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, 2023 AND
2022
(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.
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 (“MHL”) |
|
British Virgin Islands |
|
Investment holding |
|
50,000 ordinary shares at par value of US$1 |
|
100% |
|
|
|
|
|
|
|
|
|
Marvion Private Limited (“MPL”) |
|
Singapore |
|
Corporate management and IT development in Singapore |
|
1,000 ordinary shares for S$1,000 |
|
100% |
|
|
|
|
|
|
|
|
|
Marvion Group Limited (“MGL”) |
|
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 (“MHKL”) |
|
Hong Kong |
|
Corporate management in Hong Kong |
|
1,000 ordinary shares for HK$1,000 |
|
100% |
|
|
|
|
|
|
|
|
|
Typerwise Limited (“TL”) |
|
Hong Kong |
|
Provision of financing, business development solutions & related professional services |
|
10,000 ordinary shares for HK$10,000 |
|
100% |
|
|
|
|
|
|
|
|
|
Marvel Multi-dimensions Limited(“MMDL”) |
|
Hong Kong |
|
Provision of research & development, IT and consulting services and treasury management |
|
10,000 ordinary shares for HK$10,000 |
|
100% |
The Company and its subsidiaries are hereinafter
referred to as (the “Company”).
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.
Basis of presentation
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, 2023 are not necessarily indicative of the
results that may be expected for the fiscal year ending December 31, 2023. 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, 2022, filed with the SEC on April 17, 2023.
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.
Basis of consolidation
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.
Segment reporting
Accounting
Standards Codification (“ASC”) 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 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.
Digital assets
The Company’s digital
assets represent the cryptocurrencies held in its e-wallet, including Binance USD, Tether, Binance Coin, Ethereum, Polygon, OKB Token
and OEC Token. The Company accounts for its digital assets in accordance with Financial Accounting Standards Board (“FASB”)
ASC 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, the Company performs an analysis each quarter to identify whether events or
changes in circumstances and determines the fair value of its cryptocurrencies based on quoted closing prices on the active exchange on
the balance sheet date, if the fair market value is lower than the carrying value an impairment loss equal to the difference will be recognized
as “Impairment loss of digital assets” in the condensed consolidated statement of operations. If the fair market value is
higher than the carrying value the basis of the digital assets will not be adjusted to account for this increase. Gains (loss) on sale,
use or exchange of digital assets, if any, will be recognized upon sale, use or exchange of the digital assets.
The Company’s cryptocurrencies are deemed
to have an indefinite useful life; therefore, amounts are not amortized, but rather are assessed for impairment.
Development costs
The Company is a party
to a technical knowhow license and servicing agreement with a company controlled by its major shareholder and are required to make payments
for technical knowhow development. Technical knowhow consists of visual intelligence engine, emotion recognition engine, motion recognition
engine, and metaverse development. Prior to establishing technological feasibility of a product, all development costs are charged to
expenses as incurred and to be recognized as “Technology and development expenses” in the condensed consolidated statement
of operations. After establishing technological feasibility, the Company capitalizes all development payments to third-party service provider
as development costs. Significant management judgements are made in the assessment of when technological feasibility is establishing.
Amortization of capitalized development costs commences when a product is available for general release. For capitalized development costs,
annual amortization is calculated using the straight-line method over the remaining estimated life of the title. The Company evaluates
the future recoverability of capitalized development costs on a quarterly basis. The Company did not capitalize any related development
costs during the periods ended March 31, 2022 and 2021.
Impairment of long-lived assets
In accordance with the provisions of ASC 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.
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 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.
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, 2023 and 2022,
the following table shows non-cash transactions by digital assets:
Schedule of non-cash transactions | |
| | |
| |
| |
Three Months Ended March 31, | |
| |
2023 | | |
2022 | |
| |
| | |
| |
Revenue earned and received by digital assets | |
$ | 1,647,500 | | |
$ | 82,945 | |
Cost of revenue paid by digital assets | |
$ | – | | |
$ | (11 | ) |
Expense paid by digital assets | |
$ | (1,647,672 | ) | |
$ | (72,500 | ) |
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 (“ASC 740”), 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 ASC 740,
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. ASC 740 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 ASC 740.
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.
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 for the three months ended March 31, 2023 and
2022.
