|
|
Dated - June 1, 2008
|
|
$
|
52,699
|
|
|
$
|
52,699
|
|
|
|
|
|
|
|
|
|
|
Venture Capital International (b)
|
|
|
|
|
|
|
|
|
Dated – March 30, 2009
|
|
|
12,000
|
|
|
|
12,000
|
|
|
|
|
|
|
|
|
|
|
Venture Capital International (c)
|
|
|
|
|
|
|
|
|
Dated - May 7, 2009
|
|
|
17,000
|
|
|
|
17,000
|
|
|
|
|
|
|
|
|
|
|
Advantage Systems Enterprises Limited (d)
|
|
|
|
|
|
|
|
|
Dated – July 3, 2009
|
|
|
17,000
|
|
|
|
17,000
|
|
|
|
|
|
|
|
|
|
|
Advantage Systems Enterprises Limited (e)
|
|
|
|
|
|
|
|
|
Dated – August 7, 2009
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
Venture Capital International (f)
|
|
|
|
|
|
|
|
|
Dated – October 15, 2009
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
Venture Capital International (g)
|
|
|
|
|
|
|
|
|
Dated – October 27,2009
|
|
|
7,000
|
|
|
|
7,000
|
|
|
|
|
|
|
|
|
|
|
Advantage Systems Enterprises Limited (h)
|
|
|
|
|
|
|
|
|
Dated – November 9, 2009
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
Venture Capital International (i)
|
|
|
|
|
|
|
|
|
Dated – November 23, 2009
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
Strategic Relations Consulting, Inc. (j)
|
|
|
|
|
|
|
|
|
Dated – March 31, 2010
|
|
|
15,000
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
Summit Technology Corporation, Inc. (k)
|
|
|
|
|
|
|
|
|
Dated November 22, 2010
|
|
|
2,000
|
|
|
|
7,000
|
|
|
|
|
|
|
|
|
|
|
Gold Exploration LLC (l)
|
|
|
|
|
|
|
|
|
Dated July 29, 2010
|
|
|
97,000
|
|
|
|
97,000
|
|
|
|
|
|
|
|
|
|
|
Freedom Boat, LLC (m)
|
|
|
|
|
|
|
|
|
Dated February 7, 2011
|
|
|
250,000
|
|
|
|
250,000
|
|
|
|
|
|
|
|
|
|
|
Dr. Linh B. Nguyen (n)
|
|
|
|
|
|
|
|
|
Dated May 23, 2011
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
Mr. Charles Chapman (o)
|
|
|
|
|
|
|
|
|
Dated December 27, 2011
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
Mr. Leroy Steury
|
|
|
|
|
|
|
|
|
Dated March 12, 2012 (p)
|
|
|
76,875
|
|
|
|
76,875
|
|
|
|
|
|
|
|
|
|
|
Total notes and convertible note payable
|
|
|
671,574
|
|
|
|
671,574
|
|
Less current portion of long-term debt
|
|
|
(671,574
|
)
|
|
|
(671,574
|
)
|
Long term debt
|
|
$
|
-
|
|
|
$
|
-
|
|
(a) The Company entered into a purchase agreement to purchase mining claims with Gold Exploration LLC in the amount of $99,000 on June 1, 2008. The Company paid $15,000 in cash and issued a note for $84,000 with an interest rate of 12% for the remaining balance. Pursuant to the purchase agreement, $7,000 is to be paid each 90 days until the full principal balance plus accrued interest is paid off. As of September 30, 2012 and June 30, 2012, principal and interest payable to Gold Exploration LLC for this note is $66,941 and $65,346, respectively. This note is presently in default.
(b) On March 30, 2009, the Company issued a $12,000 demand promissory note to Venture Capital International, Inc. The note is due on demand with an interest rate of 5%. As of September 30, 2012 and June 30, 2012, the Company principal and interest payable to Venture Capital International, Inc. related to this note is $14,083 and $13,932, respectively.
(c) On May 7, 2009, the Company issued a $17,000 demand promissory note to Venture Capital International, Inc. The note is due on demand and has an interest rate of 5%. As of September 30, 2012 and June 30, 2012, principal and interest payable to Venture Capital International, Inc. related to this note is $19,862 and $19,648, respectively.
(d) On July 3, 2009, the Company issued a $17,000 demand promissory note to Advantage Systems Enterprise Limited. The note is due on demand with an interest rate of 5%. As of September 30, 2012 and June 30, 2012, principal and interest payable to Advantage Systems Enterprise Limited related to this note is $19,764 and $19,550, respectively.
