UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended SeptemberJune 30, 20172018

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

For the transition period from                     to                     

Commission File Number:  000-01900

Living 3D Holdings, Inc.

(Exact name of registrant as specified in its charter)

Nevada

870451230

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

 

Rm. 1801-02, Office Tower Two, Grand Plaza,

625 Nathan Road, Mongkok, Kowloon. Hong Kong

(Address of principal executive offices)

(852) 3563-9280

(Registrant’s telephone number, including area code)

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

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 issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  x Yes o No

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

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

Large accelerated filer o

Accelerated filer  o

Non-accelerated filer o (Do not check if a smaller reporting company)

Smaller Reporting Companyreporting company x

Emerging growth company  o

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.  o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes    x No


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

Class

 

Outstanding at NovemberAugust 14, 20172018

Common Stock, $.001 par value

 

30,697,04370,697,043


 

FORM 10-Q

LIVING 3D HOLDINGS, INC.

SEPTEMBERJUNE 30, 20172018

TABLE OF CONTENTS

 

 

PART I – FINANCIAL INFORMATION

Page

Item 1.

Consolidated Financial Statements.

 

 

Consolidated Balance Sheets as of SeptemberJune 30, 20172018 (Unaudited) and December 31, 2016 (Unaudited).2017.

1

 

Consolidated Statements of Operations for the threeThree and nine months ended SeptemberSix Months Ended June 30, 20172018 and 20162017 (Unaudited)

2

 

Consolidated StatementsStatement of Changes in Shareholders’ Deficit for the year ended December 31, 2016 and the nine months ended SeptemberSix Months Ended June 30, 20172018 (Unaudited).

3

 

Consolidated Statements of Cash Flows for the nine months ended SeptemberSix Months Ended June 30, 20172018 and 20162017 (Unaudited).

4

 

Notes to Unaudited Consolidated Financial Statements.

5

Item 2.

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

119

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

1514

Item 4.

Controls and Procedures.

1614

PART II – OTHER INFORMATION

Item 1.

Legal Proceedings.

16

Item 1A.

Risk Factors.

16

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

16

Item 3.

Defaults Upon Senior Securities.

16

Item 4.

Mine Safety Disclosures.

16

Item 5.

Other Information.

1716

Item 6.

Exhibits.

1716

Signatures

 

1816

Exhibits

 

17

Certifications

 

18


Table of Contents


Living 3D Holdings, Inc.

Consolidated Balance Sheets

(Stated in US dollars)

(Unaudited)

 

 

 

September 30,

2017

 

 

December 31,

2016

 

 

 

 

 

(As Restated)

ASSETS

 

 

 

 

 

Current Assets

 

 

 

 

 

Cash and cash equivalents

$

320

 

$

667

Accounts receivable

 

7,257

 

 

4,308

Total Current Assets

 

7,577

 

 

4,975

 

 

 

 

 

 

Property and equipment, net

 

2,490

 

 

3,669

TOTAL ASSETS

$

10,067

 

$

8,644

 

 

 

 

 

 

LIABILITIES & SHAREHOLDERS’ DEFICIT

 

 

 

 

 

Current Liabilities

 

 

 

 

 

Account payable

$

5,128

 

$

-

Accrued liabilities and other payables

 

163,307

 

 

149,832

Due to related parties

 

132,328

 

 

98,419

Total Current Liabilities

 

300,763

 

 

248,251

TOTAL LIABILITIES

$

300,763

 

$

248,251

 

 

 

 

 

 

SHAREHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares issued and outstanding

$

-

 

$

-

Common stock, $0.001 par value, 290,000,000 shares authorized, 30,697,043 shares and 697,043 shares  issued and outstanding at September 30, 2017 and December 31, 2016, respectively (*)

 

30,697

 

 

697

Additional paid-in capital

 

(30,497)

 

 

(497)

Accumulated deficit

 

(290,896)

 

 

(239,807)

TOTAL SHAREHOLDERS’ DEFICIT

 

(290,696)

 

 

(239,607)

 

 

 

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT

$ 

10,067

 

$ 

8,644

Living 3D Holdings, Inc.

Consolidated Balance Sheets

(Stated in US dollars)

 

 

 

June 30,

2018

 

 

December 31, 2017

 

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

Current Assets

 

 

 

 

 

Cash and cash equivalents

$

   2,968

 

$

50,668   

Accounts receivable

 

   3,024

 

 

7,257   

Prepaid expense and other receivable

 

   29

 

 

-   

Total Current Assets

 

   6,021

 

 

57,925   

Website development costs, net

 

   128,205

 

 

153,846   

Property and equipment, net

 

   1,310

 

 

2,097   

TOTAL ASSETS

$

   135,536

 

$

213,868   

 

 

 

 

 

 

LIABILITIES & SHAREHOLDERS’ DEFICIT

 

 

 

 

 

Current Liabilities

 

 

 

 

 

Account payable

$

   5,128

 

$

5,128   

Accrued liabilities and other payables

 

   189,695

 

 

184,069   

Due to related parties

 

   424,901

 

 

441,197   

Total Current Liabilities

 

   619,724

 

 

630,394   

TOTAL LIABILITIES

$

   619,724

 

$

630,394   

 

 

 

 

 

 

SHAREHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares issued or outstanding

$

 -

 

$

-   

Common stock, $0.001 par value, 290,000,000 shares authorized, 70,697,043 shares issued and outstanding at June 30, 2018 and December 31, 2017

 

70,697

 

 

70,697   

Additional paid-in capital

 

(69,215)

 

 

(69,215)  

Accumulated deficit

 

  (485,670)

 

 

(418,008)  

TOTAL SHAREHOLDERS’ DEFICIT

 

  (484,188)

 

 

(416,526)  

 

 

 

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT

$ 

  135,536

 

$ 

213,868   

The accompanying notes are an integral part of these unaudited consolidated financial statements



Table of Contents


Living 3D Holdings, Inc.

Consolidated Statements of Operations

(Stated in US dollars)

(Unaudited)

 

 

For The Three Months Ended June 30,

 

For The Six Months Ended June 30,

 

 

2018

 

2017

 

2018

 

2017

 

 

 

 

(As Restated)

 

 

 

(As Restated)

 

 

 

 

 

 

 

 

 

Revenue

$

460

$

1,282

$

3,024

$

6,538

Cost of Revenue

 

16,132

 

-

 

16,132

 

5,128

Gross Profit (Loss)

 

(15,672)

 

1,282

 

(13,108)

 

1,410

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

General and administrative expenses

 

 

21,084

 

57,817

 

54,554

 

82,304

Total Operating Expenses 

 

21,084

 

57,817

 

54,554

 

82,304

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

$

(36,756)

$

(56,535)

$

(67,662)

$

(80,894)

 

 

 

 

 

 

 

 

 

Basic and Diluted Loss per Common Share

 

$

(0.00)

$

(0.00)

$

(0.00)

$

(0.00)

Weighted Average Common Shares; Basic and Diluted

 

70,697,043

 

30,697,043

 

70,697,043

 

30,034,060

 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements

(*) The Company has effected a 1:100 reverse stock split on December 2, 2016. All share and per share data in this report has been retroactively restated to reflect the reverse stock split.


