| Summary of Significant Accounting Policies | Basis of presentation The consolidated financial statements have been
prepared in accordance with the accounting principles generally accepted in the United States of America (“U.S. GAAP”). 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, liabilities, 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, valuation
allowance for deferred tax assets and share-based compensation. 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
December 31, 2018 and December 31, 2017. Foreign currency risk Because of its foreign operations, the Company
holds cash in non-US dollars. As of December 31, 2018, cash and cash equivalents of the Group include, on an as converted basis
to US dollars, $48,572, $9,268 and $59,387, in Hong Kong Dollars (“HK$”), Renminbi (“RMB”) and Singapore
Dollars (“S$”), respectively. 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 is exposed to risk due to its concentration
of cash in foreign countries. The Group places its cash with financial institutions with high-credit ratings and quality. The Group
is also exposed to credit risk due to its concentration of customers with revenue in excess of 10%.
Total Related parties Related parties Trade Trade
Amount Amount Percentage Amount Percentage
Accounts receivables
As of December 31, 2018 $ 49,643 $ 39,427 79 % $ 10,216 21 %
As of December 31, 2017 $ 107,341 $ 89,427 83 % $ 17,914 17 %
Revenue
Continuing operations
For the year ended December 31, 2018 $ 140,652 $ 115,135 82 % $ 25,517 18 %
For the year ended December 31, 2017 $ 197,073 $ 134,877 68 % $ 62,196 32 %
Revenue
Discontinued operations
For the year ended December 31, 2018 $ 7,325 $ - - % $ 7,325 100 %
For the year ended December 31, 2017 $ 50,916 $ - - % $ 50,916 100 %
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 Fair value Fair value is the price that would be received
from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value,
the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market
participants would use when pricing the asset or liability. 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 when the amortization period is less than one-year. Disaggregation of Revenue We generate revenue from a project involving
provision of services and web/software development for customers. In respect to the provision of services, the agreements are less
than one year with cancellable clause and customers 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 year ended December 31, 2018
Provision of Services Web / Software Development
Total
Primary Geographical Markets
Continuing operations
North America $ 115,135 $ - $ 115,135
Asia - 25,517 25,517
$ 115,135 $ 25,517 $ 140,652
Discontinued operations
Asia $ - $ 7,325 $ 7,325
$ - $ 7,325 $ 7,325
Timing of Revenue Recognition
Goods transferred at a point in time $ - $ 32,842 $ 32,842
Services transferred over time 115,135 - 115,135
$ 115,135 $ 32,842 $ 147,977
For the year ended December 31, 2017
Provision of Services Web / Software Development
Total
Primary Geographical Markets
Continuing operations
North America $ - $ 134,877 $ 134,877
Asia 71,844 (9,648 ) 62,196
$ 71,844 $ 125,229 $ 197,073
Discontinued operations
Asia $ - $ 50,916 $ 50,916
$ - $ 50,916 $ 50,916
Timing of Revenue Recognition
Goods transferred at a point in time $ - $ 176,145 $ 176,145
Services transferred over time 71,844 - 71,844
$ 71,844 $ 176,145 $ 247,989 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 December 31, 2018, the aggregate amount
of the transaction price allocated to the remaining performance obligation is $0 as we have completed all projects. Research and development expenses Research and development expenses primarily
consist of (i) salaries and benefits for research and development personnel, and (ii) office rental, general expenses and depreciation
expenses associated with the research and development activities. 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 current
and 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 years ended December 31, 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 year ended December 31, 2018, the Company
recorded other comprehensive loss from a translation gain of $64,279 in the consolidated financial statements. For the year ended
December 31, 2017, the Company recorded other comprehensive loss from a translation loss of $216,068 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 stockholders 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 December 31, 2018, no shares of preferred
stock are eligible for conversion into voting common stock. Recent accounting pronouncements On Feb. 25, 2016, the Financial Accounting Standards
Board (FASB) released Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842) (the Update). The ASU requires lessees
to recognize leases on-balance sheet and disclose key information about leasing arrangements. In July 2018, the FASB issued ASU
2018-10 and ASU 2018-11, Codification Improvements to Topic 842, Leases, amending various aspects of Topic 842. The new standard
establishes a right-of-use model (ROU) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet
for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting
the pattern and classification of expense recognition in the income statement. Topic 842 will become effective for annual and
interim periods beginning in the first quarter 2019, with early adoption permitted. A modified retrospective transition approach
is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either
(1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date
of initial application. If an entity chooses the second option, the transition requirements for existing leases also apply to leases
entered into between the date of initial application and the effective date. The entity must also recast its comparative period
financial statements and provide the disclosures required by the new standard for the comparative periods. We have adopted the
new standard on January 1, 2019 and use the effective date as our date of initial application. Consequently, financial information
will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January
1, 2019. The new standard provides a number of optional
practical expedients in transition. We elected the ‘package of practical expedients’, which permits us not to reassess
under the new standard our prior conclusions about lease identification, lease classification and initial direct costs, and we
do not expect to elect the use-of- hindsight. The new standard also provides practical expedients
for an entity’s ongoing accounting. We elected the short-term lease recognition exemption for all leases that qualify. For
those leases that qualify, we will not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets
or lease liabilities for existing short-term leases of those assets in transition. We also elected the practical expedient to not
separate lease and non-lease components for all of our leases. Adoption of Topic 842 is not expected to have
a material impact on the Company’s consolidated financial statements because the only lease in force as at December 31, 2018
is the lease for the office of its subsidiary in PRC that is being disposed of on January 14, 2019. 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. |