(e) On August 7, 2009, the Company issued a $10,000 demand promissory note to Advantage Systems Enterprises Limited. The note is due on demand with an interest rate of 5%. As of September 30, 2012 and June 30, 2012, principal and interest payable to Advantage Systems Enterprise Limited, Inc. related to this note is $11,574 and $11,448, respectively.
(f) On October 15, 2009, the Company issued a $10,000 demand promissory note to Venture Capital International. The note is due on demand with an interest rate of 5%. As of September 30, 2012 and J June 30, 2012, principal and interest payable to Venture Capital International related to this note is $11,479 and $11,353, respectively.
(g) On October 27, 2009, the Company issued a $7,000 demand promissory note to Venture Capital. The note is due on demand with an interest rate of 5%. As of September 30, 2012 and June 30, 2012, principal and interest payable to Venture Capital International related to this note is $8,024 and $7,936, respectively.
(h) On November 9, 2009, the Company issued a $25,000 demand promissory note to Advantage Systems Enterprise Limited. The note is due on demand with an interest rate of 5%. As of September 30, 2012 and June 30, 2012, principal and interest payable to Advantage Systems Enterprise Limited related to this note is $28,637 and $28,322, respectively.
(i) On November 23, 2009, the Company issued a $5,000 demand promissory note to Venture Capital International. The note is due on demand with an interest rate of 5%. As of September 30, 2012 and June 30, 2012, principal and interest payable to Venture Capital International related to this note is $5,713 and $5,650, respectively.
(j) On March 31, 2010, the Company issued a $15,000 demand promissory note to Strategic Relations consulting, Inc. The note is due on demand with an interest rate of 5%. As of September 30, 2012 and June 30, 2012 principal and interest payable to Strategic Relations Consulting, Inc. related to this note is $16,878 and $16,689, respectively.
(k) On November 22, 2010, the Company issued a $7,000 demand promissory note to Summit Technologies Corporation, Inc. The note is due on demand with an interest rate of 5%. As of September 30, 2012 and June 30, 2012, principal and interest payable to Strategic Relations Consulting, Inc. related to this note is $2,336 and $2,311, respectively.
All of the above demand promissory notes issued by the Company were unsecured.
(l) On July 29, 2010, the Company issued 8,300,000 common shares to Gold Exploration LLC, valued at $83,000 (or $0.01 per share) based upon the closing price of the Company’s stock on the date the agreement was executed, to partially repay $10,000 of principal on the promissory note held by Gold Exploration LLC initially issued to Global Mineral Resources Corporation. This payment of common stock reduced the outstanding balance of the note held by Gold Exploration LLC to $97,000. The Company recognized a loss on debt conversion of $73,000. During fiscal year 2012, the note holder called the balance of the note and demanded payment. The note holder claimed that the note was in default because the Company failed to maintain the Midas Placer Mining Claim, collateral which secured the note. Pursuant to the note agreement, the note should accrue interest at 12% when due or declared due. The note is classified as a current liability on the balance sheets. As of September 30, 2012 and June 30, 2012, principal and interest payable to Gold Exploration LLC related to this note is $111,574 and $108,640, respectively.
(m) On February 7, 2011, the Company issued a $250,000 promissory note with an interest rate of 12% per annum to Freedom Boat LLC (“Freedom Boat”). Payment of $2,500 is due monthly from July 5, 2011 through December 5, 2011 with a final payment of interest and principal of $260,000 that because due on February 7, 2012. Freedom Boat also has a right to royalties under certain conditions. The note is secured by the Hull Lode claim, The West Acre Hull tract, property held by David Janney, former officer, and 10,000,000 of the Company’s common shares currently held in escrow. Proceeds from the note were used to purchase the Tarantula Mining Claim from Judgetown, LLC. As of September 30, 2012 and June 30, 2012, the remaining principal owed was $250,000. This note is presently in default but the Company is negotiating with the holder for an extension of this note.
(n) The Company entered into a demand promissory note with Linh B. Ngnyen on May 23, 2011 in the amount of $25,000. The note is due on demand with an interest rate of 5%. As of September 30, 2012 and June 30, 2012, principal and interest payable to Linh B. Ngnyen related to this note is $26,692 and $26,377, respectively.
