NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. ORGANIZATION
AND BUSINESS BACKGROUND
Bonanza Goldfields Corp.
was incorporated in the State of Nevada on March 6, 2008. The Company and its subsidiaries are hereinafter referred to as (the “Company”).
Currently, the Company is
principally engaged in the sale and distribution of media and entertainment products in its online platform, as well as the provision
of financing, business development solutions & related professional services in Hong Kong.
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 each |
|
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 each |
|
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% |
Table of Contents
BONANZA GOLDFIELDS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
2. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
These accompanying
unaudited 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 June 30, 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, and the Company’s Amendment No. 7 to the Registration
Statement on Form 10 filed with the U.S. Securities and Exchange Commission (the “SEC”) on May 9, 2022.
Use of estimates and assumptions
In preparing these
unaudited 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.
Basis of consolidation
The unaudited 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.
Segment reporting
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 unaudited 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.
Table of Contents
BONANZA GOLDFIELDS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Digital assets
The
Company’s digital assets represent the cryptocurrencies, including Binance USD, 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 as “Impairment loss of digital assets” in the
unaudited 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.
Inventories
Inventory consists of adaptation
rights products, which are stated at the lower of cost (first-in, first-out method) or net realizable value. Management regularly reviews
inventory on an item-by-item basis and provides an inventory allowance based on excess or obsolete inventory determined primarily by anticipated
future demand for our products. Inventory allowance is measured as the difference between the cost of the inventory and market value,
based on assumptions about future demand that are inherently difficult to assess. As of June 30, 2022 and December 31, 2021, the Company
did not record an allowance for obsolete inventories, nor have there been any write-offs.
Intangible asset
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 six months ended June 30, 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 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.
Table of Contents
BONANZA GOLDFIELDS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Revenue recognition
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 unaudited 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. |
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.
Media
& Entertainment Business
Sale
of licensed IP right and media products:
The
sale and distribution of the licensed IP right and media content such as images, video, episode and films, in crypto and fiat currency
transaction is the only performance obligation under the fixed-fee arrangement. These IP right and media content are 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.
Transaction
fee income:
The
Company also generates revenue through transaction fees transacted on its platform or other marketplaces. The Company charges a fee to
individual customer at the secondary transaction level, which is allocated to the single performance obligation. The transaction fee is
collected from the customer in digital assets, with revenue measured based on a certain percentage of the value of digital assets at the
time the transaction is executed.
The
Company’s service is comprised of a single performance obligation to provide a platform facilitating the transfer of its DOTs. The
Company considers its performance obligation satisfied, and recognizes revenue, at the point in time the transaction is processed.
Table of Contents
BONANZA GOLDFIELDS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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 and licensed IP right 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 six months
ended June 30, 2022 and 2021, the following table shows non-cash transactions by digital assets:
Schedule of non-cash transactions | |
| | |
| |
| |
For the Six Months Ended June 30, | |
| |
2022 | | |
2021 | |
Revenue earned and received by digital assets | |
$ | 1,069,272 | | |
$ | – | |
Cost of revenue paid by digital assets | |
| (265 | ) | |
| – | |
Expense paid by digital assets | |
$ | (513,166 | ) | |
$ | – | |
Consulting Business
Consulting service income:
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.
Income taxes
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 unaudited 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 unaudited 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.
Table of Contents
BONANZA GOLDFIELDS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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 six months ended June 30, 2022 and 2021.
Net loss per share
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$”) and the accompanying unaudited condensed consolidated financial
statements have been expressed in US$. 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 are
their respective functional currencies, 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 period ended June 30, 2022 and 2021:
Schedule of translation rates | |
| | |
| |
| |
June 30, 2022 | | |
June 30, 2021 | |
Period-end HKD:US$ exchange rate | |
| 0.1274 | | |
| 0.1288 | |
Period average HKD:US$ exchange rate | |
| 0.1278 | | |
| 0.1288 | |
Period-end SGD:US$ exchange rate | |
| 0.7189 | | |
| 0.7437 | |
Period average SGD:US$ exchange rate | |
| 0.7328 | | |
| 0.7506 | |
Table of Contents
BONANZA GOLDFIELDS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Comprehensive income
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 unaudited 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.