1



Table of Contents


Living 3D Holdings, Inc.

Consolidated Statements of Operations

(Stated in US dollars)

(Unaudited)

 

 

 

 

 

 

For The Three Months Ended

September 30,

 

For The Nine Months Ended

September 30,

 

 

2017

 

2016

 

2017

 

2016

 

 

 

 

(As Restated)

 

 

 

(As Restated)

Revenue

$

1,667

$

4,308

$

8,205

$

14,436

Cost of Revenue

 

-

 

-

 

5,128

 

6,282

Gross Profit

 

1,667

 

4,308

 

3,077

 

8,154

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

General and administrative expenses

 

 

11,567

 

19,400

 

54,166

 

44,825

Total Operating Expenses 

 

11,567

 

19,400

 

54,166

 

44,825

 

 

 

 

 

 

 

 

 

Net Loss

$

(9,900)

$

(15,092)

$

(51,089)

$

(36,671)

 

 

 

 

 

 

 

 

 

Basic and Diluted Loss per Common Share

$

(0.00)

$

(0.02)

$

(0.00)

$

(0.05)

Weighted Average Common Shares; Basic and Diluted (*)

 

30,697,043

 

697,043

 

30,257,483

 

697,043

 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements

(*) The Company has effected a 1:100 reverse stock split on December 2, 2016. All share and per share data in this report has been retroactively restated to reflect the reverse stock split.


2


Table of Contents


Living 3D Holdings, Inc. 

Consolidated Statements of Changes in Shareholders’ Deficit

(Stated in US dollars)

(Unaudited)

 

 

 

Common Stock (*)

 

Additional

 

Accumulated

 

Total Shareholders’

 

Shares

 

Amount

 

Paid-in Capital

 

Deficit

 

Deficit

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2015

697,043

$

697

$

(597)

$

(72,204)

$

(72,104)

 

 

 

 

 

 

 

 

 

 

Contributed capital of subsidiary

-

 

-

 

100

 

-

 

100

 

 

 

 

 

 

 

 

 

 

Net loss for the year

-

 

-

 

-

 

(167,603)

 

(167,603)

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2016 (As Restated)

697,043

$

697

$

(497)

$

(239,807)

$

(239,607)

 

 

 

 

 

 

 

 

 

 

Issuance of common stock in connection with acquisition of subsidiary

30,000,000

 

30,000

 

(30,000)

 

-

 

-

 

 

 

 

 

 

 

 

 

 

Net loss for the period

-

 

-

 

-

 

(51,089)

 

(51,089)

 

 

 

 

 

 

 

 

 

 

Balance as of September 30, 2017

30,697,043

$

30,697

$

(30,497)

$

(290,896)

$

(290,696)

The accompanying notes are an integral part of these unaudited consolidated financial statements

(*) The Company has effected a 1:100 reverse stock split on December 2, 2016. All share and per share data in this report has been retroactively restated to reflect the reverse stock split.


3


Table of Contents


Living 3D Holdings, Inc.

Consolidated Statements of Cash Flows

(Stated in US dollars)

(Unaudited)

 

 

 

For The Nine Months

Ended September 30,

 

 

 

2017

 

2016

 

 

 

 

 

(As Restated)

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

Net loss

$

(51,089)

$

(36,671)

 

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

Depreciation

 

1,179

 

655

 

Changes in operating assets and liabilities

 

 

 

 

 

       Accounts receivable

 

(2,949)

 

(4,308)

 

Accrued liabilities and other payables

 

49,576

 

41,478

 

Account payable

 

5,128

 

-

 

CASH PROVIDED BY OPERATING ACTIVITIES

 

1,845

 

1,154

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

        Repayment to related party

 

(2,192)

 

-

 

        Capital contribution of subsidiary

 

-

 

100

 

CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

 

(2,192)

 

100

 

 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH AND CASH

EQUIVALENTS

 

(347)

 

1,254

 

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

$

667

$

100

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

320

$

1,354

 

 

 

 

 

 

 

NON-CASH TRANSACTIONS

 

 

 

 

 

Purchase of property and equipment paid by related party

$

-

$

4,718

 

Operating expenses paid by related parties

$

36,101

$

83,181

 

Issuance of common stock in connection with acquisition of subsidiary

$

30,000

$

-

 

 

Supplementary Disclosure for Cash Flow Information:

 

 

 

 

 

Income taxes paid                                                                           

$

-

$

-

 

Interest paid

$

-

$

-

 

 

 

Living 3D Holdings, Inc.

Consolidated Statement of Changes in Shareholders’ Deficit

(Stated in US dollars)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Common Stock Shares

 

Amount

 

Additional Paid-in Capital

 

Accumulated Deficit

 

Total Shareholders’ Deficit

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2017

70,697,043   

$

70,697   

$

(69,215)  

$

(418,008)  

$

(416,526)  

Net loss for the period

-   

 

-   

 

-   

 

(67,662)  

 

(67,662)  

 

 

 

 

 

 

 

 

 

 

Balance as of June 30, 2018

70,697,043   

$

70,697   

$

(69,215)  

$

(485,670)  

$

(484,188)  

 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements



4Table of Contents


Living 3D Holdings, Inc.

Consolidated Statements of Cash Flows

(Stated in US dollars)

(Unaudited)

 

 

For the Six Months

Ended June 30,

 

 

2018

 

2017

 

 

 

 

(As Restated)

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

Net loss

$

  (67,662)

$

(80,894)  

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization expenses

 

   26,428

 

786   

Changes in operating assets and liabilities

 

 

 

 

       Accounts receivable

 

4,233

 

(1,282)   

Prepaid expense and other receivable

 

  (29)

 

-   

Accrued liabilities and other payables

 

   41,659

 

78,108   

Account payable

 

   -

 

5,128   

CASH PROVIDED BY OPERATING ACTIVITIES

 

   4,629

 

1,846   

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

        Repayments to related party

 

  (116,772)

 

(2,000)   

        Proceeds from related party

 

   64,443

 

-   

        Capital contribution of subsidiary

 

-

 

1,282   

CASH USED IN FINANCING ACTIVITIES

 

  (52,329)

 

(718)   

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH AND CASH

EQUIVALENTS

 

  (47,700)

 

1,128   

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

$

   50,668

$

667   

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

   2,968

$

1,795   

 

 

 

 

 

NON-CASH TRANSACTIONS

 

 

 

 

Operating expenses paid by related parties

$

   36,033

$

65,922  

Website development costs paid by related party

$

     -

$

38,462   

Issuance of common stock in connection with acquisition of subsidiary

$

-   

$

30,000   

Supplementary Disclosure for Cash Flow Information:

 

 

 

 

Income taxes paid

$

-   

$

-   

Interest paid

$

-   

$

-   

The accompanying notes are an integral part of these unaudited consolidated financial statements

 



Table of Contents


Living 3D Holdings, Inc.

