UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2017~~March 31, 2020

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________________________ to_________________________

Commission File Number: 001-38036

TAKUNG ART CO., LTD

(Exact name of registrant as specified in its charter)

Delaware		26-4731758
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

~~Flat/RM 03-04 20/F Hutchison House 10 Harcourt~~Room 1105 Wing On Plaza, 62 Mody Road, ~~Central,~~Tsim Sha Tsui, Kowloon, Hong Kong

(Address of principal executive offices) (Zip Code)

+852 3158 0977

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	TKAT	NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.xYes¨No

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every ~~interactive~~Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).xYes¨No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer¨	Accelerated filer¨
Non-accelerated filer ~~(Do not check if a smaller reporting company)~~¨x	Smaller reporting companyx
	Emerging growth company¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).¨Yesx No

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d)of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.¨Yes¨No

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

The number of shares of common stock issued and outstanding as of ~~November 14, 2017~~June 29, 2020 is ~~11,188,882.~~11,271,379.

EXPLANATORY NOTE

Takung Art Co., Ltd and subsidiaries (“Takung” or the “Company”) is filing this quarterly report on Form 10-Q after the May 15, 2020 (the “Original Due Date”) deadline applicable to it for the filing of a Form 10-Q for the quarter ended March 31, 2020 (the “Quarterly Report”) in reliance on the 45-day extension provided by an order issued by the U.S. Securities and Exchange Commission (the “SEC”) under Section 36 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), dated March 4, 2020 (Release No. 34-88318), as modified and superseded by a new SEC order issued on March 25, 2020 (Release No. 34-88465) (collectively, the “Order”).

On May 12, 2020, the Company filed a Current Report on Form 8-K to indicate its intention to rely on the Order for such extension. Consistent with its statements made in the Form 8-K, the Company was unable to file the Quarterly Report by the Original Due Date, and therefore relied on the Order. Due to the circumstances and uncertainty surrounding the effects of the COVID-19 pandemic on the business, employees, consultants and service providers of the Company, and considering the lack of time for the compilation, dissemination and review of the information required to be presented and the importance of markets and investors receiving materially accurate information in the Quarterly Report, the Quarterly Report is hereby filed before the extended due date permitted under the Order, i.e., 45 days after the Original Due Date, or June 29, 2020.

FORM 10-Q

TAKUNG ART ~~CO,~~CO., LTD

INDEX

PART I –FINANCIAL INFORMATION

Item 1. ~~Interim Condensed Consolidated~~ Financial Statements ~~(Unaudited)~~

TAKUNG ART CO., LTD AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

(Stated in U.S. Dollars except Number of Shares)

	March 31,			December 31,
	2020			2019
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	5,062,253		$	5,424,213
Restricted cash		15,466,438			16,404,941
Account receivables, net		154,813			-
Prepayment and other current assets, net		311,103			451,248
Amount due from a related party		-			5,834,554
Loan receivables		1,977,178			2,010,974
Total current assets		22,971,785			30,125,930

Non-current assets
Property and equipment, net		727,443			859,826
Intangible assets		22,510			22,401
Deferred tax assets, net		557,136			540,279
Operating lease right-of-use assets		582,121			731,469
Amount due from related parties		5,838,877			104,128
Other non-current assets		57,675			57,470
Total non-current assets		7,785,762			2,315,573
Total assets	$	30,757,547		$	32,441,503

LIABILITIES AND SHAREHOLDERS’ EQUITY

LIABILITIES
Current liabilities
Accrued expenses and other payables	$	831,399		$	629,666
Customer deposits		15,466,438			16,404,941
Advance from customers		16,364			8,788
Short-term borrowings from a third party		1,916,540			1,868,345
Amount due to related parties		383,638			6,862,713
Operating lease liabilities – current		132,348			166,987
Tax payables		22,274			6,050
Total current liabilities		18,769,001			25,947,490

Non-current liabilities
Operating lease liabilities, non-current		49,002			48,856
Amount due to a related party, non-current		6,450,531			-
Total non-current liabilities		6,499,533			48,856
Total liabilities		25,268,534			25,996,346

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS’ EQUITY
Common stock (1,000,000,000 shares authorized; $0.001 par value; 11,255,129 shares issued and outstanding as of March 31, 2020; 11,255,129 shares issued and outstanding as of December 31, 2019)		11,255			11,255
Additional paid-in capital		6,326,590			6,320,604
(Accumulated deficit) retained earnings		(567,035	)		386,327
Accumulated other comprehensive loss		(281,797	)		(273,029	)
Total shareholders’ equity		5,489,013			6,445,157
Total liabilities and shareholders’ equity	$	30,757,547		$	32,441,503

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

TAKUNG ART CO., LTD AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Stated in U.S. Dollars except Number of Shares)

(UNAUDITED)

	Three Months Ended
	March 31,			March 31,
	2020			2019
Revenue
Listing fee	$	176,943		$	289,072
Commission		900,823			178,358
Management fee		103,520			68,271
Total revenue		1,181,286			535,701

Cost of revenue		(656,514	)		(267,279	)
Gross profit		524,772			268,422

Operating expenses
General and administrative expenses		(1,110,447	)		(1,274,585	)
Selling expenses		(42,989	)		(30,812	)
Total operating expenses		(1,153,436	)		(1,305,397	)

Loss from operations		(628,664	)		(1,036,975	)

Other income and expenses:
Other income (expenses)		38,305			(21,990	)
Loan interest expense		(38,913	)		-
Exchange (loss) gain		(236,695	)		358,734
Total other (expenses) income		(237,303	)		336,744

Loss before income tax expense		(865,967	)		(700,231	)

Income tax expense		(87,395	)		(8,562	)

Net loss		(953,362	)		(708,793	)

Foreign currency translation adjustment		(8,768	)		(5,480	)

Comprehensive loss	$	(962,130	)	$	(714,273	)

Loss per common share – basic	$	(0.08	)	$	(0.06	)
Loss per common share – diluted	$	(0.08	)	$	(0.06	)
Weighted average number of common shares outstanding –basic		11,255,129			11,226,025
Weighted average number of common shares outstanding –diluted		11,255,129			11,226,025

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

TAKUNG ART CO., LTD AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUTIY

(Stated in U.S. Dollars except Number of Shares)

(UNAUDITED)

	Number		Common		Additional Paid-in		Retained earnings (accumulated			Accumulated other comprehensive
	of shares		stock		capital		deficit)			loss			Total
Balance, December 31, 2019		11,255,129	$	11,255	$	6,320,604	$	386,327		$	(273,029	)	$	6,445,157
Shared-based compensation		-		-		5,986		-			-			5,986
Net loss		-		-		-		(953,362	)		-			(953,362	)
Foreign currency translation adjustment		-		-		-		-			(8,768	)		(8,768	)
Balance, March 31, 2020		11,255,129	$	11,255		6,326,590		(567,035	)		(281,797	)		5,489,013

	Number		Common		Additional Paid-in		Retained			Accumulated other comprehensive
	of shares		stock		capital		earnings			loss			Total
Balance, December 31, 2018		11,226,025		11,226		6,281,790		4,479,133			(302,702	)		10,469,447

Shared-based compensation		-		-		16,851		-			-			16,851
Net loss		-		-		-		(708,793	)		-			(708,793	)
Foreign currency translation adjustment		-		-		-		-			(5,480	)		(5,480	)
Balance, March 31, 2019		11,226,025		11,226		6,298,641		3,770,340			(308,182	)		9,772,025

TAKUNG ART CO., LTD AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Stated in U.S. Dollars)

(UNAUDITED)

September 30, December 31,
2017 2016
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 14,887,890 $ 13,395,337
Restricted cash 19,057,733 21,743,360
Account receivables, net 3,732,569 3,058,568
Prepayment and other current assets 870,231 968,446
Loan receivables 6,806,623 6,374,046
Total current assets 45,355,046 45,539,757

Non-current assets
Property and equipment, net 2,104,107 2,065,182
Intangible assets 20,394 20,546
Deferred tax assets 294,676 243,772
Other non-current assets 535,420 428,764
Total non-current assets 2,954,597 2,758,264
Total assets $ 48,309,643 $ 48,298,021

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES
Current liabilities
Accrued expenses and other payables $ 780,800 $ 608,883
Customer deposits 19,057,733 21,743,360
Advance from customers - 360,248
Short-term borrowings from third parties 6,371,900 6,308,513
Amount due to related party 1,085,480 1,031,805
Taxes payable 1,094,885 549,897
Total current liabilities 28,390,798 30,602,706
Deferred tax liabilities 45,301 62,618
Total non-current liabilities 45,301 62,618
Total liabilities 28,436,099 30,665,324

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ EQUITY
Common stock (1,000,000,000 shares authorized; $0.001 par value;
11,188,882 shares issued and outstanding as of September 30, 2017;
11,169,276 shares issued and outstanding as of December 31, 2016) 11,189 11,169
Additional paid-in capital 5,928,455 5,532,426
Retained earnings 14, 229,809 13,172,671
Accumulated other comprehensive loss (295,909 ) (1,083,569 )
Total stockholders’ equity 19,873,544 17,632,697
Total liabilities and stockholders’ equity $ 48,309,643 $ 48,298,021

	Three Months Ended
	March 31,			March 31,
	2020			2019
Cash flows from operating activities:
Net cash (used in) provided by operating activities		(1,214,913	)		6,175,680

Cash flows from investing activities:
Purchase of property and equipment		-			(27,233	)
Purchase of available-for-sale investments		-			(10,633,534	)
Maturity and redemption of available-for-sale investments		-			10,633,534
Repayment from loan to third party		-			2,443,252
Net cash provided by investing activities		-			2,416,019

Cash flows from financing activities:
Repayment of loan from third party		-			(2,499,500	)
Net cash used in financing activities		-			(2,499,500	)

Effect of exchange rate change on cash, cash equivalents and restricted cash		(85,550	)		(503,119	)

Net (decrease) increase in cash, cash equivalents and restricted cash		(1,300,463	)		5,589,080

Cash, cash equivalents and restricted cash, beginning balance		21,829,154			12,524,086

Cash, cash equivalents and restricted cash, ending balance	$	20,528,691		$	18,113,166

Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets
Cash and cash equivalents as of March 31, 2020 and 2019, respectively		5,062,253			7,740,711
Restricted cash as of March 31, 2020 and 2019, respectively		15,466,438			10,372,455
Total cash, cash equivalents, and restricted cash as of March 31, 2020 and 2019, respectively		20,528,691			18,113,166

Supplemental cash flows information:

Cash paid for interest	$	-		$	-
Cash paid for income tax	$	-		$	-

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

TAKUNG ART CO., LTD AND SUBSIDIARIES

~~INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME~~

~~AND COMPREHENSIVE INCOME~~

~~(Stated in U.S. Dollars except Number of Shares)~~

~~(UNAUDITED)~~

For the Three Months Ended
September 30, For the Nine Months Ended
September 30,
2017 2016 2017 2016
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenue
Listing fee revenue $ 1,455,498 $ 2,968,534 $ 4,606,649 $ 8,166,072
Commission revenue 1,496,826 1,669,698 4,970,651 3,739,958
Gross management fee revenue 402,547 781,219 967,518 1,341,294
Annual fee revenue 140 440 859 869
Authorized agent subscription revenue - 322,318 - 966,059
Total revenue 3,355,011 5,742,209 10,545,677 14,214,252

Cost of revenue (292,168 ) (285,252 ) (822,335 ) (822,735 )

Gross profit 3,062,843 5,456,957 9,723,342 13,391,517

Operating expenses:
General and administrative expenses (2,498,848 ) (1,744,965 ) (7,311,128 ) (5,076,689 )
Selling expenses (624,151 ) (652,207 ) (1,272,010 ) (1,993,782 )

Income(loss)from operations (60,156 ) 3,059,785 1, 140,204 6,321,046

Other income and expenses:
Other income 186,259 163,738 440,470 314,268
Loan interest expense (152,059 ) (62,670 ) (455,762 ) (62,670 )
Exchange gain (loss) 177,652 (112,384 ) 526,603 (530,934 )
Total other income (loss) 211,852 (11,316 ) 511,311 (279,336 )

Income before income taxes 151,696 3,048,469 1,651,515 6,041,710

Income tax (expense) benefit (124,662 ) (596,732 ) (594,377 ) (1,377,078 )

Net income $ 27,034 $ 2,451,737 $ 1,057,138 $ 4,664,632

Foreign currency translation adjustment 311,485 10,172 787,660 18,322

Comprehensive income $ 338,519 $ 2,461,909 $ 1,844,798 $ 4,682,954

Earnings per common share– basic $ 0.00 $ 0.23 $ 0.10 $ 0.44
Earnings per common share– diluted 0.00 0.22 0.09 0.41
Weighted average number of common shares outstanding-basic 11,188,882 10,632,276 11,039,880 10,632,276
Weighted average number of common shares outstanding-diluted 11,248,688 11,365,597 11,398,082 11,277,845

~~The accompanying notes are an integral part of these interim condensed consolidated financial statements.~~

~~TAKUNG ART CO., LTD AND SUBSIDIARIES~~

~~INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS~~

~~(Stated in U.S. Dollars)~~

~~(UNAUDITED)~~

For the Nine Months For the Nine Months
Ended Ended
September 30, September 30,
2017 2016
Cash flows from operating activities:
Net cash provided by operating activities 1,028,524 5,635,391

Cash flows from investing activities:
Purchase of property and equipment (455,255 ) (976,460 )
Purchase of held-to-maturity investments - (14,995,876 )
Purchase of available-for-sales investment (53,501,874 ) (299,918 )
Maturity and redemption of available-for-sales investment 53,501,874 -
Maturity and redemption of held-to-maturity investments - 14,995,876
Loan to third parties (3,518,325 ) -
Repayment from loan to third parties 3,412,070 -
Net cash used in investing activities (561,510 ) (1,276,378 )

Cash Flows from financing activities:
Proceeds from short-term borrowings - 3,519,580
Proceeds from related party loans - 2,340,895
Loan to third parties - (3,513,534 )
Net cash provided by financing activities - 2,346,941

Effect of exchange rate change on cash and cash equivalents 1,025,539 (644,375 )

Net increase in cash and cash equivalents 1,492,553 6,061,579

Cash and cash equivalents, beginning balance 13,395,337 10,769,456

Cash and cash equivalents, ending balance $ 14,887,890 $ 16,831,035

Supplemental cash flows information:
Cash paid for interest $ 212,954 $ -
Cash paid for income tax $ 136,453 $ 562,994

~~The accompanying notes are an integral part of these interim condensed consolidated financial statements.~~

~~TAKUNG ART CO., LTD AND SUBSIDIARIES~~

NOTES TO ~~INTERIM CONDENSED~~ CONSOLIDATED FINANCIAL STATEMENTS

~~(Stated in U.S. Dollars except Number of Shares)~~

(UNAUDITED)

1. ORGANIZATION AND DESCRIPTION OF BUSINESS

Takung Art Co., Ltd and Subsidiaries (“Takung”~~, the “Company”, “we”, “us” and “our”~~), a Delaware corporation (formerly Cardigant Medical Inc.) through Hong Kong Takung Art ~~Company Limited (formerly Hong Kong Takung Assets and Equity of Artworks Exchange~~ Co., Ltd.) (“Hong Kong Takung”), a Hong Kong company and ~~our~~its wholly owned subsidiary, operates an electronic online platform located at www.takungae.com for artists, art dealers and art investors to offer and trade in valuable artwork.

