UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________________to ____________________
333-194748
Commission file number
GigWorld Inc.
(Exact name of registrant as specified in its charter)
Delaware | 45-4742558 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
4800 Montgomery Lane, Suite 210BethesdaMD | 20814 | |
(Address of principal executive offices) | (Zip Code) |
301-971-3940
Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required 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 day. days. Yes ☑ ☒ No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ☐ ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 | ☐ | Accelerated | ☐ | |
Non-accelerated | ☒ | 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 Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
Indicate the number of shares outstanding of each the registrant’s classes of common stock, as of the latest practicable date. As of November 14, 2017,May 9, 2022, there were shares outstanding of the registrant’s common stock $0.0001 par value.
Throughout this Report on Form 10-Q, the terms “Company,” “we,” “us” and “our” refer to HotApp International,GigWorld Inc., and “our board of directors” refers to the board of directors of HotApp International,GigWorld Inc.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements that involve a number of risks and uncertainties. Although our forward-looking statements reflect the good faith judgment of our management, these statements can be based only on facts and factors of which we are currently aware. Consequently, forward-looking statements are inherently subject to risks and uncertainties. Actual results and outcomes may differ materially from results and outcomes discussed in the forward-looking statements.
Forward-looking statements can be identified by the use of forward-looking words such as “may,” “will,” “should,” “anticipate,” “believe,” “expect,” “plan,” “future,” “intend,” “could,” “estimate,” “predict,” “hope,” “potential,” “continue,” or the negative of these terms or other similar expressions. Such forward-looking statements are based on our management’s current plans and expectations and are subject to risks, uncertainties and changes in plans that may cause actual results to differ materially from those anticipated in the forward-looking statements. You should be aware that, as a result of any of these factors materializing, the trading price of our common stock may decline. These factors include, but are not limited to, the following:
● | the availability and adequacy of capital to support and grow our business; | |
● | economic, competitive, business and other conditions in our local and regional markets; | |
● | actions taken or not taken by others, including competitors, as well as legislative, regulatory, judicial and other governmental authorities; | |
● | competition in our industry; | |
● | changes in our business and growth strategy, capital improvements or development plans; | |
● | the availability of additional capital to support development; and | |
● | other factors discussed elsewhere in this |
The cautionary statements made in this quarterly report are intended to be applicable to all related forward-looking statements wherever they may appear in this report.
We urge you not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly update any forward looking-statements, whether as a result of new information, future events or otherwise.
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TABLE OF CONTENTS
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PART I | FINANCIAL INFORMATION |
ITEM 1. | INTERIM FINANCIAL STATEMENTS |
GIGWORLD INC. (FORMERLY KNOWN AS HOTAPP INTERNATIONAL,BLOCKCHAIN INC.
CONDENSED CONSOLIDATED BALANCEBALANCE SHEETS AS OF SEPTEMBER 30, 2017 (UNAUDITED)MARCH 31, 2022 AND DECEMBER 31, 2016
9/30/17 | 12/31/16 | |
ASSETS | ||
CURRENT ASSETS: | ||
Cash and cash equivalents | $149,766 | $102,776 |
Account receivable | 93,936 | - |
Costs in excess of billings | - | 30,332 |
Prepaid expenses | 8,928 | 4,650 |
Deposit and other receivable | 13,412 | 19,745 |
TOTAL CURRENT ASSETS | 266,042 | 157,503 |
Fixed assets, net | 30,462 | 46,096 |
TOTAL ASSETS | $296,504 | $203,599 |
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||
CURRENT LIABILITIES: | ||
Accounts payable and accrued expenses | $216,223 | $238,315 |
Deferred revenue | 5,377 | - |
Accrued taxes and franchise fees | 7,742 | 7,742 |
Amount due to related parties | 724,422 | 455,857 |
TOTAL CURRENT LIABILITIES | 953,764 | 701,914 |
TOTAL LIABILITIES | 953,764 | 701,914 |
STOCKHOLDERS' EQUITY (DEFICIT): | ||
Preferred stock, $0.0001 par value, 15,000,000 shares authorized, 0 and 13,800,000 issued and outstanding | - | 1,380 |
Common stock, $.0001 par value, 1,000,000,000 and 500,000,000 shares authorized, 506,898,576 and 5,909,687 shares issued and outstanding, as of September 30, 2017 and December 31, 2016, respectively | 50,690 | 591 |
Accumulated other comprehensive loss | (239,238) | (73,330) |
Additional paid-in capital | 4,604,191 | 4,202,020 |
Accumulated deficit | (5,072,903) | (4,628,976) |
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) | (657,260) | (498,315) |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $296,504 | $203,599 |
March 31, 2022 | December 31, 2021 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 210,576 | $ | 245,780 | ||||
Prepaid expenses and other receivable | 1,542 | 1,870 | ||||||
Investment in Securities | 1,495,000 | 1,950,000 | ||||||
TOTAL CURRENT ASSETS | 1,707,118 | 2,197,650 | ||||||
Property and Equipment, net | 1,549 | 1,713 | ||||||
Other non-current assets | 102 | 102 | ||||||
TOTAL ASSETS | $ | 1,708,769 | $ | 2,199,465 | ||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
CURRENT LIABILITIES: | ||||||||
Accounts payable and accrued expenses | $ | 27,552 | $ | 14,609 | ||||
Accrued taxes | 7,742 | 7,742 | ||||||
Amount due to related parties | 2,432,390 | 2,383,698 | ||||||
TOTAL CURRENT LIABILITIES | 2,467,684 | 2,406,049 | ||||||
TOTAL LIABILITIES | 2,467,684 | 2,406,049 | ||||||
STOCKHOLDERS’ DEFICIT: | ||||||||
Preferred stock, $ par value, shares authorized, issued and outstanding as of March 31, 2022 and December 31, 2021 | - | - | ||||||
Common stock, $ par value, shares authorized, shares issued and outstanding, as of March 31, 2022 and December 31, 2021 | 50,690 | 50,690 | ||||||
Additional paid-in capital | 4,604,191 | 4,604,191 | ||||||
Accumulated other comprehensive loss | (282,474 | ) | (299,398 | ) | ||||
Accumulated deficit | (5,129,699 | ) | (4,560,449 | ) | ||||
TOTAL GIGWORLD INC STOCKHOLDERS’ DEFICIT | (757,292 | ) | (204,966 | ) | ||||
NON-CONTROLLING INTERESTS | (1,623 | ) | (1,618 | ) | ||||
TOTAL STOCKHOLDERS’ DEFICIT | (758,915 | ) | (206,584 | ) | ||||
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 1,708,769 | $ | 2,199,465 |
The accompanying notes to the consolidated financial statements are an integral part of these unaudited condensed consolidated financial statements.
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GIGWORLD INC. (FORMERLY KNOWN AS HOTAPP INTERNATIONAL,BLOCKCHAIN INC.
CONDENSED CONSOLIDATED STATEMENTSSTATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2017MARCH 31, 2022 AND 20162021 (UNAUDITED)
Quarter Ended September 30, 2017 | Quarter Ended September 30, 2016 | Nine Months Ended September 30, 2017 | Nine Months Ended September 30, 2016 | |
Revenues: | ||||
Project fee | $82,660 | $55,887 | $186,596 | $55,887 |
82,660 | 55,887 | 186,596 | 55,887 | |
Cost of revenues | 39,222 | 23,921 | 55,786 | 23,921 |
Gross profit | $43,438 | $31,966 | $130,810 | $31,966 |
Operating expenses: | ||||
Research and product development | $59,242 | $56,891 | $162,013 | $260,778 |
Sales and marketing | - | (19) | - | (64,654) |
Deposits written off | 25 | - | 2,705 | - |
Depreciation | 9,965 | 11,046 | 28,032 | 35,121 |
Loss on disposal of fixed assets | - | - | 131 | - |
General and administrative | 134,510 | 132,707 | 522,669 | 502,990 |
Total operating expenses | 203,742 | 200,625 | 715,550 | 734,235 |
(Loss) from operations | (160,304) | (168,659) | (584,740) | (702,269) |
Other income / expense: | ||||
Interest income | - | 1 | 1 | 2 |
Foreign exchange (loss) / gain | 32,391 | 8,084 | 140,812 | 120,588 |
Total other income (expenses) | 32,391 | 8,085 | 140,813 | 120,590 |
Loss before taxes | (127,913) | (160,574) | (443,927) | (581,679) |
Income tax provision | - | - | - | 7,037 |
Net loss applicable to common shareholders | $(127,913) | $(160,574) | $(443,927) | $(588,716) |
Net loss per share - basic and diluted | $(0.00) | $(0.03) | $(0.00) | $(0.10) |
Weighted number of shares outstanding - | ||||
Basic and diluted | 506,898,576 | 5,909,687 | 214,041,100 | 5,909,687 |
Comprehensive Income Loss: | ||||
Net loss | $(127,913) | $(160,574) | $(443,927) | $(588,716) |
Foreign currency translation gain (loss) | (44,241) | (7,163) | (165,908) | (121,484) |
Total comprehensive loss | $(172,154) | $(167,737) | $(609,835) | $(710,200) |
Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | |||||||
Operating expenses: | ||||||||
Depreciation | $ | 165 | $ | - | ||||
General and administrative | 104,156 | 30,128 | ||||||
Total operating expenses | 104,321 | 30,128 | ||||||
Loss from operations | (104,321 | ) | (30,128 | ) | ||||
Other income (loss): | ||||||||
Interest income | 1 | - | ||||||
Foreign exchange (loss) | (9,941 | ) | (36,471 | ) | ||||
Unrealized (loss) on Securities Investment | (455,000 | ) | - | |||||
Total other (loss) | (464,940 | ) | (36,471 | ) | ||||
(Loss) before taxes | (569,261 | ) | (66,599 | ) | ||||
Income tax provision | - | - | ||||||
Net (loss) | $ | (569,261 | ) | $ | (66,599 | ) | ||
Net (loss) attributable to Non-controlling interests | (11 | ) | - | |||||
Net (loss) applicable to common shareholders | $ | (569,250 | ) | $ | (66,599 | ) | ||
Net (loss) per share - basic and diluted | $ | (0.00 | ) | $ | (0.00 | ) | ||
Weighted number of shares outstanding - | ||||||||
Basic and diluted | 506,898,576 | 506,898,576 | ||||||
Comprehensive Income (Loss): | ||||||||
Net (loss) | $ | (569,261 | ) | $ | (66,599 | ) | ||
Foreign currency translation gain | 16,930 | 63,278 | ||||||
Total comprehensive (loss) | $ | (552,331 | ) | $ | (3,321 | ) |
The accompanying notes to the consolidated financial statements are an integral part of these unaudited condensed consolidated financial statements.
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GIGWORLD INC. (FORMERLY KNOWN AS HOTAPP INTERNATIONAL,BLOCKCHAIN INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSSTOCKHOLDERS’ (DEFICIT) FOR THE NINETHREE MONTHS ENDED SEPTEMBER 30, 2017MARCH 31, 2022 AND 20162021 (UNAUDITED)
Nine Months Ended September 30, 2017 | Nine Months Ended September 30, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net Loss | $(443,927) | $(588,716) |
Adjustments to reconcile net loss to cash used in operating activities: | ||
Depreciation | 28,032 | 35,121 |
Deposit written off | 2,705 | - |
Loss on disposal of fixed asset | 131 | - |
Foreign exchange transaction gain | (140,812) | (120,588) |
Change in operating assets and liabilities: | ||
Costs in excess of billings | 30,332 | - |
Account receivable | (93,936) | - |
Security deposit and other receivables | 3,628 | - |
Prepaid expenses | (4,278) | 24,750 |
Accounts payable and accrued expenses | (22,092) | (125,051) |
Deferred revenue | 5,377 | 20,632 |
Accrued taxes payable and franchise fees | - | 7,036 |
Net cash used in operating activities | $(634,840) | $(746,816) |
CASH FLOW FROM INVESTING ACTIVITIES: | ||
Acquisition of fixed asset | (12,529) | (8,733) |
Disposal of fixed assets | - | 94,410 |
Net cash (used in)/provided by investing activities | $(12,529) | $85,677 |
CASH FLOW FROM FINANCING ACTIVITIES: | ||
Advance from affiliate | 719,455 | 272,850 |
Net cash provided by financing activities | $719,455 | $272,850 |
NETINCREASE (DECREASE) IN CASH | 72,086 | (388,289) |
Effects of exchange rates on cash | (25,096) | (896) |
CASH AND CASH EQUIVALENTS at beginning of period | 102,776 | 495,136 |
CASH AND CASH EQUIVALENTS at end of period | $149,766 | $105,951 |
Supplemental disclosure of cash flow information | ||
Cash paid for: | ||
Interest | $- | $- |
Income Taxes | $- | $- |
Supplemental schedule of non-cash investing and financing activities | ||
Conversion of shareholder loan into common stock | $450,890 | $- |
Common Shares | Par Value | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total GigWorld Inc Stockholders’ Deficit | Non-Controlling Interests | Stockholders’ Equity (Deficit) | |||||||||||||||||||||||||
Balance December 31, 2021 | 506,898,576 | $ | 50,690 | $ | 4,604,191 | $ | (299,398 | ) | $ | (4,560,449 | ) | $ | (204,966 | ) | $ | (1,618 | ) | $ | (206,584 | ) | ||||||||||||
Net loss for the period | - | - | - | - | (569,250 | ) | (569,250 | ) | (11 | ) | (569,261 | ) | ||||||||||||||||||||
Foreign currency translation adjustment | - | - | - | 16,924 | - | 16,924 | 6 | 16,930 | ||||||||||||||||||||||||
Balance March 31, 2022 | 506,898,576 | $ | 50,690 | $ | 4,604,191 | $ | (282,474 | ) | $ | (5,129,699 | ) | $ | (757,292 | ) | $ | (1,623 | ) | $ | (758,915 | ) |
Common Shares | Par Value | Additional Paid-In Capital | Accumulated Other Comprehensive (Loss) | Accumulated Deficit | Total GigWorld Inc Stockholders’ Deficit | Non-Controlling Interests | Stockholders’ Equity (Deficit) | |||||||||||||||||||||||||
Balance December 31, 2020 | 506,898,576 | $ | 50,690 | $ | 4,604,191 | $ | (378,361 | ) | $ | (5,666,250 | ) | $ | (1,389,730 | ) | $ | - | $ | (1,389,730 | ) | |||||||||||||
Net loss for the period | - | - | - | - | (66,599 | ) | (66,599 | ) | - | (66,599 | ) | |||||||||||||||||||||
Foreign currency translation adjustment | - | - | - | 63,278 | - | 63,278 | - | 63,278 | ||||||||||||||||||||||||
Balance March 31, 2021 | 506,898,576 | $ | 50,690 | $ | 4,604,191 | $ | (315,083 | ) | $ | (5,732,849 | ) | $ | (1,393,051 | ) | $ | - | $ | (1,393,051 | ) |
The accompanying notes to the consolidated financial statements are an integral part of these unaudited condensed consolidated financial statements.
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GIGWORLD INC. (FORMERLY KNOWN AS HOTAPP BLOCKCHAIN INC.)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021 (UNAUDITED)
Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net (Loss) | $ | (569,261 | ) | $ | (66,599 | ) | ||
Adjustments to reconcile net loss to cash used in operations: | ||||||||
Depreciation | 165 | - | ||||||
Unrealized loss on securities investment | 455,000 | - | ||||||
Change in operating assets and liabilities: | ||||||||
Deposit, prepaid expenses and other receivable | 327 | - | ||||||
Accounts payable and accrued expenses | 12,944 | 12,229 | ||||||
Net cash used in operating activities | $ | (100,825 | ) | $ | (54,370 | ) | ||
CASH FLOW FROM FINANCING ACTIVITIES: | ||||||||
Advance from related parties | 55,946 | 14,470 | ||||||
Net cash provided by financing activities | $ | 55,946 | $ | 14,470 | ||||
NET (DECREASE) IN CASH | (44,879 | ) | (39,900 | ) | ||||
Effects of exchange rates on cash | 9,675 | 36,580 | ||||||
CASH AND CASH EQUIVALENTS at beginning of period | 245,780 | 158,057 | ||||||
CASH AND CASH EQUIVALENTS at end of period | $ | 210,576 | $ | 154,737 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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GIGWORLD INC. (FORMERLY KNOWN AS HOTAPP INTERNATIONAL,BLOCKCHAIN INC.
Note 1. The Company History and Nature of the Business
GigWorld Inc., formerly Fragmented Industry Exchange,HotApp Blockchain, Inc., (the “Company” or “Group”) was incorporated in the State of Delaware on March 7, 2012 and established a fiscal year end of December 31st.31. The Company’s initial business plan was to be a financial acquisition intermediary which would serve buyersis focused on serving business-to-business (B2B) needs in e-commerce, collaboration and sellers for companies that are in highly fragmented industries. The Company determined it was in the best interest of the shareholders to expand its business plan. On October 15, 2014, through a sale and purchase agreement (the “Purchase Agreement”) the Company acquired all the issued and outstanding stock of HotApps International Pte Ltd (the “HIP”) from Singapore eDevelopment Limited (“SeD”). HIP owned certain intellectual property relating to instant messaging for portable devices (the “HotApp”). HotApp is a cross-platform mobile application that incorporates instant messaging and ecommerce. It provides a messaging and calling services for HotApp users (text, photo, audio). HotApp can be used on any mobile platform (i.e. IOS Online or Android).
Going Concern
These financial statements have been prepared using accounting principles generally accepted in the United States of America applicable for a going concern, which assumes that the Company will realize its assets and discharge its liabilities in the ordinary course of business. Since inception, the Company has incurred net losses of $5,072,903$5,129,699 and has net working capital deficit of $687,722$760,566 at September 30, 2017.March 31, 2022. Management has concluded that due to the conditions described above, there is substantial doubt about the entities ability to continue as a going concern through November 14, 2018.May 9, 2023. We have evaluated the significance of the conditions in relation to our ability to meet our obligations and believe that our current cash balance along with our current operations will not provide sufficient capital to continue operation through 2017.2022. Our ability to continue as a going concern is dependent upon achieving sales growth, the management of operating expenses and the ability of the Company to obtain the necessary financing to meet its obligations and pay its liabilities arising from normal business operations when they come due, and upon profitable operations.
Our majority shareholder has advised us not to depend solely on itthem for financing. We have increased our efforts to raise additional capital through equity or debt financingfinancings from other sources. However, we cannot be certain that such capital (from our shareholders or from third parties) will be available to us or whether such capital will be available on terms that are acceptable to us. Any such financing likely would be dilutive to existing stockholders and could result in significant financial operating covenants that would negatively impact our business. If we are unable to raise sufficient additional capital on acceptable terms, we will have insufficient funds to operate our business or pursue our planned growth.
These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.
Note 2. Summary of Significant Accounting Policies
Basis of presentation
The accompanying condensed consolidated balance sheet at December 31, 2016 was derived from audited financial statement but does not include all disclosures required by accounting principles generally accepted in the United States of America. The other information in these condensed financial statements are unaudited but, in the opinion of management, reflect all adjustments necessary for a fair presentation of the results for the periods covered. All such adjustments are of a normal recurring nature unless disclosed otherwise. These condensed financial statements, including notes, have been prepared in accordance with the applicable rules of the Securities and Exchange Commission and do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for complete financial statements.(“U.S. GAAP”). These condensed consolidated financial statements should be read in conjunction with the financial statements and additional information as contained in our Annual Report on Form 10-K for the year ended December 31, 2016.
Basis of consolidation
The condensed consolidated financial statements include all accounts of the Company and its majority owned and controlled subsidiaries. The Company consolidates entities in which it owns more than 50% of the voting common stock and controls operations. All intercompany transactions and balances among consolidated subsidiaries have been eliminated.
The Company’s condensed consolidated financial statements include the financial statementsposition, results of Hotappoperations and cash flows of the following entities as of March 31, 2022 and December 31, 2021, as follows:
SCHEDULE FOR SUBSIDIARY’S CONSOLIDATION OF FINANCIAL STATEMENTS
Attributable interest as of, | ||||||||||
Name of subsidiary consolidated under GigWorld Inc. | State or other jurisdiction of incorporation or organization | March 31, 2022 | December 31, 2021 | |||||||
% | % | |||||||||
HotApp BlockChain Pte.Ltd. (f.k.a. HotApps International Pte. Ltd.) | Singapore | 100.0 | 100.0 | |||||||
HotApp International Limited | Hong Kong | 100.0 | 100.0 | |||||||
Gig Stablecoin Inc. (f.k.a. Crypto Exchange Inc.) | United States of America | 100.0 | 100.0 | |||||||
HWH World Inc. | United States of America | 100.0 | 100.0 | |||||||
HWH World Pte. Ltd. | Singapore | 100.0 | 100.0 | |||||||
Smart Reward Express Limited | Hong Kong | 50.0* | 50.0* |
* | Smart Reward Express Limited (“Smart Reward”) was incorporated in Hong Kong on July 13, 2021 with an issued and paid-up share capital of HK$10,000 comprising ordinary shares. |
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Smart Reward plans to be principally engaged in the business of developing a platform allowing small and medium sized merchants to set-up their own reward program, with the aim of creating a loyalty exchange program for participating merchants.
HotApp International Limited is the owner of 50% of the issued and outstanding shares of Smart Reward. The remaining 50% of the issued and outstanding shares of Smart Reward are held by Value Exchange Int’l (China) Limited, a wholly-owned subsidiary of VEII.
HotApp International Limited holds 5,000 shares of Smart Reward, representing 50% of the total issued and outstanding shares of Smart Reward. HotApp International Limited is a wholly-owned subsidiary of HotApp BlockChain Pte. Ltd., which is a wholly-owned subsidiary of GigWorld Inc. The remaining 5,000 shares of Smart Reward, representing 50% of the total issued and outstanding shares of Smart Reward, are held by Value Exchange Int’l (China) Limited, a wholly-owned subsidiary of Value Exchange International Inc. GigWorld Inc. owns % of the total issued and its subsidiaries. All inter-company transactionsoutstanding shares of Value Exchange International Inc.
Accordingly, the Company in total holds more than 50% of Smart Reward, and balances have been eliminated upon consolidation.
Use of estimates
The preparation of condensed financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and revenues, cost and expenses in the financial statements and accompanying notes. Significant accounting estimates reflected in the Group’s condensed 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 which are unrestricted from withdrawal or use, or which have original maturitieswith a maturity of three months or less when purchased.
Foreign currency risk
Because of its foreign operations, the Company holds cash in non-US dollars. As of September 30, 2017,March 31, 2022, cash and cash equivalents of the Group includes, on an as converted basis to US dollars, $51,337 and $10,625 in Hong Kong Dollars (“HK$”) and Singapore Dollars (“S$”), respectively. As of December 31, 2021, cash and cash equivalents of the Group include, on an as converted basis to US dollars, $70,844, $55,626$86,398, and $21,846$10,757, in Hong Kong Dollars (“HK$”), Reminbi (“RMB”) and Singapore Dollars (“S$”), respectively.
Investment Securities
Investments represent equity investments with readily determinable fair values.
The Renminbi (“RMB”)Company account for investments in equity securities that have readily determinable fair values are measured at fair value, with unrealized gains and losses from fair value changes recognized in net income in the condensed consolidated statements of comprehensive income.
Equipment
Property and equipment are recorded at cost, less depreciation. Repairs and maintenance are expensed as incurred. Expenditures incurred as a consequence of acquiring or using the asset, or that increase the value or productive capacity of assets are capitalized (such as removal, and restoration costs). When property and equipment is not a freely convertible currency. The State Administration for Foreign Exchange, under the authorityretired, sold, or otherwise disposed of, the People’s Bank of China, controlsasset’s carrying amount and related accumulated depreciation are removed from the conversion of RMB into foreign currencies. The valueaccounts and any gain or loss is included in operations. Depreciation is computed by the straight-line method (after considering their respective estimated residual values) over the estimated useful lives 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.
SCHEDULE OF ESTIMATED USEFUL LIVES OF ASSETS
Computer equipment | 3 years |
Concentrations
Financial instruments that potentially expose the Group to concentration of credit risk consist primarily of cash. Although the cash andat each particular bank in the United States is insured up to $250,000 by Federal Deposit Insurance Corporation (FDIC), the Group exposes to risk due to its concentration of cash equivalents.in foreign countries. The Group places theirits cash with financial institutions with high-credit ratings and quality.
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Fair value
Fair Value of Financial Instruments
The carrying value isof cash, accounts payable and accrued liabilities, and short-term borrowings, as reflected in the price that would be received from selling an assetbalance sheets, approximate fair value because of the short-term maturity of these instruments. All other significant financial assets, financial liabilities and equity instruments of the Company are either recognized or paid to transferdisclosed in the condensed consolidated financial statements together with other information relevant for making a liability in an orderly transaction between market participants at the measurement date. When determiningreasonable assessment of future cash flows, interest rate risk and credit risk. Where practicable the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise only available information pertinent to fair value measurements forhas been disclosed. The Company classifies and discloses assets and liabilities required or permitted to be recordedcarried at fair value the Group 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.
● | Level 1 - quoted prices in active markets for identical assets and liabilities; | |
● | Level 2 - observable market based inputs or unobservable inputs that are corroborated by market data; and | |
● | Level 3 - significant unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. |
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 condensed 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 yearsperiod ended DecemberMarch 31, 20162022 or 2015,2021, respectively.
Foreign currency translation
Items included in the applicationfinancial statements of each entity in the group are measured using the currency 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 ofprimary economic environment in which 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.
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 and Hong Kong and the PRC are maintained in their local currencies, the Singapore Dollar (S$), and 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 ninethree months ended September 30, 2017,March 31, 2022, the Company recorded other comprehensive lossincome from translation lossgain of $165,908$16,930 in the condensed consolidated financial statements. For the three months ended March 31, 2021, the Company recorded other comprehensive income from translation gain of $63,278 in the condensed consolidated financial statements.
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Comprehensive income (loss)
Comprehensive income (loss) includeincludes gains (losses) from foreign currency translation adjustments. Comprehensive income (loss) is reported in the condensed consolidated statements of operations and comprehensive loss.
Basic lossearnings (loss) per share is computed by dividing net lossincome (loss) attributable to shareholdersstockholders by the weighted average number of shares outstanding during the period.
As of September 30, 2017,March 31, 2022, there are no sharespotentially dilutive securities that were excluded from the computation of preferred stockdiluted EPS.
Non-controlling interests
Non-controlling interests represent the equity in a subsidiary not attributable, directly or indirectly, to owners of the Company, and are eligible for conversion into voting common stock.
On March 31, 2022 and December 31, 2021, the aggregate non-controlling interests in the Company were $(1,623) and $(1,618), respectively.
Recent accounting pronouncements
Management does not believe that any recently issued, but not yet effective, accounting pronouncements, whenstandards, if currently adopted, willwould have a material effect on the accompanyingCompany’s condensed consolidated financial statements.
September 30, | December 31, | |
2017 | 2016 | |
Computer equipment | $75,610 | $69,442 |
Office equipment | 22,353 | 19,671 |
Furniture and fixtures | 10,488 | 7,156 |
$108,451 | $96,269 | |
Less: accumulated depreciation | (77,989) | (50,173) |
Fixed assets, net | $30,462 | $46,096 |
Note 4. 3. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accrued expenses and other current liabilities consisted of the following:
SCHEDULE OF ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
March 31, | December 31, | |||||||
2022 | 2021 | |||||||
Accrued payroll | $ | 626 | $ | 321 | ||||
Accrued professional fees | 24,710 | 11,185 | ||||||
Other | 2,216 | 3,103 | ||||||
Total | $ | 27,552 | $ | 14,609 |
Note 4. PROPERTY AND EQUIPMENT, NET
Property and Equipment, net consisted of the following:
SCHEDULE OF PROPERTY AND EQUIPMENT
March 31, | December 31, | |||||||
2022 | 2021 | |||||||
Computer equipment | $ | 1,990 | $ | 1,990 | ||||
Less: accumulated depreciation | 441 | 277 | ||||||
Total | $ | 1,549 | $ | 1,713 |
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September 30, | December 31, | |
2017 | 2016 | |
Accrued payroll | $172,462 | $180,464 |
Accrued professional fees | 31,346 | 45,612 |
Other | 12,415 | 12,239 |
Total | $216,223 | $238,315 |
Note 5. SHARE CAPITALIZATION
The Company is authorized to issue 1 billionacquired shares of common stock and 15 million shares of preferred stock. The authorized share capital of the Company’s common stock was increased from 500 million to 1 billion on May 5, 2017. Both share types have a $0.0001 par value. As of September 30, 2017 and 2016, the Company had issued and outstanding, 506,898,576 and 5,909,687 of common stock, respectively and 0 and 13,800,000 shares of preferred stock, respectively.
SCHEDULE OF INVESTMENT
Level 1 | Level 2 | Level 3 | Fair Value | |||||||||||||
Fair Value Measurement Using | Amount at | |||||||||||||||
Level 1 | Level 2 | Level 3 | Fair Value | |||||||||||||
March 31, 2022 | ||||||||||||||||
Asset | ||||||||||||||||
Investment Securities – Fair Value | $ | 1,495,000 | $ | - | $ | - | $ | 1,495,000 | ||||||||
Total Investment in securities at Fair Value | $ | 1,495,000 | $ | - | $ | - | $ | 1,495,000 |
Level 1 | Level 2 | Level 3 | Fair Value | |||||||||||||
Fair Value Measurement Using | Amount at | |||||||||||||||
Level 1 | Level 2 | Level 3 | Fair Value | |||||||||||||
December 31, 2021 | ||||||||||||||||
Asset | ||||||||||||||||
Investment Securities – Fair Value | $ | 1,950,000 | $ | - | $ | - | $ | 1,950,000 | ||||||||
Total Investment in securities at Fair Value | $ | 1,950,000 | $ | - | $ | - | $ | 1,950,000 |
The captioned shares were issuedchange in fair value of investment securities during the three months ended March 31, 2022 was $455,000, and was recorded as unrealized (loss) on June 9, 2017, and SeD owned 99.979% of the Company after such transactions.
Note 7. 6. RELATED PARTY BALANCES AND TRANSACTIONS
Effective as of September 1, 2020, Chan Heng Fai resigned as the Acting Chief Executive Officer of the Company, and the Company’s Board of Directors appointed Lee Wang Kei (“Nathan”) as the Company’s Chief Executive Officer. Alset International Limited (“AIL”) is the Company’s majority stockholder. Chan Heng Fai, the Executive Chairman of the Company’s Board of Directors, is also the Chief Executive Officer and a member of AIL’s Board of Directors, as well as the majority stockholder of AIL. Lui Wai Leung Alan, the Company’s Chief Financial Officer, is also the Executive Director and Chief Financial Officer of AIL. Both Chan Heng Fai and Lui Wai Leung Alan are compensated by AIL, the Company’s majority stockholder. Our Chief Executive Officer, Lee Wang Kei, is paid $2,000 per month by HotApp International Limited, a subsidiary of the Company. AIL has provided staff to our Company without charge since becoming our majority stockholder.
As of September 30, 2017,March 31, 2022, the Company has an amount due to AIL of $2,432,288 plus an amount due to an associated company of AIL of $102. As of December 31, 2021, the Company has amount due to SeD for US$724,422 and hasAIL of $2,383,596 plus an amount due from a fellow subsidiary for US$2,209. The Company has made full impairment provision for the amount due from the fellow subsidiary.
Note 8. 7. SUBSEQUENT EVENTEVENTS
Directors’ resolutions of HWH World Pte. Ltd passed on April 18, 2022 for the approval of transfer of shares from Hotapp Blockchain Pte. Ltd to Health Wealth Happiness Pte. Ltd for a consideration price of S$ .
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ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
FORWARD-LOOKING STATEMENTS
Certain matters discussed herein are forward-looking statements. Such forward-looking statements contained in this Form 10-Q involve risks and uncertainties, including statements as to:
1. our future operating results;
2. our business prospects;
3. any contractual arrangements and relationships with third parties;
4. the dependence of our future success on the general economy;
5. any possible financings; and
6. the adequacy of our cash resources and working capital.
These forward-looking statements can generally be identified as such because the context of the statement will include words such as we “believe,” “anticipate,” “expect,” “estimate” or words of similar meaning. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which are described in close proximity to such statements and which could cause actual results to differ materially from those anticipated as of the date of filing of this Form 10-Q. Shareholders, potential investors and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included herein are only made as of the date of filing of this Form 10-Q, and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results may differ materially from those anticipated in these forward-looking statements.
The coronavirus or other adverse public health developments could have a material and adverse effect on our business operations, financial condition and results of operations
In December 2019, a novel strain of coronavirus (COVID-19) was first identified in Wuhan, Hubei Province, China, and has since spread to a number of other countries, including the United States. The COVID-19 pandemic’s far-reaching impact on the global economy could negatively affect various aspects of our business. The extent to which the COVID-19 pandemic may impact our business will depend on future developments, which are highly uncertain and cannot be predicted.
The COVID-19 pandemic may adversely impact our potential to expand our business activities. The COVID-19 pandemic has impacted, and may continue to impact, the global supply of certain goods and services in ways that may impact the sale of products to consumers that we, or companies we may partner with, will attempt to make. The COVID-19 pandemic may prevent us from pursuing otherwise attractive opportunities.
In addition, the COVID-19 pandemic could directly impact the ability of our management and service providers to continue to work, and our ability to conduct our operations in a prompt and efficient manner. Our management has shifted to mostly working from home since March 2020, but this has had minimal impact on our operations to date. However our management’s ability to travel has been significantly limited, and limitations on the mobility of our management may slow down our ability to enter into new transactions and expand existing projects.
Background
GigWorld Inc., formerly Fragmented Industry Exchangeknown as HotApp Blockchain Inc., (the “Company” or “Group”), was incorporated in the State of Delaware on March 7, 2012 and established a fiscal year end of December 31st.2012. The Company’s initial business plan was to be a financial acquisition intermediary which would serve buyers and sellers for companies that are in highly fragmented industries. The CompanyOur Board determined it was in the best interest of the shareholdersCompany to expand itsour business plan. On October 15, 2014, through a sale and purchase agreement, (the “Purchase Agreement”) the Company acquired all the issued and outstanding stock of HotApp BlockChain Pte. Ltd., formerly known as HotApps International Pte Ltd (the “HIP”(“HIP”) from Alset International Limited (“AIL”), formerly known as Singapore eDevelopment Limited (“SeD”).Limited. AIL is presently our largest stockholder. HIP owned certain intellectual property relating to instant messaging for portable devices (the “HotApp”(referred to herein as the “HotApp Application”).
The HotApp Application is a cross-platform mobile application that incorporates instant messaging and ecommerce. It provides a messaging and calling services for HotApp users (text, photo, audio). HotAppThis application can be used on any mobile platform (i.e. IOS Online or Android). The HotApp Application offered messaging and calling services for HotApp Application users (text, photo, audio); however, the messaging and calling services we offered were terminated in 2017.
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In December of September 30, 2017, detailsthe Company’s name was changed from “HotApp International, Inc.” to “HotApp Blockchain Inc.” to reflect the Board of Directors’ determination that it was in the best interest of the Company’s subsidiariesCompany to expand its activities to include the development and commercialization of blockchain-related technologies. One area we are as follows:
In 2018, one of our main developments was a broadening of our scope of planned operations into a digital transformation technology business. As a digital transformation technology business, we are committed to enabling enterprises we work with to engage in HotApp International Limited.
We are focused on SeD as its principal sources of funding during the year. The Board has,serving business-to-business (B2B) needs in the meantime, reviewede-commerce, collaboration and approved the restructuring of HotApp, by which has since reduced by half its personnel resources as comparedsupply chains. We will help enterprises and community users to 2015. HotApp has revamped itstransform their business model and technology platform to focus on business-to-business (“B2B”) services, built around enterprise communications and workflow. Its product line will target these industries: (i) network and direct marketing; (ii) enterprise Voice-over-IP; (iii) enterprise messaging; (iv) real estate; (v) social media; (vi) e-commerce; (vii) investor relations; (viii) healthcare and wellness; and (ix) hospitality, combining HotApp applications with hotel-room management. This strategic shift is intended to create commercial value withdigital economy in a sharper focus.
Our technology platform consists of instant messaging systems, social media, e-commerce and payment systems, network marketing platforms and e-real estate. We are focused on business-to-business solutions such as enterprise messaging and workflow. We have successfully implemented several strategic platform developments for clients, including a mobile front-end solution for network marketing, a hotel e-commerce platform for Asia and a real estate agent management platform in China. We have also enhanced our technological capability from mobile application development to include blockchain architectural design, allowing mobile-friendly front-end solutions to integrate with software platforms. Our main digital assets at the present time are our applications. We continue to strengthen our technology architecture and develop Application Development Interface (API) for collaboration partners such as network marketing back end service providers. In addition we are continuing our development activities in blockchain preparing for future clients opportunities.
In January 2017, we entered into a revenue-sharing agreement with iGalen, a network marketing company selling health products (AIL, our majority stockholder, was a significant stockholder of iGalen). Under the agreement, we customized a secure app for iGalen’s communication and management system. The app enables mobile friendly backend access for iGalen Inc. members, among other functions. We are continuing to improve this secure app. In particular, we intend to utilize blockchain supply logistics to improve its functions (the original iGalen app did not utilize the latest distributed ledger technology). Once the improvements to this technology are completed, and initially utilized by iGalen, We intend to then attempt to sell similar services to other companies engaged in network marketing, as members of our management have a particular experience offering services to that industry and we believe our solutions are particularly suited to that industry’s needs. This app can be modified to meet the specific needs of any network marketing company. We believe that these technologies will, among other benefits, make it easier for network marketing companies to securely and effectively manage their systems of compensation. Our current plan is to commence sales of this technology in 2022.
In February of 2021, the Company’s name was changed to “GigWorld Inc.”
The direct selling industry has been adopting gig economy practices and relying heavily on digital marketing technology in team development and customer engagement. We have positioned ourselves to serve the growing demand in the transformation of the direct selling industry towards the gig economy.
The Group has relied significantly on AIL, our majority stockholder, as its principal sources of funding during the period. AIL has advised us not to depend solely on it for financing. We have increased our efforts to raise additional capital through equity or debt financings from other sources. However, we cannot be certain that such capital (from our stockholders or from third parties) will be available to us or whether such capital will be available on terms that are acceptable to us. Any such, financing likely would be dilutive to existing stockholders and could result in significant financial operating covenants that would negatively impact our business. If we are unable to raise sufficient additional capital on acceptable terms, we will have insufficient funds to operate our business or pursue our planned growth.
On April 8, 2021, the Company entered into a Securities Purchase Agreement with Value Exchange International, Inc., a Nevada corporation (“VEII”) pursuant to which the Company purchased 6.5 million restricted shares of VEII Common Stock from VEII for an aggregate purchase price of $650,000. The closing of the transaction occurred on April 12, 2021. The Company presently owns approximately 18% of the total issued and outstanding shares of Value Exchange International Inc. Pursuant to this Securities Purchase Agreement, the Company was entitled to appoint one nominee to the Board of Directors of VEII. The Company appointed Mr. Lum Kan Fai as its nominee. Mr. Lum is the Vice Chairman of the Company’s Board of Directors. VEII is a provider of customer-centric technology solutions for the retail industry in Hong Kong and certain regions of China and Philippines.
In July of 2021, the Company’s indirect subsidiary HotApp International Limited incorporated Smart Reward Express Limited (“Smart Reward”) in Hong Kong. Smart Reward plans to be principally engaged in the business of developing a platform allowing small and medium sized merchants to set-up their own reward program, with the aim of creating a loyalty exchange program for participating merchants.
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HotApp International Limited is the owner of 50% of the issued and outstanding shares of Smart Reward. The remaining 50% of the issued and outstanding shares of Smart Reward are held by Value Exchange Int’l (China) Limited, a wholly-owned subsidiary of VEII.
Trends in the Market and Our Opportunity
The gig economy has become very appealing to those seeking flexibility in how and when they work. Technology has been a November 2016 forecast by eMarketer,key driver along with reducing complexity to simplicity in how work is done and how the worker is compensated.
Technology has changed pretty much every aspect of a leading research companybusiness, opening up work opportunities for digital business professionals,those who want to work in the gig economy. This change has also helped employers increase profitability because they only have to only hire workers when they need them.
While there is no universal definition of a gig worker, making them a difficult cohort to categorize, some estimates predict that gig workers represent around 35 percent of the U.S. workforce in 2020, up from between 14 and 20 percent in 2014.
That means roughly 57 million Americans currently engage in some type of gig work that contributes more than one-quarter$1 trillion to the U.S. economy annually. Those figures are only expected to grow, with some predicting that freelance workers will make up more than half of the world’s population will be using mobile messaging appsU.S. workforce by 2019. eMarketer also projected that mobile phone messaging apps would be used by more than 1.4 billion people in 2016, an increase of almost 16% from 2015. The Asia-Pacific region is home to more than 50% of all chat app users worldwide, with more than 805 million consumers in 2016.
Based upon the above trends, we believe significant opportunities exist for:
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Industries such as Network Marketing, affiliate marketing and Hospitality and Franchising businesses are utilizing | |
● | Loyalty programs integrated with Point of Sales systems, retail applications and smart vending machines |
Our Plan of Operations and Growth Strategy
We believe that we have significant opportunities to further enhance the value we deliver to our Users.users. We intend to pursue the following growth strategy:
● | |
● | |
● | identify solutions and licensing opportunities in accelerating the digital transformation for |
Results of Operations
Summary of Key Results
For the unaudited three months period ending September 30, 2017March 31, 2022 and 2016
Revenue
The Company had no revenue forduring the three months ended September 30, 2017March 31, 2022 and 2016 were $82,660 and $55,887 respectively.
Cost of revenue
Total cost of revenue for the three months ended September 30, 2017March 31, 2022 and 20162021 were $39,222 and $23,921, respectively.
General and Administrative
General and administrative expenses consist primarily of salary and benefits, professional fees, consulting fee and rental expense.maintenance expenses of existing software framework. We expect our general and administrative expenses to maintain with moderate changes in line with business activities. Total general and administrative expenses for the quartersthree months ended September 30, 2017March 31, 2022 and 20162021 were $134,510$104,321 and $132,707,$30,128, of which $165 and $0 were depreciation expenses, respectively.
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Other Expense(Expense) / Income
For the quartersthree months ended September 30, 2017March 31, 2022 and 2016,2021, we have incurred $9,965$(9,941) and $11,046 for depreciation, $25 and $0 for the deposits written off. In the quarters ended September 30, 2017 and 2016, we have incurred $32,391 and $8,084$(36,471) in foreign exchange gain,(loss), $(455,000) and $0 and $1 in interest income.
Liquidity and Capital Resources
At September 30, 2017,March 31, 2022, we had cash of $149,766$210,576 and working capital deficit of $687,722. Cash had increased during the nine months ended September 30, 2017 primarily due to the receipt of payment for the revenue earned.
We had a total stockholders’ deficit of $657,260$758,915 and an accumulated deficit of $5,072,903$5,129,699 as of September 30, 2017March 31, 2022 compared with a total stockholders’ deficit of $498,315$206,584 and an accumulated deficit of $4,628,976$4,560,449 as of December 31, 2016.2021. This difference is primarily due to the netunrealized loss incurredon securities investment during the period and the issuance of 500,988,889 shares of common stock by debt conversion.
For the ninethree months ended September 30, 2017,March 31, 2022, we recorded a net loss of $443,927.
We had net cash used in operating activities of $634,840$100,825 for the ninethree months ended September 30, 2017. We made a positive adjustment of $28,032 due to depreciation, a positive adjustment of $2,705 due to deposits written off, a positive adjustment of $131 due to loss on disposal of fixed asset, and a negative adjustment of $140,812 due to foreign currency transaction gain.March 31, 2022. We had a positive change of $30,332 due to costs$327 in excess of billingsdeposit, prepaid expenses and a negative change of $93,936 due to accountother receivable, and a positive change of $3,628 due to security deposit and other receivables, and a negative change of $4,278 due to prepaid expenses. We had a negative change of $22,092$12,944 due to accounts payable and accrued expenses and a positive change of $5,377 due to deferred revenue.
For the ninethree months ended September 30, 2016,March 31, 2021, we recorded a net loss of $588,716.
We had net cash used in operating activities of $746,816$54,370 for the ninethree months ended September 30, 2016. We made a positive adjustment of $35,121 due to depreciation and a negative adjustment of $120,588 due to foreign currency transaction gain.March 31, 2021. We had a positive change of $24,750 due to prepaid expenses and a positive change of $7,036 due to accrued taxes payable and franchise fees. We had a negative change of $125,051$12,229 due to accounts payable and accrued expenses and a positive change of $20,632 due to deferred revenue.
For the ninethree months ended September 30, 2017,March 31, 2022 and 2021, we spent $12,529 on the acquisition of fixed assets, resulting in net cash used inhad no investing activities of $12,529 for the period.
For the ninethree months ended September 30, 2016, we spent $8,733 on the acquisition of fixed assets and received $94,410 on the disposal of fixed assets, resulting in net cash provided by investing activities of $85,677 for the period.
For the ninethree months ended September 30, 2016,March 31, 2021, we had net cash provided by financial activities of $272,850$14,470 due to advances from an affiliate amounting to $272,850.
As of September 30, 2017,March 31, 2022, we do not have any fixed operating office lease agreements for Guangzhou’s office amounting to $11,604 from 2017 to 2018, Hong Kong’s offices minimum lease commitments of $19,588 from 2017 to 2019.
We will need to raise additional capital through equity or debt financing.financings. However, we cannot be certain that such capital (from SEDAIL or from third party)parties) will be available to us or whether such capital will be available on a termterms that isare acceptable to us. Any such financing likely would be dilutive to existing shareholders and could result in significant financial and operating covenants that would negatively impact our business. If we are unable to raise sufficient additional capital on acceptable terms, we will have insufficient funds to operate our business and pursue our business plan.
Consistent with Section 144 of the Delaware General Corporation Law, it is our current policy that all transactions between us and our officers, directors and their affiliates will be entered into only if such transactions are approved by a majority of the disinterested directors, are approved by vote of the stockholders, or are fair to us as corporation as of the time it is authorized, approved or ratified by the board. We will conduct an appropriate review of all related party transactions on an ongoing basis.
Critical Accounting Policies
Our discussion and analysis of the financial condition and results of operations are based upon the Company’s financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We believe that the estimates, assumptions and judgments involved in the accounting policies described below have the greatest potential impact on our financial statements, so we consider these to be our critical accounting policies. Because of the uncertainty inherent in these matters, actual results could differ from the estimates we use in applying the critical accounting policies. Certain of these critical accounting policies affect working capital account balances, including the policies for revenue recognition, allowance for doubtful accounts, inventory reserves and income taxes. These policies require that we make estimates in the preparation of our financial statements as of a given date.
Within the context of these critical accounting policies, we are not currently aware of any reasonably likely events or circumstances that would result in materially different amounts being reported.
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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 when persuasive evidence of an arrangement exists, delivery has occurred,and cash flows arising from the sales price is fixedentity’s contracts to provide goods or determinable, and collectability is reasonably assured. The Group currently has $186,596 revenue from its services rendered on projects, and plans to derive its revenue from membership subscription services, offeringcustomers. Under the platform for Enterprise Collaboration with integration. Revenue is currently recognized under contract accounting due to the significant software production required, and the percentage-of-completion method is used in accordance with ASC 605-35. The Company is recognizing the percentage-of-completion based on input measures that measured directly from expenses incurred, and management reviews the progress to completion. In case of the 3% iGalen revenue sharing,new standard, revenue is recognized when a customer obtains control of promised goods or services in accordancean 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 ASC 985-605-25. In addition, revenuecustomers below.
Revenue is recognized when (or as) the Company transfers promised goods or services to its customers in accordance with ASC 606-25amounts 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 new contract obtained during the quarter ended 30 September 2017.
The Company had no revenue for the period ended March 31, 2022 and 2021.
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.
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 condensed 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 applicationrelevant 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 New EIT Law to our operations, specifically with respect to our tax residency.provisions for income taxes. The New EIT Law specifies that legal entities organized outside of the PRC will be considered residents for PRCGroup did not recognize any income tax purposes if their “de facto management bodies” as “establishments that carry on substantialdue to uncertain tax position or incur any interest and overall management and control overpenalties related to potential underpaid income tax expenses for the operations, personnel, accounting, properties, etc.period ended March 31, 2022 or 2021, respectively.
Off-Balance Sheet Arrangements
As of the Company.” Because of the uncertainties 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.
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
As a “smaller reporting company” as defined inby Item 10(f)(1) of SEC Regulation S-K.
ITEM 4. | CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures
In connection with the evaluation aspreparation of the end of the period covered by thisour Quarterly Report on Form 10-Q, an evaluation was carried out by management, with the participation of our Chief Executive Officer and Chief Financial Officer, concluded thatof the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (Exchange Act)) as amended (the “Exchange Act”)of March 31, 2022. Disclosure controls and procedures are effectivedesigned to ensure that information required to be disclosed by us in reports that we filefiled or submitsubmitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified, in the Securities and Exchange Commission’s (“SECs”) rules and forms and to ensure that such information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including ourthe Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
During evaluation of disclosure controls and procedures as of March 31, 2022 conducted as part of our preparation of our interim financial statements, management conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures and concluded that our disclosure controls and procedures were not effective. Management determined that at March 31, 2022, we had a material weakness in our internal control over financial reporting because our small accounting team, currently furnished by a related-party, manages both bookkeeping and accounting functions and therefore prevents us from segregating duties within our internal control system.
Changes in the Company’s Internal Controls over Financial Reporting
There have been no changes in the Company’s internal control over financial reporting during the most recently completed fiscal quarter that have materially affected or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II | OTHER INFORMATION |
ITEM 1. | LEGAL PROCEEDINGS |
We are not a party to any legal proceedings. Management is not aware of any legal proceedings proposed to be initiated against us. However, from time to time, we may become subject to claims and litigation generally associated with any business venture operating in the ordinary course.
ITEM 1A. | RISK FACTORS |
Not applicable to a “smaller reporting company” as defined in Item 10(f)(1) of SEC Regulation S-K.
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
None.
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
None.
ITEM 4. | MINE SAFETY DISCLOSURES |
Not Applicable.
ITEM 5. | OTHER INFORMATION |
Not Applicable.
ITEM 6. | EXHIBITS |
Exhibit Number | Description | |
31.1* | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of | |
31.2* | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of | |
32.1** | Section 1350 Certification of Chief Executive Officer and Chief Financial Officer | |
101.INS | Inline XBRL Instance Document | |
101.SCH | ||
101.CAL | Inline XBRL Taxonomy Extension Calculation | |
101.DEF | Inline XBRL Taxonomy Extenstion Definition Linkbase. | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase | |
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Filed herewith.
** Furnished herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
GIGWORLD INC. | |||
Date: May 9, 2022 | By: | /s/ Lee Wang Kei | |
Lee Wang Kei | |||
Chief Executive Officer (Principal Executive Officer) | |||
Date: | By: | /s/ Lui Wai Leung, Alan | |
Lui Wai Leung, Alan | |||
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
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