Net loss per share
The Company calculates net loss per share in accordance
with ASC 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$, in accordance with ASC 830-30, “Translation of Financial Statement”, using
the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains
and losses resulting from translation of financial statements of foreign subsidiary are recorded as a separate component of accumulated
other comprehensive income within the statements of changes in shareholder’s equity.
Translation of amounts from HKD and SGD into US$
has been made at the following exchange rates for the periods ended March 31, 2023 and 2022:
Schedule of translation rates | |
| | |
| |
| |
March 31, 2023 | | |
March 31, 2022 | |
Period-end HKD:US$ exchange rate | |
| 0.1274 | | |
| 0.1277 | |
Average HKD:US$ exchange rate | |
| 0.1276 | | |
| 0.1281 | |
Period-end SGD:US$ exchange rate | |
| 0.7519 | | |
| 0.7387 | |
Average SGD:US$ exchange rate | |
| 0.7504 | | |
| 0.7396 | |
Comprehensive income (loss)
ASC 220, “Comprehensive Income”,
establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income
(loss) as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income (loss),
as presented in the accompanying condensed consolidated statements of changes in shareholders’ equity, consists of changes in unrealized
gains and losses on foreign currency translation. This comprehensive income (loss) is not included in the computation of income tax expense
or benefit.
Fair value of financial instruments
The Company follows ASC 825-10-50-10 for disclosures
about fair value of its financial instruments and has adopted ASC 820-10-35-37 to measure the fair value of its financial instruments.
ASC 820-10-35-37 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, ASC 820-10-35-37
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 ASC 820-10-35-37 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
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. Unless otherwise discussed, the Company believes that the impact of recently issued standards that
are not yet effective will not have a material impact on its financial position or results of operations upon adoption.
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 clarifies and 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. The ASU provides guidance to clarify whether an issuer should account for a modification or
an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange as (1)
an adjustment to equity and, if so, the related earnings per share effects, if any, or (2) an expense and, if so, the manner and pattern
of recognition. ASU 2021-04 is effective for annual beginning after December 15, 2021, including interim periods within those fiscal years.
Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact that this standard
will have on its financial statements.
In October 2021, the FASB issued guidance which
requires companies to apply Topic 606, Revenue from Contracts with Customers, to recognize and measure contract assets and contract
liabilities from contracts with customers acquired in a business combination. Public entities must adopt the new guidance for fiscal years
beginning after December 15, 2022 and interim periods within those fiscal years, with early adoption permitted. The Company is currently
evaluating the impact and timing of adoption of this guidance.
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 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
$516,995 during the current period and incurred the accumulated deficit of $26,722,024 as of March 31, 2023.
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. Management believes 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 years:
Schedule of revenue from contracts with customers | |
| | |
| |
| |
Three Months Ended March 31, | |
| |
2023 | | |
2022 | |
| |
| | |
| |
Media and entertainment income: | |
| | | |
| | |
Sale of licensed IP right and media products | |
$ | 1,647,500 | | |
$ | 82,945 | |
Transaction fee income | |
| 52,198 | | |
| – | |
Consulting service income | |
| – | | |
| 24,825 | |
Total revenues | |
$ | 1,699,698 | | |
$ | 107,770 | |
The table below presents our revenues by geographic
areas in which our customers were located.
Schedule of revenue from customer by geographic segment | |
| | |
| |
| |
Three Months Ended March 31, | |
| |
2023 | | |
2022 | |
| |
| | |
| |
Hong Kong | |
$ | – | | |
$ | 24,825 | |
Rest of the World | |
| 1,699,698 | | |
| 82,945 | |
Total revenues | |
$ | 1,699,698 | | |
$ | 107,770 | |
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. |
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.