Hong Kong Takung was incorporated in Hong Kong on September 17, 2012 and operates an electronic online platform for offering and trading artwork. ~~For the period from September 17, 2012 (inception) to December 31, 2012, there was no operation except the issuance of shares for subscription receivable. We generate~~The Company generates revenue from ~~our~~its services in connection with the offering and trading of artwork on ~~our~~its system, primarily consisting of listing fees, trading commissions, and management fees. ~~We conduct our~~The Company conducts business primarily in Hong Kong, People’s Republic of China.

Takung (Shanghai) Co., Ltd (“Shanghai Takung”) is a limited liability company, with a registered capital of $1 million, located in the Shanghai Pilot Free Trade Zone. Shanghai Takung was incorporated on July 28, 2015. It is engaged in providing services to its parent company Hong Kong Takung by receiving deposits from and making payments to online artwork traders of Takung for and on behalf of Takung. Shanghai Takung was deregistered on May 8, 2020 and the Company merged the operations of Shanghai Takung with Tianjin Takung.

~~Shanghai Takung set up a new office in Hangzhou, PRC on November 20, 2016 for technology development.~~ Takung Cultural Development (Tianjin) Co., Ltd (“Tianjin Takung”) ~~is a limited liability company, with a registered capital of $1 million located in Pilot Free Trade Zone. Tianjin Takung was incorporated on January 27, 2016.~~

~~Tianjin Takung~~ provides technology ~~support~~development services to Hong Kong ~~Takung and Shanghai~~ Takung and also carries out marketing and promotion activities in mainland China. It is engaged in providing services to its parent company Hong Kong Takung by receiving deposits from and making payments to online artwork traders of Takung for and on behalf of Takung when Shanghai Takung was deregistered.

Hong Kong Takung Art Holdings Company Limited (“Takung Art Holdings”) was formed in Hong Kong on July 20, 2018 and operates as a holding company to control an online platform for offering, selling and trading whole piece of artwork.

Art Era Internet Technology (Tianjin) Co., Ltd (“Art Era”), formed in Tianjin on September 7, 2018, is a directly wholly owned subsidiary of Takung Art Holdings, and formed as a limited liability company with a registered capital of $2 million located in the Pilot Free Trade Zone in Tianjin. Art Era mainly focuses on developing its e-commerce platform for art. Art Era was deregistered on June 18, 2019 due to Company’s plan to put off the e-commerce platform development.

Hong Kong MQ Group Limited (“Hong Kong MQ”) was formed in Hong Kong on November 27, 2018 and currently has no operations. On June 19, 2019, as a result of a private transaction, one (1) share of common stock of Hong Kong MQ was transferred from Ms. Hiu Ngai Ma to the Company. The net asset of Hong Kong MQ was $nil as of the acquisition date. The consideration paid for the ownership transfer, which represent 100% of the issued and outstanding share capital of Hong Kong MQ, was $0.13 (HK$1). Hong Kong MQ became a direct wholly-owned subsidiary of the Company.

MQ (Tianjin) Enterprise Management Consulting Co., Ltd. (“Tianjin MQ”) was incorporated in Tianjin, PRC on July 9, 2019 and is a directly wholly owned subsidiary of Hong Kong MQ. It was established as a limited liability company with a registered capital of $100,000 located in the Pilot Free Trade Zone in Tianjin. Tianjin MQ will focus on exploring business opportunities and promoting its artwork trading business.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying ~~condensed~~ consolidated balance sheet as of December 31, ~~2016,~~2019, which has been derived from audited financial statements, and the unaudited interim condensed consolidated financial statements as of ~~September 30, 2017~~March 31, 2020 and for the three months ended March 31, 2020 and ~~nine months ended September 30, 2017 and 2016~~2019 have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and disclosures, which are normally included in financial statements prepared in accordance with United States (“U.S. ~~GAAP,~~”) generally accepted accounting principles (“GAAP”), have been condensed or omitted pursuant to such rules and ~~regulations, although the management~~regulations. Management believes that the disclosures made are adequate to provide ~~for~~a fair presentation. The interim financial information should be read in conjunction with the ~~Financial Statements~~financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016,~~2019, previously filed with the SEC.

Beginning in the quarter ended March 31, 2020, a strain of coronavirus (COVID-19) has spread globally and at this point, the extent to which the COVID-19 may impact operations of the Company is uncertain. The extent of the impact of the coronavirus on the Company's business and operations will depend on several factors, such as the duration, severity, and geographic spread of the pandemic, development of the testing and treatment and stimulus measures of the government. The Company is monitoring and assessing the evolving situation closely and evaluating its potential exposure. The operating results for the three months ended March 31, 2020 may not be indicative of the future operating results for the fiscal year ending December 31, 2020 or other future periods, particularly in light of the uncertain impact COVID-19 could have on the Company's business.

This basis of accounting involves the application of accrual accounting and consequently, revenues and gains are recognized when earned, and expenses and losses are recognized when incurred. The Company’s financial statements are expressed in U.S. ~~dollars.~~Dollars.

In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair statement of the Company’s ~~unaudited~~ interim condensed consolidated financial position as of ~~September 30, 2017,~~March 31, 2020, its interim condensed consolidated results of operations and cash flows for the ~~nine-month~~three-month periods ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, as applicable, have been made. The interim results of operations are not necessarily indicative of the operating results for the full fiscal year or any future periods.

Recent Accounting Pronouncements

Except for the ASUs issued but not yet adopted disclosed in Note 2 to the financial statements on Form 10-K for the fiscal year ended December 31, 2019, previously filed with the SEC, there is no ASU issued by the FASB that is expected to have a material impact on the condensed consolidated financial statements upon adoption.

3. PREPAYMENT AND OTHER CURRENT ASSETS, NET

Prepayment and other current assets mainly consist of the prepaid tax, the prepaid services for ~~development,~~ maintenance of online trading system, the advertising and promotional services, prepaid financial advisory and banking services, as well as other current assets.

	March 31,			December 31,
	2020			2019
	(Unaudited)
Prepaid tax	$	181,068		$	281,582
Prepaid service fees		101,695			132,064
Short-term borrowings to a third party		54,184			53,919
Staff advance		22,892			18,380
Deposit		311			316
Other current assets		5,137			18,906
Less: allowance for doubtful accounts		(54,184	)		(53,919	)
Prepayment and other current assets, net	$	311,103		$	451,248

September 30,
2017 December 31,
2016
(Unaudited)
Advertising and promotional services 438,741 296,163
Prepaid professional fee 144,706 -
Prepaid rental expense 82,793 60,822
Prepaid insurance 54,875 31,082
Prepaid maintenance of trading system 78,784 17,514
Staff advance 11,263 28,806
Prepaid financial advisory and banking services 39,153 201,808
Short-term borrowings to third party - 259,254
Other current assets 19,916 72,997
Prepayment and other current assets $ 870,231 $ 968,446

No provision for doubtful accounts was recognized for the three months ended March 31, 2020 and 2019.

4. ACCOUNT RECEIVABLES, NET

Account receivables consisted of the following:

	September 30, 2017			December 31, 2016		March 31, 2020			December 31, 2019
	(Unaudited)					(Unaudited)
Listing fee	$	1,562,924		$	1,403,255	$	154,813		$	-
Authorized agent subscription revenue		924,100			995,453		563,537			560,780
Monthly commission fee		1,422,750			605,677		1,392,229			1,385,420
Others		63,323			54,183		54,174			53,909
Less: allowance for doubtful accounts		(240,528	)		-		(2,009,940	)		(2,000,109	)
Account receivables, net	$	3,732,569		$	3,058,568	$	154,813		$	-

Management reviewed the collectability of the receivables periodically, and identified certain inactive traders during this quarter. Management considered the receivables due from these traders are uncertain and provided bad debtNo provision ~~of $240,528~~for doubtful accounts was recognized for the three ~~and nine~~ months ended ~~September 30, 2017.~~

March 31, 2020 and 2019.

5. LOAN RECEIVABLES

The following table sets forth a summary of the loan agreements in loan receivables balance:

Date Borrower Lender Original
Amount
(RMB)
September 30,
2017
(USD)

December 31,
2016
(USD)
Annual
Interest
Rate Repayment
Due Date
(Unaudited)
7/15/2016 Xiaohui Wang Shanghai Takung 10,080,000 $ - $ 1,451,822 0 % 3/31/2017
8/24/2016 Xiaohui Wang Shanghai Takung 13,350,000 $ - $ 1,922,800 0 % 3/31/2017
11/14/2016 Xiaohui Wang Shanghai Takung 10,275,000 $ 1,544,346 $ 1,479,908 0 % 10/31/2017
12/9/2016 Xiaohui Wang Tianjin Takung 10,550,000 $ 1,585,680 $ 1,519,516 0 % 11/30/2017
1/4/2017 Xiaohui Wang Tianjin Takung 24,461,505 $ 3,676,597 $ - 0 % 12/31/2017
Total $ 6,806,623 $ 6,374,046

~~All the transactions were aimed to meet the Company’s working capital needs in US Dollar, which is freely convertible to Hong Kong Dollar.~~

Date	Borrower	Lender		Original Amount (RMB)		Outstanding Balance (RMB)		Amount in Reporting Currency (USD)		Annual Interest Rate		Repayment Due Date
7/18/2019	Chongqing Aoge Import and Export Co.		Tianjin Takung		5,000,000		5,000,000	$	706,135	0	%	7/17/2020
8/29/2019	Chongqing Aoge Import and Export Co.		Tianjin Takung		5,000,000		5,000,000	$	706,135	0	%	8/28/2020
9/20/2019	Chongqing Aoge Import and Export Co.		Tianjin Takung		4,000,000		4,000,000	$	564,908	0	%	9/19/2020
					Total			$	1,977,178

The interest-free loans (the “RMB Loans”) ~~that Shanghai Takung and~~entered into by Tianjin Takung ~~entered~~ were guaranteed by Mr. Daquan Wang who is a General Manager and legal representative of Chongqing ~~Wintus (New Star) Enterprises Group~~Aoge Import and Export Co. (“Chongqing”). ~~Xiaohui~~Mr. Daquan Wang ~~(“Ms. Wang”)~~ is a ~~national~~citizen of the People’s Republic of China. ~~Ms. Wang is a shareholder and the legal representative of Chongqing.~~ Both Chongqing and ~~Ms.~~Mr. Daquan Wang are ~~the~~ non-related parties to the Company.

~~In the meantime,~~

Hong Kong Takung entered into loan agreements (the ~~“US Dollar~~“HKD Loans”) with ~~Merit Crown Limited,~~Friend Sourcing Ltd., a Hong Kong company (“~~Merit Crown)~~Friend Sourcing”) with interest accruing at a rate of 8% per annum (See Note 8). ~~Merit Crown~~Friend Sourcing is a non-related party to the Company.

The transactions with Friend Sourcing were aimed to meet the Company’s working capital needs in Hong Kong Dollars.

Through an understanding between ~~Ms. Wang~~Chongqing Aoge Import and ~~Merit Crown,~~Export Co. and Friend Sourcing, the ~~US Dollar~~HKD Loans are “secured” by the RMB Loans. It is the understanding between the parties that the HKD Loans and the RMB Loans will be repaid simultaneously.

6. PROPERTY AND EQUIPMENT, NET

Property and equipment consisted of the following:

	March 31,			December 31,
	2020			2019
	(Unaudited)
Furniture, fixtures and equipment	$	199,091		$	201,093
Leasehold improvements		342,465			343,697
Computer trading and clearing system		3,375,544			3,379,654
Transport equipment		101,594			103,330
Sub-total		4,018,694			4,027,774
Less: accumulated depreciation		(3,291,251	)		(3,167,948	)
Property and equipment, net	$	727,443		$	859,826

Depreciation expense was $127,930 and $156,779 for the three months ended March 31, 2020 and 2019, respectively.

7. ACCRUED EXPENSES AND OTHER PAYABLES

Accrued expenses and other payables as of March 31, 2020 and December 31, 2019 consisted of the following:

	March 31,		December 31,
	2020		2019
	(Unaudited)
Accruals for professional fees		434,650		168,040
Accruals for consulting fees	$	267,499	$	311,122
Payroll payables		33,105		79,710
Trading and clearing system		50,543		50,295
Other payables		45,602		20,499
Total accrued expenses and other payables	$	831,399	$	629,666

8. SHORT-TERM BORROWINGS FROM A THIRD PARTY

In July 2019, Hong Kong Takung entered into loan agreements (the “HKD Loans”) with Friend Sourcing Ltd, a Hong Kong company (“Friend Sourcing”) with interest accruing at a rate of 8% per annum. The HKD Loans are to provide Hong Kong Takung with sufficient HKD currency to meet its working capital requirements. Friend Sourcing is a non-related party to the Company.

In the meantime, Tianjin Takung entered interest-free loan (the “RMB Loans”) to another third party as a guarantee for the HKD Loans. The loan amount was $1,977,178 (RMB 14,000,000). Through an understanding between the two third parties, the HKD Loans are “secured” by the RMB Loans. It is an understanding between the parties that when the ~~US Dollar~~HKD Loans are repaid, the RMB Loans will be repaid at the same time.