Notes to Unaudited Consolidated Financial Statements

 

NOTE 1 - DESCRIPTION OF BUSINESS AND ORGANIZATION

 

Living 3D Holdings, Ltd ("L3D") was incorporated in the British Virgin Islands (the "BVI") on June 23, 2008. L3D operated as a globally integrated enterprise that targeted 3D technology and effective business. The Company intended to specialize in the design, development, production, sale and marketing of "auto stereoscopic 3D" technology, or Auto 3D products, services and solutions. Auto 3D means that viewers are not required to wear 3D glasses in order to experience the 3D effects of the screen, and instant switching between two dimensional, or 2D, and 3D viewing is enabled.

Living 3D Holdings, Inc. (“we”, “our”, the “Company”) is a Nevada corporation and the parent of L3D, its wholly owned subsidiary. The Company also intended to provide technical and support services of 3D in software development, contents production and hardware configuration to a wide range of industries, including entertainment, education, consumer electronics, medical diagnosis, scientific research and, in particular, media and advertising. The Company aimed at customizing product requirements and specifications in order to enhance the power of product displays in business advertising and special operational environments.

At September 30, 2015, L3D had the following wholly owned subsidiaries: Living 3D (Hong Kong) Limited, 3D Capital Holdings Inc. Columbia College Hollywood International Limited and Living 3D Technology Group Limited. L3D and its wholly owned subsidiaries are collectively referred to herein as "L3D".corporation.

 

On November 30, 2015, Jimmy Kent-Lam Wong, the Company's former CEO, former director and principal shareholder, entered into a stock purchase agreement to sell 54.35% of the Company's outstanding shares, or 37,883,841 shares, of common stock, to Man Wah Stephen Yip. Simultaneously, Living 3D Holdings, Inc. entered into a shares sale and purchase agreement with Jimmy Kent-Lam Wong, pursuant to which the Company agreed to sell its entire ownership interest in L3Dall the Company’s subsidiaries as of September 30, 2015, namely Living 3D (Hong Kong) Limited, 3D Capital Holdings Inc. Columbia College Hollywood International Limited and Living 3D Technology Group Limited to Jimmy Kent-Lam Wong for a total consideration of $100 effective October 1, 2015.

Since our business development efforts in the 3D industry were not sufficiently mature to render us as a commercially viable player in that industry, the Company has ceased its 3D business activities and shifted its business from 3D technology development to computer software development sometime in late 2016, initially operating in Hong Kong and Mainland China. The Company expects to focus on the research and development of an e-commerce platform, with mobile game and virtual reality applications. Our e-commerce platform will seek to integrate web application with product manufacturing which should increase the productivity and efficiency of the operation. Along with the ever increasing usage of the internet, our O2O (O2O stands for “online to offline”, a term used to describe a variety of e-commerce services that provide online information, services, or discounts to consumers that enhance their offline shopping experiences) e-commerce platform is expected to create more business opportunities for the manufacturer.

 

On December 30, 2016, the Company entered into a share acquisition and exchange agreement (the "Share Acquisition and Exchange"Exchange I") with Sugar Technology Group Holdings Corporation, a company incorporated in the British Virgin Islands (the “BVI”) on February 26, 2016 and has a wholly owned subsidiary, XYZMILL.COM Limited, which was incorporated on May 9, 2016. Sugar Technology Group Holdings Corporation and its subsidiary are collectively referred as Sugar. Under the Share Acquisition and Exchange I, the Company will issue an aggregate of 30,000,000 shares of its common stock at par value of $0.001 each to all of the shareholders of Sugar in exchange for all of the issued and outstanding stock of Sugar. The Share Acquisition and Exchange I was closed on January 5, 2017 and the 30,000,000 shares of the Company’s common stock were issued on January 4, 2017. As a result of the Share Acquisition and Exchange I, Sugar became the Company’s wholly-owned subsidiary. The acquisition of Sugar by the Company has been accounted for as business combination between entities under common control since the Company and Sugar are controlled by the same group of shareholders before and after the reorganization.


5


Table of Contents


As a result, the Company accounted for the operations of Sugar on a retrospective basis in the Company’s consolidated financial statements from the inception date of Sugar on February 26, 2016. Accordingly, the consolidated balance sheet as of December 31, 2016, the consolidated statement of operations for the three and nine months ended September 30, 2016, the consolidated statement of changes in shareholders’ deficit for the year ended December, 31, 2016 and the consolidated statement of cash flows for the nine months ended September 30, 2016 have been retrospectively stated in this report to reflect Sugar’s accounts at their historical amount as of those dates.  

 

Sugar is engaged in computer software development with major operations in Hong Kong and Mainland China. The Company focuses on the research and development of e-commerce platform, mobile game and virtual reality application. The e-commerce platform seeks to integrate web application with product manufacturing which will increase the productivity and efficiency of the operation. Along with the ever increasingever-increasing usage of the internet, our O2O e-commerce platform is expected to bring in more business opportunities to the manufacturer.

With a view of diversifying its existing business, the Company has entered another share acquisition and exchange agreement (the "Share Acquisition and Exchange II") on December 4, 2017 with Hong Kong Cryptocurrency Exchange Limited (the “HKCCEX”), a company incorporated in Hong Kong Special Administrative Region on April 19, 2017. Under the Share Acquisition and Exchange II, the Company will issue an aggregate of 40,000,000 shares of its common stock at par value of $0.001 each to the shareholder of HKCCEX in exchange for all of the issued and outstanding stock of HKCCEX. The Share Acquisition and Exchange II was closed on December 28, 2017 and the 40,000,000 shares of the Company’s common stock were issued on the same day. As a result of the Share Acquisition and Exchange II, HKCCEX became the Company’s wholly-owned subsidiary. The acquisition of HKCCEX by the Company has been accounted for as business combination between entities under common control since the Company and HKCCEX are controlled by the same group of shareholders before and after the reorganization.

As a result, the Company accounted for the operations of HKCCEX on a retrospective basis in the Company’s consolidated financial statements from the inception date of HKCCEX on April 19, 2017. Accordingly, the consolidated statement of operations for the three and six months ended June 30, 2017 and the consolidated statement of cash flows for the six months ended June 30, 2017 have been retrospectively stated in this report to reflect HKCCEX’s accounts at their historical amount as of those dates.



Table of Contents


The Company, through its subsidiary, HKCCEX, a FinTech company, focuses on developing no-frills software solution that facilitate the wide spread adoption of cutting edge technological ideas.