Related parties
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 unaudited 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.
Table of Contents
BONANZA GOLDFIELDS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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 unaudited 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.
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 expenses and other current assets, accrued
liabilities and other payable, 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.
Table of Contents
BONANZA GOLDFIELDS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Recent accounting pronouncements
From time to time, new accounting
pronouncements are issued by the Financial Accounting Standard Board (“FASB”) or other standard setting bodies and adopted
by the Company as of the specified effective date.
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.
3. GOING
CONCERN UNCERTAINTIES
The accompanying unaudited
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 $1,973,954 during the
six months ended June 30, 2022 and incurred the accumulated deficit of $18,131,321
as of June 30, 2022. Expenses are expected to increase in the forthcoming year and cash flows of the Company may not be able to
sustain the expansion required.
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 unaudited 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.
Table of Contents
BONANZA GOLDFIELDS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
4. REVENUE
FROM CONTRACTS WITH CUSTOMERS
The table below presents our
revenues by revenue source.
Schedule of revenue from contracts with customers | |
| | |
| |
| |
For the Three Months Ended June 30, | | |
For the Six Months Ended June 30, | |
| |
2022 | | |
2021 | | |
2022 | | |
2021 | |
| |
| | |
| | |
| | |
| |
Consulting service income | |
$ | – | | |
$ | 96,283 | | |
$ | 24,759 | | |
$ | 188,211 | |
Media and entertainment income: | |
| | | |
| | | |
| | | |
| | |
Sale of licensed IP right and media products | |
| 963,084 | | |
| – | | |
| 1,046,029 | | |
| – | |
Transaction fee income | |
| 23,243 | | |
| – | | |
| 23,243 | | |
| – | |
Total revenues | |
$ | 986,327 | | |
$ | 96,283 | | |
$ | 1,094,031 | | |
$ | 188,211 | |
The table below presents our
revenues by geographic areas in which our customers were located.
Schedule of revenue from customer by geographic segment | |
| | |
| |
| |
For the Three Months Ended June 30, | | |
For the Six Months Ended June 30, | |
| |
2022 | | |
2021 | | |
2022 | | |
2021 | |
Hong Kong | |
$ | – | | |
$ | 96,283 | | |
$ | 24,759 | | |
$ | 188,211 | |
Rest of the World | |
| 986,327 | | |
| – | | |
| 1,069,272 | | |
| – | |
Total revenues | |
$ | 986,327 | | |
$ | 96,283 | | |
$ | 1,094,031 | | |
$ | 188,211 | |
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 IP right and media products to end-users; and |
|
(ii) |
Business Consulting Segment, which mainly provides financing, business development solutions and related professional services to the customers. |
Table of Contents
BONANZA GOLDFIELDS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
In the following tables,
revenue is disaggregated by primary major product line, and timing of revenue recognition. The tables also include a reconciliation of
the disaggregated revenue with the reportable segments.
