See accompanying notes to unaudited condensed
consolidated financial statements.
See accompanying notes to unaudited condensed
consolidated financial statements.
See accompanying notes to unaudited condensed
consolidated financial statements.
See accompanying notes to unaudited condensed
consolidated financial statements.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND
2021
(Currency expressed in United States Dollars
(“US$”), except for number of shares)
1. DESCRIPTION
OF BUSINESS AND ORGANIZATION
Bonanza Goldfields Corp. (the “Company”)
was incorporated in the State of Nevada on March 6, 2008. Currently, the Company through its subsidiaries, are principally engaged in
the sale and distribution of media and entertainment products in its online platform in Singapore, as well as the provision of financing,
business development solutions & related professional services in Hong Kong.
On August 27, 2021, Dr. Lee Ying Chiu Herbert
purchased a controlling interest in the Company, resulting in a change of control. On August 26, 2021, Dr. Lee Ying Chiu Herbert was
appointed to serve as director of the Company.
On October 18, 2021, the Company consummated
the Share Exchange Transaction among Marvion Holdings Limited (“MHL”) and its shareholders. The Company acquired all of the
issued and outstanding shares of MHL from its shareholders, in exchange for 139,686,481,453 shares of the issued and outstanding common
stock. Upon completion of the Share Exchange Transaction, MHL became a 100% owned subsidiary of the Company.
Prior to the Share Exchange, the Company was
considered as a shell company due to its nominal assets and limited operation. The transaction will be treated as a recapitalization
of the Company.
The Share Exchange between the Company and MHL
on October 18, 2021, is a merger of entities under common control that Dr. Lee Ying Chiu Herbert is the common director and shareholder
of both the Company and MHL. Under the guidance in Accounting Standard Codification Topic 805, for transactions between entities under
common control, the assets, liabilities and results of operations, are recognized at their carrying amounts on the date of the Share
Exchange, which required retrospective combination of the Company and MHL for all periods presented.
Description of subsidiaries
Description of Subsidiaries |
|
|
|
|
|
|
|
|
Name |
|
Place of incorporation
and kind of
legal entity |
|
Principal activities
and place of operation |
|
Particulars of registered/paid
up share capital |
|
Effective interest
held |
|
|
|
|
|
|
|
|
|
Marvion Holdings Limited |
|
British Virgin Islands |
|
Investment holding |
|
50,000 ordinary shares at par value of US$1 |
|
100% |
|
|
|
|
|
|
|
|
|
Marvion Private Limited |
|
Singapore |
|
Corporate management and IT development in Singapore |
|
1,000 ordinary shares for S$1,000 |
|
100% |
|
|
|
|
|
|
|
|
|
Marvion Group Limited |
|
British Virgin Islands |
|
Procurement of media and entertainment in Singapore |
|
50,000 ordinary shares at par value of US$1 |
|
100% |
|
|
|
|
|
|
|
|
|
Marvion (Hong Kong) Limited |
|
Hong Kong |
|
Corporate management in Hong Kong |
|
1,000 ordinary shares for HK$1,000 |
|
100% |
|
|
|
|
|
|
|
|
|
Typerwise Limited |
|
Hong Kong |
|
Provision of financing, business development solutions & related professional services |
|
10,000 ordinary shares for HK$10,000 |
|
100% |
|
|
|
|
|
|
|
|
|
Marvel Multi-dimensions Limited |
|
Hong Kong |
|
Provision of research & development, IT and consulting services and treasury management for
the Group |
|
10,000 ordinary shares for HK$10,000 |
|
100% |
The Company and its subsidiaries are hereinafter
referred to as (the “Company”).
BONANZA GOLDFIELDS CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND
2021
(Currency expressed
in United States Dollars (“US$”), except for number of shares)
2. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying condensed consolidated financial statements reflect
the application of certain significant accounting policies as described in this note and elsewhere in the accompanying condensed consolidated
financial statements and notes.
These accompanying condensed consolidated financial
statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US
GAAP”) for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).
Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the financial statements
not misleading have been included. Operating results for the interim period ended March 31, 2022 are not necessarily indicative of the
results that may be expected for the fiscal year ending December 31, 2022. The information included in this Form 10-Q should be read
in conjunction with Management’s Discussion and Analysis, and the financial statements and notes thereto included in the Company’s
Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on March 31, 2022.
|
· |
Use of estimates and assumptions |
In preparing these condensed consolidated financial
statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet
and revenues and expenses during the periods reported. Actual results may differ from these estimates. If actual results significantly
differ from the Company’s estimates, the Company’s financial condition and results of operations could be materially impacted.
Significant estimates in the period include the impairment loss on digital assets, valuation and useful lives of intangible assets and
deferred tax valuation allowance.
The condensed consolidated financial statements
include the accounts of BONZ and its subsidiaries. All significant inter-company balances and transactions within the Company have been
eliminated upon consolidation.
Accounting Standards Codification (“ASC”)
Topic 280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis
consistent with the Company’s internal organization structure as well as information about geographical areas, business segments
and major customers in condensed consolidated financial statements. Currently, the Company operates in two reportable operating segments
in Hong Kong and Singapore.
|
· |
Cash and cash equivalents |
Cash and cash equivalents are carried at cost
and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with
an original maturity of three months or less as of the purchase date of such investments.
BONANZA GOLDFIELDS CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND
2021
(Currency expressed
in United States Dollars (“US$”), except for number of shares)
The Company’s
digital assets represent the crypto currencies, including Tether, Binance Coin, Ethereum, OKB Token and OEC Token. The Company accounts
for its digital assets in accordance with Financial Accounting Standards Board (“FASB”) ASC Topic 350, “General
Intangibles Other Than Goodwill” (“ASC 350”). ASC 350 requires assets to be measured based on the fair value of
the consideration given or the fair value of the assets (or net assets) acquired, whichever is more clearly evident and, thus, more reliably
measurable. Accordingly, if the fair market value at any point during the reporting period is lower than the carrying value an impairment
loss equal to the difference will be recognized in the condensed consolidated statement of operations. If the fair market value at any
point during the reporting period is higher than the carrying value the basis of the digital assets will not be adjusted to account for
this increase. Gains on digital assets, if any, will be recognized upon sale or disposal of the assets.
The Company’s cryptocurrencies are deemed
to have an indefinite useful life; therefore amounts are not amortized, but rather are assessed for impairment.
Intangible assets consist of licensed media content,
trademarks and trade name. The intangible assets are amortized following the patterns in which the economic benefits are consumed or
straight-line over the estimated useful life. The Company periodically reviews the estimated useful lives of these intangible assets
and reviews these assets for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may
not be recoverable. The determination of impairment is based on estimates of future undiscounted cash flows. If an intangible asset is
considered to be impaired, the amount of the impairment will be equal to the excess of the carrying value over the fair value of the
asset. There was no impairment of intangible assets identified for the periods ended March 31, 2022 and 2021.
|
· |
Impairment of long-lived assets |
In accordance with the provisions of ASC Topic
360, “Impairment or Disposal of Long-Lived Assets”, all long-lived assets such as plant and equipment and intangible
assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying
amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered
to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair
value of the assets. There has been no impairment charge for the periods presented.
The Company adopted Accounting Standards Update
("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”) using the full retrospective
transition method. The Company's adoption of ASU 2014-09 did not have a material impact on the amount and timing of revenue recognized
in its condensed consolidated financial statements.
The Company applies the following five steps
in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:
· |
identify the contract with a customer; |
· |
identify the performance obligations in the contract; |
· |
determine the transaction price; |
· |
allocate the transaction price to performance obligations in the contract;
and |
· |
recognize revenue as the performance obligation is satisfied. |
BONANZA GOLDFIELDS CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND
2021
(Currency expressed in United States Dollars
(“US$”), except for number of shares)
Revenue is recognized when the Company satisfies
its performance obligation under the contract by transferring the promised product to its customer that obtains control of the product
and collection is reasonably assured. A performance obligation is a promise in a contract to transfer a distinct product or service to
a customer. Most of the Company’s contracts have a single performance obligation, as the promise to transfer products or services
is not separately identifiable from other promises in the contract and, therefore, not distinct.
Consulting Business: Revenue is earned
from the rendering of marketing and strategic advisory services to the customers. The Company recognizes services revenue over the period
in which such services are performed under fixed price contracts.
Media & Entertainment:
The sale and distribution of the licensed media content, such as, images, video, episode and films, in crypto asset transaction is
the only performance obligation under the fixed-fee arrangements. This media content is individually monetized as non-interchangeable
unit of data stored on a blockchain, a form of digital ledger that can be, in the form of a token on the online platform. The revenue
is recognized for each sale when the designated content token is transferred to the end user.
The transaction consideration
the Company receives, if any, is noncash consideration, which the Company measures at fair value on the date received, at which time
revenue is recognized. Fair value of the digital asset award received is determined using the average U.S. dollar spot rate of the related
digital currency at the time of receipt.
Expenses associated
with operating the media & entertainment business, such as token minting cost are also recorded as cost of revenues. Amortization
on licensed media content is also recorded as a component of cost of revenues.
During the periods ended March 31, 2022 and 2021,
the following table shows non-cash transactions by digital assets:
Schedule of non-cash transactions | |
| | | |
| | |
| |
Three months ended March 31, | |
| |
2022 | | |
2021 | |
| |
| | |
| |
Revenue earned and received by digital assets | |
$ | 82,945 | | |
$ | – | |
Cost of revenue paid by digital assets | |
| (11 | ) | |
| – | |
Expense paid by digital assets | |
$ | (72,500 | ) | |
$ | – | |
The Company adopted the ASC 740 “Income
tax” provisions of paragraph 740-10-25-13, which addresses the determination of whether tax benefits claimed or expected to
be claimed on a tax return should be recorded in the condensed consolidated financial statements. Under paragraph 740-10-25-13, the Company
may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained
on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the condensed
consolidated financial statements from such a position should be measured based on the largest benefit that has a greater than fifty
percent (50%) likelihood of being realized upon ultimate settlement. Paragraph 740-10-25-13 also provides guidance on de-recognition,
classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company
had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of paragraph 740-10-25-13.
