ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations General Overview
Forward Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements. These statements relate to future events or our future financial performance. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no duty to update any of the forward-looking statements after the date of this report to conform such statements to actual results or to changes in our expectations.
Available Information
Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports that we file with the U.S. Securities and Exchange Commission (SEC) are available at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.
History
Banny Cosmic International Holdings, Inc., formerly Wincash Apolo Gold & Energy Inc., (“Company”) was incorporated in March 1997 under the laws of the State of Nevada. Its objective was to pursue mineral properties in South America, Central America, North America and Asia. The Company incorporated a subsidiary: Compania Minera Apologold, C.A in Venezuela to develop a gold/diamond mining concession in Southeastern Venezuela. Project was terminated in August 2001, due to poor testing results and the property abandoned. This subsidiary company has been inactive since 2001 and will not be reactivated.
On April 16, 2002, the Company announced the acquisition of the mining rights to a property known as the Napal Gold Property, (“NUP”). This property is located 48 km south-west of Bandar Lampung, Sumatra, Indonesia. The property consisted of 733.9 hectares and possessed a Production Permit (a KP) # KW. 098PP325. The terms of the Napal Gold Property called for a total payment of $375,000 US over a six-year period of which a total of $250,000 have been made to date. Company paid $250,000 over the past 5 years and subsequent to the year ending June 30, 2008 the Company terminated its agreement on the NUP property and returned all exploration rights to the owner.
On December 11, 2013, the Company acquired 70% interest in three gold exploration claims located in China’s Xinjiang Province from Yinfu Gold Corp. (“Yinfu”). The Company issued 6,000,000 shares of restricted common stock for the claims at $0.20 per share for the consideration of $1,200,000. On January 19, 2015, the Company and Yinfu reached a mutual agreement to terminate the acquisition at the current market value of $0.10 per share and therefore an investment loss of $600,000 was resulted. On February 3, 2015, all 6,000,000 shares of restricted common stock were returned and effectively cancelled.
On December 23, 2013, the Company acquired 24% interest in Jiangxi Everenergy New Material Co., Ltd. (“Everenergy”) for a consideration of $4,000,000. The consideration was settled with the issuance of 8,000,000 shares of restricted common stock at a deemed price of $0.375 per share, plus $1,000,000 in cash.
On February 19, 2014, the Company acquired an additional 29% interest in Everenergy for a consideration of $4,950,000. The consideration was settled with the issuance of 11,000,000 shares of restricted common stock at a deemed price of $0.45 per share.
On September 17, 2014, the Company cancelled both transactions with Everenergy at the current market value of $0.12 per share and requested the return of $1,000,000 cash payment. The 11,000,000 shares were effectively cancelled on October 21, 2014 and the Company continues to pursue the return and cancellation of the remaining 8,000,000 shares. On October 16, 2016, the Company received and cancelled 6,208,655 shares. For the year ended June 30, 2015, the Company could not recover the $1,000,000 cash payment and therefore a total investment loss of $6,670,000 was resulted.
On February 13, 2015, the Company disposed its 100% equity interest in Apolo Gold Direct Limited (formerly Apolo Gold & Energy Asia Limited) to (i) Mr. Tommy Tsap Wai Ping, who acquired 50% equity interest. Mr. Tsap Wai Ping became the Chief Executive Officer (“CEO”) and director of the Company on December 1, 2015. (ii) Mr. Kelvin Chak Wai Man, the former president, CEO and director of the Company and a relative of the current CEO of the Company, acquired 40% equity interest, and (iii) China Yi Gao Gold Trader Co., Limited, a company incorporated in Hong Kong, which acquired the remaining 10% equity interest, for a consideration of $100.
On June 4, 2015, the Company issued 6,000,000 shares of restricted common stock at $0.10 per share for the rendering of business and strategic consulting services of $600,000. For the years ended June 30, 2016 and 2015, the Company amortized $550,000 and $50,000 in expenses, respectively to the operations of the Company using the straight-line method.
On June 9, 2015, the Company issued 400,000 shares of restricted common stock at $0.10 per share for the rendering of administrative consulting services of $40,000. As of June 9, 2015, the current market value was $0.10 per share.