(o) On December 27, 2011, the Company issued a $50,000 promissory note to Mr. Charles Chapman. The note was due on February 15, 2012 with an interest rate of 12%. Pursuant to the note agreement, Mr. Chapman has the right to receive 500,000 shares of the Company’s common stock in lieu of interest payments. On December 28, 2011, the Company issued 500,000 shares valued at $4,000 in lieu of the interest. On March 19, 2012, the note agreement was amended to extend the due date to May 15, 2012. Pursuant to the amendment, the Company agreed to issue an additional 500,000 common shares valued at $15,500 which was recorded as debt discount and fully amortized during fiscal year 2012. As of June 30, 2012, the 500,000 common shares related to the March 19, 2012 amendment have not been issued and is recorded as stock payable of $15,500. On May 16, 2012, the Company entered into a second amendment to extend the loan to November 15, 2012. Pursuant to the second amendment, the Company will issue 100,000 shares of its common stock per month for a period of six months in lieu of interest. As of June 30, 2012, the Company has issued 500,000 common shares valued at $11,000.
(p) On March 12, 2012, the Company issued a $75,000 convertible note to Mr. Leroy Steury. The note was due on June 12, 2012 with an interest rate of 10%. Mr. Leroy Steury has the right to receive 7.5 million shares of common stock in lieu of unpaid principal and interest before June 17, 2012. The Company recorded a beneficial conversion feature of $75,000 which was fully amortized during fiscal year 2012. On June 13, 2012, the Company amended the agreement to include the accrued interest of $1,875 on the $75,000 in the principal and extended the note to September 13, 2012. On September 17, 2012, the Company entered into the second amendment to extend the note to December 17, 2012. As of September 30, 2012 and June 30, 2012, principal and interest payable to Leroy Steury related to this note is 78,230 and $77,780, respectively.
NOTE 5 - EQUITY
On March 31, 2011, the Company increased the authorized common shares to 500,000,000.
During the three months ended September 30, 2012, the Company received cash of $140,000 for the subscription of 8,730,945 common shares. The Company also received cash of $37,500 in October 2012 for the subscription of 2,062,500 common shares. These shares were recorded as subscription receivables.
During the three months ended September 30, 2012, the Company granted 13,000,000 shares of common stock for services of executives and a consultant. These shares were valued at $260,000 based on the trading price of the stock on the date granted. At September 30, 2012, these shares have not been issued and were recorded as stock payable.
Preferred Stock
On June 14, 2011, the Company authorized 20,000,000 shares of Series A Preferred Stock at $0.0001 par value. The Preferred Stock contains certain rights, preferences, privileges, restrictions and other characteristics. Specifically, the Preferred Stock has 100 votes per share, whereas, each share of Common Stock has 1 vote. Preferred Stock holders may vote with holders of the Company’s Common Stock on all matters which common stockholders may vote. On June 14, 2011, the Company issued 3,000,000 preferred shares valued at $300 to its former CEO/CFO. In August 2011, the former CEO/CFO returned those shares as a result of his resignation from the Company. The preferred shares were then cancelled.
NOTE 6 – STOCK-BASED COMPENSATION
Effective June 18, 2008, the Board of Directors of the Company approved the 2008 Stock Option and Restricted Stock Plan (the "2008 Plan"). The Plan reserves 1,000,000 shares of common stock for grants of incentive stock options, nonqualified stock options, warrants and restricted stock awards to employees, nonemployee directors and consultants performing services for the Company. Options and warrants granted under the Plan have an exercise price equal to or greater than the fair market value of the underlying common stock at the date of grant and become exercisable based on a vesting schedule determined at the date of grant. The options expire 2 years from the date of grant whereas warrants generally expire 5 years from the date of grant. Restricted stock awards granted under the 2008 Plan are subject to a vesting period determined at the date of grant.
On June 6, 2011, the Board of Directors of the Company amended the 2008 Plan to increase the reserved grant shares from 1,000,000 common shares to 25,000,000 common shares. On August 17, 2012, the Board of Directors of the Company amended the 2008 Plan to increase the authorized shares to be granted from 25,000,000 common shares to 35,000,000 common shares.
The cost of all employee stock options, as well as other equity-based compensation arrangements, is reflected in the financial statements over the vesting period based on the estimated fair value of the awards.
A summary of warrant activity for the three months ended September 30, 2012 is presented below:
|
|
|
|
|
Outstanding Options/Warrants
|
|
|
|
Shares
Available for
Grant
|
|
|
Number of
Shares Granted
|
|
|
Weighted
Average
Exercise Price
|
|
|
Weighted Average
Remaining
Contractual Life
(years)
|
|
|
Aggregate
Intrinsic Value
|
|
June 30, 2012
|
|
|
19,000,000
|
|
|
|
25,500,000
|
|
|
$
|
0.02
|
|
|
|
3.72
|
|
|
|
120,000
|
|
Grants
|
|
|
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
Forfeitures
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
September 30, 2012
|
|
|
9,500,000
|
|
|
|
25,500,000
|
|
|
$
|
0.02
|
|
|
|
3.47
|
|
|
|
875,000
|
|
The Company has 17,500,000 warrants and 8,000,000 options outstanding as of September 30, 2012.