|
|
|
|
|
|
|
|
|
|
|
|
Media &
Entertainment
Segment |
|
|
Business
Consulting
Segment |
|
|
Total |
|
For the Three Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue from external customers: |
|
|
|
|
|
|
|
|
|
|
|
|
Media and entertainment income |
|
$ |
986,327 |
|
|
$ |
– |
|
|
$ |
986,327 |
|
Consulting service income |
|
|
– |
|
|
|
– |
|
|
|
– |
|
Total revenues |
|
|
986,327 |
|
|
|
– |
|
|
|
986,327 |
|
Cost of revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Media and entertainment income |
|
|
(811,562 |
) |
|
|
– |
|
|
|
(811,562 |
) |
Amortization on licensed media content |
|
|
(11,918 |
) |
|
|
– |
|
|
|
(11,918 |
) |
Consulting service income |
|
|
– |
|
|
|
– |
|
|
|
– |
|
Total cost of revenues |
|
|
(823,480 |
) |
|
|
– |
|
|
|
(823,480 |
) |
Gross profit |
|
|
162,847 |
|
|
|
– |
|
|
|
162,847 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Technology and development expenses |
|
|
(101,162 |
) |
|
|
– |
|
|
|
(101,162 |
) |
Sales and marketing expenses |
|
|
(116,800 |
) |
|
|
(5,710 |
) |
|
|
(122,510 |
) |
Corporate development expenses |
|
|
(72,870 |
) |
|
|
– |
|
|
|
(72,870 |
) |
General and administrative expenses |
|
|
(812,312 |
) |
|
|
(2,345 |
) |
|
|
(814,657 |
) |
Impairment loss of digital assets |
|
|
(2,803 |
) |
|
|
– |
|
|
|
(2,803 |
) |
Total operating expenses |
|
|
(1,105,947 |
) |
|
|
(8,055 |
) |
|
|
(1,114,002 |
) |
Segment loss |
|
$ |
(943,100 |
) |
|
$ |
(8,055 |
) |
|
$ |
(951,155 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue from external customers: |
|
|
|
|
|
|
|
|
|
|
|
|
Media and entertainment income |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
– |
|
Consulting service income |
|
|
– |
|
|
|
96,283 |
|
|
|
96,283 |
|
Total revenues |
|
|
– |
|
|
|
96,283 |
|
|
|
96,283 |
|
Cost of revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Sale of licensed media products |
|
|
– |
|
|
|
– |
|
|
|
– |
|
Consulting service income |
|
|
– |
|
|
|
(25,102 |
) |
|
|
(25,102 |
) |
Total cost of revenues |
|
|
– |
|
|
|
(25,102 |
) |
|
|
(25,102 |
) |
Gross profit |
|
|
– |
|
|
|
71,181 |
|
|
|
71,181 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses |
|
|
– |
|
|
|
(43,704 |
) |
|
|
(43,704 |
) |
Total operating expenses |
|
|
– |
|
|
|
(43,704 |
) |
|
|
(43,704 |
) |
Segment income |
|
$ |
– |
|
|
$ |
27,477 |
|
|
$ |
27,477 |
|
Table of Contents
BONANZA GOLDFIELDS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
| |
Media & Entertainment Segment | | |
Business Consulting Segment | | |
Total | |
For the Six Months Ended June 30, 2022 | |
| | | |
| | | |
| | |
Revenue from external customers: | |
| | | |
| | | |
| | |
Media and entertainment income | |
$ | 1,069,272 | | |
$ | – | | |
$ | 1,069,272 | |
Consulting service income | |
| – | | |
| 24,759 | | |
| 24,759 | |
Total revenues | |
| 1,069,272 | | |
| 24,759 | | |
| 1,094,031 | |
Cost of revenues: | |
| | | |
| | | |
| | |
Media and entertainment income | |
| (811,574 | ) | |
| – | | |
| (811,574 | ) |
Amortization on licensed media content | |
| (24,060 | ) | |
| – | | |
| (24,060 | ) |
Consulting service income | |
| – | | |
| (25,558 | ) | |
| (25,558 | ) |
Total cost of revenues | |
| (835,634 | ) | |
| (25,558 | ) | |
| (861,192 | ) |
Gross profit (loss) | |
| 233,638 | | |
| (799 | ) | |
| 232,839 | |
Operating expenses: | |
| | | |
| | | |
| | |
Technology and development expenses | |
| (607,092 | ) | |
| – | | |
| (607,092 | ) |
Sales and marketing expenses | |
