UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For The Quarterly Period Ended June 30, 2023
or
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ____________ to ____________
Commission File Number 333-264963
catTHIS HOLDINGS CORP.
(Exact name of registrant issuer as specified in its charter)
| Nevada | 61-1990019 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
A-9-3, Northpoint Office, Mid Valley City, Lingkaran Syed Putra, 59200, Kuala Lumpur, Malaysia.
Address of principal executive offices, including zip code
+(60)3 - 9775 6029
Registrant’s phone number, including area code
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name on each exchange on which registered | ||
| N/A | N/A | N/A |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large Accelerated Filer ☐ | Accelerated Filer ☐ | Non-accelerated Filer ☒ | Smaller reporting company ☒ |
| Emerging growth company ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act).
Yes ☐ No ☒
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
N/A
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Class | Outstanding at August 22, 2023 | |
| Common Stock, $0.0001 par value |
TABLE OF CONTENTS
| 2 |
PART I — FINANCIAL INFORMATION
Item 1. Financial statements
CATTHIS HOLDINGS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2023 (unaudited) and DECEMBER 31, 2022 (audited)
(Currency expressed in United States Dollars (“US$”), except for number of share)
| As of June 30, 2023 | As of December 31, 2022 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | 7,770 | 5,850 | ||||||
| Trade receivables, net | $ | 34,225 | $ | 78,337 | ||||
| Deposits, prepayments and other receivables | 8,190 | 8,337 | ||||||
| TOTAL CURRENT ASSETS | $ | 50,185 | $ | 92,524 | ||||
| NON-CURRENT ASSETS | ||||||||
| Right of use assets, net | 7,161 | 16,426 | ||||||
| Equipment, net | 35,355 | 42,493 | ||||||
| Intangible assets, net | 7,575 | 9,245 | ||||||
| TOTAL NON-CURRENT ASSETS | 50,091 | 68,164 | ||||||
| TOTAL ASSETS | $ | 100,276 | $ | 160,688 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Other payables and accrual liabilities | 36,326 | 41,240 | ||||||
| Trade payables | $ | 15,103 | $ | 12,599 | ||||
| Amount due to director | 90 | 95 | ||||||
| Lease liabilities, current portion | 7,429 | 17,049 | ||||||
| TOTAL CURRENT LIABILITIES | 58,948 | 70,983 | ||||||
| TOTAL LIABILITIES | $ | 58,948 | $ | 70,983 | ||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Stockholders’ equity | ||||||||
| Common Shares, par value $; shares authorized shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively | 12,674 | 12,674 | ||||||
| Additional paid-in capital | 703,648 | 703,648 | ||||||
| Foreign exchange translation adjustment | (17,656 | ) | (14,636 | ) | ||||
| Accumulated deficit | (657,338 | ) | (611,981 | ) | ||||
| TOTAL STOCKHOLDERS’ EQUITY | $ | 41,328 | $ | 89,705 | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 100,276 | $ | 160,688 | ||||
See accompanying notes to the unaudited condensed consolidated financial statements.
| F-1 |
CATTHIS HOLDINGS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023 AND 2022 (UNAUDITED)
(Currency expressed in United States Dollars (“US$”), except for number of shares)
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| REVENUE | $ | 32,746 | $ | 68,956 | $ | 66,869 | $ | 93,283 | ||||||||
| COST OF REVENUE | (26,197 | ) | (18,423 | ) | (54,675 | ) | (35,202 | ) | ||||||||
| GROSS PROFIT | $ | 6,549 | $ | 50,533 | $ | 12,194 | $ | 58,081 | ||||||||
| OTHER INCOME | 120 | 6,796 | 317 | 7,911 | ||||||||||||
| SELLING AND DISTRIBUTION EXPENSES | (2,214 | ) | (19,052 | ) | (4,866 | ) | (21,473 | ) | ||||||||
| GENERAL AND ADMINISTRATIVE EXPENSES | (16,280 | ) | (172,750 | ) | (37,750 | ) | (288,009 | ) | ||||||||
| OTHER OPERATING EXPENSE | (7,468 | ) | (10,304 | ) | (15,252 | ) | (18,424 | ) | ||||||||
| LOSS BEFORE INCOME TAX | (19,293 | ) | (144,777 | ) | (45,357 | ) | (261,914 | ) | ||||||||
| INCOME TAX EXPENSES | - | - | - | - | ||||||||||||
| NET LOSS | (19,293 | ) | (144,777 | ) | (45,357 | ) | (261,914 | ) | ||||||||
| OTHER COMPREHENSIVE INCOME/(LOSS): | ||||||||||||||||
| - Foreign currency translation income/(loss) | (3,179 | ) | (11,493 | ) | (3,020 | ) | (13,916 | ) | ||||||||