~~6. PROPERTY AND EQUIPMENT, NET~~

~~Property and equipment consisted of the following:~~

September 30,
2017 December 31,
2016
(Unaudited)
Furniture, fixtures and equipment $ 157,736 $ 100,386
Leasehold improvements 402,597 298,965
Computer trading and clearing system 3,220,318 2,802,430
Sub-total 3,780,651 3,201,781
Less: accumulated depreciation (1,676,544 ) (1,136,599 )
Property and equipment, net $ 2,104,107 $ 2,065,182

~~Depreciation expense amounted to~~ ~~$190,626 and $133,608 for the three months ended September 30, 2017 and 2016, respectively, and $538,532 and $373,308 for the nine months ended September 30, 2017 and 2016, respectively.~~

7.~~ACCRUED EXPENSES AND OTHER PAYABLES~~

~~Accrued expenses and other payables as of September 30, 2017 and December 31, 2016 consisted of:~~

September 30, December 31,
2017 2016
(Unaudited)
Trading and clearing system $ 54,688 $ 61,735
Accruals for professional fees 19,972 49,952
Accruals for consulting fees 297,461 290,773
Payroll payables 295,722 141,022
Accruals for business trip expense 23,722 -
Other payables 89,235 65,401
Total accrued expenses and other payables $ 780,800 $ 608,883

~~8. SHORT-TERM BORROWINGS FROM THIRD PARTIES~~

~~The following table sets forth a summary of the loan agreements in loan receivables balance:~~

Date Borrower Lender Original Amount
(HKD) September 30,
2017
(USD) December 31,
2016
(USD) Annual
Interest Rate Repayment
Due Date
(Unaudited)
7/15/2016 Hong Kong Takung Merit Crown Limited 11,700,000 $ 1,497,888 $ 1,509,015 8 % 12/31/2017
8/24/2016 Hong Kong Takung Merit Crown Limited 15,596,100 $ 1,996,684 $ 2,011,518 8 % 12/31/2017
11/18/2016 Hong Kong Takung Merit Crown Limited 11,479,102 $ 1,469,607 $ 1,480,525 8 % 10/31/2017
12/9/2016 Hong Kong Takung Merit Crown Limited 11,787,600 $ 1,509,103 $ 1,520,314 8 % 11/30/2017

Less: Discount loan payable $ 101,382 $ 212,859

Total $ 6,371,900 $ 6,308,513

The US Dollar Loans are to provide Hong Kong Takung with sufficient US Dollar-denominated currency to meet its working capital requirements. It is “secured” by the aforementioned RMB Loans (See Note 5) of equivalent amount by its subsidiary to an individual and guarantor affiliated with the lender of the US Dollar Loans. It is the understanding between the parties that when the US Dollar Loans are repaid, the RMB Loans will similarly be repaid.

Date	Borrower	Lender	March 31, 2020 (USD)			December 31, 2019 (USD)			Annual Interest Rate			Repayment Due Date
7/18/2019	Hong Kong Takung	Friend Sourcing Ltd.	$	718,322		$	714,808			8	%	7/17/2020
8/29/2019	Hong Kong Takung	Friend Sourcing Ltd.	$	699,624		$	696,202			8	%	8/28/2020
9/20/2019	Hong Kong Takung	Friend Sourcing Ltd.	$	559,699		$	556,961			8	%	9/19/2020
		Less: Discount loan payable	$	(61,105	)	$	(99,626	)
		Total	$	1,916,540		$	1,868,345

The weighted average interest rate of outstanding short-term borrowings was 8% per annum as of ~~September 30, 2017 and December~~March 31, ~~2016.~~2020. The fair ~~values~~value of the short-term borrowings ~~approximate~~approximates their carrying amounts. The weighted average short-term ~~borrowing was $6,419,099~~borrowings were $1,916,540 and ~~$1,678,803~~$686,884 for the ~~nine~~three months ~~period~~ ended ~~September 30, 2017~~March 31, 2020 and the year ended December 31, ~~2016,~~2019, respectively. The interest expenses for the short-term borrowings were ~~$133,174~~$38,913 and ~~$62,670~~$nil for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016, respectively and $394,295 and $62,670 for the nine months ended September 30, 2017 and 2016,~~2019, respectively.

On October 30, 2017, Hong Kong Takung entered into agreements with both Merit Crown Limited and Ms. Wang to extend the US Dollar Loan and RMB Loan (see Note 5) with the original maturity date on October 31, 2017, to October 31, 2018.

9. RELATED PARTY BALANCES AND TRANSACTIONS

The following is a list of director and related parties to which the Company has transactions with:

(a) Jianping Mao (“Mao”), the ~~wife of the Vice General Manager~~Human Resources Management Director of Hong Kong Takung.

(b) Shuhai Li (“Li”), the legal representative of Tianjin Takung, resigned on April 3, 2020.

(c) Jing Wang (“Wang”), the Chief Financial Officer of the Company since June 1, 2020 and the legal representative of Tianjin Takung since May 28, 2020.

Amount due from related parties

Amount due from related parties consisted of the following as of the years indicated:

	March 31, 2020		December 31, 2019
	(Unaudited)
Li (b)(i)		-		5,834,554
Total current amount due from a related party	$	-	$	5,834,554

	March 31, 2020		December 31, 2019
		(Unaudited)
Li (b)(i)		5,736,499		-
Mao (a) (ii)	$	102,378	$	104,128

Total noncurrent amount due from related parties	$	5,838,877	$	104,128

Amount due to related ~~party~~parties

Amount due to related ~~party~~parties consisted of the following as of the ~~periods~~years indicated:

September 30,
2017 December 31,
2016
(Unaudited)
Mao (a) $ 1,085,480 $ 1,031,805
Total 1,085,480 1,031,805

	March 31, 2020		December 31, 2019
	(Unaudited)
Li (b) (i)		-		6,418,980
Mao (a) (ii)		383,638		443,733
Total current amount due to related parties	$	383,638	$	6,862,713

	March 31, 2020		December 31, 2019
		(Unaudited)
Li (b)(i)		6,450,531		-
Total noncurrent amount due to a related party	$	6,450,531	$	-

The interest rate of the outstanding short-term loan from Mao was 8% per annum as of September 30, 2017 and December 31, 2016. The interest expense was $61,283 and $19,941 for the nine months ended September 30, 2017 and 2016, respectively, and $20,652 and $19,941 for the three months ended September 30, 2017 and 2016, respectively.

(i)	Amount due to and due from Li and Wang

On ~~October 26, 2017,~~September 16, 2019, Hong Kong Takung entered into ~~a supplementary~~an interest-free loan agreement (the "HK Dollar Working Capital Loan") with ~~Mao that, as~~Li for the loan of ~~30 September 2017, the outstanding principal amount~~$6,450,531 (HK$50,000,000) to Hong Kong Takung. The purpose of the ~~Loan (as defined in the Loan Agreement)~~loan is to ~~be repaid by~~provide Hong Kong Takung with sufficient Hong Kong Dollar-denominated currency to ~~Mao is HK$8,000,000 (Hong Kong Dollars Eight Million) (“~~~~Outstanding Principal Loan Amount~~~~”), and the accrued interest of the Outstanding Principal Loan Amount is HK$478,685 (“~~~~Accrued Interest~~~~”). Mao hereby agreed to extend~~meet its working capital requirements with the maturity date of the ~~Outstanding Principal Loan Amount and the interest thereof by~~loan as May 15, 2020. On May 15, 2020, Hong Kong Takung ~~as below: (i) HK$4,500,000~~entered into an extension agreement with Li to extend the HK Dollar Working Capital Loan with a maturity date on May 15, 2021. On May 29, 2020, the loan was transferred to Wang, the Chief Financial Officer of the Company and the ~~interest thereof, together~~legal representative of Tianjin Takung. Thus, the amount was reclassified to non-current assets as of March 31, 2020. As of March 31, 2020, the current and noncurrent portions of this loan obligation were nil and $6,450,531, respectively.

In the meantime, Tianjin Takung entered into an interest-free loan agreement (the "RMB Working Capital Loan") with Li for the loan of $5,736,499 (RMB40,619,000) with the ~~Accrued Interest~~maturity date of the loan as May 15, 2020. On May 15, 2020, Tianjin Takung entered into an extension agreement with Li to extend the RMB Working Capital Loan with a maturity date on May 15, 2021. On May 29, 2020, the loan was transferred to Wang. Thus, the amount was reclassified to non-current liabilities as of March 31, 2020. As of March 31, 2020, the current and noncurrent portions of this loan receivable were nil and $5,736,499, respectively.

Through an understanding between Wang and the Company, the HK Dollar Working Capital Loan is "secured" by the RMB Working Capital Loan. It is the understanding between the parties that the HK Dollar Working Capital Loan and the RMB Working Capital Loan will be repaid simultaneously.

(ii)	Amount due to and due from Mao

The amount due to Mao is primarily related to the lease from Mao. On May 13, 2019, the Company entered into a non-cancellable lease agreement with a related party, Mao for its office location in Tianjin, PRC. The leased office location is approximately 2,090.61 square meters. The lease will expire on May 12, 2021. The Company is charged rent at a rate of $0.55 per square meter per day. The agreement requires a lump sum payment of $204,756 (RMB1,449,838.04) every six months and ~~payable by November 30, 2017;~~a deposit of $102,378 (RMB724,919.02). The deposit is refundable to the Company. The total lease liability was $377,342, which was included in current portion as of March 31, 2020.

On October 16, 2019, Tianjin MQ entered into a non-cancellable lease agreement with Ms. Mao for its office facility in Tianjin, PRC. The leased office location is approximately 1,475.67 square meters. The lease was terminated on February 15, 2020 and ~~(ii) HK$3,500,000 together with~~monthly rent payment is approximately $24,441 (RMB 170,563). As of March 31, 2020, the ~~interest thereof~~amount due to ~~be due and payable by December~~Mao pertinent to this lease agreement was $nil.

As of March 31, ~~2017.~~2020, Mao also lent a startup deposit of $6,296 to Hong Kong MQ.

10. INCOME TAXES

Takung was incorporated in the State of Delaware and is therefore subject to United States income tax. Hong Kong Takung, Takung Art Holdings and Hong Kong MQ were incorporated in Hong Kong S.A.R. People’s Republic of China and are subject to Hong Kong profits tax. Shanghai Takung, Tianjin Takung and Tianjin MQ are PRC corporations and are subject to enterprise taxes in the PRC.

United States of America

The Coronavirus Aid, Relief and Economy Security (CARES) Act (“the CARES Act, H.R. 748”) was signed into law on March 27, 2020. The CARES Act temporarily eliminates the 80% taxable income limitation (as enacted under the Tax Cuts and Jobs Act of 2017) for NOL deductions for 2018-2020 tax years and reinstated NOL carrybacks for the 2018-2020 tax years. Moreover, the CARES Act also temporarily increases the business interest deduction limitations from 30% to 50% of adjusted taxable income for the 2019 and 2020 taxable year. Lastly, the Tax Act technical correction classifies qualified improvement property as 15-year recovery period, allowing the bonus depreciation deduction to be claimed for such property retroactively as if it was included in the Tax Act at the time of enactment. The Company does not anticipate a material impact on its financial statements as of March 31, 2020 due to the recent enactment.

As of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, the Company in the United States had ~~$4,008,459~~$2,403,141 and ~~$2,212,890~~$2,167,494 in net operating loss ~~carried forward~~carry forwards available to offset future taxable income, respectively. ~~Federal~~For net operating losses ~~can generally~~arising after December 31, 2017, the Tax Act limits the Company’s ability to utilize NOL carryforwards to 80% of taxable income and carryforward the NOL indefinitely. NOLs generated prior to January 1, 2018 will not be ~~carried forward twenty years. The federal corporate net operating loss carryover is expired in 20 taxable years following~~subject to the taxable ~~year of the loss.~~income limitation and will begin to expire in 2033 if not utilized.

Hong Kong

The ~~Company believes that~~two-tier profits tax rates system was introduced under the Inland Revenue (Amendment)(No.3) Ordinance 2018 (“the Ordinance”) of Hong Kong became effective for the assessment year 2018/2019. Under the two-tier profit tax rates regime, the profits tax rate for the first HKD 2 million (approximately $257,374) of assessable profits of a corporation will be subject to the lowered tax rate, 8.25% while the remaining assessable profits will be subject to the legacy tax rate, 16.5%. The Ordinance only allows one entity within a group of “connected entities” is eligible for the two-tier tax rate benefit. An entity is a connected entity of another entity if (1) one of them has control over the other; (2) both of them are under the control (more than 50% of the issued share capital) of the same entity; (3) in the case of the first entity being a natural person carrying on a sole proprietorship business-the other entity is the same person carrying on another sole proprietorship business. Since Hong Kong Takung, Takung Art Holdings and Hong Kong MQ are wholly owned and under the control of Takung U.S, these entities are connected entities. Under the Ordinance, it is ~~more likely than not~~an entity’s election to nominate the entity that ~~these net accumulated operating losses~~ will ~~not~~ be ~~utilized in~~subject to the ~~future. Therefore, the~~two-tier profits tax rates on its profits tax return. The election is irrevocable. The Company has provided a full valuation allowance for the deferred tax assets arising from the losses at the U.S. during the nine months ended September 30, 2017 and year ended December 31, 2016 amounting to $1,414,445 and $962,012, respectively. Accordingly, the Company has no net deferred tax assets under the US entity.

elected Hong Kong Takung to be subject to the two-tier profits tax rates.

The provision for current income and deferred taxes of ~~the subsidiary operating in~~ Hong Kong Takung has been calculated by applying the ~~current~~new tax rate of ~~taxation~~8.25%. Takung Art Holdings and Hong Kong MQ still apply the original tax rate of 16.5% for ~~the nine months ended September 30, 2017~~its provision for current income and ~~2016, if applicable.~~deferred taxes.

PRC

In accordance with the relevant tax laws and regulations of the PRC, a company registered in the PRC is subject to income taxes within the PRC at the applicable tax rate on taxable income. All the PRC subsidiaries were subject to income tax at a rate of 25%.

The income tax provision consists of the following components:

For the Three Months Ended
September 30, For the Nine Months Ended
September 30,
2017 2016 2017 2016
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Current $ 159,281 $ 684,801 $ 662,598 $ 1,561,728
Deferred (34,619 ) (88,069 ) (68,221 ) (184,650 )

Total provision for income taxes $ 124,662 $ 596,732 $ 594,377 $ 1,377,078

	Three Months Ended March 31,
	2020			2019
		(Unaudited)			(Unaudited)
Current:
Federal	$	-		$	-
State		-			-
Foreign		101,561			-
Total Current	$	101,561		$	-

Deferred:
Federal	$	-		$	-
State		-			-
Foreign		(14,166	)		8,562
Total Deferred	$	(14,166	)	$	8,562

Total income tax expense	$	87,395		$	8,562

A reconciliation between the Company’s actual provision for income taxes and the provision at the Hong Kong statutory rate is as ~~follow:~~follows:

For the Three Months Ended
September 30, For the Nine Months Ended
September 30,
2017 2016 2017 2016
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Income before income tax expense $ 151,697 $ 3,048,469 $ 1,651,515 $ 6,041,710

Computed tax expense with statutory tax rate 25,030 502,998 271,806 994,688
Impact of different tax rates in other jurisdictions (73,258 ) (24,505 ) (230,651 ) (254,199 )

Non-deductible items:
Tax effect of non-deductible expenses 25,896 11,117 100,789 32,742
Changes in valuation allowance 146,994 107,122 452,433 603,847

Actual income tax expense $ 124,662 $ 596,732 $ 594,377 $ 1,377,078

	Three Months Ended March 31,
	2020			2019
	(Unaudited)			(Unaudited)
Loss before income tax expense	$	(865,967	)	$	(700,231	)

Computed tax expense with statutory tax rate		(142,884	)		(115,494	)
Impact of different tax rates in other jurisdictions		(5,019	)		(4,365	)
Impact of preferred tax rate		57,184			43,848

Non-deductible items:
Tax effect of non-deductible expenses		13,328			6,825
Changes in valuation allowance		28,600			77,748
Others		136,186			-
Total income tax expense	$	87,395		$	8,562

The ~~Company's~~ effective tax rate was ~~82.2%~~(10.1)% and ~~19.6%~~(1.2)% for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016, respectively, and 36.0% and 22.8% for the nine months ended September 30, 2017 and 2016,~~2019, respectively.

