10QSB 1 g1321.txt QUARTERLY REPORT FOR THE QTR ENDED 7/31/06 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB Quarterly Report under Section 12(b) or 12(g) of The Securities Act of 1934 For the Period ended July 31, 2006 Commission File Number 333-130286 AMERICAN BONANZA RESOURCES CORP. (Name of small business issuer in its charter) Nevada 20-2781289 (State of incorporation) (IRS Employer ID Number) Suite 206 - 455 Granville Street Vancouver, BC V6C1T1 (604) 681-8123 (Address and telephone number of principal executive offices) Check whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Check whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ] Check whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ] There were 1,820,000 shares of Common Stock outstanding as of July 31, 2006. AMERICAN BONANZA RESOURCES CORP. (An Exploration Stage Company) Balance Sheets --------------------------------------------------------------------------------
As of As of July 31, October 31, 2006 2005 -------- -------- ASSETS CURRENT ASSETS Cash $ 44,672 $ 4,919 -------- -------- TOTAL CURRENT ASSETS 44,672 4,919 -------- -------- $ 44,672 $ 4,919 ======== ======== LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Accounts Payable $ 1,000 $ -- Due to Director 5,200 -- -------- -------- TOTAL CURRENT LIABILITIES 6,200 -- -------- -------- TOTAL LIABILITIES 6,200 -- STOCKHOLDERS' EQUITY (DEFICIT) Common stock, ($0.001 par value, 75,000,000 shares authorized; 1,900,000 and 1,000,000 shares issued and outstanding as of July 31, 2006 and October 31, 2005) 1,900 1,000 Additional paid-in capital 48,100 4,000 Deficit accumulated during exploration stage (11,528) (81) -------- -------- TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 38,472 4,919 -------- -------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT) $ 44,672 $ 4,919 ======== ========
See Notes to Financial Statements 2 AMERICAN BONANZA RESOURCES CORP. (An Exploration Stage Company) Statements of Operations --------------------------------------------------------------------------------
May 2, 2005 Nine Months Three Months May 2, 2005 (inception) Ended Ended (Inception) to through July 31, July 31, July 31, July 31, 2006 2006 2005 2006 ----------- ----------- ----------- ----------- REVENUES Revenues $ -- $ -- $ -- $ -- ----------- ----------- ----------- ----------- TOTAL REVENUES -- -- -- -- OPERATING COSTS Administrative Expenses 6,194 715 62 6,274 Professional fees 5,253 1,000 -- 5,253 ----------- ----------- ----------- ----------- TOTAL OPERATING COSTS 11,447 1,715 62 11,527 ----------- ----------- ----------- ----------- NET INCOME (LOSS) $ (11,447) $ (1,715) $ (62) $ (11,527) =========== =========== =========== =========== BASIC EARNINGS (LOSS) PER SHARE $ (0.01) $ (0.00) -- =========== =========== =========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 1,378,022 1,898,261 -- =========== =========== ===========
See Notes to Financial Statements 3 AMERICAN BONANZA RESOURCES CORP. (An Exploration Stage Company) Statement of Changes in Stockholders' Equity From May 2, 2005 (Inception) through July 31, 2006 --------------------------------------------------------------------------------
Deficit Accumulated Common Additional During Common Stock Paid-in Exploration Stock Amount Capital Stage Total ----- ------ ------- ----- ----- BALANCE, MAY 2, 2005 -- $ -- $ -- $ -- $ -- Stock issued for cash on May 2, 2005 @ $0.01 per share 1,000,000 1,000 4,000 5,000 Net loss, October 31, 2005 (81) $ (81) --------- ------- -------- -------- -------- BALANCE, OCTOBER 31, 2005 1,000,000 $ 1,000 $ 4,000 $ (81) 4,919 --------- ------- -------- -------- -------- Net loss, January 31, 2006 (6,402) (6,402) --------- ------- -------- -------- -------- BALANCE, JANUARY 31, 2006 1,000,000 $ 1,000 $ 4,000 $ (6,483) $ (1,483) --------- ------- -------- -------- -------- Stock issued for cash pursuant to SB-2 offering @ $.05 per share 820,000 820 40,180 41,000 Net loss, April 30, 2006 (3,330) (3,330) --------- ------- -------- -------- -------- BALANCE, APRIL 30, 2006 1,820,000 $ 1,820 $ 44,180 $ (9,813) $ 36,187 --------- ------- -------- -------- -------- Stock issued for cash pursuant to SB-2 offering @ $.05 per share 80,000 80 3,920 4,000 --------- ------- -------- -------- -------- Net loss, July 31, 2006 (1,715) (1,715) --------- ------- -------- -------- -------- BALANCE, JULY 31, 2006 1,900,000 $ 1,900 $ 48,100 $(11,528) $ 38,472 ========= ======= ======== ======== ========
