Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 14, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | HotApp Blockchain Inc. | |
Entity Central Index Key | 1,600,347 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Small Business | true | |
Entity Common Stock, Shares Outstanding | 506,898,576 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,018 |
CONDENSED BALANCE SHEETS (Unaud
CONDENSED BALANCE SHEETS (Unaudited) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
CURRENT ASSETS: | ||
Cash | $ 66,912 | $ 95,038 |
Accounts receivable-related parties | 39,427 | 89,427 |
Accounts receivable-trade | 10,220 | 17,914 |
Prepaid expenses | 3,870 | 7,532 |
Deposit and other receivable | 8,176 | 8,189 |
Current assets of discontinued operations | 15,370 | 35,038 |
TOTAL CURRENT ASSETS | 143,975 | 253,138 |
Fixed assets, net | 8,313 | 14,628 |
Non-current assets of discontinued operations | 2,320 | 8,309 |
TOTAL ASSETS | 154,608 | 276,075 |
CURRENT LIABILITIES: | ||
Accounts payable and accrued expenses | 35,713 | 33,141 |
Accrued taxes and franchise fees | 7,742 | 7,742 |
Amount due to related parties | 987,206 | 825,107 |
Current liabilities of discontinued operations | 164,485 | 171,566 |
TOTAL CURRENT LIABILITIES | 1,195,146 | 1,037,556 |
TOTAL LIABILITIES | 1,195,146 | 1,037,556 |
STOCKHOLDERS' EQUITY (DEFICIT): | ||
Preferred stock, $0.0001 par value, 15,000,000 shares authorized, 0 issued and outstanding as of September 30, 2018 and December 31, 2017 | 0 | 0 |
Common stock, $0.0001 par value, 1,000,000,000 shares authorized, 506,898,576 shares issued and outstanding, as of September 30, 2018 and December 31, 2017 | 50,690 | 50,690 |
Accumulated other comprehensive loss | (198,836) | (289,398) |
Additional paid-in capital | 4,604,191 | 4,604,191 |
Accumulated deficit | (5,496,583) | (5,126,964) |
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) | (1,040,538) | (761,481) |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 154,608 | $ 276,075 |
CONDENSED BALANCE SHEETS (Paren
CONDENSED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Preferred stock, Par Value | $ 0.0001 | $ 0.0001 |
Preferred stock, Share Authorized | 15,000,000 | 15,000,000 |
Preferred stock, Issued | 0 | 0 |
Preferred stock, Outstanding | 0 | 0 |
Common stock, Par Value | $ 0.0001 | $ 0.0001 |
Common stock, Shares Authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, Issued | 506,898,576 | 506,898,576 |
Common stock, Outstanding | 506,898,576 | 506,898,576 |
CONDENSED STATEMENTS OF OPERATI
CONDENSED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenues: | ||||
Project fee - related parties | $ 23,018 | $ 33,694 | $ 115,107 | $ 103,548 |
Project fee-others | 10,203 | 48,538 | 20,408 | 38,869 |
Total Revenues | 33,221 | 82,232 | 135,515 | 142,417 |
Cost of revenues | 20,652 | 39,135 | 74,111 | 46,715 |
Gross profit | 12,569 | 43,097 | 61,404 | 95,702 |
Operating expenses: | ||||
Deposits written off | 0 | 25 | 0 | 2,705 |
Depreciation | 2,207 | 3,954 | 7,833 | 9,138 |
Loss on disposal of fixed assets | 0 | 0 | 0 | 131 |
General and administrative | 71,137 | 123,106 | 293,161 | 483,818 |
Total operating expenses | 73,344 | 127,085 | 300,994 | 495,792 |
(Loss) from operations | (60,775) | (83,988) | (239,590) | (400,090) |
Other income (expenses): | ||||
Interest income | 0 | 0 | 7 | 1 |
Foreign exchange gain (loss) | (3,359) | 31,567 | (49,773) | 147,424 |
Total other income (expenses) | (3,359) | 31,567 | (49,766) | 147,425 |
Loss before taxes | (64,134) | (52,421) | (289,356) | (252,665) |
Income tax provision | 0 | 0 | 0 | 0 |
Net income from continuing operations | (64,134) | (52,421) | (289,356) | (252,665) |
Loss from discontinued operations, net of tax | (32,143) | (75,492) | (80,263) | (191,262) |
Net loss applicable to common shareholders | $ (96,277) | $ (127,913) | $ (369,619) | $ (443,927) |
Net loss from continuing operations per share - basic and diluted | $ 0 | $ 0 | $ 0 | $ 0 |
Net loss from discontinued operations per share - basic and diluted | 0 | 0 | 0 | 0 |
Net loss per share - basic and diluted | $ 0 | $ 0 | $ 0 | $ 0 |
Weighted number of shares outstanding - Basic and diluted | 506,898,576 | 506,898,576 | 506,898,576 | 214,041,100 |
Net loss | $ (96,277) | $ (127,913) | $ (369,619) | $ (443,927) |
Foreign currency translation gain (loss) | 21,899 | (44,241) | 90,562 | (165,908) |
Total comprehensive loss | $ (74,378) | $ (172,154) | $ (279,057) | $ (609,835) |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) - USD ($) | Preferred Stock | Common Stock | Paid-In Capital | Accumulated Other Comprehensive Income (Loss) [Member] | Accumulated Deficit | Total |
Beginning Balances, Shares at Dec. 31, 2017 | 0 | 506,898,576 | ||||
Beginning Balance, Amount at Dec. 31, 2017 | $ 0 | $ 50,690 | $ 4,604,191 | $ (289,398) | $ (5,126,964) | $ (761,481) |
Net loss for period | (70,645) | (70,645) | ||||
Foreign currency translation adjustment | (59,452) | (59,452) | ||||
Ending Balance, Shares at Mar. 31, 2018 | 0 | 506,898,576 | ||||
Ending Balance, Amount at Mar. 31, 2018 | $ 0 | $ 50,690 | 4,604,191 | (348,850) | (5,197,609) | (891,578) |
Beginning Balances, Shares at Dec. 31, 2017 | 0 | 506,898,576 | ||||
Beginning Balance, Amount at Dec. 31, 2017 | $ 0 | $ 50,690 | 4,604,191 | (289,398) | (5,126,964) | (761,481) |
Net loss for period | (369,619) | |||||
Ending Balance, Shares at Sep. 30, 2018 | 0 | 506,898,576 | ||||
Ending Balance, Amount at Sep. 30, 2018 | $ 0 | $ 50,690 | 4,604,191 | (198,836) | (5,496,583) | (1,040,538) |
Beginning Balances, Shares at Mar. 31, 2018 | 0 | 506,898,576 | ||||
Beginning Balance, Amount at Mar. 31, 2018 | $ 0 | $ 50,690 | 4,604,191 | (348,850) | (5,197,609) | (891,578) |
Net loss for period | (202,697) | (202,697) | ||||
Foreign currency translation adjustment | 128,115 | 128,115 | ||||
Ending Balance, Shares at Jun. 30, 2018 | 0 | 506,898,576 | ||||
Ending Balance, Amount at Jun. 30, 2018 | $ 0 | $ 50,690 | 4,604,191 | (220,735) | (5,400,306) | (966,160) |
Net loss for period | (96,277) | (96,277) | ||||
Foreign currency translation adjustment | 21,899 | 21,899 | ||||
Ending Balance, Shares at Sep. 30, 2018 | 0 | 506,898,576 | ||||
Ending Balance, Amount at Sep. 30, 2018 | $ 0 | $ 50,690 | $ 4,604,191 | $ (198,836) | $ (5,496,583) | $ (1,040,538) |
CONDENSED STATEMENTS OF CASH FL
CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (289,356) | $ (252,665) |
Adjustments to reconcile net loss to cash used in operating activities: | ||
Depreciation | 7,833 | 9,138 |
Deposit written off | 0 | 2,705 |
Loss on disposal of fixed asset | 0 | 131 |
Foreign exchange transaction loss (gain) | 49,773 | (147,424) |
Change in operating assets and liabilities: | ||
Costs in excess of billings and accounts receivable | 0 | 30,332 |
Accounts receivable - related parties | 50,000 | (58,088) |
Accounts receivable - trade | 7,694 | (35,848) |
Security deposit and other receivables | 13 | 3,628 |
Prepaid expenses | 3,662 | (7,199) |
Accounts payable and accrued expenses | 2,572 | (5,102) |
Deferred revenue | 0 | 5,377 |
Net cash used in operating activities | (167,809) | (455,015) |
Discontinued Operations | ||
Net Loss from discontinued operations, including noncontrolling interests | (80,263) | (191,262) |
Depreciation | 5,989 | 18,894 |
Deposit written off | 0 | 0 |
Loss on disposal of fixed asset | 0 | 0 |
Foreign exchange transaction loss (gain) | 9,123 | 6,612 |
Change in operating assets and liabilities: | ||
Accounts receivable - trade | (2,913) | 0 |
Security deposit and other receivable | 279 | 0 |
Prepaid expenses | 0 | 2,921 |
Accounts payable and accrued expenses | (7,081) | (16,990) |
Net cash used in operations of Discontinued Operations | (74,866) | (179,825) |
CASH FLOW FROM INVESTING ACTIVITIES: | ||
Purchase of fixed asset | (1,518) | (12,529) |
Net cash used in investing activities | (1,518) | (12,529) |
CASH FLOW FROM FINANCING ACTIVITIES: | ||
Advance from related parties | 162,099 | 719,455 |
Net cash provided by financing activities | 162,099 | 719,455 |
NET (DECREASE)/INCREASE IN CASH | (82,094) | 72,086 |
Effects of exchange rates on cash | 31,666 | (25,096) |
CASH AND CASH EQUIVALENTS at beginning of period | 124,739 | 102,776 |
CASH AND CASH EQUIVALENTS at end of period | 74,311 | 149,766 |
Supplemental schedule of non-cash investing and financing activities | ||