Schedule of disaggregated
revenue from segments | |
| | | |
| | | |
| | |
| |
Media & Entertainment Segment | | |
Business Consulting Segment | | |
Total | |
For the three months ended March 31, 2023 | |
| | | |
| | | |
| | |
Revenue from external customers: | |
| | | |
| | | |
| | |
Media and entertainment income | |
$ | 1,699,698 | | |
$ | – | | |
$ | 1,699,698 | |
Consulting service income | |
| – | | |
| – | | |
| – | |
Total revenues | |
| 1,699,698 | | |
| – | | |
| 1,699,698 | |
Cost of revenues: | |
| | | |
| | | |
| | |
Sale of licensed media products | |
| (1,389,798 | ) | |
| – | | |
| (1,389,798 | ) |
Amortization on licensed media content | |
| (12,319 | ) | |
| – | | |
| (12,319 | ) |
Consulting service income | |
| – | | |
| – | | |
| – | |
Total cost of revenues | |
| (1,402,117 | ) | |
| – | | |
| (1,402,117 | ) |
Gross profit | |
| 297,581 | | |
| – | | |
| 297,581 | |
Operating expenses: | |
| | | |
| | | |
| | |
Technology and development expenses | |
| (134,129 | ) | |
| – | | |
| (134,129 | ) |
Sales and marketing expenses | |
| (190,649 | ) | |
| – | | |
| (190,649 | ) |
Corporate development expenses | |
| (45,000 | ) | |
| – | | |
| (45,000 | ) |
General and administrative expenses | |
| (444,927 | ) | |
| (134 | ) | |
| (445,061 | ) |
Total operating expenses | |
| (814,705 | ) | |
| (134 | ) | |
| (814,839 | ) |
Segment loss | |
$ | (517,124 | ) | |
$ | (134 | ) | |
$ | (517,258 | ) |
| |
| | | |
| | | |
| | |
For the three months ended March 31, 2022 | |
| | | |
| | | |
| | |
Revenue from external customers: | |
| | | |
| | | |
| | |
Media and entertainment income | |
$ | 82,945 | | |
$ | – | | |
$ | 82,945 | |
Consulting service income | |
| – | | |
| 24,825 | | |
| 24,825 | |
Total revenues | |
| 82,945 | | |
| 24,825 | | |
| 107,770 | |
Cost of revenues: | |
| | | |
| | | |
| | |
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 revenues | |
| (12,154 | ) | |
| (25,626 | ) | |
| (37,780 | ) |
Gross profit | |
| 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 | ) |
6. INTANGIBLE
ASSETS
As of March 31, 2023 and December 31, 2022, intangible
assets consisted of the following:
Schedule of intangible assets |
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Useful Life |
|
March 31, 2023 |
|
|
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
At cost: |
|
|
|
|
|
|
|
|
|
|
Licensed media content |
|
3 years |
|
$ |
148,140 |
|
|
$ |
146,958 |
|
Trademarks and trade name |
|
10 years |
|
|
9,480 |
|
|
|
9,544 |
|
|
|
|
|
|
157,620 |
|
|
|
156,502 |
|
Less: accumulated amortization |
|
|
|
|
(75,365 |
) |
|
|
(62,297 |
) |
|
|
|
|
$ |
82,255 |
|
|
$ |
94,205 |
|
In October 2021, under the Sale and Purchase Agreement
with Phoenix Waters Productions (HK) Limited, the Company was granted with an exclusive perpetual worldwide license to mint or produce
token products for the distribution of 12-episode series of the video film at a fixed fee. This agreement allowed the Company to sell
the corresponding media content by monetizing as non-interchangeable unit of data stored on a blockchain, a form of digital ledger that
can be sold on its online platform. The management assessed the commercial life of this licensed media content and determined the estimated
life of 3 years.
As of March 31, 2023, 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 Ending March 31: |
|
Amount |
|
2024 |
|
$ |
50,328 |
|
2025 |
|
|
25,638 |
|
2026 |
|
|
948 |
|
2027 |
|
|
948 |
|
2028 |
|
|
948 |
|
Thereafter |
|
|
3,445 |
|
Total |
|
$ |
82,255 |
|
Amortization of intangible assets was $12,556
and $12,380 for the three months ended March 31, 2023 and 2022, respectively.
