| SUMMARY OF SIGNIFICANT POLICIES | Note 2 - SUMMARY OF SIGNIFICANT POLICIES Basis of Presentation The Company is on a fiscal year ending December
31; as such the year ended December 31, 2018 is referred to as “fiscal 2018”, the year ended December 31, 2017 is referred
to as “fiscal 2017”, and the year ended December 31, 2016 is referred to as “fiscal 2016”. The accompanying consolidated financial statements
are in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant
to the U.S. Securities and Exchange Commission (“SEC”) rules. The Company included all adjustments that are necessary
for the fair presentation of our financial position, results of operations, and cash flows for the periods presented. This basis
of accounting differs in certain material respects from that used for the preparation of the books of account of the Company, which
are prepared in accordance with the accounting principles and the relevant financial regulations applicable to enterprises with
limited liabilities established in the PRC (“PRC GAAP”), the accounting standards used in the places of their domicile.
The accompanying consolidated financial statements reflect necessary adjustments not recorded in the books of account of the Company
to present them in conformity with U.S. GAAP. Principles of Consolidation The accompanying consolidated financial statements
include the accounts for AGM Holdings and all its wholly owned subsidiaries. All intercompany accounts and transactions have been
eliminated in consolidation. The Company includes the following:
● AGM Group Holdings Inc., a British Virgin Islands company limited by shares (“AGM Holdings”);
● AGM Technology Limited, a Hong Kong SAR limited company (“AGM HK”) and a wholly-owned subsidiary of AGM Holdings;
● AGM Group Ltd., a Belize limited liability company (“AGM Belize”) and formerly a wholly-owned subsidiary of AGM Holdings. It’s discontinued operation since the Company sold 90% of its equity to Mr. Zhentao, a related party, on September 5, 2018;
● Shenzhen AnGaoMeng Financial Technology Service Co., Ltd. (“AGM Shenzhen”), a wholly foreign-owned enterprise (“WFOE”) formed under the laws of the People’s Republic of China (the “PRC”) and a wholly-owned subsidiary of AGM HK;
● Beijing AnGaoMeng Technology Service Co., Ltd. (“AGM Beijing”), a PRC company and a wholly-owned subsidiary of AGM Shenzhen;
● Nanjing XinGaoMeng Software Technology Co., Ltd. (“AGM Nanjing”), a PRC company and a wholly-owned subsidiary of AGM Shenzhen;
● AGM Software Service LTD (“AGM Software”), a British Virgin Islands company limited by shares and a wholly-owned subsidiary of AGM Holdings;
● AGMTrade UK LTD (“AGM UK”), a company incorporated under the law of England and Wales, limited by shares and a wholly-owned subsidiary of AGM Holdings;
● AGM Trade Global PTY LTD (“AGM Australia”), an Australia company, limited by shares and a wholly-owned subsidiary of AGM Holdings;
● AGMClub Service Limited (“AGMClub”), a Hong Kong SAR limited company and a wholly-owned subsidiary of AGM Holdings.
● AGM Global Asset
Management Limited (“AGM Global”), a Cayman limited company and a wholly-owned subsidiary of AGM
Holdings. Foreign Currency Translation The accompanying consolidated financial statements
are presented in United States dollar (“$”), which is the reporting currency of the Company. The functional currency
of AGM Holdings, AGM Belize, AGM HK, AGM Software, AGM UK, AGM Australia, AGMClub, and AGM Global are United States dollar.
The functional currency of AGM Beijing, AGM Shenzhen and AGM Nanjing are Renminbi (“RMB”). For the subsidiaries whose
functional currencies are RMB, results of operations and cash flows are translated at average exchange rates during the period,
assets and liabilities are translated at the exchange rate at the end of the period, and equity is translated at historical exchange
rates. The resulting translation adjustments are included in determining other comprehensive income or loss. Transaction gains
and losses are reflected in the consolidated statements of income. The consolidated balance sheet
balances, with the exception of equity at December 31, 2018, 2017 and 2016 were translated at RMB6.8764, RMB6.5064 and
RMB6.9437 to $1.00, respectively. The equity accounts were stated at their historical rate. The average translation rates
applied to consolidated statements of income and cash flows for the year ended December 31, 2018, 2017 and 2016 were
RMB6.6146, RMB6.7570 and RMB6.6430 to $1.00, respectively. Use of Estimates The preparation of financial statements in
conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities on the date of the consolidated financial statements and the reported amounts of
revenues and expenses during the reporting periods. The Company bases its estimates and judgments on historical experience and
on various other assumptions and information that are believed to be reasonable under the circumstances. Estimates and assumptions
of future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events
occur, as more experience is acquired, as additional information is obtained and as our operating environment changes. Significant
estimates and assumptions by management include, among others, useful lives and impairment of long-lived assets, allowance for
doubtful accounts, and income taxes including the valuation allowance for deferred tax assets. While the Company believes that
the estimates and assumptions used in the preparation of the financial statements are appropriate, actual results could differ
from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the financial
statements in the period they are determined to be necessary. Cash and cash equivalents Cash and cash equivalents are financial assets
that are either cash or highly liquid investments with an original maturity term of 90 days or less. At December 31, 2018, the
Company’s cash equivalents primarily consist cash in various financial institutions. Fair Value of Financial Instruments ASC 825 requires the disclosure of the estimated
fair value of financial instruments including those financial instruments for which fair value option was not elected. The Company’s financial instruments
mainly include cash and cash equivalents, transaction monetary assets held for clients, mark to market assets for open trading
positions, net accounts receivable, prepaid expenses and other current assets, accounts payable, deposits payable, mark to market
liabilities for open trading positions, accrued expenses and other current liabilities, advance from customers, and income tax
payable. The carrying values of these financial instruments approximate their fair values due to short-term maturities. Accounts Receivable Accounts receivable consists principally
of amounts due from trade customers. Credit is extended based on an evaluation of the customer’s financial condition and
collateral is not generally required. The Company maintains allowances for doubtful
accounts for estimated losses from the receivable amount that cannot be collected. The Company reviews the accounts receivable
on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances.
In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the
balance, a customer’s historical payment history, its current credit-worthiness and current economic trends. In determining
these estimates, the Company examines historical write-offs of its receivables and reviews each client’s account to identify
any specific customer collection issues. Cost method investment Investments in which
the Company does not have the ability to exercise significant influence and does not have any control (generally 0-20 percent
ownership), are accounted for under the cost method of accounting and are included in the long-term assets on the consolidated
balance sheets. The Company evaluates its cost method investment whenever events or changes in circumstance indicate that
the carrying amounts of such investment may be impaired. If a decline in the value of a cost method investment is determined to
be other than temporary, a loss is recorded in the current period. Equity method investment Investments in which
the Company has the ability to exercise significant influence, but do not control, are accounted for under the equity method
of accounting and are included in the long-term assets on the consolidated balance sheets. Under this method of accounting, the
Company’s share of the net earnings or losses of the investee is presented below the income tax line on the consolidated
statements of operations. The Company evaluates its equity method investment whenever events or changes in circumstance indicate
that the carrying amounts of such investment may be impaired. If a decline in the value of an equity method investment is determined
to be other than temporary, a loss is recorded in the current period. Property and Equipment Property and equipment are stated at cost
less accumulated depreciation. Cost represents the purchase price of the asset and other costs incurred to bring the asset into
its existing use. Identifiable significant improvements are capitalized and expenditures for maintenance, repairs, and betterments,
including replacement of minor items, are charged to expense. Depreciation is computed based on
cost, less the estimated residual value, if any, using the straight-line method over the estimated useful life. The residual value
rate and useful life of property and equipment are summarized as follows:
Category Residual value rate Useful life
Electronic equipment 5 % 3 years
Office equipment 5 % 5 years Acquired Intangible Assets with Finite Lives Acquired intangible assets with finite lives
are stated at cost less accumulated amortization. Intangible assets mainly represent the purchased software copyrights and are
amortized on a straight-line basis over an estimated life of ten years. Impairment of Long-lived Assets In accordance with ASC Topic 360, the Company
reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets
may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted
future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between
the asset’s estimated fair value and carrying amount. Lease Commitments The Company has adopted FASB Accounting Standard
Codification, or ASC 840. If the lease terms meet one or all of the following four criteria, it will be classified as a capital
lease, otherwise, it is an operating lease: (1) The lease transfers the title to the lessee at the end of the term; (2) the lease
contains a bargain purchase option; (3) the lease term is equal to 75% of the estimated economic life of the leased property or
more; (4) the present value of the minimum lease payment in the term equals or exceeds 90% of the fair value of the leased property. Payments made under operating leases are
charged to the consolidated statements of income on a straight-line basis over the lease period. Revenue Recognition The Company adopted ASU 2014-09, Topic 606
on January 1, 2018, using the modified retrospective method. ASC 606 requires the use of a new five-step model to recognize revenue
from customer contracts. The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify
the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent
that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance
obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. The Company derived revenues through two
operating lines: (i) Online Trading and Computer Support Service; and (ii) program trading application technology and management
service. Prior to September 5, 2018, the Company also derived revenues by conducting forex trading brokerage business. Revenue from Online Trading and Computer
Support Service mainly consists of revenues from website maintaining and software developing focusing on database analysis and
monitoring, as well as service fees for usages of online trading application based on trading volumes of the forex trading brokerage
transactions, initial trading application setup fees and ongoing service support fees. Revenue from program trading application
technology and management service refers to the commission on profit or loss of client’s investment managed by our intelligent
trading system. The Company record revenues from Online Trading
and Computer Support Service and program trading application technology and management service as service revenues. Revenue from forex trading brokerage business
includes forex trading brokerage fees and commissions which are recorded as discontinued operations Online Trading and Computer Support Service Revenue from computer program technical support
and solution services is recognized when the monthly maintaining services are delivered in the case of website maintaining, or
when a software module is developed in accordance with the requirements stated in sales contacts and accepted by customers in a
case of software developing. In either situation, the price is predetermined in contracts, and the collectability is reasonably
assured. Revenue for usages of online trading application
is recognized based on the monthly trading volumes incurred by the clients during the fiscal year. Revenue for service support
is recognized ratably over the contract term beginning on the commencement of date of each contact. Revenue for initial application
setup is recognized when the physical work of the initial application setup has been completed. The agreements the Company enters into with
clients to deliver online trading access application services generally include multiple deliverables, including online multiple-account
trading management services, initial trading application setup and ongoing service support. Each of these deliverables has a stated
price in the service agreement with the client. These three service deliverables are separated into different units of accounting
and their relative selling prices are based on their stated prices in the agreements. The Company determines the relative selling
prices for the three deliverables based on their stated prices in the agreement because the online multiple-account trading management
services and ongoing support services, which are the last two undelivered elements, will be both delivered on a monthly basis upon
the commencement of the agreement. The initial setup service is the element that will be delivered first and whose consideration
is insignificant compared to the last two elements. As such, the Company has determined that whether or not a Vendor Specific Objective
Price (“VSOE”) is established and used for each of the deliverable will not have material impacts to the Company revenue
recognition. Program trading application technology and management
service The revenue of program trading application
technology and management service is recognized when services have been rendered and accepted, the commission is determinable based
on the realized return or loss of investment under management, and collectability is reasonably assured at the month end. The Company reports revenues net of applicable
sales taxes and related surcharges. Research and Development Expenses Research and development costs are expensed
as incurred. The costs primarily consist of the wage expenses incurred to continuously improve and upgrade the Company’s
services. Research and development expenses of the years ended December 31, 2018, 2017 and 2016 were $993,220, $398,188 and $289,487,
respectively. Income Taxes The Company accounts for income taxes under
the provision of ASC 740-10, which requires the recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes
are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their
financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which
the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred
tax assets to the amount expected to be realized. The Company evaluates its uncertain tax positions
in accordance with ASC 740. The Company initially recognize the financial statement effects of a tax position when it is more likely
than not, based on the technical merits, that the position will be sustained upon examination. The term more likely than not means
a likelihood of more than 50%; the terms examined and upon examination also include resolution of the related appeals or litigation
processes, if any. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold shall
consider the facts, circumstances, and information available at the reporting date. The level of evidence that is necessary and
appropriate to support the Company’s assessment of the technical merits of a tax position is a matter of judgment that depends
on all available information. In making the assessment, the Company considers the potential outcomes of examinations by tax authorities
in determining the adequacy of our provision for income taxes. Tax positions are evaluated in a two-step
process. The Company first determines whether it is more likely than not that a tax position will be sustained upon examination,
including the resolution of any related appeals or litigations based on the technical merits of that position. The second step
is to measure the tax benefit as the largest amount of the benefit that is greater than 50% likely of being realized upon ultimate
settlement. Interests and penalties related to unrecognized
tax benefits are recorded in Provision for income taxes Comprehensive Income ASC 220 “Comprehensive Income”
established standards for reporting and display of comprehensive income, its components and accumulated balances. Components of
comprehensive income include net income and foreign currency translation adjustments. For the years ended December 31, 2018, 2017
and 2016, the only component of accumulated other comprehensive income was foreign currency translation adjustments. Related Party Transactions A related party is generally defined as (i)
any person and or their immediate family hold 10% or more of the company’s securities (ii) the Company’s management,
(iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone
who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related
party transaction when there is a transfer of resources or obligations between related parties. The Company conducts business with
its related parties in the ordinary course of business. Related parties may be individuals or corporate entities. 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. It is not, however, practical to determine the fair value of amounts due from/to related parties due to their related
party nature. Concentration of Credit Risk Financial instruments that potentially subject
the Company to concentration of credit risk are cash and cash equivalents, transaction monetary assets held for clients, mark to
market assets for open trading positions, and accounts receivable arising from its normal business activities. The Company places
its cash in what it believes to be credit-worthy financial institutions or trading platforms. The Company routinely assesses the
financial strength of the customer and, based upon factors surrounding the credit risk, establishes an allowance, if required,
for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance
is limited. Reclassification Certain prior year amounts have been reclassified
to conform to the current period presentation. These reclassifications had no impact on the net earnings and financial position. Earnings per Ordinary Share Basic earnings per ordinary share is computed
by dividing net earnings attributable to ordinary shareholders by the weighted-average number of ordinary shares outstanding during
the period. Diluted earnings per share is computed by dividing net income attributable to ordinary shareholders by the sum of the
weighted-average number of ordinary shares outstanding and dilutive potential ordinary shares during the period. Selling and Marketing Selling and marketing costs are related to
promoting, advertising, and other marketing activities, and are expensed as incurred. For the years ended December 31, 2018, 2017
and 2016, the selling and marketing expenses were $91,468, $695,412 and $0, respectively. Segment Reporting The Company uses the “management approach”
in determining reportable operating segments. The management approach considers the internal organization and reporting used by
the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining
the Company’s reportable segments. The Company’s chief operating decision maker has been identified as the chief executive
officer of the Company who reviews financial information of separate operating segments based on U.S. GAAP. The chief operating
decision maker now reviews results analyzed by customer. This analysis is only presented at the revenue level with no allocation
of direct or indirect costs. Consequently, the Company has determined that it has only one operating segment. Recently Issued Accounting Pronouncements In
March 2019, the FASB issued ASU 2019-01, Leases (Topic 842) Codification Improvements, which provides clarification on implementation
issues associated with adopting ASU 2016-02. The implementation issues noted in ASU 2019-01 include determining the fair
value of the underlying asset by lessors that are not manufacturers or dealers, presentation on the statement of cash flows for
sales-type and direct financing leases, and transition disclosures related to Topic 250, Accounting Changes and Error Corrections. We
will apply the guidance, if applicable, as of January 1, 2019, the date we adopted ASU 2016-02. We are currently evaluating
the impact of this ASU on our financial position, results of operations, cash flows, or presentation thereof In October 2018, the
FASB issued ASU 2018-17, Targeted Improvements to Related Party Guidance for Variable Interest Entites, that changes the guidance
for determining whether a decision-making fee paid to a decision makers and service providers are variable interests. The guidance
is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years, with early
adoption permitted. We will adopt this standard on its effective date of January 1, 2020. We do not expect the adoption of
this ASU to have a material impact on our consolidated financial position, results of operations, cash flows, or presentation thereof. In August 2018, the
FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for
Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. ASU 2018-15 aligns the requirements
for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing
implementation costs incurred to develop or obtain internal-use software. The standard is effective for fiscal years beginning
after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. We will adopt
this standard on its effective date of January 1, 2020. We are currently evaluating the impact of this ASU on our financial
position, results of operations, cash flows, or presentation thereof. In August 2018, the
FASB issued ASU 2018-13 to modify the disclosure requirements on fair value measurements. The amendments are effective beginning
after December 15, 2019. An entity is permitted to early adopt any removed or modified disclosures and delay adoption of the additional
disclosures until the effective date. Most amendments should be applied retrospectively, but certain amendments will be applied
prospectively. The Company is in the process of assessing the impact of the standard on the Company’s fair value disclosures.
However, the standard is not expected to have an impact on the Company’s consolidated financial position, results of operations
and cash flows. A variety of proposed or otherwise potential
accounting standards are currently under study by standard setting organizations and various regulatory agencies. Due to the
tentative and preliminary nature of those proposed standards, we have not determined whether implementation of such proposed standards
would be material to our consolidated financial statements. |