| TOTAL COMPREHENSIVE LOSS | (22,472 | ) | (156,270 | ) | (48,377 | ) | (275,830 | ) | ||||||||
| NET LOSS PER SHARE, BASIC AND DILUTED | ) | ) | ) | ) | ||||||||||||
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC AND DILUTED | ||||||||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
| F-2 |
CATTHIS HOLDINGS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023 AND 2022 (unaudited)
(Currency expressed in United States Dollars (“US$”), except for number of shares)
| Shares | Amount | Capital | ADJUSTMENT | loss | EQUITY | |||||||||||||||||||
| Common Stock | ||||||||||||||||||||||||
| FOREIGN | ||||||||||||||||||||||||
| NUMBER | Additional | EXCHANGE | Accumulated | Total | ||||||||||||||||||||
| OF | Paid-in | TRANSLATION | comprehensive | STOCKHOLDERS | ||||||||||||||||||||
| Shares | Amount | Capital | ADJUSTMENT | loss | EQUITY | |||||||||||||||||||
| Balance as of December 31, 2021 | 126,737,500 | $ | 12,674 | $ | 703,648 | $ | 6,550 | $ | (312,597 | ) | $ | 410,275 | ||||||||||||
| Net loss for the period | - | - | - | - | (117,137 | ) | (117,137 | ) | ||||||||||||||||
| Foreign currency translation | - | - | - | (2,423 | ) | - | (2,423 | ) | ||||||||||||||||
| Balance as of March 31, 2022 | 126,737,500 | $ | 12,674 | $ | 703,648 | $ | 4,127 | $ | (429,734 | ) | $ | 290,715 | ||||||||||||
| Net loss for the period | - | - | - | - | (144,777 | ) | (144,777 | ) | ||||||||||||||||
| Foreign currency translation | - | - | - | (11,493 | ) | - | (11,493 | ) | ||||||||||||||||
| Balance as of June 30, 2022 | 126,737,500 | $ | 12,674 | $ | 703,648 | $ | (7,366 | ) | $ | (574,511 | ) | $ | 134,445 | |||||||||||
| Common Stock | FOREIGN | |||||||||||||||||||||||
| NUMBER | Additional | EXCHANGE | Accumulated | Total | ||||||||||||||||||||
| OF | Paid-in | TRANSLATION | comprehensive | STOCKHOLDERS | ||||||||||||||||||||
| Shares | Amount | Capital | ADJUSTMENT | loss | EQUITY | |||||||||||||||||||
| Balance as of December 31, 2022 | 126,737,500 | $ | 12,674 | $ | 703,648 | $ | (14,636 | ) | $ | (611,981 | ) | $ | 89,705 | |||||||||||
| Net loss for the period | - | - | - | - | (26,064 | ) | (26,064 | ) | ||||||||||||||||
| Foreign currency translation | - | - | - | 159 | - | 159 | ||||||||||||||||||
| Balance as of March 31, 2023 | 126,737,500 | $ | 12,674 | $ | 703,648 | (14,477 | ) | (638,045 | ) | $ | 63,800 | |||||||||||||
| Net loss for the period | - | - | - | - | (19,293 | ) | (19,293 | ) | ||||||||||||||||
| Foreign currency translation | - | - | - | (3,179 | ) | - | (3,179 | ) | ||||||||||||||||
| Balance as of June 30, 2023 | 126,737,500 | $ | 12,674 | $ | 703,648 | (17,656 | ) | (657,338 | ) | 41,328 | ||||||||||||||
See accompanying notes to consolidated financial statements
| F-3 |
CATTHIS HOLDINGS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR SIX MONTHS ENDED JUNE 30, 2023 AND 2022 (unaudited)
(Currency expressed in United States Dollars (“US$”), except for number of shares)
| 2023 | 2022 | |||||||
| For the Six Months Ended, June 30 | ||||||||
| 2023 | 2022 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (45,357 | ) | $ | (261,914 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Depreciation and amortization expenses | 14,925 | 17,469 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Trade receivables | 39,834 | (45,397 | ) | |||||
| Deposits, prepayments and other receivables | (308 | ) | 1,649 | |||||
| Operating lease liabilities | (8,689 | ) | (10,478 | ) | ||||
| Trade payables | 3,192 | 14,754 | ||||||
| Other payables and accrued liabilities | (2,663 | ) | (11,317 | ) | ||||
| Net cash flows used in operating activities | $ | 934 | $ | (295,234 | ) | |||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of equipment | - | (3,496 | ) | |||||
| Net cash flows used in investing activities | $ | - | $ | (3,496 | ) | |||
| Effect of exchange rate changes | $ | 986 | $ | (10,614 | ) | |||
| Net changes in cash and cash equivalents | 1,920 | (309,344 | ) | |||||
| Cash and cash equivalents, beginning of year | 5,850 | 345,678 | ||||||
| CASH AND CASH EQUIVALENTS, END OF YEAR | $ | 7,770 | $ | 36,334 | ||||
See accompanying notes to the unaudited condensed consolidated financial statements.
| F-4 |
CATTHIS HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022 (unaudited)
(Currency expressed in United States Dollars (“US$”), except for number of shares)
1. ORGANIZATION AND BUSINESS BACKGROUND
catTHIS Holdings Corp. was incorporated on January 4, 2021 under the laws of the state of Nevada.
The Company, through its subsidiary, engages in providing digital marketing service.
On June 25, 2021 the Company acquired 100% of the equity interests in catTHIS Holdings Corp. (herein referred as the “Malaysia Company”), a private limited company incorporated in Labuan, Malaysia.
Details of the Company’s subsidiaries:
SCHEDULE OF COMPANY’S SUBSIDIARY
| No. | Company Name | Domicile and Date of Incorporation | Particulars of Issued Capital | Principal Activities | ||||
| 1 | catTHIS Holdings Corp. | Labuan, January 26, 2021 | 100 Share of Ordinary Share, US$1 each | Digital marketing service provider |
For purposes of consolidated financial statement presentation, catTHIS Holdings Corp. and its subsidiary is hereinafter referred to as the “Company”.
| F-5 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements for catTHIS Holdings Corp. and its subsidiary for the six months ended June 30, 2023 are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and include the accounts of catTHIS Holdings Corp. and its wholly owned subsidiary. The Company has adopted December 31 as its fiscal year end.
Basis of Consolidation
The condensed consolidated financial statements include the accounts of the Company and its subsidiary. All inter-company accounts and transactions have been eliminated upon consolidation.
Use of Estimates
Management uses estimates and assumptions in preparing these financial statements in accordance with US GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities in the balance sheets, and the reported revenue and expenses during the periods reported. Actual results may differ from these estimates.
Intangible assets, net
The Company follows ASC 360 in accounting for intangible assets, which requires impairment losses to be recorded when indicators of impairment are present and the undiscounted cash flows estimated to be generated by the assets are less than the assets’ carrying amounts. For the period ended June 30, 2023 the Company determined there were no indicators of impairment of intangible assets.
The amortization is provided on straight line method so as to write off the amortization amount of the respective classes of intangible assets as follows:
SCHEDULE OF AMORTIZATION OF INTANGIBLE ASSETS
| Asset Categories | Amortization Periods | |
| Software and applications | 5 years |
| F-6 |
Equipment, net
Equipment stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational.
SCHEDULE OF ESTIMATED USEFUL LIVES OF PROPERTY, PLANT AND EQUIPMENT
| Asset Categories | Depreciation Periods | |
| Office equipment | 10 years | |
| Photography and videography equipment | 5 years |
Lease
The Company recognizes lease payments for its short-term lease on a straight-line basis over the lease term in accordance with ASC 842.
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received. Costs associated with operating lease assets are recognized on a straight-line basis within operating expenses over the term of the lease.
In determining the present value of the unpaid lease payments, ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. As most of the Company leases do not provide an implicit rate, the Company uses its incremental borrowing rate as the discount rate for the lease. The Company incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments.
Cash and cash equivalents
Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.
Revenue recognition
The Company follows the guidance of ASC 606, “Revenue from Contracts”. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients.
Revenue is measured at the fair value of the consideration received or receivable, net of discounts and taxes applicable to the revenue. The Company derives its revenue from provision of digital marketing services to customers.
| F-7 |
Income tax expense
Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC Topic 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclosed in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.
Going concern
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying financial statements, for the period ended June 30, 2023, the Company suffered net loss of $45,357 and accumulated deficit of $657,338. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the financial statements are issued. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
The Company’s ability to continue as a going concern is dependent upon improving its profitability and the continuing financial support from its shareholders. Management believes the existing shareholders or external financing will provide the additional cash to meet the Company’s obligations as they become due. No assurance can be given that any future financing, if needed, will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, if needed, it may contain undue restrictions on its operations, in the case of debt financing, or cause substantial dilution for its stockholders, in the case of equity financing.
The Company calculates net loss per share in accordance with ASC Topic 260, “Earnings per Share.” Basic loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period. Diluted income per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive.
| F-8 |
Foreign currencies translation
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statements of operations.
The reporting currency of the Company is United States Dollars (“US$”). The Company’s subsidiary in Labuan maintains its books and record in United States Dollars (“US$”) respectively, and Ringgits Malaysia (“MYR”) is functional currency as being the primary currency of the economic environment in which the entity operates.
In general, for consolidation purposes, assets and liabilities of its subsidiary whose functional currency is not the US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the year. The gains and losses resulting from translation of financial statements of foreign subsidiary are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.
Translation of amounts from RM into US$1 has been made at the following exchange rates for the respective periods:
SCHEDULE OF FOREIGN EXCHANGE RATES
| 2023 | 2022 | ||||||
| MYR : US$1 exchange rate, as of June 30, 2023 | 4.6679 | 4.4055 | |||||
| MYR : US$1 exchange rate, for six months ended June 30, 2023 | 4.4883 | 4.3506 | |||||
Related parties
Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence.
Fair value of financial instruments
The carrying value of the Company’s financial instruments: cash and cash equivalents, trade receivable, deposits and other receivables, amount due to related parties, trade payables, other payables and accrual liabilities approximate at their fair values because of the short-term nature of these financial instruments.
The Company also follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” (“ASC 820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
Level 1 : Observable inputs such as quoted prices in active markets;
Level 2 : Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level 3 : Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
As of June 30, 2023 and 2022, the Company did not have any nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements, at least annually, on a recurring basis, nor did the Company have any assets or liabilities measured at fair value on a non-recurring basis.
| F-9 |
Recently Adopted Accounting Standards
In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced the expected credit losses methodology for the measurement of credit losses on financial assets measured at amortized cost basis, replacing the previous incurred loss methodology. In November 2019, the FASB issued ASU 2019-10 highlighted the adoption timeline. For smaller reporting entities, Topic 326 is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years, of which is effective for the Company on January 1, 2023.
Credit loss rate is determined by historical collection based on aging schedule, adjusted for current conditions using reasonable and supportable forecasts. Based on the aging categorization and the adjusted loss rate per category, an allowance for credit losses is calculated by multiplying the adjusted loss rate with the amortized cost in the respective age category.
Recently Issued Accounting Standards
The Company reviews new accounting standards as issued. Management has not identified any other new standards that it believes will have a significant impact on the Company’s unaudited condensed consolidated financial statements.
3. GOING CONCERN UNCERTAINTIES
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company incurred a loss of $45,357 for the six months ended June 30, 2023 resulting in accumulated deficit of $657,338.
The Company’s cash position may not be significant enough to support the Company’s daily operations. While the Company believes in the viability of its strategy and in its ability to raise additional funds, there can be no assurances to that effect. The Company’s ability to continue as a going concern is dependent upon its ability to improve profitability and the ability to acquire funding through public offering. If funding from public offering is insufficient, then the Company shall rely on the financial support from its controlling shareholder.
These and other factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that financial statements are issued. These financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result in the Company not being able to continue as a going concern.
4. TRADE RECEIVABLE
SCHEDULE OF ACCOUNTS RECEIVABLE
| As of June 30, 2023 | As of December 31, 2022 | |||||||
| Trade receivable | $ | 34,225 | $ | 78,337 | ||||
| Allowance for expected credit loss | - | - | ||||||
| Trade receivable, net | $ | 34,225 | $ | 78,337 | ||||
5. EQUIPMENT
SCHEDULE OF EQUIPMENT
| As of June 30, 2023 | As of December 31, 2022 | |||||||
| Office equipment, cost | 6,362 | 6,729 | ||||||
| Photography & videography equipment, cost | 44,988 | 47,587 | ||||||
| Total equipment | 51,350 | 54,316 | ||||||
| Accumulated depreciation | (15,995 | ) | (11,823 | ) | ||||
| Total equipment, net | $ | 35,355 | $ | 42,493 | ||||
Office equipment include, but are not strictly limited to, preparing the interior of the office space for the Company’s use, improving functionality, and purchasing new office equipment.
For the six months ended June, 2023 and 2022, the depreciation of equipment amounted $5,010 and $5,225.
6. INTANGIBLE ASSETS
SCHEDULE OF INTANGIBLE ASSETS
| As of June 30, 2023 | As of December 31, 2022 | |||||||
| Software and applications, cost | 11,654 | 12,327 | ||||||
| Accumulated amortization | (4,079 | ) | (3,082 | ) | ||||
| Software and applications, net | $ | 7,575 | $ | 9,245 | ||||
For the six months ended June, 2023 and 2022, the amortization of intangible assets amounted $1,212 and $1,273.
| F-10 |
7. LEASE RIGHT-OF-USE ASSET AND LEASE LIABILITIES
A single lease cost is recognized over the lease term on a generally straight-line basis. All cash payments of operating lease cost are classified within operating activities in the statement of cash flows.
SCHEDULE OF OPERATING LEASE RIGHT AND LEASE LIABILITY
| Right-Of-Use Assets | ||||
| Balance as of December 31, 2022 | $ | 16,426 | ||
| Amortization for the six months ended June, 2023 | (8,703 | ) | ||
| Adjustment for foreign currency translation difference | (562 | ) | ||
| Balance as of June 30, 2023 | 7,161 | |||
| Lease Liability | ||||
| Balance as of December 31, 2022 | $ | 17,049 | ||
| Add: imputed interest | 321 | |||
| Less: gross repayment | (9,358 | ) | ||
| Adjustment for foreign currency translation difference | (583 | ) | ||
| Balance as of June 30, 2023 | 7,429 | |||
| Lease liability current portion | 7,429 | |||
| Lease liability non-current portion | $ | - |
8. DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES
SCHEDULE OF OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS
| As of June 30, 2023 | As of December 31, 2022 | |||||||
| Prepayment | $ | 309 | $ | - | ||||
| Deposits | 7,881 | 8,337 | ||||||
| Total deposits, prepayments and other receivables | $ | 8,190 | $ | 8,337 | ||||
Deposits includes rental and utility deposit and car park deposits, while prepayment consist solely of car park rental prepayment.
9. OTHER PAYABLES AND ACCURED LIABILITIES
SCHEDULE OF OTHER PAYABLES AND ACCRUED LIABILITIES
| As of June 30, 2023 | As of December 31, 2022 | |||||||
| Accruals | $ | 13,699 | $ | 20,280 | ||||
| Other payables | 22,627 | 20,960 | ||||||
| Total other payable and accrued liabilities | 36,326 | 41,240 | ||||||
Other payables consist primarily of outstanding audit fee and marketing expenses while accruals consist primarily of outstanding salary and subcontractor fee.
10. AMOUNT DUE TO A DIRECTOR
Amount due to a director consist solely of paid-up capital of subsidiary paid by director on behalf of the Company.
11. INCOME TAXES
The loss before income taxes of the Company for the six months ended June 30, 2023 and 2022 were comprised of the following:
SCHEDULE OF LOCAL AND FOREIGN COMPONENTS OF LOSS BEFORE INCOME TAXES
| 2023 | 2022 | |||||||
| For the six months ended June 30 | ||||||||
| 2023 | 2022 | |||||||
| Tax jurisdictions from: | ||||||||
| – Local | $ | (10,229 | ) | $ | (165,359 | ) | ||
| – Foreign, representing: | ||||||||
| Labuan | (35,128 | ) | (96,555 | ) | ||||
| Loss before income taxes | $ | (45,357 | ) | $ | (261,914 | ) | ||
| F-11 |
Provision for income taxes consisted of the following:
SCHEDULE OF PROVISION OF INCOME TAXES
| 2023 | 2022 | |||||||
| For the six months ended June 30 | ||||||||
| 2023 | 2022 | |||||||
| Current: | ||||||||
| –Local | $ | - | $ | - | ||||
| –Foreign: | - | - | ||||||
| Deferred: | ||||||||
| –Local | - | - | ||||||
| –Foreign | - | - | ||||||
| Income tax expense | $ | - | $ | - | ||||
The effective tax rate in the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. During the periods presented, the Company has a number of subsidiaries that operates in different countries and is subject to tax in the jurisdictions in which its subsidiaries operate, as follows:
United States of America
The Company is registered in the State of Nevada and is subject to the tax laws of the United States of America. The net operating loss carry forwards begin to expire in 2043, if unutilized. The Company has provided for a full valuation allowance against the deferred tax assets on the expected future tax benefits from the net operating loss carry forwards as the management believes it is more likely than not that these assets will not be realized in the future.
Malaysia
Under the current laws of the Labuan, catTHIS Holdings Corp. is governed under the Labuan Business Activity Act, 1990. The tax charge for such company is based on 3% of net audited profit.
| F-12 |
The following table sets forth the significant components of the aggregate deferred tax assets of the Company as of June 30 and December 31, 2022:
SCHEDULE OF DEFERRED TAX ASSETS
| As of | As of | |||||||
| June 30, 2023 | December 31, 2022 | |||||||
| Deferred tax assets: | ||||||||
| Cumulative tax credit from operating loss carryforwards | ||||||||
| – United States of America | $ | 61,192 | $ | 59,210 | ||||
| – Labuan | 9,410 | 8,777 | ||||||
| Deferred tax assets , gross | ||||||||
| Less: valuation allowance | (70,602 | ) | (67,987 | ) | ||||
| Deferred tax assets | $ | - | $ | - |
12. CONCENTRATION OF RISK
The Company is exposed to the following concentration of risk:
(a) Major customer
For the three months ended June 30, 2023, and 2022 for the customer who accounted for 10% or more of the Company’s revenues and its accounts receivable balance at period-end are presented as follows:
SCHEDULE OF CONCENTRATION OF RISK
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
| Revenue | Percentage of revenue | Trade receivable | ||||||||||||||||||||||
| Customer A | 32,746 | 68,956 | 100 | % | 100 | % | 34,225 | 45,397 | ||||||||||||||||
| Total | 32,746 | 68,956 | 100 | % | 100 | % | 34,255 | 45,397 | ||||||||||||||||
For the six months ended June 30, 2023, and 2022 for the customer who accounted for 10% or more of the Company’s revenues and its accounts receivable balance at period-end are presented as follows:
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
| Revenue | Percentage of revenue | Trade receivable | ||||||||||||||||||||||
| Customer A | 66,869 | 93,283 | 100 | % | 100 | % | 34,225 | 45,397 | ||||||||||||||||
| Total | 66,869 | 93,283 | 100 | % | 100 | % | 34,255 | 45,397 | ||||||||||||||||
(b) Major supplier
For the three months ended June 30, 2023, and 2022 for the supplier who accounted for 10% or more of the Company’s cost of revenue and its accounts payable balance at period-end are presented as follows:
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
| Cost of sales | Percentage of cost of revenue | Trade payable | ||||||||||||||||||||||
| Supplier A | 26,197 | 18,423 | 100 | % | 100 | % | 15,103 | 14,754 | ||||||||||||||||
| Total | 26,197 | 18,423 | 100 | % | 100 | % | 15,103 | 14,754 | ||||||||||||||||
For the six months ended June 30, 2023, and 2022 for the supplier who accounted for 10% or more of the Company’s cost of revenue and its accounts payable balance at period-end are presented as follows:
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
| Cost of sales | Percentage of cost of revenue | Trade payable | ||||||||||||||||||||||
| Supplier A | 53,495 | 35,202 | 98 | % | 100 | % | 15,103 | 14,754 | ||||||||||||||||
| Total | 53,495 | 35,202 | 98 | % | 100 | % | 15,103 | 14,754 | ||||||||||||||||
(c) Credit risk
Financial instruments that are potentially subject to credit risk consist principally of accounts receivable. The Company believes the concentration of credit risk in its trade receivables is substantially mitigated by its ongoing credit evaluation process and relatively short collection terms. The Company does not generally require collateral from customers. The Company evaluates the need for an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information.
(d) Exchange rate risk
The Company cannot guarantee that the current exchange rate will remain stable, therefore there is a possibility that the Company could post the same amount of income for two comparable periods and because of the fluctuating exchange rate actually post higher or lower income depending on exchange rate of RM converted to USD on that date. The exchange rate could fluctuate depending on changes in political and economic environments without notice.
13. SEGMENT REPORTING
ASC 280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about services categories, business segments and major customers in financial statements. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes.
| F-13 |
The Company had no inter-segment sales for the periods presented. Summarized financial information concerning the Company’s reportable segments is shown as below:
SCHEDULE OF INTER SEGMENT INFORMATION
By Business Segment:
| Digital Catalogue Management Service | Total | |||||||
| Six Months Ended June 30, 2023 | ||||||||
| Digital Catalogue Management Service | Total | |||||||
| Revenue | $ | 66,869 | $ | 66,869 | ||||
| Cost of revenue | (54,675 | ) | (54,675 | ) | ||||
| Gross profit | $ | 12,194 | $ | 12,194 | ||||
| Selling, general and administrative expenses and other income | (57,551 | ) | (57,551 | ) | ||||
| Net loss | $ | (45,357 | ) | $ | (45,357 | ) | ||
| Total assets | $ | 100,276 | 100,276 | |||||
| Digital Catalogue Management Service | Total | |||||||
| Six Months Ended June 30, 2022 | ||||||||
| Digital Catalogue Management Service | Total | |||||||
| Revenue | $ | 93,283 | $ | 93,283 | ||||
| Cost of revenue | (35,202 | ) | (35,202 | ) | ||||
| Gross profit | $ | 58,081 | $ | 58,081 | ||||
| Selling, general and administrative expenses and other income | (319,995 | ) | (319,995 | ) | ||||
| Loss from operation | $ | (261,914 | ) | $ | (261,914 | ) | ||
| Total assets | $ | 184,797 | 184,797 | |||||
By Geography:
| United State (Nevada) | Malaysia (Labuan) | Total | ||||||||||
| Six Months Ended June 30, 2023 | ||||||||||||
| United State (Nevada) | Malaysia (Labuan) | Total | ||||||||||
| Revenue | $ | - | $ | 66,869 | $ | 66,869 | ||||||
| Cost of revenue | - | (54,675 | ) | (54,675 | ) | |||||||
| Gross profit | $ | - | $ | 12,194 | $ | 12,194 | ||||||
| Selling, general and administrative expenses and other income | (10,229 | ) | (47,322 | ) | (57,551 | ) | ||||||
| Loss from operation | $ | (10,229 | ) | $ | (35,128 | ) | $ | (45,357 | ) | |||
| Total assets | $ | - | 100,276 | 100,276 | ||||||||
| United State (Nevada) | Malaysia (Labuan) | Total | ||||||||||
| Six Months Ended June 30, 2022 | ||||||||||||
| United State (Nevada) | Malaysia (Labuan) | Total | ||||||||||
| Revenue | $ | - | $ | 93,283 | $ | 93,283 | ||||||
| Cost of revenue | - | (35,202 | ) | (35,202 | ) | |||||||
| Gross profit | $ | - | $ | 58,081 | $ | 58,081 | ||||||
| Selling, general and administrative expenses and other income | (165,359 | ) | (154,636 | ) | (319,995 | ) | ||||||
| Loss from operation | $ | (165,359 | ) | $ | (96,555 | ) | $ | (261,914 | ) | |||
| Total assets | $ | - | 184,797 | 184,797 | ||||||||
14. SUBSEQUENT EVENTS
In accordance with ASC Topic 855, “Subsequent Events”, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued, the Company has evaluated all events or transactions that occurred after June 30, 2023 up through the date the Company presented these audited financial statements.
| F-14 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information contained in this quarter report on Form 10-Q is intended to update the information contained in our Form 10-K, dated April 14, 2023, for the period ended December 31, 2022 and presumes that readers have access to, and will have read, the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other information contained in such Form 10-K. The following discussion and analysis also should be read together with our consolidated financial statements and the notes to the consolidated financial statements included elsewhere in this Form 10-Q.
The following discussion contains certain statements that may be deemed “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements appear in a number of places in this Report, including, without limitation, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements are not guarantees of future performance and involve risks, uncertainties and requirements that are difficult to predict or are beyond our control. Forward-looking statements speak only as of the date of this quarterly report. You should not put undue reliance on any forward-looking statements. We strongly encourage investors to carefully read the factors described in our Form 10-K in the section entitled “Risk Factors” for a description of certain risks that could, among other things, cause actual results to differ from these forward-looking statements. We assume no responsibility to update the forward-looking statements contained in this transition report on Form 10-Q. The following should also be read in conjunction with the unaudited Condensed Consolidated Financial Statements and notes thereto that appear elsewhere in this report.
Overview
catTHIS Holdings Corp., was incorporated in the State of Nevada on January 4, 2021 and it operates through its wholly owned subsidiary, catTHIS Holdings Corp., a Company organized in Labuan, Malaysia. The Nevada and, Malaysia corporations share the same exact business plan.
We are an online platform that provides digital catalogue management service to retailers. Our app “catTHIS” enables users to save PDF catalogues and organize them in a customized way. Users can download the mobile app from Google Play (https://play.google.com/store/apps/details?id=com.incredibleqr.mycatthis.production) or App Store (https://apps.apple.com/us/app/catthis/id1211749794), or access our web-based digital catalogue management system via https://catthis.com/.
We are a startup early-stage company that intend to provide digital marketing services through technology. Its leading mobile application “catTHIS” is a digital catalogue management platform that allows users to upload and share PDF catalogues anywhere and from any devices for free. This environmental-friendly service would significantly bring down the number of physical printed catalogues, newspaper advertisement, magazines and other printed materials. The key feature of this digital catalogue management platform is its engagement metrics, which are extremely useful for users to understand how well its catalogue is reaching their audience.
| 3 |
Results of Operations
Revenue, cost of revenue and gross profit
For six months ended June 30, 2023 and 2022, the Company has generated revenue of $66,869 and $93,283.
For three months ended June 30, 2023 and 2022, the Company has generated revenue of $32,746 and $68,956.
The revenue generated was the result of branding and marketing service fees paid by corporate clients which include catalogue management services, video production and live streaming services via green-screen studio.
For the six months ended June 30, 2023 and 2022, the Company has incurred cost of revenue of $54,675 and $35,502.
For the three months ended June 30, 2023 and 2022, the Company has incurred cost of revenue of $26,197 and $18,423.
Cost of revenue incurred arise in providing marketing service fees paid by corporate clients which include catalogue management services, video production and live streaming services via green-screen studio.
As a result, for six months ended June 30, 2023 and 2022, the Company has generated gross profit of $12,194 and $58,081.
While for three months ended June 30, 2023 and 2022, the Company has generated gross profit of $6,549 and $50,533.
Selling, Distribution and General and Administrative Expenses
For the six months ended June 30, 2023 and 2022, the Company incurred selling and distribution expenses amounted $4,866 and $21,473.
For three months ended June 30, 2023 and 2022, the Company incurred selling and distribution expenses amounted $2,214 and $19,052.
Selling and distribution expenses primarily consist of advertisement, event, marketing fee, travelling expenses and website maintenance.
For the six months ended June 30, 2023 and 2022, the Company incurred general and administrative expenses amounted $37,750 and $288,009.
For three months ended June 30, 2023 and 2022, the Company incurred general and administrative expenses amounted $16,280 and $172,750.
General and administrative expenses primarily consist of subcontractor fee, secretary fee, utility and rental expenses. Significant decrease general and administrative expenses were due to a one off payment made for consultation purpose for OTC Market quotation in year 2022.
For the six months ended June 30, 2023 and 2022, the Company incurred other expenses amounted $15,252 and $18,424.
For three months ended June 30, 2023 and 2022, the Company incurred other expenses amounted $7,468 and $10,304.
Other expenses consist of depreciation of equipment, right of use assets and software and application amortization.
Net Loss
For the six months ended June 30, 2023 and 2022, the Company has incurred a net loss of $45,357 and $261,914 respectively.
For the three months ended June 30, 2023 and 2022, the Company has incurred a net loss of $19,293 and $144,777 respectively.
| 4 |
Liquidity and Capital Resources
Cash Used In Operating Activities
For the six months ended June 30, 2023, the Company has generated $934 in operating activities primarily caused by depreciation and amortization expense, increase in trade payable and decrease in trade receivable contra by net loss from operating, increase in deposits, prepayments and other receivable, decrease in other payable and repayment of lease liability.
For the six months ended June 30, 2022, the Company has used $295,234 in operating activities primarily caused by net loss from operating, increase in trade receivable, repayment of lease liability and other payables and accrued liabilities contra by depreciation and amortization expenses and increase in trade payables.
Cash Used In Investing Activities
No investing activities has occurred for the six months ended June 30, 2023.
For the six months ended June 30, 2022, the Company has invested $3,496 in investing activity for the acquisition of office equipment.
Off-balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders as of June 30, 2023.
Contractual Obligations
As of June 30, 2023, the Company has no contractual obligations involved.
| 5 |
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
ITEM 4 CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures:
We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 30, 2023. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2023, our disclosure controls and procedures were not effective due to the presence of material weaknesses in internal control over financial reporting.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has identified the following material weaknesses which have caused management to conclude that, as of June 30, 2023, our disclosure controls and procedures were not effective: (1) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties and effective risk assessment; (3) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines; and (4) lack of internal audit function due to the fact that the Company lacks qualified resources to perform the internal audit functions properly and that the scope and effectiveness of the internal audit function are yet to be developed.
Changes in Internal Control Over Financial Reporting:
There were no changes in our internal control over financial reporting during the quarter ended June 30, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| 6 |
PART II — OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may become party to litigation or other legal proceedings that we consider to be a part of the ordinary course of our business. We are not currently involved in legal proceedings that could reasonably be expected to have a material adverse effect on our business, prospects, financial condition or results of operations. We may become involved in material legal proceedings in the future.
Item 1A. Risk Factors
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a) None.
(b) None.
(c) None.
Item 3. Defaults Upon Senior Securities
(a) None.
(b) None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information.
None.
Item 6. Exhibits
| 31.1 | Rule 13(a)-14(a) / 15(d)-14(a) Certification of principal executive officer and principal financial officer | |
| 32.1 | Section 1350 Certification of principal executive officer and principal financial officer | |
| 101..INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
| 7 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| catTHIS Holdings Corp. | ||
| (Name of Registrant) | ||
| Date: August 24, 2023 | ||
| By: | /s/ Yeo Choon Pin | |
| Name: | Yeo Choon Pin | |
| Title: | Chief Executive Officer, Director | |
| 8 |