See Notes to Financial Statements 4 AMERICAN BONANZA RESOURCES CORP. (An Exploration Stage Company) Statements of Cash Flows --------------------------------------------------------------------------------
May 2, 2005 Nine Months May 2, 2005 (inception) Ended (Inception) to through July 31, July 31, July 31, 2006 2005 2006 -------- -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $(11,447) $ (62) $(11,528) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Changes in operating assets and liabilities: Increase (decrease) in Accounts Payable 1,000 -- 1,000 Increase (decrease) in Payable to Director 5,200 -- 5,200 -------- -------- -------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (5,247) (62) (5,328) CASH FLOWS FROM INVESTING ACTIVITIES NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES -- -- -- CASH FLOWS FROM FINANCING ACTIVITIES Issuance of common stock 900 1,000 1,900 Additional paid-in capital 44,100 4,000 48,100 -------- -------- -------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 45,000 5,000 50,000 -------- -------- -------- NET INCREASE (DECREASE) IN CASH 39,753 4,938 44,672 CASH AT BEGINNING OF PERIOD 4,919 -- -- -------- -------- -------- CASH AT END OF PERIOD $ 44,672 $ 4,938 $ 44,672 ======== ======== ======== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during year for: Interest $ -- $ -- $ -- ======== ======== ======== Income Taxes $ -- $ -- $ -- ======== ======== ========
See Notes to Financial Statements 5 AMERICAN BONANZA RESOURCES CORP. (An Exploration Stage Company) Notes to Financial Statements July 31, 2006 NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS American Bonanza Resources Corp. (the Company) was incorporated under the laws of the State of Nevada on May 2, 2005. The Company was formed to engage in the acquisition, exploration and development of natural resource properties. The Company is in the exploration stage. Its activities to date have been limited to capital formation, organization, development of its business plan and staking of mining claims. The Company has not commenced operations. NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. BASIS OF ACCOUNTING The Company's financial statements are prepared using the accrual method of accounting. The Company has elected an October 31, year-end. B. BASIC EARNINGS PER SHARE In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share", which specifies the computation, presentation and disclosure requirements for earnings (loss) per share for entities with publicly held common stock. SFAS No. 128 supersedes the provisions of APB No. 15, and requires the presentation of basic earnings (loss) per share and diluted earnings (loss) per share. The Company has adopted the provisions of SFAS No. 128 effective May 2, 2005 (inception). Basic net loss per share amounts is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted earnings per share are the same as basic earnings per share due to the lack of dilutive items in the Company. C. CASH EQUIVALENTS The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. D. USE OF ESTIMATES AND ASSUMPTIONS 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 of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In accordance with FASB 16 all adjustments are normal and recurring. 6 AMERICAN BONANZA RESOURCES CORP. (An Exploration Stage Company) Notes to Financial Statements July 31, 2006 NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) E. INCOME TAXES Income taxes are provided in accordance with Statement of Financial Accounting Standards No. 109 (SFAS 109), Accounting for Income Taxes. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carryforwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of all of the deferred tax assets will be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. NOTE 3. GOING CONCERN The accompanying financial statements are presented on a going concern basis. The Company had no operations during the period from May 2, 2005 (inception) to July 31, 2006 and generated a net loss of $11,528. This condition raises substantial doubt about the Company's ability to continue as a going concern. The Company's continuation as a going concern is dependent on its ability to meet its obligations, to obtain additional financing as may be required and ultimately to attain profitability. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Management plans to raise additional funds through debt or equity offerings. Management's current plan includes a SB-2 registration statement with the U.S. Securities and Exchange Commission of 2,000,000 units for sale at $.05 per unit to raise capital of $100,000 to implement their business plan. Each unit will consist of one share and two- share purchase warrants. Each share purchase warrant will be valid for a period of two years and will be exercisable at a price of $.10 per share. There is no guarantee that the Company will be able to raise any capital through this or any other offerings. NOTE 4. WARRANTS AND OPTIONS There are currently 1,800,000 warrants outstanding exercisable at a price of $.10 per share expiring March 2, 2008. There are currently no outstanding options to acquire any additional shares of common stock. NOTE 5. RELATED PARTY TRANSACTIONS The Company neither owns nor leases any real or personal property. Beginning January 1, 2006 the Company has been paying a director $100 per month for use of office space and services. The officer and director of the Company is involved in other business activities and may, in the future, become involved in other business opportunities as they become available, he may face a conflict in selecting between the Company and his other business interests. The Company has not formulated a policy for the resolution of such conflicts. 7 AMERICAN BONANZA RESOURCES CORP. (An Exploration Stage Company) Notes to Financial Statements July 31, 2006 Thomas Gelfand, officer and director of the Company, will not be paid for any underwriting services that he performs on behalf of the Company with respect to the Company's current SB-2 offering. He will also not receive any interest on any funds that he advances to the Company for offering expenses prior to the offering being closed which will be repaid from the proceeds of the offering. NOTE 6. INCOME TAXES As of July 31, 2006 ------------------- Deferred tax assets: Net operating tax carryforwards $ 11,528 Other 0 -------- Gross deferred tax assets 11,528 Valuation allowance (11,528) -------- Net deferred tax assets $ 0 ======== Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carryforwards are expected to be available to reduce taxable income. As the achievement of required future taxable income is uncertain, the Company recorded a full valuation allowance. NOTE 7. NET OPERATING LOSSES As of July 31, 2006, the Company has a net operating loss carryforwards of approximately $11,528. Net operating loss carryforward expires twenty years from the date the loss was incurred. NOTE 8. MINERAL PROPERTY On October 17, 2005 the Company staked mining claims located east of Lillooet Lake and 25 kilometres southeast of Pemberton in South-Western British Columbia. NOTE 9. STOCK TRANSACTIONS Transactions, other than employees' stock issuance, are in accordance with paragraph 8 of SFAS 123. Thus issuances shall be accounted for based on the fair value of the consideration received. Transactions with employees' stock issuance are in accordance with paragraphs (16-44) of SFAS 123. These issuances shall be accounted for based on the fair value of the consideration received or the fair value of the equity instruments issued, or whichever is more readily determinable. On May 2, 2005 the Company issued a total of 1,000,000 shares of common stock to two directors for cash in the amount of $0.005 per share for a total of $5,000. During the months of March and April, 2006, 820,000 80,000 shares of common stock had been sold. 8 During the month of May, 2006, 80,000 shares of common stock had been sold. As of July 31, 2006 the Company had 1,900,000 shares of common stock issued and outstanding. NOTE 10. STOCKHOLDERS' EQUITY The stockholders' equity section of the Company contains the following classes of capital stock as of July 31, 2006: Common stock, $ 0.001 par value: 75,000,000 shares authorized; 1,900,000 shares issued and outstanding. 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION RESULTS OF OPERATIONS Our cash in the bank at July 31, 2006 was $44,672. In order to satisfy our cash requirements we were required to complete our offering of 2,000,000 shares registered pursuant to our SB-2 Registration Statement which became effective on March 2, 2006. Subsequent to our July 31, 2006 financials statements, we completed and closed our SB-2 offering on August 18, 2006 selling a total of 2,000,000 shares at $.05 per share to raise an aggregate amount of $100,000 from 34 shareholders. We incurred operating expenses of $1,715 and $11,447 for the three and nine month periods ended July 31, 2006, respectively. These expenses consisted of general operating expenses incurred in connection with the day to day operation of our business and the preparation and filing of our periodic reports and registration statement. Our net loss for the three months ended July 31, 2006 and 2005 was $11,447 and $62, respectively. Our plan of operation for the twelve months following the completion of our offering is to implement the first three phases of exploration programs on the Twin Mineral Claims. In addition to the $85,000 we anticipate spending for Phases I, II and III of the exploration program as outlined below, we anticipate spending an additional $15,000 on professional fees, including fees payable in connection with the filing of our registration statement and complying with reporting obligations, and general administrative costs. Total expenditures over the next 12 months are therefore expected to be $100,000, which is the amount raised in our offering. The Phase I budget will cover initial geological mapping; silt (soil if necessary) geochemical sampling of defined drainages; and prospecting. The Phase II budget will cover the detailed geological mapping and geophysical surveying. Phase III will involve a limited airborne survey if the equipment is available prior to drilling. All three phases are estimated to cost $85,000. We have not yet commenced any exploration work on the Twin Mineral Claims. We do not intend to purchase any significant property or equipment, nor incur any significant changes in employees during the next 12 months. For the period from inception to July 31, 2006, we had no revenues and incurred net operating losses of $11,527, consisting of general and administrative expenses primarily incurred in connection with the preparation and filing of our SB-2 Registration Statement and our periodic reports. 10 Net cash provided by financing activities since inception is $105,000 which includes $5,000 raised from the private sale of stock to an officer and director and $100,000 from the offering pursuant to our SB-2 Registration Statement. In their report on our audited financial statements as at October 31, 2005, our auditors expressed their doubt about our ability to continue as a going concern unless we are able to raise additional capital and ultimately to generate profitable operations. PLAN OF OPERATION Following is an outline of the exploration program we plan to implement on our property: The Phase I budget will cover initial geological mapping; silt (soil if necessary) geochemical sampling of defined drainages; and prospecting. The Phase II budget will cover the detailed geological mapping and geophysical surveying. Phase III will involve a limited airborne survey if the equipment is available prior to drilling. All three phases are estimated to cost $85,000 as described below. All figures in US dollars. BUDGET - PHASE I Geologist 5 days @ $500/day $ 2,500 Geotechnician 10 days @ $250/day $ 2,500 Equipment rental 1 x 4 wheel drive vehicle $ 500 Fuel, Food, Field Supplies $ 1,500 Assays 40 @ $250 each $ 1,000 Report $ 1,200 Filing Fees $ 300 -------- TOTAL $ 9,500 ======== BUDGET - PHASE II Follow-up Geochem Surveying Grid establishment $ 4,000 Detailed Geological Mapping and sampling $ 4,000 Assays 200 samples $20 / metre $ 4,000 Follow-up Report and supervision $ 3,000 -------- TOTAL $ 15,000 ======== PHASE III Following the geological mapping, sampling and prospecting of Phase I and II, the Phase III exploration program will utilize a helicopter equipped, airborne EM system if one is available in the area to conduct a detailed geophysical survey of the target areas to further refine the targets, prior to drilling. 11 BUDGET - PHASE III Airborne Electromagnetic Survey $ 15,000 Drilling 500 metres at $90 / metre $ 40,000 Follow-up Report and supervision $ 5,500 -------- TOTAL $ 60,500 ======== GRAND TOTAL $ 85,000 ======== OFF-BALANCE SHEET ARRANGEMENTS We have no off-balance sheet arrangements. CRITICAL ACCOUNTING POLICIES It is suggested that these financial statements be read in conjunction with our October 31, 2005 audited financial statements and notes thereto, which can be found in our Form SB-2 Registration Statement and amendments thereto on the SEC website at www.sec.gov under our SEC File Number 333-130286. The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates which have been made using careful