| (175,063 | ) | |
| (14,313 | ) | |
| (189,376 | ) |
Corporate development expenses | |
| (132,870 | ) | |
| – | | |
| (132,870 | ) |
General and administrative expenses | |
| (1,256,312 | ) | |
| (2,351 | ) | |
| (1,258,663 | ) |
Impairment loss of digital assets | |
| (4,049 | ) | |
| – | | |
| (4,049 | ) |
Total operating expenses | |
| (2,175,386 | ) | |
| (16,664 | ) | |
| (2,192,050 | ) |
Segment loss | |
$ | (1,941,748 | ) | |
$ | (17,463 | ) | |
$ | (1,959,211 | ) |
| |
| | | |
| | | |
| | |
For the Six Months Ended June 30, 2021 | |
| | | |
| | | |
| | |
Revenue from external customers: | |
| | | |
| | | |
| | |
Media and entertainment income | |
$ | – | | |
$ | – | | |
$ | – | |
Consulting service income | |
| – | | |
| 188,211 | | |
| 188,211 | |
Total revenues | |
| – | | |
| 188,211 | | |
| 188,211 | |
Cost of revenues: | |
| | | |
| | | |
| | |
Sale of licensed media products | |
| – | | |
| – | | |
| – | |
Consulting service income | |
| – | | |
| (68,934 | ) | |
| (68,934 | ) |
Total cost of revenues | |
| – | | |
| (68,934 | ) | |
| (68,934 | ) |
Gross profit | |
| – | | |
| 119,277 | | |
| 119,277 | |
Operating expenses: | |
| | | |
| | | |
| | |
General and administrative expenses | |
| – | | |
| (87,077 | ) | |
| (87,077 | ) |
Total operating expenses | |
| – | | |
| (87,077 | ) | |
| (87,077 | ) |
Segment income | |
$ | – | | |
$ | 32,200 | | |
$ | 32,200 | |
Table of Contents
BONANZA GOLDFIELDS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Segment balance sheet items | |
| | |
| | |
| |
| |
Media & Entertainment Segment | | |
Business Consulting Segment | | |
Total | |
As of June 30, 2022 | |
| | | |
| | | |
| | |
Intangible assets | |
$ | 151,107 | | |
$ | – | | |
$ | 151,107 | |
Identifiable assets | |
$ | 9,951,184 | | |
$ | 10,530 | | |
$ | 9,961,714 | |
| |
| | | |
| | | |
| | |
As of December 31, 2021 | |
| | | |
| | | |
| | |
Intangible assets | |
$ | 153,656 | | |
$ | – | | |
$ | 153,656 | |
Identifiable assets | |
$ | 115,608 | | |
$ | 28,124 | | |
$ | 143,732 | |
6. DIGITAL
ASSETS
The following table summarizes
the change in carrying value of Company’s digital assets for the period indicated:
Schedule of digital assets | |
| | |
| |
| |
For the Six Months Ended June 30, | |
| |
2022 | | |
2021 | |
Digital assets at beginning of the period | |
$ | 98,862 | | |
$ | – | |
Received as revenue | |
| 1,069,272 | | |
| – | |
Paid as expense | |
| (513,431 | ) | |
| – | |
Impairment loss of digital assets | |
| (4,049 | ) | |
| – | |
Loss on disposal of digital assets | |
| (18,566 | ) | |
| – | |
Digital assets at end of the period | |
$ | 632,088 | | |
$ | – | |
The following table summarizes
the Company’s digital asset holdings as of:
| |
| | |
| |
| |
As of June 30, 2022 | | |
As of December 31, 2021 | |
Binance USD (“BUSD”) | |
$ | 622,890 | | |
$ | – | |
Tether (“USDT”) | |
| 340 | | |
| 340 | |
Binance Coin (“BNB”) | |
| 7,793 | | |
| 94,848 | |
Ethereum (“ETH”) | |
| 1,063 | | |
| 3,669 | |
Others | |
| 2 | | |
| 5 | |
Total digital assets | |
$ | 632,088 | | |
$ | 98,862 | |
Table of Contents
BONANZA GOLDFIELDS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
7. INTANGIBLE
ASSETS
As of June 30, 2022 and December
31, 2021, intangible assets consisted of the following:
Schedule of intangible assets | |
| |
| | |
| |
| |
Estimated Useful Life | |
As of June 30, 2022 | | |
As of December 31, 2021 | |
At cost: | |
| |
| | | |
| | |
Licensed media content | |
3 years | |
$ | 141,623 | | |