~~11. COMMITMENTS AND CONTINGENCIES~~

~~Operation Commitments~~Uncertain tax positions

The ~~total future minimum~~reconciliation of the beginning and ending amount of liabilities associated with uncertain tax positions is as follows:

	March 31, 2020		December 31, 2019
Uncertain tax liabilities, beginning of period		-		-
Additions for tax position of current period		73,446		-
Uncertain tax liabilities, end of period	$	73,446	$	-

The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by the respective jurisdictions, where applicable. The statute of limitations for the tax returns varies by jurisdictions.

The amounts of uncertain tax liabilities listed above are based on the recognition and measurement criteria of ASC Topic 740, and the balance is presented as current liability in the interim condensed consolidated financial statements as of March 31, 2020. The Company anticipated that the settlements with the taxing authority are remitted within one year.

Our policy is to include interest and penalty charges related to uncertain tax liabilities as necessary in the provision for income taxes. The Company has a liability for accrued interest of nil as of March 31, 2020 and December 31, 2019, respectively.

Our subsidiary, Hong Kong Takung, has been recently selected for routine examination for its tax years ended 31 December 2016 through 2018 by Hong Kong Inland Revenue Department (“IRD”). As of March 31, 2020 and December 31, 2019, the Company had $73,446 and nil, respectively, of uncertain tax liabilities related to the different methodology of certain tax non-deductible expenses applied by the IRD. The examination is currently in progress. Due to the uncertain tax regulations, it is possible that the ultimate resolution of uncertain tax positions may result in an adverse finding and we would be subject to additional liability which could be materially different from these estimates. In such circumstances, we will record additional tax expense or tax benefit in the period in which such the resolution occurs. The Company does not expect the position ofuncertain tax liabilities will significantly fluctuate within the next twelve months.

The statute of limitations for the Internal Revenue Services to assess the income tax returns on a taxpayer expires three years from the due date of the income tax return or the date on which it was filed, whichever is later.

In accordance with the Hong Kong profits tax regulations, a tax assessment by the IRD may be initiated within six years after the relevant year of assessment, but extendable to 10 years in the case of potential willful underpayment or evasion.

In accordance with PRC Tax Administration Law on the Levying and Collection of Taxes, the PRC tax authorities generally have up to five years to assess underpaid tax plus penalties and interest for PRC entities’ tax filings. In the case of tax evasion, which is not clearly defined in the law, there is no limitation on the tax years open for investigation. Accordingly, the PRC entities remain subject to examination by the tax authorities based on the above.

11. LEASES

The Company has operating leases for its office facilities and artwork storages. The Company's leases have remaining terms of less than one year to approximately six years. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease ~~payments under~~expense for these leases on a straight-line basis over the ~~non-cancellable~~lease term. The Company does not separate non-lease components from the lease components to which they relate, and instead accounts for each separate lease and non-lease component associated with that lease component as a single lease component for all underlying asset classes.

The following table provides a summary of leases by balance sheet location as of March 31, 2020:

Assets/liabilities	Classification	As of March 31, 2020
Assets
Operating lease right-of-use assets	Operating lease assets	$	582,121

Liabilities
Current
Operating lease liability - current	Current operating lease liabilities	$	132,348
	Amount due to a related party		377,342

Long-term
Operating lease liability - non-current	Long-term operating lease liabilities		49,002

Total lease liabilities		$	558,692

The operating lease ~~with respect to the office and the dormitory as of September 30, 2017 are payable as follows:~~

Three months ending December 31, 2017 $ 244,960

Year ending December 31, 2018 761,175

Year ending December 31, 2019 223,026

Year ending December 31, 2020 39,999

Year ending December 31, 2021 15,030

Year ending December 31, 2022 and thereafter 53,232

Total $ 1,337,422

~~Rental expense of the Company was $293,338 and $199,514~~expenses for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016, respectively, and $721,492 and $428,440 for the nine months ended September 30, 2017 and 2016, respectively.~~2019 were as follows:

		Three Months Ended March 31,
Lease Cost	Classification	2020		2019
Operating lease cost	Cost of revenue, general and administrative expenses	$	200,362		190,449
Total lease cost		$	200,362		190,449

Maturities of operating lease liabilities at March 31, 2020 were as follows:

Maturity of Lease Liabilities	Operating Leases
2020 (remaining)	$	530,175
2021		14,123
2022		14,123
2023		14,123
2024		14,123
Thereafter		-
Total lease payments	$	586,667
Less: interest		(27,975	)
Present value of lease payments	$	558,692

	Three Months Ended March 31,
Lease Term and Discount Rate	2020			2019
Weighted-average remaining lease term (years)
Operating leases		1.51			2.60

Weighted-average discount rate (%)
Operating leases		8	%		8	%

	Three Months Ended March 31,
Other Information	2020		2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	28,478	$	41,063
Leased assets obtained in exchange for new operating lease liabilities		-		275,189

12. ~~EARNINGS~~LOSS PER SHARE

Basic ~~earnings~~loss per share is computed by dividing net ~~income~~loss by the weighted-average number of common shares outstanding during the period. Diluted ~~earnings~~loss per share is computed by dividing net ~~income~~loss by the weighted-average number of common shares and dilutive potential common shares outstanding during the period.

For the Three Months Ended
September 30, For the Nine Months Ended
September 30,
2017 2016 2017 2016
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Numerator:
Net income $ 27,034 2,451,737 $ 1,057,138 4,664,632

Denominator:
Weighted-average shares outstanding
Weighted-average shares outstanding - Basic 11,188,882 10,632,276 11,039,880 10,632,276
Stock options and restricted shares 59,806 733,321 358,202 645,569
Weighted-average shares outstanding - Diluted 11,248,688 11,365,597 11,398,082 11,277,845

Earnings per share
-Basic 0.00 0.23 0.10 0.44
-Diluted 0.00 0.22 0.09 0.41

	Three Months Ended March 31,
	2020			2019
	(Unaudited)			(Unaudited)
Numerator:
Net loss	$	(953,362	)	$	(708,793	)

Denominator:
Weighted-average shares outstanding – Basic		11,255,129			11,226,025
Stock options and restricted shares		-			-
Weighted-average shares outstanding – Diluted		11,255,129			11,226,025

Loss per share
-Basic		(0.08	)		(0.06	)
-Diluted		(0.08	)		(0.06	)

~~Diluted earnings per share takes into account~~Due to the ~~potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted into common stock.~~

~~For~~loss for the three months ended ~~September 30, 2017,~~March 31, 2019, approximately 149,323 options and 15,000 restricted shares, respectively, were excluded from the calculation of diluted ~~earnings~~net loss per ~~share calculation did not include options~~share.

Due to ~~purchase up to 109,160 shares of~~ the ~~Company's common stock, because they were out of money. It has no such impact for~~loss or the three months ended ~~September 30, 2016, nine months ended September 30, 2017~~March 31, 2020, approximately 100,890 options and ~~2016 respectively.~~6,250 restricted shares, respectively, were excluded from the calculation of diluted net loss per share.

~~There~~

13. CONTINGENCIES

The Company received two summons dated on May 22, 2020 and June 9, 2020, respectively, there were ~~dilutive effects~~two individuals filing claims against Shanghai Takung and Tianjing Takung in the Shanghai Pudong People’s Court, China, as a result of ~~487,000 shares~~contractual disputes and misrepresentations over ownership units made by certain service agent. The claims amounted to approximately $0.23 million. The Company hired legal counsel to evaluate the case. The Company believes that the allegations are without merit and intends to vigorously defend itself. Currently, the cases are under review by the Shanghai Pudong People’s Court. In the opinion of management, it is not probable that the Company will incur any losses arising from these two litigation cases. As such, as of March 31, 2020, the Company has not accrued any liability in connection with potential losses from the legal proceedings.

Except for the ~~nine months period ended September 30, 2017~~above, as of March 31, 2020 and ~~2016.~~ through the issuance date of the condensed consolidated financial statements included in this Form 10-Q, the Company does not have any other significant indemnification claims.

14. SUBSEQUENT EVENTS

On May 15, 2020, Hong Kong Takung entered into a loan extension agreement for its HK Dollar Working Capital Loan with Shuhai Li, the legal representative of Tianjin Takung who resigned on April 3, 2020, with a maturity date on May 15, 2021. On the same day, Tianjin Takung also entered into a loan extension agreement for its RMB Working Capital Loan with Shuhai Li with a maturity date on May 15, 2021.

On May 29, 2020, the Company’s Hong Kong subsidiary, Hong Kong Takung entered into a loan transfer agreement for its HK Dollar Working Capital Loan with Shuhai Li, and Jing Wang, the Chief Financial Officer of the Company and the new legal representative of Tianjin Takung. Simultaneously, the Company’s PRC subsidiary, Tianjin Takung entered into a loan transfer agreement for its RMB Working Capital Loan with Shuhai Li and Jing Wang.

The ~~487,000 restricted~~Company had subsequently granted an aggregate of 10,000 shares of ~~Common Stock (the “Compensation Shares”) related~~common stock as a stock-based awards to the Consulting Agreement with Regeneration Capital Group, LLC (“Regeneration”) were placed in an escrow account and were subject to Regeneration’s performance condition. The shares were released from escrow account and transferred to Regeneration since the Company successfully listedCompany’s SEC legal counsel on ~~NYSE on March 22, 2017.~~ May 27, 2020 as a compensation for legal advisory services rendered.

~~13. SUBSEQUENT EVENT~~

Other than the ~~newly signed extension agreements as disclosed in Note 8, and the supplementary agreement with related party as disclosed in Note 9 above,~~events aforementioned, the Company ~~does not identify any~~has evaluated subsequent events through the date of issuance of the interim condensed consolidated financial statements, there were no other subsequent events ~~with material financial impact on~~occurred that would require recognition or disclosure in the ~~unaudited~~interim condensed consolidated financial statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read in conjunction with our financial statements and related notes thereto.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q ~~and other reports filed by us from time to time with the Securities and Exchange Commission (collectively the “Filings”) contain~~contains or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, our management as well as estimates and assumptions made by our management. When used in the ~~filings~~report the words “anticipate”, “believe”, “estimate”, “expect”, “future”, “intend”, “plan” or the negative of these terms and similar expressions as they relate to us or our management identify forward-looking statements. Such statements reflect the current view of our management with respect to future events and are subject to risks, uncertainties, assumptions and other factors as they relate to our industry, our operations and results of operations, and any businesses that we may acquire. Should one or more of the events described in these risk factors materialize, or should our underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.

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. Except as required by applicable law, including the U.S. federal securities laws, we do not intend to update any of the forward-looking statements to conform them to actual ~~results.~~results unless required by applicable securities regulations or rules. The following discussion should be read in conjunction with our ~~pro forma~~ financial statements and the related notes ~~that will be~~ filed herein.

Overview

We were incorporated in Delaware under the name Cardigant Medical Inc. on April 17, 2009. Our initial business plan was to focus on the development of novel biologic and peptide based compounds and enhanced methods for local delivery for the treatment of vascular disease including peripheral artery disease and ischemic stroke.

Hong Kong Takung is a limited liability company incorporated on September 17, 2012 under the laws of Hong Kong, Special Administrative Region, China. Although Takung was incorporated in 2012, it did not commence business operations until late 2013.

As a result of the transfer of the excluded assets pursuant to the Contribution Agreement and the acquisition of all the issued and outstanding shares of Hong Kong Takung, we are no longer conducting the Cardigant Business and have now assumed Hong Kong Takung’s business operations as it now our only operating wholly-owned subsidiary.

Hong Kong Takung operates an electronic online platform located at http://~~eng.takungae.com~~en.takungae.com/ for artists, art dealers and art investors to offer and trade in valuable artwork.

Through Hong Kong Takung, we offer on-line listing and trading services that allow artists/art dealers/owners to access a much bigger art trading market where they can engage with a wide range of investors that they might not encounter without our platform. Our platform also makes investment in high-end and expensive artwork more accessible to ordinary people without substantial financial resources.

We generate revenue from our services in connection with the offering and trading of artwork on our system, primarily consisting of listing fees, trading commissions, management fees and authorized agent subscription.

On July 28, 2015, Hong Kong Takung incorporated a wholly owned subsidiary, Takung (Shanghai) Co., Ltd. (“Shanghai Takung”), in Shanghai Free-Trade Zone (SFTZ) in Shanghai, China, with a registered capital of $1 million. Shanghai Takung ~~is engaged~~assists in ~~providing services to its parent company~~ Hong Kong ~~Takung~~Takung’s operations by receiving deposits from and making payments to online artwork traders ~~for and~~in mainland China on behalf of Hong Kong Takung.

On January 27, 2016, Hong Kong Takung incorporated ~~another~~a wholly owned subsidiary, Takung Cultural Development (Tianjin) Co., Ltd (“Tianjin Takung”)~~, a limited liability company,~~ in the Tianjin Free Trade Zone (TJFTZ) in Tianjin, China with a registered capital of $1 ~~million in Tianjin Pilot Free Trade Zone in Tianjin, People’s Republic of China.~~million. Tianjin Takung provides technology development services to Hong Kong Takung and Shanghai Takung, and also carries out marketing and promotion activities in mainland China. Management has recently determined to merge the operations of Shanghai Takung with Tianjin Takung’s and eventually dissolve Shanghai Takung in order to save costs. Shanghai Takung was deregistered on May 8, 2020.

~~Recently Shanghai~~Hong Kong Takung ~~set up~~Art Holdings Company Limited (“Takung Art Holdings”) was incorporated in Hong Kong on July 20, 2018 and operates as a holding company to operate an ~~office in Hangzhou to carry out technology development.~~e-commerce platform for offering, selling and trading whole pieces of artwork instead of units of artwork.

~~Since~~Hong Kong MQ Group Limited (“Hong Kong MQ”) was formed in Hong Kong on November 27, 2018 and currently has no operations. On June 19, 2019, as a result of a private transaction, one (1) share of common stock of Hong Kong MQ was transferred from Ms. Hiu Ngai Ma to the Company. The net asset of Hong Kong MQ was $nil as of the acquisition date. The consideration paid for the ownership transfer, which represent 100% of the issued and outstanding share capital of Hong Kong MQ, was $0.13 (HK$1). Hong Kong MQ became a direct wholly-owned subsidiary of the Company.