The estimated future tax effects of temporary
differences between the tax basis of assets and liabilities are reported in the accompanying balance sheets, as well as tax credit carry-backs
and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its balance sheets and provides
valuation allowances as management deems necessary.
BONANZA GOLDFIELDS CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND
2021
(Currency expressed in United States Dollars
(“US$”), except for number of shares)
|
· |
Uncertain tax positions |
The Company did not take any uncertain tax positions
and had no adjustments to its income tax liabilities or benefits pursuant to the ASC 740 provisions of Section 740-10-25 for the three
months ended March 31, 2022 and 2021.
The Company calculates net loss per share in
accordance with ASC Topic 260, “Earnings per Share.” Basic income per share is computed by dividing the net income
by the weighted-average number of common shares outstanding during the period. Diluted income per share is computed similar to basic
income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding
if the potential common stock equivalents had been issued and if the additional common shares were dilutive.
|
· |
Foreign currencies translation |
Transactions denominated
in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the
dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated
into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded
in the condensed consolidated statement of operations.
The reporting currency
of the Company is United States Dollar (“US$”) and the accompanying condensed consolidated financial statements have been
expressed in US$. In addition, the Company is operating in Hong Kong and Singapore, and maintains its books and record in its local currencies,
Hong Kong Dollars (“HKD”) and Singapore Dollars (“SGD”) respectively, which is a functional currency as being
the primary currency of the economic environment in which their operations are conducted. In general, for consolidation purposes, assets
and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30,
“Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are
translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of
foreign subsidiary are recorded as a separate component of accumulated other comprehensive income within the statements of changes in
shareholders’ equity.
Translation of amounts
from HKD and SGD into US$ has been made at the following exchange rates for the periods ended March 31, 2022 and 2021:
Schedule of translation rates | |
| | | |
| | |
| |
March 31, 2022 | | |
March 31, 2021 | |
Period-end HKD:US$ exchange rate | |
| 0.1277 | | |
| 0.1286 | |
Average HKD:US$ exchange rate | |
| 0.1281 | | |
| 0.1289 | |
Period-end SGD:US$ exchange rate | |
| 0.7387 | | |
| 0.7433 | |
Average SGD:US$ exchange rate | |
| 0.7396 | | |
| 0.7507 | |
ASC Topic 220, “Comprehensive Income”,
establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income
as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented
in the accompanying condensed consolidated statements of changes in stockholders’ equity, consists of changes in unrealized gains
and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.
BONANZA GOLDFIELDS CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND
2021
(Currency expressed in United States Dollars
(“US$”), except for number of shares)
The Company follows the ASC 850-10, “Related
Party Disclosures” for the identification of related parties and disclosure of related party transactions.
Pursuant to section 850-10-20 the related parties
include a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election
of the fair value option under the Fair Value Option Subsection of section 825-10-15, to be accounted for by the equity method by the
investing entity; c) trusts for the benefit of employees, such as pension and Income-sharing trusts that are managed by or under the
trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company
may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one
of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly
influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting
parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully
pursuing its own separate interests.
The condensed consolidated financial statements
shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other
similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated
or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s)
involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each
of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects
of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which income
statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period;
and d) amount due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the
terms and manner of settlement.
|
· |
Commitments and contingencies |
The Company follows the ASC 450-20, “Contingencies”
to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may
result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses
such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related
to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates
the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or
expected to be sought therein.
If the assessment of a contingency indicates
that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability
would be accrued in the Company’s condensed consolidated financial statements. If the assessment indicates that a potentially material
loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent
liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally
not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon
information available at this time that these matters will have a material adverse effect on the Company’s financial position,
results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s
business, financial position, and results of operations or cash flows.
BONANZA GOLDFIELDS CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND
2021
(Currency expressed
in United States Dollars (“US$”), except for number of shares)
|
· |
Fair value of financial instruments |
The Company follows paragraph 825-10-50-10 of
the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and has adopted paragraph 820-10-35-37
of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments.
Paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a framework for measuring fair value in generally accepted
accounting principles (GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair
value measurements and related disclosures, paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a fair value
hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value
hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest
priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by paragraph 820-10-35-37 of the FASB Accounting
Standards Codification are described below:
Level 1 |
|
Quoted market prices available in active markets for identical assets or liabilities
as of the reporting date. |
|
|
|
Level 2 |
|
Pricing inputs other than quoted prices in active markets included in Level 1, which are either
directly or indirectly observable as of the reporting date. |
|
|
|
Level 3 |
|
Pricing inputs that are generally observable inputs and not corroborated by market data. |
Financial assets are considered Level 3 when
their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant
model assumption or input is unobservable.
The fair value hierarchy gives the highest priority
to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If
the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is
based on the lowest level input that is significant to the fair value measurement of the instrument.
The carrying amounts of the Company’s financial
assets and liabilities, such as cash and cash equivalents, prepaid expense and other current assets, accrued liabilities and other payables,
accrued consulting service fee, amounts due to related parties and income tax payable approximate their fair values because of the short
maturity of these instruments.
|
· |
Recent accounting pronouncements |
In May 2021, the FASB issued ASU 2021-04, Earnings
Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and
Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40), (“ASU 2021-04”). This ASU reduces
diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example,
warrants) that remain equity classified after modification or exchange. This ASU provides guidance for a modification or an exchange of
a freestanding equity-classified written call option that is not within the scope of another Topic. It specifically addresses: (1) how
an entity should treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option
that remains equity classified after modification or exchange; (2) how an entity should measure the effect of a modification or an exchange
of a freestanding equity-classified written call option that remains equity classified after modification or exchange; and (3) how an
entity should recognize the effect of a modification or an exchange of a freestanding equity-classified written call option that remains
equity classified after modification or exchange. This ASU became effective for all entities for fiscal years beginning after December
15, 2021. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of
the amendments. The adoption of ASU 2021-04 on January 1, 2022 did not have a material impact on the Company’s financial statements
or disclosures.
The Company has reviewed all recently issued,
but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected
to cause a material impact on its financial condition or the results of its operations.
BONANZA GOLDFIELDS CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND
2021
(Currency expressed
in United States Dollars (“US$”), except for number of shares)
3 GOING
CONCERN UNCERTAINTIES
The accompanying condensed consolidated financial
statements have been prepared using the going concern basis of accounting, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business.
The Company has generated a recurring loss of
$1,029,967 during the current period and incurred the accumulated deficit of $17,187,334 as of March 31, 2022. In addition, with respect
to the ongoing and evolving coronavirus (COVID-19) outbreak, which was designated as a pandemic by the World Health Organization on March
11, 2020, the outbreak has caused substantial disruption in international economies and global trades and if repercussions of the outbreak
are prolonged, could have a significant adverse impact on the Company’s business.
The continuation of the Company as a going concern
through the next twelve months is dependent upon the continued financial support from its major shareholders. The Company is currently
pursuing additional financing for its operations. However, there is no assurance that the Company will be successful in securing sufficient
funds to sustain the operations.
These and other factors raise substantial doubt
about the Company’s ability to continue as a going concern. These condensed consolidated financial statements do not include any
adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities that may result
in the Company not being able to continue as a going concern.
4. REVENUE
FROM CONTRACTS WITH CUSTOMERS
The following is a disaggregation
of the Company’s revenue by major source for the respective periods:
Disaggregation of revenue | |
| | |
| |
| |
Three months ended March 31, | |
| |
2022 | | |
2021 | |
| |
| | |
| |
Sale of licensed media products | |
$ | 82,945 | | |
$ | – | |
Consulting service income | |
| 24,825 | | |
| 91,928 | |
| |
$ | 107,770 | | |
$ | 91,928 | |
BONANZA GOLDFIELDS CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND
2021
(Currency expressed
in United States Dollars (“US$”), except for number of shares)
5. BUSINESS
SEGMENT INFORMATION
Currently, the Company has two reportable business
segments:
|
(i) |
Media & Entertainment Segment, which mainly operates an online
platform to sell and distribute the licensed media products to end-users; and |
|
(ii) |
Business Consulting Segment, which mainly provides financing, business
development solutions and related professional services to the customers. |
In the following table, revenue is disaggregated
by primary major product line, and timing of revenue recognition. The table also includes a reconciliation of the disaggregated revenue
with the reportable segments.
Schedule of reconciliation of revenue from segments | |
| | |
| | |
| |
| |
Three months ended March 31, 2022 | |
| |
Media &
Entertainment
Segment | | |
Business Consulting Segment | | |
Total | |
Revenue from external customers: | |
| | | |
| | | |
| | |
Sale of licensed media products | |
$ | 82,945 | | |
$ | – | | |
$ | 82,945 | |
Consulting service income | |
| – | | |
| 24,825 | | |
| 24,825 | |
Total revenue | |
| 82,945 | | |
| 24,825 | | |
| 107,770 | |
| |
| | | |
| | | |
| | |
Cost of revenue: | |
| | | |
| | | |
| | |
Sale of licensed media products | |
| (12 | ) | |
| – | | |
| (12 | ) |
Amortization on licensed media content | |
| (12,142 | ) | |
| – | | |
| (12,142 | ) |
Consulting service income | |
| – | | |
| (25,626 | ) | |
| (25,626 | ) |
Total cost of revenue | |
| (12,154 | ) | |
| (25,626 | ) | |
| (37,780 | ) |
| |
| | | |
| | | |
| | |
Gross profit (loss) | |
| 70,791 | | |
| (801 | ) | |
| 69,990 | |
| |
| | | |
| | | |
| | |
Operating Expenses: | |
| | | |
| | | |
| | |
Technology and development expenses | |
| (505,930 | ) | |
| – | | |
| (505,930 | ) |
Sales and marketing expenses | |
| (58,263 | ) | |
| (8,603 | ) | |
| (66,866 | ) |
Corporate development expenses | |
| (60,000 | ) | |
| – | | |
| (60,000 | ) |
General and administrative expenses | |
| (444,000 | ) | |
| (4 | ) | |
| (444,004 | ) |
Impairment loss of digital assets | |
| (1,246 | ) | |
| – | | |
| (1,246 | ) |
Total operating expenses | |
| (1,069,439 | ) | |
| (8,607 | ) | |
| (1,078,046 | ) |
| |
| | | |
| | | |
| | |
Segment loss | |
$ | (998,648 | ) | |
$ | (9,408 | ) | |
$ | (1,008,056 | ) |
BONANZA GOLDFIELDS CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND
2021
(Currency expressed in United States Dollars
(“US$”), except for number of shares)
| |
| | | |
| | | |
| | |
| |
| | |
| | |
| |
| |
Three months ended March 31, 2021 | |
| |
Media & Entertainment Segment | | |
Business Consulting Segment | | |
Total | |
Revenue from external customers: | |
| | | |
| | | |
| | |
Sale of licensed media products | |
$ | – | | |
$ | – | | |
$ | – | |
Consulting service income | |
| – | | |
| 91,928 | | |
| 91,928 | |
Total revenue | |
| – | | |
| 91,928 | | |
| 91,928 | |
| |
| | | |
| | | |
| | |
Cost of revenue: | |
| | | |
| | | |
| | |
Sale of licensed media products | |
| – | | |
| – | | |
| – | |
Consulting service income | |
| – | | |
| (43,832 | ) | |
| (43,832 | ) |
Total cost of revenue | |
| – | | |
| (43,832 | ) | |
| (43,832 | ) |
| |
| | | |
| | | |
| | |
Gross profit | |
| – | | |
| 48,096 | | |
| 48,096 | |
| |
| | | |
| | | |
| | |
Operating Expenses: | |
| | | |
| | | |
| | |
General and administrative expenses | |
| – | | |
| (43,373 | ) | |
| (43,373 | ) |
Total operating expenses | |
| – | | |
| (43,373 | ) | |
| (43,373 | ) |
| |
| | | |
| | | |
| | |
Segment income | |
$ | – | | |
$ | 4,723 | | |
$ | 4,723 | |
Segment balance sheet items | |
| | |
| | |
| |
| |
As of March 31, 2022 | |
| |
Media & Entertainment Segment | | |
Business Consulting Segment | | |
Total | |
| |
| | | |
| | | |
| | |
Intangible assets | |
$ | 155,029 | | |
$ | – | | |
$ | 155,029 | |
Identifiable assets | |
$ | 149,880 | | |
$ | 18,627 | | |
$ | 168,507 | |
| |
| | |
| | |
| |
| |
As of December 31, 2021 | |
| |
Media & Entertainment Segment | | |
Business Consulting Segment | | |
Total | |
| |
| | | |
| | | |
| | |
Intangible assets | |
$ | 153,656 | | |
$ | – | | |
$ | 153,656 | |
Identifiable assets | |
$ | 115,608 | | |
$ | 28,124 | | |
$ | 143,732 | |
BONANZA GOLDFIELDS CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND
2021
(Currency expressed
in United States Dollars (“US$”), except for number of shares)
The below revenues are based on the countries
in which the customer is located. Summarized financial information concerning our geographic segments is shown in the following tables:
Schedule of revenue from customer by geographic segment | |
| | |
| |
| |
Three months ended March 31, | |
| |
2022 | | |
2021 | |
| |
| | |
| |
Hong Kong | |
$ | 24,825 | | |
$ | 91,928 | |
Around the world | |
| 82,945 | | |
| – | |
| |
| | | |
| | |
| |
$ | 107,770 | | |
$ | 91,928 | |
6. INTANGIBLE
ASSETS
As of March 31, 2022 and December 31, 2021, intangible
assets consisted of the following:
Schedule of intangible assets | |
| |
| | |
| |
| |
Estimated useful life | |
March 31, 2022 | | |
December 31, 2021 | |
| |
| |
| | |
| |
At cost: | |
| |
| | | |
| | |
Licensed media content | |
3 years | |
$ | 145,525 | | |
$ | 146,010 | |
Trademarks and trade name | |
10 years | |
| 9,504 | | |
| 7,646 | |
| |
| |
| 155,029 | | |
| 153,656 | |
Less: accumulated amortization | |
| |
| (24,603 | ) | |
| (12,279 | ) |
| |
| |
$ | 130,426 | | |
$ | 141,377 | |
As of March 31, 2022, the estimated amortization
expense for intangible assets for each of the succeeding five years and thereafter is as follows:
Schedule of amortization expense for intangible assets | |
| | |
Twelve months ended March 31, | |
Amount | |
2023 | |
$ | 49,459 | |
2024 | |
| 49,459 | |
2025 | |
| 25,205 | |
2026 | |
| 950 | |
2027 | |
| 950 | |
Thereafter | |
| 4,403 | |
Total | |
$ | 130,426 | |
Amortization expense of intangible assets was
$12,380 and $0 for the three months ended March 31, 2022 and 2021, respectively.
BONANZA GOLDFIELDS CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND
2021
(Currency expressed
in United States Dollars (“US$”), except for number of shares)
7. ACCRUED
CONSULTING AND SERVICE FEE
For the three months ended March 31, 2022, the Company agreed to provide
business or professional services which utilized and incurred IT development service, sale and marketing service, corporate development
service and administrative service. These consulting and service fees totaled $850,000
and was agreed to be settled in lieu of the common stock of the Company.
For the three months ended March 31, 2021, no
such accrued consulting and service fee were incurred.
8. AMOUNTS
DUE TO RELATED PARTIES
The amounts represented temporary advances from
the Company’s directors and companies which are controlled by a director of the Company for working capital purpose, which were
unsecured, interest-free and had no fixed terms of repayments. The related parties balance was $421,532 and $283,636 as of March 31,
2022 and December 31, 2021, respectively.
9. STOCKHOLDERS’
DEFICIT
Preferred stock
The
Company’s authorized shares were 30,000,000 shares of preferred stock, with a par value of $0.0001.
The Company has designated 10,000,000 shares
of its preferred stock as Series A Preferred Stock.
The Company has designated 1,000,000 shares of
its preferred stock as Series B Preferred Stock.
The Company has designated 1 share of its preferred
stock as Series C Preferred Stock.
As of March 31, 2022 and December 31, 2021,
the Company had 10,000,000 shares
of Series A Preferred Stock issued and outstanding.
As of March 31, 2022 and December 31, 2021, the
Company had 366,345
shares of Series B Preferred Stock issued and outstanding.
As of March 31, 2022 and December 31, 2021, the
Company had 1
share of Series C Preferred Stock issued and outstanding.
Common stock
The
Company’s authorized shares were 1,970,000,000 shares of common stock, with a par value of $0.0001.
As of March 31, 2022 and December 31, 2021, the
Company had 1,867,681,876 shares of common stock
issued and outstanding.
BONANZA GOLDFIELDS CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND
2021
(Currency expressed
in United States Dollars (“US$”), except for number of shares)
10. NET
(LOSS) INCOME PER SHARE
The following table sets forth the computation
of basic and diluted net loss per share for the three months ended March 31, 2022 and 2021:
Schedule of net loss per share | |
| | | |
| | |
| |
Three months ended March 31, | |
| |
2022 | | |
2021 | |
| |
| | |
| |
Net (loss) income attributable to common shareholders | |
$ | (1,029,967 | ) | |
$ | 4,758 | |
| |
| | | |
| | |
Weighted average common shares outstanding: | |
| | | |
| | |
– Basic | |
| 1,867,681,876 | | |
| 1,217,764,822 | |
– Diluted^ | |
| 140,336,398,507 | | |
| 139,686,481,453 | |
| |
| | | |
| | |
Net (loss) income per share: | |
| | | |
| | |
– Basic# | |
$ | (0.00 | ) | |
$ | 0.00 | |
– Diluted# | |
$ | (0.00 | ) | |
$ | 0.00 | |
____________________
#
Less than $0.001
^ The diluted weighted
average common shares outstanding is derived after having taken into account 138,468,716,631 common stock that is committed but yet to
be issued as follows:
| |
Three months ended March 31, | |
| |
2022 | | |
2021 | |
| |
| | |
| |
Weighted average common shares outstanding – basic | |
| 1,867,681,876 | | |
| 1,217,764,822 | |
Common stock committed but yet to be issued | |
| 138,468,716,631 | | |
| 138,468,716,631 | |
Weighted average common shares outstanding - diluted | |
| 140,336,398,507 | | |
| 139,686,481,453 | |
11. INCOME
TAX
For the three months ended March 31, 2022 and
2021, the local (“United States of America”) and foreign components of (loss) income before income taxes were comprised of
the following:
Schedule of income (loss) before income tax | |
| | |
| |
| |
Three months ended March 31, | |
| |
2022 | | |
2021 | |
Tax jurisdiction from: | |
| | | |
| | |
- Local | |
$ | ) | |
$ | |
- Foreign, including | |
| | | |
| | |
British Virgin Islands | |
| ) | |
| |
Singapore | |
| ) | |
| |
Hong Kong | |
| ) | |
| |
(Loss) income before income taxes | |
$ | ) | |
$ | |
BONANZA GOLDFIELDS CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND
2021
(Currency expressed
in United States Dollars (“US$”), except for number of shares)
The provision for income taxes consisted of the
following:
Schedule of provision for income taxes | |
| | | |
| | |
| |
Three months ended March 31, | |
| |
2022 | | |
2021 | |
| |
| | |
| |
Current: | |
| | | |
| | |
- Local | |
$ | – | | |
$ | – | |
- Foreign | |
| – | | |
| – | |
| |
| | | |
| | |
Deferred: | |
| | | |
| | |
- Local | |
| – | | |
| – | |
- Foreign | |
| – | | |
| – | |
| |
| | | |
| | |
Income tax expense | |
$ | – | | |
$ | – | |
The effective tax rate in the periods
presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rate. The
Company has operations in Hong Kong and Singapore that are subject to taxes in the jurisdictions in which they operate, as
follows:
United States of America
BONZ is registered in
the State of Nevada and is subject to the tax laws of United States of America. The U.S. Tax Cuts and Jobs Act (the “Tax Reform
Act”) was signed into law. The Tax Reform Act significantly revised the U.S. corporate income tax regime by, among other things,
lowering the U.S. corporate tax rate from 35% to 21% effective January 1, 2018. The Company’s policy is to recognize accrued interest
and penalties related to unrecognized tax benefits in its income tax provision. The Company has not accrued or paid interest or penalties
which were not material to its results of operations for the periods presented. Deferred tax asset is not provided for as the tax losses
may not be able to carry forward after a change in substantial ownership of the Company.
For the three months
ended March 31, 2022 and 2021, there were no operating income.
BVI
Under the current BVI law, the Company is not
subject to tax on income.
Singapore
The Company’s subsidiary registered in
the Republic of Singapore is subject to the tax laws of Singapore. A subsidiary incorporated in BVI is registered as a branch in Singapore
for operating purpose and is also subject to tax in the Republic of Singapore.
BONANZA GOLDFIELDS CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND
2021
(Currency expressed
in United States Dollars (“US$”), except for number of shares)
Schedule of income tax expense | |
| | |
| |
| |
Three months ended March 31, | |
| |
2022 | | |
2021 | |
| |
| | |
| |
Loss before income taxes | |
$ | 853,333 | | |
$ | – | |
Statutory income tax rate | |
| 17% | | |
| 17% | |
Income tax expense at statutory rate | |
| 145,067 | | |
| – | |
Net operating loss not recognized as deferred tax | |
| (145,067 | ) | |
| – | |
Income tax expense | |
$ | – | | |
$ | – | |
Hong Kong
The Company’s subsidiaries operating in
Hong Kong is subject to the Hong Kong Profits Tax at the two-tiered profits tax rates from 8.25% to 16.5% on the estimated assessable
profits arising in Hong Kong during the current period, after deducting a tax concession for the tax year. The reconciliation of income
tax rate to the effective income tax rate for the three months ended March 31, 2022 and 2021 is as follows:
Schedule of income tax expense | |
| | | |
| | |
| |
Three months ended March 31, | |
| |
2022 | | |
2021 | |
| |
| | |
| |
Income (loss) before income taxes | |
$ | (14,172 | ) | |
$ | 4,758 | |
Statutory income tax rate | |
| 16.5% | | |
| 16.5% | |
Income tax expense (benefit) at statutory rate | |
| (2,338 | ) | |
| 785 | |
Tax holiday | |
| – | | |
| (785 | ) |
Valuation allowance not recognized as deferred tax | |
| 2,338 | | |
| | |
Income tax expense | |
$ | – | | |
$ | – | |
The following table sets forth the significant
components of the deferred tax assets of the Company as of March 31, 2022 and December 31, 2021:
Schedule of deferred tax assets | |
| | | |
| | |
| |
March 31, 2022 | | |
December 31, 2021 | |
| |
| | |
| |
Deferred tax assets: | |
| | | |
| | |
NOL – US tax regime | |
$ | 150,800 | | |
$ | 116,807 | |
NOL – British Virgin Islands regime | |
| – | | |
| – | |
NOL – Hong Kong tax regime | |
| 2,338 | | |
| – | |
NOL – Singapore tax regime | |
| 415,198 | | |
| 270,131 | |
| |
| 568,336 | | |
| 386,938 | |
Less: valuation allowance | |
| (568,336 | ) | |
| (386,938 | ) |
Deferred tax assets, net | |
$ | – | | |
$ | – | |
BONANZA GOLDFIELDS CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND
2021
(Currency expressed
in United States Dollars (“US$”), except for number of shares)
As of March 31, 2022, the operations in the
United States of America incurred $718,094 of
cumulative net operating losses which can be carried forward indefinitely to offset future taxable income. The Company has provided for a full valuation allowance against the deferred tax assets of $150,800 on
the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not
that these assets will not be realized in the future.
As of March 31, 2022, the operations in Singapore incurred
$2,442,341 of cumulative net operating losses which can be carried forward to offset future taxable income. There is no expiry in net operating loss carryforwards under Singapore tax regime. the Company has provided for a
full valuation allowance against the deferred tax assets of $415,198 on the expected future tax benefits from the net operating loss carryforwards as
the management believes it is more likely than not that these assets will not be realized in the future.
The Company filed income tax returns in the United
States federal tax jurisdiction and several state tax jurisdictions. Since the Company is in a loss carryforward position, it is generally
subject to examination by federal and state tax authorities for all tax years in which a loss carryforward is available.
12. RELATED
PARTY TRANSACTIONS
From time to time, the Company’s directors
and companies which are controlled by a director of the Company advanced funds to the Company for working capital purpose. Those advances
are unsecured, non-interest bearing and have no fixed terms of repayment.
During the three months ended March 31, 2022
and 2021, the Company paid the aggregate amount of $130,626
and $83,630
as compensation and consultancy fees to its directors, respectively.
During the three months ended March 31, 2022 and
2021, the Company paid the management service fee of $72,500 and $0 to a company controlled by its director.
Apart from the transactions and balances detailed elsewhere in these accompanying
condensed consolidated financial statements, the Company has no other significant or material related party transactions during the periods
presented.
13. CONCENTRATIONS
OF RISK
The Company is exposed to the following concentrations of risk:
For the three months ended March 31, 2022 and
2021, the customers who accounted for 10% or more of the Company’s revenues and its outstanding receivable balances are presented
as follows:
Schedules of concentrations | |
| | | |
| | | |
| | |
| |
Three months ended March 31, 2022 | | |
March 31, 2022 | |
Customer | |
Revenues | | |
Percentage of revenues | | |
Accounts receivable | |
| |
| | |
| | |
| |
Customer A | |
$ | 24,825 | | |
| 23% | | |
$ | – | |
BONANZA GOLDFIELDS CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND
2021
(Currency expressed in United States Dollars
(“US$”), except for number of shares)
| |
Three months ended March 31, 2021 | | |
March 31, 2021 | |
Customer | |
Revenues | | |
Percentage of revenues | | |
Accounts receivable | |
| |
| | |
| | |
| |
Customer A | |
$ | 50,278 | | |
| 55% | | |
$ | – | |
Customer B | |
| 41,650 | | |
| 45% | | |
| – | |
| |
| | | |
| | | |
| | |
| |
$ | 91,928 | | |
| 100% | | |
$ | – | |
|
(b) |
Economic and political risk |
The Company’s major operations are conducted
in Hong Kong and Singapore. Accordingly, the political, economic, and legal environments, as well as the general state of economy in
Hong Kong and Singapore may influence the Company’s business, financial condition, and results of operations.
The Company cannot guarantee that the current
exchange rate will remain steady; therefore, the Company could post the same amount of profit for two comparable
periods and because of the fluctuating exchange rate actually post higher or lower profit depending on exchange rate of HKD and SGD converted
to US$ on that date. The exchange rate could fluctuate depending on changes in political and economic environments without notice.
|
(d) |
Market price risk of crypto (“digital”) assets |
The Company generated certain level of its revenue
from the sale and distribution of licensed media token products on its platform by the means of crypto assets by the customers, while
revenue from these products have not been significant to date, most of this revenue will also fluctuate based on the price of crypto
assets. Accordingly, crypto asset price risk could adversely affect its operating results. In particular, the future profitability may
depend upon the market price of BNB, ETH, as well as other crypto assets. Crypto asset prices, along with the operating results, have
fluctuated significantly from quarter to quarter. There is no assurance that crypto asset prices will reflect historical trends. A decline
in the market price of BTC, ETH and Other crypto assets could have a material and adverse effect on our earnings, the carrying value
of the crypto assets, and the future cash flows. This may also affect the liquidity and the ability to meet our ongoing obligations.
As of March 31, 2022, the Company recorded an impairment charge on the crypto assets held when crypto asset prices decrease below their
carrying value of these crypto assets.
|
(e) |
Risk from COVID-19 pandemic |
The pandemic has resulted in quarantines, travel
restrictions, and the temporary closure of stores and business facilities in Hong Kong in a limited period during 2021. Due to the nature
of the Company’s business, the impact of the closure on the operational capabilities was not significant. The extent to which the
COVID-19 outbreak impacts the Company’s results will depend on future developments that are highly uncertain and cannot be predicted,
including new information that may emerge concerning the severity and mutation of the virus and the actions to contain its impact, that
are beyond the Company’s control. There is no guarantee that the Company’s revenues will grow or remain at a similar level
in the foreseeable period.
BONANZA GOLDFIELDS CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND
2021
(Currency expressed in United States Dollars
(“US$”), except for number of shares)
14. COMMITMENTS
AND CONTINGENCIES
As of March 31, 2022, the Company had an office
service agreement for its corporate office. The lease contains the renewal option and will expire on 24 September 2022.
Apart from lease commitments, the Company has
no other material commitments or contingencies, as of March 31, 2022.
15. SUBSEQUENT
EVENTS
In accordance with ASC Topic 855, “Subsequent
Events”, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet
date but before consolidated financial statements are issued, the Company has evaluated all events or transactions that occurred after
March 31, 2022, up through the date the Company issued the unaudited condensed consolidated financial statements. The Company had no
material recognizable subsequent events since March 31, 2022, except for the following transactions:-
On April 1, 2022, the Company entered into an Equity Purchase Agreement
with Williamsburg Venture Holdings, LLC (“Investor”), a Nevada limited liability company, whereby the Investor has committed
to invest up to Twenty Million Dollars ($20,000,000) in the Company’s common stock in accordance with the terms and
conditions stated within the Equity Purchase Agreement dated April 1, 2022, and no later than February 24, 2025.
On April 14, 2022, the
Company, through its subsidiary, Marvion Private Limited, entered into an Intellectual Property Sale and Purchase Agreement (the “EA
SPA”) with Euro Amazing Limited, a limited liability company organized under the laws of Hong Kong, pursuant to which the Company
agreed to acquire a perpetual worldwide license for ten (10) categories of adaptation rights to twenty (20) movies in consideration of
2,325,581,395 shares of our common stock, at a valuation of $0.0043 per share. The EA SPA also contains normal and customary representations,
warranties and indemnification provisions. The Company hopes to consummate this transaction shortly after the increase in its authorized
capital is approved by FINRA.