7. PREPAID
EXPENSES AND OTHER CURRENT ASSETS
Schedule of prepaid expenses and other current assets | |
| | |
| |
| |
March 31, 2023 | | |
December 31, 2022 | |
| |
| | |
| |
Prepayment for technical knowhow license and service | |
$ | 4,587,840 | | |
$ | 2,940,440 | |
Other prepayments | |
| 114,386 | | |
| 113,689 | |
Other receivables | |
| 5,649 | | |
| 3,213 | |
| |
$ | 4,707,875 | | |
$ | 3,057,342 | |
8. ACCRUED
CONSULTING AND SERVICE FEE
For the three months ended March 31, 2023, the
Company agreed to compensate certain business or professional service providers, which rendered IT development service, sale and marketing
service, corporate development service and administrative service. These consulting and service fees totaled $621,302 and the Company
will issue shares in lieu of services rendered, of which the number of shares to be issued are to be determined at the later date.
9. AMOUNTS
DUE TO RELATED PARTIES
The amounts represented temporary payments/advances
from/to 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 $1,560,643 and $1,544,729 as of March
31, 2023 and December 31, 2022, respectively.
10. SHAREHOLDERS’
DEFICIT
Preferred stock
As of March 31, 2023 and December 31,2022, 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, 2023 and December 31, 2022, the
Company had 10,000,000 and 10,000,000 shares of Series A Preferred Stock issued and outstanding, respectively.
As of March 31, 2023 and December 31, 2022, the
Company had 366,346 and 366,346 shares of Series B Preferred Stock issued and outstanding, respectively.
As of March 31, 2023 and December 31, 2022, the
Company had 1 and 1 share of Series C Preferred Stock issued and outstanding, respectively.
Common stock
As of March 31, 2023 and December 31, 2022, 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, 2023 and December 31, 2022, the
Company had 1,942,681,876 shares of common stock issued and outstanding, respectively.
Common stock to be issued
As of March 31, 2023 and December 31, 2022, the
Company had 140,794,298,026 shares of its common stock committed to be issued but pending to be consummated, respectively.
11. NET
LOSS PER SHARE
The following table sets forth the computation
of basic and diluted net loss per share for the three months ended March 31, 2023 and 2022:
Schedule of basic and diluted net (loss) income per share | |
| | |
| |
| |
Three Months Ended March 31, | |
| |
2023 | | |
2022 | |
| |
| | |
| |
Net loss attributable to common shareholders | |
$ | (516,995 | ) | |
$ | (1,029,967 | ) |
| |
| | | |
| | |
Weighted average common shares outstanding: | |
| | | |
| | |
– Basic | |
| 1,942,681,876 | | |
| 1,867,681,876 | |
– Diluted | |
| 142,736,979,902 | | |
| 140,336,398,507 | |
| |
| | | |
| | |
Net loss per share | |
| | | |
| | |
– Basic# | |
$ | (0.00 | ) | |
$ | (0.00 | ) |
– Diluted# | |
$ | (0.00 | ) | |
$ | (0.00 | ) |
| # | Basic and diluted net loss per share was less than $0.01 |
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 | |
| | |
| |
| |
Three Months Ended March 31, | |
| |
2023 | | |
2022 | |
| |
| | |
| |
Weighted average common shares outstanding – Basic and Diluted | |
$ | 1,942,681,876 | | |
$ | 1,867,681,876 | |
Common stock committed but yet to be issued (1) | |
| 140,794,298,026 | | |
| 138,468,716,631 | |
Weighted average common shares outstanding under if-converted method for Basic and Diluted | |
$ | 142,736,979,902 | | |
$ | 140,336,398,507 | |
(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 ended March 31, 2023 and 2022, because including them would have been anti-dilutive. |
12. INCOME TAX
For the three months ended March 31, 2023 and
2022, the local (“United States of America”) and foreign components of loss before income taxes were comprised of the following:
Schedule of income (loss) before income tax | |
| | |
| |
| |
Three Months Ended March 31, | |
| |
2023 | | |
2022 | |
| |
| | |
| |
Tax jurisdiction from: | |
| | | |
| | |
- Local | |
$ | ) | |
$ | ) |
- Foreign, including | |
| | |
| |
British Virgin Islands | |
| ) | |
| ) |
Singapore | |
| ) | |
| ) |
Hong Kong | |
| ) | |
| ) |
Loss before income taxes | |
$ | ) | |
$ | ) |
The provision for income taxes consisted of the
following:
Schedule of provision for income taxes | |
| | | |
| | |
| |
| Three Months Ended March 31, | |
| |
| 2023 | | |
| 2022 | |
| |
| | | |
| | |
Current: | |
| | | |
| | |
- Local | |
$ | – | | |
$ | – | |
- Foreign | |
| – | | |
| – | |
| |
| | | |
| | |
Deferred: | |
| | | |
| | |
- Local | |
| – | | |
| – | |
- Foreign | |
| – | | |
| – | |
| |
| | | |
| | |
Income tax expense | |
$ | – | | |
$ | – | |
The effective tax rate in the years 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, 2023 and 2022, there were no operating income.