 

For the sake of clarity, this report follows the English naming convention of first name followed by last name, regardless of whether an individual’s name is Chinese or English. For example, the name of our Chief Executive Office will be presented as "Man Wah Stephen Yip," even though, in Chinese, his name would be presented as "Yip Man Wah Stephen".

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

A. BASIS OF PRESENTATIONPREPARATION AND PRINCIPLES OF CONSOLIDATION

 

The consolidated financial statements are prepared in accordance with generally accepted accounting principles used in the United States of America. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in the consolidation.

Certain information and footnote disclosures normally included in financial statements prepared in conjunction with U.S. generally accepted accounting principles ("U.S. GAAP") have been condensed or omitted as permitted by the rules and regulations of the United States Securities and Exchange Commission ("SEC"), although. The accompanying unaudited consolidated financial statements should be read in conjunction with the Company believes that the disclosuresaudited consolidated financial statements and notes thereto contained in thisthe Company's latest annual report are adequate to makeon Form 10-K filed with the information presented not misleading.

SEC. The accompanying unaudited interim consolidated financial statements reflect all adjustments of a normal and recurring nature which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows of the Company for the interim periods presented. The results of operations for these periods are not necessarily comparable to, or indicative of, results of any other interim period or for the fiscal year taken as a whole. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements as reported in the Form 10-K for the fiscal year ended December 31, 2017, have been omitted.

 

B. ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTSRECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

 

Accounts receivableThe Company accounts for revenue arising from contracts with customers in accordance with Accounting Standards Update (ASU or Update) No. 2014-09, Revenue from Contracts with Customers (“ASC 606”), which was adopted on January 1, 2018 using the full retrospective method. The adoption of ASC 606 did not impact the Company’s previously reported financial statements in any prior period nor did it result in a cumulative effect adjustment to retained earnings.

Under ASC 606, the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are recognizedperformance obligations and carried at original invoiceassesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount less an allowance for any uncollectible amounts. An estimate for doubtful account is made when collection of the full amount becomes questionable.transaction price, which is allocated to the respective performance obligation, when the performance obligation is satisfied.

 

C. PROPERTY AND EQUIPMENT

(a)Measurement 

The Company’s property and equipment consists primarilyGenerally, the Company has two revenue streams from its operations. 1) Revenue derived from the provision of a motor vehicle andwebsite, game or advertising design services which is initially recognized at cost and subsequently carried at cost less accumulated depreciation and accumulated impairment losses.

(b)Depreciation 

Depreciation of motor vehicle is calculated usinga point in time when the straight-line method to allocate its depreciable amount over its estimated useful life of three years.

      D. FOREIGN CURRENCY TRANSLATION

services have been


6



Table of Contents


Living 3D Holdings, Inc. maintains its booksdelivered and accounting recordsthe customer has obtained control of promised services. 2) Revenue derived from the contracts with customers to grant the right to use the web base trading system of cryptocurrency in United States Dollars with the United States Dollars being the functional currency. Sugar Technology Group Holdings Corporation and its wholly owned subsidiary maintain their books and accounting records in Hong Kong Dollars with the Hong Kong Dollars being the functional currency. Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on the transaction dates. Assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the balance sheet date.

The exchange rates used for the foreign currency translation were as follows (USD$1=HKD):

Period Covered

Balance Sheet Date Rate

Average Rate

For the period from January 1, 2016 through September 30, 2017

7.8

7.8

E.

RELATED PARTIES

A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.

Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.

F. IMPAIRMENT OF LONG-LIVED ASSETS

The Company reviews its long lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. When these events occur, the Company measures impairment by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, the Company would recognize an impairment losscommission based on the fair valuetrading transactions of the assets.

G. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Management believes that none ofend users which is recognized at a point in time when the recently adopted accounting pronouncements will have a material effect on the Company’s financial position, results of operations, or cash flows.cryptocurrency trading transactions occur. 

 

NOTE 3 – GOING CONCERN

 

The Company first generated revenue in 2010 and is still in the early stages of establishing a market for the products it sells. The Company has a working capital deficit of $293,186$613,703 as of SeptemberJune 30, 20172018 and has only generated $1,845 oflimited cash flow from operations for the ninesix months ended SeptemberJune 30, 2017.2018. The Company incurred netsuffered recurring losses of $51,089 for the nine months ended September 30, 2017.from operations. The Company is primarily funded by its Chief Executive Officer ("CEO") and principal shareholder. The Company will have to raise additional capital, including through the sale of equity securities, to support its operation and expansion.


7


Table of Contents


 

These conditions and uncertainties raise substantial doubt as to the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

NOTE 4 – RELATED PARTY TRANSACTIONS

The related parties consist of the following:

 

Man Wah Stephen Yip, the Company’s CEO, a director and principal shareholder;

So Ka Yan, the Company’s Secretary, a director, principal shareholder and the wife of Man Wah Stephen Yip;

Wai Tak Edward Lau, the Company’s director;

 

Due to Related Parties

 

Due to related parties consists of the following:

 

 

September 30, 2017

 

 

December 31,2016

  (As Restated)

Man Wah Stephen Yip

$

104,832

 

$

82,496

So Ka Yan

 

27,496

 

 

15,923

Total

$

132,328

 

$   

98,419

 

 

 

Man Wah Stephen Yip

 

 

So Ka Yan

 

 

Total

Balance at December 31, 2017

 

$ 123,420   

 

$ 317,777   

 

$ 441,197   

 

 

 

 

 

 

 

Expenses paid on behalf of the Company  

 

24,749   

 

11,284   

 

36,033   

Advances to the Company

 

-   

 

64,443   

 

64,443   

Less: Repayments received from the Company

 

-   

 

(116,772)  

 

(116,772)  

Balance at June 30, 2018

 

$ 148,169   

 

$ 276,732   

 

 $ 424,901   

 

The amounts due to related parties represent loans borrowed fromexpenses paid on behalf and advances received to support the related parties.operation of the Company. They are unsecured, bear no interest and are repayable on demand. During the nine months ended September 30, 2017, Man Wah Stephen Yip and So Ka Yan paid expenses in the amount of $22,336 and $13,765, respectively, on behalf of the Company to support the Company’s operations. The Company repaid $2,000 and $192 in May 2017 and July 2017, respectively, to So Ka Yan. On May 19, 2016, the Company purchased property and equipment in the amount of $4,718 and So Ka Yan made the payment on behalf of the Company.

 

Office Furnished by Related Party

 

The Company’s office in Hong Kong consists of approximately 400 square feet located at Room S, 2/F, Block D East Sun Industrial Center, 16 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong. This office is furnished to the Company by the CEO at no charge.

The Company has another office which is situated at 10th Floor, Si Toi Commercial Building, 32 Queen Street, Sheung Wan, Hong Kong. This office is furnished to the Company by Wai Tak Edward Lau, who was newly appointed as a director of the Company on February 7, 2018, at no charge.