On June 18, 2015, the Company filed an Amendment to its Articles of Incorporation with the Nevada Secretary of State to change its name from Apolo Gold & Energy, Inc. to Wincash Apolo Gold & Energy, Inc.
On June 26, 2015, the Board of Directors of the Company approved the issuance of 340,000 shares of restricted common stock at $0.15 per share to settle a debt of $51,000 owed to the Chief Executive Officer and a director of the Company. All 340,000 shares were issued July 2, 2015. As of June 26, 2015, the current market value was $0.16 per share.
On December 1, 2015, the Board of Directors of the Company approved the issuance of 200,000 shares of restricted common stock at $0.08 per share for the rendering of consulting services with a value of $16,000. For the nine months ended March 31, 2017, all 200,000 shares have been issued and the Company amortized $6,667 to the operations using the straight-line method.
On July 27, 2017, the Company issued 3,238,431 common shares as settlement of $126,800 in advances made by a former director of the Company and another 826,838 common shares as settlement of $32,375 in advances made by another former director of the Company.
On October 12, 2017 the Company closed a private placement and issued 20,000,000 shares of its common stock for $100,000.00 in cash.
On October 12, 2017 the Company exchanged 20,000,000 shares of its common stock for 50,000 shares of the common stock of Gain First Group Corporation (“Gain First”), a Corporation formed under the laws of the British Virgin Islands. As a result of that transaction, Gain First became a wholly owned subsidiary of the Company. Gain First is a newly formed startup Company with nominal assets. It has signed a sole agency agreement with De Lassalle Ltd. (“De Lasalle”), whereby Gain First is to market and sell De Lasalle’s wine products in China. This acquisition resulted in a change of business direction of the Company. Since that time the Company has been active in the wine distribution business.
On December 12, 2017, the Company issued 75,000,000 shares of its common stock as consideration in lieu of a payment at a deemed value of $10,000 for Gain First to acquire an agency agreement for exclusive rights to distribute De Lassalle’s wine products in the South East Asia region.
On April 3, 2018, the Company entered into a share exchange agreement with Banny International Trading Co., Ltd., a Macau company. Under the terms of that share exchange agreement, the Company will issue 36,500,000 shares of its common stock and an option to purchase an additional 36,500,000 shares of its common stock in exchange for rights to the brand name “Banny Choice” and the right to use Banny’s sale and distribution network for the sale of wine under the Banny Choice name in Asia and other parts of the World.
On July 23, 2018, the Company filed an Amendment to its Articles of Incorporation with the Nevada Secretary of State to change its name from Wincash Apolo Gold & Energy, Inc. to Banny Cosmic International Holdings, Inc. and increases the number of authorized shares from 300,000,000 common shares and 25,000,000 preferred shares, each with a par value of $0.001 per share, to 1,000,000,000 common shares and 100,000,000 preferred shares with a par value of $0.001 per share.
On September 10, 2018, the Company signed a cancellation agreement with Banny International Trading Co. Ltd. to cancel the transaction described in the paragraph above. As a part of this cancellation transaction, the 36,500,000 shares issued to Banny International Group (Holdings) Limited will be returned to the Company’s treasury for cancellation, and the option to acquire 36,500,000 shares of the Company’s common stock granted to Banny International Group (Holdings) Limited will be cancelled.
Results of Operations – Three months ended December 31, 2018 compared to the three months ended December 31, 2017
REVENUES:
During the three months ended December 31, 2018, the Company had sales revenue of $361,341 compared to no sales revenue for the corresponding period in 2017. The cost of goods sold for the three months ended December 31, 2018 was $111,056 and the gross profit was $250,285.
EXPENSES:
During the three months ended December 31, 2018, the Company had total operating expenses of $240,432 compared to $131,864 for the corresponding period in 2017. For the three months ended December 31, 2018, the Company had expenses in advertising and promotion of $91,029, commission of $72,268, consulting fees of $12,000, general and administration expenses of $47,168 and professional fees of $17,967 compared to no advertising and promotion expenses, no commission, consulting fees of $93,973, general and administration expenses of $16,041 and professional fees of $21,850 for the three months ended December 31, 2017. The increase in expenses for the three months ended December 31, 2018 was primarily due to the increase of corporate and operating activities during the period.