The Company values all warrants using the Black-Scholes option-pricing model. Critical assumptions for the Black-Scholes option-pricing model include the market value of the stock price at the time of issuance, the risk-free interest rate corresponding to the term of the warrant, the volatility of the Company’s stock price, dividend yield on the common stock, as well as the exercise price and term of the warrant. The warrants are not subject to any form of vesting schedule and, therefore, are exercisable by the holders anytime at their discretion during the life of the warrant. No discounts were applied to the valuation determined by the Black-Scholes option-pricing model.
On May 8, 2012, the Company granted Mr. Peter Cao, a member of the Company’s Board of Directors, 8,000,000 options to purchase common stock of the Company at a price of $0.025 per share. Options for 4 million common shares vested immediately. After six months of Mr. Cao’s employment with the Company, additional options to purchase 4,000,000 shares at $0.025 per share will vest. The options have a five-year expected life, and were valued at $198,519. At September 30, 2012, unamortized value of this warrant was $33,087.
Current management has not found supporting documents or evidence that the stock option of 2008 or any plan has been ratified by the shareholders and/or Board of Directors. Current management is in the process of determining a method to rectify this situation.
NOTE 7 – RELATED PARTY TRANSACTIONS
As of September 30, 2012 and June 30, 2012, the Company had payables to a related party of $0 and $18,000, respectively, for services provided.
NOTE 8 – COMMITMENTS AND CONTINGENCIES
On May 8, 2012, the Company entered into an employment contract with Mr. Peter Cao, Chief Operating Officer. Pursuant to the agreement, the Company will pay monthly compensation of $1,000. Mr. Cao is also entitled to 2,000,000 common shares for the increase in the Company’s market value for every $15 million up to $100 million. Additionally, Mr. Cao was granted options to purchase a total of 8,000,000 common shares. Options for 4 million common shares are exercisable at $0.025 per share and vested immediately. After six months of Mr. Cao’s employment with the Company, additional options to purchase 4,000,000 shares at $0.025 per share will vest. The 8,000,000 options were valued at $198,519, which is being expensed over the vesting periods. On October 1, 2012, Mr. Cao entered into a new employment agreement with the Company to replace the agreement dated May 8, 2012. The October 1, 2012 agreement states the following:
(1) Starting October 1, 2012 the Company will pay $4,000 per month;
(2) 8,000,000 share of common stock is granted immediately and valued at $232,000 based on the market price at October 1, 2012.
(3) Salary will increase as the Company’s monthly production hits the operational milestones as follows:
i. Production of 200 ounces: salary of $5,000 per month
ii. Production of 400 ounces: salary of $6,000 per month
iii. Production of 600 ounces: salary of $7,000 per month
iv. Production of 800 ounces: salary of $8,000 per month
v. Production of 1,000 ounces: salary of $9,000 per month
vi. Production of 1,200 ounces: salary of $10,000 per month
vii. At production of 1,200 ounces per month or another 4,000,000 shares will be granted.
(4) Executive will be eligible for bonuses based on a combination of individual performance and company performance which will be determined by the CEO and Board of Directors
On October 30, 2012, the Company amended the employment agreement to increase the monthly salary to $3,000 per month for the three months ended September 30, 2012. Mr. Cao also agreed that the 8 million common shares granted on October 1, 2012 replace the 8,000,000 options granted on May 8, 2012.
On June 19, 2012, the Board of Directors appointed Mr. Michael Stojsavljevich as the new Chief Executive Officer, secretary and a member of the Board of Directors. Mr. Stojsavljevich would receive $5,500 for the first two months and $11,000 per month from the third month of his employment. Mr. Stojsavljevich is entitled to 2,500,000 shares of common stock quarterly from July 1, 2012 and every quarter thereafter to a total of 10,000,000 shares. On August 1, 2012, Mr. Stojsavljevich entered into a new employment agreement with Company to replace the agreement dated June 19, 2012 as follows:
(1) Starting August 1, 2012, the Company will pay $5,500 monthly salary;
(2) 10,000,000 shares of common stock is granted immediately and valued at $200,000 based on the market price at August 1, 2012. On October 30, 2012, Mr. Stojsavljevich entered into an amendment to the employment agreement to say that the term to issue 2,500,000 shares of common stock quarterly from July 1, 2012 and every quarter thereafter to a total of 10,000,000 shares stated in the June 19, 2012 agreement is replaced.
