What changed in this filing

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Item 7. Management’s Discussion and Analysis

2013-10-15 compared with 2012-09-28 · 67 added, 62 removed, 118 unchanged (52% of the section changed)

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We are unable to assure you we will be able to raise the additional funds necessary to implement any future exploration or extraction program even if mineralization is found.

Our Chief Executive Officer and Chief Financial Officer concluded that our internal controls over financial disclosure and procedures were not effective.

If the weaknesses in our disclosure controls and procedures are not remedied based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO, the Company may not be able to accurately disclose its financial condition.

Going Concern

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An impairment loss is recognized when the carrying value of those assets is not recoverable and exceeds its fair value.

As of June 30, 2012, management has determined that there was no impairment loss required as compared to impairment loss required of $615,700 as of June 30, 2011.

As of June 30, 2013, management has determined that there was no impairment loss required.

At such time as commercial production may commence, depletion of each mining property will be provided on a unit-of-production basis using estimated proven and probable recoverable reserves as the depletion base.

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If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset.

As of June 30, 2011, management has determined that there was impairment loss required of $647,822, including the impairment of $615,700 for mineral property rights.

There was no impairment loss required for June 30, 2013.

Share-Based Compensation

The Company applies Topic 718 “Share-Based Payments” (“Topic 718”) to share-based compensation, which requires the measurement of the cost of services received in exchange for an award of an equity instrument based on the grant-date fair value of the award.

The measurement of the cost of services received in exchange for an award of an equity instrument is based on the grant-date fair value of the award.

Compensation cost is recognized when the event occurs.

The Black-Scholes option-pricing model is used to estimate the fair value of options granted.

There are 12,000,000 options and no warrants outstanding as of June 30, 2012.

Recent Accounting Pronouncements

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RECENT DEVELOPMENTS AND OPERATIONS

We are a junior mining and exploration company identifying and acquiring properties integrated with placer ore and hard rock mineralization in geo-politically stable regions.

Management continues to focus all efforts on the flagship Tarantula Project, Congress, Arizona.

Our managements’ strategy is to process feasible placer ore, while proving out hard rock structures of the flagship Tarantula Project, Congress, Arizona.

We are a junior mining and exploration company identifying and acquiring properties integrated with placer ore and hard rock mineralization in geo-politically stable regions, management continues to focus all efforts in Arizona.

Our management’s strategy is to process feasible placer ore, while proving out hard rock structures of the flagship Tarantula Project, Congress, Arizona.

Our work effort has focused exclusively on the Tarantula Project.

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Furthermore, there are vestiges and hallmarks of major geological upheaval resulting in unique anomalies, such as extensive mineralized quartz veins.

Initially, local non-qualified assay results showed high grades of gold, as well as lower grades of silver, platinum, and rare earth metals, convincing management of the existence of possible bonanza type resources.

Bonanza Goldfields’ flagship Tarantula Project consists of 38 lode claims covering 600 acres of patented, private property claims and Bureau of Land Management (“BLM”) claims in the Date Creek Mountains, Arizona consisting of both alluvial and mineralized quartz deposits.

Initially, local non-qualified assay results showed high grades of gold, as well as lower grades of silver, platinum, and rare earth metals, convincing management the existence of possible bonanza type resources.

Bonanza Goldfields’ flagship Tarantula Project consists of 38 lode claims covering 600 acres of patented, private property claims and BLM claims in the Date Creek Mountains, Arizona consisting of both alluvial and mineralized quartz deposits.

A Preliminary Geological Survey of the claims and the immediate region is now completed of the Tarantula Project, prepared by Auric Resources International, Inc.

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Our management believes the alluvial deposits originate from two ancient rivers that flowed in opposing directions during separate geological periods.

We expanded the flagship Tarantula Project with the acquisition of the Piedmont Mine, a gold and silver mine in operation until 1940.

The Piedmont Mine has been deemed by the Bonanza geological team a highly prospective addition to the Tarantula Project.

The acquisition expands the Tarantula Project to 38 lode mining claims covering over 600 acres of contiguous property directly adjacent to the historic Congress Mine which produced over 400,000 ounces of lode gold between 1887 and 1959.

While conducting a survey of the Tarantula Project, explorations of the outlying region lead to the acquisition of additional claims.

While conducting a survey of the leased claims, explorations of the outlying region lead to the acquisition of additional claims.

With the expansion of the land package, management believes an economically feasible resource estimate can be derived and “proved out.” Furthermore, with the added resource, small to medium scale placer production operations can commence.

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With placer production commencing of placer material, we intend to move directly into core drilling of the property.

The adjacent historic Congress Mine was a hard rock mining operation, which resulted in the production of an estimated 400,000 ounces of gold until it ceased operations in the 1959.

Congress’ hard rock structures appear to move directly onto Bonanza’s properties, and management believes, but can provide no assurances, that RC (reverse circulation) drilling samples will ultimately prove this out.

On September 20, 2013, the Company entered into an Amended and Restated Asset Purchase Agreement with Gunner Gold, LLC.

Pursuant to the terms of Amended and Restated Asset Purchase Agreement, Gunner Gold, LLC purchased certain assets and assumed certain liabilities from the Company for 3,300,000 units of Gunner Gold, LLC stock.

The Company also granted Gunner Gold, LLC the right to conduct mining operations on the Company’s BLM properties with the option to acquire the mineral rights for 700,000 additional units of Gunner Gold, LLC’s stock.

The Company will receive 5% of the net proceeds, after the payment of all maintenance costs, earned by Gunner Gold from the mining operation on BLM properties.

RESULTS OF OPERATIONS

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The recoverability of amounts from the properties or claims will be dependent upon the discovery of economically recoverable reserves, confirmation of our interest in the underlying properties and/or claims, our ability to obtain necessary financing to satisfy the expenditure requirements under the property and/or claim agreements and to complete the development of the properties and/or claims, and upon future profitable production or proceeds for the sale thereof.

For the years ended June 30, 2012 and 2011, we generated no revenue.

For the years ended June 30, 2013 and 2012, we generated minimal or no revenue.

Our future revenue plan is uncertain and is dependent on our ability to effectively mine our products, generate sales, and obtain contract mining opportunities.

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The cost of mining is intensive so it is critical for us to raise appropriate capital to implement our business plan.

We incurred losses of $1,091,355 and $2,409,959 for the years ended June 30, 2012 and 2011 and our losses since inception amount to $6,606,854.

We incurred losses of $1,424,191 and $1,091,355 for the years ended June 30, 2013 and 2012, respectively, and our losses since inception amount to $8,031,045.

Our operating expenses for exploration activities for the years ended June 30, 2013 and 2012 were $207,067 and $66,282, respectively.

The costs associated with exploration activities included trenching, testing, hauling, and labor costs associated with the exploration of our gold mines claims.

The costs associated with exploration activities included trenching, testing, hauling, and labor costs associated with the exploration of our gold mine claims.

We acquired several mining claims through the course of our exploration stage and through the course of this process impaired claims.

The Midas Place Mining Claim title was never transferred to the Company and Orisis Gold Joint Venture agreement expired on June 2011.

We currently own the Tarantula mining claim.

During the year ended June 30, 2011, we recorded $615,700 of impairment on mining claims and $32,122 on equipment.

Our general and administrative expenses for the year ended June 30, 2013 were $775,183 as compared to $768,056 for the year ended June 30, 2012.

The decrease is primarily attributable to the reduction of stock issued for services and stock issued for conversion of debt.

In the year ended June 30, 2011, we learned that the documents provided and other documents concealed by our prior CEO/CFO were forgeries which represented 86,000,000 common shares issued.

We expensed $985,100 as non-cash compensation as follows:

December 9, 2010:

Tucker Financial Services, Inc.

received 12,000,000 common shares alleged to be exempt from registration under Rule 144 of the Securities Act of 1933 (although new management believes that such exemption was not available) for the conversion of $2,900 of debt.

January 24, 2011;

Tucker Financial Services, Inc.

February 16, 2011:

Stock Loan Solutions received 12,000,000 common shares alleged to be exempt from registration under Rule 144 of the Securities Act of 1933 (although new management believes that such exemption was not available) for the conversion of $2,900 of debt.

February 22, 2011:

Nicolas Sprung of Tucker Financial Services, Inc.

April 18, 2011:

Euroline Clearing Corporation received 7,000,000 common shares alleged to be exempt from registration under Rule 144 of the Securities Act of 1933 (although new management believes that such exemption was not available) for the conversion of $2,900 of debt.

April 18, 2011:

Enavest International S.A., received 7,000,000 common shares alleged to be exempt from registration under Rule 144 of the Securities Act of 1933 (although new management believes that such exemption was not available) for the conversion of $2,900 of debt.

April 18, 2011:

Vanilla Sky, S.A.

received 7,000,000 common shares alleged to be exempt from registration under Rule 144 of the Securities Act of 1933 (although new management believes that such exemption was not available) for the conversion of $2,900 of debt.

June 28, 2011:

Scott Geisler received 17,000,000 common shares alleged to be exempt from registration under Rule 144 of the Securities Act of 1933 (although new management believes that such exemption was not available) for the conversion of $2,900 of debt.

Our interest expense for the year ended June 30, 2012 was $192,517 as compared to $94,832 for June 30, 2011.

The increase is primarily attributable to the increase in average debt outstanding and the amortization of debt discount of $119,930for the year ended June 30, 2012 compared to 68,957 for the year ended June 30, 2011.

The increase is primarily attributable to the stock compensation of officers and consultants.

Our interest expense for the year ended June 30, 2013 was $472,060 as compared to $192,517 for the year ended June 30, 2012.

The increase is primarily attributable to the increase in average debt outstanding and the amortization of debt discount of $332,255 for fiscal year 2013 and $119,930 for fiscal year 2012.

On February 26, 2012, the Company entered into a settlement agreement with David Janney, former CEO.

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These shares were valued at $59,000 and recorded as loss on settlement of litigation.

No such loss was recorded for the year ended June 30, 2011.

Our loss on accounts payable and loss on conversion of debt for the years ended June 30, 2012 were $5,500 as compared to $149,284 for June 30, 2011.

In a settlement agreement dated February 19, 2013, David Janney agreed to forfeit his right to receive 2,500,000 common shares based on the settlement agreement dated February 26, 2012.

The Company recorded a gain on the settlement of litigation for the year ended June 30, 2013 of $29,500 and eliminated the corresponding disputed payable previously recorded.

Liquidity and Capital Resources

Our cash used in operating activities for the year ended June 30, 2012 was $542,385 as compared to $203,255 for the year ended June 30, 2011.

The increase in cash flows used in operations was primarily attributable to payments made to vendors for general and administrative expenses and payments made to related parties during the year ended June 30, 2012.

Our cash used in investing activities for the year ended June 30, 2012 was $33,173 as compared to $50,000 for the year ended June 30, 2011.

Payments made during fiscal year 2012 were related to the purchase of equipment for the exploration of our mining claims, and payment of $50,000 during fiscal year 2011 was related to the Osiris Gold Joint Venture which expired in June 2011.

Our cash provided by financing activities for the year ended June 30, 2012 was $637,875 as compared to $276,300 for the year ended June 30, 2011.

The increase is mainly due to the issuance of common stock for $559,000 cash and proceeds from notes payable and convertible notes payable of $126,875 for fiscal year 2012 compared to proceeds from notes payable of $101,300 and proceeds of $175,000 from the issuance of common stock during fiscal year 2011.

To date, we have has succeeded in securing capital as needed, but there is no guarantee this will continue.

We believe we will have to rely on public and private equity and debt financings to fund our liquidity requirements over the intermediate term.

We may be unable to obtain any additional financings on terms favorable to us, or obtain additional funding at all.

If adequate funds are not available on acceptable terms, and if cash and cash equivalents together with any income generated from operations fall short of our liquidity requirements, we may be unable to sustain operations.

Continued negative cash flows raise substantial doubt regarding our ability to fully implement our business plan and could render us unable to expand our operations or take advantage of acquisition opportunities, any of which may have a material adverse effect on our business.

If we raise additional funds through the issuance of equity securities, our stockholders may experience dilution of their ownership interest, and the newly issued securities may have rights superior to those of our common stock.

If we raise additional funds by issuing debt, we may be subject to limitations on our operations, including limitations on the payments of dividends.

Our cash used in operating activities for year ended June 30, 2013 was $455,318 compared to $542,385 for the year ended June 30, 2012.

The decrease in cash used in operations was primarily attributable to the decrease of cash payments made to the professionals.

Our cash used in investing activities for the year ended June 30, 2013 was $154,265, compared to $33,173 for fiscal year 2012.

Cash used in investing activities mainly included the purchase of equipment for the production site and a mining claim on the Judgetown property during fiscal year 2013 and only included the purchase of equipment during fiscal year 2012.

We are in default on our note to Freedom Boat, LLC for $250,000 which is secured by 10,000,000 shares of common stock of the Company.

We have preliminarily agreed with Freedom Boat to create another 2 year interest only payment structure with the balance due at the end of the 24 month term and which is convertible to stock.

The Company is still in discussion with Freedom Boat to amend the original note agreement.

Our cash provided by financing activities for the year ended June 30, 2013 was $532,517, compared to $637,875 for the year ended June 30, 2012.

The decrease is mainly due to fewer proceeds from the sale of common stock.