Table of Contents


Service Provided by Related Party

Harris Yeung, a personal assistant of CEO, provided non-compensated book keeping service to the Company during the six months ended June 30, 2018 and for the year ended December 31, 2017.

 

NOTE 5 – CONCENTRATION OF CREDIT RISKS AND MAJOR CUSTOMERS


The Company had certain customers whose revenue individually represented 10% or more of the Company’s total revenue, or whose accounts receivable balances individually represented 10% or more of the Company’s total accounts receivable, as follows:


For the ninesix months ended SeptemberJune 30, 2018, customer B and E accounted for 85% and 15% of the total revenue, respectively.

For the six months ended June 30, 2017, customer A and B accounted for 64%80% and 36%20% of total revenue respectively. For the nine months ended September 30, 2016, customer C and D accounted for 70% and 30% of total revenue, respectively.


At SeptemberJune 30, 2018, customer B and E accounted for 85% and 15 % of the accounts receivable, respectively. At December 31, 2017, customer B and D accounted for 41% and 59% of the accounts receivable. receivable, respectively.


For the six months ended June 30, 2018, the Company’s cost of revenue primarily consisted of amortization of website development costs. For the six months ended June 30, 2017, all the cost of revenue is related to fees paid to one subcontractor.

At June 30, 2018 and December 31, 2016, customer D2017, the same subcontractor accounted for 100% of account receivable.

For the nine months ended September 30, 2017, subcontractor A accounted for 100% of cost of revenue. For the nine months ended September 30, 2016, subcontractor B accounted for 100% of cost of revenue.

At September 30, 2017, subcontractor A accounted for 100% of account payable. There was no balance of account payable as of December 31, 2016.


8


Table of Contents


NOTE 6 – INCOME TAXES

Living 3D Holdings, Inc. is incorporated in the State of Nevada, United States and is subject to US Corporate

Income Tax (“CIT”) on the taxable income in accordance with the relevant US income tax laws. No provision for income taxes in the US has been made as the Company had no US taxable income for the nine months period ended September 30, 2017 and 2016.

Sugar Technology Group Holdings Corporation is registered in the BVI and under the current laws of the BVI is not subject to income taxes.

XYZMILL.COM Limited is registered in Hong Kong and Hong Kong profits tax is calculated at 16.5% of the estimated assessable profit for the period.

No provision for income taxes has been made as XYZMILL.COM Limited suffered loss from inception of May 9, 2016 through September 30, 2017.

A reconciliation of the income tax computed at the U.S. statutory rate and the Company's provision for income tax is as follows:

 

 

For the nine months ended September 30,

 

 

2017

 

2016

U.S. statutory rate

 

34.0%

 

34.0%

Foreign income not recognized in the U.S.

 

(34.0%)

 

(34.0%)

Hong Kong corporate income tax rate

 

16.5%

 

16.5%

Net loss not subject to income tax

 

(16.5%)

 

(16.5%)

Provision for income tax

 

0.0%

  

0.0%

Accounting for Uncertainty in Income Taxes

The Company adopted the provisions of Accounting for Uncertainty in Income Taxes. The provision clarify the accounting for uncertainty in income taxes recognized in an Enterprise's financial statements in accordance with the standard "Accounting for Income Taxes,", and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The provisions of Accounting for Uncertainty in Income Taxes also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

The Company has evaluated and concluded that there are no significant uncertain tax positions required recognition in its consolidated financial statements.

The Company may from time to time be assessed interest or penalties by major tax jurisdictions.  In the event it receives an assessment for interest and/or penalties, it will be classified in the consolidated financial statements as tax expense.

NOTE 7 – SHAREHOLDERS’ DEFICIT

On October 19, 2016, the Company filed a Certificate of Amendment with the Secretary of State of the State of

Nevada to effect a 1-for-100 reverse stock split of its common stock and an increase of its authorized shares of common stock from 90,000,000 to 290,000,000.

Effective on the opening of business on December 2, 2016, the Financial Industry Regulatory Authority granted market effectiveness to the 1-for-100 reverse stock split.


9


Table of Contents


The Company’s capital accounts have been retroactively restated to reflect the reverse stock split for all periods presented.

On January 4, 2017, the Company issued an aggregate of 30,000,000 shares of its common stock at par value of $0.001 each to all of the shareholders of Sugar in exchange for all of the issued and outstanding stock of Sugar. The shares were recorded at par value with a decrease $30,000 to additional paid-in capital as the transaction was accounted for as business combination between entities under common control.


10



Table of Contents


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

 

Forward-Looking Statements

This report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “may,” “should,” “could,” “will,” “plan,” “future,” “continue” and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. These forward-looking statements are based largely on our expectations or forecasts of future events, can be affected by inaccurate assumptions, and are subject to various business risks and known and unknown uncertainties, a number of which are beyond our control. Therefore, actual results could differ materially from the forward-looking statements contained in this document, and readers are cautioned not to place undue reliance on such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law. A wide variety of factors could cause or contribute to such differences and could adversely impact revenues, profitability, cash flows and capital needs. There can be no assurance that the forward-looking statements contained in this document will, in fact, transpire or prove to be accurate.

Factors that could cause or contribute to our actual results to differ materially from those discussed herein or for our stock price to be adversely affected include, but are not limited to: (i) our short operating history, limited revenue and history of losses; (ii) our independent registered certified public accountants have expressed a going concern opinion; (iii) our ability to raise additional working capital that we may require and, if available, that such working capital will be on terms acceptable to us; (iv) our ability to implement our business plan; (v) uncertainties regarding our ability to generate revenues and penetrate our market; (vi) economic and general risks relating to business; (vii) our ability to manage our costs of production; (viii) our ability to protect our intellectual property through patents and other intellectual property protection; (ix) our dependence on key personnel; (x) increased competition or our failure to compete successfully; (xi) our ability to keep pace with technological advancements in our industry; (xii) our ability to comply with Section 404 of the Sarbanes-Oxley Act of 2002, as required; (xiii) our nonpayment of dividends and lack of plans to pay dividends in the future; (xiv) future sale of a substantial number of shares of our common stock that could depress the trading price of our common stock, if it trades, lower our value and make it more difficult for us to raise capital; (xv) our additional securities available for issuance, which, if issued, could adversely affect the rights of the holders of our common stock; (xvi) our ability to have our common stock trade in an active public market; (xvii) the price of our stock, if it trades, is likely to be highly volatile because of several factors, including a relatively limited public float; and (xviii) indemnification of our officers and directors.

 

General

The following discussion should be read in conjunction with our Financial Statements and notes thereto. The following discussion contains forward-looking statements, including, but not limited to, statements concerning our plans, anticipated expenditures, the need for additional capital and other events and circumstances described in terms of our expectations and intentions. You are urged to review the information set forth under the captions for factors that may cause actual events or results to differ materially from those discussed below.