$ | 146,010 | |
Trademarks and trade name | |
10 years | |
| 9,484 | | |
| 7,646 | |
Intangible assets, at cost | |
| |
| 151,107 | | |
| 153,656 | |
Less: accumulated amortization | |
| |
| (35,991 | ) | |
| (12,279 | ) |
Intangible assets, net | |
| |
$ | 115,116 | | |
$ | 141,377 | |
Amortization expense of
intangible assets was $12,155 and
$0 for the
three months ended June 30, 2022 and 2021, respectively, and $24,535 and
$0 for the six months ended June 30,
2022 and 2021, respectively. Amortization of licensed media content was primarily in “Cost of revenues” in the Condensed
Consolidation Statements of Operations and Comprehensive (Loss) Income.
The following table outlines
the estimated aggregate amortization expense related to intangible assets held as of June 30, 2022, for each of the five succeeding fiscal
years:
Schedule of amortization expense for intangible assets | |
| |
Year ending December 31, | |
| |
2022 (excluding the six months ended June 30, 2022) | |
$ | 24,078 | |
2023 | |
| 48,156 | |
2024 | |
| 36,354 | |
2025 | |
| 948 | |
2026 | |
| 948 | |
Thereafter | |
| 4,632 | |
Total | |
$ | 115,116 | |
Table of Contents
BONANZA GOLDFIELDS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
8. ACCRUED
CONSULTING AND SERVICE FEE
For the six months ended
June 30, 2022, the Company agreed to compensate certain business or professional services providers, which rendered IT development service,
sale and marketing service, corporate development service and administrative service. These consulting and service fees totaled $1,439,535
and was agreed to be settled in lieu of the common stock of the Company, of which the number of shares to be issued are to be
determined at a later date.
For the six months ended June
30, 2021, no such accrued consulting and service fee were incurred.
9. 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 $472,214 and $283,636 as of
June 30, 2022 and December 31, 2021, respectively.
10. STOCKHOLDERS’
EQUITY (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 June 30, 2022 and December
31, 2021, the Company had 10,000,000 shares of Series A Preferred Stock issued and outstanding.
As of June 30, 2022 and December
31, 2021, the Company had 366,345 shares of Series B Preferred Stock issued and outstanding.
As of June 30, 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 June 30, 2022 and December
31, 2021, the Company had 1,867,681,876 shares of common stock issued and outstanding.
Table of Contents
BONANZA GOLDFIELDS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Common stock to be issued
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 the consideration of 2,325,581,395 shares
of our common stock, at a valuation of $0.0043 per
share, equivalent to total consideration price of $10,000,000. This perpetual worldwide license for adaptation rights is treated as
inventories and will be recorded as cost when the performance obligation is satisfied to recognize the revenue.
On May 23, 2022, Marvion Private
Limited and Euro Amazing Limited signed an addendum and agreed to replace certain movies in the EA SPA with other movies. As of June 30,
2022, the increase in authorized capital of the Company has not yet been approved by FINRA. Accordingly, the share issuance transaction
has not yet consummated.
As of June 30, 2022 and December
31, 2021, the Company had 140,794,298,026 and 138,468,716,631 shares of its common stock committed to be issued but pending to be consummated,
respectively.