(3) Salary will increase as the Company monthly production achieves operational milestones as described below:
i. Production of 200 ounces: salary of $6,500 per month
ii. Production of 400 ounces: salary of 7,500 per month
iii. Production of 600 ounces: salary of $8,500 per month
iv. Production of 800 ounces: salary of $9,500 per month
v. Production of 1,000 ounces: salary of $10,500 per month
vi. Production of 1,200 ounces: salary of 11,500 per month
vii. At a monthly production of 1,200 ounces per month another 4,000,000 shares will be granted.
(4) Mr. Stojsavljevich will be eligible for bonuses based on a combination of individual performance and company performance which will be determined by the Board of Directors.
On May 10, 2012, the Company entered into a two-year employment contract with Mr. Scott Geisler, Chief Executive Officer at that time. The agreement allows the immediate accrual of unpaid salary from August 29, 2011 at $100,000 per year. The Company also issued stock options to purchase a total of 17,000,000 common shares. Options for 8,500,000 common shares at an exercise price of $0.01 per share vested immediately. Additional options to purchase 8,500,000 common shares at an exercise price of $0.01 per share vested in August 2012. The 17,000,000 options are valued at $507,862. These options have a term of 5 years and can be exercised on a cashless basis. On June 8, 2012, the Company entered into a mutual release agreement with Mr. Geisler. That mutual release agreement superseded the employment agreement dated May 10, 2012. Pursuant to the mutual release agreement, Mr. Geisler would receive $75,000 in the next 25 months commencing July 15, 2012, and 7,500,000 shares of the Company’s common stock. On June 1, 2012, Mr. Geisler resigned as Chief Executive Officer of the Company.
On October 30, 2012 we learned that former President and CEO, Scott Geisler, filed suit against the company on September 20, 2012, in the Circuit Court of the Sixth Judicial District in the State of Florida. The Company has not yet been served with the summons and complaint or filed an answer. Mr. Geisler asserts that the Company is in default with respect to payments under a Settlement and Mutual Release Agreement entered into upon his resignation as an officer and director of the Company and effective June 8, 2012. Mr. Geisler claims monetary damages "in excess of $15,000," attorneys' fees, court costs and seeks the issuance of 7,500,000 shares of common stock that is provided for under the Settlement and Mutual Release Agreement. We have engaged legal counsel to represent the Company in this dispute and counsel has identified defenses to the claims and setoffs. We are optimistic that a settlement of the dispute will be reached in the near future without having a materially adverse effect on our financial condition or results of operations.
Currently, the Company is carrying the amount of $293,400 as a disputed payable until resolved, which include other disputed payables.
The Company entered into a purchase agreement to purchase mining claims from Gold Exploration LLC in the amount of $99,000 on June 1, 2008. The agreement requires the Company to make royalty payments equal to 2% of the Net Smelter Returns (“NSR”) per year. The Company had no NSR for the three months ended September 30, 2012 and no royalties were paid. The agreement does not have any commitment dates of when production is to begin.
On February 7, 2011 the Company entered into a $250,000 promissory note agreement with Freedom Boat which bears interest rate at 12%. The agreement includes a royalty payment which includes 5% in royalty of its gross profits from gold extraction form the Tarantula Placer Mine and 5% royalty payment from Hull Placer Mine.
On February 7, 2011, David Janney, former officer, entered an agreement with Amazon Holding LLC to pay a finder’s fee for raising $250,000 in the acquisition of mining property. On January 19, 2012, Amazon Holding LLC demanded the Company make the payment. The dispute is still pending but the Company believes that it
is not likely that Amazon Holding LLC will prevail if a suit is filed against the Company related to this agreement.
NOTE 9 – LOSS ON SETTLEMENT OF LITIGATION
On February 26, 2012, the Company entered into a settlement agreement with David Janney (former CEO/CFO) for his actions related to wrongfully issued common stock of the Company, among many other things. The settlement agreement includes the following terms:
a.
|
The Company agreed to issue 5 million shares of restricted Bonanza Goldfields common stock to Mr. Janney as a form of compensation. The shares will be paid in two tranches. The first 2,500,000 shares should be issued upon the execution of the settlement and was issued on March 19, 2012. The second 2,500,000 shares were to be issued six months from the execution date of the settlement but have not been issued.
|
b.
|
The funds held in escrow by Christine Wright at the Wright Law Firm, P.A. on behalf of Freedom Boat, LLC for a loan under Mr. Janney’s name will be considered payment in full for Mr. Janney's return of 20,000,000 shares to the treasury on August 29, 2011.
|
c.
|
Mr. Janney agreed not to sell any more than 1,000,000 shares of his personal holdings of Bonanza Goldfields common stock in the open market in any thirty-day period.
|
d.
|
Mr. Janney agreed to return to the Company all of the Company’s property in his possession or in the possession of his family or agents including without limitation Bonanza's files and all documentation (and all copies thereof) dealing with the finances, operations and activities of the Company, its clients, employees or suppliers.
|
The Company recorded a loss of $59,000 on this settlement during the year ended June 30, 2012.