MQ (Tianjin) Enterprise Management Consulting Co., Ltd (“Tianjin MQ”) was incorporated in Tianjin, PRC on July ~~28, 2016, we have expanded access to~~9, 2019 and is a directly wholly owned subsidiary of Hong Kong MQ. It was established as a limited liability company with a registered capital of $100,000 located in the Pilot Free Trade Zone in Tianjin. Tianjin MQ will focus on exploring business opportunities and promoting our artwork trading platform to residents of Russia, Mongolia, Australia and New Zealand – our first major expansion of operations outside of China. To further stimulate trading interest, we have added selected portfolios from these countries to our platform, which now numbers 199 artworks including three Russian painting portfolios and fifteen Mongolian paintings. business.

Our headquarters are located in Hong Kong, Special Administrative Region, People’s Republic of China and we conduct our business primarily in Hong Kong ~~Shanghai~~ and Tianjin. ~~Recently, we set up a new office in Hangzhou to conduct technology development.~~ Our principal executive offices are located at ~~Flat/RM 03-04, 20/F, Hutchison House, 10 Harcourt~~Room 1105 Wing On Plaza, 62 Mody Road, ~~Central~~Tsim Sha Tsui, Kowloon, Hong Kong.

Our common stock began trading on the NYSE American under the symbol “TKAT” on March 22, 2017.

Recent Impacts of COVID-19 on Our Business

While the ongoing coronavirus pandemic is spreading throughout the world, the Company’s operations have fully resumed in March 2020 and we have not identified any significant decrease in the number of transactions on our platform since then. We have also maintained a stable number of new account openings.

The extent to which the COVID-19 impacts our operations is highly uncertain and cannot be predicted with confidence. It will depend on various factors including the duration and severity of the outbreak, new information which may emerge concerning the severity of the coronavirus and the actions to contain the coronavirus or treat its impact, among others.

Although we do not expect that the virus will have a material adverse effect on our business or financial results at this time, COVID-19 may eventually affect the Company's 2020 overall business performance. The operating results for the three months ended March 31, 2020 may not be indicative of the future operating results for the fiscal year ending December 31, 2020 or other future periods, particularly in light of the uncertain impact COVID-19 could have on the Company's business.

Results of Operation of Takung

~~The following discussion should be read~~Hong Kong Takung operates a platform for offering and trading artwork. We generate revenue from our services in ~~conjunction~~connection with the ~~unaudited condensed consolidated Financial Statements~~offering and trading of ~~the Company for the three-month~~artwork ownership units on our system, primarily consisting of listing fees, trading commissions, and ~~nine-month period ended September 30, 2017 and 2016 and related notes thereto.~~management fees.

THREE-MONTH PERIOD ENDED ~~SEPTEMBER 30, 2017~~MARCH 31, 2020 COMPARED TO THREE-MONTH PERIOD ENDED ~~SEPTEMBER 30, 2016~~

~~Revenue~~MARCH 31, 2019

The following tables set forth our ~~condensed consolidated statements of income data:~~

Three Months Ended
September 30,
2017 2016
(Unaudited) (Unaudited)
Revenue $ 3,355,011 $ 5,742,209
Cost of revenue (292,168 ) (285,252 )
Selling expense (624,151 ) (652,207 )
General and administrative expenses (2,498,848 ) (1,744,965 )
Total costs and expenses (3,415,167 ) (2,682,424 )
Income from operations (60,156 ) 3,059,785
Interest and other income (loss), net 211,852 (11,316 )
Income before income taxes 151,696 3,048,469
Income tax benefit (expense) (124,662 ) (596,732 )
Net income $ 27,034 $ 2,451,737

~~The following tables set forth our~~interim condensed consolidated statements of income data ~~(as~~with a ~~percentage of revenue):~~percentage:

	Three Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2020			% of Revenue			2019			% of Revenue
	(Unaudited)			(Unaudited)			(Unaudited)						(Unaudited)
Revenue		100	%		100	%	$	1,181,286			100		$	535,701			100
Cost of revenue – Direct revenue		(9	)		(5	)
Cost of revenue								(656,514	)		(56	)		(267,279	)		(50	)
Selling expense		(18	)		(11	)		(42,989	)		(4	)		(30,812	)		(6	)
General and administrative expenses		(74	)		(30	)		(1,110,447	)		(94	)		(1,274,585	)		(238	)
Total costs and expenses		(101	)		(46	)		(1,809,950	)		(154	)		(1,572,676	)		(294	)
Income from operations		(1	)		54
Interest and other income (loss), net		6			-
Income before income taxes		5			54
Loss from operations								(628,664	)		(54	)		(1,036,975	)		(194	)
Interest and other (expenses) income, net								(237,303	)		(20	)		336,744			63
Loss before income tax expense								(865,967	)		(74	)		(700,231	)		(131	)
Income tax expense		(4	)		(10	)		(87,395	)		(7	)		(8,562	)		(2	)
Net income		1	%		44	%
Net loss							$	(953,362	)		(81	)	$	(708,793	)		(133	)

Revenue

~~Listing fee~~

The following table sets forth our interim condensed consolidated revenue ~~was $1,455,498 and $2,968,534; commission~~by revenue was $1,496,826 and $1,669,698, gross management fee revenue was $402,547 and $781,219, annual fee revenue was $140 and $440 , authorized agent subscription revenue was $nil and $322,318 for the three months ended September 30, 2017 and 2016, respectively.source:

	Three Months Ended March 31,
	2020		2019		��
	(Unaudited)		(Unaudited)
Listing fee revenue	$	176,943	$	289,072
Commission revenue		900,823		178,358
Management fee revenue		103,520		68,271
Total	$	1,181,286	$	535,701

(i)

Listing fee revenue

~~Listing fee revenue is calculated based on~~As of March 31, 2020, a ~~percentage~~total of ~~the listing value and transaction value~~287 sets of ~~artworks.~~

~~Listing value is the total offering price of an~~ artwork ~~when the ownership units are initially~~were listed for trade on our ~~trading platform. We utilize an appraised value as a basis to determine the appropriate listing value for each artwork, or portfolio of artworks.~~

~~Takung Unit+ is a new unit trading~~ platform for collectibles. It allows investors to buy and trade shared ownership units of portfolios of collectibles, however, unlike the Company's standard Unit trading platform, each Takung Unit+ portfolio will contain multiple numbers of the same item, and traders will have the option of direct ownership with physical delivery by trading the units they own for one or more of the items in the portfolio. Takung will collect listing fees on the initial listing values of new portfolios, commissions on trades made by investors using the platform, and management fees for the storage, transportation, and insurance of the items in the portfolio.

~~During the three months ended September 30, 2017, there were 6~~—comprising 62 sets of paintings and calligraphies 9from famous Chinese, Russian and Mongolian artists, with a total listing value of $26,779,740 (HK$208,100,000); 35 pieces of jewelry with a total listing value of $9,350,389 (HK$72,660,000); 134 pieces of precious stones 1with a total listing value of $16,991,816 (HK$132,040,000); 29 pieces of ~~jewelry and 1 set of Unit+ product listed on our platform. Their~~amber with a total listing ~~values were $2,118,726~~value of $12,225,254 (HK$~~16,500,000) for the~~95,000,000); 4 pieces of antique mammoth ivory carvings with a total listing value of $669,172 (HK$5,200,000); 2 pieces of porcelain pastel paintings with a total listing value of $334,586 (HK$2,600,000); 7 pieces of porcelain with a total listing value of $1,093,838 (HK$8,500,000); 6 sets of ~~paintings~~Unit+ products with a total listing value of $1,327,276 (HK$10,314,000); 1 piece of Yixing collectable with a listing value of $128,687 (HK$1,000,000); and ~~calligraphies, $1,132,555~~7 pieces of Sports memorabilia with a listing value of $1,095,048 (HK$ ~~8,820,000) for~~8,509,400), of which 22.5%-48% (for 62 sets of paintings), 24%-48.5% (for the 9134 pieces of precious ~~stones, $46,227 (HK$360,000) for~~stones), 29%-48% (for the 135 pieces of ~~jewelry and $152,578 (HK$1,188,000) for~~jewelry), 47%-48.5% (for 4 piece of antique mammoth ivory carvings), 32%-48% (for the ~~1 set~~29 pieces of ~~Unit+ product,~~amber), 45%-46% (for the 2 pieces of ~~which 41.5%-47%~~porcelain pastel paintings), 25%-48% (for the 7 pieces of porcelain), 30.25%-45% (for the 6 sets of ~~paintings~~Unit+ products), 45% (1 piece of Yixing collectable) and ~~calligraphies), 26%-46%~~45% (for the 97 pieces of ~~precious stones), 43% (for the 1 pieces of jewelry) and 30.3% (for the 1 set of Unit+ product)~~Sports memorabilia) of the listed values were charged as listing fees, respectively.

~~Compared to~~During the ~~corresponding period~~three months ended ~~September 30, 2016,~~March 31, 2020, there were 72 sets of paintings listed on our platform. Their total listing values were $772,121 (HK$6,000,000) for the paintings, of which 22.83%-23% (for the paintings) of the listed values were charged as listing fees.

As of March 31, 2019, a total of 285 sets of artwork were listed for trade on our platform —comprising 60 sets of paintings and calligraphies 7from famous Chinese, Russian and Mongolian artists, with a total listing value of $25,758,348 (HK$202,100,000); 35 pieces of ~~amber, 14~~jewelry with a total listing value of $9,260,770 (HK$72,660,000); 134 pieces of precious stones 5with a total listing value of $16,828,957 (HK$132,040,000); 29 pieces of ~~jewelry successfully listed on our system. The~~amber with a total listing ~~values were $1,802,475~~value of $12,108,081 (HK$~~14,000,000) for the 7 sets~~95,000,000); 4 pieces of antique mammoth ivory carvings with a total listing value of $662,758 (HK$5,200,000); 2 pieces of porcelain pastel paintings ~~and calligraphies, $2,974,083~~with a total listing value of $331,379 (HK$~~23,100,000) for the~~2,600,000); 7 pieces of ~~amber, $1,042,860~~porcelain with a total listing value of $1,083,355 (HK$~~8,100,000) for the 14 pieces of precious stones, $746,739 (HK$5,800,000) for 5 pieces of jewelry, of which 47.75%-48% (for the 7~~8,500,000); 6 sets of ~~paintings~~Unit+ products with a total listing value of $1,314,555 (HK$10,314,000); 1 piece of Yixing collectable with a listing value of $127,453 (HK$1,000,000); and ~~calligraphies) ,46% (for the~~ 7 pieces of ~~amber)~~Sports memorabilia with a listing value of $1,084,553 (HK$8,509,400), ~~32%~~of which 22.5%-48% (for 60 sets of paintings), 24%-48.5% (for the 14134 pieces of precious stones), 29%-48% (for the 535 pieces of jewelry), 47%-48.5% (for 4 piece of antique mammoth ivory carvings), 32%-48% (for the 29 pieces of amber), 45%-46% (for the 2 pieces of porcelain pastel paintings), 25%-48% (for the 7 pieces of porcelain), 30.25%-45% (for the 6 sets of Unit+ products), 45% (1 piece of Yixing collectable) and 45% (for the 7 pieces of Sports memorabilia) of the listed values were charged as listing fees, respectively.

~~The decrease in number~~During the three months ended March 31, 2019, there were 6 sets of ~~pieces~~paintings listed on our platform. Their total listing values ~~and corresponding~~were $1,147,081 (HK$9,000,000) for the paintings, of which 22.9%-28% (for the paintings) of the listed values were charged as listing fees.

The listing fees charged decreased to $176,943 during the three months ended ~~September 30, 2017~~March 31, 2020 compared to $289,072 for the same period ended ~~September 30, 2016 resulted in a decrease in listing fee revenue in~~March 31, 2019. Compared to those for the ~~current period. The decrease in~~three months ended March 31, 2019, the number of ~~pieces listed was due to a~~ new listing ~~category (“A-tier”) implemented on July 3, 2017. A-tier is aim to meet an elevated set~~ of ~~standards including higher levels~~paintings and the value of ~~liquidity, market value, number of owners and number of VIP traders. Therefore,~~ the ~~listing schedule of some~~ artworks were ~~deferred~~lower during the same period in 2020. There were only two sets of paintings listed during the three months ended March 31, 2020 while there were six sets of paintings during the same period in 2019 listed on our platform. The total listing value of the new artworks for the three months ended March 31, 2020 was $772,121 compared to ~~a later time.~~$1,147,081 for the three months ended March 31, 2019.

(ii)

Commission fee revenue

We generate commission fee from non-VIP traders and selected traders as follows:

For non-VIP ~~Traders,~~traders, the commission revenue was calculated based on a percentage of transaction value of artworks, ~~which~~where we charge trading commissions for the purchase and sale of the ownership shares of the artworks. The commission is typically 0.3% of the total amount of each transaction, ~~but as an initial promotion,~~ we currently charge a reduced fee of 0.2% (resulting in an aggregate of 0.4% for both buy and sell transactions) of the total transaction amount with the minimum charge of ~~$0.13~~$0.0013 (HK$1)0.01). ~~The commission is accounted for as revenue and immediately deducted from the proceeds from the sales of artwork units when a transaction is completed.~~

For selected VIP Traders, we ran a discount program for them starting from April 1, 2015, when their trading volumes of the certain artworks reached an agreed level in each month, a contractually determined flat rate of trading commission was applied to the transactions of these certain artworks. Any trading commission charges incurred by the VIP Traders over the flat rate would be waived. The discounted rate varied between selected artworks. This discount program ended on March 31, 2016.

For selected ~~Traders,~~traders, starting from April 1, 2016, we charged a predetermined monthly fee (unlimited trades for specific artworks) for specific artworks. These ~~Traders~~traders are selected by authorized agents and reviewed by us. After review, we negotiate individually with each one of them to determine a fixed monthly fee. Different ~~Traders~~traders may have different rates but once negotiated and agreed to, the monthly fee is fixed. Using the output method, we recognize the monthly commission revenue when the selected traders receive access to our trading platform to make unlimited trades for specific artwork.

~~Commission rebate programs are offered~~We define traders as “inactive” if they meet the following criteria;

The trader defaults in payment over three months;

The trader did not incur any transactions in the month of reassessment;

The service agent has confirmed with the relevant trader that he/she was inactive.

Once an inactive trader has been assessed and identified, his/her contract will be reassessed pursuant to ASC 606-10-25-5 because there has been a significant change in fact and circumstances and pursuant to ASC 606-10-25-1)e), his/her contract will not be deemed to exist and revenue will not be recognized until consideration is received in accordance with ASC 606-10-25-7(a) as we would have already performed our obligations ahead of receiving consideration.

We charge a non-transactional transfer commission on the transfer of the ownership of an artwork. The commission amount is calculated based on 0.3% of the close value of the artwork and each artwork unit. For the large volume of transfer or under certain special circumstances, we charge at an agreed-upon percentage of artworks units.