BVI
Under the current BVI law, MHL and MGL are not
subject to tax on income.
Singapore
MPL 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.
For the three months ended March 31, 2023, the
operation in the Singapore generated an operating loss of $392,348 and incurred $11,588,831 of cumulative net operating losses which can
be carried forward to offset future taxable income. The net operating losses carryforward have no expiration. The Company has provided
for a full valuation allowance against the deferred tax assets of $1,970,101 on the expected future tax benefits from the net operating
loss (“NOL”) carryforwards as the management believes it is more likely than not that these assets will not be realized in
the future.
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. For the three months ended
March 31, 2023, the operation in Hong Kong generated an operating loss of $328.
The following table sets forth the significant
components of the deferred tax assets of the Company as of March 31, 2023 and December 31, 2022:
Schedule of deferred tax assets | |
| | |
| |
| |
March 31, 2023 | | |
December 31, 2022 | |
| |
| | |
| |
Deferred tax assets: | |
| | | |
| | |
NOL – US tax regime | |
$ | 207,081 | | |
$ | 180,976 | |
NOL – British Virgin Islands regime | |
| – | | |
| – | |
NOL – Hong Kong tax regime | |
| 6,517 | | |
| 6,454 | |
NOL – Singapore tax regime | |
| 1,970,101 | | |
| 1,905,633 | |
| |
| 2,183,699 | | |
| 2,093,063 | |
Less: valuation allowance | |
| (2,183,699 | ) | |
| (2,093,063 | ) |
Deferred tax assets, net | |
$ | – | | |
$ | – | |
As of March 31, 2023 and December 31, 2022, the
Company had no unrecognized tax benefits. Interest and penalty charges, if any, related to income taxes would be classified as a component
of the provision for income taxes in the consolidated statements of operations. The Company does not expect any significant change in
its uncertain tax positions in the next twelve months.
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.
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 March 31, 2023 and
2022, the Company paid the aggregate amount of $75,000 and $100,626 as consultancy fees to its director and former director, respectively.
During the three months ended March 31, 2023 and
2022, the Company paid the aggregate amount of $30,000 and $30,000 as compensation to its director, respectively.
On
April 1, 2022, the Company entered into a Service Agreement (the “Service agreement”) with a company controlled by its major
shareholder, which agreed to provide staffing and back-office services to the Company until the arrangement is terminated by the parties.
During the three months ended March 31, 2023 and 2022, the Company incurred the related management service fee of $0 and
$72,500.
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 years presented.
14. CONCENTRATIONS
OF RISK
The Company is exposed to the following concentrations of risk:
For the three months ended March 31, 2023, there
was no single customer who accounted for 10% or more of the Company’s revenues.
For the three months ended March 31, 2022, the
following customers 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 | |
Revenue | | |
Percentage of revenue | | |
Accounts receivable | |
Customer A | |
$ | 24,825 | | |
| 23% | | |
$ | – | |
(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 there is a possibility that 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,
2023, the Company recorded an impairment charge on the crypto assets held when crypto asset prices decrease below their carrying value
of these crypto assets.
15. COMMITMENTS
AND CONTINGENCIES
As of March 31,2023, the Company is committed
to the below contractual agreement.
Lease
As of March 31, 2023, the Company had an office
service agreement for its corporate office. The lease contains the renewal option and will expire on 24 September 2023.
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 March 31, 2023, the
remaining balance for Equity Purchase from the Investor was $19,823,750.
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 September 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.
Apart from these commitments, the Company has
no other material commitments or contingencies, as of March 31, 2023.
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 consolidated financial statements are issued, the Company has evaluated all events or transactions that occurred after March
31, 2023, up through the date the Company issued the unaudited condensed consolidated financial statements. The Company had no material
recognizable subsequent events since March 31, 2023.