ITEM 1. BUSINESS
General
The Company was incorporated under the laws of the State of Delaware in December 2006 under the name “Cold Gin Corporation.” On December 27, 2010, we entered into an Agreement and Plan of Reorganization with Bonanza Gold Corp., a wholly-owned subsidiary of the Company, pursuant to which we merged with and into Bonanza Gold Corp, with Bonanza Gold Corp. being the surviving corporation. In connection with the reincorporation merger we changed our domicile from Delaware to Nevada, our name to Bonanza Gold Corp. and each outstanding share of our common stock was exchanged for one hundred fifty shares of the common stock of the Nevada entity. Thereafter, our trading market experienced some unusual activity. In an effort to stabilize the market, we effectuated a 150:1 reverse stock split on March 4, 2011.
We were initially established to become a developer of Internet media content for mixed martial arts fans and consumers. We have not derived any revenue from the martial arts business. Due to a change of control that occurred in August 2010, we abandoned the martial arts business. Effective December 10, 2010, we transitioned our business focus from that of a developer of Internet media for martial arts to a company engaged in the exploration and mining of minerals.
The Company’s management has experience in the field of mineral exploration and intends to continue to invest resources into our exploration and drilling program, and intends to extend the campaign over the next several years. Depending upon our ability to obtain sufficient funding, we may also acquire additional properties for exploration. In addition, assuming sufficient funding, we plan to engage an internationally recognized mining and geological consultancy firm to assist us in our drilling efforts.
We believe that an expanded exploration and drilling program is currently our best option for increasing the value of our Company. However, we have no revenues, our stock has no trading volume, and we believe our stock price does not reflect the true value of our Company. These factors limit our ability to obtain financing.
In April, 2011, we executed a property purchase agreement for the acquisition of certain assets from Independent Resources, Inc. pursuant to which we acquired an undivided interest in six (6) claims representing 1002.16 ha that has been staked and recorded as MTO Cell Claims. The property is located east of Harrison Lake and northwest of Hope in southwestern British Columbia. We acquired the assets for Ten Thousand Dollars ($10,000), which was funded by a loan from our former Chief Executive Officer. Due to the lack of capital, we have not commenced such exploitation program at this time, we have the legal and functional capability to do so, including the required exploitation permits.
In December 2010, in an effort to generate revenue to continue our operations, we acquired two properties, one located in Arizona and the other in Mexico. In May 2011, we assigned the property located in Arizona and the property located in Mexico back to the original owner that had sold us the properties in exchange for a termination of all of our payment obligations for such assets. In June 2011 we acquired a 75% interest in 28 lode claims and approximately 560 acres in Okanogan County, State of Washington. In May 2013, we assigned the property located in Okanogan County, State of Washington back to the original owner that had sold us the properties in exchange for a termination of all of our payment obligations for such assets. In February 2012 we acquired one (1) patented mining claim (the “Zellweger Patented Claim”) and twenty- six (26) lode mining claims (the “Kelvin Prospect Claims”) in Sections 8, 9 and 17, Township 4 South, Range 13 East, G.&S.R.B.&M., Pinal County, Arizona. In February 2013, we assigned the property located in Pinal County, Arizona back to the original owner that had sold us the properties in exchange for a termination of all of our payment obligations for such assets. While, due to the lack of capital, we have not commenced any exploration program at this time, we have the legal and functional capability to do so, including the required exploration permits when we obtain suitable properties.
Recent Developments
On December 1, 2014, the Board of Directors of the Company decreased the size of the Board of Directors to one through the appointment of Steve Helm as the sole director of the company. Concurrent with Steve Helm’s appointment were the resignations of Craig Russell and Stephen Buxton.
During the year ended December 31, 2013, the Company terminated two Property Purchase Agreements and the properties that had been purchased pursuant to the terms of the agreement reverted to the original property owners. On May 3, 2013, the Company and United Copper Holdings Ltd (“United Copper”) agreed to terminate the purchase agreement dated June 30, 2011 relating to the 28 Lode claims located in Okanogan County, Washington (the “United Copper Agreement”). On February 21, 2013, the Company notified Century Copper LLC of its termination of the a property purchase agreement (the “Century Copper Agreement”) that it entered into with Century Copper LLC on February 21, 2013 for the acquisition of the property known as the Kelvin Project, consisting of one (1) patented mining claim (the “Zellweger Patented Claim”) and twenty-six (26) lode mining claims (the “Kelvin Prospect Claims”) in Sections 8, 9 and 17, Township 4 South, Range 13 East, G.&S.R.B.&M., Pinal County, Arizona. In accordance with the termination provisions contained in the United Copper Agreement, United Copper LLC retained the 125,000 shares of common stock previously issued to it, all documents conveying title claims to the property were released to United Copper and the Company has no further obligations under the United Copper Agreement. In accordance with the termination provisions contained in the Century Copper Agreement, Century Copper LLC retained the Two Hundred Thousand Dollars ($200,000) cash payment previously made to it, all documents conveying title claims to the property were released to Century Copper LLC and the Company has no further obligations under the Century Copper Agreement.
Executive Officers of the Registrant
Steve Helm currently serves as our President, Chief Executive Officer, Treasurer and Secretary. The Company does not have any other executive officers.
Employees
The Company currently has one employee, Steve Helm, who is also our sole officer and a director.
ITEM 1A.
ITEM 1A. RISK FACTORS
An investment in our common stock involves various risks. You should carefully consider the risk factors set forth below in conjunction with the other information contained in this report before purchasing our common stock. If any of the risks discussed in this report actually occur, our business, operating results, prospects and/or financial condition could be adversely impacted. This could cause the market price of our common stock to decline and could cause you to lose all or part of your investment.
Risks Related to our Business and Our Industry
Our business and financial condition are subject to various risks and uncertainties, including, without limitation, those set forth below, any one of which could cause a material reduction in the value of our Company or our ability to raise capital. An investment in our securities is highly speculative and involves an extremely high degree of risk. Therefore, you should thoroughly consider the risk factors discussed below and elsewhere in this Annual Report before purchasing our securities. You should understand that you may lose all or part of your investment. No person should consider investing who cannot afford to lose their entire investment or who is in any significant way dependent upon the funds that they are investing. The risk factors contained herein are not meant to be exhaustive.
Our auditors have expressed a going concern opinion.
We have no established source of revenues, have incurred losses since inception, have a working capital deficit and are in need of capital to grow our operations so that we can become profitable. Accordingly, the opinion of our auditor for the years ended December 31, 2014 and December 31, 2013 expressed substantial doubt as to whether we will be able to continue as a going concern.
This may negatively impact our ability to obtain funding that we may require or to do so on terms attractive to us and may negatively impact the market price of our stock.
A shortfall of funding will have a negative impact on our ability to implement our business plan.
Pursuit of the Company’s business plan is dependent upon obtaining sufficient funding to support such plan. There can be no assurance that we will have the funds necessary to maintain this commitment. Our current operating funds are insufficient either to complete our planned exploration, to fund our commitments or to begin a limited exploitation program. Therefore, we will need to obtain additional funding in order to implement our business plan. There is no guarantee that such funding will be available on terms acceptable to us or at all. Additionally, even if we are able to obtain sufficient funding, there can be no assurance that we will be able to successfully implement our plan or that unanticipated expenses, problems or difficulties will not occur which would result in material delays in its implementation.
Our current business plan contemplates that we will incur significant expenses in connection with the exploration and exploitation, if warranted. We do not currently have sufficient funds to commence a small scale exploration program. We will require additional funding even to conduct limited mining activities. We will also require additional funding if the costs of our exploration or exploitation, if any, are greater than anticipated.
We will require additional funding to sustain our business. We do not currently have any arrangements for funding and we can provide no assurance to investors that we will be able to find such funding on terms acceptable to us or at all. Obtaining additional funding would be subject to a number of factors, including, without limitation, the market prices for copper, silver and gold, investor acceptance of our business plan, the credibility of our exploration results, investor confidence and interest in our sector generally and our Company in particular and general market conditions. These factors may make the timing, amount, terms or conditions of additional funding unavailable to us.
We do not expect to generate revenues in the foreseeable future.
We anticipate that we will continue to incur increased operating expenses into the foreseeable future without realizing any revenues. Consequently, we expect to incur significant losses into the foreseeable future. If we are unable to raise additional funding, we will not be able to continue our operations.
The exploration industry is capital intensive and of high risk.
The industry within which the Company expects to engage in is historically capital intensive and of high risk. The Company’s ability to achieve profitable operations will be dependent upon many factors, including its ability to raise sufficient capital to explore the Assets and ability to discover viable and economic mineralized material. The ability to discover such mineralized materials are subject to numerous factors, most of which are beyond the Company’s control and are not predictable. Exploration for gold is speculative in nature, involves many risks and is frequently unsuccessful. Any exploration program entails risks relating to:
· the ability to discover economic ore deposits;
· the subsurface location of economic ore deposits;
· the development of appropriate metallurgical processes;
· the receipt of necessary governmental approval; and,
· the construction of mining and processing facilities at any site chosen for mining.
In addition, the commercial viability of a mineral deposit is dependent on a number of factors including:
· the price;
· exchange rates; and,
· the particular attributes of the deposit, such as its size, grade and proximity to infrastructure, financing costs, taxation, royalties, land tenure, land use, water use, power use, importing and exporting, and environmental protection.
The effect of these factors cannot be accurately predicted, and the occurrence of any one or more factors could have a material adverse impact on the Company and its proposed operations.
The speculative prices of gold, silver and copper may adversely impact commercialization efforts.
As stated above, exploration and production is highly speculative and involves numerous natural risks that may not be overcome by knowledge and experience. In particular, even if the Company is successful in identifying gold, silver, or copper deposits, for which no assurances can be given, the commercialization will be dependent upon the existing market price for gold, silver, or copper, among other factors. The market price of gold, silver, and copper has historically been unpredictable, and subject to wide fluctuations. The decline in the price of gold, silver, or copper could render a discovered property uneconomic for unpredictable periods of time.
The mineral exploration industry is subject to numerous regulations which may adversely impact our mining efforts.
The mineral exploration and mining industry is subject to numerous statutory and regulatory requirements and controls at various governmental levels. Regulations can impact the manner and methodology of mining activities undertaken by the Company. The impact of such regulations cannot be predicted, and may cause unexpected delays, and/or become cost prohibitive, thereby rendering any prospect uneconomic.
The legal and regulatory environment that pertains to the mining industry is uncertain and may change. Uncertainty and new regulations could increase our operating costs and prevent us from exploring and drilling for mineralized material and developing the assets that we own, even if we determine such development is warranted. In addition to new laws and regulations being adopted, existing laws may be applied to mining operations that have not yet been so applied. Any such new laws may increase our operating costs which could have a material adverse effect on our results of operations and financial condition. Changes in regulatory policy could also have a material adverse effect on our future exploration and future production activities. Any changes in government policy may result in changes to laws affecting, without limitation:
· ownership of our concessions;
· land tenure;
· development of infrastructure;
· mining policies;
· monetary policies;
· taxation;
· rates of exchange;
· environmental regulations; and/or,
· labor relations.
Any such changes may affect our ability to continue our exploration and drilling program, to undertake mining operations with respect to the assets we own in the manner currently contemplated, or our ability to explore or develop future properties. We must take into account the possibility that future governments may adopt substantially different policies, which might extend to expropriation of assets.
Environmental and other risks could have a material adverse impact on our business.
Mining activities pose certain environmental risks and personal injury risks. While the Company will attempt to manage its risks, one or more incidents of environmental damage or personal injury resulting from its mining activities could have a material adverse impact on the business of the Company. If we become subject to onerous government regulations or other legal uncertainties, our business would likely be negatively affected. The government regulates the environmental impacts of mining operations and requires, under certain circumstances, certain environmental permits, work permits, posting of bonds, and the performance of remediation work for any physical or other disturbance to the land or the environment. We may incur significant costs and expenses in connection to comply with such governmental regulations. Depending on market conditions and the options available to us, we may attempt to enter into a joint venture with an operating company or permit an operating company to undertake exploration work. We may also consider seeking equity or debt financing (including borrowing from commercial lenders) or a sale of the Company or its assets.
We have no proven or probable reserves.
We have not established the presence of any proven or probable reserves, as those terms are defined by SEC.
Estimates of mineralized material are based on interpretation and assumptions which may be unreliable.
Estimates of our mineralized material, if any, will be based on interpretation and assumptions and may yield less under actual conditions than current estimates. When making determinations about whether to advance any of our projects to production, we must rely upon such estimated calculations as to the mineralized material on the property. Until the mineralized material is actually mined and processed, any amounts and values can only be considered estimates.
These estimates are imprecise and depend on geological interpretation and statistical inferences drawn from drilling and assay sampling analysis, which may prove to be unreliable. We cannot assure you that the estimates of our future mineralized material will be accurate or that we can mine or process this mineralized material profitably.
Any material changes in estimates of our future mineralized material could affect the economic viability of the assets and could have a material adverse effect on our operations and financial position. There can be no assurance that minerals recovered in small scale will be recovered at production scale.
Our operations are subject to permitting requirements.
Our operations are subject to permitting requirements which could require us to delay, suspend or terminate our operations. Our operations, including but not limited to any exploitation program, require permits from the U.S. government. We may be unable to obtain these permits in a timely manner, on reasonable terms, or at all. If we cannot obtain or maintain the necessary permits, or if there is a delay in receiving these permits, our timetable and business plan for exploration and/or exploitation, may be materially and adversely affected.
Competition in the mining industry is intense and we have limited financial and personnel resources with which to compete.
Competition in the mining industry is extremely intense in all aspects, including but not limited to raising investment capital for exploration and obtaining qualified managerial and technical employees. We are an insignificant participant in the mining industry due to our limited financial and personnel resources. Our competition includes large established mining companies, with substantial capabilities and with greater financial and technical resources than we have As a result of this competition, we may be unable to attract the necessary funding or qualified personnel. If we are unable to successfully compete for funding or for qualified personnel, our mining activities may be slowed, suspended or terminated, any of which would have a material adverse effect on our ability to continue operations.
We may experience supply and equipment shortages.
We may not be able to purchase all of the supplies and materials we need to continue our mining activities due to shortage of funds, lack of availability or other reasons. This could cause us to delay or suspend operations. Competition and unforeseen limited sources of supplies in the industry could result in occasional spot shortages of supplies, such as explosives, and certain equipment, such as bulldozers, drilling equipment and excavators, that we might need to conduct our mining activities. If we cannot find the supplies and equipment we need, we may have to suspend our operations until we do find the supplies and equipment we need. If we are unable to find the supplies in the U.S. or British Columbia but can find them in another location, the cost will increase significantly, as will the time to deliver.
There are risks inherent in doing business in foreign countries.
In the past we have owned property located in Mexico. Risks of doing business in a foreign country could materially and adversely affect our results of operations and financial condition. We face risks normally associated with doing business in a foreign country. These risks include, but are not limited to:
· labor disputes;
· invalidity of governmental orders;
· uncertain or unpredictable political, legal and economic environments;
· war;
· civil and political unrest;
· crime and security issues including but not limited to drug cartel activity;
· property disputes;
· changes to existing laws or policies relating to the mining industry that increase our costs;
· unpredictable changes in or application of taxation regulations;
· delays in obtaining or the inability to obtain necessary governmental permits;
· governmental seizure of land or mining concessions;
· limitations on ownership;
· limitations on the repatriation of earnings;
· increased financial costs;
· import and export regulations, including restrictions on the export of gold, silver and copper; and/or,
· foreign exchange controls.
The occurrence of one or more of these events or a change in existing policy could have a material adverse effect on our cash flows, earnings, results of operations, and financial condition. These risks may limit or disrupt our operations, restrict the movement of funds, impair contract rights, or result in the taking of property by nationalization or expropriation without fair compensation. Finally, any country that is a developing country may make it more difficult for us to obtain required funding.
Defective title to the Assets could have a material adverse effect on our exploration and exploitation activities.
There are uncertainties as to title matters in the mining industry. Consistent with industry practice and, to the best of our knowledge, those rights are in good standing. However, we cannot guarantee that the title to or our rights to explore, exploit and develop our current asset will not be challenged by third parties or governmental agencies. In addition, there can be no assurance that our asset is not subject to prior unregistered agreements, transfers or claims. Our title may be affected by undetected defects. Any such defects could have a material adverse effect on us.
In the event of a dispute regarding title to our assets in foreign countries or any facet of our operations, it would likely be necessary for us to resolve the dispute in a foreign country, where we would be faced with unfamiliar laws and procedures. The resolution of disputes in foreign countries as well as in the U.S. can be costly and time consuming, similar to the situation in the United States. However, in a foreign country, we face the additional burden of understanding unfamiliar laws and procedures. We may not be entitled to a jury trial, as we might be in the United States. Further, to litigate in a foreign country, we would be faced with the necessity of hiring lawyers and other professionals who are familiar with the foreign laws. For these reasons, we may incur unforeseen losses if we are forced to resolve a dispute in a foreign country.
Material losses in excess of insurance coverage could adversely affect our exploration and future production activities.
If we incur material losses or liabilities our financial position could be materially and adversely affected. Mining operations involve a number of risks and hazards including without limitation:
· environmental hazards;
· industrial accidents;
· metallurgical and other processing problems;
· failure of pit walls or dams;
· acts of God; and/or,
· equipment and facility performance problems.
Such risks could have various negative consequences, including, without limitation:
· damage to, or destruction of, mineral properties or production facilities;
· personal injury or death;
· environmental damage;
· delays in exploration; and/or,
· monetary losses.
Industrial accidents could have a material adverse effect on our future business and operations. We do not currently have insurance in place that will cover the risks associated with our mining activities or that we will be able to acquire insurance to cover these risks at economically feasible premiums. We also might become subject to liability for pollution or other hazards which we cannot insure against or which we may elect not to insure against because of premium costs or other reasons. Losses from such events may have a material adverse effect on our ability to continue operations.
We are dependent upon our sole executive officer.
The Company is dependent on Steven Helm, its Chief Executive and Financial Officer, to effectuate many of the Company’s services and plans for the implementation of our proposed activities and business. While Mr. Helm does not have experience in the area of exploring for and/or mining precious metals, his background in real-estate development is beneficial to the Company efforts in developing collaborative agreements and in its efforts to consider diversification. If he were to resign, there is no guarantee that we could replace him with qualified individual(s) in a timely or economic manner, or if at all. Investors must be willing to entrust all of the affairs of the Company to current management.
At the present time we are unable to pay any dividends.
The Company has not paid any cash dividends and does not anticipate paying any cash dividends on its common stock in the foreseeable future. It is anticipated that earnings, if any, which may be generated from operations will be used to finance the continued operations of the Company. Investors who anticipate the immediate need of cash dividends from their investment should refrain from purchasing any of the securities offered hereby.
Future issuance of securities could cause dilution to existing shareholders.
The Company has the authority to issue up to 250,000,000 shares of common stock, and to issue options and warrants to purchase shares of our common stock without stockholder approval. Future issuances of common stock will dilute the holdings of our existing stockholders and may reduce the market price of our common stock. Holders of our common stock are not entitled to preemptive rights.
Certain of our officers may have conflicts of interest.
Certain conflicts of interest exist with respect to management and the operations of the Company. Although management has committed to devote sufficient time and attention to the affairs of the business, management is not subject to any written agreement regarding such matters. Consequently, other business interests may arise which could compromise the time and attention devoted by management to the affairs of the Company.
An adverse evaluation of our internal controls could result in loss of investor confidence.
We are required to annually evaluate our internal controls under Section 404 of the Sarbanes-Oxley Act of 2002 and any adverse results from such evaluation could result in a loss of investor confidence in our financial reports and have a material adverse effect on the price of our common stock. Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, we have furnished a report by our management on internal controls for the fiscal year ended December 31, 2014. Such a report contains, among other matters, our assessment of the effectiveness of our internal controls over financial reporting, including a statement as to whether or not our internal controls are effective. This assessment must include disclosure of any material weakness in our internal controls over financial reporting identified by our management. Due to among other things, our lack of segregation of duties, our internal controls over financial reporting are ineffective as of the date hereof, and there is no assurance that they will be effective in the future. If we are unable to effectuate and maintain the effectiveness of our controls, investors could lose confidence in our financial reports and our stock price may decline.
We are subject to adverse changes in currency values.
Since some of our expenses will be paid in foreign currency, and our investment capital is in United States dollars, we are subject to adverse changes in currency values which will be difficult to prevent or predict. Our operations in the future could be affected by changes in the value of the foreign currency against the United States dollar. At the present time, since we have no production and limited investment, we have no plans or policies to utilize forward sales contracts or currency options to minimize this exposure. If and when these measures are implemented, there is no assurance they will be cost effective or be able to fully offset the effect of any currency fluctuations.
Risks related to Owning Our Stock
Our stock price may be volatile.
Our stock price may be volatile and as a result investors could lose all or part of their investment. In addition to volatility associated with over- the-counter securities in general, the value of any investment could decline due to the impact of any of the following factors upon the market price of our common stock:
· changes in the worldwide price for gold, silver and copper;
· disappointing results from our exploration and drilling efforts;
· fluctuation in production costs that make mining uneconomical;
· unanticipated variations in grade and other geological problems;
· unusual or unexpected rock formations;
· failure to reach commercial production or producing at lower rates than those targeted;
· decline in demand for our common stock;
· downward revisions in securities analysts' estimates or changes in general market conditions;
· investor perception of our industry or our Company; and/or,
· general economic trends.
In addition, stock markets have experienced extreme price and volume fluctuations and the market price of securities has been highly volatile. These fluctuations are often unrelated to asset value and may have a material adverse effect on the market price of our common stock. As a result, investors may be unable to resell their shares at a fair price.
There is currently a limited trading market for our common stock and our stock experiences price fluctuations.
There is currently a limited market for our common stock and we can provide no assurance to investors that a more robust market will develop. If a more robust market for our common stock does not develop, our shareholders may not be able to resell the shares of our common stock they have purchased and they may lose all of their investment. Our stock is thinly traded and is therefore subject to significant fluctuations if the amount of trading increases significantly for a short period of time. Even one large trade could materially affect the price of the stock even though the status of the Company remains unchanged.
The trading price of our common stock may be subject to wide fluctuations. Trading prices of our common stock may fluctuate in response to a number of factors, many of which will be beyond our control, including, without limitation, public announcements regarding our Company, purchases or sales by existing stockholders, changes in government regulations, conditions in our market segment or changes in earnings estimates by analysts. These fluctuations may have a material adverse effect on the trading price of our common stock.
In addition, the stock market in general, and the market for mining companies in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of such companies. Market and industry factors may adversely affect the market price of our common stock, regardless of our operating performance. In the past, following periods of volatility in the market price of a company’s securities, securities class-action litigation has often been instituted. Such litigation, if instituted, could result in substantial costs and a diversion of management’s attention and resources. In addition, we may not have complied in the past with federal and/or state securities laws and regulations, which could potentially result in litigation, penalties and/or fines, other substantial costs and expenses and a substantial diversion of management’s attention and resources.
The value of our common stock is partially related to the value of our mineralized material.
Several factors may affect the prices for mineralized material, including, without limitation:
· global supply and demand;
· global or regional political, economic or financial events and situations;
· investors' expectations with respect to the rate of inflation;
· currency exchange rates;
· interest rates; and/or,
· investment and trading activities of hedge funds and commodity funds.
Reporting our investments in mineral properties as an expense may have a negative impact of our stock price.
We prepare our financial statements in accordance with accounting principles generally accepted in the United States of America and intend to report substantially all exploration and drilling expenditures as expenses until we are able to establish proven or probable reserves. If we are able to establish proven or probable reserves, we would report development expenditures as an asset subject to future amortization using the units-of-production method. Since it is uncertain when, if ever, we will establish proven or probable reserves, it is uncertain whether we will ever report these expenditures as an asset. Accordingly, our financial statements report fewer assets and greater expenses than would be the case if we had proven or probable reserves, which could have a negative impact on our stock price.
ITEM 1B.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2.
ITEM 2. PROPERTIES
The Company rented office space located at Colombia Tower, 701 Fifth Avenue, Office 4263, Seattle, WA 98104, until January 31, 2014, the rent charges were approximately $1,500 per month. The Company is in the process of relocating its offices to Houston, Texas, and will be co-located with another one of Mr. Helm’s business endeavors, and this co-location shall result in benefiting from having no rent obligations through at least the end of 2015.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
We are not currently a party to any legal proceedings, and we are not aware of any proceeding pending or threatened against us by any governmental authority or other party.
ITEM 4.
ITEM 4. MINE SAFETY DISCLOSURES
None.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES
Market Information
Our common stock has been listed on the OTC Bulletin Board under the symbol "BNZA" since January 5, 2011. Prior to this, our common stock was listed on the OTC Bulletin Board under the symbol "CLGC". Our Ordinary Shares were deleted from OTC Bulletin Board (OTCBB), operated by FINRA, effective October 21, 2013 pursuant to FINRA Rule 6530e. There has been limited trading activity for our common stock for each quarter since September 1, 2008 as reported on the OTC Bulletin Board. Subsequently the Company has been listed on the OTC Markets Pink Marketplace.
Holders
As of August 27, 2015 there were approximately 10 shareholders of record of our common stock and 6,923,005 shares of common stock deemed outstanding.
Dividends and Share Repurchases
We have not paid any dividends to our shareholders. There are no restrictions which would limit our ability to pay dividends on common equity or that are likely to do so in the future.
Issuer Purchases of Equity Securities
None.
Equity Compensation Plan Information
Not applicable.
Recent Sales of Unregistered Securities; Uses of Proceeds from Registered Securities
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable because the Company is a smaller reporting company.
ITEM 7.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operations should be read in conjunction with the audited financial statements and notes thereto for the fiscal year ended December 31, 2014, found in this report. In addition to historical information, the following discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Where possible, we have tried to identify these forward looking statements by using words such as “anticipate,” “believe,” “intends,” or similar expressions. Our actual results could differ materially from those anticipated by the forward-looking statements due to important factors and risks including, but not limited to, those set forth under “Risk Factors” in Part I, Item 1A of this report.
Company Overview
The Company was incorporated under the laws of the State of Delaware in December 2006 under the name “Cold Gin Corporation.” On December 27, 2010, we entered into an Agreement and Plan of Reorganization with Bonanza Gold Corp., a wholly-owned subsidiary of the Company, pursuant to which we merged with and into Bonanza Gold Corp, with Bonanza Gold Corp. being the surviving corporation. In connection with the reincorporation merger we changed our domicile from Delaware to Nevada, our name to Bonanza Gold Corp. and each outstanding share of our common stock was exchanged for one hundred fifty shares of the common stock of the Nevada entity. Thereafter, our trading market experienced some unusual activity. In an effort to stabilize the market, we effectuated a 150:1 reverse stock split on March 4, 2011.
We were initially established to become a developer of Internet media content for mixed martial arts fans and consumers. We have not derived any revenue from the martial arts business. Due to a change of control that occurred in August 2010, we abandoned the martial arts business. Effective December 10, 2010, we transitioned our business focus from that of a developer of Internet media for martial arts to a company engaged in the exploration and mining of minerals.
On May 3, 2013, the Company and United Copper Holdings Ltd (“United Copper”) agreed to terminate the purchase agreement dated June 30, 2011 relating to the 28 Lode claims located in Okanogan County, Washington (the “United Copper Agreement”). It was agreed that United Copper would retain all payments it had received under the United Copper Agreement, that no further payments would be required under the United Copper Agreement as all outstanding payments due were forgiven and that the Company would return to United Copper the property and any recorded claims it had previously acquired from United Copper. On June 30, 2011, the Company executed the United Copper Agreement for the acquisition of certain property from United Copper Holdings Ltd. (the “Seller”) pursuant to which the Company acquired a 75% interest in 28 Lode claims and approximately 560 acres. The property is located in Okanogan County, State of Washington. The Company acquired the property from United Copper in exchange for 200,000 shares of its common stock, which was to be issued to United Copper as follows: (i) 100,000 shares were issued upon the closing of the United Copper Agreement; (ii) 50,000 shares were to be issued within 6 months of the closing of the United Copper Agreement; and (iii) 50,000 shares were to be issued within 12 months of the closing of the United Copper Agreement. In addition, United Copper retained a 5% Net Smelter Returns Royalty on the gross mineral production. Pursuant to the terms of the United Copper Agreement, the Company agreed to provide a work commitment (the “Work Commitment”) for the property of $1,000,000 over a 2-year period and the Company will be entitled to earn a further 25% interest in the property after $500,000 of the Work Commitment is expended. The Company also agreed to grant to United Copper an additional 200,000 shares upon discovery of a 25 million ton copper deposit within the Work Commitment period.
In accordance with the termination provisions contained in the United Copper Agreement, United Copper LLC retained the 125,000 shares of common stock previously issued to it, all documents conveying title claims to the property were released to United Copper and the Company has no further obligations under the United Copper Agreement.
On February 21, 2013, the Company notified Century Copper LLC of its termination of the Century Copper Agreement that it entered into on February 21, 2013 for the acquisition of the property known as the Kelvin Project, consisting of one (1) patented mining claim (the “Zellweger Patented Claim”) and twenty-six (26) lode mining claims (the “Kelvin Prospect Claims”) in Sections 8, 9 and 17, Township 4 South, Range 13 East, G.&S.R.B.&M., Pinal County, Arizona. The purchase price for the assets was Two Million Dollars ($2,000,000), which was to be paid as follows: (i) Fifty Thousand Dollars ($50,000) for the Zellweger Patented Claim, of which (x) Ten Thousand Dollars ($10,000) was previously paid upon execution of a letter of intent between the parties; and (y) Forty Thousand Dollars ($40,000) was payable upon execution of the Century Copper Agreement; and (ii) One Million Nine Hundred Fifty Thousand Dollars ($1,950,000), of which (x) One Hundred Fifty Thousand Dollars ($150,000) was payable on or before February 28, 2012; (ii) Two Hundred Thousand Dollars ($200,000) was to be paid annually thereafter commencing on February 28, 2013 until the total amount is paid or the agreement is mutually terminated. In addition, we agreed to issue to the seller One Million (1,000,000) of our post-split shares of common stock, of which (i) Two Hundred Fifty Thousand (250,000) shares was to be issued within four (4) months of the closing of the transactions pursuant to the agreement; (ii) Two Hundred Fifty Thousand (250,000) shares was to be issued within eight (8) months of the closing of the transactions pursuant to the agreement; (iii) Two Hundred Fifty Thousand (250,000) shares was to be issued within twelve (12) months of the closing of the transactions pursuant to the agreement; and (iv) Two Hundred Fifty Thousand (250,000) shares was to be issued within eighteen (18) months of the closing of the transactions pursuant to the agreement.
In accordance with the termination provisions contained in the Century Copper Agreement, Century Copper LLC retained the Two Hundred Thousand Dollars ($200,000) cash payment previously made to it, all documents conveying title claims to the property were released to Century Copper LLC and the Company has no further obligations under the Century Copper Agreement.
In the fourth quarter of 2014, we decided to seek a take-over candidate in an attempt to enhance shareholder value. In the third quarter of 2015, Brightlane Acquisition Corp. acquired a controlling interest in the Company from existing shareholders.
Recent Developments
In connection with the aforementioned change of control, we have been advised that our business will transition into a lease-to-own real estate model in which we will acquire single family homes and portfolios of single family homes and then lease-to-own the properties whereby the lessees will eventually own the home if they so choose. Once the tenants fulfill their obligations under the contract, we will deliver the deed to the lessees. We will actively pursue the acquisition of these types of homes through the purchase of bank REOs, portfolios and other methods of acquisition. In connection with this transition, we expect to change our name to Brightlane Corp.
Critical Accounting Policies
We prepare our financial statements in conformity with GAAP, which requires management to make certain estimates and assumptions and apply judgments. We base our estimates and judgments on historical experience, current trends and other factors that management believes to be important at the time the financial statements are prepared and actual results could differ from our estimates and such differences could be material. We have identified below the critical accounting policies which are assumptions made by management about matters that are highly uncertain and that are of critical importance in the presentation of our financial position, results of operations and cash flows. On a regular basis, we review our accounting policies and how they are applied and disclosed in our financial statements.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Estimates are based on historical experience, management expectations for future performance, and other assumptions as appropriate. Key areas affected by estimates include the assessment of the recoverability of long-lived assets, which is based on such factors as estimated future cash flows. We re-evaluate estimates on an ongoing basis; therefore, actual results may vary from those estimates.
Fair Values of Financial Instruments
The carrying values of cash, accounts receivable, accounts payable and accrued expenses approximate the fair values of these instruments due to their short-term nature. The carrying amount for borrowings under the financing agreement approximates fair value because of the variable market interest rates charged for these borrowings.
Plan of Operations
Steve Helm’s, our Chief Executive Officer, President, Chief Financial Officer, Secretary and Treasurer, extensive background in the real-estate development industry will lend itself well to the future direction of the company with the integration of Brightlane Housing Corp.
Off Balance Sheet Arrangements
There are no off balance sheet arrangements.
Results of Operations for the years ended December 31, 2014 and 2013
For the years ended December 31, 2014 and 2013 we did not generate revenue and net losses were $130,024 and $382,584, respectively.
The net losses were attributable to operating expenses and other income expenses that primarily consisted of expenses related to disposition of properties and interest expense. The operating expenses of $134,014 for the year ended December 31, 2014 were primarily general and administrative in nature and included rent, legal fees, management and consulting fees, and audit and accounting fees. The operating expenses of $180,023 for the year ended December 31, 2013 consisted of the same. The overall decrease in operating expenses of approximately $46,000 is attributable to decreases in maintenance fees related to the terminated property purchase agreement of $12,000; decreased professional fees of $4,000 and rent expense of $16,000.
The decrease in other expense is attributable to the disposition of two properties and consists primarily of accelerated amortization of the associated debt discount in 2013.
Liquidity
At December 31, 2014 we had cash and cash equivalents of $0 and had a working capital deficit of $74,657. We have incurred negative cash flows from operations since inception of the Company. We have spent and expect to continue to spend, substantial amounts in connection with implementing our business strategy, including our planned exploration activities. Based on our current plans, our cash will not be sufficient to enable us to meet our planned operating needs in the next 12 months. We do not have sufficient cash to meet our SEC reporting requirements, and as such are dependent on loans from others and/or raising capital from the sale of our common shares.
Our working capital deficiency at December 31, 2014 and 2013 was $74,657 and $64,568, respectively. The increased deficiency of $10,089 was primarily attributable to a reduction in cash during the period and an increase in accounts payable of $24,132, accrued expenses of $13,000 and a decrease in accrued payroll of $32,500, respectively.
Our net cash used in operating activities for the year ended December 31, 2014 was $40,743 and was primarily the result of a loss of $130,024. Our net cash used in operating activities for the year ended December 31, 2013 was $121,643 and was the result of our net loss of $382,584. Net cash used in investing activities for the year ended December 31, 2014 was $0. Net cash used in investing activities for the year ended December 31, 2013 was $8,312, resulting from our investment in mineral properties for $5,000 and website of $3,312. Our cash provided by financing activities for the year ended December 31, 2014 was $35,000 from the proceeds of a stock subscription that we received. The shares subscribed were issued on March 24, 2014. Our cash provided by financing activities for the year ended December 31, 2013 was $125,000 from the proceeds of a stock subscription that we received.
The actual amount of funds we will need to operate is subject to many factors, some of which are beyond our control. We have based our estimate on assumptions that may prove to be wrong. We may need to obtain additional funds sooner or in greater amounts than we currently anticipate. Potential sources of financing include strategic relationships, public or private sales of our shares or debt and other sources. We may seek to access the public or private equity markets when conditions are favorable due to our long-term capital requirements. We do not have any committed sources of financing at this time, and it is uncertain whether additional funding will be available when we need it on terms that will be acceptable to us, or at all. If we raise funds by selling additional shares of common stock or other securities convertible into common stock, the ownership interest of our existing stockholders will be diluted. If we are not able to obtain financing when needed, we may be unable to carry out our business plan. As a result, we may have to significantly limit our operations and our business, financial condition and results of operations would be materially harmed.
We have no known demands or commitments and are not aware of any events or uncertainties as of December 31, 2014, other than the work commitment previously mentioned, that will result in or that are reasonably likely to materially increase or decrease our current liquidity.
Capital Resources.
We had no material commitments for capital expenditures as of December 31, 2014 and 2013.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable because the Company is a smaller reporting company.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
BONANZA GOLD CORP.
INDEX TO AUDITED FINANCIAL STATEMENTS
DECEMBER 31, 2014 AND 2013
RLB Certified Public Accountant PLLC
PO Box 48261 Saint Petersburg, FL 33743
Cell 727-452-4803 Email robin@rlbcpa.biz
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of:
BONANZA GOLD CORP.
Columbia Tower
701 Fifth Avenue - Office 4263
Seattle, WA 98104
I have audited the accompanying balance sheets of Bonanza Gold Corp. as of December 31, 2014 and 2013 and the related statements of income, comprehensive income, stockholders' equity and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audits.
I conducted my audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor was I engaged to perform, an audit of its internal control over financial reporting. My audit 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, I express no such opinion. An audit also 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. I believe that my audits provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bonanza Gold Corp. as of December 31, 2014 and 2013, and the results of its operations and its cash flows for the years then ended, 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 2 to the financial statements, the Company has recurring operating losses, working capital deficiencies, negative cash flows from operating activities, adverse financial ratios, and a stockholders' deficit. The Company is requiring traditional financing or equity funding to continue its operating activities. These conditions 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 2. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. My opinion is not modified with respect to this matter.
RLB Certified Public Accountant PLLC
Gulfport, Florida
August 31, 2015
BONANZA GOLD CORP.
BALANCE SHEETS
The accompanying notes to the audited financial statements are an integral part of these statements.
BONANZA GOLD CORP.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
The accompanying notes to the audited financial statements are an integral part of these statements.
BONANZA GOLD CORP.
STATEMENT OF STOCKHOLDERS' DEFICIT
The accompanying notes to the audited financial statements are an integral part of these statements.
BONANZA GOLD CORP.
STATEMENTS OF CASH FLOWS
The accompanying notes to the audited financial statements are an integral part of these statements.
BONANZA GOLD CORP.
NOTES TO THE AUDITED FINANCIAL STATEMENTS
DECEMBER 31, 2014 AND 2013
NOTE 1 - ORGANIZATION AND BUSINESS
Bonanza Gold Corp. (“we” the “Company” or the “Registrant”) was incorporated under the laws of the State of Delaware in December 2006 under the name “Cold Gin Corporation.” Effective December 10, 2010, we transitioned our business focus from that of a developer of Internet media for martial arts to a company engaged in the exploration and mining of minerals. On December 27, 2010, we entered into an Agreement and Plan of Reorganization with Bonanza Gold Corp., a wholly-owned subsidiary of the Company, pursuant to which we merged with and into Bonanza Gold Corp, with Bonanza Gold Corp. being the surviving corporation.
NOTE 2 - GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, the Company incurred losses of approximately $1,231,500, has not yet produced revenues from operations, and has a working capital deficit. These factors raise substantial doubt about the Company's ability to continue as a going concern.
The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event that the Company cannot continue as a going concern. Management anticipates that it will be able to raise additional working capital through the issuance of stock and through additional loans and advances from investors.
The ability of the Company to continue as a going concern is dependent upon the Company’s ability to attain a satisfactory level of profitability and obtain suitable and adequate financing. There can be no assurance that management's plan will be successful.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Financial Statements and related disclosures have been prepared pursuant to the rules and regulations of the SEC. The Financial Statements have been prepared using the accrual basis of accounting and accounting principles generally accepted in the United States of America (“GAAP” accounting). The Company has adopted a December 31 fiscal year end. (See Note 2, Going Concern, regarding the assumption that the Company is a “going-concern”).
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company accounts for cash and cash equivalents under FASB ASC 305, “Cash and Cash Equivalents”, and considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company had $0 and $5,457 cash at December 31, 2014 and 2013, respectively.
Cash Flows Reporting
The Company follows ASC 230, “Statement of Cash Flows,” for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by ASC 230 to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period.
Commitments and Contingencies
The Company follows ASC 450-20, “Loss Contingencies,” to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. There were no commitments or contingencies at December 31, 2014 and 2013.
Comprehensive Income
The Company has established standards for reporting and display of comprehensive income, its components and accumulated balances. When applicable, the Company would disclose this information on its Statement of Stockholders’ Deficit.
Deferred Income Taxes and Valuation Allowance
The Company accounts for income taxes under ASC 740, “Income Taxes”. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. No deferred tax assets or liabilities were recognized at December 31, 2014 or 2013.
Earnings (Loss) Per Share
The Company computes basic and diluted earnings per share amounts in accordance with ASC Topic 260, “Earnings per Share.” Basic earnings per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company.
Foreign Currency
The operations of the Company are located in United States. The Company maintains both U.S. Dollar and British Pound Sterling accounts. The functional currency is the United States Dollar. Transactions in foreign currencies other than the functional currency, if any, are re-measured into the functional currency at the rate in effect at the time of the transaction. Re-measurement gains and losses that arise from exchange rate fluctuations are included in income or loss from operations. Monetary assets and liabilities denominated in the functional currency are translated into U.S. Dollars at the rate in effect at the balance sheet date. Revenue and expenses denominated in the functional currency are translated at the spot exchange rate. Other comprehensive income includes the foreign exchange gains and losses that arise from translating from the functional currency into U.S. Dollars.
Financial Instruments
The Company’s balance sheet includes certain financial instruments: primarily accounts payable and, accrued expenses. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization.
ASC 820, “Fair Value Measurements and Disclosures,” defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
·
Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities
·
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
·
Level 3 - Inputs that are both significant to the fair value measurement and unobservable.
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2014. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments.
Long-lived Assets
Long-lived assets such as property, equipment and identifiable intangibles are reviewed for impairment whenever facts and circumstances indicate that the carrying value may not be recoverable. When required impairment losses on assets to be held and used are recognized based on the fair value of the asset. The fair value is determined based on estimates of future cash flows, market value of similar assets, if available, or independent appraisals, if required. If the carrying amount of the long-lived asset is not recoverable from its undiscounted cash flows, an impairment loss is recognized for the difference between the carrying amount and fair value of the asset. When fair values are not available, the Company estimates fair value using the expected future cash flows discounted at a rate commensurate with the risk associated with the recovery of the assets. We did not recognize any impairment losses for any periods presented.
Mineral Properties
The Company follows ASC 930, “Extractive Activities - Mining,” for its mineral properties. Mineral properties and related mineral rights acquisition costs are capitalized pending determination of whether the drilling has found proved reserves. If a mineral ore body is discovered, capitalized costs will be amortized on a unit-of-production basis following the commencement of production. Otherwise, capitalized acquisition costs are expensed when it is determined that the mineral property has no future economic value. General exploration costs and costs to maintain rights and leases, including rights of access to lands for geophysical work and salaries, equipment, and supplies for geologists and geophysical crews are expensed as incurred. When it is determined that a mining deposit can be economically and legally extracted or produced based on established proven and probable reserves, further exploration costs and development costs as well as interest costs relating to exploration and development projects that require greater than six (6) months to be readied for their intended use incurred after such determination will be capitalized. The establishment of proven and probable reserves is based on results of final feasibility studies which indicate whether a property is economically feasible. Upon commencement of commercial production, capitalized costs will be transferred to the appropriate asset categories and amortized on a unit-of-production basis. Capitalized costs, net of salvage values, relating to a deposit which is abandoned or considered uneconomic for the foreseeable future will be written off. The sale of a partial interest in a proved property is accounted for as a cost recovery and no gain or loss is recognized as long as this treatment does not significantly affect the unit-of-production amortization rate. A gain or loss will be recognized for all other sales of proved properties and will be classified in other operating revenues. Maintenance and repairs are charged to expense, and renewals and betterments are capitalized to the appropriate property and equipment accounts.
The provision for depreciation, depletion and amortization (“DD&A”) of mineral properties is calculated on a property-by-property basis using the unit-of-production method. Taken into consideration in the calculation of DD&A are estimated future dismantlement, restoration and abandonment costs, which are net of estimated salvage values. Upon becoming fully amortized, the related cost and accumulated amortization are removed from the accounts.
To date, the Company has not established the economic feasibility of any exploration prospects; therefore, all general exploration costs, if any, are expensed.
Property, Plant, and Equipment
The Company follows ASC 360, “Property, Plant, and Equipment”, for its fixed assets. Equipment is stated at cost less accumulated depreciation. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets (3 years). All equipment with an acquisition value greater than $500 and a useful life of over one year is capitalized.
Related Parties
The Company follows ASC 850, “Related Party Disclosures,” for the identification of related parties and disclosure of related party transactions.
Restricted Stock
The Company issues restricted stock to consultants for various services. Cost for these transactions are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is measurable more reliably measurable. The value of the common stock is measured at the earlier of (i) the date at which a firm commitment for performance by the counterparty to earn the equity instruments is reached or (ii) the date at which the counterparty's performance is complete.
Stock-Based Compensation
FASB ASC 718 “Compensation - Stock Compensation,” prescribes accounting and reporting standards for all stock-based payments award to employees, including employee stock options, restricted stock, employee stock purchase plans and stock appreciation rights, may be classified as either equity or liabilities. The Company determines if a present obligation to settle the share-based payment transaction in cash or other assets exists. A present obligation to settle in cash or other assets exists if: (a) the option to settle by issuing equity instruments lacks commercial substance or (b) the present obligation is implied because of an entity’s past practices or stated policies. If a present obligation exists, the transaction should be recognized as a liability; otherwise, the transaction should be recognized as equity.
The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC 505-50 “Equity - Based Payments to Non-Employees.” Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.
Recently Issued Accounting Pronouncements
Except for rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of grandfathered standards, the FASB Accounting Standards Codification™ (“ASC”) is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company.
We have reviewed the FASB issued Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.
In August 2014, FASB issued Accounting Standards Update (ASU) No. 2014-15, Presentation of Financial Statements - Going Concern; Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendments in this update provide guidance in GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. In doing so, the amendments should reduce diversity in the timing and content of footnote disclosures. The guidance is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early adoption is permitted but not required; at this time we are not early adopting As the objective of this accounting standard is to provide guidance on the disclosure of uncertainties about an entity’s ability to continue as a going concern, the adoption of this standard is not expected to impact our financial position or results of operations.
In June 2014, FASB issued Accounting Standards Update (ASU) No. 2014-12 Compensation - Stock Compensation (Topic 718), Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. A performance target in a share-based payment that affects vesting and that could be achieved after the requisite service period should be accounted for as a performance condition under Accounting Standards Codification (ASC) 718, Compensation - Stock Compensation. As a result, the target is not reflected in the estimation of the award’s grant date fair value. Compensation cost would be recognized over the required service period, if it is probable that the performance condition will be achieved. The guidance is effective for annual periods beginning after December 15, 2015 and interim periods within those annual periods. Early adoption is permitted but not required; at this time we are not early adopting. As the objective of the amendments in this update is to resolve diverse accounting treatments of these particular share-based awards adoption of this guidance is not expected to impact our financial position or results of operations.
In June 2014, the FASB issued ASU 2014-10, “Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation.” The amendments in this update remove all incremental financial reporting requirements from U.S. GAAP for development stage entities and also eliminate an exception provided to development stage entities in Topic 810, Consolidation, for determining whether an entity is a variable interest entity on the basis of the amount of investment equity that is at risk. These amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. Early application of each of the amendments is permitted for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued (public business entities) or made available for issuance (other entities). We have elected to early adopt at June 30, 2014. As the objective of the amendments in this update is to improve financial reporting by reducing the cost and complexity associated with the incremental reporting requirements for development stage entities adoption of this guidance did not impact our financial position or results of operations.
NOTE 4 - EMPLOYMENT AGREEMENTS
On June 24, 2011 the Company appointed Mr. Craig Russell to its board of directors. Until December 1, 2014, Mr. Russell also served as the Company’s Chief Executive Officer and had an employment agreement with the Company that required monthly compensation of $6,500. Total compensation paid on this employment agreement was $0 for the year ended December 31, 2014 and $78,000 for the year ended December 31, 2013. On December 15, 2014, Mr. Russell agreed to waive all accrued compensation, which was recorded as additional paid in capital. At December 31, 2014 and 2013, accrued payroll was $0 and $32,500, respectively.
NOTE 5 - PROPERTY, PLANT, AND EQUIPMENT
Capitalized property and equipment, net of accumulated depreciation, consisted of the following as of December 31, 2014 and 2013:
Property and equipment are depreciated using the straight-line method. Depreciation expense was $969 and $969 for the years ended December 31, 2014 and 2013, respectively.
NOTE 6- SHAREHOLDERS’ EQUITY
Common Stock
The Company has 250,000,000 authorized common shares with a par value of $0.001 per share. Each common share entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.
During the period ended December 31, 2013, the Company agreed to issue 625,000 shares of restricted common stock in exchange for $125,000 received.
On March 24, 2014, 625,000 shares of restricted common stock were issued, eliminating the corresponding reduction in equity of $125,000. Also on March 14, 2014 an additional 175,000 restricted common shares were issued in exchange for $35,000.
Each Unit consists of one share of common stock of the Company and one common share purchase warrant subject to adjustment. Each warrant was not transferable and entitled the holder thereof to purchase one share of common stock of the Company for a period of three (3) years, at a price of $1.25 per Warrant Share.
There were 6,923,005 and 6,123,005 common shares issued and outstanding at December 31, 2014 and 2013, respectively.
Preferred Stock
The Company has no issued or authorized preferred stock.
Warrants issued in connection with sale of common shares
Description of warrants
(iii) Warrants issued during quarterly period ended March 31, 2012
For the period ended March 31, 2012, in connection with the sale of 300,000 and 2,500,000 shares of its common stock at $0.20 and $0.10 per share respectively or $310,000 in gross proceeds to the investors, the Company issued warrants to purchase 2,800,000 shares of its common stock exercisable at $1.25 per share, such warrants expiring three (3) years from the date of issuance.
The fair value of the warrant grant estimated on the date of grant uses the Black-Scholes Option-Pricing Model with the following assumptions:
* As a thinly traded public entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public traded goldmine companies to calculate the expected volatility. The reason for selecting comparable public traded goldmine companies is that the Company plans to engage in goldmine business. The Company calculated five (5) comparable public traded goldmine companies’ historical volatility over the expect life of the warrants and averaged the five (5) comparable public traded goldmine companies’ historical volatility as its expected volatility.
The Company allocated the gross proceeds of $310,000 between common stock and warrants based on their relative fair value, estimated on the date of grant, valued common stock and the warrant at $257,920 and $52,080, respectively, using the Black-Scholes Option-Pricing Model with the above assumptions.
(iv) Warrants issued on September 4, 2012
On September 4, 2012, in connection with the sale of 750,000 shares of its common stock at $0.20 per share or $150,000 in gross proceeds to the investor, the Company issued warrants to purchase 750,000 shares of its common stock exercisable at $1.25 per share, such warrants, as amended on July 14, 2015, expiring four (4) years from the date of issuance.
The fair value of the warrant grant estimated on the date of grant uses the Black-Scholes Option-Pricing Model with the following assumptions:
* As a thinly traded public entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public traded goldmine companies to calculate the expected volatility. The reason for selecting comparable public traded goldmine companies is that the Company plans to engage in goldmine business. The Company calculated five (5) comparable public traded goldmine companies’ historical volatility over the expect life of the warrants and averaged the five (5) comparable public traded goldmine companies’ historical volatility as its expected volatility.
The Company allocated the gross proceeds of $150,000 between common stock and warrants based on their relative fair value, estimated on the date of grant, valued common stock and the warrant at $115,230 and $34,770, respectively, using the Black-Scholes Option-Pricing Model with the above assumptions.
(v) Warrants issued on December 3, 2012
On December 3, 2012, in connection with the sale of 225,000 shares of its common stock at $0.20 per share or $45,000 in gross proceeds to the investor, the Company issued warrants to purchase 225,000 shares of its common stock exercisable at $1.25 per share, such warrant, as amended on July 14, 2015, expiring four (4) years from the date of issuance.
The fair value of the warrant grant estimated on the date of grant uses the Black-Scholes Option-Pricing Model with the following assumptions:
* As a thinly traded public entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public traded goldmine companies to calculate the expected volatility. The reason for selecting comparable public traded goldmine companies is that the Company plans to engage in goldmine business. The Company calculated five (5) comparable public traded goldmine companies’ historical volatility over the expect life of the warrants and averaged the five (5) comparable public traded goldmine companies’ historical volatility as its expected volatility.
The Company allocated the gross proceeds of $45,000 between common stock and warrants based on their relative fair value, estimated on the date of grant, valued common stock and the warrant at $33,838 and $11,162, respectively, using the Black-Scholes Option-Pricing Model with the above assumptions.
(vi) Warrants issued on March 24, 2014
On March 24, 2014, in connection with the issue of 800,000 units comprised of one common share and one warrant each, the Company issued warrants to purchase 800,000 shares of its common stock exercisable at $1.25 per share, such warrants, as amended on July 14, 2014, expiring four (4) years from the date of issuance.
The fair value of the warrant grant estimated on the date of grant uses the Black-Scholes Option-Pricing Model with the following assumptions:
* As a thinly traded public entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public traded goldmine companies to calculate the expected volatility. The reason for selecting comparable public traded goldmine companies is that the Company plans to engage in goldmine business. The Company calculated five (5) comparable public traded goldmine companies’ historical volatility over the expect life of the warrants and averaged the five (5) comparable public traded goldmine companies’ historical volatility as its expected volatility.
The Company allocated the gross proceeds of $160,000 between common stock and warrants based on their relative fair value, estimated on the date of grant, valued common stock and the warrant at $148,126 and $11,874, respectively, using the Black-Scholes Option-Pricing Model with the above assumptions.
Summary of warrant activities
The table below summarizes the Company’s non-derivative warrant activities through December 31, 2014:
The following table summarizes information concerning outstanding and exercisable warrants as of December 31, 2014:
NOTE 7 - INCOME TAXES
The Company has not recognized an income tax benefit for its operating losses generated based on uncertainties concerning its ability to generate taxable income in future periods. The tax benefit for the periods presented is offset by a valuation allowance established against deferred tax assets arising from the net operating losses and other temporary differences, the realization of which could not be considered more likely than not. In future periods, tax benefits and related deferred tax assets will be recognized when management considers realization of such amounts to be more likely than not.
At December 31, 2014 the Company has incurred net operating losses of approximately $1,231,500 resulting in a net operating loss carry-forward for income tax purposes. Net operating losses begin expiring in 2026. The loss also results in a deferred tax asset of approximately $431,000 at the effective statutory rate. The deferred tax asset has been off-set by an equal valuation allowance.
The reconciliation of the effective income tax rate to the federal statutory rate is as follows:
NOTE 8 - RELATED PARTY TRANSACTIONS
Mr. Craig Russell sat on the board of directors and also served as the Company’s Chief Executive Officer, until his resignation on December 1, 2014. His employment agreement with the Company stipulated monthly compensation of $6,500.
Total compensation paid or accrued on this employment agreement was $0 for the year ended December 31, 2014 and $78,000 for the year ended December 31, 2013. On December 15, 2014, Mr. Russell waived in full, $81,780, representing a prior year balance of $7,030 and a current year total of $74,750 in accrued compensation and which was recorded as additional paid in capital.
NOTE 9 - SUBSEQUENT EVENTS
Management has evaluated subsequent events through the date the financial statements were issued. Based on our evaluation the below listed events/transactions occurred and require adjustment or disclosure.
On July 14, 2015, the Company’s Board of Directors, not subject to stockholder approval, approved the Amendment and Restatement of Outstanding Warrants. The amendments extend the expiry date for a period of one year and add a provision for cashless exercise.
The following table shows the Company's warrants that have been amended:
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
On May 1, 2014, Messineo & Co., CPAs, LLC (M&Co) declined to stand for reappointment as our independent auditors and the Company engaged RLB Certified Public Accountant PLLC (RLBCPA) of Saint Petersburg, Florida, as its new registered independent public accountant. Our Board of Directors participated in and approved the decision to engage RLBCPA.
There were no disagreements with accountants on accounting and financial disclosure for the year ended December 31, 2014.
ITEM 9A.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
The Company has adopted and maintains disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the reports filed under the Exchange Act, such as this annual report, is collected, recorded, processed, summarized and reported within the time periods specified in the rules of the SEC. The Company’s disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to management to allow timely decisions regarding required disclosure. As required under Exchange Act Rule 13a-15, the Company’s management, including the Chief Executive Officer who also serves as our Principal Financial Officer, has conducted an evaluation of the effectiveness of disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Office who also serves as our Principal Financial Officer concluded that the disclosure controls and procedures are ineffective.
The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: domination of management by a single individual without adequate compensating controls, lack of a majority of outside directors on board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; inadequate segregation of duties consistent with control objectives, lack of a majority of outside directors on board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures, ineffective oversight of the entity’s financial reporting and internal control by management and those charged with governance, and lack of an audit committee. These material weaknesses were identified by our Chief Executive Officer who also serves as our Chief Financial Officer in connection with the above annual evaluation.
Management believes that the material weaknesses did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and inadequate segregation of duties results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.
Management recognizes that its controls and procedures would be substantially improved if we had an audit committee and two individuals serving as officers and as such is actively seeking to remediate this issue.
Management’s Report on Internal Control over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). The Company’s internal control over financial reporting is designed to provide reasonable assurance to the Company’s management and board of directors regarding the preparation and fair presentation of published financial statements. Management conducted an assessment of the Company’s internal control over financial reporting based on the framework and criteria established by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework. Based on the assessment, management concluded that, as of December 31, 2013, the Company’s internal control over financial reporting is ineffective based on those criteria.
The Company’s management, including its Chief Executive Officer who also serves as our Chief Financial Officer, does not expect that the Company’s disclosure controls and procedures and its internal control processes will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of error or fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that the breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.
Management’s Remediation Initiatives
In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate, the following series of measures:
We will create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to us. And, we plan to appoint one or more outside directors to our board of directors who shall be appointed to an audit committee resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management when funds are available to us.
Management believes that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on our Board.
We will work as quickly as possible to implement these initiatives; however, the lack of adequate working capital and positive cash flow from operations will likely slow this implementation.
Changes in Internal Control
There have been no changes in internal controls over the financial reporting that occurred during the quarter ending December 31, 2013, that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this annual report.
ITEM 9B.
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Below is certain information regarding our director and executive officer as of December 1, 2014.
Name Age
Steven Helm Chairman, President Chief Executive Officer, Chief Financial officer, Sole Director
Mr. Helm has served as a commercial real estate executive materially involved in the areas of finance, development/acquisition and property management for the last 24 years. Prior to joining New Regional Planning as its CFO, from 2004 -2009 he served as Regional Director for Imperial Capital Bank/Bancorp (NYSE), launching the Texas/Rocky Mountain commercial real estate lending platform as part of the firm’s national expansion. In that capacity, he opened and managed four commercial real estate loan production offices (Dallas, Austin, Denver & Kansas City) covering the Texas, New Mexico, Oklahoma, Arkansas, Colorado and Kansas market areas and funded in excess of $500 million of structured debt (construction & bridge) and portfolio permanent credit facilities from $500K to $20 million for all core property types.
Prior to Imperial, he was President of the family business, The Helm Companies, directing the ground up development, re-development, financing and management of small retail and Class A, B & C multifamily. During his tenure with the family enterprise, Steve secured over $60 million of FHA (221 D-4 & 223F) and conventional bank debt as well as LIHTC, private and mezzanine equity financing and supervised the management of a multifamily portfolio of 6 properties comprising over 900 units. Steve has earned the National Apartment Assoc. CAPS Designation and is an CPM Candidate. Steve holds an MBA from the Cox School of Business, Southern Methodist University and a BBA - Finance from the University of Texas at Austin.
Employees
At December 31, 2014 we had one employee.
Directors’ Term of Office
Directors will hold office until the next annual meeting of stockholders and the election and qualification of their successors. Officers are elected annually by our board of directors and serve at the discretion of the board of directors.
Director Independence
Although our securities do not trade on any national securities exchange, for purposes of independence we use the NASDAQ definition of independence. Our director, Steven Helm, is not independent because of his position as an executive officer of the Company. Stephen Buxton is independent in accordance with the NASDAQ definition for independence.
Audit Committee and Audit Committee Financial Expert
Our board of directors acts as our audit committee and compensation committee. We do not have an “audit committee financial expert,” as that term is defined in Item 407(d) of Regulation S-K promulgated under the Securities Act. The board of directors believes that its members are financially literate and experienced in business matters and are capable of (1) understanding generally accepted accounting principles (“GAAP”) and financial statements, (2) assessing the general application of GAAP principles in connection with our accounting for estimates, accruals and reserves, (3) analyzing and evaluating our financial statements, (4) understanding our internal controls and procedures for financial reporting, and (5) understanding audit committee functions, all of which are attributes of an audit committee financial expert. However, the board of directors believes that no audit committee member has obtained these attributes through the experience specified in the SEC's definition of “audit committee financial expert.” Further, as is the case with many small companies, it would be difficult for us to attract and retain board members who qualify as “audit committee financial experts,” and competition for such individuals is significant. The board of directors believes that its current audit committee is able to fulfill its role under SEC regulations despite not having a designated “audit committee financial expert.”
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company’s executive officers, directors and persons who beneficially own more than ten percent of a registered class of the Company’s equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of the Company’s common stock. Such officers, directors and persons are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms that they file with the SEC.
Based solely on a review of the copies of such forms that were received by the Company, or written representations from certain reporting persons that no Form 5s were required for those persons, the Company is not aware of any failures to file reports or report transactions in a timely manner during the Company’s fiscal year ended December 31, 2014 other than the filing of a Form 3 during fiscal year ended December 31, 2013 by Rare Earth Minerals International Ltd upon its acquisition of beneficial ownership of in excess of 10% of our common stock and subsequent Form4s upon its [nine] subsequent acquisitions of additional shares of our common stock.
Code of Ethics
We have adopted a Code of Ethics applicable to our officers and directors, which is filed as an exhibit to this Annual Report on Form 10-K. At present we do not host a website; therefore, our Code of Ethics is not accessible. We will provide any person without charge, upon written or oral request to our corporate headquarters, a copy of our Code of Ethics.
Procedure for Nominating Directors
In 2014, we have not made any material changes to the procedures by which security holders may recommend nominees to our Board of Directors.
Family Relationships
There are no family relationships among our directors, executive officers or persons nominated to become executive officers or directors.
Involvement in Certain Legal Proceedings
During the past ten (10) years, none of our directors, persons nominated to become directors, executive officers, promoters or control persons was involved in any of the legal proceedings listen in Item 401 (f) of Regulation S-K.
Arrangements
There are no arrangements or understandings between an executive officer, director or nominee and any other person pursuant to which he was or is to be selected as an executive officer or director.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
There was compensation paid to our Chief Executive/Financial Officer for services rendered of $78,000 for each of the years ending December 31, 2014 and 2013.
The table below summarizes all compensation awarded to, earned by, or paid to our named executive officer for all services rendered in all capacities to us for the years ended December 31, 2014 and 2013.
Option/SAR Grants in Last Fiscal Year
None.
Outstanding Equity Awards at Fiscal Year-End
None.
Compensation of Directors
None of the Company’s directors received any compensation for services as directors during the last fiscal year.
Equity Compensation Plan Information
Not applicable.
Employment Agreements
None.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information regarding beneficial ownership of our common stock and warrants to purchase shares of our common stock as of July 31, 2014 by (i) each person (or group of affiliated persons) who is known by us to own more than five percent of the outstanding shares of our common stock, (ii) each of our directors and executive officers, and (iii) all of our directors and executive officers as a group. As of September 30, 2014, there were [6,923,005] shares of common stock outstanding.
Beneficial ownership is determined in accordance with SEC rules and generally includes voting or investment power with respect to securities. The principal address of each of the stockholders listed below is c/o 3270 Sul Ross, Houston, TX 77098. We believe that all persons named in the table have sole voting and investment power with respect to shares beneficially owned by them. All share ownership figures include shares issuable upon exercise of options or warrants exercisable within 60 days of September 30, 2014, which are deemed outstanding and beneficially owned by such person for purposes of computing his or her percentage ownership, but not for purposes of computing the percentage ownership of any other person. Such amounts include the 50,000 shares that were to be issued in connection with our acquisitions, but have not yet been issued.
All references to the number of shares and per share amounts have been retroactively restated to reflect a 150 for 1 reverse stock split of all the outstanding common stock of the Company, which was effective in March 2011.
Principal Stockholders Table
(1) Includes 5,200,000 shares of common stock and 4,400,000 are shares of common stock underlying currently exercisable warrants.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
None.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Aggregate fees including expenses billed to us for the years ended December 31, 2014 and 2013 for professional services performed:
Board of Directors Pre-Approval Process, Policies and Procedures
Our principal auditors have performed their audit procedures in accordance with pre-approved policies and procedures established by our Board of Directors. Our principal auditors have informed our Board of Directors of the scope and nature of each service provided. With respect to the provisions of services other than audit, review, or attest services, our principal accountants brought such services to the attention of our Board of Directors prior to commencing such services.
PART IV
ITEM 15.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)(1) The following financial statements are included in this Annual Report on Form 10-K for the fiscal year ended December 31, 2014:
1. Report of Independent Registered Public Accounting Firm
2. Balance Sheets as of December 31, 2014 and 2013
3. Statements of Operations for the years ended December 31, 2014 and 2013
4. Statement of Changes in Stockholders’ Equity (Deficit) as of December 31, 2014
5. Statements of Cash Flows for the years ended December 31, 2014 and 2013
6. Notes to the Financial Statements
(a)(2) All financial statement schedules have been omitted as the required information is either inapplicable or included in the Consolidated Financial Statements or related notes.
(a)(3) The following exhibits are either filed as part of this report or are incorporated herein by reference:
3.1 Certificate of Incorporation of Cold Gin Corporation, as amended (incorporated herein by reference from the Company’s Exhibit to its Information Statement on Schedule 14C filed on December 3, 2010)
3.2 Articles of Incorporation of Bonanza Gold Corp., as amended (incorporated herein by reference from the Company’s Exhibit to its Information Statement on Schedule 14C filed on December 3, 2010)
3.3 Articles of Merger (incorporated herein by reference from the Company’s Exhibit to its Information Statement on Schedule 14C filed on December 3, 2010)
3.4 Certificate of Merger (incorporated herein by reference from the Company’s Exhibit to its Information Statement on Schedule 14C filed on December 3, 2010)
3.5 By-Laws of Bonanza Gold Corp. (incorporated herein by reference from the Company’s Exhibit to its Information Statement on Schedule 14C filed on December 3, 2010)
3.5 Certificate of Amendment to the Articles of Incorporation of Bonanza Gold Corp. (incorporated herein by reference from the Company’s Exhibit to its Information Statement on Schedule 14C filed on February 9, 2011)
10.1 Asset Purchase Agreement, dated December 10, 2010, by and between Precious Metals Exploration, Ltd. and Cold Gin Corporation (incorporated herein by reference from the Company’s Exhibit 10.1 to its Current Report on Form 8-K filed on December 14, 2010)
10.2 Asset Purchase Agreement, dated December 10, 2010, by and between Precious Metals Exploration, Ltd. and Cold Gin Corporation (incorporated herein by reference from the Company’s Exhibit 10.2 to its Current Report on Form 8-K filed on December 14, 2010)
10.3 Promissory Note in the amount of One Million Dollars ($1,000,000), dated December 14, 2010, payable to Precious Metals Exploration, Ltd. (incorporated herein by referenced from the Company’s Exhibit 10.3 to its Current Report on Form 8-K filed on December 14, 2010)
10.4 Agreement and Plan of Reincorporation, dated as of December 27, 2010, by and between Cold Gin Corporation and Bonanza Gold Corp. (incorporated by reference from the Company’s Exhibit 10.4 to its Annual Report on Form 10-K for the year ended December 31, 2010 filed on March 31, 2011)
10.5 Asset Purchase Agreement dated April 30, 2011 by and between Independent Resources Inc. and Bonanza Gold Corp (incorporated by reference from the Company’s Exhibit 10.1 to its Current Report on Form 8-K filed on May 5, 2011)
10.6 Termination Agreement dated May 19, 2011 by and between Precious Metals Exploration, Ltd and Bonanza Gold Corp. (incorporated by reference from the Company’s Exhibit 10.2 to its Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 filed on May 23, 2011)
10.7 Assignment and Assumption Agreement dated May 19, 2011 by and between Precious Metals Exploration, Ltd and Bonanza Gold Corp. (incorporated by reference from the Company’s Exhibit 10.3 to its Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 filed on May 23, 2011)
10.8 Asset Purchase Agreement dated June 27, 2011 by and between United Copper Holdings Ltd and Bonanza Gold Corp (incorporated by reference from the Company’s Exhibit 10.1 to its Current Report on Form 8-K filed on July 5, 2011)
10.9 Property Purchase agreement dated as of February 28, 2012 by and between Century Cooper, LLC (incorporated by reference from the Company’s Exhibit 10.9 to its Annual Report on Form 10-K filed April 16, 2012)
10.10 Form of Confidential Private Placement Subscription Agreement (incorporated by reference from the Company’s Exhibit 10.1 to its current Report on Form 8-K filed on September 10, 2013)
14.1 Code of Ethics (incorporated by reference from the Company’s Exhibit 14.1to its Annual Report on Form 10-K filed October 8, 2014)
31.1 Certification pursuant to Rule 13a-14(a)/15d-14(a) (1)
32.1 Certification pursuant to Section 1350 of the Sarbanes-Oxley Act of 2002 (1)
**+101.INS XBRL Instance Document
**+101.SCH XBRL Taxonomy Extension Schema Document
**+101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
**+101.DEF XBRL Taxonomy Extension Definition Linkbase Document
**+101.LAB XBRL Taxonomy Extension Label Linkbase Document
**+101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
* Management contract or compensatory plan or arrangement required to be identified pursuant to Item 15(a)(3) of this report
** As provided in Rule 406T of Regulation S-T, this information is deemed furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933, as amended, and Section 18 of the Securities Exchange Act of 1934, as amended.
(1) Filed herewith.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned.