What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2013-11-14 compared with 2013-05-20 · 77 added, 88 removed, 112 unchanged (60% of the section changed)

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Certain statements included in this Form 10-Q, including, without limitation, statements related to anticipated cash flow sources and uses, and words including but not limited to “anticipates”, “believes”, “plans”, “expects”, “future” and similar statements or expressions, identify forward looking statements.

Any forward-looking statements herein are subject to certain risks and uncertainties in the Company’s business, including but not limited to, reliance on key customers and competition in its markets, market demand, product performance, technological developments, maintenance of relationships with key suppliers, difficulties of hiring or retaining key personnel, any changes in current accounting rules, and f uture regulatory or legislative actions (including additional taxes, changes in environmental regulation, and disclosure requirements under the Dodd-Frank Wall Street Reform, Consumer Protection Act and the Jumpstart our Business Startups Act of 2012 ), all of which may be beyond the control of the Company.

Any forward-looking statements herein are subject to certain

risks and uncertainties in the Company’s business, including but not limited to, reliance on key customers and competition in its markets, market demand, product performance, technological developments, maintenance of relationships with key suppliers, difficulties of hiring or retaining key personnel and any changes in current accounting rules, all of which may be beyond the control of the Company.

The Company adopted at management’s discretion, the most conservative recognition of revenue based on the most astringent guidelines of the SEC in terms of recognition of revenue.

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We do not undertake and specifically decline any obligation to update any forward-looking statements.

Our financial statements have been prepared in accordance with United States generally accepted accounting principles.

We are an exploration stage company and that there is no assurance that a commercially viable mineral deposit exist on any of our properties and that further exploration will be required.

It is our objective to identify mineral prospect properties of merit, conduct preliminary exploration work, and if results are positive, to process mineral resources through in a market where we believe capital is transitioning to the safety of gold.

Our exploration target is to find exploitable minerals on our properties and to raise adequate funding to begin processing our land.

Our success depends on achieving that target and becoming cash flow positive once production begins.

There is the likelihood of our mineral claims containing little or no economic mineralization or reserves of gold and other minerals.

There is the possibility that our claims do not contain any reserves and funds that we spend on exploration will be lost.

Even if we complete our current exploration program and are successful in identifying a mineral deposit, we will be required to expend substantial funds to bring our claims to production.

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.

It is our objective in fiscal year 2014 to identify mineral prospect properties of merit, conduct preliminary exploration work, and if results are positive, to process mineral resources through a market where we believe capital is transitioning to the safety of gold.

Our management contends that this business model is timely in a world of financial and currency instability with escalating mineral demand.

However, as the landscape for gold changed in April of 2013, raising adequate capital became much more difficult to secure at a reasonable rate.

To ensure the viability of the Company, management entered into an asset purchase agreement with Gunner Gold LLC, which closed in September 2013.

The asset purchase agreement allows the Company to retain critical assets such as our mining claim to the land of Bureau of Land Management (“BLM”) and the patented Hull Lode claim.

It also grants a royalty to the Company on revenues produced on the BLM land while giving the Company 3.3 million units of Gunner Gold, LLC.

A National Instrument 43-101 Technical Report was prepared August 30, 2011 on mineral rights now owned or leased by Gunner Gold.

This is a report that is the standard used in the industry to estimate the amount of minerals located on the subject property.

The report places an estimate of its inferred mineral resources at 5.88 million ounces of gold and with current gold spot prices of roughly $1,275 per ounce it could have a perceived gross value of approximately $7.5 billion.

Our areas of exploration are in geopolitically stable North American areas.

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The first is federal mining claims on BLM land totaling 435 acres.

The second is 130.76 acres of patented land we lease for an initial term of two years with an option to buy from Judgetown LLC.

The lease agreement with Judgetown was effective on October 15, 2012.

The third property is referred to as the Hull land and is approximately 20 acres of patented land which we have purchased with funds borrowed from Freedom Boat.

The Judgetown lease, with an effective date of October 15, 2012, was executed on or before September 30, 2012 between our company and Judgetown LLC, an Arizona Limited Liability Company located in Arizona (“Lessor”).

The second was 130.76 acres of patented land we leased for an initial term of two years with an option to buy from Judgetown LLC.

This lease option to the Judgetown LLC patented property has been sold to Gunner Gold, LLC in September 2013.

This relieved the Company of a large and growing debt to Judgetown LLC.

The lease agreement with Judgetown was effective on October 15, 2012 and was sold in September 2013.

The third property is referred to as the Hull land and is approximately 20 acres of patented land which we have purchased with funds borrowed from Freedom Boat and remains in Bonanza’s possession but is being leased to Gunner Gold LLC for 2 years commencing in September 2013.

The Company also sold its Yukon 25 plant to Gunner Gold, LLC.

Bonanza Goldfields Corp also retired certain debt with proceeds from the asset purchase agreement.

This investment into Gunner Gold, LLC and the reduction of debt will allow us to redefine a corporate strategy in light of the underperformance of the gold mining industry in 2013.

Management believes that the current structure allows investors to benefit from a rebound in gold but in the event that the gold price remains at current levels the Company now has the flexibility to examine entering other businesses.

Historical Background:

The Judgetown lease, with an effective date of October 15, 2012, was executed on or before September 30, 2012 between our Company and Judgetown LLC, an Arizona Limited Liability Company located in Arizona.

The leased premises consist of 130.76 acres in the county of Yavapai, Arizona in the Date Creek Mountain range.

The lease is exclusive to the Company and our successors and assigns all of Lessors’ interest in and to all mining rights and minerals (hereafter the "Mineral Substance") beneath the surface of, within, or that may be produced from the premises.

The lease is exclusive to the Company and our successors and assigns all of Judgetown LLC’s interest in and to all mining rights and minerals beneath the surface of, within, or that may be produced from the premises.

The lease granted the following to us for a period of two years unless terminated pursuant to the lease;

Mining and Access Rights, Cross Mining, Commingling, Deposit of Waste Materials, Treatment and Water Rights.

The lease amount, as amended, is $300,000 for the period commencing on January 15, 2013.

The lease obligation, as amended, is $320,000 for the period commencing on January 15, 2013.

An option to purchase the land was also granted for a price of $1,500,000 less lease payments.

The lease with an option to purchase was amended on February 1, 2013 solely to reflect a new owner who had replaced an original owner of the lessor.

Our leased lands consist 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, as well as the presence of certain rare earth elements.

The lease with an option to purchase was amended on February 1, 2013 to reflect a new owner and to amend the payment schedule and amount.

As of November 14, 2013, our leased lands consist of 38 lode claims covering about 455 acres of patented, private property claims and BLM claims in the Date Creek Mountains, Arizona consisting of both alluvial and mineralized quartz deposits, as well as the presence of certain rare earth elements.

A Preliminary Geological Survey as well as subsequent testing and assays of the leased claims were prepared by Auric Resources International, Inc.

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Prior to commencing the survey, extensive samplings were analyzed locally at multiple depths demonstrating the potential for high grade gold findings throughout the property.

Modern access for heavy equipment is already in place through our privately constructed roads, and rail is localized.

Modern access for heavy equipment is already in place through Bonanza’s privately constructed roads, and rail is localized.

Unique features appear ubiquitous throughout the immediate area, including greenstone dike extensions, placer gravel deposits, and vestiges of numerous pre-historic waterfalls.

Additionally, lode gold possibilities exist due to the extensions of schist and mineralized quartz veins in the immediate area of the Congress Mine.

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

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

Our most recent gold assays occurred during the month of July 2012 and were surface level rock chip assays on the Company's Bureau of Land Management (BLM) claims located near the Piedmont Mine area.

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Rare Earth Metal Tests:

We also tested for the most prevalent and critical rare earth metals (REM) in the Arizona geographic region, which are Cerium, Lanthanum, Scandium, Yttrium.

The Company also tested for the most prevalent and critical rare earth metals (REM) in the Arizona geographic region, which are Cerium, Lanthanum, Scandium, Yttrium.

The tests proved positive for all four rare earth elements.

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We expanded our geological footprint with the acquisition of the Piedmont Mine, gold and silver mine in operation until 1940.

The Piedmont Mine has been deemed by the our geological team a strategic addition to leased claims.

The acquisition expands the geological footprint to 38 lode mining claims covering over 600 acres of contiguous property.

The Piedmont Mine has been deemed by the Bonanza geological team a strategic addition to leased claims.

The acquisition expands the geological footprint to 38 lode mining claims covering about 600 acres of contiguous property.

There are gold-bearing quartz fissure veins that closely follow “greenstone” (andesite or diabase) dikes that occur along east-west and northwest-southeast trending structures in early Proterozoic granitic rocks.

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The highest grade gold is generally associated with the highest concentrations of pyrite.

There has been significant work completed on the property.

First the roads have been improved to be completely usable for all types of equipment such as loaders, dump truck, back hoes, all types of cars, and even larger scale trucks.

Second, a water retention pond holding just under 1 million gallons of water and currently between 700,000 – 800,000 gallons.

Third, a gold processing plant has been installed which is specifically a Goldfield International Yukon 25 plant and finishing table.

Fourth, enhancement to the plant such as a new sluice system and a staging area for placer material processing.

All of this was done on the Hull land which is patented property.

Fifth, a slime pond was created along with a sophisticated water retention system connected between the plant and the large retention pond.

Sixth, fencing around the pond for safety purposes.

Seventh, an additional water well to the well already on the land.

This all occurred between October 2012 and December 2012 and was financed by investors.

The Goldfield International Yukon 25 plant was purchased new in October 2012 along with the finishing table.

The plant is therefore considered by us to be in very good condition.

There have been no subsurface improvements since we have been pursuing placer material since setting up the plant.

The infrastructure has been newly established with competent personnel and functional equipment.

Additionally, we have a tool shed needed for maintenance.

As of December 31, 2012 we ran approximately 700 tons of placer material and ran an additional 600 tons of more placer material through our production plant this fiscal quarter.

Currently the plant is suspended temporarily until we secure additional financing to mine hard rock as opposed to the placer.

We have been trenching and testing several locations on the Judgetown LLC land as well as the Hull land.

We have sent out this placer material as well as some rock chip samples of load material to obtain a multi-element analysis from an accredited third party assayer.

Total cost to date is $3,116,907 and future costs are being assessed currently but thus far if we implement an operation that would include load material and the BLM properties we feel that up to an additional $3 million may be needed.

We have two wells (one of which is solar powered) that have the capacity to pump a total 12 gallons per minute which is adequate for our present operations.

Our power supply comes from 2 generators which are on the property.

We have not completed a Canadian 43101 report or an American equivalent and do not know what our proven reserves are, but we are in the process of doing an internal resource estimate based on the placer material run to date and the assays we have completed and are in the process of completing on our load material.

We have not completed a Canadian NI 43-101 report or an American equivalent and do not know what our proven reserves are, but we are in the process of doing an internal resource estimate based on the placer material run to date and the assays we have completed and are in the process of completing on our load material.

This will include our rock chip analysis that can be used to estimate load material and is being conducted by our internal geologist and we are using an accredited external assayer in Prescott, Arizona named Copper State Labs.

On April 4, 2013, we announced that three hand-collected samples from an 1,800 foot strike of an exposed quartz vein within our patents were assayed at 0.08 ounce per ton (oz/ton), 0.192 oz/ton, and 0.62 oz/ton.

A single sample collected from a second quartz vein on our leased, patented property assayed at 2.73 oz/ton.

A fifth sample collected from a pit on a separate leased our patented property assayed at 0.007 oz/ton.

All assays were performed by Copper State Analytical Lab in Prescott, Arizona, an independent registered assayer.

Arne Stenseth of Bonanza Goldfields Corp.

has provided all geological analysis to the Company.

Although some preliminary testing has been done on portions of the property, the majority of the land package has virgin placer gravels and large quartz veins that have never been explored or tested.

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and the presence of placer gold in widespread gravels indicates that the Tarantula Property may host a large, potentially economic gold deposit and undoubtedly represents an excellent exploration target with potential for both placer and lode gold production from auriferous placers and veins.

There was some surface disturbance before we acquired the property.

There was some surface disturbance before Bonanza Goldfields acquired the property.

There are a few existing adits and test pits, and a network of roads built by the previous owner who was selling boulders to housing developments.

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If placer material is not economical and load tests to be more economical then we plan to move to load given financing is available.

Tonaquint is currently our main planned funding source.

We will seek other sources of funding if our relationship with Tonaquint terminates.

We plan to utilize our internal Geochemist Arne Stenseth a graduate of the Montana College of Mineral Science and Technology with an American Chemical Society accredited Bachelor of Science Degree (1994) in Chemistry.

He is a member in good standing of the Geochemistry Division of the American Chemical Society (ACSGEOC), the International Association of GeoChemistry (IAGC), the Geochemical Society, and the Association of Applied Geochemists (AAG).

He is a Founder and Managing Member of Gruvedrift Enterprises, LLC, a mineral exploration company, and is currently working as a geochemist for our company.

Arne Stenseth collects and maintains custody of the samples.

The rock chip samples are collected as representative samples of the outcrop or vein.

The rock chips are bagged and labeled.

The labeled bags are sent to either Copper State Analytical Lab in Prescott, AZ or to Skyline Assayers & Laboratories in Tucson, AZ.

The labs perform multi-element analyses by ICP, and gold and silver are determined by fire assay.

Concentrates collected from the finishing table are also collected by Arne Stenseth, who maintains custody of the samples.

The concentrates are bagged and labeled and sent to the same laboratories as above for the same analyses.

On September 20, 2013, we 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 has agreed to purchase certain assets and assume certain liabilities from us for a purchase price of 3,300,000 units of Gunner Gold, LLC stock.

We also granted Gunner Gold, LLC the right to conduct mining operations on our 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

Three months Ended September 30, 2013 Compared to Three months Ended September 30, 2012

We are an exploration stage company acquiring mineral properties or claims located in the State of Arizona, USA.

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 three months ended March 31, 2013, we generated $619 revenue.

For the three months ended September 30, 2013 and 2012, we generated 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.

There are no assurances of our ability to begin to mine our claim.

The expenditures for mining are cost intensive so it is critical for us to raise sufficient capital to implement our business plan.

We incurred losses of $211,450 for the three months ended March 31, 2013, compared to $135,758 for the three months ended March 31, 2012.

We incurred losses of $1,084,649 for the nine months ended March 31, 2013 compared to $536,823 for the nine months ended March 31, 2012.

Three and Nine months Ended March 31, 2013 Compared to Three and Nine months Ended March 31, 2012

For the three and nine months ended March 31, 2013, we generated $619 revenue.

Our future revenue plan is still uncertain as we are in an early testing and exploration phase and are still dependent on our ability to effectively and economically mine gold.

The expenditures for mining are cost intensive so it is critical for us to minimize costs while exploring the best areas on our land to process placer ore.

We incurred losses of $211,450 and $1,084,649 for the three and nine months ended March 31, 2013, respectively, compared to losses of $135,758 and $536,823 for the three and nine months ended March 31, 2012, respectively.

Our operating expenses for exploration activities were $57,611 and $201,697 for the three and nine months ended March 31, 2013, respectively, compared to $10,972 and $68,194 for the three and nine months ended March 31, 2012, respectively.

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

Our general and administrative expenses were $47,340 and $654,068 for the three and nine months ended March 31, 2013 respectively, compared to $89,836 and $318,871 for the three and nine months ended March 31, 2012, respectively.

The increase for the nine months ended March 31, 2013 was primarily related to the stock compensation expense of $132,348 related to the issuance of options to our COO, $200,000 related to the common stock granted to our CEO, $60,000 related to common stock granted to other professionals and our director, and other professional fees of $59,000.

Our interest expense was $136,618 and $259,352 for the three and nine months ended March 31, 2013, respectively, compared to $34,950 and $90,758 for the three and nine months ended March 31, 2012 respectively.

The increases are primarily attributable to the amortization of debt discount related to a note issued to Tonaquint, Inc.

There are no assurances of the ability of our Company to begin to mine our claim.

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

We had net income of $172,195 for the three months ended September 30, 2013 and a net loss of $484,467 for the three months ended September 30, 2012, respectively, and our losses since inception amount to $7,858,850.

Our operating expenses for exploration activities for the three months ended September 30, 2013 and 2012 were $6,818 and $20,684, respectively.

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

Our general and administrative expenses for the three months ended September 30, 2013 and 2012 were $78,545 and $439,841, respectively.

The decrease is primarily attributable to the decrease of compensation to an officer and a consultant.

The Company is not active in its mining operation and has temporarily terminated its employment agreement with certain officer and consultant.

Our interest expense for the three months ended September 30, 2013 and 2012 was $158,059 and $23,942, respectively.

The increase is primarily attributable to the full amortization of debt discount related to a note issued to Tonaquint, Inc.

as a result of the settlement in September 2013.

During the three months ended September 30, 2013, the Company settled the entire Secured Convertible Promissory Note and Warrant Purchase Agreement with Tonaquint, Inc with cash payment of $275,000 and recorded $106,999 gain on settlement of note payable to Tonaquint.

During the three months ended September 30, 2013, the Company exchanged its Judgetown claim and certain other assets for a noncontrolling interest in Gunner Gold LLC’s and $433,635 cash and recorded $306,118 gain on sale of assets to Gunner Gold LLC.

Liquidity and Capital Resources

Our cash used in operating activities for the nine months ended March 31, 2013 was $430,497 compared to $379,719 for the nine months ended March 31, 2012.

The increase in cash used in operations was primarily attributable to our mining activities and payments made to the professionals for the filing of a registration statement during the nine months ended March 31, 2013.

Our cash used in investing activities for the nine months ended March 31, 2013 was $146,290, compared to $0 for the nine months ended March 31, 2012.

Cash used in investing activities mainly included the purchase of equipment for the production site and a mining claim on the Judgetown property.

Our cash provided by financing activities for the nine months ended March 31, 2013 was $525,000, compared to $426,000 for the nine months ended March 31, 2012.

The increase is mainly due to $300,000 in proceeds from convertible notes payables related to Tonaquint, Inc.

Our cash used in operating activities for three months ended September 30, 2013 was $143,044 compared to $82,065 for the three months ended September 30, 2012.

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

Cash provided by investing activities was $433,935 and $0 for the three months ended September 30, 2013 and 2012, respectively.

The increase is mainly due to the cash received from sale of assets to Gunner Gold LLC.

Our cash used in financing activities for the three months ended September 30, 2013 was $275,000 compared to $140,000 cash provided by financing activities for the three months ended September 30, 2012.

We settled the entire Secured Convertible Promissory Note and Warrant Purchase Agreement with Tonaquint, Inc with cash payment of $275,000 during the three months ended September 30, 2013.

Cash provided by financing activities during the three months ended September 30, 2012 included the proceeds from the sale of common stock.

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 pay monthly interest for another 2 years from September 30, 2013 with the balance due at the end of the 24-month term.

On September 24, 2013 the Company entered into an agreement with Gunner Gold LLC in which Gunner agreed to pay $2,500 for 24 months to lease the Company’s Hull Lode claim.

The $2,500 monthly payment will be used to repay the interest of note payable to Freedom Boat.

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

If we have insufficient revenue, we will be able to borrow the funds from Tonaquint pursuant to the agreements in place.

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.

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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.

The promissory note, if prepaid, has a penalty of 135% prepayment obligation.

The Secured Convertible Promissory Note was 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.

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

Tonaquint's ability to fund our company is evidenced by three Buyer Mortgage Notes, in the principal amount of $50,000, $150,000, and $400,000.

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.

Tonaquint’s obligation to fund our company is further evidenced by a promissory note in the amount of $750,000.

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

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

We borrowed the funds pursuant to the Secured Convertible Promissory Note.

The amount borrowed was $300,000 and it is repaid in monthly payments of $93, 5333.83 (including interest) in cash or stock beginning in April 2013.

There are no set dates or requirements for the Company to draw down on the Secured Convertible Promissory Note.

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

A National Instrument 43-101 Technical Report was prepared August 30, 2011 on mineral rights now owned or leased by Gunner Gold.

This is a report that is the standard used in the industry to estimate the amount of minerals located on the subject property.

The report places an estimate of its inferred mineral resources at 5.88 million ounces of gold and with current gold spot prices of approximately $1,275 per ounce it could have a perceived gross value of approximately $7.5 billion.

On September 20, 2013, the entire Secured Convertible Promissory Note and Warrant Purchase Agreement with Tonaquint, Inc was settled with cash payment of $275,000.

Off-balance sheet arrangements

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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-Q

Item 2. Management’s Discussion and Analysis