Conversion of shareholder loan into common stock | $ 0 | $ 450,890 |
1. The Company History and Natu
1. The Company History and Nature of the Business | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
The Company History and Nature of the Business | HotApp Blockchain Inc., formerly HotApp International, Inc., (the “Company” or “Group”) was incorporated in the State of Delaware on March 7, 2012 and established a fiscal year end of December 31. The Company’s initial business plan was to be a financial acquisition intermediary which would serve buyers and sellers for companies that are in highly fragmented industries. The Company determined it was in the best interest of the shareholders to expand its business plan. On October 15, 2014, through a sale and purchase agreement (the “Purchase Agreement”) the Company acquired all the issued and outstanding stock of HotApps International Pte Ltd (“HIP”) from Singapore eDevelopment Limited (“SeD”). HIP owned certain intellectual property relating to instant messaging for portable devices (“HotApp”). HotApp is a cross-platform mobile application that incorporates instant messaging and ecommerce. It provides a messaging and calling services for HotApp users (text, photo, audio). Started from a cross platform mobile application that incorporate messaging and eCommerce, HotApp has evolved as a platform service provider with application framework serving vertical industry such as multilevel marketing. The messaging and calling services was terminated in 2017. HotApp can be used on any mobile platform (i.e. IOS Online or Android). As of September 30, 2018, details of the Company’s subsidiaries are as follows: Subsidiaries Date of Incorporation Place of Incorporation Percentage of Ownership 1st Tier Subsidiary: HotApps International Pte Ltd (“HIP”) May 23, 2014 Republic of Singapore 100% by Company Crypto Exchange Inc. December 15, 2017 State of Nevada, the United States of America 100% by Company 2nd Tier Subsidiaries: HWH World Pte. Ltd., formerly Crypto Exchange Pte. Ltd. and HotApps Call Pte Ltd September 15, 2014 Republic of Singapore 100% owned by HIP HotApps Information Technology Co Ltd November 10, 2014 People’s Republic of China 100% owned by HIP HotApp International Limited* July 8, 2014 Hong Kong (Special Administrative Region) 100% owned by HIP * On March 25, 2015, HotApps International Pte Ltd acquired 100% of the issued and outstanding shares of HotApp International Limited. These financial statements have been prepared using accounting principles generally accepted in the United States of America applicable for a going concern, which assumes that the Company will realize its assets and discharge its liabilities in the ordinary course of business. Since inception, the Company has incurred net losses of $5,496,583 and has net working capital deficit of $1,051,171 at September 30, 2018. Management has concluded that due to the conditions described above, there is substantial doubt about the entities ability to continue as a going concern through November 14, 2019. We have evaluated the significance of the conditions in relation to our ability to meet our obligations and believe that our current cash balance along with our current operations will not provide sufficient capital to continue operation through 2018. Our ability to continue as a going concern is dependent upon achieving sales growth, the management of operating expenses and the ability of the Company to obtain the necessary financing to meet its obligations and pay its liabilities arising from normal business operations when they come due, and upon profitable operations. Our majority shareholder has advised us not to depend solely on them for financing. We have increased our efforts to raise additional capital through equity or debt financings from other sources. However, we cannot be certain that such capital (from our shareholders or third parties) will be available to us or whether such capital will be available on terms that are acceptable to us. Any such financing likely would be dilutive to existing stockholders and could result in significant financial operating covenants that would negatively impact our business. If we are unable to raise sufficient additional capital on acceptable terms, we will have insufficient funds to operate our business or pursue our planned growth. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty. |
2. Summary of Significant Accou
2. Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Basis of presentation The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). These condensed consolidated financial statements should be read in conjunction with the financial statements and additional information as contained in our Annual Report on Form 10-K for the year ended December 31, 2017. Results of operations for the nine month periods ended September 30, 2018 are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2018. The other information in these condensed consolidated financial statements is unaudited but, in the opinion of management, reflects all adjustments necessary for a fair presentation of the results for the periods covered. All such adjustments are of a normal recurring nature unless disclosed otherwise. Basis of consolidation The consolidated financial statements of the Group include the financial statements of HotApp Blockchain Inc. and its subsidiaries. All inter-company transactions and balances have been eliminated upon consolidation. Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and revenues, cost and expenses in the financial statements and accompanying notes. Significant accounting estimates reflected in the Group’s consolidated financial statements include revenue recognition, the useful lives and impairment of property and equipment. Cash and cash equivalents The Company considers all highly liquid investments with a maturity of three months or less at the date of acquisition to be cash equivalents. There were no cash equivalents as of September 30, 2018 and December 31, 2017. Foreign currency risk Because of its foreign operations, the Company holds cash in non-US dollars. As of September 30, 2018, cash and cash equivalents of the Group includes, on an as converted basis to US dollars $51,872, $7,399 and $14,102 in Hong Kong Dollars (“HK$”), Reminbi (“RMB”) and Singapore Dollars (“S$”), respectively. The Renminbi (“RMB”) is not a freely convertible currency. The State Administration for Foreign Exchange, under the authority of the People’s Bank of China, controls the conversion of RMB into foreign currencies. The value of the RMB is subject to changes in central government policies and to international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market. Concentrations Financial instruments that potentially expose the Group to concentration of credit risk consist primarily of cash. Although the cash at each particular bank in the United States is insured up to $250,000 by Federal Deposit Insurance Corporation (FDIC), the Group exposes to risk due to its concentration of cash in foreign countries. The Group places their cash with financial institutions with high-credit ratings and quality. The Group also exposes to credit risk due to its concentration for customers with revenue in excess of 10%. Total Related parties Related parties Trade Trade Amount Amount Percentage Amount Percentage Accounts receivables As of September 30, 2018 $ 52,560 $ 39,427 75 % $ 13,133 25 % As of December 31, 2017 $ 107,341 $ 89,427 83 % $ 17,914 17 % Revenue For the nine months ended September 30, 2018 $ 142,952 $ 115,107 81 % $ 27,845 19 % For the nine months ended September 30, 2017 $ 186,596 $ 103,548 55 % $ 83,048 45 % Fixed assets, net Property and equipment are stated at cost less accumulated depreciation. Depreciation is calculated on a straight-line basis over the following estimated useful lives: Office equipment 3 years Computer equipment 3 years Furniture and fixtures 3 years Motor vehicles 10 years Fair value The carrying value of cash and cash equivalents, accounts payable and accrued liabilities, and borrowings, as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments. All other significant financial assets, financial liabilities and equity instruments of the Company are either recognized or disclosed in the financial statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk. Where practicable the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise only available information pertinent to fair value has been disclosed. Revenue recognition Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers ("ASC 606"), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide goods or services to customers. Under the new standard, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. The Company adopted this new standard on January 1, 2018 under the modified retrospective method to all contracts not completed as of January 1, 2018 and the adoption did not have a material effect on our financial statements but we expanded our disclosures related to contracts with customers below. Revenue is recognized when (or as) the Company transfers promised goods or services to its customers in amounts that reflect the consideration to which the Company expects to be entitled to in exchange for those goods or services, which occurs when (or as) the Company satisfies its contractual obligations and transfers over control of the promised goods or services to its customers. Costs to obtain or fulfill a contract are expensed as incurred. Disaggregation of Revenue We generate revenue from the project involving provision of services and web/software development to customers. In respect to the provision of services, the agreement span over the length of one year with cancellable clause and are typically billed on a monthly basis. The following table depicts the disaggregation of revenue according to revenue type and is consistent with how we evaluate our financial performance: For the nine months ended September 30, 2018 Segments Provision of Services Web / Software Development Total Primary Geographical Markets North America $ 115,107 $ - $ 115,107 Asia - 27,845 27,845 $ 115,107 $ 27,845 $ 142,952 Timing of Revenue Recognition Goods transferred at a point in time $ - $ 27,845 $ 27,845 Services transferred over time 115,107 - 115,107 $ 115,107 $ 27,845 $ 142,952 For the nine months ended September 30, 2017 Segments Provision of Services Web / Software Development Total Primary Geographical Markets North America $ - $ 103,548 $ 103,548 Asia 48,521 34,527 83,048 $ 48,521 $ 138,075 $ 186,596 Timing of Revenue Recognition Goods transferred at a point in time $ - $ 138,075 $ 138,075 Services transferred over time 48,521 - 48,521 $ 48,521 $ 138,075 $ 186,596 Contract assets and contract liabilities Based on our contracts, we normally invoice customers once our performance obligations have been satisfied, at which point payment is unconditional. Accordingly, our contracts do not give rise to contract assets or liabilities under ASC 606. Accounts receivable are recorded when the right to consideration becomes unconditional. Remaining performance obligations As of September 30, 2018, the aggregate amount of the transaction price allocated to the remaining performance obligation is $5,110, and the Group will recognize this revenue as the web development is completed, which is expected to occur over the next 3 months. Research and development expenses Research and development expenses primarily consist of salaries and benefits for research and development personnel. The Company’s research and development activities primarily consist of the research and development of new features for its mobile platform and its self-developed mobile games. Expenditures incurred during the research phase are expensed as incurred. Income taxes Current income taxes are provided for in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements. Net operating loss carry forwards and credits are applied using enacted statutory tax rates applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that a portion of or all of the deferred tax assets will not be realized. The components of the deferred tax assets and liabilities are individually classified as non-current based on their characteristics. The impact of an uncertain income tax position on the income tax return is recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant tax authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Interest and penalties on income taxes will be classified as a component of the provisions for income taxes. The Group did not recognize any income tax due to uncertain tax position or incur any interest and penalties related to potential underpaid income tax expenses for the period ended September 30, 2018 or 2017, respectively. Uncertainties exist with respect to the application of the New EIT Law to our operations, specifically with respect to our tax residency. The New EIT Law specifies that legal entities organized outside of the PRC will be considered residents for PRC income tax purposes if their “de facto management bodies” as “establishments that carry on substantial and overall management and control over the operations, personnel, accounting, properties, etc. of the Company.” Because of the uncertainties that have resulted from limited PRC guidance on the issue, it is uncertain whether our legal entities outside the PRC constitute residents under the New EIT Law. If one or more of our legal entities organized outside the PRC were characterized as PRC residents, the impact would adversely affect our results of operations. Foreign currency translation Items included in the financial statements of each entity in the group are measured using the currency of the primary economic environment in which the entity operates (“functional currency”). The functional and reporting currency of the Company is the United States dollar (“U.S. dollar”). The financial records of the Company’s subsidiaries located in Singapore, Hong Kong and the PRC are maintained in their local currencies, the Singapore Dollar (S$), Hong Kong Dollar (HK$) and Renminbi ("RMB"), which are also the functional currencies of these entities. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at the rates of exchange ruling at the balance sheet date. Transactions in currencies other than the functional currency during the year are converted into functional currency at the applicable rates of exchange prevailing when the transactions occurred. Transaction gains and losses are recognized in the statement of operations. The Company’s entities with functional currency of Renminbi, Hong Kong Dollar and Singapore Dollar, translate their operating results and financial positions into the U.S. dollar, the Company’s reporting currency. Assets and liabilities are translated using the exchange rates in effect on the balance sheet date. Revenues, expenses, gains and losses are translated using the average rate for the year. Translation adjustments are reported as cumulative translation adjustments and are shown as a separate component of comprehensive income (loss). For the three and nine months ended September 30, 2018, the Company recorded other comprehensive income from translation gain of $21,899 and $90,562 in the consolidated financial statements. For the three and nine months ended September 30, 2017, the Company recorded other comprehensive income from translation loss of $44,241 and $165,908 in the consolidated financial statements. Operating leases Leases where the rewards and risks of ownership of assets primarily remain with the lessor are accounted for as operating leases. Payments made under operating leases are charged to the consolidated statements of operations on a straight-line basis over the lease periods. Comprehensive income (loss) Comprehensive income (loss) includes gains (losses) from foreign currency translation adjustments. Comprehensive income (loss) is reported in the consolidated statements of operations and comprehensive loss. Loss per share Basic loss per share is computed by dividing net loss attributable to shareholders by the weighted average number of shares outstanding during the period. The Company's convertible preferred shares are not participating securities and have no voting rights until converted to common stock. As of September 30, 2018, no shares of preferred stock are eligible for conversion into voting common stock. As of September 30, 2018, there are no potentially dilutive securities that were excluded from the computation of diluted EPS. Recent accounting pronouncements not yet adopted On Feb. 25, 2016, the Financial Accounting Standards Board (FASB) released Accounting Standards Update No. 2016-02, Leases (Topic 842) (the Update). The new leasing standard presents dramatic changes to the balance sheets of lessees. Lessor accounting is updated to align with certain changes in the lessee model and the new revenue recognition standard. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018. The Company is currently evaluating the potential impacts of this Update. In February 2018, the FASB issued Accounting Standards Update No. 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from accumulated Other Comprehensive Income, or ASU 2018-02, which requires the reclassification from accumulated other comprehensive income to retained earnings for the stranded tax effects arising from the change in the reduction of the U.S. federal statutory income tax rate to 21% from 35%. ASU 2018-02 is effective for interim and annual periods beginning after December 15, 2018. We will adopt ASU 2018-02 on January 1, 2019. The Company is currently evaluating the potential impacts of this Update. In June 2018, the FASB issued Accounting Standards Update No. 2018-07, which simplifies several aspects of the accounting for nonemployee share-based payment transactions resulting from expanding the scope of Topic 718, Compensation-Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. Some of the areas for simplification apply only to nonpublic entities. The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Company is currently evaluating the potential impacts of this Update. |
3. Fixed Assets, Net
3. Fixed Assets, Net | 9 Months Ended |
Sep. 30, 2018 | |
Fixed Assets Net | |
Fixed assets, net | Fixed assets, net consisted of the following: September 30, December 31, 2018 2017 Computer equipment $ 78,078 $ 76,662 Office equipment 22,945 22,843 Furniture and fixtures 10,599 10,599 $ 111,622 $ 110,104 Less: accumulated depreciation (100,989 ) (87,167 ) Fixed assets, net $ 10,633 $ 22,937 Depreciation expenses charged to the consolidated statements of operations for the three months ended September 30, 2018 and 2017 were $3,400 and $9,965, respectively. Depreciation expenses charged to the consolidated statements of operations for the nine months ended September 30, 2018 and 2017 were $13,822 and $28,032, respectively. |
4. Accounts Payable and Accrued
4. Accounts Payable and Accrued Expenses | 9 Months Ended |
Sep. 30, 2018 | |
Accounts Payable And Accrued Expense | |
Accounts Payable and Accrued Expenses | Accrued expenses and other current liabilities consisted of the following: September 30, December 31, 2018 2017 Accrued payroll & benefits $ 173,250 $ 170,915 Accrued professional fees 18,532 20,666 Other 8,416 13,126 Total $ 200,198 $ 204,707 |
5. Share Capitalization
5. Share Capitalization | 9 Months Ended |
Sep. 30, 2018 | |
Share Capitalization | |
Share Capitalization | The Company is authorized to issue 1 billion shares of common stock and 15 million shares of preferred stock. The authorized share capital of the Company’s common stock was increased from 500 million to 1 billion on May 5, 2017. Both share types have a $0.0001 par value. As of September 30, 2018 and December 31, 2017, the Company had issued and outstanding, 506,898,576 of common stock, and 0 shares of preferred stock. Common Shares: Pursuant to the Purchase Agreement, dated October 15, 2014, the Company issued 1,000,000 shares of common stock to SeD. Such amount represented 19% ownership in the Company. On July 13, 2015, Singapore eDevelopment Limited (“SeD”) acquired 777,687 shares of the Company common stock by converting outstanding loans made to the Company into common stock of the Company at a rate of $5.00 per share (rounded to the nearest full share). After such transactions SeD owned 98.17% of the Company. On March 27, 2017, the Company entered into a Loan Conversion Agreement with SeD, pursuant to which SeD agreed to convert $450,890 of debt owed by Company to SeD into 500,988,889 common shares at a conversion price of $0.0009. The captioned shares were issued on June 9, 2017, and SeD owned 99.979% of the Company after such transactions. Preferred Shares: Pursuant to the Purchase Agreement, dated October 15, 2014, the Company issued 13,800,000 shares of a class of preferred stock called Perpetual Preferred Stock (“Preferred Stock”) to SeD . The Preferred Stock has no dividend or voting rights. The Preferred Stock is convertible to common stock of the Company dependent upon the number of commercial users of the Software. For each 1,000,000 commercial users of the Software (without duplication), SeD shall have the right to convert 1,464,000 shares of Perpetual Preferred Stock into 7,320,000 shares of Common Stock, so that there must be a minimum of 9,426,230 commercial users in order for all of the shares of the Perpetual Preferred Stock to be converted into common stock of the Company (13,800,000 shares of Preferred Stock convertible into 69,000,000 shares of common stock). On March 27, 2017, SeD and the Company entered into a Preferred Stock Cancellation Agreement, by which SeD agreed to cancel its 13,800,000 shares Perpetual Preferred Stock issued by the Company. On June 8, 2017, a Certificate of Retirement for 13,800,000 shares of the Perpetual Preferred Stock has been filed to the office of Secretary of State of the State of Delaware. Other than the conversion rights described above, the Preferred Stock has no voting, dividend, redemption or other rights. |
6. Equity Incentive Plan
6. Equity Incentive Plan | 9 Months Ended |
Sep. 30, 2018 | |
Equity Incentive Plan | |
Equity Incentive Plan | On July 30, 2018, the Company adopted the Equity Incentive Plan (the “Equity Plan”). The Equity Plan is intended to encourage ownership of shares of common stock by employees, directors, and certain consultants to the Company in order to attract and retain such people and, to induce them to work for the benefit of the Company. The Equity Plan provides for the grant of options and/or other stock-based or stock-denominated awards. Subject to adjustment in accordance with the terms of the Equity Plan, 50,000,000 shares of Common Stock of the Company have been reserved for issuance pursuant to awards under the Equity Plan. The Equity Plan will be administered by the Company’s Board of Directors. This Equity Plan shall terminate ten (10) years from the date of its adoption by the Board of Directors. |
7. Discontinued Operations
7. Discontinued Operations | 9 Months Ended |
Sep. 30, 2018 | |
Discontinued Operations Abstract | |
Discontinued Operations | September 30, 2018 December 31, 2017 ASSETS CURRENT ASSETS: Cash $ 7,399 $ 29,701 Accounts receivable-trade 2,913 - Deposit and other receivable 5,058 5,337 TOTAL CURRENT ASSETS 15,370 35,038 Fixed assets, net 2,320 8,309 TOTAL ASSETS $ 17,690 $ 43,347 LIABILITIES AND STOCKHOLDERS' DEFICIT CURRENT LIABILITIES: Accounts payable and accrued expenses $ 164,485 $ 171,566 TOTAL CURRENT LIABILITIES 164,485 171,566 TOTAL LIABILITIES $ 164,485 $ 171,566 Quarter Ended September 30, 2018 Quarter Ended September 30, 2017 Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017 Revenues: Project fee-others $ - $ - $ 7,437 $ 44,179 - - 7,437 44,179 Cost of revenues - - 4,596 9,071 Gross profit $ - $ - $ 2,841 $ 35,108 Operating expenses: Research and product development $ - $ 59,242 $ - $ 162,013 Depreciation 1,193 6,011 5,989 18,894 General and administrative 21,279 11,404 68,413 38,851 Total operating expenses 22,472 76,657 74,402 219,758 (Loss) from operations (22,472 ) (76,657 ) (71,561 ) (184,650 ) Other income (expenses): Other sundry income 81 - 421 - Foreign exchange gain (loss) (9,752 ) 1,165 (9,123 ) (6,612 ) Total other income (expenses) (9,671 ) 1,165 (8,702 ) (6,612 ) Loss from discontinued operations $ (32,143 ) $ (75,492 ) $ (80,263 ) $ (191,262 ) |
8. Commitments and Contingencie
8. Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments And Contingencies | |
Commitments and Contingencies | On May 9, 2016, the Company entered into a lease agreement for 1,231 square feet of office space in Guangzhou, China. The lease commenced on May 9, 2016 and runs through May 8, 2018 with monthly payments of $2,366. The Company has renewed the lease agreement for another year until May 29, 2019 with monthly payments of $2,484. The Company was required to put up a security deposit of $4,498. For the nine months ended September 30, 2018, the Company recorded rent expense of $21,883 for the Guangzhou office. On April 10, 2015, the Company entered into a lease agreement for 347 square feet of office space in Kowloon, Hong Kong. This lease commenced on April 20, 2015 and runs through April 19, 2017 with monthly payments of $2,574. The Company was required to put up a security deposit of $5,147. On March 16, 2017, the Company entered into a lease agreement for 1,504 square feet of office space in Kowloon, Hong Kong. This lease commenced on March 16, 2017 and runs through March 31, 2019 with monthly payments of $3,253. The Company was required to put up a security deposit of $6,515. For the three and nine months ended September 30, 2018, the Company recorded rent expense of $10,577 and $30,894 for the office. For the three and nine months ended September 30, 2017, the Company recorded rent expense of $12,043 and $31,561 for the office. The lease was terminated on September 30, 2018 and the security deposit is expected to be returned in the coming quarter. The following is a schedule by years of future minimum lease payments under non-cancellable operating leases: 2018 $ 7,452 2019 4,968 Total $ 12,420 |
9. Related Party Balances and T
9. Related Party Balances and Transactions | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Balances and Transactions | The Company’s Acting Chief Executive Officer, Mr. Chan Heng Fai is also the Chief Executive Officer of SeD. SeD is the majority shareholder of the Company. As of the date of this report, the Company has not entered into any employment arrangement with any director or officer. On March 1, 2018, the Company’s subsidiary HotApp International Ltd. entered into an Outsource Technology Development Agreement (the “Agreement”) with Document Security Systems, Inc. (“Document Security Systems”), which may be terminated by either party on 30-days’ notice. The purpose of the Agreement is to facilitate Document Security Systems’ development of a software application to be included as part of Document Security Systems’ AuthentiGuard® Technology suite. Under this agreement, Document Security Systems agreed to pay $23,000 per month for access to HotApp International Ltd.’s software programmers. The agreement was terminated on July 31, 2018. Mr. Chan Heng Fai is a member of the Company’s Board of Directors and, through his control of the Company’s majority shareholder, the beneficial owner of a majority of the Company’s common stock. Mr. Chan is also a member of the Board of Document Security Systems and a shareholder of Document Security Systems. The agreement was terminated on July 31, 2018. As of September 30, 2018, the Company has amount due to SeD for $981,951, plus an amount due to a director of $5,255 and has an amount due from an affiliate for $2,192. The Company has made full impairment provision for the amount due from the affiliate. The account receivable as of September 30, 2018 included a trade receivable from an affiliate by common ownership amounting to $39,428 resulting from the revenue earned from that affiliate during the year 2017. On October 25, 2018, HotApps International Pte. Ltd. (“HotApps International”), a wholly owned subsidiary of the Company entered into an Equity Purchase Agreement with DSS Asia Limited (“DSS Asia”), a Hong Kong subsidiary of DSS International Inc. (“DSS International”), pursuant to which HotApps International will sell to DSS Asia all of the issued and outstanding shares of Guangzhou HotApps Technology Ltd. (“Guangzhou HotApps”). Mr. Chan Heng Fai is the Acting Chief Executive Officer and a Member of the Board of Directors of the Company. He is also the Chief Executive Officer, Chairman and controlling shareholder of Singapore eDevelopment Limited, the majority shareholder of the Company. Mr. Chan is also the Chief Executive Officer and Chairman of DSS International and a significant shareholder and a member of the Board of Document Security Systems Inc., which is the sole owner of DSS International. Mr. Chan Heng Fai is also a member of the Board of Directors of Document Security Systems and a shareholder of Document Security Systems. Lum Kan Fai, a member of the Board of Directors of the Company, is also an employee of DSS International. The closing of the Equity Purchase Agreement is subject to conditions and the parties expect to close in 2018. Guangzhou HotApps is primarily engaged in engineering work for software development, mainly voice over internet protocol. Guangzhou HotApps is also involved in a number of outsourcing projects, including projects related to real estate and lighting. The purchase price for this transaction is $100,000, which shall be paid in the form of a two-year, interest free, unsecured, demand promissory note in the principal amount of $100,000. The note shall be due and payable in full on two years from the closing of the Equity Purchase Agreement. |
10. Subsequent Events
10. Subsequent Events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | On October 25, 2018, HotApps International Pte. Ltd. (“HotApps International”), a wholly owned subsidiary of the Company entered into an Equity Purchase Agreement with DSS Asia Limited (“DSS Asia”), a Hong Kong subsidiary of DSS International Inc. (“DSS International”), pursuant to which HotApps International will sell to DSS Asia all of the issued and outstanding shares of Guangzhou HotApps Technology Ltd. (“Guangzhou HotApps”). Mr. Chan Heng Fai is the Acting Chief Executive Officer and a Member of the Board of Directors of the Company. He is also the Chief Executive Officer, Chairman and controlling shareholder of Singapore eDevelopment Limited, the majority shareholder of the Company. Mr. Chan is also the Chief Executive Officer and Chairman of DSS International and a significant shareholder and a member of the Board of Document Security Systems Inc., which is the sole owner of DSS International. Mr. Chan Heng Fai is also a member of the Board of Directors of Document Security Systems and a shareholder of Document Security Systems. Lum Kan Fai, a member of the Board of Directors of the Company, is also an employee of DSS International. The closing of the Equity Purchase Agreement is subject to conditions and the parties expect to close in 2018. Guangzhou HotApps is primarily engaged in engineering work for software development, mainly voice over internet protocol. Guangzhou HotApps is also involved in a number of outsourcing projects, including projects related to real estate and lighting. The purchase price for this transaction is $100,000, which shall be paid in the form of a two-year, interest free, unsecured, demand promissory note in the principal amount of $100,000. The note shall be due and payable in full on two years from the closing of the Equity Purchase Agreement. |
2. Summary of Significant Acc_2
2. Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Summary Of Significant Accounting Policies Policies | |
Basis of Presentation | The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). These condensed consolidated financial statements should be read in conjunction with the financial statements and additional information as contained in our Annual Report on Form 10-K for the year ended December 31, 2017. Results of operations for the nine month periods ended September 30, 2018 are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2018. The other information in these condensed consolidated financial statements is unaudited but, in the opinion of management, reflects all adjustments necessary for a fair presentation of the results for the periods covered. All such adjustments are of a normal recurring nature unless disclosed otherwise. |
Basis of consolidation | The consolidated financial statements of the Group include the financial statements of HotApp Blockchain Inc. and its subsidiaries. All inter-company transactions and balances have been eliminated upon consolidation. |
Use of estimates | The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and revenues, cost and expenses in the financial statements and accompanying notes. Significant accounting estimates reflected in the Group’s consolidated financial statements include revenue recognition, the useful lives and impairment of property and equipment. |
Cash and Cash Equivalents | The Company considers all highly liquid investments with a maturity of three months or less at the date of acquisition to be cash equivalents. There were no cash equivalents as of September 30, 2018 and December 31, 2017. |
Foreign currency risk | Because of its foreign operations, the Company holds cash in non-US dollars. As of September 30, 2018, cash and cash equivalents of the Group includes, on an as converted basis to US dollars $51,872, $7,399 and $14,102 in Hong Kong Dollars (“HK$”), Reminbi (“RMB”) and Singapore Dollars (“S$”), respectively.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Renminbi (“RMB”) is not a freely convertible currency. The State Administration for Foreign Exchange, under the authority of the People’s Bank of China, controls the conversion of RMB into foreign currencies. The value of the RMB is subject to changes in central government policies and to international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>" id="sjs-B8"><p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Because of its foreign operations, the Company holds cash in non-US dollars. As of September 30, 2018, cash and cash equivalents of the Group includes, on an as converted basis to US dollars $51,872, $7,399 and $14,102 in Hong Kong Dollars (“HK$”), Reminbi (“RMB”) and Singapore Dollars (“S$”), respectively.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Renminbi (“RMB”) is not a freely convertible currency. The State Administration for Foreign Exchange, under the authority of the People’s Bank of China, controls the conversion of RMB into foreign currencies. The value of the RMB is subject to changes in central government policies and to international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> |
Concentrations | Financial instruments that potentially expose the Group to concentration of credit risk consist primarily of cash. Although the cash at each particular bank in the United States is insured up to $250,000 by Federal Deposit Insurance Corporation (FDIC), the Group exposes to risk due to its concentration of cash in foreign countries. The Group places their cash with financial institutions with high-credit ratings and quality. The Group also exposes to credit risk due to its concentration for customers with revenue in excess of 10%. Total Related parties Related parties Trade Trade Amount Amount Percentage Amount Percentage Accounts receivables As of September 30, 2018 $ 52,560 $ 39,427 75 % $ 13,133 25 % As of December 31, 2017 $ 107,341 $ 89,427 83 % $ 17,914 17 % Revenue For the nine months ended September 30, 2018 $ 142,952 $ 115,107 81 % $ 27,845 19 % For the nine months ended September 30, 2017 $ 186,596 $ 103,548 55 % $ 83,048 45 % |
Fixed assets, net | Property and equipment are stated at cost less accumulated depreciation. Depreciation is calculated on a straight-line basis over the following estimated useful lives: Office equipment 3 years Computer equipment 3 years Furniture and fixtures 3 years Motor vehicles 10 years |
Fair Value | The carrying value of cash and cash equivalents, accounts payable and accrued liabilities, and borrowings, as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments. All other significant financial assets, financial liabilities and equity instruments of the Company are either recognized or disclosed in the financial statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk. Where practicable the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise only available information pertinent to fair value has been disclosed. |
Revenue Recognition | Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers ("ASC 606"), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide goods or services to customers. Under the new standard, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. The Company adopted this new standard on January 1, 2018 under the modified retrospective method to all contracts not completed as of January 1, 2018 and the adoption did not have a material effect on our financial statements but we expanded our disclosures related to contracts with customers below. Revenue is recognized when (or as) the Company transfers promised goods or services to its customers in amounts that reflect the consideration to which the Company expects to be entitled to in exchange for those goods or services, which occurs when (or as) the Company satisfies its contractual obligations and transfers over control of the promised goods or services to its customers. Costs to obtain or fulfill a contract are expensed as incurred. |
Disaggregation of Revenue | We generate revenue from the project involving provision of services and web/software development to customers. In respect to the provision of services, the agreement span over the length of one year with cancellable clause and are typically billed on a monthly basis. The following table depicts the disaggregation of revenue according to revenue type and is consistent with how we evaluate our financial performance: For the nine months ended September 30, 2018 Segments Provision of Services Web / Software Development Total Primary Geographical Markets North America $ 115,107 $ - $ 115,107 Asia - 27,845 27,845 $ 115,107 $ 27,845 $ 142,952 Timing of Revenue Recognition Goods transferred at a point in time $ - $ 27,845 $ 27,845 Services transferred over time 115,107 - 115,107 $ 115,107 $ 27,845 $ 142,952 For the nine months ended September 30, 2017 Segments Provision of Services Web / Software Development Total Primary Geographical Markets North America $ - $ 103,548 $ 103,548 Asia 48,521 34,527 83,048 $ 48,521 $ 138,075 $ 186,596 Timing of Revenue Recognition Goods transferred at a point in time $ - $ 138,075 $ 138,075 Services transferred over time 48,521 - 48,521 $ 48,521 $ 138,075 $ 186,596 |
Contract assets and contract liabilities | Based on our contracts, we normally invoice customers once our performance obligations have been satisfied, at which point payment is unconditional. Accordingly, our contracts do not give rise to contract assets or liabilities under ASC 606. Accounts receivable are recorded when the right to consideration becomes unconditional. |
Remaining performance obligations | As of September 30, 2018, the aggregate amount of the transaction price allocated to the remaining performance obligation is $5,110, and the Group will recognize this revenue as the web development is completed, which is expected to occur over the next 3 months. |
Research and development expenses | Research and development expenses primarily consist of salaries and benefits for research and development personnel. The Company’s research and development activities primarily consist of the research and development of new features for its mobile platform and its self-developed mobile games. Expenditures incurred during the research phase are expensed as incurred. |
Income Taxes | Current income taxes are provided for in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements. Net operating loss carry forwards and credits are applied using enacted statutory tax rates applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that a portion of or all of the deferred tax assets will not be realized. The components of the deferred tax assets and liabilities are individually classified as non-current based on their characteristics. The impact of an uncertain income tax position on the income tax return is recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant tax authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Interest and penalties on income taxes will be classified as a component of the provisions for income taxes. The Group did not recognize any income tax due to uncertain tax position or incur any interest and penalties related to potential underpaid income tax expenses for the period ended September 30, 2018 or 2017, respectively. Uncertainties exist with respect to the application of the New EIT Law to our operations, specifically with respect to our tax residency. The New EIT Law specifies that legal entities organized outside of the PRC will be considered residents for PRC income tax purposes if their “de facto management bodies” as “establishments that carry on substantial and overall management and control over the operations, personnel, accounting, properties, etc. of the Company.” Because of the uncertainties that have resulted from limited PRC guidance on the issue, it is uncertain whether our legal entities outside the PRC constitute residents under the New EIT Law. If one or more of our legal entities organized outside the PRC were characterized as PRC residents, the impact would adversely affect our results of operations. |
Foreign currency translation | Items included in the financial statements of each entity in the group are measured using the currency of the primary economic environment in which the entity operates (“functional currency”). The functional and reporting currency of the Company is the United States dollar (“U.S. dollar”). The financial records of the Company’s subsidiaries located in Singapore, Hong Kong and the PRC are maintained in their local currencies, the Singapore Dollar (S$), Hong Kong Dollar (HK$) and Renminbi ("RMB"), which are also the functional currencies of these entities. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at the rates of exchange ruling at the balance sheet date. Transactions in currencies other than the functional currency during the year are converted into functional currency at the applicable rates of exchange prevailing when the transactions occurred. Transaction gains and losses are recognized in the statement of operations. The Company’s entities with functional currency of Renminbi, Hong Kong Dollar and Singapore Dollar, translate their operating results and financial positions into the U.S. dollar, the Company’s reporting currency. Assets and liabilities are translated using the exchange rates in effect on the balance sheet date. Revenues, expenses, gains and losses are translated using the average rate for the year. Translation adjustments are reported as cumulative translation adjustments and are shown as a separate component of comprehensive income (loss). For the three and nine months ended September 30, 2018, the Company recorded other comprehensive income from translation gain of $21,899 and $90,562 in the consolidated financial statements. For the three and nine months ended September 30, 2017, the Company recorded other comprehensive income from translation loss of $44,241 and $165,908 in the consolidated financial statements. |
Operating leases | Leases where the rewards and risks of ownership of assets primarily remain with the lessor are accounted for as operating leases. Payments made under operating leases are charged to the consolidated statements of operations on a straight-line basis over the lease periods. |
Comprehensive income (loss) | Comprehensive income (loss) includes gains (losses) from foreign currency translation adjustments. Comprehensive income (loss) is reported in the consolidated statements of operations and comprehensive loss. |
Loss per share | Basic loss per share is computed by dividing net loss attributable to shareholders by the weighted average number of shares outstanding during the period. The Company's convertible preferred shares are not participating securities and have no voting rights until converted to common stock. As of September 30, 2018, no shares of preferred stock are eligible for conversion into voting common stock. As of September 30, 2018, there are no potentially dilutive securities that were excluded from the computation of diluted EPS. |
Recent Accounting Pronouncements Not Yet Adopted | On Feb. 25, 2016, the Financial Accounting Standards Board (FASB) released Accounting Standards Update No. 2016-02, Leases (Topic 842) (the Update). The new leasing standard presents dramatic changes to the balance sheets of lessees. Lessor accounting is updated to align with certain changes in the lessee model and the new revenue recognition standard. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018. The Company is currently evaluating the potential impacts of this Update. In February 2018, the FASB issued Accounting Standards Update No. 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from accumulated Other Comprehensive Income, or ASU 2018-02, which requires the reclassification from accumulated other comprehensive income to retained earnings for the stranded tax effects arising from the change in the reduction of the U.S. federal statutory income tax rate to 21% from 35%. ASU 2018-02 is effective for interim and annual periods beginning after December 15, 2018. We will adopt ASU 2018-02 on January 1, 2019. The Company is currently evaluating the potential impacts of this Update. In June 2018, the FASB issued Accounting Standards Update No. 2018-07, which simplifies several aspects of the accounting for nonemployee share-based payment transactions resulting from expanding the scope of Topic 718, Compensation-Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. Some of the areas for simplification apply only to nonpublic entities. The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Company is currently evaluating the potential impacts of this Update. |
1. The Company History and Na_2
1. The Company History and Nature of the Business (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Company History And Nature Of Business Tables | |
Summary of subsidiaries | Subsidiaries Date of Incorporation Place of Incorporation Percentage of Ownership 1st Tier Subsidiary: HotApps International Pte Ltd (“HIP”) May 23, 2014 Republic of Singapore 100% by Company Crypto Exchange Inc. December 15, 2017 State of Nevada, the United States of America 100% by Company 2nd Tier Subsidiaries: HWH World Pte. Ltd., formerly Crypto Exchange Pte. Ltd. and HotApps Call Pte Ltd September 15, 2014 Republic of Singapore 100% owned by HIP HotApps Information Technology Co Ltd November 10, 2014 People’s Republic of China 100% owned by HIP HotApp International Limited* July 8, 2014 Hong Kong (Special Administrative Region) 100% owned by HIP |
2. Summary of Significant Acc_3
2. Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Summary Of Significant Accounting Policies Tables | |
Concentrations | Total Related parties Related parties Trade Trade Amount Amount Percentage Amount Percentage Accounts receivables As of September 30, 2018 $ 52,560 $ 39,427 75 % $ 13,133 25 % As of December 31, 2017 $ 107,341 $ 89,427 83 % $ 17,914 17 % Revenue For the nine months ended September 30, 2018 $ 142,952 $ 115,107 81 % $ 27,845 19 % For the nine months ended September 30, 2017 $ 186,596 $ 103,548 55 % $ 83,048 45 % |
Fixed Assets estimated useful life | Office equipment 3 years Computer equipment 3 years Furniture and fixtures 3 years Motor vehicles 10 years |
Disaggregation of Revenue | For the nine months ended September 30, 2018 Segments Provision of Services Web / Software Development Total Primary Geographical Markets North America $ 115,107 $ - $ 115,107 Asia - 27,845 27,845 $ 115,107 $ 27,845 $ 142,952 Timing of Revenue Recognition Goods transferred at a point in time $ - $ 27,845 $ 27,845 Services transferred over time 115,107 - 115,107 $ 115,107 $ 27,845 $ 142,952 For the nine months ended September 30, 2017 Segments Provision of Services Web / Software Development Total Primary Geographical Markets North America $ - $ 103,548 $ 103,548 Asia 48,521 34,527 83,048 $ 48,521 $ 138,075 $ 186,596 Timing of Revenue Recognition Goods transferred at a point in time $ - $ 138,075 $ 138,075 Services transferred over time 48,521 - 48,521 $ 48,521 $ 138,075 $ 186,596 |
3. Fixed Assets, Net (Tables)
3. Fixed Assets, Net (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Fixed Assets Net Tables | |
Fixed Assets, Net | September 30, December 31, 2018 2017 Computer equipment $ 78,078 $ 76,662 Office equipment 22,945 22,843 Furniture and fixtures 10,599 10,599 $ 111,622 $ 110,104 Less: accumulated depreciation (100,989 ) (87,167 ) Fixed assets, net $ 10,633 $ 22,937 |
4. Accounts Payable and Accru_2
4. Accounts Payable and Accrued Expense (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Accounts Payable And Accrued Expense Tables | |
Schedule of accounts payable and accrued expenses | September 30, December 31, 2018 2017 Accrued payroll & benefits $ 173,250 $ 170,915 Accrued professional fees 18,532 20,666 Other 8,416 13,126 Total $ 200,198 $ 204,707 |
7. Discontinued Operations (Tab
7. Discontinued Operations (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Discontinued Operations Tables Abstract | |
Discontinued operations | September 30, 2018 December 31, 2017 ASSETS CURRENT ASSETS: Cash $ 7,399 $ 29,701 Accounts receivable-trade 2,913 - Deposit and other receivable 5,058 5,337 TOTAL CURRENT ASSETS 15,370 35,038 Fixed assets, net 2,320 8,309 TOTAL ASSETS $ 17,690 $ 43,347 LIABILITIES AND STOCKHOLDERS' DEFICIT CURRENT LIABILITIES: Accounts payable and accrued expenses $ 164,485 $ 171,566 TOTAL CURRENT LIABILITIES 164,485 171,566 TOTAL LIABILITIES $ 164,485 $ 171,566 Quarter Ended September 30, 2018 Quarter Ended September 30, 2017 Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017 Revenues: Project fee-others $ - $ - $ 7,437 $ 44,179 - - 7,437 44,179 Cost of revenues - - 4,596 9,071 Gross profit $ - $ - $ 2,841 $ 35,108 Operating expenses: Research and product development $ - $ 59,242 $ - $ 162,013 Depreciation 1,193 6,011 5,989 18,894 General and administrative 21,279 11,404 68,413 38,851 Total operating expenses 22,472 76,657 74,402 219,758 (Loss) from operations (22,472 ) (76,657 ) (71,561 ) (184,650 ) Other income (expenses): Other sundry income 81 - 421 - Foreign exchange gain (loss) (9,752 ) 1,165 (9,123 ) (6,612 ) Total other income (expenses) (9,671 ) 1,165 (8,702 ) (6,612 ) Loss from discontinued operations $ (32,143 ) $ (75,492 ) $ (80,263 ) $ (191,262 ) |
8. Commitments and Contingenc_2
8. Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Commitments And Contingencies Tables Abstract | |
Future minimum lease payments | 2018 $ 7,452 2019 4,968 Total $ 12,420 |
1. The Company History and Na_3
1. The Company History and Nature of the Business (Details) | 9 Months Ended |
Sep. 30, 2018 | |
HotApps International Pte Ltd ("HIP") | |
Date of Incorporation | May 23, 2014 |
Place of Incorporation | Republic of Singapore |
Percentage of Ownership | 100.00% |
Crypto Exchange Inc. | |
Date of Incorporation | Dec. 15, 2017 |
Place of Incorporation | State of Nevada, the United States of America |
Percentage of Ownership | 100.00% |
Crypto Exchange Pte. Ltd. | |
Date of Incorporation | Sep. 15, 2014 |
Place of Incorporation | Republic of Singapore |
Percentage of Ownership | 100.00% |
HotApps Information Technology Co Ltd | |
Date of Incorporation | Nov. 10, 2014 |
Place of Incorporation | People’s Republic of China |
Percentage of Ownership | 100.00% |
HotApp International Limited | |
Date of Incorporation | Jul. 8, 2014 |
Place of Incorporation | Hong Kong (Special Administrative Region) |
Percentage of Ownership | 100.00% |
1. The Company History and Na_4
1. The Company History and Nature of the Business (Details Narrative) | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Company History And Nature Of Business | |
Incurred net losses | $ (5,496,583) |
Net working capital deficit | $ (1,051,171) |
2. Summary of Significant Acc_4
2. Summary of Significant Accounting Policies (Details) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Accounts receivables | $ 52,560 | $ 107,341 | |
Revenue | 142,952 | $ 186,596 | |
Related parties | |||
Accounts receivables | 39,427 | $ 89,427 | |
Revenue | $ 115,107 | 103,548 | |
Related parties | Accounts receivables | |||
Concentration risk | 75.00% | 83.00% | |
Related parties | Revenue | |||
Concentration risk | 81.00% | 55.00% | |
Trade | |||
Accounts receivables | $ 13,133 | $ 17,914 | |
Revenue | $ 27,845 | $ 83,048 | |
Trade | Accounts receivables | |||
Concentration risk | 25.00% | 17.00% | |
Trade | Revenue | |||
Concentration risk | 19.00% | 45.00% |
2. Summary of Significant Acc_5
2. Summary of Significant Accounting Policies (Details 1) | 9 Months Ended |
Sep. 30, 2018 | |
Office Equipment | |
Estimated useful life | 3 years |
Computer Equipment | |
Estimated useful life | 3 years |
Furniture and Fixtures | |
Estimated useful life | 3 years |
Motor Vehicles | |
Estimated useful life | 10 years |
2. Summary of Significant Acc_6
2. Summary of Significant Accounting Policies (Details 2) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenues | $ 33,221 | $ 82,232 | $ 135,515 | $ 142,417 |
Goods transferred at a point in time | ||||
Revenues | 27,845 | 138,075 | ||
Services transferred over time | ||||
Revenues | 115,107 | 48,521 | ||
North America | ||||
Revenues | 115,107 | 103,548 | ||
Asia | ||||
Revenues | 27,845 | 83,048 | ||
Provision of Services | ||||
Revenues | 115,107 | 48,521 | ||
Provision of Services | Goods transferred at a point in time | ||||
Revenues | 0 | 0 | ||
Provision of Services | Services transferred over time | ||||
Revenues | 115,107 | 48,521 | ||
Provision of Services | North America | ||||
Revenues | 115,107 | 0 | ||
Provision of Services | Asia | ||||
Revenues | 0 | 48,521 | ||
Software Development | ||||
Revenues | 27,845 | 138,075 | ||
Software Development | Goods transferred at a point in time | ||||
Revenues | 27,845 | 138,075 | ||
Software Development | Services transferred over time | ||||
Revenues | 0 | 0 | ||
Software Development | North America | ||||
Revenues | 0 | 103,548 | ||
Software Development | Asia | ||||
Revenues | $ 27,845 | $ 34,527 |
2. Summary of Significant Acc_7
2. Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Summary Of Significant Accounting Policies | ||
Foreign currency translation gain (loss) | $ 90,562 | $ (165,908) |
3. Fixed Assets, Net (Details)
3. Fixed Assets, Net (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Fixed Assets Net Details | ||
Computer equipment | $ 78,078 | $ 76,662 |
Office equipment | 22,945 | 22,843 |
Furniture and fixtures | 10,599 | 10,599 |
Fixed assets, gross | 111,622 | 110,104 |
Less: accumulated depreciation | (100,989) | (87,167) |
Fixed assets, net | $ 10,633 | $ 22,937 |
3. Fixed Assets, Net (Details N
3. Fixed Assets, Net (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Fixed Assets Net Details Narrative Abstract | ||||
Depreciation expense | $ 3,400 | $ 9,965 | $ 13,822 | $ 28,032 |
4. Accounts Payable and Accru_3
4. Accounts Payable and Accrued Expense (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Accounts Payable And Accrued Expense Details | ||
Accrued payroll & benefits | $ 173,250 | $ 170,915 |
Accrued professional fees | 18,532 | 20,666 |
Other | 8,416 | 13,126 |
Total | $ 200,198 | $ 204,707 |
5. Share Capitalization (Detail
5. Share Capitalization (Details Narrative) - shares | Sep. 30, 2018 | Dec. 31, 2017 |
Share Capitalization Details Narrative Abstract | ||
Common stock, Issued | 506,898,576 | 506,898,576 |
Common stock, Outstanding | 506,898,576 | 506,898,576 |
Preferred stock, Issued | 0 | 0 |
Preferred stock, Outstanding | 0 | 0 |
7. Discontinued Operations (Det
7. Discontinued Operations (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Discontinued Operations Details Abstract | ||
Cash | $ 7,399 | $ 29,701 |
Accounts receivable-trade | 2,913 | 0 |
Deposit and other receivable | 5,058 | 5,337 |
TOTAL CURRENT ASSETS | 15,370 | 35,038 |
Fixed assets, net | 2,320 | 8,309 |
TOTAL ASSETS | 17,690 | 43,347 |
Accounts payable and accrued expenses | 164,485 | 171,566 |
TOTAL CURRENT LIABILITIES | 164,485 | 171,566 |
TOTAL LIABILITIES | $ 164,485 | $ 171,566 |
7. Discontinued Operations (D_2
7. Discontinued Operations (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenues: | ||||
Project fee-others | $ 0 | $ 0 | $ 7,437 | $ 44,179 |
Cost of revenues | 0 | 0 | 4,596 | 9,071 |
Gross profit | 0 | 0 | 2,841 | 35,108 |
Operating expenses: | ||||
Research and product development | 0 | 59,242 | 0 | 162,013 |
Depreciation | 1,193 | 6,011 | 5,989 | 18,894 |
General and administrative | 21,279 | 11,404 | 68,413 | 38,851 |
Total operating expenses | 22,472 | 76,657 | 74,402 | 219,758 |
(Loss) from operations | (22,472) | (76,657) | (71,561) | (184,650) |
Other income (expenses): | ||||
Other sundry income | 81 | 0 | 421 | 0 |
Foreign exchange gain (loss) | (9,752) | 1,165 | (9,123) | (6,612) |
Total other income (expenses) | (9,671) | 1,165 | (8,702) | (6,612) |
Loss from discontinued operations | $ (32,143) | $ (75,492) | $ (80,263) | $ (191,262) |
8. Commitments and Contingenc_3
8. Commitments and Contingencies (Details) | Sep. 30, 2018USD ($) |
Commitments And Contingencies Details Abstract | |
2,018 | $ 7,452 |
2,019 | 4,968 |
Total | $ 12,420 |
8. Commitments and Contingenc_4
8. Commitments and Contingencies (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Guangzhou | ||||
Rent expense | $ 21,883 | |||
Security deposit | $ 4,498 | 4,498 | ||
Hong Kong | ||||
Rent expense | 10,577 | $ 12,043 | 30,894 | $ 31,561 |
Security deposit | $ 5,147 | $ 5,147 |