11. NET
(LOSS) INCOME PER SHARE
As the Company has net losses
for the three months and six months ended June 30, 2022, all potential common shares were deemed to be anti-dilutive. The following table
sets forth the computation of the basic and diluted net (loss) income per share (in dollars, except share data):
Schedule of basic and diluted net (loss) income per share | |
| | | |
| | | |
| | | |
| | |
| |
For the Three Months Ended June 30, | | |
For the Six Months Ended June 30, | |
| |
2022 | | |
2021 | | |
2022 | | |
2021 | |
Net (loss) income attributable to common stockholders | |
$ | (943,987 | ) | |
$ | 27,477 | | |
$ | (1,973,954 | ) | |
$ | 32,235 | |
| |
| | | |
| | | |
| | | |
| | |
Weighted average common shares outstanding: | |
| | | |
| | | |
| | | |
| | |
Basic | |
| 1,867,681,876 | | |
| 1,217,764,822 | | |
| 1,867,681,876 | | |
| 1,217,764,822 | |
Diluted | |
| 1,867,681,876 | | |
| 139,686,481,453 | | |
| 1,867,681,876 | | |
| 139,686,481,453 | |
| |
| | | |
| | | |
| | | |
| | |
Net (loss) income per share: | |
| | | |
| | | |
| | | |
| | |
Basic (1) | |
$ | (0.00 | ) | |
$ | 0.00 | | |
$ | (0.00 | ) | |
$ | 0.00 | |
Diluted (1) | |
$ | (0.00 | ) | |
$ | 0.00 | | |
$ | (0.00 | ) | |
$ | 0.00 | |
Table of Contents
BONANZA GOLDFIELDS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following
table presents the computation of weighted average common shares outstanding is derived after having taken into account of common stock
that is committed but yet to be issued as follows:
Schedule of weighted average common shares
outstanding | |
| | | |
| | | |
| | | |
| | |
| |
| | |
| |
| |
For
the Three Months Ended June
30, | | |
For
the Six Months Ended June
30, | |
| |
2022 | | |
2021 | | |
2022 | | |
2021 | |
Weighted average common shares outstanding – Basic and
Diluted | |
| 1,867,681,876 | | |
| 1,217,764,822 | | |
| 1,867,681,876 | | |
| 1,217,764,822 | |
Common
stock committed but yet to be issued (1) | |
| 140,794,298,026 | | |
| 138,468,716,631 | | |
| 140,794,298,026 | | |
| 138,468,716,631 | |
Weighted average common shares outstanding under
if-converted method for Basic and Diluted | |
| 142,661,979,902 | | |
| 139,686,481,453 | | |
| 142,661,979,902 | | |
| 139,686,481,453 | |
(1) |
The common stock committed but yet to be issued has been excluded from the computation of the diluted net loss per common stock for the
three months and six months ended June 30, 2022, because including them would have been anti-dilutive. |
12. INCOME
TAX
For the six months ended June
30, 2022 and 2021, the local (“United States of America”) and foreign tax regime incurred (loss) income before income taxes,
which comprised of the following:
Schedule of income (loss) before income tax | |
| | |
| |
| |
For the Six Months Ended June 30, | |
| |
2022 | | |
2021 | |
Tax jurisdiction from: | |
| | | |
| | |
- Local | |
$ | ) | |
$ | |
- Foreign, including | |
| | | |
| | |
British Virgin Islands | |
| ) | |
| |
Singapore | |
| ) | |
| |
Hong Kong | |
| ) | |
| |
(Loss) income before income taxes | |
$ | ) | |
$ | |
Table of Contents
BONANZA GOLDFIELDS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The provision for income taxes
consisted of the following:
Schedule of provision for income taxes | |
| | |
| |
| |
For the Six Months Ended June 30, | |
| |
2022 | | |
2021 | |
Current: | |
| | |
| |
- Local | |
$ | – | | |
$ | – | |
- Foreign | |
| 3,823 | | |
| – | |
| |
| | | |
| | |
Deferred: | |
| | | |
| | |
- Local | |
| – | | |
| – | |
- Foreign | |
| – | | |
| – | |
Income tax credit (expense) | |
$ | 3,823 | | |
$ | – | |
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 six months ended June 30, 2022 and 2021, there were no operating income.
