GOING CONCERN

9 Months Ended

Sep. 30, 2021

GOING CONCERN

GOING CONCERN

3. GOING CONCERN

Due to the recent regulatory scrutiny by PRC governments on digital asset related business, the artwork unit trading platform operated by the PRC subsidiary Tianjin Takung was suspended by the local authority. The Management became aware of the suspension on or around November 8, 2021. The local authority indicated the suspension was to facilitate certain investigation although it did not announce the purpose of the investigation. The Company intends to fully cooperate with the local authority's investigation.

In the event that the suspension carries on for a substantial period of time or the investigation results in unfavourable outcome, the Company is subject to various risks, including, but not limited to, permanent discontinuation of the artwork unit trading platform business, material loss of Tianjin Takung’s carrying assets, material impact to the Company’s financial performance and liquidity, and being involved in litigation.

The following table sets forth the carrying value of the assets and liabilities of Tianjin Takung whose operation was suspended as disclosed above, which were included in the accompanying unaudited condensed consolidated financial statements:

	September 30,		December 31,
	2021		2020
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	5,897,115	$	3,922,665
Restricted cash		53,241,711		9,144,610
Prepayment and other current assets, net		212,868		71,876
Intercompany receivables		1,439,513		1,379,393
Amount due from related parties		6,303,970		6,225,134
Loan receivables		2,172,766		2,609,748
Total current assets		69,267,943		23,353,426
NON-CURRENT ASSETS
Property and equipment, net		113,481		231,939
Deferred tax assets, net		138,501		125,190
Operating lease right-of-use assets		51,953		59,790
Total non-current assets		303,935		416,919
TOTAL ASSETS	$	69,571,878	$	23,770,345
CURRENT LIABILITIES
Accrued expenses and other payables	$	614,128	$	436,674
Customer deposits		53,241,711		9,144,610
Intercompany payables		16,328,379		14,829,608
Operating lease liabilities - current		12,381		11,517
Tax payable		11,009		20,003
Total current liabilities		70,207,608		24,442,412
NON-CURRENT LIABILITIES
Operating lease liability - non-current		27,932		40,610
TOTAL LIABILITIES	$	70,235,540	$	24,483,022

The Company has considered whether there is substantial doubt about its ability to continue as a going concern based on above factor. In evaluating if there is substantial doubt about its ability to continue as a going concern, the Company is trying to alleviate the

going concern risk through further developing its operations in blockchain and NFT related businesses including consultancy services, development of NFT marketplace and “Play to Earn” style block chain-based online games.

Meanwhile, the Company is actively seeking other strategic partners with resources that can expand its blockchain and NFT businesses.