Net Income
During the three months ended December 31, 2018, the Company had a net comprehensive income of $9,853 compared to a net comprehensive loss of $131,864 in 2017. The increase in net income was primarily due to the Company having sales revenue during the three months ended December 31, 2018 compared to no sales revenue in 2017.
Results of Operations – Six months ended December 31, 2018 compared to the six months ended December 31, 2017
REVENUES:
During the six months ended December 31, 2018, the Company had sales revenue of $756,441 compared to no sales revenue for the corresponding period in 2017. The cost of goods sold for the six months ended December 31, 2018 was $242,630 and the gross profit was $513,811.
EXPENSES:
During the six months ended December 31, 2018, the Company had total operating expenses of $460,103 compared to $145,937 for the corresponding period in 2017. For the six months ended December 31, 2018, the Company had expenses in advertising and promotion of $121,166, commission of $220,838, consulting fees of $27,165, general and administration expenses of $65,649 and professional fees of $25,285 compared to no advertising and promotion expenses, no commission, consulting fees of $107,473, general and administration expenses of $16,614 and professional fees of $21,850 for the six months ended December 31, 2017. The increase in expenses for the six months ended December 31, 2018 was primarily due to the increase of corporate and operating activities during the period.
Net Income
During the six months ended December 31, 2018, the Company had a net comprehensive income of $53,708 compared to a net comprehensive loss of $145,937 in 2017. The increase in net income was primarily due to the Company having sales revenue during the six months ended December 31, 2018 compared to no sales revenue in 2017.
Cash Used in Operating Activities
Net cash provided by operating activities for the six months ended December 31, 2018 was $144,591 compared to net cash used in operating activities of $143,657 for the six months ended December 31, 2017, for an increase of $288,248. The increase of net cash in operating activities for the six months ended December 31, 2018 are mainly attributed to the having sales revenue during the six months ended December 31, 2018 compared to no sales revenue in 2017.
Cash Used in Investing Activities
There was no cash used in or generated from investing activities for six months ended December 31, 2018 and 2017.
Cash Provided by Financing Activities
Net cash provided by financing activities for the six months ended December 31, 2018 was $66,940 consisting totally of advance from related parties, compared to $134,027 consisting advance from related parties of $34,027 and from a private placement of $100,000 in 2017.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 2019, the Company had total current assets of $216,945, which consists of cash and prepaid expenses, and had total current liabilities of $249,083, which consists of $106,423 from trades and other payables and $142,660 from due to related parties.
The Company has financed its development to date by way of sale of common stock and with advances from directors and shareholders of the Company.
As of May 13, 2019, the Company had 141,137,387 shares of common stock outstanding.
As of December 31, 2018, the amount due to related parties was $142,660 compared to $75,720 as of June 30, 2018. These debts were unsecured, interest free and have no fixed terms of repayment.
As of December 31, 2018, the Company had cash of $214,033 compared to $2,502 on June 30, 2018.
While the Company continues to seek out additional capital, there is no assurance that they will be successful in completing this necessary financing. The Company recognizes that it is dependent on the ability of its management team to obtain the necessary working capital required.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements, financings or other relationships.
Contractual Obligations and Commitments
As of December 31, 2018, we did not have any contractual obligations and commitments other than the agency agreement with De Lassalle for distribution of De Lassalle’s wine products in the China and South-East Asia regions.
Going Concern
We have incurred losses since our inception. We anticipate incurring additional losses before realizing growth in revenue and we will depend on additional financing in order to meet our continuing obligations and ultimately to attain profitability. Our ability to obtain additional financing, whether through the issuance of additional equity or through the assumption of debt, is uncertain. Accordingly, our independent auditors’ report on our financial statements for the year ended June 30, 2018 includes an explanatory paragraph regarding concerns about our ability to continue as a going concern, including additional information contained in the notes to our financial statements describing the circumstances leading to this disclosure. The financial statements contained in this report do not include any adjustments that might result from the uncertainty about our ability to continue our business.