BVI
Under the current BVI law,
the Company is not subject to tax on income.
Table of Contents
BONANZA GOLDFIELDS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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.
Schedule of income tax expense | |
| | |
| |
| |
For the Six Months Ended June 30, | |
| |
2022 | | |
2021 | |
Loss before income taxes | |
$ | 1,702,904 | | |
$ | – | |
Statutory income tax rate | |
| 17% | | |
| 17% | |
Income tax benefit at statutory rate | |
| 289,494 | | |
| – | |
Tax effect of disallowable items | |
| (4,105 | ) | |
| | |
Net operating loss not recognized as deferred tax | |
| (285,389 | ) | |
| – | |
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 six months ended June 30, 2022 and 2021 is as follows:
Schedule of income tax expense | |
| | |
| |
| |
For the Six Months Ended June 30, | |
| |
2022 | | |
2021 | |
(Loss) income before income taxes | |
$ | (30,606 | ) | |
$ | 32,235 | |
Statutory income tax rate | |
| 16.5% | | |
| 16.5% | |
Income tax (benefit) expense at statutory rate | |
| (5,050 | ) | |
| 5,319 | |
Tax holiday | |
| – | | |
| (5,365 | ) |
Tax effect of non-deductible and non-taxable items | |
| 117 | | |
| 46 | |
Tax over-provision | |
| 3,823 | | |
| – | |
Net operating loss not recognized as deferred tax | |
| 4,933 | | |
| – | |
Income tax credit | |
$ | 3,823 | | |
$ | – | |
Table of Contents
BONANZA GOLDFIELDS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table sets forth
the significant components of the deferred tax assets of the Company as of June 30, 2022 and December 31, 2021:
Schedule of deferred tax assets | |
| | |
| |
| |
As of June 30, 2022 | | |
As of December 31, 2021 | |
Deferred tax assets: | |
| | | |
| | |
NOL – US tax regime | |
$ | 163,229 | | |
$ | 116,807 | |
NOL – British Virgin Islands regime | |
| – | | |
| – | |
NOL – Hong Kong tax regime | |
| 4,933 | | |
| – | |
NOL – Singapore tax regime | |
| 554,085 | | |
| 270,131 | |
| |
| 722,247 | | |
| 386,938 | |
Less: valuation allowance | |
| (722,247 | ) | |
| (386,938 | ) |
Deferred tax assets, net | |
$ | – | | |
$ | – | |
As of June 30, 2022, the operations
in the United States of America incurred $777,283 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 $163,229 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 June 30, 2022, the operations
in Singapore incurred $3,259,324 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 $554,085 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 June 30, 2022, the operations
in Hong Kong incurred $29,894 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 Hong Kong tax regime. the Company has provided for a full valuation allowance against
the deferred tax assets of $4,933 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.
Table of Contents
BONANZA GOLDFIELDS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
13. 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 June 30, 2022 and 2021, the Company paid the aggregate amount of $74,932 and $25,102 as consultancy fees to its director,
respectively. During the six months ended June 30, 2022 and 2021, the Company paid the aggregate amount of $175,558 and $68,934 as
consultancy fees to its director, respectively.
During the three months ended
June 30, 2022 and 2021, the Company paid the aggregate amount of $30,000 and $39,278 as compensation to its directors, respectively.
During the six months ended June 30, 2022 and 2021, the Company paid the aggregate amount of $60,000
and $79,076
as compensation to its directors, respectively.
On April 1, the Company
entered into a Service Agreement with a company controlled by its director, which agreed to provide staffing and back-office
services to the Company until the arrangement is terminated by the parties. During the six months ended June 30, 2022, the Company
paid the related management service fee of $443,487.
The foregoing description of the Services Agreement is qualified in its entirety by reference to such agreement which is filed
as Exhibits 10.6 to this quarterly report on Form 10-Q and incorporated herein by reference.