Overview

Living 3D Holdings, Inc. is a globallyFinTech company with focus on developing no-frills software solutions that facilitate the wide spread adoption of cutting edge technological ideas. Our flagship product is a B2B cryptocurrency web based trading system featuring newsfeed, live quote, integrated enterprise that targets the intersection of 3D technologyCRM, agent management and effective business. The Company specializesaccounting system. This web based trading system is then customized and provided to companies with previous experience in the design, development, production, salefinancial, trading or similar fields allowing them to capture a new and marketingexisting market with minimum change to their current Modus Operandi. These companies have user right to the customized web based trading system, which allow their end-customers to trade cryptocurrency as registered users. These companies mainly reside in Hong Kong and Singapore with many operating online with target pockets in the global market. We provide technical support to ensure that our web based trading system and customers work within the confines of “auto stereoscopic 3D” technology, or Auto 3D products, servicestheir respective legal system, and solutions. The products we market are based on "auto stereoscopic 3D" technology, or Auto 3D, which means that viewers are not requiredvery sensitive to wear 3D glasses in order to experience the 3D effectsany reaction of the screen,legal system as a whole with regards to the regulation of cryptocurrency. We provide our web based trading system with AML and instant switching between two dimensional, or 2D, and 3D viewing is enabled.  We believe that this gives us a competitive advantage over other suppliers of 3D products requiring the use of a visor or glasses in order to experience a 3D effect.

The Company also provides technical andKYC compliance support services of 3D in software development, contents production, hardware configuration to a wide range of industries, including entertainment, education, consumer electronics, medical diagnosis, scientific research and, in particular, media and advertising. The Company aims atwhich we deem as an inalienable


11



Table of Contents


customizing product requirementspart of the web based trading system and specifications in order to enhance the power of product display in business advertisingmanagement protocol, and special operational environments.

Through innovative and reliable provision of products and services as well as collaborationwe conduct thorough training sessions with our strategic partners,customers to ensure compliance and also the Company is embarking on the following new strategic directions:documentation and consequences of non-compliance.

*Enabling enterprises to fully exploit the power and capacity of 3D technology;

*Satisfying the full range of media display in business advertising and business operation;

*Enabling a truly integrated solution for 3D applications and powerful display specially customized for business requirements and operations; and

*Developing and delivering a comprehensive, low cost media content development and productivity environment.

We market our 3D technologies and products under our Living 3D brand in the PRC.

With the change in the Company’s control in December 2015, the Company redefined its business from 3D technology development to computer software development with major operations in Hong Kong and Mainland China. The Company focuses on the research and development of e-commerce platform, mobile game and virtual reality application. Our e-commerce platform seeks to integrate web application with product manufacturing which will increase the productivity and efficiency of the operation. Along with the ever increasing usage of the internet, our O2O (O2O stands for “online to offline.” It's a term used to describe a variety of e-commerce services that provide online information, services, or discounts to consumers that enhance their offline shopping experiences.) e-commerce platform is expected to bring in more business opportunities to the manufacturer.

Recent Development.  On December 30, 2016,4, 2017, the Company entered into a share acquisition and exchange agreement (the "Share Acquisition and Exchange"Exchange II") with Sugar Technology Group Holdings Corporation,HKCCEX, a company incorporated in the British Virgin Islands (the “BVI”) on February 26, 2016 and has a wholly owned subsidiary of XYZMILL.COM Limited, which was incorporated on May 9, 2016. Sugar Technology Group Holdings Corporation and its subsidiary are collectively referred as Sugar.Hong Kong Special Administrative Region.  Under the Share Acquisition and Exchange II, the Company will issueissued an aggregate of 30,000,00040,000,000 shares of its common stock at par value of $0.001 each to allthe sole shareholder of the shareholders of SugarHKCCEX in exchange for all of the issued and outstanding stock of Sugar.HKCCEX.  The Share Acquisition and Exchange II was closed on January 5, 2017 and the 30,000,000 shares of the Company’s common stock were issued on January 4,December 28, 2017. As a result of the Share Acquisition and Exchange SugarII, HKCCEX became the Company’s wholly-owned subsidiary.

 

Sugar engages in computer software development with major operations in Hong Kong and Mainland China. SugarThe Company, through its subsidiary, HKCCEX, a FinTech company, focuses on developing no-frills software solution that facilitate the research andwide spread adoption of cutting edge technological ideas.  

The Company’s development of e-commerce platform, mobile gamethe web based trading system on cryptocurrency was fully completed in January 2018 and virtual reality application. The e-commerce platform seeksthe Company granted customers the right to integrate web application with product manufacturing which will increaseuse the productivity and efficiency of the operation. Along with the ever increasing usage of the internet, our O2O e-commerce platform is expected to bring in more business opportunities to the manufacturer. trading system starting April 2018.

 

The following discussion summarizes the material changes in our results of operations and our financial condition for the three and ninesix months ended SeptemberJune 30, 20172018 and SeptemberJune 30, 2016.2017. The Consolidated Statements of Operations is included in the Financial Statements attached to this report. Please refer to the Consolidated Statements of Operations.

 

Results of Operations for the three months ended SeptemberJune 30, 20172018 and 20162017

Results from Operations

Revenues.Revenue.  For the three months ended SeptemberJune 30, 20172018 and September 30, 2016,2017, revenues were $1,667$460 and $4,308$1,282 respectively, a decrease of $2,641.$822. The decreaserevenue for the three months ended June 30, 2018 represented commission earned on the trading of cryptocurrency by the end users on our web based trading system, whereas the revenue for the three months ended June 30, 2017 was derived from website development.

Since our business development efforts in revenue was attributablethe computer software, and in particular the e-commerce trading platform were not sufficiently mature to render us as a commercially viable player in that industry, the Company has slowed down the related activities and shifted its business from the research and development of e-commerce trading platform to the decrease in sales. development of the web based trading system on cryptocurrency.

The Company is still in the early stage of development and its sales fluctuate. The Company has granted the right to use its web based trading system to a customer in the middle of April 2018 and managed to generate minimal income therefrom. Management believes that the revenue of the Company will increase substantially when more customers can be acquired in the later part of the year.

Cost of Revenue. The Company incurred no cost of revenue for the three months ended SeptemberJune 30, 20172018 amounted to $16,132 represented substantially the amortization of its web based trading system. The Company started to amortize its web based trading system since January 2018 over a period of three years. As the Company has put into use and 2016.  Thegranted the right to use the web based trading system to its customer in April 2018, the company has classified the amortization as the cost of revenue primarily represented fee paid to subcontractor oninstead of general and administrative expenses as in the design of software for sale. There wasfirst quarter in 2018.

The Company incurred no such salecost of revenue for the three months ended SeptemberJune 30, 2017 and 2016.2017.