During the year ended June 30, 2012, the Company learned that the title of Midas Placer Claim which the Company purchased from Global Minerals, Inc., a company controlled by Mr. David Janney, was never transferred to the Company. As such, the Company is currently in dispute with Mr. Janney.
NOTE 10 – SUBSEQUENT EVENTS
On October 1, 2012, the Company entered into a new employment agreement with Peter Cao (see Note 8). On October 25, 2012, the Company amended the employment agreements of Peter Cao and Michael Stojsavljevich to clarify certain terms in the new employment agreements (see Note 8).
On October 1, 2012, the Company entered into a Note and Warrant Purchase Agreement (the "Purchase Agreement") with Tonaquint, Inc., a Utah corporation ("Tonaquint"), whereby the Company issued (i) a secured convertible promissory note of the Company in the principal amount of $1,660,000 (the "Promissory Note") and (ii) a warrant to purchase a number of the Company’s common stock equal to $1,660,000 divided by the Market Price (the "Warrant"). Market Price means 65% of the arithmetic average of the 3 lowest volume-weighted average prices of the stock price during the 20 consecutive trading day period immediately preceding the date of the conversion. The Market Price will be adjusted for any stock split, stock dividend, stock combination or other similar transaction. The warrant also contains a cashless exercise provision subject to certain limitations. The Warrant has an exercise price of is $0.075 per share and can be exercised at any time within five years after October 1, 2012.
The Promissory Note is due 30 months from the issuance date of October 1, 2012 (“Maturity Date”) and has an interest rate of 8% payable monthly. The Promissory Note, if prepaid, has a penalty of 135% prepayment obligation. The total amount funded (in cash and notes) at closing will be $1,500,000, representing the principal amount of $1,660,000 less an original issuance discount of $150,000 and the payment of $10,000 to cover Tonaquint’s fees. The payments from Tonaquint consisted of $150,000 in cash advanced at closing and $1,350,000 in a series of three secured Buyer Mortgage Notes and one Promissory Note with interest rates of 5% described in more detail below. The Company also has the right to offset the payment of any of these notes and not receive payment for such notes or be obligated to pay such portion of the notes, subject to certain conditions and obligations. The shares of common stock underlying the Promissory Note and Warrant are to be registered by a registration statement pursuant to the terms and conditions of a registration rights agreement.
Beginning on the earlier of the date that is (i) 30 calendar days after the effective date of a registration statement and (ii) 180 calendar days after October 1, 2012, and each month thereafter, the Company shall pay to Tonaquint principal payments of $69,167 plus the sum of any accrued and unpaid interest due on such date by converting such amount at a conversion price equals to the lower of the (i) conversion price in effect ($0.05 per share if no anti-dilution adjustment) (ii) 65% of the arithmetic average of the 3 lowest volume-weighted average prices of the stock price during the 20 consecutive trading day period immediately preceding the date of the payment date.
Tonaquint has the right to convert, subject to restrictions described in the Promissory Note, all or a portion of the outstanding amount of the Promissory Note that is eligible for conversion into shares of the Company’s common stock. The conversion price of the Promissory Note is $0.05 per share.
Each of the Promissory Note and the Warrant contain "blocker provisions" such that Tonaquint shall not be permitted to hold by virtue of payment of interest or principal under the Promissory Note or conversion of the Promissory Note or the exercise of the Warrant a number of shares of common stock exceeding 4.99% of the number of shares of the Company’s common stock outstanding (the “4.99% Cap”). The Company shall not be obligated and shall not issue its common stock which would exceed the 4.99% Cap until such time as the 4.99% Cap would no longer be exceeded by any such receipt of shares of common stock by Tonaquint.
Tonaquint's obligation to fund the Company is evidenced by 3 Buyer Mortgage Notes, in the principal amount of $50,000, $150,000, and $400,000. The Buyer Mortgage Notes are secured by certain real property owned by Tonaquint located in Cook County, Illinois. Tonaquint’s obligation to fund the Company is further evidenced by a Promissory Note in the amount of $750,000. Each Buyer Mortgage Note and the Promissory Note is due and payable on or before the earlier of (i) 60 days following the occurrence of the Maturity Date (as defined in the Promissory Note), and (ii) subject to certain conditions described in each Buyer Mortgage Note and the Promissory Note. The Buyer Mortgage Notes and Promissory Note each contain standard events of default related to payment, certain covenants and bankruptcy events.
Pursuant to the Purchase Agreement, the Company shall reserve 75 million shares of common stock beginning on October 1, 2012 and ending 4 months after October 1, 2012. The Company shall not enter into any equity line of credit or financing arrangement or other transaction that involves issuing securities that are convertible into common stock (including without limitation selling convertible debt, warrants or convertible preferred stock), or otherwise issue Common Stock (a) with conversion, exercise or similar mechanics or reset provisions that vary according to the market price of the common stock without a floor at or higher than $0.01 or (b) at a fixed price which is lower than $0.01, without the prior written consent of Tonaquint. Without the prior written consent of Tonaquint, the Company agrees not to declare or make any dividend or other distributions of its assets.
The Purchase Agreement contains representations and warranties of the Company and Tonaquint that are customary for transactions of this kind. The Purchase Agreement contains certain penalties and damages in the event the Tonaquint is unable to sell shares of the Company’s common stock under Rule 144 because the Company is not current in regards to its required reports under the Securities Exchange Act of 1934, as amended, or if the Company fails to timely deliver (generally within five business days) any shares of common stock issuable to Tonaquint upon conversion of the Promissory Note or exercise of the Warrant.
* * * * * * * * * * *
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses in connection with the issuance and distribution of the securities being registered hereby. All such expenses will be borne by the Company; none shall be borne by any selling security holders.
We are paying all of the selling shareholder’s expenses related to this offering, except that the selling shareholder will pay any applicable underwriting discounts and commissions. The fees and expenses payable by us in connection with this Registration Statement are estimated as follows:
Securities and Exchange Commission Registration Fee
|
|
$
|
441.12
|
|
Accounting Fees and Expenses
|
|
$
|
8,000.00
|
|
Legal Fees and Expenses
|
|
$
|
30,000.00
|
|
Miscellaneous Fees and Expenses
|
|
$
|
1,558,88
|
|
Total
|
|
$
|
40,000.00
|
|
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our officers and directors are indemnified as provided by the Nevada Revised Statutes and our Bylaws.
Under the Nevada Revised Statutes, director immunity from liability to a company or its shareholders for monetary liabilities applies automatically unless it is specifically limited by a company's Certificate of Incorporation. Our Certificate of Incorporation does not specifically limit our directors' immunity. Excepted from that immunity are: (a) a willful failure to deal fairly with the company or its stockholders in connection with a matter in which the director has a material conflict of interest; (b) a violation of criminal law, unless the director had reasonable cause to believe that his or her conduct was lawful or no reasonable cause to believe that his or her conduct was unlawful; (c) a transaction from which the director derived an improper personal profit; and (d) willful misconduct.
Our bylaws provide that we will indemnify our directors and officers to the fullest extent permitted by Nevada law; provided, however, that we may modify the extent of such indemnification by individual contracts with our directors and officers; and, provided, further, that we shall not be required to indemnify any director or officer in connection with any proceeding, or part thereof, initiated by such person unless such indemnification: (a) is expressly required to be made by law, (b) the proceeding was authorized by our board of directors, (c) is provided by us, in our sole discretion, pursuant to the powers vested in us under Nevada law or (d) is required to be made pursuant to the bylaws.
Our bylaws also provide that we may indemnify a director or former director of subsidiary corporation and we may indemnify our officers, employees or agents, or the officers, employees or agents of a subsidiary corporation and the heirs and personal representatives of any such person, against all expenses incurred by the person relating to a judgment, criminal charge, administrative action or other proceeding to which he or she is a party by reason of being or having been one of our directors, officers or employees.
Our directors cause us to purchase and maintain insurance for the benefit of a person who is or was serving as our director, officer, employee or agent, or as a director, officer, employee or agent or our subsidiaries, and his or her heirs or personal representatives against a liability incurred by him as a director, officer, employee or agent.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and control persons pursuant to the foregoing provisions or otherwise, we have been advised that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy, and is, therefore, unenforceable.
RECENT SALES OF UNREGISTERED SECURITIES
During the quarter ending September 30, 2012, we issued 10,793,445 common shares for $177,500 in cash. We also granted 13,000,000 common stock for services of executives in the amount of $260,000 which is valued at the trading price of the stock on the date granted and has been recorded as stock payable.
The offer and sale of such shares of our common stock were effected in reliance on the exemptions for sales of securities not involving a public offering, as set forth in Rule 506 promulgated under the Securities Act of 1933 (the “Securities Act”) and in Section 4(2) of the Securities Act, based on the following: (a) the investors confirmed to us that they were “accredited investors,” as defined in Rule 501 of Regulation D promulgated under the Securities Act and had such background, education and experience in financial and business matters as to be able to evaluate the merits and risks of an investment in the securities; (b) there was no public offering or general solicitation with respect to the offering; (c) the investors were provided with certain disclosure materials and all other information requested with respect to our company; (d) the investors acknowledged that all securities being purchased were “restricted securities” for purposes of the Securities Act, and agreed to transfer such securities only in a transaction registered under the Securities Act or exempt from registration under the Securities Act; and (e) a legend was placed on the certificates representing each such security stating that it was restricted and could only be transferred if subsequent registered under the Securities Act or transferred in a transaction exempt from registration under the Securities Act.
Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
|
(i)
|
To include any prospectus required by Section 10(a)(3) of the Securities Act;
|
|
(ii)
|
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
|
|
(iii)
|
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
|
(2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered that remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability of the undersigned registrant under the Securities Act to any purchaser in the initial distribution of the securities:
The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
|
(i)
|
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424 (§ 230.424 of this chapter);
|
|
(ii)
|
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
|
|
(iii)
|
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
|
|
(iv)
|
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
|
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
For the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A (§ 230.430A of this chapter), shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Phoenix, State of Arizona, on November 20, 2012.
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BONANZA GOLDFIELDS CORPORATION
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By:
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/s/
Michael Stojsavljevich
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Michael Stojsavljevich
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President, Chief Executive Officer Chief Financial Officer
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,
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POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers and directors of Bonanza Goldfields Corporation that is filing a registration statement on Form S-1 with the Securities and Exchange Commission under the provisions of the Securities Act of 1933, as amended, hereby constitute and appoint Michael Stojsavljevich
their true and lawful attorney-in-fact and agent, with full power of substitution and re-substitution, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments to the registration statement, including a prospectus or an amended prospectus therein, and all other documents in connection therewith to be filed with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all interests and purposes as they might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or either of them, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
Signature
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Title
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Date
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/s/
Michael Stojsavljevich
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President, Chief Executive Officer, and Chief Financial
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November 20, 2012
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Michael Stojsavljevich
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and Director
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/s/
Peter Cao
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Director
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November 20 , 2012
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Peter Cao
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EXHIBIT INDEX
Exhibit No.
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Description
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3.1
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Articles of Incorporation(1)
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3.2
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Bylaws (1)
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4.1
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$1,660,000 Secured Convertible Note dated October 1, 2012 (3)
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4.2
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Common Stock Purchase Warrant dated October 1, 2012 (3)
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5.1
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Opinion of Logan Law Firm PLC*
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10.1
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Agreement with Gold Explorations, LLC and Bonanza Goldfields, Corp., dated July 1, 2009.(2)
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10.2
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Peter Cao Chief Operating Officer employment agreement (3)
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10.3
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Scott Geisler Chief Executive Officer employment agreement (3)
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10.4
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Note and Warrant Purchase Agreement dated October 1, 2012
(3)
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10.5
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Form of Promissory Note (3)
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10.6
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Form of Mortgage, dated October 1, 2012 (3)
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10.7
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Escrow Agreement dated
October 1, 2012 (3)
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10.8
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Form of Buyer Mortgage Note 1 dated October 1, 2012. (3)
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10.9
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Form of Buyer Mortgage Note 2 dated October 1, 2012.(3)
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10.10
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Form of Buyer Mortgage Note 3 dated October 1, 2012. (3)
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10.11
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Registration rights Agreement, dated October 1, 2012 (3)
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10.12
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Security Agreement dated October 1, 2012
(3)
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14.1
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Code of Ethics (2)
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23.1
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Consent of Logan Law Firm PLC (included in exhibit 5.1)
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Consent of GBH CPAs, PC*
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24.1
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Power of Attorney (included on signature page)
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(1). Incorporated by reference to the same exhibit filed with Amendment No. 3 to the Company’s Registration Statement on Form SB2 (Commission File No. 333-137170).
(2) Filed in the Form 10K for June 18, 2009
(3) Filed in the Form 10Q for March 31, 2012
(4) Filed in the Form 10 K for June 30, 2012.
(5) Incorporated by reference and filed in the Form 8-K on October 5, 2012
*Filed herein
Bonanza Goldfields (PK) (USOTC:BONZ)
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