We used to offer commissions to Traders and service agents. ~~We would rebate 5% of the commission earned from the transactions of new Traders referred by the existing Traders. The rebate rate was adjusted from 15% to 5%, starting from~~Effective January 1, ~~2017.~~2019, we no longer offered commission to our Traders. For service agents, we ~~rebate~~offer a total of 40% to ~~60%~~75% of the commission earned from transactions with new Traders to the service agents when they bring in an agreed number of Traders to the trading platform. ~~For service agents who have individual referrers referring Traders to us, we will, after rebating such individual referrers 15% of the~~

The commission ~~earned from the transactions of new Traders they referred, deduct such 15% of the commission from the rebates payable~~paid to the service agents ~~to which such individual referrers belong. The commission rebate is recognized as reduction of the commission revenue. The rebates~~ and discounts are recognized as a ~~reduction~~cost of revenue in the same period the related revenue is recognized.

~~In spite~~Since the second half of ~~this, total~~2018, there was a decrease in our trading volume and transaction value amounts because of the deteriorating economy in China due to the under-performance of its financial stock markets as well as the fall-out from the P2P (peer-to-peer) lending market. Our trading volume and transaction value amounts increased in the fourth quarter of 2019 and first quarter of 2020.

Total commission revenue ~~decreased~~increased by ~~$172,872~~$722,465 or ~~10%~~405.1% for the three months ended ~~September 30, 2017~~March 31, 2020 to ~~$1,496,826~~$900,823 compared to ~~$1,669,698~~$178,358 for the three months ended ~~September 30, 2016 primarily because~~March 31, 2019. For the three months ended March 31, 2020, the trading amount was approximately $1,669,248,138 (HK$12,971,393,429) compared to $163,552,049 (HK$1,283,229,377) in the same period in 2019. The number of active traders increased by 45,303, from 15,074 in the ~~change~~three months ended March 31, 2019 to 60,377 in ~~our commission fee policy and~~ the ~~decrease of transaction volume of non VIP traders and non-selected traders. From April 1, 2016 onwards, selected Traders pay a predetermined monthly fixed fee for their trades~~same period in ~~specific artworks while our other non-VIP Traders continue to pay a commission calculated based on a percentage of transaction value of artworks.~~2020.

(iii)

Management fee revenue

We charge ~~Traders~~traders a management fee to cover the costs of insurance, storage, and transportation for an artwork and trading management of artwork units, which are calculated at $0.0013 (HK$0.01) per 100 artwork units per day. The management fee is deducted from proceeds from the sale of artwork units.

During the three-month period ended ~~September 30, 2017,~~March 31, 2020, management fee revenue ~~decreased~~increased by ~~$378,672,~~$35,249, from ~~$781,219~~$68,271 for the three months ended ~~September 30, 2016~~March 31, 2019 to ~~$402,547. From September 1, 2016, we waived management fees for certain VIP Traders. We recognized these promotions as a reduction of revenue, which was recognized upon~~$103,520, due to the ~~completion of the transactions. Although the listed artworks increased, the management fee decreased by the promotions.~~increase in trading.

~~(iv)~~

~~Other revenue~~

~~During the three-month period ended September 30, 2017, annual fee revenue decreased~~Revenue by ~~$300, from $440 for the three-month period ended September 30, 2016 to $140.~~

~~(v) Authorized agent subscription revenue~~customer type

~~Authorized agent subscription~~The following table presents our revenue was nil for the three-month period ended September 30, 2017 compared to $322,318 for the three-month period ended September 30, 2016. We have ceased charging new authorized agent with subscription revenue in order to encourage high quality authorized agent to sign up with our platform.

by customer type:

Three months ended
March 31,

2020 2019
(Unaudited) (Unaudited)
Artwork owners $ 176,943 $ 289,072
Non – VIP Traders 856,132 154,645
VIP Traders 148,211 91,984
Total $ 1,181,286 $ 535,701

Cost of Revenue
Three months ended
March 31,
2020 2019
(Unaudited) (Unaudited)
Commissions paid to service agents $ 497,601 $ 54,916
Depreciation 96,191 122,032
Internet service charge 34,332 50,674
Artwork insurance 12,120 11,962
Artwork storage 16,270 27,242
Others - 453
Total $ 656,514 $ 267,279

Cost of revenue for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~March 31, 2019 was ~~$292,168~~$656,514 and ~~$285,252,~~$267,279, respectively. ~~Our~~The increase in cost of revenue ~~primarily includes~~by $389,235, for the three months ended March 31, 2020 compared to March 31, 2019, was mainly due to an increase in commissions paid to service agents by $442,685 because of increase in trading transactions in the first quarter of 2020 as discussed above. Such increase was offset by a decrease in depreciation by $25,841 due to having fully depreciated of some of our computer equipment and trading systems, a decline in internet service ~~fee, depreciation~~charges by $16,342 and ~~amortization of hardware and software for our trading platform.~~artwork storage costs by $10,972.

Gross Profit

Gross profit was ~~$3,062,843~~$524,772 or 44.4% for the three months ended ~~September 30, 2017,~~March 31, 2020, compared to ~~$5,456,957~~$268,422 or 50.1% for the three months ended September 30, 2016. The decrease was due to the less artworks listed on our platform, the change in our commission fee policy and the decrease of transaction volume of non VIP traders and non-selected traders.March 31, 2019.

Listing fees contributed ~~43.4%~~15.0% of the total revenue for the quarter ended March 31, 2020 compared to 54.0% in the corresponding period in 2019, while commission revenue contributed 76.3% for the quarter ended March 31, 2020 compared to 33.3% in the corresponding period in 2019. Compared to the same period in 2019, there was a significant increase in commission revenue. On the other hand, our cost of revenue for the three months ended March 31, 2020 was 55.6% of the total revenue compared to 49.9% for the same period in 2019. The higher cost of revenue over the total revenue for the three months ended ~~September 30, 2017 compared~~March 31, 2020 was primarily due to ~~51.7% in~~ the ~~corresponding period in 2016, while commission revenue contributed 44.6%~~more commissions being paid to service agents as discussed above. Consequently, we posted a gross profit and gross profit margin of $524,772 and 44.4%, respectively, for the three months ended ~~September 30, 2017~~March 31, 2020 compared to 29% in the corresponding period in 2016. While there was a decrease in commission revenue in the current period, the negative factors were catalyzed by a decrease in listing fees due to less artworks listing on the platform during the current period. Consequently, we posted a comparable gross profit margin of 91% for the three months ended September 30, 2017 compared to 95%$268,422 and 50.1% for the same period in ~~2016.~~2019, respectively.

Operating Expenses

Selling expenses were $624,151, or 20% of net sales, for the three months ended September 30, 2017 compared to $652,207, or 12% of net sales, for the comparable period in 2016, a decrease by $28,056. Selling expenses consist primarily of marketing expenses.
General and administrative expenses for the three months ended ~~September 30, 2017~~March 31, 2020 were ~~$2,498,848~~$1,110,447 compared to ~~$1,744,965~~$1,274,585 for the three months ended ~~September 30, 2016.~~March 31, 2019. The ~~substantial increase~~decrease in general and administrative expenses by $164,138 was ~~primarily~~attributable to a decrease in salaries and welfare by $122,765 as a result of salary reductions for our executives, a decrease in legal and professional fees by $84,880 due to reduced audit and legal fees incurred by Hong Kong Takung, a decrease in consultancy fees by $70,041 as no such fees were incurred in 2020, a decrease in share-based compensation by $10,865 as there were no restricted shares granted in 2020, a reduction in research and development expenses by $50,540 because such expenses were incurred by Art Era for the development of a software platform in 2019 but not in 2020, a decrease in depreciation by $3,008 and others by $9,223. The overall decrease was offset by an increase in ~~salaries~~office, insurance and rental expenses by ~~$258,469 because~~$144,639 due to new offices being leased by Tianjin Takung in the second quarter in 2019, travel and accommodation fees by $15,483 attributable to meeting and conference fees incurred by Tianjin Takung for human resources and software program training, and an increase in non-deductible input VAT expenses by $27,062 as a result of an increase in ~~employee headcount, accrual of doubtful account by $241,248, office, insurance and rental expense by $141,281 and an increase~~service fees paid to Tianjin Takung in ~~travelling expenses by $116,220 which were incurred~~the first quarter 2020 compared to ~~attend to~~that in the ~~listing of our common stock on the NYSE American.~~same period in 2019.

The following table sets forth the main components of the Company’s general and administrative expenses for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016.~~March 31, 2019.

Three months ended
September 30, 2017 Three months ended
September 30, 2016 Three months ended Three months ended
(Unaudited) (Unaudited) March 31, 2020 March 31, 2019
Amount($) % of Total Amount($) % of Total (Unaudited) (Unaudited)
Consultancy fee $ 46,059 2 % $ 92,809 5 %
Legal and professional fees 218,066 9 % 247,278 14 %
Amount ($) % of Total Amount ($) % of Total
Salary and welfare 1,008,736 40 % 750,267 43 % 324,732 29.2 447,497 35.1
Office, insurance and rental expenses 430,047 17 % 288,766 17 % 324,779 29.2 180,140 14.1
Non-deductible input VAT expenses 6,924 0 % - - %
Traveling and accommodation fees 187,780 8 % 71,560 4 %
Share-based compensation 138,161 6 % 186,928 11 %
Bad debt expenses 241,248 10 % - - %
Legal and professional fees 189,218 17.1 274,098 21.5
Non-deductible input VAT expense 72,093 6.5 45,031 3.5
Travel and accommodation fees 36,841 3.3 21,358 1.7
Consultancy fee 35,117 3.2 105,158 8.3
Depreciation 31,739 2.9 34,747 2.7
R&D expense - - 50,540 4.0
Share based compensation expense 5,986 0.5 16,851 1.3
Others 221,827 8 % 107,357 6 % 89,942 8.1 99,165 7.8
Total general and administrative expenses $ 2,498,848 100.0 % $ 1,744,965 100.0 %
Total general and administrative expense $ 1,110,447 100.0 $ 1,274,585 100.0

~~Net Income~~Other (expenses) income
Other expenses for the three-month period ended March 31, 2020 were $237,303, compared to other income of $336,744 for the same period in 2019. There was a significant increase in exchange loss by $595,429, arising from the depreciation of the Renminbi against the US dollar and loan interest expenses of $38,913 incurred in the first quarter of 2020 by a third party financing obtained in the third quarter 2019.

~~We had~~Income tax expenses
The Company’s effective tax rate varies due to the multiple jurisdictions in which it books its pretax income or losses. The Company was subject to a ~~net~~U.S. income tax rate of 21%, Hong Kong profits tax rate of 8.25% for the first HK$ 2 million (approximately $257,374) assessable profits and at 16.5% for assessable profits above HK$ 2 million (approximately $257,374) and PRC enterprise income tax rate of 25%.
The effective tax rates for the three months ended ~~September 30, 2017 of $27,034 compared to net income of $2,451,737~~March 31, 2020 and 2019 were (10.1)% and (1.2)%, respectively.
Income taxes expense for the three months ended ~~September 30, 2016.~~March 31, 2020 and 2019 were $87,395 and $8,562, respectively.
Net Loss
We recorded a net loss of $953,362 and $708,793 for the three months ended March 31, 2020 and 2019, respectively.

The ~~decrease~~increase in the net ~~income~~loss by ~~$2,424,703~~$244,569 during this current period was ~~primarily due to a decrease of revenue by $2,387,198 as discussed in the previous paragraphs.~~

~~NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2017 COMPARED TO NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2016~~
~~Revenue~~
~~The following tables set forth our condensed consolidated statements of income data:~~
Nine Months Ended
September 30,
2017 2016
(Unaudited) (Unaudited)
Revenue $ 10,545,677 $ 14,214,252
Cost of revenue (822,335 ) (822,735 )
Selling expense (1,272,010 ) (1,993,782 )
General and administrative expenses (7,311,128 ) (5,076,689 )
Total costs and expenses (9,405,473 ) (7,893,206 )
Income from operations 1,140,204 6,321,046
Interest and other income (loss), net 511,311 (279,336 )
Income before income taxes 1,651,515 6,041,710
Income tax expense (594,377 ) (1,377,078 )
Net income $ 1,057,138 $ 4,664,632
~~The following tables set forth our condensed consolidated statements of income data (as a percentage of revenue):~~
Nine Months Ended
September 30,
2017 2016
(Unaudited) (Unaudited)
Revenue 100 % 100 %
   Cost of revenue – Direct revenue (8 ) (6 )
   Selling expense (12 ) (14 )
   General and administrative expenses (69 ) (36 )
Total costs and expenses (89 ) (56 )
Income from operations 11 44
Interest and other income (loss), net 5 (2 )
Income before income taxes 16 42
Income tax expense (6 ) (10 )
Net income 10 % 32 %
Listing fee revenue was $4,606,649 and $8,166,072; commission revenue was $4,970,651 and $3,739,958, gross management fee revenue was $967,518 and $1,341,294, annual fee revenue was $859 and $869, authorized agent subscription revenue was $nil and $966,059, for the nine months ended September 30, 2017 and 2016, respectively.
~~(i)~~ ~~Listing fee revenue~~
During the nine months ended September 30, 2017, there were 49 sets of artwork listed for trade on our platform —comprising 8 sets of paintings and calligraphies, with a total listing value of $2,632,356 (HK$20,500,000), 16 pieces of jewelry with a total listing value of $5,567,754 (HK$43,360,000), 23 pieces of precious stones with a total listing value of $3,212,759 (HK$25,020,000), 1 piece of porcelains with a total listing value of $38,522 (HK$300,000) and 1 set of Unit+ product which was listed in Unit+ trading platform, with a total listing value of $152,548 (HK$1,188,000), of which 41.5%-47% (for 8 sets of paintings and calligraphies), 33.5%-48% (for the 16 pieces of jewelry), 26%-47% (for the 23 pieces of precious stones), 46% (for the 1 pieces of porcelains) and 43% (for the 1 set of Unit+ product) of the listed values were charged as listing fees, respectively.