Apart from the
transactions and balances detailed elsewhere in these accompanying unaudited condensed consolidated financial statements, the
Company has no other significant or material related party transactions during the periods presented.
14. CONCENTRATIONS
OF RISK
The Company is exposed to the following concentrations
of risk:
For the three and six months
ended June 30, 2022, there was no single customer who accounted for 10% or more of the Company’s revenues.
For the three and six months
ended June 30, 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 | |
| | |
| | |
| | |
| | |
| |
| |
For the Three Months Ended June 30, 2021 | | |
For the Six Months Ended June 30, 2021 | | |
As of June 30, 2021 | |
Customer | |
Revenues | | |
Percentage of revenues | | |
Revenues | | |
Percentage of revenues | | |
Accounts receivable | |
Customer A | |
$ | 50,216 | | |
| 52% | | |
$ | 100,494 | | |
| 53% | | |
$ | 25,113 | |
Customer B | |
| 46,067 | | |
| 48% | | |
| 87,717 | | |
| 47% | | |
| – | |
| |
$ | 96,283 | | |
| 100% | | |
$ | 188,211 | | |
| 100% | | |
$ | 25,113 | |
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BONANZA GOLDFIELDS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
|
(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 June 30, 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.
Liquidity risk is the risk that the Company will
not be able to meet its financial obligations as they become due. The Company’s policy is to ensure that it has sufficient cash
to meet its liabilities when they become due, under both normal and stressed conditions, without incurring unacceptable losses or risking
damage to the Company’s reputation. A key risk in managing liquidity is the degree of uncertainty in the cash flow projections.
If future cash flows are fairly uncertain, the liquidity risk increases.
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BONANZA GOLDFIELDS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
15. COMMITMENTS
AND CONTINGENCIES
Commitments
As of June 30, 2022, the Company
is committed to the below contractual agreement.
Leases
As of June 30, 2022, the Company
had a virtual office service agreement for its corporate office. The lease contains the renewal option and will expire on 24 September
2022.
Other contractual commitments
| · | Williamsburg Venture Holdings, LLC |
On April 1, 2022, the
Company entered into an Equity Purchase Agreement with Williamsburg Venture Holdings, LLC (“Investor”), a Nevada limited
liability company, pursuant to which the Investor agreed 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, by and between the Company and the Investor (the “Equity Purchase
Agreement”). During the term, the Company shall be entitled to put to the Investor, and the Investor shall be obligated to
purchase, such number of shares of the Company’s common stock and at such price as are determined in accordance with the
Equity Purchase Agreement. The per share purchase price for the Williamsburg Put Shares will be equal to 88% of the lowest traded
price of the Common Stock on the principal market during the five (5) consecutive trading days immediately preceding the date which
Williamsburg received the Williamsburg Put Shares as DWAC Shares in its brokerage account (as reported by Bloomberg Finance L.P.,
Quotestream, or other reputable source). In connection with the Equity Purchase Agreement, both parties also entered into a
Registration Rights Agreement (the “Registration Rights Agreement”) pursuant to which the Company agreed to register
with the SEC the common stock issuable under the Equity Purchase Agreement, among other securities. As of June 30, 2022, the
remaining balance for Equity Purchase from the Investor was $20,000,000.
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, or total consideration price of $10,000,000. On May 23, 2022, Marvion Private Limited and Euro Amazing Limited signed an addendum and agreed to replace certain
movies in the EA SPA with other movies. As of June 30, 2022, the increase in authorized capital of the Company has
not yet been approved by FINRA, therefore the share issuance transaction has not yet consummated.
16. 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 unaudited condensed consolidated financial statements are issued, the Company has evaluated all
events or transactions that occurred after June 30, 2022, up through the date the Company issued the unaudited condensed consolidated
financial statements. The Company had no material recognizable subsequent events since June 30, 2022.
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