Gross Profit. For the three months ended SeptemberJune 30, 2017,2018, the gross profit was $1,667$(15,672) compared with $4,308$1,282 for the same period in 2016.2017. The decrease was because of the decreaseincrease in sales.cost of revenue as discussed above.

Management is of the opinion that the web based trading system has not been fully utilized and that the gross profit will improve gradually over time when the Company can acquire more customers in the later part of the year.


12



Table of Contents


General and Administrative Expenses.  For the three months ended SeptemberJune 30, 20172018 and September 30, 2016,2017, general and administrative expenses were $11,567$21,084 and $19,400,$57,817 respectively, a decrease of $7,833.$36,733. The decrease in such expenses was primarily attributable to the decrease in motor vehicle running expenses andconsultancy fee for the discount given bydevelopment of the Company’s attorney onweb based trading system of cryptocurrency as all the fee chargedcosts at the planning stage were expensed as incurred. No such costs were incurred during the three months ended SeptemberJune 30, 2017. No such discount was given by the Company’s attorney for the three months ended September 30, 2016.2018.

Net Loss.  For the three months ended SeptemberJune 30, 2018, the net loss was $(36,756) and, for the same period ended June 30, 2017, the net loss was $(9,900)$(56,535), a decrease of $19,779. The decrease of net loss between the periods was explained by the decrease in the general and administrative expenses which was partially offset by the increase in cost of revenue as discussed above.

Results of Operations for the six months ended June 30, 2018 and 2017

Results from Operations

Revenue.  For the six months ended June 30, 2018 and 2017, revenues were $3,024 and $6,538 respectively, a decrease of $3,514. The decrease in revenue was attributable to the decrease in sales. The Company has shifted to the business of the development of a web based trading system which was granted to a customer the right to use in April 2018. The Company has managed to generate minimal revenue therefrom. As the Company’s business in cryptocurrency web based trading system is still in the early stage of development and its sales fluctuate. Management believes that the revenue of the Company will increase substantially when some more customers can be acquired in the later part of the year.

Cost of Revenue. The cost of revenue for the six months ended June 30, 2018 and June 30, 2017 amounted to $16,132 and $5,128 respectively, an increase of $11,004. The increase in the cost of revenue can mainly be attributable to the increase in the amortization of the web based trading system which was put into operation in April 2018, details of which has been discussed above.

Gross Profit. For the six months ended June 30, 2018, the gross profit was $(13,108) compared with $1,410 for the same period in 2017. The decrease was because of the increase in cost of revenue.

General and Administrative Expenses.  For the six months ended June 30, 2018 and 2017, general and administrative expenseswere $54,554 and $82,304, respectively, a decrease of $27,750.The decrease in such expenses was primarily attributable to the decrease in consultancy fee for the development of the web based trading system of cryptocurrency as all the costs at the planning stage were expensed as incurred. No such costs were incurred during the six months ended June 30, 2018. This decrease was partially offset by the increase in the amortization of our web based trading system in cryptocurrency. The web based trading system is to be amortized over a period of three years on a straight-line method, starting from January 2018 when it is ready for use. The amortization has been allocated to the cost of revenue starting April 2018 when the web based trading system was put into use. No such expense was incurred for the six months ended of June 30, 2017.

Net Loss.  For the six months ended June 30, 2018, the net loss was $(67,662) and, for the same period ended SeptemberJune 30, 2016,2017, the net loss was $(15,092)$(80,894), a decrease of $5,192.$13,232. The decrease of net loss between the periods was explained by the decrease in general and administrative expenses as discussed above.

Results of Operations for the nine months ended September 30, 2017 and 2016

Results from Operations

Revenues.  For the nine months ended September 30, 2017 and September 30, 2016, revenues were $8,205 and $14,436 respectively, a decrease of $6,231. The revenues for the nine months ended September 30, 2017 are mainly derived from advertisement development and website development whereas the revenue for the nine months ended September 30, 2016which was mainly generated from website design and development. Moreover, the Company is still in the early stage of development and its sales fluctuate.

Cost of Revenue. The Company’s cost of revenue decreased to $5,128 from $6,282 in the period ended September 30, 2017 compared to the same period in 2016. The decrease was due to the decrease in sales.

Gross Profit. For the nine months ended September 30, 2017, the gross profit was $3,077 compared with $8,154 for the same period in 2016. The decrease was because of the decrease in sales.

General and Administrative Expenses.  For the nine months ended September 30, 2017 and September 30, 2016, general and administrative expenseswere $54,166 and $44,825, respectively, an increase of $9,341.The increase in such expenses was primarily attributable to the increase auditor’s remuneration and the increase in motor vehicle running expenses.

Net Loss.  For the nine months ended September 30, 2017, the net loss was $(51,089) and, for the same period ended September 30, 2016, the net loss was $(36,671), an increase of $14,418.  The increase of net loss between the periods was explainedpartially offset by the increase in general and administrative expenses and the decrease in salescost of revenue as discussed above.

Liquidity and Capital Resources.  Cash and cash equivalents as of SeptemberJune 30, 20172018 and December 31, 20162017 were $320$2,968 and $667$50,668 respectively. The decrease was mainly attributable by the repayments to related party. There were no substantial movements in the funds used in operating activities as merely all the expenses of the Company were paid by Man Wah Stephen Yip and So Ka Yan on behalf of the Company.



Table of Contents


Liquidity and Capital Resources

Current and Expected Liquidity

Historically, we have financed operations primarily through the issuance of debt.  In the near future, as additional capital is needed, we expect to rely primarily on loans from our major shareholder and the sale of equity securities.  We financed operations by increasing the amount due to related parties to $132,328 at September 30, 2017 from $98,419 at December 31, 2016, an increase of $33,909.  The increase is due principally to professional fees paid by related parties on behalf of the Company for the services rendered in the period of 2017.

 

Our cash flows provided by operating activities increased by $691$2,783 from $1,154$1,846 at SeptemberJune 30, 20162017 to $1,845$4,629 at SeptemberJune 30, 2017,2018, due principally to the increasedecrease in accounts receivable of $2,949, account payable of $5,128,$4,233, and an increase in accrued liabilities and other payables of $ 49,57641,659 offset by the net loss of $51,089.


13


Table$67,662 and depreciation and amortization expenses of Contents$26,428.


Our cash flows used in financing activities increased by $51,611, from $718 at June 30, 2017 to $52,329 at June 30, 2018, due principally to an increase in repayments to related party of $116,772 offset by the increase in proceeds from related party of $64,443.

We will require substantial additional capital to develop a market for 3D products, the O2O e-commerce platformweb based trading system in cryptocurrency and implement our business plan.  We plan to pursue financing from private investors and institutions in and outside the PRC.  We do not have any commitments for additional financing. Such new financing could include equity, which would likely be dilutive to our shareholders, or debt, which would likely restrict our ability to borrow from other sources.  In addition, such securities may contain rights, preferences or privileges senior to the rights of our current shareholders.

 

There can be no assurance that additional funds will be available on terms acceptable to us or at all.  If adequate funds are not available, we may have to materially curtail our operations.  Any inability to raise adequate funds could have a material adverse effect on our business, results of operation and financial condition.

Due to the uncertainties related to these matters, there exists substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should we be unable to continue as a going concern.

Capital Commitments

We had no material commitments for capital expenditures.

Off-Balance Sheet Arrangements

There were no off-balance sheet arrangements as of SeptemberJune 30, 2017.2018.

Critical Accounting Policies and Estimates

Accounting Estimates.  The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results when ultimately realized could differ from those estimates.

Fair Value of Financial Instruments.  The carrying amounts of financial instruments, including cash, other receivables, accounts payable and accrued expenses,liabilities and other payables, approximates their fair value due to the relatively short-term nature of these instruments.

Management believes it is not practical to determine the fair value of due to related party because the transactions cannot be assumed to have been consummated at arm’s length, the terms are not deemed to be market



Table of Contents


terms, there are no quoted values available for these instruments, and an independent valuation would not be practical due to the lack of data regarding similar instruments, if any, and the associated potential costs.

Property and Equipment.   The Company’s property and equipment consists primarily of a motor vehicle and is initially recognized at cost and subsequently carried at cost less accumulated depreciation and accumulated impairment losses. Depreciation of motor vehicle is calculated using the straight-line method to allocate its depreciable amount over its estimated useful life of three years.

Revenue Recognition.  WeThe Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the significant risks and rewards of ownership have been transferredCompany satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer, including factors such as when persuasive evidencecustomer. At contract inception, once the contract is determined to be within the scope of an arrangement exists, deliveryASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service has been performed, the sales price is fixed and determinable, and collectability is probable.distinct. The Company then recognizes salesas revenue the amount of the transaction price, which is allocated to the respective performance obligation, when the merchandiseperformance obligation is shipped, title has passedsatisfied.

Website Development Costs. The Company accounts for website development costs in accordance with Accounting Standards Codification 350-50 “Website Development Costs”. Accordingly, all costs incurred in the planning stage are expensed as incurred, costs incurred in the website application and infrastructure development stage that meet specific criteria are capitalized and costs incurred in the day to day operation of the website are expensed as incurred.

All capitalized costs associated with the website will be subject to straight-line amortization over its expected useful life of three years when the website is ready for its intended use.

The Company reviews its website development costs for impairment whenever events or changes in circumstances indicate that the carrying amount of the website development costs may no longer be recoverable. When these events occur, the Company measures impairment by comparing the carrying value of the website development costs to the customers orestimated undiscounted future cash flows expected to result from the serviceuse of the website development costs and their eventual disposition. If the sum of the expected undiscounted cash flow is provided, and collectability is reasonably assured.less than the carrying amount of the website development costs, the Company would recognize an impairment loss based on the fair value of the website development costs.

Foreign Currency Translation. Living 3D Holdings, Inc. maintains its booksThe reporting currency of the Company is the USD. The functional currency of Sugar and accounting records in United States Dollars withHKCCEX is the United States Dollars beingHong Kong Dollar (“HKD”). For financial reporting purposes, the functional currency.financial statements of Sugar Technology Group Holdings Corporation and its wholly owned subsidiary maintain their books and accounting recordsHKCCEX which are prepared in Hong Kong Dollars with the Hong Kong Dollars being the functional currency. Transactions denominated in foreign currenciesDollar are translated into the functional currency at the exchange rates prevailing on the transaction dates.  Assets and liabilities denominated in foreign currenciesUnited States Dollars. Balance sheet accounts are translated intousing the functional currency at theclosing exchange rates prevailingrate in effect at the balance sheet date.  date and income and expense accounts are translated using the average exchange rate prevailing during the reporting period. Capital accounts are translated at their historical exchange rates when the capital transactions occurred. Adjustments resulting from the translation, if any, are included in accumulated other comprehensive income (loss) in the owners' equity

We follow FASB ASC 80-30, "Foreign Currency Translation", for both the translation and re-measurement of balance sheet and income statement items into U.S. dollars.  Resulting translation adjustments are reported as a


14


Table of Contents


separate component of accumulated comprehensive income (loss) in shareholders' equity.

Income Taxes.  Income tax expense is based on reported income before income taxes. We account for income taxes using the liability method.  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income in the period that includes the enactment date.  A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not



Table of Contents


expected to be realized.  

Related Parties.  A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company.  Related parties also include principal shareholders of the Company, its management, members of the immediate families of principal shareholders of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.  A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.

Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.

Recent Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

Item 3.Quantitative and Qualitative Disclosures about Market Risk  

Not applicable.


15


Table of Contents


Item 4.Controls and Procedures  

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Under the supervision of our Chief Executive Officer and with the participation of our Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934.  Based on their evaluation as of the end of the period covered by this report, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective at a reasonable assurance level to ensure that the information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, including this report, were recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and was accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Our management identified the following material weaknesses in our internal control over financial reporting, which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.

We plan to take steps to enhance and improve the design of our internal control over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we hope to implement the following changes during our fiscal year ending December 31, 2017:2018: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; (ii) adopt sufficient written policies and procedures for accounting and



Table of Contents


financial reporting; and (iii) appoint additional independent directors that can serve as members of an audit committee. The remediation efforts will be largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal controls over financial reporting during the quarter ended SeptemberJune 30, 20172018 that have materially affected or are reasonably likely to materially affect, such controls.



Table of Contents


PART II – OTHER INFORMATION

Item 1.     Legal Proceedings. 

There are no claims, actions, suits, proceedings or investigations that are currently pending or, to our knowledge, threatened by or against us, or with respect to our operations or assets, by or against any of our officers, directors or affiliates.

Item 1A.     Risk Factors. 

Not applicable.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds. 

None.

Item 3.Defaults upon Senior Securities. 

None.

Item 4.Mine Safety Disclosures. 


16


Table of Contents


Not applicable.

Item 5.Other Information. 

None.

Item 6.Exhibits. 

(c)Exhibits.  

 

 

31.1

Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32

Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


17



Table of Contents


SIGNATURES

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

 

LIVING 3D HOLDINGS, INC.

 

 



Date:  NovemberAugust 14, 20172018

 

 

/s/ Man Wah Stephen Yip

Name:  Man Wah Stephen Yip

Title: Chief Executive Officer and Chairman of the Board of Directors

 

 



Date:  NovemberAugust 14, 20172018

 

 

/s/ Sze Cheong Eric Ng

Name:  Sze Cheong Eric Ng

Title: Chief Financial Officer and Director

 

 


18



Table of Contents


Index to Exhibits

 

 

 

31.1

Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32

Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


1918