judgement. The financial statements have, in management's opinion, been properly prepared within reasonable limits of materiality and within the framework of the significant accounting policies summarized below: A. BASIS OF ACCOUNTING The Company's financial statements are prepared using the accrual method of accounting. The Company has elected an October 31, year-end. B. BASIC EARNINGS PER SHARE In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share", which specifies the computation, presentation and disclosure requirements for earnings (loss) per share for entities with publicly held common stock. SFAS No. 128 supersedes the provisions of APB No. 15, and requires the presentation of basic earnings (loss) per share and diluted earnings (loss) per share. The Company has adopted the provisions of SFAS No. 128 effective May 2, 2005 (inception). 12 Basic net loss per share amounts is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted earnings per share are the same as basic earnings per share due to the lack of dilutive items in the Company. C. CASH EQUIVALENTS The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. D. USE OF ESTIMATES AND ASSUMPTIONS 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 of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In accordance with FASB 16 all adjustments are normal and recurring. E. INCOME TAXES Income taxes are provided in accordance with Statement of Financial Accounting Standards No. 109 (SFAS 109), Accounting for Income Taxes. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry-forwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of all of the deferred tax assets will be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. ITEM 3. CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as of the end of the period covered by this report. Based on this evaluation, our principal executive 13 officer and principal financial officer concluded as of the evaluation date that our disclosure controls and procedures were effective such that the material information required to be included in our Securities and Exchange Commission reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to our company, particularly during the period when this report was being prepared. Additionally, there were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the evaluation date. We have not identified any significant deficiencies or material weaknesses in our internal controls, and therefore there were no corrective actions taken. PART II - OTHER INFORMATION ITEM 5. OTHER INFORMATION DEPARTURE OF DIRECTOR On September 11, 2006 we received the resignation of Robert Gardner, one of our directors. There were no disagreements between the director and the registrant on any matter relating to the registrant's operations, policies or practices. The 500,000 common stock shares held by Mr. Gardner were transferred, in a private transaction, to our remaining director, Thomas Gelfand. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K The following exhibits are included with this quarterly filing. Those marked with an asterisk and required to be filed hereunder, are incorporated by reference and can be found in their entirety in our original Form SB-2 Registration Statement, filed under SEC File Number 333-130286, at the SEC website at www.sec.gov: Exhibit Number Description ------ ----------- 3.1 Articles of Incorporation* 3.2 Bylaws* 31.1 Sec. 302 Certification of Principal Executive Officer 31.2 Sec. 302 Certification of Principal Financial Officer 32.1 Sec. 906 Certification of Principal Executive Officer 32.2 Sec. 906 Certification of Principal Financial Officer There were no reports filed on Form 8-K during the quarter ended July 31, 2006. 14 SIGNATURES Pursuant to the requirements of Section 13(a) 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, thereunto duly authorized. September 14, 2006 American Bonanza Resources Corp, Registrant By: /s/ Thomas Gelfand ------------------------------------------ Thomas Gelfand, President, Chief Executive Officer, Principal Accounting Officer, Chief Financial Officer, Secretary and Chairman of the Board In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. September 14, 2006 American Bonanza Resources Corp, Registrant By: /s/ Thomas Gelfand ------------------------------------------ Thomas Gelfand, President, Chief Executive Officer, Principal Accounting Officer, Chief Financial Officer, Secretary and Chairman of the Board 15