The impact was partially offset by the $307,514 of proceeds from the issuance of convertible notes payable to Tonaquint, Inc.

We are in need of approximately $65,000 per month in order to meet our operating expenses.

We are currently in discussion with Tonaquint for additional funding.

On October 1, 2012, we entered into a Secured Convertible Promissory Note and Warrant Purchase Agreement with Tonaquint, Inc., a Utah corporation ("Tonaquint"), whereby the Company issued (i) a Secured Convertible Promissory Note of the Company in the principal amount of $1,660,000 and (ii) a warrant to purchase 158,953,080 shares of the Company’s common stock.

The warrant has an exercise price of $0.075 per share and can be exercised at any time within five years after October 1, 2012.

Tonaquint has the right to convert, subject to restrictions described in the promissory note, all or a portion of the outstanding amount of the promissory note that is eligible for conversion into shares of our common stock.

The conversion price of the promissory note is $0.05 per share.

The Secured Convertible Promissory Note is due on April 1, 2015 and the interest rate of 8% payable monthly.

In the event the Company elects to prepay all or any portion of the outstanding balance, the Company shall pay Tonaquint 135% of the amount the Company elects to prepay.

The total amount to be funded is $1,500,000, representing the principal amount of $1,660,000 less an original issuance discount of $150,000 and the payment of $10,000 to cover Tonaquint’s fees.

The shares of common stock underlying the Secured Convertible Promissory Note and Warrant were to be registered by a registration statement pursuant to the terms and conditions of a registration rights agreement.

The registration statement has been withdrawn with Tonaquint’s consent.

Tonaquint initially funded the Company $150,000 in cash and issued three Buyer Mortgage Notes, in the principal amount of $50,000, $150,000, and $400,000 and a promissory note in the amount of $750,000 to the Company pursuant to the agreement.

The Buyer Mortgage Notes are secured by certain real property owned by Tonaquint located in Cook County, Illinois.

Pursuant to the purchase agreement, we reserved 75,000,000 shares of common stock.

We agreed not to enter into any equity line of credit or financing arrangement or other transaction that involves issuing securities that are convertible into common stock (including without limitation selling convertible debt, warrants or convertible preferred stock), or otherwise issue common stock (a) with conversion, exercise or similar mechanics or reset provisions that vary according to the market price of the common stock without a floor at or higher than $0.01 or (b) at a fixed price which is lower than $0.01, without the prior written consent of Tonaquint.

We agreed not to declare or make any dividend or other distributions of our assets.

As of June 30, 2013, we have received principal of $307,514 pursuant to the Secured Convertible Promissory Note.

On September 20, 2013, Tonaquint, Inc.

was paid in full and there is no longer any further obligations related to this note agreement.

Other Considerations

There are numerous factors that affect the business and the results of its operations.

Sources of these factors include general economic and business conditions, federal and state regulation of business and mining activities, changes to the tax code during or after the current congressional session, and our ability to continue to improve our infrastructure including personnel and systems to keep pace with the Company’s anticipated rapid growth.

The Company will be subject to environmental and governmental regulations.

Initial exploration such as geological mapping and sampling can be done on BLM land without permits.

If more than 5 acres are to be disturbed, a Notice of Intent to Conduct Exploration must be submitted to the BLM.

The Notice will include a reclamation bond.

The approved Notice will allow bulk sampling of up to 1,000 tons of material.

If the sampling program warrants further exploration with a drilling program, the Arizona Department of Water Resources will require permits for exploration drilling.

To conduct exploration which disturbs more than 5 acres of surface, the BLM requires the filing of a Plan of Operation which must include a reclamation bond.

The Plan of Operation must also be sent to other entities including the Arizona Department of Environmental Quality, the US Army Corps of Engineers, the Mine Safety and Health Administration, and the Arizona Department of Water Resources.

Each of the entities will review the Plan of Operations and request any necessary changes.

The BLM will require either an Environmental Assessment or an Environmental Impact Statement for mining on BLM claims.

Processing of the mined material will be done on patented claims owned by the company, but an Aquifer Protection Permit will still be required.

A pollution prevention plan and an air quality permit may also be required by the State and County.

Biological and cultural surveys will also be required and will note any threatened or endangered species of plants and animals and any cultural or historical sites which must be protected.

The permitting process for a mining operation is complex and can take considerable time.

The effect of this permitting process and the government regulations are limited to the costs of outside consultants to perform the biological and cultural surveys and to write the Environmental Impact Statement, if required.

It is not anticipated that any of these regulations or permits will prevent further development of the patented or BLM land.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis