Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Sep. 30, 2013 | Nov. 03, 2013 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'Bonanza Goldfield Corp. | ' |
Entity Central Index Key | '0001439264 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-13 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--06-30 | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' |
Is Entity a Voluntary Filer? | 'No | ' |
Is Entity's Reporting Status Current? | 'Yes | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 411,982,943 |
Document Fiscal Period Focus | 'Q1 | ' |
Document Fiscal Year Focus | '2014 | ' |
BALANCE_SHEETS
BALANCE SHEETS (USD $) | Sep. 30, 2013 | Jun. 30, 2013 |
CURRENT ASSETS | ' | ' |
Cash | $24,448 | $8,557 |
Interest receivable | ' | 43,770 |
Total current assets | 24,448 | 52,327 |
Property and equipment, net | ' | 123,938 |
Deposits | ' | 300 |
Investment in Gunner Gold LLC | 39,603 | ' |
Mining claims | 250,000 | 560,568 |
TOTAL ASSETS | 314,051 | 737,133 |
CURRENT LIABILITIES | ' | ' |
Accounts payable and accrued liabilities | 134,682 | 199,181 |
Accrued interest | 84,147 | 71,218 |
Lease obligation, current portion | ' | 205,720 |
Disputed payable | 263,950 | 263,950 |
Common stock payable | 432,500 | 432,500 |
Deferred liabilities | 60,000 | 60,000 |
Convertible note payable | ' | 323,926 |
Notes payable | 594,699 | 594,699 |
TOTAL CURRENT LIABILITIES | 1,569,978 | 2,151,194 |
Long-term lease obligation | ' | 54,848 |
TOTAL LIABILITIES | 1,569,978 | 2,206,042 |
COMMON STOCK SUBJECT TO RESCISSION | 985,100 | 985,100 |
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; 325,982,943 and 290,485,137 issued and outstanding, respectively | 32,598 | 29,048 |
Additional paid-in capital | 5,585,225 | 5,547,988 |
Deficit accumulated during exploration stage | -7,858,850 | -8,031,045 |
TOTAL STOCKHOLDERS' DEFICIT | -2,241,027 | -2,454,009 |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $314,051 | $737,133 |
BALANCE_SHEETS_Parenthetical
BALANCE SHEETS (Parenthetical) (USD $) | Sep. 30, 2013 | Jun. 30, 2013 |
Stockholders Equity | ' | ' |
Preferred Stock par value | $0.00 | $0.00 |
Preferred Stock Authorized | 20,000,000 | 20,000,000 |
Preferred Stock Issued | 0 | 0 |
Preferred Stock Outstanding | 0 | 0 |
Common Stock par value | $0.00 | $0.00 |
Common Stock Authorized | 500,000,000 | 500,000,000 |
Common Stock Issued | 325,982,943 | 290,485,137 |
Common Stock Outstanding | 325,982,943 | 290,485,137 |
STATEMENTS_OF_OPERATIONS
STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | 67 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | |
Statements Of Operations | ' | ' | ' |
REVENUE | ' | ' | $619 |
OPERATING EXPENSES: | ' | ' | ' |
General and administrative | 78,545 | 439,841 | 3,363,907 |
Exploration expense | 6,818 | 20,684 | 463,205 |
Impairment of mining claims | ' | ' | 714,700 |
Impairment of other assets | ' | ' | 32,122 |
Total operating expenses | 85,363 | 460,525 | 4,573,934 |
OTHER (INCOME) EXPENSES: | ' | ' | ' |
Other income | -2,500 | ' | -2,500 |
Interest expense | 158,059 | 23,942 | 3,516,868 |
Loss on settlement of litigation | ' | ' | -29,500 |
Loss on conversion of accounts payable | ' | ' | 33,014 |
Loss on debt conversion | ' | ' | 121,770 |
Gain on settlement of note payable to Tonaquint | -106,999 | ' | -106,999 |
Gain on sale of assets to Gunner Gold LLC | -306,118 | ' | -306,118 |
Total other (income) expense | -257,558 | 23,942 | 3,285,535 |
NET INCOME (LOSS) | $172,195 | ($484,467) | ($7,858,850) |
NET INCOME (LOSS) PER COMMON SHARE: | ' | ' | ' |
Basic and diluted | $0 | $0 | ' |
Weighted average common shares outstanding, basic and diluted | 393,799,953 | 320,980,000 | ' |
STATEMENTS_OF_CASH_FLOWS
STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | 67 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ' | ' | ' |
Net loss | $172,195 | ($484,467) | ($7,858,850) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' | ' |
Depreciation | 6,818 | 2,213 | 31,095 |
Stock based compensation and options | ' | 359,261 | 1,869,602 |
Impairment of mining claims | ' | ' | 714,700 |
Impairment of other assets | ' | ' | 32,122 |
Amortization of debt discount | 125,259 | ' | 2,744,881 |
Common stock issued for interest expense | ' | ' | 610,583 |
Loss on settlement of litigation | ' | ' | -29,500 |
Loss on settlement of accounts payable | ' | ' | 33,014 |
Loss on conversion of notes payable | ' | ' | 121,770 |
Gain on settlement of note payable to Tonaquint | -106,999 | ' | -106,999 |
Gain on the sale of assets to Gunner Gold LLC | -306,118 | ' | -306,118 |
Changes in operating assets and liabilities: | ' | ' | ' |
Interest receivable | -14,167 | ' | -57,937 |
Prepaid expenses and other current assets | ' | 20,200 | 7,700 |
Accounts payable and accrued expenses | -20,032 | 20,728 | 197,246 |
Disputed payable | ' | ' | 293,450 |
Deferred liabilities | ' | ' | 60,000 |
Net cash used in operating activities | -143,044 | -82,065 | -1,584,241 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ' | ' | ' |
Investment in mining property | ' | ' | -140,138 |
Purchase of intangible asset | ' | ' | -199,000 |
Deposit | 300 | ' | ' |
Proceeds from sale of assets to Gunner Gold LLC | 433,635 | ' | 433,635 |
Net cash used in investing activities | 433,935 | ' | 94,497 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ' | ' | ' |
Proceeds from notes payable | ' | ' | 355,800 |
Repayment of notes payable | -275,000 | ' | -333,000 |
Proceeds from convertible note payable | ' | ' | 437,389 |
Proceeds from the sale of common stock | ' | 140,000 | 1,054,003 |
Net cash provided by (used in) financing activities | -275,000 | 140,000 | 1,514,192 |
INCREASE (DECREASE) IN CASH | 15,891 | 57,935 | 24,448 |
CASH, BEGINNING OF PERIOD | 8,557 | 85,623 | ' |
CASH, END OF PERIOD | 24,448 | 143,558 | 24,448 |
SUPPLEMENTAL CASH FLOW INFORMATION: | ' | ' | ' |
Interest paid | 2,500 | 1,875 | 670,470 |
Income taxes paid | ' | ' | ' |
NONCASH INVESTING AND FINANCING TRANSACTIONS | ' | ' | ' |
Notes issued to acquire mining claims | ' | ' | 357,000 |
Debt discount | ' | ' | 2,507,342 |
Common stock issued for note modification | ' | ' | 48,387 |
Common stock issued to acquire mining claim | ' | ' | 458,700 |
Common stock issued for fixed assets | ' | ' | 43,872 |
Common stock issued for conversion of debt | 40,787 | ' | 386,346 |
Common stock to be issued for settlement of litigation | ' | ' | 29,500 |
Common stock to be issued for note extension | ' | ' | $15,500 |
1_DESCRIPTION_OF_BUSINESS
1. DESCRIPTION OF BUSINESS | 3 Months Ended |
Sep. 30, 2013 | |
Notes to Financial Statements | ' |
1. DESCRIPTION OF BUSINESS | ' |
Bonanza Goldfields Corporation (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’s areas of exploration are in geopolitically stable North American areas. The Company has acquired 3 sets of mineral properties in the state of Arizona. The mineral properties are contiguous, therefore the three sets are considered as one project. The first is federal mining claims on land managed by the Bureau of Land Management totaling 435 acres. The second property is 130.76 acres of patented land the Company leased for an initial term of two years with an option to buy from Judgetown LLC. The lease agreement with Judgetown LLC was effective on October 15, 2012 and ended on September 20, 2013. The third property is referred to as the Hull land and is approximately 20 acres of patented land. | |
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 significant revenues since inception. As of September 30, 2013, the Company has an accumulated deficit of $7,858,850. 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. |
2_SUMMARY_OF_SIGNIFICANT_ACCOU
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended | ||
Sep. 30, 2013 | |||
Notes to Financial Statements | ' | ||
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | ||
Basis of Presentation | |||
The accompanying unaudited interim consolidated 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 consolidated financial statements and notes thereto contained in the Company's latest Annual Report filed with the SEC on Form 10-K for the year ended June 30, 2013. 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 consolidated financial statements that would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year as reported in the Form 10-K 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. | |||
Cost method investment | |||
The Company accounts for equity investment in private companies using the cost method accounting when the Company does not have the ability to exercise significant influence over the operating and financial policies of the investee. Cost method investment is adjusted only for other-than-temporary declines in fair value, certain distributions and additional investments. In September 2013, the Company acquired a 1% ownership interest in Gunner Gold LLC, a private company incorporated in Delaware. The investment is accounted for using the cost method. | |||
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, 2013, 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, 2013. | |||
Asset Retirement Obligations | |||
The Company had no operating properties at September 30, 2013, 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, 2013 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 | |||
Support Equipment | 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, 2013, the Company did not record any liabilities for uncertain tax positions. | |||
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 Income (Loss) Per Common Share | |||
Net income (loss) per common share was computed by dividing the net income (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. Options and warrants will have a dilutive effect only when the average stock price during the period exceeds the exercise price of the options or warrants (they are in the money). | |||
At September 30, 2013 and 2012, common stock equivalents consisted of warrants to purchase 5,500,000 and 25,500,000 shares of common stock, respectively, which have been antidilutive. | |||
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. | |||
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. |
3_SALE_OF_ASSETS_TO_GUNNER_GOL
3. SALE OF ASSETS TO GUNNER GOLD, LLC | 3 Months Ended |
Sep. 30, 2013 | |
Notes to Financial Statements | ' |
3. SALE OF ASSETS TO GUNNER GOLD, LLC | ' |
On September 20, 2013, the Company entered into an Amended and Restated Asset Purchase Agreement with Gunner Gold, LLC. Pursuant to the terms of the Amended and Restated Asset Purchase Agreement, the Company exchanged the following assets for 3,300,000 units of Gunner Gold, LLC common shares and $433,635 cash: 1) mining equipment and materials with net book value of $117,117; 2) right to conduct mining operations on the Company’s BLM properties for 7 years with the option to acquire the mineral rights for 700,000 additional units of Gunner Gold, LLC’s stock; 3) right to conduct mining operations on the Company’s Hull Lode Mining Claim with a monthly payment of $2,500; 4) the Company’s Judgetown Mining Claim related to a lease agreement with Judgetown, LLC dated September 30, 2012 (See Note 4). The Company will receive 5% of the net proceeds, after the payment of all maintenance costs, earned by Gunner Gold, LLC from the mining operation on BLM properties. Gunner Gold, LLC also assumed $260,568 of the lease obligation pursuant to the lease agreement. $275,000 of the $433,635 proceeds was paid directly to Tonaquint, Inc. to satisfy the Company’s entire obligation to Tonaquint Inc. under the Secured Convertible Promissory Note and Warrant Purchase Agreement entered on October 1, 2012. The 3,300,000 units of Gunner Gold, LLC was valued at $39,600 on the acquisition date and is accounted for using the cost method of accounting because the Company does not have the ability to exercise significant influence over the operating and financial policies of Gunner Gold, LLC. The Company recognized a gain on sale of assets of $306,118 as a result of the transaction. The gain represents the excess of the sum of the fair value of the Company’s investment in Gunner Gold LLC and $433,635 cash over the sum of the carrying value of the assets sold. | |
At September 30, 2013, the Company had a receivable of $57,500 from Gunner Gold, LLC related to this transaction. |
4_PROPERTY_AND_EQUIPMENT
4. PROPERTY AND EQUIPMENT | 3 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Notes to Financial Statements | ' | ||||||||
4. PROPERTY AND EQUIPMENT | ' | ||||||||
Property and equipment consists of the following at September 30, 2013 and June 30, 2013: | |||||||||
September 30, | June 30, | ||||||||
2013 | 2013 | ||||||||
Support equipment | $ | - | $ | 148,215 | |||||
Less: accumulated depreciation | - | -24,277 | |||||||
Net property and equipment | - | 123,938 | |||||||
Depreciation expense was $6,818 and $2,213 for the three months ended September 30, 2013 and 2012, respectively. |
5_MINING_CLAIMS
5. MINING CLAIMS | 3 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Notes to Financial Statements | ' | ||||||||
5. MINING CLAIMS | ' | ||||||||
The following is a detail of mining claims at September 30, 2013 and June 30, 2013: | |||||||||
September 30, | June 30, | ||||||||
2013 | 2013 | ||||||||
Midas Placer Mining Claim (fully impaired) | $ | 565,700 | $ | 565,700 | |||||
Tarantula (Hull Lode) Mining Claim | 250,000 | 250,000 | |||||||
Osiris Gold Joint Venture (fully impaired) | 50,000 | 50,000 | |||||||
Judgetown Mining Claim | - | 310,568 | |||||||
Total mining and equipment activity | 865,700 | 1,176,268 | |||||||
Accumulated impairment of mining claims | (615,700 | ) | (615,700 | ) | |||||
Total Mining Claims | $ | 250,000 | $ | 560,568 | |||||
During the year ended June 30, 2013, 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, 2013 as the Midas Placer Mining Claim was fully impaired during fiscal year 2011. | |||||||||
On September 30, 2012, the Company entered into a lease agreement with Judgetown LLC, an Arizona Limited Liability Company located in Arizona to lease 130.76 acres land in the county of Yavapai, Arizona. The lease is exclusive to the Company and its successors and assigns all of Judgetown LLC’s interest in and to all mining rights and minerals beneath the surface of, within, or that may be produced from the land. The lease is for a period of two years unless terminated pursuant to the lease. The lease obligation, as amended on February 9, 2013, is $200,000 for the first year and $120,000 for the second year. An option to purchase the land was also granted for a price of $1,190,000 less lease payments before January 15, 2015. At June 30, 2013, $310,568 of the discounted value of the lease payments was recorded as the Judgetown Mining Claim as a component of Mining Claims assets. As of June 30, 2013, the Company had recorded a lease obligation payable related to this agreement of $260,568. The Judgetown lease rights were sold on September 20, 2013. See Note 3. |
6_NOTES_PAYABLE
6. NOTES PAYABLE | 3 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Notes to Financial Statements | ' | ||||||||
6. NOTES PAYABLE | ' | ||||||||
The Company had the following notes payable outstanding as of September 30, 2013 and June 30, 2013: | |||||||||
September 30, | June 30, | ||||||||
2013 | 2013 | ||||||||
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 | 2,000 | |||||||
Gold Exploration LLC (l) | |||||||||
Dated July 29, 2010 | 97,000 | 97,000 | |||||||
Freedom Boat, LLC (m) | |||||||||
Dated February 7, 2012 | 250,000 | 250,000 | |||||||
Dr. Linh B. Nguyen (n) | |||||||||
Dated May 23, 2012 | 25,000 | 25,000 | |||||||
Mr. Charles Chapman (o) | |||||||||
Dated December 27, 2012 | 50,000 | 50,000 | |||||||
Tonaquint, Inc. (p) | |||||||||
Dated October 1, 2012 | - | 449,185 | |||||||
Total notes and convertible note payable | 594,699 | 1,043,884 | |||||||
Less debt discount | - | (125,259 | ) | ||||||
Less current portion of long-term debt | (594,699 | ) | (918,625 | ) | |||||
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 September 30 and June 30, 2013, principal and interest payable to Gold Exploration LLC for this note is $73,264 and $71,670, respectively. This agreement required that Gold Exploration LLC perfect the transfer and send the documents to the Company. The transfer was never made and a review of the BLM lists of claims disclosed that Gold Exploration LLC never owned the claims that they attempted to sell to the Company. On August 27, 2013, the Company has demanded the cancellation of the note agreement and remittance of $15,000. Gold Exploration LLC has not yet responded to the Company’s request. | |||||||||
(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, 2013 and June 30, 2013, principal and interest payable to Venture Capital International, Inc. related to this note is $14,683 and $14,532, respectively. Venture Capital has not demanded the repayment of the note. | |||||||||
(c) On May 7, 2009, the Company issued a $17,000 demand promissory note to Venture Capital International, Inc. The note is not secured, due on demand and has an interest rate of 5%. As of September 30, 2013 and June 30, 2013, principal and interest payable to Venture Capital International, Inc. related to this note is $20,712 and $20,498,respectively. Venture Capital has not demanded the repayment of the note. | |||||||||
(d) On July 3, 2009, the Company issued a $17,000 demand promissory note to Advantage Systems Enterprise Limited. The note is not secured, due on demand with an interest rate of 5%. As of September 30, 2013 and June 30, 2013, principal and interest payable to Advantage Systems Enterprise Limited related to this note is $20,614 and $20,400, respectively. Advantage Systems Enterprise Limited has not demanded the repayment of the note. | |||||||||
(e) On August 7, 2009, the Company issued a $10,000 demand promissory note to Advantage Systems Enterprises Limited. The note is not secured, due on demand with an interest rate of 5%. As of September 30, 2013 and June 30, 2013, principal and interest payable to Advantage Systems Enterprise Limited, Inc. related to this note is $12,074 and $11,948, respectively. Advantage Systems Enterprise Limited has not demanded the repayment of the note. | |||||||||
(f) On October 15, 2009, the Company issued a $10,000 demand promissory note to Venture Capital International. The note is not secured, due on demand with an interest rate of 5%. As of September 30, 2013 and June 30, 2013, principal and interest payable to Venture Capital International related to this note is $ $11,979 and $11,853, respectively. Venture Capital has not demanded the repayment of the note. | |||||||||
(g) On October 27, 2009, the Company issued a $7,000 demand promissory note to Venture Capital. The note is not secured, due on demand with an interest rate of 5%. As of September 30, 2013 and June 30, 2013, principal and interest payable to Venture Capital International related to this note is $8,374 and $8,286, respectively. Venture Capital has not demanded the repayment of the note. | |||||||||
(h) On November 9, 2009, the Company issued a $25,000 demand promissory note to Advantage Systems Enterprise Limited. The note is not secured, due on demand with an interest rate of 5%. As of September 30, 2013 and June 30, 2013, principal and interest payable to Advantage Systems Enterprise Limited related to this note is $29,887 and $29,572, respectively. Advantage Systems Enterprise Limited has not demanded the repayment of the note. | |||||||||
(i) On November 23, 2009, the Company issued a $5,000 demand promissory note to Venture Capital International. The note is not secured, due on demand with an interest rate of 5%. As of September 30, 2013 and June 30, 2013, principal and interest payable to Venture Capital International related to this note is $5,963 and $5,900, respectively. Venture Capital International has not demanded the repayment of the note. | |||||||||
(j) On March 31, 2010, the Company issued a $15,000 demand promissory note to Strategic Relations consulting, Inc. The note is not secured, due on demand with an interest rate of 5%. As of September 30, 2013 and June 30, 2013 principal and interest payable to Strategic Relations Consulting, Inc. related to this note is $17,628 and $17,439, respectively. Subsequent to September 30, 2013, Strategic Relations Consulting, Inc. has agreed to convert the note to 15,000 units of Gunner Gold’s stock that the Company acquired on September 20, 2013. | |||||||||
(k) On November 22, 2010, the Company issued a $7,000 demand promissory note to Summit Technologies Corporation, Inc. The note is not secured, due on demand with an interest rate of 5%. As of September 30, 2013 and June 30, 2013, principal and interest payable to Strategic Relations Consulting, Inc. related to this note is $2,436 and $2,411, respectively. Summit Technologies Corporation, Inc. has not demanded the repayment of the note. | |||||||||
(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 September 30 and June 30, 2013, principal and interest payable to Gold Exploration LLC related to this note is $123,214 and $120,280, respectively. This agreement required that Gold Exploration LLC perfect the transfer and send the documents to the Company. The transfer was never made and a review of the BLM lists of claims disclosed that Gold Exploration LLC never owned the claims that they attempted to sell to the Company. On June 2, 2011, Gold Exploration LLC requested to lift the Section 144 restrictive legends without a proper legal opinion and the legends were removed at the direction of David Janney, the Company’s former CEO. On August 27, 2013, the Company demanded the cancellation of the promissory note and the return of the 8,300,000 common shares. Gold Exploration LLC has not yet responded to the Company’s demand. | |||||||||
(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. Proceed from the note was used to purchase Tarantula Mining Claim from Judgetown, LLC. As of September 30 and June 30, 2013, the remaining principal owed was $250,000. This note is presently in default but the Company is negotiating with the holder for an amendment of this note. On September 24, 2013 the Company entered into an agreement with Gunner Gold LLC in which Gunner agreed to pay $2,500 per month to lease the Hull Lode claim for 24 months. The $2,500 received from Gunner Gold LLC will be used to pay the monthly interest payment on the above note. | |||||||||
(n) On April 6, 2011, the Company entered into a demand promissory note with Linh B. Nguyen in the amount of $25,000. The note is not secured, due on demand with an interest rate of 5%. As of September 30 and June 30, 2013, principal and interest payable to Linh B. Nguyen related to this note is $27,942 and $27,627, respectively. Dr. Nguyen has demanded the repayment of this note during the year ended June 30, 2013. The note is currently in default. | |||||||||
(o) On December 27, 2011, the Company issued a $50,000 unsecured 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 payment. 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. 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. During the year ended June 30, 2013, the Company issued the 500,000 common shares related to the March 19, 2012 amendment and an additional 100,000 common shares for one month interest which was valued at 1,950. On October 9, 2013, the $50,000 note and any unpaid interest were settled with 55,000 units of Gunner Gold, LLC stock that the Company acquired on September 20, 2013. | |||||||||
(p) On October 1, 2012, the Company entered into a Secured Convertible Promissory Note and Warrant 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 with a conversion price of $0.05 per share and an annual interest rate of 8% and (ii) a warrant to purchase 158,953,080 shares of the Company’s common stock. The warrant has an exercise price of $0.075 per share and can be exercised at any time within five years after October 1, 2012. 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. | |||||||||
Buyer Mortgage Note 1 was due on the earlier of (1) 60 days following March 31, 2015, and (2) upon the Company’s filing of a registration statement pursuant to the Secured Convertible Promissory Note and Warrant Purchase Agreement. Buyer Mortgage Note 2 was due on the earlier of (1) 60 days following March 31, 2015, and (2) if Tonaquint has been required to repay Buyer Mortgage Note 1, 5 trading date after the initial registration statement is declared effective. Buyer Mortgage Note 3 was due on the earlier of (1) 60 days following March 31, 2015, and (2) if (i) the shares issued to Tonaquint to repay the Secured Convertible Promissory Note are freely saleable or covered by an effective registration statement (ii) Tonaquint has been required to repay Buyer Mortgage Note 2 and (ii) the Company has produced 200 ounces of gold with an average production of at least 1 gram per ton of processed material within 60 days after Tonaquint was required to pay Buyer Mortgage Note 2; (iii) outstanding balance of the Secured Convertible Promissory Note payable to Tonaquint is less or equal to $1.3 million. The $750,000 promissory note receivable from Tonaquint was due on the earlier of (1) 60 days following March 31, 2015, and (2) if (i) the shares issued to Tonaquint to repay the Secured Convertible Promissory Note are freely saleable or covered by an effective registration statement (ii) Tonaquint has been required to repay Buyer Mortgage Note 3 and (ii) the Company has produced 200 ounces of gold with an average production of at least 1 gram per ton of processed material, within 60 days after Tonaquint was required to pay Buyer Mortgage Note 3; (iii) outstanding balance of the Secured Convertible Promissory Note payable to Tonaquint is less or equal to $900,000. | |||||||||
The promissory note was due on April 1, 2015 and the interest was payable monthly. The total amount to be funded is $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 shares of common stock underlying the Secured Convertible Promissory Note and Warrant were to be registered by a registration statement pursuant to the terms and conditions of a registration rights agreement. The registration statement has been withdrawn with Tonaquint’s consent. | |||||||||
Tonaquint initially funded the Company $150,000 in cash and issued three Buyer Mortgage Notes, in the principal amount of $50,000, $150,000, and $400,000 and a promissory note in the amount of $750,000 to the Company pursuant to the agreement. The Buyer Mortgage Notes are secured by certain real property owned by Tonaquint located in Cook County, Illinois. The Buyer Mortgage Notes and the $750,000 promissory note carry interest of 5% per annum. | |||||||||
Pursuant to the purchase agreement, the Company reserved 75,000,000 shares of common stock. The Company has agreed not to 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. The Company agrees not to declare or make any dividend or other distributions of its assets. | |||||||||
The Company’s default status on the Freedom Boat note existed prior to and during negotiations on the transaction with Tonaquint. | |||||||||
As of September 30, 2013, the Company has received net proceeds of $307,514 from Tonaquint. Pursuant to the purchase agreement, warrants to purchase 22,106,057 shares of the Company’s common stock were issued. The Company determined the estimated fair value of the warrants was $1,146,845. $1,146,845 of the proceeds were allocated to the warrants. The promissory note included a beneficial conversion feature of $363,155. The total discount of $1,660,000, including the original issuance discount of $150,000, was amortized over the life of the promissory note commencing upon the receipt of the funding. | |||||||||
Beginning on March 30, 2013, and each month thereafter, the Company was to 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 three lowest volume-weighted average prices of the stock price during the 20 consecutive trading day period immediately preceding the date of the payment date; provided, however, the Company may, at its option as described in the agreement, pay all or any part of such installment amount by redeeming such installment amount in cash or by any combination of a Company conversion and a Company redemption. | |||||||||
At June 30, 2013, the Company offset the notes receivable from Tonaquint of $1,202,486 with notes payable to Tonaquint of $1,651,671 as permitted under the agreement and had interest receivable from Tonaquint of $43,770. During the three months ended September 30, 2013, the Company recorded interest income of $14,167 which was offset with interest expense of $31,537 related to the agreement with Tonaquint. | |||||||||
During the three months ended September 30, 2013, the Company issued Tonaquint 35,497,806 common shares to repay interest of $22,439 and principal of $18,348. | |||||||||
On September 20, 2013, the entire Secured Convertible Promissory Note and Warrant Purchase Agreement with Tonaquint, Inc were settled with a cash payment of $275,000. The Company recorded a $106,999 gain on settlement of note payable related to this settlement. |
7_EQUITY
7. EQUITY | 3 Months Ended |
Sep. 30, 2013 | |
Notes to Financial Statements | ' |
7. EQUITY | ' |
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. | |
Common Stock | |
On July 25, 2013 and August 30, 2013, the Company issued 12,695,369 and 22,802,437 common shares, respectively, to repay accrued interest and principal totaling $40,787 related to the note payable to Tonaquint. |
8_STOCKBASED_COMPENSATION
8. STOCK-BASED COMPENSATION | 3 Months Ended | ||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||
Notes to Financial Statements | ' | ||||||||||||||||||||
8. 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. | |||||||||||||||||||||
There was no warrant activity during the three months ended September 30, 2013. Details of warrants outstanding are presented below: | |||||||||||||||||||||
Shares | Number of | Weighted | Weighted Average | Aggregate | |||||||||||||||||
Available for | Shares Granted | Average | Remaining | Intrinsic Value | |||||||||||||||||
Grant | Exercise Price | Contractual Life | |||||||||||||||||||
(years) | |||||||||||||||||||||
30-Jun-13 | 29,500,000 | 5,500,000 | $ | 0.01 | 1.41 | - | |||||||||||||||
30-Sep-13 | 29,500,000 | 5,500,000 | $ | 0.01 | 1.16 | - |
9_COMMITMENTS_AND_CONTINGENCIE
9. COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Sep. 30, 2013 | |
Notes to Financial Statements | ' |
9. COMMITMENT AND CONTINGENCIES | ' |
The Company believes that through a fraudulent scheme by former management, 86,000,000 shares of our common stock were improperly issued. The Company is in the process of seeking a legal remedy to this issue however, if the Company is not successful in its efforts to cancel the shares, the stock value could be improperly diminished because of the dilution created by this fraudulent scheme to the detriment of the shareholders. The Company will bring an action in the appropriate court against the original recipients of the shares and the former CEO and to request an order to cancel the shares. Securities issued in violation of section 5 are subject to rescission under section 12(a) (l) of the Act. Sections 12(a) (1) of the Securities Act and Section 5 allow purchasers to sue sellers for offering or selling a non-exempt security without registering it. As long as the purchaser can prove a direct link between the purchaser and the seller and the purchaser may obtain rescission with interest or damages if the investor sold his securities for less than he purchased them. The Company did not receive any consideration for the improper sale of the shares and will pursue all legal remedies available to correct this issue including but not limited to bringing an action in federal court to cancel the shares and for damages sustained by the Company. However, if the Company is not successful the stock value could be improperly diminished because of the dilution created by this fraudulent scheme. | |
The Company believes that the former CEO in concert with associates and acting outside his authority defrauded the Company. The legitimate purchasers of the shares could have an action against the seller who knew the shares were not registered or exempt from registration. | |
The Company was not a party to this fraudulent scheme and therefore believes rescission is not available to the Company. The damage sustained by the Company could be at least $985,100, which is the amount that the Company would have realized if the shares had been sold pursuant to a registration statement or as restricted shares to legitimate buyers at the time of this incident. The Company has classified $985,100 as common stocks subject to rescission. | |
On October 1, 2012, Mr. Cao entered into an employment agreement with the Company. Pursuant to the employment agreement, the Company will compensate Mr. Cao $4,000 monthly. In February 2013, Mr. Cao agreed to temporarily terminate the agreement since the Company is not active in mining operations. | |
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 Settlement and Mutual Release Agreement with Mr. Geisler. That Settlement and Mutual Release Agreement superseded the employment agreement dated May 10, 2012. Pursuant to the Settlement and Mutual Release Agreement, Mr. Geisler would receive 7,500,000 shares of the Company’s common stock and $75,000 in the next 25 months commencing July 15, 2012. On June 1, 2012, Mr. Geisler resigned as Chief Executive Officer of the Company. | |
On October 30, 2012, management learned that former President and CEO, Mr. 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. The case has been dismissed due to the Plaintiffs failure to prosecute the case against the Company. | |
Currently, the Company is carrying the amount of $263,950 as disputed payables 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 years ended June 30, 2013 and 2012 and no royalties have been paid. The agreement does not have any commitment dates of when production is to begin. This agreement is in a legal dispute as the Company believes that Gold Exploration LLC never owned the mining claims that should have been transferred to the Company. | |
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 from the Hull Lode Placer Claim and 5% royalty payment from Hull Placer Mine when and if production occurs. There is currently no production. | |
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. |
10_SUBSEQUENT_EVENTS
10. SUBSEQUENT EVENTS | 3 Months Ended |
Sep. 30, 2013 | |
Notes to Financial Statements | ' |
10. SUBSEQUENT EVENTS | ' |
On October 9, 2013, the Company transferred 55,000 units of Gunner Gold LLC to Charles Chapman for the settlement of principal and accrued interest payable to him under the note agreement dated December 27, 2012. | |
Subsequent to September 30, 2013, Strategic Relations Consulting, Inc. has agreed to convert the note to 15,000 units of Gunner Gold’s stock that the Company acquired on September 20, 2013. | |
* * * * * * * * * * * | |
In this Quarterly Report on Form 10-Q, “Company,” “our company,” “us,” and “our” refer to Bonanza Goldfields Corporation, unless the context requires otherwise. | |
2_SUMMARY_OF_SIGNIFICANT_ACCOU1
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended | ||
Sep. 30, 2013 | |||
Notes to Financial Statements | ' | ||
Basis of Presentation | ' | ||
The accompanying unaudited interim consolidated 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 consolidated financial statements and notes thereto contained in the Company's latest Annual Report filed with the SEC on Form 10-K for the year ended June 30, 2013. 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 consolidated financial statements that would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year as reported in the Form 10-K 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. | |||
Cost method investment | ' | ||
The Company accounts for equity investment in private companies using the cost method accounting when the Company does not have the ability to exercise significant influence over the operating and financial policies of the investee. Cost method investment is adjusted only for other-than-temporary declines in fair value, certain distributions and additional investments. In September 2013, the Company acquired a 1% ownership interest in Gunner Gold LLC, a private company incorporated in Delaware. The investment is accounted for using the cost method. | |||
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, 2013, 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, 2013. | |||
Asset Retirement Obligations | ' | ||
The Company had no operating properties at September 30, 2013, 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, 2013 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 | |||
Support Equipment | 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, 2013, the Company did not record any liabilities for uncertain tax positions. | |||
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 Share | ' | ||
Net income (loss) per common share was computed by dividing the net income (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. Options and warrants will have a dilutive effect only when the average stock price during the period exceeds the exercise price of the options or warrants (they are in the money). | |||
At September 30, 2013 and 2012, common stock equivalents consisted of warrants to purchase 5,500,000 and 25,500,000 shares of common stock, respectively, which have been antidilutive. | |||
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. | |||
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. |
2_SUMMARY_OF_SIGNIFICANT_ACCOU2
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended | ||
Sep. 30, 2013 | |||
Summary Of Significant Accounting Policies Tables | ' | ||
Range of estimated useful lives used to calculated depreciation for principal items of property and equipment | ' | ||
Asset Category | Depreciation/ | ||
Amortization Period | |||
Support Equipment | 5 Years |
4_PROPERTY_AND_EQUIPMENT_Table
4. PROPERTY AND EQUIPMENT (Tables) | 3 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Property And Equipment Tables | ' | ||||||||
Schedule of Property and Equipment | ' | ||||||||
September 30, | June 30, | ||||||||
2013 | 2013 | ||||||||
Support equipment | $ | - | $ | 148,215 | |||||
Less: accumulated depreciation | - | -24,277 | |||||||
Net property and equipment | - | 123,938 |
5_MINING_CLAIMS_Tables
5. MINING CLAIMS (Tables) | 3 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Notes to Financial Statements | ' | ||||||||
Mining Claims | ' | ||||||||
September 30, | June 30, | ||||||||
2013 | 2013 | ||||||||
Midas Placer Mining Claim (fully impaired) | $ | 565,700 | $ | 565,700 | |||||
Tarantula (Hull Lode) Mining Claim | 250,000 | 250,000 | |||||||
Osiris Gold Joint Venture (fully impaired) | 50,000 | 50,000 | |||||||
Judgetown Mining Claim | - | 310,568 | |||||||
Total mining and equipment activity | 865,700 | 1,176,268 | |||||||
Accumulated impairment of mining claims | (615,700 | ) | (615,700 | ) | |||||
Total Mining Claims | $ | 250,000 | $ | 560,568 | |||||
6_NOTES_PAYABLE_Tables
6. NOTES PAYABLE (Tables) | 3 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Notes to Financial Statements | ' | ||||||||
Notes Payable Outstanding | ' | ||||||||
September 30, | June 30, | ||||||||
2013 | 2013 | ||||||||
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 | 2,000 | |||||||
Gold Exploration LLC (l) | |||||||||
Dated July 29, 2010 | 97,000 | 97,000 | |||||||
Freedom Boat, LLC (m) | |||||||||
Dated February 7, 2012 | 250,000 | 250,000 | |||||||
Dr. Linh B. Nguyen (n) | |||||||||
Dated May 23, 2012 | 25,000 | 25,000 | |||||||
Mr. Charles Chapman (o) | |||||||||
Dated December 27, 2012 | 50,000 | 50,000 | |||||||
Tonaquint, Inc. (p) | |||||||||
Dated October 1, 2012 | - | 449,185 | |||||||
Total notes and convertible note payable | 594,699 | 1,043,884 | |||||||
Less debt discount | - | (125,259 | ) | ||||||
Less current portion of long-term debt | (594,699 | ) | (918,625 | ) | |||||
Long term debt | $ | - | $ | - |
8_STOCKBASED_COMPENSATION_Tabl
8. STOCK-BASED COMPENSATION (Tables) | 3 Months Ended | ||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||
Notes to Financial Statements | ' | ||||||||||||||||||||
Warrant Activity | ' | ||||||||||||||||||||
Shares | Number of | Weighted | Weighted Average | Aggregate | |||||||||||||||||
Available for | Shares Granted | Average | Remaining | Intrinsic Value | |||||||||||||||||
Grant | Exercise Price | Contractual Life | |||||||||||||||||||
(years) | |||||||||||||||||||||
30-Jun-13 | 29,500,000 | 5,500,000 | $ | 0.01 | 1.41 | - | |||||||||||||||
30-Sep-13 | 29,500,000 | 5,500,000 | $ | 0.01 | 1.16 | - |
1_DESCRIPTION_OF_BUSINESS_Deta
1. DESCRIPTION OF BUSINESS (Details Narrative) (USD $) | Sep. 30, 2013 | Jun. 30, 2013 |
Description Of Business Details Narrative | ' | ' |
Accumulated deficit | $7,858,850 | $8,031,045 |
2_SUMMARY_OF_SIGNIFICANT_ACCOU3
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (Support equipment [Member]) | 3 Months Ended |
Sep. 30, 2013 | |
Support equipment [Member] | ' |
Depreciation and Amortization Period | '5 years |
2_SUMMARY_OF_SIGNIFICANT_ACCOU4
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | Sep. 30, 2012 |
Summary Of Significant Accounting Policies Details Narrative | ' |
Warrants and options in common stock equivalents | 25,500,000 |
3_PROPERTY_AND_EQUIPMENT_Detai
3. PROPERTY AND EQUIPMENT (Details) (USD $) | Sep. 30, 2013 | Jun. 30, 2013 |
Property And Equipment Details | ' | ' |
Support equipment | ' | $148,215 |
Less: accumulated depreciation | ' | -24,277 |
Net property and equipment | ' | $123,938 |
3_PROPERTY_AND_EQUIPMENT_Detai1
3. PROPERTY AND EQUIPMENT (Details Narrative) (USD $) | 3 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Property And Equipment Details Narrative | ' | ' |
Depreciation expense | $6,818 | $2,213 |
5_MINING_CLAIMS_Details
5. MINING CLAIMS (Details) (USD $) | Sep. 30, 2013 | Jun. 30, 2013 |
Total mining and equipment activity | $865,700 | $1,176,268 |
Accumulated impairment of mining claims | -615,700 | -615,700 |
Total Mining Claims | 250,000 | 560,568 |
Midas Placer Mining Claim fully impaired | ' | ' |
Total mining and equipment activity | 565,700 | 565,700 |
Hull Lode Mining Claim Freedom Boat Lease | ' | ' |
Total mining and equipment activity | 250,000 | 250,000 |
Osiris Gold Joint Venture fully impaired | ' | ' |
Total mining and equipment activity | 50,000 | 50,000 |
Judgetown Mining Claim | ' | ' |
Total mining and equipment activity | ' | $310,568 |
6_NOTES_PAYABLE_Details
6. NOTES PAYABLE (Details) (USD $) | Sep. 30, 2013 | Jun. 30, 2013 |
Notes Payable Details | ' | ' |
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 | 2,000 |
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 Nguyen (o) Dated May 23, 2011 | 25,000 | 25,000 |
Charles Chapman (p) Dated December 27, 2011 | 50,000 | 50,000 |
Tonaquint, Inc. Dated October 1, 2012 (q) | ' | 449,185 |
Total notes and convertible note payable | 594,699 | 1,043,884 |
Less debt discount | ' | -125,259 |
Less current portion of long-term debt | -594,699 | -918,625 |
Long-term debt | ' | ' |
8_STOCKBASED_COMPENSATION_Deta
8. STOCK-BASED COMPENSATION (Details) (USD $) | Sep. 30, 2013 | Jun. 30, 2013 |
Stock-Based Compensation Details | ' | ' |
Shares Available for Grant | 29,500,000 | 29,500,000 |
Number of Shares Granted | 5,500,000 | 5,500,000 |
Weighted Average Exercise Price | $0.01 | $0.01 |
Weighted Average Remaining Contractual Life (Years) | '1 year 1 month 28 days | '1 year 4 months 28 days |
Aggregate Intrinsic Value | ' | ' |