Compared to the corresponding period ended September 30, 2016, there were 15 pieces of painting, 59 pieces of precious stones, 11 pieces of jewelry, 3 pieces of ivory, 18 pieces of amber and 2 pieces of porcelain pastel paintings successfully listed on our system. The total listing values were $3,349,005 (HK$26,000,000) for the 15 pieces of painting, $5,744,832 (HK$44,600,000) for the 59 pieces of precious stones, $1,816,191 (HK$14,100,000) for the 11 pieces of jewelry, $515,232 (HK$4,000,000) for the 3 pieces of ivory, $7,239,003 (HK$56,200,000) for the 18 pieces of amber, and $334,900 (HK$2,600,000) for the 2 pieces of porcelain pastel paintings, of which 47.75%-48% (for the 15 pieces of painting), 29%-48.5% (for the 59 pieces of precious stones), 29%-48% (for the 11 pieces of jewelry), 47% (for the 3 pieces of ivory), 45%-48% (for the 18 pieces of amber), and 45%-46% (for 2 pieces of porcelain pastel paintings ) of the relevant listed values were charged as listing fees, respectively.
The decrease in number of pieces listed, listing values and corresponding listing fees charged during the nine months ended September 30, 2017 compared to the same period ended September 30, 2016 resulted in a decrease in listing fee revenue in the current period. The decrease in number of pieces listed was due to a new listing category (“~~A-tier~~”) implemented on July 3, 2017. A-tier is aim to meet an elevated set of standards including higher levels of liquidity, market value, number of owners and number of VIP traders. Therefore, the rigorous listing requirements of A-tier led some artworks listing deferred.
~~(ii)~~ ~~Commission fee revenue~~
Our trading volume and transaction value amounts increased significantly from 2015 when we commenced operations in Shanghai and consequently added a significant number of Traders from mainland China as they could now settle their trades in Renminbi. This trend continued into 2017. Trading volume increased by 193% and trading amount increased by 178% for the nine months ended September 30, 2017 compared to corresponding period in 2016.
In spite of this, total commission revenue increased by $1,230,693 or 33% for the nine months ended September 30, 2017 to $4,970,651 compared to $3,739,958 for the nine months ended September 30, 2016 primarily because of the change in our commission fee policy and the decrease of transaction volume of non VIP traders and non-selected traders . From April 1, 2016 onwards, selected Traders pay a predetermined monthly fixed fee for their trades in specific artworks while our other non-VIP Traders continue to pay a commission calculated based on a percentage of transaction value of artworks.
~~(iii)~~ ~~Management fee revenue~~
During the nine month period ended September 30, 2017, management fee revenue decreased by $373,776, from $1,341,294 for the nine months ended September 30, 2016 to $967,518. From September 1, 2016, we waived management fees for certain VIP Traders. We recognized these promotions as a reduction of revenue, which was recognized upon the completion of the transactions.
~~(iv)~~ ~~Other revenue~~
~~During the nine-month period ended September 30, 2017, annual fee revenue increased by $10, from $869 for the nine-month period ended September 30, 2016 to $859.~~
(~~v) Authorized agent subscription revenue~~
Authorized agent subscription revenue for the nine-month period ended September 30, 2017 was nil compared to $966,059 for the nine-month period ended September 30, 2016. We have ceased charging new authorized agent with subscription revenue in order to encourage high quality authorized agent to sign up with our platform.
~~Cost of Revenue~~
Cost of revenue for the nine months ended September 30, 2017 and 2016 was $822,335 and $822,735, respectively. Our cost of revenue primarily includes internet service fee, depreciation and amortization of hardware and software for our trading platform.

In the third quarter of 2014, we entered into an agreement with a third party service provider, Shenzhen Qianrong Cultural Investment Development Co., Ltd (“Qianrong”), to provide software development services with a total contract amount of $902,592 (HK$6,995,000). The services contracted for are divided into different modules, according to different upgrades and new functionalities. As of September 30, 2017 and 2016, nine out of the ten modules have been completed and are operational. We capitalized (with a total cost of $1,069,853 (HK$8,295,000)) and amortized these costs once the modules were completed.
~~Gross Profit~~
Gross profit was $9,723,342 for the nine months ended September 30, 2017, compared to $13,391,517 for the nine months ended September 30, 2016. The decrease was due to the less artworks listed on our platform, the change in our commission fee policy and the decrease of transaction volume of non VIP traders and non-selected traders.
~~Operating Expenses~~
Selling expenses were $1,272,010, or 13% of net sales, for the nine months ended September 30, 2017 compared to $1,993,782 or 15% of net sales, for the comparable period in 2016, a decrease by 36%. Selling expenses consist primarily of marketing expenses.
General and administrative expenses for the nine months ended September 30, 2017 were $7,311,128 compared to $5,076,689 for the nine months ended September 30, 2016. The substantial increase by $2,234,439 or 44% was chieflypredominately due to an increase in ~~salaries~~foreign exchange loss by ~~$1,314,324 because of an increase in employee headcount, accrual of doubtful accounts, by $241,248, office, insurance and rental expenses by $400,067~~$595,429 and an increase in ~~travelling~~income tax expense by $78,833, which were offset by an increase in gross profit by $256,350, a decrease in operating expenses by ~~$495,715 which were incurred to attend to the listing of our common stock on the NYSE American.~~
~~The following table sets forth the main components of the Company’s general~~$151,961 and ~~administrative expenses for the nine months ended September 30, 2017 and 2016.~~
Nine months ended
September 30, 2017 Nine months ended
September 30, 2016
(Unaudited) (Unaudited)
Amount($) % of Total Amount($) % of Total
Consultancy fee $ 187,230 3 % $ 361,610 7 %
Legal and professional fees 733,466 10 % 728,856 14 %
Salary and welfare 3,166,679 43 % 1,852,355 36 %
Office, insurance and rental expenses 1,252,561 17 % 852,494 17 %
Non-deductible input VAT expense 16,369 - % - - %
Traveling and accommodation fees 679,950 9 % 184,235 4 %
Share-based compensation 562,184 8 % 846,703 17 %
Bad debt expenses 241,248 4 % - - %
Others 471,441 6 % 250,436 5 %
Total general and administrative expenses $ 7,311,128 100.0 % $ 5,076,689 100.0 %
~~Net Income~~
~~We had~~ a ~~net income for the nine months ended September 30, 2017 of $1,057,138 compared to net income of $4,664,632 for the nine months ended September 30, 2016.~~
~~The~~ decrease in ~~net income~~bank charges by ~~$3,607,494 during this current period was due to a fall of revenue by $3,668,575, and the increase of general and administrative expenses by $2,234,439 as discussed in the previous paragraphs.~~$25,468.

Liquidity and Capital Resources

The following tables set forth our ~~condensed~~ consolidated statements of cash flow:

Nine months ended September 30
2017 2016
(Unaudited) (Unaudited)
Net cash provided by operating activities $ 1, 028,524 $ 5,635,391
Net cash used in investing activities (561,510 ) (1,276,378 )
Net cash provided by financing activities - 2,346,941
Effect of exchange rate change on cash and cash equivalents 1,025,539 (644,375 )
Net increase in cash and cash equivalents 1,492,553 6,061,579
Cash and cash equivalents, beginning balance 13,395,337 10,769,456
Cash and cash equivalents, ending balance $ 14,887,890 $ 16,831,035
Three months ended
March 31,
2020 2019
(Unaudited) (Unaudited)
Net cash (used in) provided by operating activities $ (1,214,913 ) $ 6,175,680
Net cash provided by investing activities - 2,416,019
Net cash used in financing activities - (2,499,500 )
Effect of exchange rate change on cash and cash equivalents (85,550 ) (503,119
Net (decrease) increase in cash, cash equivalents and restricted cash (1,300,463 ) 5,589,080
Cash, cash equivalents and restricted cash, beginning balance 21,829,154 12,524,086
Cash, cash equivalents and restricted cash, ending balance $ 20,528,691 $ 18,113,166

Sources of Liquidity

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, net cash used in operating activities totaled $1,214,913, which predominately resulted from the net loss of $953,362 and a decline in net change in operating assets and liabilities of $654,218 and offset by non-cash adjustments to net loss of $392,667. There was no net cash used in or provided by investing or financing activities for the three months ended March 31, 2020. The resulting change in cash for the period was a decrease of $1,300,463. The cash balance at the beginning of the period was $21,829,154. The cash balance as of March 31, 2020 was $20,528,691.
During the three months ended March 31, 2019, net cash generated from operating activities totaled ~~$1,028,524.~~$6,175,680, which predominately resulted from the increase in client deposits by $5,823,253 placed by the customers for upcoming transactions which influenced the increased amounts due to clients. Net cash generated from investing activities totaled $2,416,019. Net cash used in ~~investing~~financing activities totaled ~~$561,510. No cash was generated from financing activities during the period.~~$2,499,500. The resulting change in cash for the period was an increase of ~~$1,492,553.~~$5,589,080. The cash balance at the beginning of the period was ~~$13,395,337.~~$12,524,086. The cash balance ~~on September 30, 2017~~as of March 31, 2019 was ~~$14,887,890.~~
During the nine months ended September 30, 2016, net cash provided by operating activities totaled $5,635,391. Net cash used in investing activities totaled $1,276,378. Net cash provided by financing activities totaled $2,346,941. The resulting change in cash for the period was an increase of $6,061,579. The cash balance at the beginning of the period was $10,769,456. The cash balance on September 30, 2016 was $16,831,035.$18,113,166.

As of ~~September 30, 2017,~~March 31, 2020, the Company had $28,390,798 in total current liabilities, which comprised of $780,800 in accrued expense and other payables, $19,057,733 in customers’ deposits, $6,371,900 in short-term borrowings from third parties, $1,085,480 in amount due to related party and $1,094,885 in tax payables. As of December 31, 2016, the Company had $30,602,706$18,769,001 in total current liabilities, which included ~~$608,883~~$831,399 in accrued ~~expense~~expenses and other ~~accruals, $21,743,360~~payables, $15,466,438 in customers’ deposits, ~~$360,248 in advance from customers, $6,308,513~~$1,916,540 in short-term borrowings from a third ~~parties, $1,031,805~~party, $383,638 in amount due to related ~~party~~parties, $16,364 in advances from customers, $132,348 in lease liabilities and ~~$549,897~~$22,274 in tax payables.

~~The Company had deferred tax liabilities as long-term liability of $45,301 as of September 30, 2017, and $62,618 as~~As of December 31, ~~2016, respectively. The Company’s~~2019, the Company had $25,947,490 in total current liabilities, ~~as of September 30, 2017~~which included $629,666 in accrued expenses and ~~December 31, 2016 amounted~~other payables, $16,404,941 in customers’ deposits, $1,868,345 in short-term borrowings from a third party, $6,862,713 in amount due to ~~$28,436,099~~related parties, $8,788 in advances from customers, $166,987 in lease liabilities and ~~$30,665,324, respectively.~~$6,050 in VAT payables.


The Company is aware of events or uncertainties which may affect its future liquidity because of capital controls in the PRC. The ~~Renminbi~~RMB is only currently convertible under the ~~“current account”,~~"current account," which includes dividends, trade and service-related foreign exchange transactions, but not under the ~~“capital account”,~~"capital account," which includes foreign direct investment and loans, including loans we may secure from our onshore subsidiaries or variable interest entities. Currently, our PRC subsidiaries, which are wholly-foreign owned enterprises, may purchase foreign currency for settlement of ~~“current~~"current account ~~transactions”,~~transactions," including payment of dividends to us, without the approval of the State Administration of Foreign Exchange (“SAFE”) by complying with certain procedural requirements. However, the relevant PRC governmental authorities may limit or eliminate our ability to purchase foreign currencies in the future for current account transactions. The existing and future restrictions on currency exchange may limit our ability to utilize revenue generated in Renminbi to fund our business activities outside of the PRC or pay dividends in foreign currencies to our stockholders, including holders of our shares of common stock. Foreign exchange transactions under the capital account remain subject to limitations and require approvals from, or registration with, SAFE and other relevant PRC governmental authorities. This could affect our ability to obtain foreign currency through debt or equity financing for our PRC subsidiaries.

Applicable PRC law permits payment of dividends to us by our operating subsidiaries in China only out of their net income, if any, determined in accordance with PRC accounting standards and regulations. Our operating subsidiaries in China are also required to set aside a portion of their net income, if any, each year to fund general reserves for appropriations until such reserves have reached 50% of the subsidiary's registered capital. These reserves are not distributable as cash dividends. In addition, registered share capital and capital reserve accounts are also restricted from withdrawal in the PRC, up to the amount of net assets held in each operating subsidiary. In contrast, there is no foreign exchange control or restrictions on capital flows into and out of Hong Kong. Hence, our Hong Kong operating subsidiary is able to transfer cash without any limitation to the U.S. under normal circumstances.

If our operating subsidiaries were to incur additional debt on their own behalf in the future, the instruments governing the debt may restrict the ability of our operating subsidiaries to transfer cash to our U.S. investors.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements, including arrangements that would affect our liquidity, capital resources, market risk support, and credit risk support or other benefits.

Future Financings

WeAlthough we are suffering business downturn including a decrease in trading volume and customer deposits, we are also undergoing a company restructuring, including re-evaluating the company’s Unit business and a downsize of the workforce. Our management forecasts that we have ~~always been generating~~ sufficient cash from our ~~operation~~operations to fund our business organically. However, we may conduct equity sales of our common shares in order to fund further expansion and growth of our business. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any sales of the equity securities to fund expansion and other activities, orand if we are able to, there is no guarantee that existing shareholders will not be substantially diluted. In essence, we do not need to rely on equity sales to fund our business operations.

Critical Accounting Policies

We regularly evaluate the accounting policies and estimates that we use to make budgetary and financial statement assumptions. A complete summary of these policies is included in the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

See Note 2 to the financial statements included herewith and Note 2 to the financial statements on Form 10-K for the fiscal year ended December 31, ~~2016,~~2019, previously filed with the SEC.

Recent Accounting Pronouncements

See Note 2 to the financial statements included herewith and Note 2 to the financial statements on Form 10-K for the fiscal year ended December 31, ~~2016,~~2019, previously filed with the SEC.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
We conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act), under the supervision of and with the participation of our management, which presently comprises our Chief Executive Officer, ~~Mr. Di Xiao~~Ms. Fang Mu and our Chief Financial Officer, ~~Mr. Chun Hin Leslie Chow.~~Mrs. Jing Wang. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures as of ~~September 30, 2017~~March 31, 2020 were effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Controls over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during our fiscal quarter ended ~~September 30, 2017~~March 31, 2020 that materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

27

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

~~None.~~
~~Item 1A. Risk Factors~~
~~Not applicable.~~
~~Item 2. Unregistered Sales~~On or around early April and May, 2020, plaintiffs Chunji Zhao Guangming Su respectively, commenced legal proceedings against Hong Kong Takung Art Co. Ltd and Takung Cultural Development (Tianjin) Co., Ltd, over a contract dispute relating to the Company’s trading platform use agreement amounting to an aggregate of ~~Equity Securities~~approximately $0.23 million. Both cases originated in the Shanghai Pudong People’s Court and ~~Use~~were originally brought against Takung (Shanghai) Co., Ltd (“Shanghai Takung. However, because Shanghai Takung was deregistered on May 8, 2020, both plaintiffs requested in their respective cases that the named defendant in the case be changed to Hong Kong Takung Art Co. Ltd, its parent company. The plaintiffs also requested that Takung Cultural Development (Tianjin) Co., Ltd be named as an additional defendant in each case. In addition to damages, plaintiffs Chunji Zhao and Guangming Su are also claiming litigation costs of ~~Proceeds.~~RMB1,090,000 (approximately, $152,000) and RMB 536,025 (approximately,$75,733) respectively. We do not believe that the proceedings have any merit and intend to vigorously defend against them.
~~None.~~
~~Item 3. Defaults Upon Senior Securities.~~
~~None.~~
~~Item 4. Mine Safety Disclosures.~~
~~Not applicable.~~
~~Item 5. Other Information.~~
~~Not applicable.~~

Item 6. Exhibits.

Copies of the following documents are included as exhibits to this report pursuant to Item 601 of Regulation S-K.

Exhibit
No. Description

3.1 Certificate of Incorporation (1)
3.2 By-laws of the Company ~~(1)~~(2)
3.3 Certificate of Amendment of the Certificate of Incorporation (1)
3.4 Certificate of Amendment of the Certificate of Incorporation (1)
3.5 Certificate of Amendment (2)
3.6 Certificate of Amendment of the Certificate of Incorporation (4)
3.7 Certificate of Incorporation of Hong Kong Takung Assets and Equity Artworks Exchange Co., Ltd.(3)
3.8 Articles of Association of Hong Kong Takung Assets and Equity Artworks Exchange Co., Ltd.(3)
~~3.9~~ Certificate of Change of Name of Hong Kong Takung Assets and Equity Artworks Exchange Co., Ltd.*
31.1 Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2 Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1 Certification of the Principal Executive Officer and the Principal Financial Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
101.INS XBRL Instance Document*
101.SCH XBRL Taxonomy Extension Schema Document*
101.CAL XBRL Taxonomy Calculation Linkbase Document*
101.DEF XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB XBRL Taxonomy Label Linkbase Document*
101.PRE XBRL Taxonomy Presentation Linkbase Document*

~~(1)~~ ~~Incorporated by reference to the exhibit to our registration statement on Form S-1 filed with the SEC on August 16, 2011.~~
(1)       Incorporated by reference to the exhibit to our registration statement on Form S-1 filed with the SEC on August 16, 2011.
~~(2)~~ ~~Incorporated by reference to the exhibit to our current report on Form 8-K filed with the SEC on March 7, 2013.~~
(2)       Incorporated by reference to the exhibit to our current report on Form 8-K filed with the SEC on March 7, 2013.
~~(3)~~ ~~Incorporated by reference to the exhibit to our current report on Form 8-K filed with the SEC on October 22, 2014.~~
(3)       Incorporated by reference to the exhibit to our current report on Form 8-K filed with the SEC on October 22, 2014.
~~(4)~~ ~~Incorporated by reference to the exhibit to our current report on Form 8-K filed with the SEC on November 6, 2014.~~
(4)       Incorporated by reference to the exhibit to our current report on Form 8-K filed with the SEC on November 6, 2014.

*Filed herewith.
**Furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

TAKUNG ART CO., LTD

Date: ~~November 14, 2017~~June 29, 2020
By: /s/ ~~Di Xiao~~Fang Mu
~~Di Xiao~~Fang Mu
Chief Executive Officer
(Principal Executive Officer) ~~and Director~~

Date: ~~November 14, 2017~~June 29, 2020
By: /s/ ~~Chun Hin Leslie Chow~~Jing Wang
~~Chun Hin Leslie Chow~~Jing Wang
Chief Financial Officer
(Principal Financial ~~Officer and Principal Accounting~~ Officer)

			Page
PART I.		Financial Information		3

~~PART I.~~	~~Financial Information~~	3

		Item 1. Interim Condensed Consolidated Financial Statements (Unaudited).		3

		Item 2. Management’s Discussion and Analysis of Financial Condition and ~~results~~Results of Operation.		1718

		Item 3. Quantitative and Qualitative Disclosures About Market Risk.		2628

		Item 4. Controls and Procedures.		2728

PART II.		Other Information		2829

		Item ~~1. Legal Proceedings.~~6. Exhibits.		2829

	~~Item 1A. Risk Factors.~~	28Signatures

	~~Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.~~30	28

	~~Item 3. Defaults Upon Senior Securities.~~	28

	~~Item 4. Mine Safety Disclosures.~~	28

	~~Item 5. Other Information.~~	28

	~~Item 6. Exhibits.~~	28

	~~Signatures~~	29

	September 30,			December 31,
	2017			2016
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	14,887,890		$	13,395,337
Restricted cash		19,057,733			21,743,360
Account receivables, net		3,732,569			3,058,568
Prepayment and other current assets		870,231			968,446
Loan receivables		6,806,623			6,374,046
Total current assets		45,355,046			45,539,757

Non-current assets
Property and equipment, net		2,104,107			2,065,182
Intangible assets		20,394			20,546
Deferred tax assets		294,676			243,772
Other non-current assets		535,420			428,764
Total non-current assets		2,954,597			2,758,264
Total assets	$	48,309,643		$	48,298,021

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES
Current liabilities
Accrued expenses and other payables	$	780,800		$	608,883
Customer deposits		19,057,733			21,743,360
Advance from customers		-			360,248
Short-term borrowings from third parties		6,371,900			6,308,513
Amount due to related party		1,085,480			1,031,805
Taxes payable		1,094,885			549,897
Total current liabilities		28,390,798			30,602,706
Deferred tax liabilities		45,301			62,618
Total non-current liabilities		45,301			62,618
Total liabilities		28,436,099			30,665,324

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ EQUITY
Common stock (1,000,000,000 shares authorized; $0.001 par value; 11,188,882 shares issued and outstanding as of September 30, 2017; 11,169,276 shares issued and outstanding as of December 31, 2016)		11,189			11,169
Additional paid-in capital		5,928,455			5,532,426
Retained earnings		14, 229,809			13,172,671
Accumulated other comprehensive loss		(295,909	)		(1,083,569	)
Total stockholders’ equity		19,873,544			17,632,697
Total liabilities and stockholders’ equity	$	48,309,643		$	48,298,021

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2017			2016			2017			2016
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenue
Listing fee revenue	$	1,455,498		$	2,968,534		$	4,606,649		$	8,166,072
Commission revenue		1,496,826			1,669,698			4,970,651			3,739,958
Gross management fee revenue		402,547			781,219			967,518			1,341,294
Annual fee revenue		140			440			859			869
Authorized agent subscription revenue		-			322,318			-			966,059
Total revenue		3,355,011			5,742,209			10,545,677			14,214,252

Cost of revenue		(292,168	)		(285,252	)		(822,335	)		(822,735	)

Gross profit		3,062,843			5,456,957			9,723,342			13,391,517

Operating expenses:
General and administrative expenses		(2,498,848	)		(1,744,965	)		(7,311,128	)		(5,076,689	)
Selling expenses		(624,151	)		(652,207	)		(1,272,010	)		(1,993,782	)

Income(loss)from operations		(60,156	)		3,059,785			1, 140,204			6,321,046

Other income and expenses:
Other income		186,259			163,738			440,470			314,268
Loan interest expense		(152,059	)		(62,670	)		(455,762	)		(62,670	)
Exchange gain (loss)		177,652			(112,384	)		526,603			(530,934	)
Total other income (loss)		211,852			(11,316	)		511,311			(279,336	)

Income before income taxes		151,696			3,048,469			1,651,515			6,041,710

Income tax (expense) benefit		(124,662	)		(596,732	)		(594,377	)		(1,377,078	)

Net income	$	27,034		$	2,451,737		$	1,057,138		$	4,664,632

Foreign currency translation adjustment		311,485			10,172			787,660			18,322

Comprehensive income	$	338,519		$	2,461,909		$	1,844,798		$	4,682,954

Earnings per common share– basic	$	0.00		$	0.23		$	0.10		$	0.44
Earnings per common share– diluted		0.00			0.22			0.09			0.41
Weighted average number of common shares outstanding-basic		11,188,882			10,632,276			11,039,880			10,632,276
Weighted average number of common shares outstanding-diluted		11,248,688			11,365,597			11,398,082			11,277,845

	For the Nine Months			For the Nine Months
	Ended			Ended
	September 30,			September 30,
	2017			2016
Cash flows from operating activities:
Net cash provided by operating activities		1,028,524			5,635,391

Cash flows from investing activities:
Purchase of property and equipment		(455,255	)		(976,460	)
Purchase of held-to-maturity investments		-			(14,995,876	)
Purchase of available-for-sales investment		(53,501,874	)		(299,918	)
Maturity and redemption of available-for-sales investment		53,501,874			-
Maturity and redemption of held-to-maturity investments		-			14,995,876
Loan to third parties		(3,518,325	)		-
Repayment from loan to third parties		3,412,070			-
Net cash used in investing activities		(561,510	)		(1,276,378	)

Cash Flows from financing activities:
Proceeds from short-term borrowings		-			3,519,580
Proceeds from related party loans		-			2,340,895
Loan to third parties		-			(3,513,534	)
Net cash provided by financing activities		-			2,346,941

Effect of exchange rate change on cash and cash equivalents		1,025,539			(644,375	)

Net increase in cash and cash equivalents		1,492,553			6,061,579

Cash and cash equivalents, beginning balance		13,395,337			10,769,456

Cash and cash equivalents, ending balance	$	14,887,890		$	16,831,035

Supplemental cash flows information:
Cash paid for interest	$	212,954		$	-
Cash paid for income tax	$	136,453		$	562,994

Three months ending December 31, 2017	$	244,960

Year ending December 31, 2018		761,175

Year ending December 31, 2019		223,026

Year ending December 31, 2020		39,999

Year ending December 31, 2021		15,030

Year ending December 31, 2022 and thereafter		53,232

Total	$	1,337,422

	Three months ended September 30, 2017					Three months ended September 30, 2016					Three months ended				Three months ended
	(Unaudited)					(Unaudited)					March 31, 2020				March 31, 2019
	Amount($)		% of Total			Amount($)		% of Total			(Unaudited)				(Unaudited)
Consultancy fee	$	46,059		2	%	$	92,809		5	%
Legal and professional fees		218,066		9	%		247,278		14	%
											Amount ($)		% of Total		Amount ($)		% of Total
Salary and welfare		1,008,736		40	%		750,267		43	%		324,732		29.2		447,497		35.1
Office, insurance and rental expenses		430,047		17	%		288,766		17	%		324,779		29.2		180,140		14.1
Non-deductible input VAT expenses		6,924		0	%		-		-	%
Traveling and accommodation fees		187,780		8	%		71,560		4	%
Share-based compensation		138,161		6	%		186,928		11	%
Bad debt expenses		241,248		10	%		-		-	%
Legal and professional fees												189,218		17.1		274,098		21.5
Non-deductible input VAT expense												72,093		6.5		45,031		3.5
Travel and accommodation fees												36,841		3.3		21,358		1.7
Consultancy fee												35,117		3.2		105,158		8.3
Depreciation												31,739		2.9		34,747		2.7
R&D expense												-		-		50,540		4.0
Share based compensation expense												5,986		0.5		16,851		1.3
Others		221,827		8	%		107,357		6	%		89,942		8.1		99,165		7.8
Total general and administrative expenses	$	2,498,848		100.0	%	$	1,744,965		100.0	%
Total general and administrative expense											$	1,110,447		100.0	$	1,274,585		100.0

	Nine Months Ended September 30,
	2017			2016
	(Unaudited)			(Unaudited)
Revenue	$	10,545,677		$	14,214,252
Cost of revenue		(822,335	)		(822,735	)
Selling expense		(1,272,010	)		(1,993,782	)
General and administrative expenses		(7,311,128	)		(5,076,689	)
Total costs and expenses		(9,405,473	)		(7,893,206	)
Income from operations		1,140,204			6,321,046
Interest and other income (loss), net		511,311			(279,336	)
Income before income taxes		1,651,515			6,041,710
Income tax expense		(594,377	)		(1,377,078	)
Net income	$	1,057,138		$	4,664,632

	Nine months ended September 30, 2017					Nine months ended September 30, 2016
	(Unaudited)					(Unaudited)
	Amount($)		% of Total			Amount($)		% of Total
Consultancy fee	$	187,230		3	%	$	361,610		7	%
Legal and professional fees		733,466		10	%		728,856		14	%
Salary and welfare		3,166,679		43	%		1,852,355		36	%
Office, insurance and rental expenses		1,252,561		17	%		852,494		17	%
Non-deductible input VAT expense		16,369		-	%		-		-	%
Traveling and accommodation fees		679,950		9	%		184,235		4	%
Share-based compensation		562,184		8	%		846,703		17	%
Bad debt expenses		241,248		4	%		-		-	%
Others		471,441		6	%		250,436		5	%
Total general and administrative expenses	$	7,311,128		100.0	%	$	5,076,689		100.0	%

	Nine months ended September 30
	2017			2016
	(Unaudited)			(Unaudited)
Net cash provided by operating activities	$	1, 028,524		$	5,635,391
Net cash used in investing activities		(561,510	)		(1,276,378	)
Net cash provided by financing activities		-			2,346,941
Effect of exchange rate change on cash and cash equivalents		1,025,539			(644,375	)
Net increase in cash and cash equivalents		1,492,553			6,061,579
Cash and cash equivalents, beginning balance		13,395,337			10,769,456
Cash and cash equivalents, ending balance	$	14,887,890		$	16,831,035

Exhibit No.		Description

3.1		Certificate of Incorporation (1)
3.2		By-laws of the Company ~~(1)~~(2)
3.3		Certificate of Amendment of the Certificate of Incorporation (1)
3.4		Certificate of Amendment of the Certificate of Incorporation (1)
3.5		Certificate of Amendment (2)
3.6		Certificate of Amendment of the Certificate of Incorporation (4)
3.7		Certificate of Incorporation of Hong Kong Takung Assets and Equity Artworks Exchange Co., Ltd.(3)
3.8		Articles of Association of Hong Kong Takung Assets and Equity Artworks Exchange Co., Ltd.(3)

31.1		Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2		Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1		Certification of the Principal Executive Officer and the Principal Financial Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

101.INS		XBRL Instance Document*
101.SCH		XBRL Taxonomy Extension Schema Document*
101.CAL		XBRL Taxonomy Calculation Linkbase Document*
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB		XBRL Taxonomy Label Linkbase Document*
101.PRE		XBRL Taxonomy Presentation Linkbase Document*

	TAKUNG ART CO., LTD

Date: ~~November 14, 2017~~June 29, 2020	By:	/s/ ~~Di Xiao~~Fang Mu
		~~Di Xiao~~Fang Mu
		Chief Executive Officer
		(Principal Executive Officer) ~~and Director~~

Date: ~~November 14, 2017~~June 29, 2020	By:	/s/ ~~Chun Hin Leslie Chow~~Jing Wang
		~~Chun Hin Leslie Chow~~Jing Wang
		Chief Financial Officer
		(Principal Financial ~~Officer and Principal Accounting~~ Officer)