10-Q

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, 2018

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

HotApp Blockchain 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 210 Bethesda MD	20814
(Address of principal executive offices)	(Zip Code)

301-971-3940

Registrant’s telephone number, including area code

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 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 filer ☐	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☑
(Do not check if a 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, 2018, there were 506,898,576 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 Blockchain Inc., and “our board of directors” refers to the board of directors of HotApp Blockchain 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 annual report.

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.

TABLE OF CONTENTS

		PAGE
PART I	FINANCIAL INFORMATION	4
ITEM 1.	INTERIM FINANCIAL STATEMENTS	4
	CONDENSED CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2018 (UNAUDITED) AND DECEMBER 31, 2017	5
	CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 (UNAUDITED)	6
	CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 (UNAUDITED)	7
	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 (UNAUDITED)	8
	NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	9
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.	17
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	22
ITEM 4.	CONTROLS AND PROCEDURES	22
PART II	OTHER INFORMATION	24
ITEM 1.	LEGAL PROCEEDINGS	24
ITEM 1A.	RISK FACTORS	24
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	24
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	24
ITEM 4.	MINE SAFETY DISCLOSURES	24
ITEM 5.	OTHER INFORMATION	24
ITEM 6.	EXHIBITS	24

PART I                

FINANCIAL INFORMATION 

ITEM 1.              

INTERIM FINANCIAL STATEMENTS 

Condensed Consolidated Balance Sheets as of September 30, 2018 (unaudited) and December 31, 2017	5
Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2018 and 2017 (unaudited)	6
Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the nine months ended September 30, 2018 (unaudited)	7
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2018 and 2017 (unaudited)	8
Notes to Condensed Consolidated Financial Statements	9

4

HOTAPP BLOCKCHAIN INC. (FORMERLY KNOWN AS HOTAPP INTERNATIONAL, INC.)

CONDENSED CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2018 (UNAUDITED) AND DECEMBER 31, 2017

	September 30, 2018	December 31, 2017
ASSETS
CURRENT ASSETS:
Cash	$66,912	$95,038
Accounts receivable-related parties	39,427	89,427
Accounts receivable-trade	10,220	17,914
Prepaid expenses	3,870	7,532
Deposit and other receivable	8,176	8,189
Current assets of discontinued operations	15,370	35,038
TOTAL CURRENT ASSETS	143,975	253,138
Fixed assets, net	8,313	14,628
Non-current assets of discontinued operations	2,320	8,309
TOTAL ASSETS	$154,608	$276,075
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$35,713	$33,141
Accrued taxes and franchise fees	7,742	7,742
Amount due to related parties	987,206	825,107
Current liabilities of discontinued operations	164,485	171,566
TOTAL CURRENT LIABILITIES	1,195,146	1,037,556
TOTAL LIABILITIES	1,195,146	1,037,556
STOCKHOLDERS' (DEFICIT):
Preferred stock, $0.0001 par value, 15,000,000 shares authorized, 0 issued and outstanding as of September 30, 2018 and December 31, 2017	-	-
Common stock, $0.0001 par value, 1,000,000,000 shares authorized, 506,898,576 shares issued and outstanding, as of September 30, 2018 and December 31, 2017	50,690	50,690
Accumulated other comprehensive loss	(198,836)	(289,398)
Additional paid-in capital	4,604,191	4,604,191
Accumulated deficit	(5,496,583)	(5,126,964)
TOTAL STOCKHOLDERS' DEFICIT	(1,040,538)	(761,481)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$154,608	$276,075

The accompanying notes to the consolidated financial statements are an integral part of these financial statements.

5

HOTAPP BLOCKCHAIN INC. (FORMERLY KNOWN AS HOTAPP INTERNATIONAL, INC.)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 (UNAUDITED)

	Quarter Ended September 30, 2018	Quarter Ended September 30, 2017	Nine Months Ended September 30, 2018	Nine Months Ended September 30, 2017
Revenues:
Project fee-related parties	$23,018	$33,694	$115,107	$103,548
Project fee-others	10,203	48,538	20,408	38,869
	33,221	82,232	135,515	142,417
Cost of revenues	20,652	39,135	74,111	46,715
Gross profit	$12,569	$43,097	$61,404	$95,702
Operating expenses:
Research and product development	$-	$-	$-	$-
Deposits written off	-	25	-	2,705
Depreciation	2,207	3,954	7,833	9,138
Loss on disposal of fixed assets	-	-	-	131
General and administrative	71,137	123,106	293,161	483,818
Total operating expenses	73,344	127,085	300,994	495,792
(Loss) from operations	(60,775)	(83,988)	(239,590)	(400,090)
Other income (expenses):
Interest income	-	-	7	1
Other sundry income	-	-	-	-
Foreign exchange gain (loss)	(3,359)	31,567	(49,773)	147,424
Total other income (expenses)	(3,359)	31,567	(49,766)	147,425
Loss before taxes	(64,134)	(52,421)	(289,356)	(252,665)
Income tax provision	-	-	-	-
Net income from continuing operations	(64,134)	(52,421)	(289,356)	(252,665)
Loss from discontinued operations, net of tax	(32,143)	(75,492)	(80,263)	(191,262)
Net loss applicable to common shareholders	$(96,277)	$(127,913)	$(369,619)	$(443,927)
Net loss from continuing operations per share - basic and diluted	$(0.00)	$(0.00)	$(0.00)	$(0.00)
Net loss from discontinued operations per share - basic and diluted	$(0.00)	$(0.00)	$(0.00)	$(0.00)
Net loss per share - basic and diluted	$(0.00)	$(0.00)	$(0.00)	$(0.00)
Weighted number of shares outstanding -
Basic and diluted	506,898,576	506,898,576	506,898,576	214,041,100
Comprehensive Income Loss:
Net loss	$(96,277)	$(127,913)	$(369,619)	$(443,927)
Foreign currency translation gain (loss)	21,899	(44,241)	90,562	(165,908)
Total comprehensive loss	$(74,378)	$(172,154)	$(279,057)	$(609,835)

The accompanying notes to the consolidated financial statements are an integral part of these financial statements.

6

HOTAPP BLOCKCHAIN INC. (FORMERLY KNOWN AS HOTAPP INTERNATIONAL, INC.)

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 (UNAUDITED)

	Preferred Stock		Common		Paid-In	Accumulated Other Comprehensive	Accumulated	Stockholders' Equity
	Shares	Par Value	Shares	Par Value	Capital	Income (Loss)	Deficit	(Deficit)
Balance December 31, 2017	-	$-	506,898,576	$50,690	$4,604,191	$(289,398)	$(5,126,964)	$(761,481)
Net loss for period	-	-	-	-	-	-	(70,645)	(70,645)
Foreign currency translation adjustment	-	-	-	-	-	(59,452)	-	(59,452)
Balance March 31, 2018	-	$-	506,898,576	$50,690	$4,604,191	$(348,850)	$(5,197,609)	$(891,578)
Net loss for period	-	-	-	-	-	-	(202,697)	(202,697)
Foreign currency translation adjustment	-	-	-	-	-	128,115	-	128,115
Balance June 30, 2018	-		$506,898,576	$50,690	$4,604,191	$(220,735)	$(5,400,306)	$(966,160)
Net loss for period	-	-	-	-	-	-	(96,277)	(96,277)
Foreign currency translation adjustment	-	-	-	-	-	21,899	-	21,899
Balance September 30, 2018	-	$-	506,898,576	$50,690	$4,604,191	$(198,836)	$(5,496,583)	$(1,040,538)

The accompanying notes to the consolidated financial statements are an integral part of these financial statements.

7

HOTAPP BLOCKCHAIN INC. (FORMERLY KNOWN AS HOTAPP INTERNATIONAL, INC.)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 (UNAUDITED)

	Nine Months Ended September 30, 2018	Nine Months Ended September 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Continuing Operations
Net Loss including noncontrolling interests	$(289,356)	$(252,665)
Adjustments to reconcile net loss to cash used in operations of Continuing Operations:
Depreciation	7,833	9,138
Deposit written off	-	2,705
Loss on disposal of fixed asset	-	131
Foreign exchange transaction loss (gain)	49,773	(147,424)
Change in operating assets and liabilities:
Costs in excess of billings	-	30,332
Accounts receivable-related parties	50,000	(58,088)
Accounts receivable-trade	7,694	(35,848)
Security deposit and other receivable	13	3,628
Prepaid expenses	3,662	(7,199)
Accounts payable and accrued expenses	2,572	(5,102)
Deferred revenue	-	5,377
Net cash used in operating activities	$(167,809)	$(455,015)
Discontinued Operations
Net Loss from discontinued operations, including noncontrolling interests	(80,263)	(191,262)
Depreciation	5,989	18,894
Deposit written off	-	-
Loss on disposal of fixed asset	-	-
Foreign exchange transaction loss (gain)	9,123	6,612
Change in operating assets and liabilities:
Accounts receivable-trade	(2,913)	-
Security deposit and other receivable	279	-
Prepaid expenses	-	2,921
Accounts payable and accrued expenses	(7,081)	(16,990)
Net cash used in operations of Discontinued Operations	$(74,866)	$(179,825)
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of fixed asset	(1,518)	(12,529)
Net cash used in investing activities	$(1,518)	$(12,529)
CASH FLOW FROM FINANCING ACTIVITIES:
Advance from related parties	162,099	719,455
Net cash provided by financing activities	$162,099	$719,455
NET (DECREASE)/INCREASE IN CASH	(82,094)	72,086
Effects of exchange rates on cash	31,666	(25,096)
CASH AND CASH EQUIVALENTS at beginning of period	124,739	102,776
CASH AND CASH EQUIVALENTS at end of period	$74,311	$149,766
Supplemental schedule of non-cash investing and financing activities
Conversion of shareholder loan into common stock	$-	$450,890

The accompanying notes to the consolidated financial statements are an integral part of these financial statements.

8

HOTAPP BLOCKCHAIN INC. (FORMERLY KNOWN AS HOTAPP INTERNATIONAL, INC.)

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. The Company History and Nature of the Business

HotApp Blockchain Inc., formerly HotApp International, Inc., (the “Company” or “Group”) was incorporated in the State of Delaware on March 7, 2012 and established a fiscal year end of December 31. 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 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 (“HIP”) from Singapore eDevelopment Limited (“SeD”). HIP owned certain intellectual property relating to instant messaging for portable devices (“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). Started from a cross platform mobile application that incorporate messaging and eCommerce, HotApp has evolved as a platform service provider with application framework serving vertical industry such as multilevel marketing. The messaging and calling services was terminated in 2017. HotApp can be used on any mobile platform (i.e. IOS Online or Android).

As of September 30, 2018, details of the Company’s subsidiaries are as follows:

Subsidiaries	Date of Incorporation	Place of Incorporation	Percentage of Ownership
1st Tier Subsidiary:
HotApps International Pte Ltd (“HIP”)	May 23, 2014	Republic of Singapore	100% by Company
Crypto Exchange Inc.	December 15, 2017	State of Nevada, the United States of America	100% by Company
2nd Tier Subsidiaries:
HWH World Pte. Ltd., formerly Crypto Exchange Pte. Ltd. and HotApps Call Pte Ltd	September 15, 2014	Republic of Singapore	100% owned by HIP
HotApps Information Technology Co Ltd	November 10, 2014	People’s Republic of China	100% owned by HIP
HotApp International Limited*	July 8, 2014	Hong Kong (Special Administrative Region)	100% owned by HIP

* On March 25, 2015, HotApps International Pte Ltd acquired 100% of the issued and outstanding shares of HotApp International Limited.

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 $5,496,583 and has net working capital deficit of $1,051,171 at September 30, 2018. 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, 2019. 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 2018. 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 them 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 shareholders or 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 financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“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, 2017. Results of operations for the nine month periods ended September 30, 2018 are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2018. The other information in these condensed consolidated financial statements is unaudited but, in the opinion of management, reflects 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.

9

Basis of consolidation

The consolidated financial statements of the Group include the financial statements of HotApp Blockchain Inc. and its subsidiaries. All inter-company transactions and balances have been eliminated upon consolidation.

Use of estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and revenues, cost and expenses in the financial statements and accompanying notes. Significant accounting estimates reflected in the Group’s consolidated financial statements include revenue recognition, the useful lives and impairment of property and equipment.

Cash and cash equivalents

The Company considers all highly liquid investments with a maturity of three months or less at the date of acquisition to be cash equivalents. There were no cash equivalents as of September 30, 2018 and December 31, 2017.

Foreign currency risk

Because of its foreign operations, the Company holds cash in non-US dollars. As of September 30, 2018, cash and cash equivalents of the Group includes, on an as converted basis to US dollars $51,872, $7,399 and $14,102 in Hong Kong Dollars (“HK$”), Reminbi (“RMB”) and Singapore Dollars (“S$”), respectively.

The Renminbi (“RMB”) is not a freely convertible currency. The State Administration for Foreign Exchange, under the authority of the People’s Bank of China, controls the conversion of RMB into foreign currencies. The value of the RMB is subject to changes in central government policies and to international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market.

Concentrations

Financial instruments that potentially expose the Group to concentration of credit risk consist primarily of cash. Although the cash at each particular bank in the United States is insured up to $250,000 by Federal Deposit Insurance Corporation (FDIC), the Group exposes to risk due to its concentration of cash in foreign countries. The Group places their cash with financial institutions with high-credit ratings and quality. The Group also exposes to credit risk due to its concentration for customers with revenue in excess of 10%.

	Total	Related parties	Related parties	Trade	Trade
	Amount	Amount	Percentage	Amount	Percentage
Accounts receivables
As of September 30, 2018	$52,560	$39,427	75%	$13,133	25%
As of December 31, 2017	$107,341	$89,427	83%	$17,914	17%
Revenue
For the nine months ended September 30, 2018	$142,952	$115,107	81%	$27,845	19%
For the nine months ended September 30, 2017	$186,596	$103,548	55%	$83,048	45%

Fixed assets, net

Property and equipment are stated at cost less accumulated depreciation. Depreciation is calculated on a straight-line basis over the following estimated useful lives:

Office equipment	3 years
Computer equipment	3 years
Furniture and fixtures	3 years
Motor vehicles	10 years

10

Fair value

The carrying value of cash and cash equivalents, accounts payable and accrued liabilities, and borrowings, as reflected in the balance 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 disclosed in the financial statements together with other information relevant for making a reasonable 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 has been disclosed.

Revenue recognition

Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers ("ASC 606"), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide goods or services to customers. Under the new standard, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. The Company adopted this new standard on January 1, 2018 under the modified retrospective method to all contracts not completed as of January 1, 2018 and the adoption did not have a material effect on our financial statements but we expanded our disclosures related to contracts with customers below.

Revenue is recognized when (or as) the Company transfers promised goods or services to its customers in amounts that reflect the consideration to which the Company expects to be entitled to in exchange for those goods or services, which occurs when (or as) the Company satisfies its contractual obligations and transfers over control of the promised goods or services to its customers. Costs to obtain or fulfill a contract are expensed as incurred.

Disaggregation of Revenue

We generate revenue from the project involving provision of services and web/software development to customers. In respect to the provision of services, the agreement span over the length of one year with cancellable clause and are typically billed on a monthly basis. The following table depicts the disaggregation of revenue according to revenue type and is consistent with how we evaluate our financial performance:

	For the nine months ended September 30, 2018
Segments	Provision of Services	Web / Software Development	Total
Primary Geographical Markets
North America	$115,107	$-	$115,107
Asia	-	27,845	27,845
	$115,107	$27,845	$142,952
Timing of Revenue Recognition
Goods transferred at a point in time	$-	$27,845	$27,845
Services transferred over time	115,107	-	115,107
	$115,107	$27,845	$142,952

	For the nine months ended September 30, 2017
Segments	Provision of Services	Web / Software Development	Total
Primary Geographical Markets
North America	$-	$103,548	$103,548
Asia	48,521	34,527	83,048
	$48,521	$138,075	$186,596
Timing of Revenue Recognition
Goods transferred at a point in time	$-	$138,075	$138,075
Services transferred over time	48,521	-	48,521
	$48,521	$138,075	$186,596

11

Contract assets and contract liabilities

Based on our contracts, we normally invoice customers once our performance obligations have been satisfied, at which point payment is unconditional. Accordingly, our contracts do not give rise to contract assets or liabilities under ASC 606. Accounts receivable are recorded when the right to consideration becomes unconditional.

Remaining performance obligations

As of September 30, 2018, the aggregate amount of the transaction price allocated to the remaining performance obligation is $5,110, and the Group will recognize this revenue as the web development is completed, which is expected to occur over the next 3 months.

Research and development expenses

Research and development expenses primarily consist of salaries and benefits for research and development personnel. The Company’s research and development activities primarily consist of the research and development of new features for its mobile platform and its self-developed mobile games. Expenditures incurred during the research phase are expensed as incurred.

Income taxes

Current income taxes are provided for in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements. Net operating loss carry forwards and credits are applied using enacted statutory tax rates applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that a portion of or all of the deferred tax assets will not be realized. The components of the deferred tax assets and liabilities are individually classified as 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 period ended September 30, 2018 or 2017, respectively.

Uncertainties exist with respect to the application of the New EIT Law to our operations, specifically with respect to our tax residency. The New EIT Law specifies that legal entities organized outside of the PRC will be considered residents for PRC income tax purposes if their “de facto management bodies” as “establishments that carry on substantial and overall management and control over the operations, personnel, accounting, properties, etc. of the Company.” Because of the uncertainties that have resulted from limited PRC guidance on the issue, it is uncertain whether our legal entities outside the PRC constitute residents under the New EIT Law. If one or more of our legal entities organized outside the PRC were characterized as PRC residents, the impact would adversely affect our results of operations.

Foreign currency translation

Items included in the financial statements of each entity in the group are measured using the currency of the primary economic environment in which the entity operates (“functional currency”).

The functional and reporting currency of the Company is the United States dollar (“U.S. dollar”). The financial records of the Company’s subsidiaries located in Singapore, Hong Kong and the PRC are maintained in their local currencies, the Singapore Dollar (S$), Hong Kong Dollar (HK$) and Renminbi ("RMB"), which are also the functional currencies of these entities.

Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at the rates of exchange ruling at the balance sheet date. Transactions in currencies other than the functional currency during the year are converted into functional currency at the applicable rates of exchange prevailing when the transactions occurred. Transaction gains and losses are recognized in the statement of operations.

The Company’s entities with functional currency of Renminbi, Hong Kong Dollar and Singapore Dollar, translate their operating results and financial positions into the U.S. dollar, the Company’s reporting currency. Assets and liabilities are translated using the exchange rates in effect on the balance sheet date. Revenues, expenses, gains and losses are translated using the average rate for the year. Translation adjustments are reported as cumulative translation adjustments and are shown as a separate component of comprehensive income (loss).

For the three and nine months ended September 30, 2018, the Company recorded other comprehensive income from translation gain of $21,899 and $90,562 in the consolidated financial statements. For the three and nine months ended September 30, 2017, the Company recorded other comprehensive income from translation loss of $44,241 and $165,908 in the consolidated financial statements.

12

Operating leases

Leases where the rewards and risks of ownership of assets primarily remain with the lessor are accounted for as operating leases. Payments made under operating leases are charged to the consolidated statements of operations on a straight-line basis over the lease periods.

Comprehensive income (loss)

Comprehensive income (loss) includes gains (losses) from foreign currency translation adjustments. Comprehensive income (loss) is reported in the consolidated statements of operations and comprehensive loss.

Loss per share

Basic loss per share is computed by dividing net loss attributable to shareholders by the weighted average number of shares outstanding during the period.

The Company's convertible preferred shares are not participating securities and have no voting rights until converted to common stock. As of September 30, 2018, no shares of preferred stock are eligible for conversion into voting common stock.

As of September 30, 2018, there are no potentially dilutive securities that were excluded from the computation of diluted EPS.

Recent accounting pronouncements not yet adopted

On Feb. 25, 2016, the Financial Accounting Standards Board (FASB) released Accounting Standards Update No. 2016-02, Leases (Topic 842) (the Update). The new leasing standard presents dramatic changes to the balance sheets of lessees. Lessor accounting is updated to align with certain changes in the lessee model and the new revenue recognition standard. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018. The Company is currently evaluating the potential impacts of this Update.

In February 2018, the FASB issued Accounting Standards Update No. 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from accumulated Other Comprehensive Income, or ASU 2018-02, which requires the reclassification from accumulated other comprehensive income to retained earnings for the stranded tax effects arising from the change in the reduction of the U.S. federal statutory income tax rate to 21% from 35%. ASU 2018-02 is effective for interim and annual periods beginning after December 15, 2018. We will adopt ASU 2018-02 on January 1, 2019. The Company is currently evaluating the potential impacts of this Update.

In June 2018, the FASB issued Accounting Standards Update No. 2018-07, which simplifies several aspects of the accounting for nonemployee share-based payment transactions resulting from expanding the scope of Topic 718, Compensation-Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. Some of the areas for simplification apply only to nonpublic entities. The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Company is currently evaluating the potential impacts of this Update.

Note 3. FIXED ASSETS, NET

Fixed assets, net consisted of the following:

	September 30,	December 31,
	2018	2017
Computer equipment	$78,078	$76,662
Office equipment	22,945	22,843
Furniture and fixtures	10,599	10,599
	$111,622	$110,104
Less: accumulated depreciation	(100,989)	(87,167)
Fixed assets, net	$10,633	$22,937

Depreciation expenses charged to the consolidated statements of operations for the three months ended September 30, 2018 and 2017 were $3,400 and $9,965, respectively. Depreciation expenses charged to the consolidated statements of operations for the nine months ended September 30, 2018 and 2017 were $13,822 and $28,032, respectively.

13

Note 4. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accrued expenses and other current liabilities consisted of the following:

	September 30,	December 31,
	2018	2017
Accrued payroll & benefits	$173,250	$170,915
Accrued professional fees	18,532	20,666
Other	8,416	13,126
Total	$200,198	$204,707

Note 5. SHARE CAPITALIZATION

The Company is authorized to issue 1 billion 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, 2018 and December 31, 2017, the Company had issued and outstanding, 506,898,576 of common stock, and 0 shares of preferred stock.

Common Shares:

Pursuant to the Purchase Agreement, dated October 15, 2014, the Company issued 1,000,000 shares of common stock to SeD. Such amount represented 19% ownership in the Company.

On July 13, 2015, Singapore eDevelopment Limited (“SeD”) acquired 777,687 shares of the Company common stock by converting outstanding loans made to the Company into common stock of the Company at a rate of $5.00 per share (rounded to the nearest full share). After such transactions SeD owned 98.17% of the Company.

On March 27, 2017, the Company entered into a Loan Conversion Agreement with SeD, pursuant to which SeD agreed to convert $450,890 of debt owed by Company to SeD into 500,988,889 common shares at a conversion price of $0.0009. The captioned shares were issued on June 9, 2017, and SeD owned 99.979% of the Company after such transactions.

Preferred Shares:

Pursuant to the Purchase Agreement, dated October 15, 2014, the Company issued 13,800,000 shares of a class of preferred stock called Perpetual Preferred Stock (“Preferred Stock”) to SeD . The Preferred Stock has no dividend or voting rights. The Preferred Stock is convertible to common stock of the Company dependent upon the number of commercial users of the Software. For each 1,000,000 commercial users of the Software (without duplication), SeD shall have the right to convert 1,464,000 shares of Perpetual Preferred Stock into 7,320,000 shares of Common Stock, so that there must be a minimum of 9,426,230 commercial users in order for all of the shares of the Perpetual Preferred Stock to be converted into common stock of the Company (13,800,000 shares of Preferred Stock convertible into 69,000,000 shares of common stock).

On March 27, 2017, SeD and the Company entered into a Preferred Stock Cancellation Agreement, by which SeD agreed to cancel its 13,800,000 shares Perpetual Preferred Stock issued by the Company. On June 8, 2017, a Certificate of Retirement for 13,800,000 shares of the Perpetual Preferred Stock has been filed to the office of Secretary of State of the State of Delaware.

Other than the conversion rights described above, the Preferred Stock has no voting, dividend, redemption or other rights.

Note 6. EQUITY INCENTIVE PLAN

On July 30, 2018, the Company adopted the Equity Incentive Plan (the “Equity Plan”). The Equity Plan is intended to encourage ownership of shares of common stock by employees, directors, and certain consultants to the Company in order to attract and retain such people and, to induce them to work for the benefit of the Company. The Equity Plan provides for the grant of options and/or other stock-based or stock-denominated awards. Subject to adjustment in accordance with the terms of the Equity Plan, 50,000,000 shares of Common Stock of the Company have been reserved for issuance pursuant to awards under the Equity Plan. The Equity Plan will be administered by the Company’s Board of Directors. This Equity Plan shall terminate ten (10) years from the date of its adoption by the Board of Directors.

14

Note 7. DISCONTINUED OPERATIONS

The composition of assets and liabilities included in discontinued operations was as follows:

	September 30, 2018	December 31, 2017
ASSETS
CURRENT ASSETS:
Cash	$7,399	$29,701
Accounts receivable-trade	2,913	-
Deposit and other receivable	5,058	5,337
TOTAL CURRENT ASSETS	15,370	35,038
Fixed assets, net	2,320	8,309
TOTAL ASSETS	$17,690	$43,347
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$164,485	$171,566
TOTAL CURRENT LIABILITIES	164,485	171,566
TOTAL LIABILITIES	$164,485	$171,566

The aggregate financial results of discontinued operations were as follows:

	Quarter Ended September 30, 2018	Quarter Ended September 30, 2017	Nine Months Ended September 30, 2018	Nine Months Ended September 30, 2017
Revenues:
Project fee-others	$-	$-	$7,437	$44,179
	-	-	7,437	44,179
Cost of revenues	-	-	4,596	9,071
Gross profit	$-	$-	$2,841	$35,108
Operating expenses:
Research and product development	$-	$59,242	$-	$162,013
Depreciation	1,193	6,011	5,989	18,894
General and administrative	21,279	11,404	68,413	38,851
Total operating expenses	22,472	76,657	74,402	219,758
(Loss) from operations	(22,472)	(76,657)	(71,561)	(184,650)
Other income (expenses):
Other sundry income	81	-	421	-
Foreign exchange gain (loss)	(9,752)	1,165	(9,123)	(6,612)
Total other income (expenses)	(9,671)	1,165	(8,702)	(6,612)
Loss from discontinued operations	$(32,143)	$(75,492)	$(80,263)	$(191,262)

15

Note 8. COMMITMENTS AND CONTINGENCIES

On May 9, 2016, the Company entered into a lease agreement for 1,231 square feet of office space in Guangzhou, China. The lease commenced on May 9, 2016 and runs through May 8, 2018 with monthly payments of $2,366. The Company has renewed the lease agreement for another year until May 29, 2019 with monthly payments of $2,484. The Company was required to put up a security deposit of $4,498. For the nine months ended September 30, 2018, the Company recorded rent expense of $21,883 for the Guangzhou office.

On April 10, 2015, the Company entered into a lease agreement for 347 square feet of office space in Kowloon, Hong Kong. This lease commenced on April 20, 2015 and runs through April 19, 2017 with monthly payments of $2,574. The Company was required to put up a security deposit of $5,147. On March 16, 2017, the Company entered into a lease agreement for 1,504 square feet of office space in Kowloon, Hong Kong. This lease commenced on March 16, 2017 and runs through March 31, 2019 with monthly payments of $3,253. The Company was required to put up a security deposit of $6,515. For the three and nine months ended September 30, 2018, the Company recorded rent expense of $10,577 and $30,894 for the office. For the three and nine months ended September 30, 2017, the Company recorded rent expense of $12,043 and $31,561 for the office. The lease was terminated on September 30, 2018 and the security deposit is expected to be returned in the coming quarter.

The following is a schedule by years of future minimum lease payments under non-cancellable operating leases:

2018	$7,452
2019	4,968
Total	$12,420

Note 9. RELATED PARTY BALANCES AND TRANSACTIONS

The Company’s Acting Chief Executive Officer, Mr. Chan Heng Fai is also the Chief Executive Officer of SeD.  SeD is the majority shareholder of the Company.  As of the date of this report, the Company has not entered into any employment arrangement with any director or officer.

On March 1, 2018, the Company’s subsidiary HotApp International Ltd. entered into an Outsource Technology Development Agreement (the “Agreement”) with Document Security Systems, Inc. (“Document Security Systems”), which may be terminated by either party on 30-days’ notice. The purpose of the Agreement is to facilitate Document Security Systems’ development of a software application to be included as part of Document Security Systems’ AuthentiGuard® Technology suite. Under this agreement, Document Security Systems agreed to pay $23,000 per month for access to HotApp International Ltd.’s software programmers. The agreement was terminated on July 31, 2018. Mr. Chan Heng Fai is a member of the Company’s Board of Directors and, through his control of the Company’s majority shareholder, the beneficial owner of a majority of the Company’s common stock. Mr. Chan is also a member of the Board of Document Security Systems and a shareholder of Document Security Systems. The agreement was terminated on July 31, 2018.

As of September 30, 2018, the Company has amount due to SeD for $981,951, plus an amount due to a director of $5,255 and has an amount due from an affiliate for $2,192. The Company has made full impairment provision for the amount due from the affiliate.

The account receivable as of September 30, 2018 included a trade receivable from an affiliate by common ownership amounting to $39,428 resulting from the revenue earned from that affiliate during the year 2017.

On October 25, 2018, HotApps International Pte. Ltd. (“HotApps International”), a wholly owned subsidiary of the Company entered into an Equity Purchase Agreement with DSS Asia Limited (“DSS Asia”), a Hong Kong subsidiary of DSS International Inc. (“DSS International”), pursuant to which HotApps International will sell to DSS Asia all of the issued and outstanding shares of Guangzhou HotApps Technology Ltd. (“Guangzhou HotApps”).  Mr. Chan Heng Fai is the Acting Chief Executive Officer and a Member of the Board of Directors of the Company.  He is also the Chief Executive Officer, Chairman and controlling shareholder of Singapore eDevelopment Limited, the majority shareholder of the Company.  Mr. Chan is also the Chief Executive Officer and Chairman of DSS International and a significant shareholder and a member of the Board of Document Security Systems Inc., which is the sole owner of DSS International.  Mr. Chan Heng Fai is also a member of the Board of Directors of Document Security Systems and a shareholder of Document Security Systems.  Lum Kan Fai, a member of the Board of Directors of the Company, is also an employee of DSS International.  The closing of the Equity Purchase Agreement is subject to conditions and the parties expect to close in 2018.  Guangzhou HotApps is primarily engaged in engineering work for software development, mainly voice over internet protocol.  Guangzhou HotApps is also involved in a number of outsourcing projects, including projects related to real estate and lighting.  The purchase price for this transaction is $100,000, which shall be paid in the form of a two-year, interest free, unsecured, demand promissory note in the principal amount of $100,000.  The note shall be due and payable in full on two years from the closing of the Equity Purchase Agreement.

Note 10. SUBSEQUENT EVENTS

On October 25, 2018, HotApps International Pte. Ltd. (“HotApps International”), a wholly owned subsidiary of the Company entered into an Equity Purchase Agreement with DSS Asia Limited (“DSS Asia”), a Hong Kong subsidiary of DSS International Inc. (“DSS International”), pursuant to which HotApps International will sell to DSS Asia all of the issued and outstanding shares of Guangzhou HotApps Technology Ltd. (“Guangzhou HotApps”). Mr. Chan Heng Fai is the Acting Chief Executive Officer and a Member of the Board of Directors of the Company. He is also the Chief Executive Officer, Chairman and controlling shareholder of Singapore eDevelopment Limited, the majority shareholder of the Company. Mr. Chan is also the Chief Executive Officer and Chairman of DSS International and a significant shareholder and a member of the Board of Document Security Systems Inc., which is the sole owner of DSS International. Mr. Chan Heng Fai is also a member of the Board of Directors of Document Security Systems and a shareholder of Document Security Systems. Lum Kan Fai, a member of the Board of Directors of the Company, is also an employee of DSS International. The closing of the Equity Purchase Agreement is subjectto conditions and the parties expect to close in 2018. Guangzhou HotApps is primarily engaged in engineering work for software development, mainly voice over internet protocol. Guangzhou HotApps is also involved in a number of outsourcing projects, including projects related to real estate and lighting. The purchase price for this transaction is $100,000, which shall be paid in the form of a two-year, interest free, unsecured, demand promissory note in the principal amount of $100,000. The note shall be due and payable in full on two years from the closing of the Equity Purchase Agreement.

16

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.

Background

HotApp Blockchain Inc., formerly HotApp International, Inc., (the “Company” or “Group”) was incorporated in the State of Delaware on March 7, 2012 and established a fiscal year end of December 31. 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 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). Started from a cross platform mobile application that incorporate messaging and eCommerce, HotApp has evolved as a platform Service provider with application framework serving vertical industry such as multilevel Marketing. The messaging and calling services has been terminated in 2017. HotApp can be used on any mobile platform (i.e. IOS Online or Android). On 1 January 2018, the Company’s new subsidiary, Crypto Exchange Inc., has issued 1,000 shares of its common stock to the Company.

As of September 30, 2018, details of the Company’s subsidiaries are as follows:

Subsidiaries	Date of Incorporation	Place of Incorporation	Percentage of Ownership
1st Tier Subsidiary:
HotApps International Pte Ltd (“HIP”)	May 23, 2014	Republic of Singapore	100% by Company
Crypto Exchange Inc.	December 15, 2017	State of Nevada, the United States of America	100% by Company
2nd Tier Subsidiaries:
HWH World Pte. Ltd., formerly Crypto Exchange Pte. Ltd. and HotApps Call Pte Ltd	September 15, 2014	Republic of Singapore	100% owned by HIP
HotApps Information Technology Co Ltd	November 10, 2014	People’s Republic of China	100% owned by HIP
HotApp International Limited*	July 8, 2014	Hong Kong (Special Administrative Region)	100% owned by HIP

* On March 25, 2015, HotApps International Pte Ltd acquired 100% of the issued and outstanding shares of HotApp International Limited.

The Group has relied significantly on SeD as its principal sources of funding during the year. With the restructuring efforts in 2016, HotApp has reduced its expense runway significantly and had revamped its 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; and (iv) e-commerce. This strategic shift is intended to create commercial value with a sharper focus.

17

Our Business

HotApp Blockchain Inc.is positioned as a technology platform serving Business to Business (B2B) need in eCommerce, collaboration and supply chain, the company has built a number of reusable application modules and framework. These properties will help enterprises and community users to transform their business model with digital economy in a more effective manner. With our platform, users can discover and build their own communities and create valuable content. Our platform tools empower these communities to share their thoughts and words across multiple channels. As these communities grow, they provide the critical mass that attracts enterprises. Enterprises in turn enhance user experience with premium contents, all of which are facilitated by the transactions of every stakeholder via e-commerce.

Trends in the Market and Our Opportunity

Digital and mobile technologies are reshaping the B2B marketplace. This isn’t only a technological revolution, it’s also a paradigm shift in how B2B buyers consume content, make informed buying decisions, and engage with sales people.

A report by Statista on B2B eCommerce in 2017 has estimated $2.3 trillion B2C sales online while for B2B it is $7.7 trillion with a 234.78% difference. The reasons behind the dominance of B2B are:

●

The rise of self-service: 57% B2B customers use typical purchase process for accomplishing proactive research online.

●

The simplified ordering experiences: The wholesale customers on B2B portals find simplified interface compared to a number of bells & whistles required on the B2C e-commerce sites.

Mobile is increasingly playing a critical role in the B2B customer journey. In fact, 50% of B2B search queries today are made on smartphones. A research from Boston Consulting Group expects that figure to grow to 70% by 2020.

Based upon the above trends, we believe significant opportunities exist for:

●

Enterprises deploying mobile platform to effectively engage different stakeholders.

●

User Experience in Mobile Commerce is one of the critical success factor, HotApp has been able to capitalize our experience in B2C and apply to B2B world.

●

Enterprises to increase usage of Over-The-Top Services, such as adoption of Enterprise messaging Apps alongside with using of email, video and audio conferencing, collaboration through cloud services, as a new medium for different stakeholder engagement including customers, to promote and market their products and services (Collaboration Framework). HotApp’s approach in white labelling for the enterprises will augment and fill this demand in the market. White label refers to packaging HotApp solution under brand name of clients with some content being customized only for clients.

●

Industries such as Network Marketing and Hospitality and Franchising businesses are utilizing Mobile friendly solutions to reach out effectively to their marketing network on a global basis.

●

Application of blockchain technology is no longer confined in the Financial industry, enterprises are looking to blockchain as a way to address product diversion, counterfeiting and track and trace solution. These applications become a major building block of B2B commerce.

Recent Developments

Outsource Technology Development Agreement

On March 1, 2018, the Company’s subsidiary HotApp International Ltd. entered into an Outsource Technology Development Agreement (the “Agreement”) with Document Security Systems, Inc. (“Document Security Systems”), which may be terminated by either party on 30-days’ notice. The purpose of the Agreement is to facilitate Document Security Systems’ development of a software application to be included as part of Document Security Systems’ AuthentiGuard® Technology suite. Under this agreement, Document Security Systems agreed to pay $23,000 per month for access to HotApp International Ltd.’s software programmers. The agreement was terminated on July 31, 2018. Mr. Chan Heng Fai is a member of the Company’s Board of Directors and, through his control of the Company’s majority shareholder, the beneficial owner of a majority of the Company’s common stock. Mr. Chan is also a member of the Board of Document Security Systems and a shareholder of Document Security Systems.

18

Our Plan of Operations and Growth Strategy

We believe that we have significant opportunities to further enhance the value we deliver to our users. We intend to pursue the following growth strategy:

●

Continual focus in Business to Business market

●

Engage Mobile App Integration Opportunities for Enterprises globally through “Powered by HotApp” initiatives, enabling Offline businesses to go On Line (O2O) with HotApp technology support.

●

Identify Strategic Partnership Opportunities globally through “Powered by HotApp” initiatives, enabling Mobile B2B commerce.

●

Position HotApp as the technology consultant and project manager for ICO initiatives in Asia.

●

Expand the service portfolio to blockchain / smart contract design and implementation in supply chain network

Results of Operations

Summary of Key Results

For the unaudited three months period ending September 30, 2018 and 2017

Revenue

Revenue consist primarily of the service rendered on projects which require significant software production. Total revenue for the three months ended September 30, 2018 and 2017 were $33,221 and $82,232, including $23,018 and $33,694 from related parties respectively. There were two projects undergoing for the three months ended September 30, 2018 and 2017 respectively. Both projects went through the whole quarter ended September 30, 2017; while one of the projects has terminated by end of July 2018.

Cost of revenue

Cost of revenue consist primarily of salary and outside consulting expenses incurred directly to the projects. Total cost of revenue for the three months ended September 30, 2018 and 2017 were $20,652 and $39,135, respectively.

Research and Development Expense

Research and development expenses consists primarily of salary and benefits. Expenditures incurred during the research phase are expensed as incurred. We expect our research and development expenses to maintain with moderate changes in line with business activities. Total research and development for the three months ended September 30, 2018 and 2017 were $0 and $59,242, respectively. The decrease was a result from the streamlining and restructuring of Company.

General and Administrative

General and administrative expenses consist primarily of salary and benefits, professional fees and rental expense. We expect our general and administrative expenses to maintain with moderate changes in line with business activities. Total general and administrative expenses for the three months ended September 30, 2018 and 2017 were $95,816 and $144,475, respectively.

Other (Expense) / Income

In the three months ended September 30, 2018 and 2017, we have incurred $(13,111) and $32,732 in foreign exchange (loss) gain, $0 and $(25) for the deposits written off and $81 and $0 in other sundry income.

For the unaudited nine months period ending September 30, 2018 and 2017

Revenue

Revenue consist primarily of the service rendered on projects which require significant software production. Total revenue for the nine months ended September 30, 2018 and 2017 were $142,952 and $186,596, including $115,107 and $103,548 from related parties respectively.

Cost of revenue

Cost of revenue consist primarily of salary and outside consulting expenses incurred directly to the projects. Total cost of revenue for the nine months ended September 30, 2018 and 2017 were $78,707 and $55,786, respectively.

19

Research and Development Expense

Research and development expenses consists primarily of salary and benefits. Expenditures incurred during the research phase are expensed as incurred. Total research and development for the nine months ended September 30, 2018 and 2017 were $0 and $162,013, respectively. The decrease was a result from the streamlining and restructuring of Company.

General and Administrative

General and administrative expenses consist primarily of salary and benefits, professional fees and rental expense. We expect our general and administrative expenses to maintain with moderate changes in line with business activities. Total general and administrative expenses for the nine months ended September 30, 2018 and 2017 were $375,396 and $550,701, respectively.

Other (Expense) / Income

In the nine months ended September 30, 2018 and 2017, we have incurred $0 and $(2,705) for the deposits written off, $0 and $131 for loss on disposal of fixed assets, and $(58,896) and $140,812 in foreign exchange (loss) gain, $7 and $1 in interest income and $421 and $0 in other sundry income.

Liquidity and Capital Resources

At September 30, 2018, we had cash of $74,311 and working capital deficit of $1,051,171. Cash had decreased during the nine months ended September 30, 2018 primarily due to operating losses incurred during the quarter.

We had a total stockholders’ deficit of $1,040,538 and an accumulated deficit of $5,496,583 as of September 30, 2018 compared with a total stockholders’ deficit of $761,481 and an accumulated deficit of $5,126,964 as of December 31, 2017. This difference is primarily due to the net loss incurred during the period.

For the nine months ended September 30, 2018, we recorded a net loss of $369,619.

We had net cash used in operating activities of $242,675 for the nine months ended September 30, 2018. We had a positive change of $54,781 due to accounts receivable, a positive change of $292 due to security deposit and other receivables, and a positive change of $3,662 due to prepaid expenses. We had a negative change of $4,509 due to accounts payable and accrued expenses.

For the nine months ended September 30, 2017, we recorded a net loss of $443,927.

We had net cash used in operating activities of $634,840 for the nine months ended September 30, 2017. We had a negative change of $63,604 due to costs in excess of billings and account receivable, 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 due to accounts payable and accrued expenses, and a positive change of $5,377 due to deferred revenue.

For the nine months ended September 30, 2018, we spent $1,518 on the acquisition of fixed assets, resulting in net cash used in investing activities of $1,518 for the period.

For the nine months ended September 30, 2017, we spent $12,529 on the acquisition of fixed assets, resulting in net cash used in investing activities of $12,529 for the period.

For the nine months ended September 30, 2018, we had net cash provided by financial activities of $162,099 due to advances from an affiliate.

For the nine months ended September 30, 2017, we had net cash provided by financial activities of $719,455 due to advances from an affiliate.

As of September 30, 2018, we have fixed operating office lease agreements for Guangzhou’s office amounting to $12,420 from 2018 to 2019.

We will need to raise additional capital through equity or debt financings. However, we cannot be certain that such capital (from SeD or third party) 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 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.

20

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.

Revenue recognition

Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers ("ASC 606"), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide goods or services to customers. Under the new standard, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. The Company adopted this new standard on January 1, 2018 under the modified retrospective method to all contracts not completed as of January 1, 2018 and the adoption did not have a material effect on our financial statements but we expanded our disclosures related to contracts with customers below.

Revenue is recognized when (or as) the Company transfers promised goods or services to its customers in amounts that reflect the consideration to which the Company expects to be entitled to in exchange for those goods or services, which occurs when (or as) the Company satisfies its contractual obligations and transfers over control of the promised goods or services to its customers. Costs to obtain or fulfill a contract are expensed as incurred.

Disaggregation of Revenue

We generate revenue from the project involving provision of services and web/software development to customers. In respect to the provision of services, the agreement span over the length of one year with cancellable clause and are typically billed on a monthly basis. The following table depicts the disaggregation of revenue according to revenue type and is consistent with how we evaluate our financial performance:

	For the nine months ended September 30, 2018
Segments	Provision of Services	Web / Software Development	Total
Primary Geographical Markets
North America	$115,107	$-	$115,107
Asia	-	27,845	27,845
	$115,107	$27,845	$142,952
Timing of Revenue Recognition
Goods transferred at a point in time	$-	$27,845	$27,845
Services transferred over time	115,107	-	115,107
	$115,107	$27,845	$142,952

21

	For the nine months ended September 30, 2017
Segments	Provision of Services	Web / Software Development	Total
Primary Geographical Markets
North America	$-	$103,548	$103,548
Asia	48,521	34,527	83,048
	$48,521	$138,075	$186,596
Timing of Revenue Recognition
Goods transferred at a point in time	$-	$138,075	$138,075
Services transferred over time	48,521	-	48,521
	$48,521	$138,075	$186,596

Contract assets and contract liabilities

Based on our contracts, we normally invoice customers once our performance obligations have been satisfied, at which point payment is unconditional. Accordingly, our contracts do not give rise to contract assets or liabilities under ASC 606. Accounts receivable are recorded when the right to consideration becomes unconditional.

Remaining performance obligations

As of September 30, 2018, the aggregate amount of the transaction price allocated to the remaining performance obligation is $5,110, and the Group will recognize this revenue as the web development is completed, which is expected to occur over the next 3 months.

Research and development expenses

Research and development expenses primarily consist of (i) salaries and benefits for research and development personnel, and (ii) office rental, general expenses and depreciation expenses associated with the research and development activities. The Company’s research and development activities primarily consist of the research and development of new features for its mobile platform and its self-developed mobile games. Expenditures incurred during the research phase are expensed as incurred.

Income taxes

Current income taxes are provided for in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements. Net operating loss carry forwards and credits are applied using enacted statutory tax rates applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that a portion of or all of the deferred tax assets will not be realized. The components of the deferred tax assets and liabilities are individually classified as non-current based on their characteristics.

Uncertainties exist with respect to the application of the New EIT Law to our operations, specifically with respect to our tax residency. The New EIT Law specifies that legal entities organized outside of the PRC will be considered residents for PRC income tax purposes if their “de facto management bodies” as “establishments that carry on substantial and overall management and control over the operations, personnel, accounting, properties, etc. of the Company.” Because of the uncertainties 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 by Item 10(f)(1) of Regulation S-K, the Company is not required to provide the information required by this Item.

ITEM 4.               

CONTROLS AND PROCEDURES

Our Chief Executive Officer and Chief Financial Officer are responsible for establishing and maintaining disclosure controls and procedures for the Company.

(a)

Evaluation of Disclosure Controls and Procedures

Based on the evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) are effective to ensure that information required to be disclosed by us in reports that we file or submit 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 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 our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

22

(b)

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.

23

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 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

None.

ITEM 6.               

EXHIBITS

The following exhibits filed with this Form 10-Q Quarterly Report:

Exhibit Number	Description
10.1	Guangzhou HotApp Equity Purchase Agreement
31.1	Certification of Acting Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
101.INS	XBRL Instance Document
101.SCH	XBXRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extenstion Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

24

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.

	HOTAPP BLOCKCHAIN INC.
Date: November 14, 2018	By:	/s/ Chan Heng Fai
		Chan Heng Fai
		Acting Chief Executive Officer (Principal Executive Officer)

Date: November 14, 2018	By:	/s/ Lui Wai Leung, Alan
		Lui Wai Leung, Alan
		Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

25

EX-10.1

Exhibit 10.1

EQUITY PURCHASE AGREEMENT

This EQUITY PURCHASE AGREEMENT (the “Agreement”) is made and entered into as of October 25, 2018, by and among DSS Asia Limited, a corporation existing and registered in Hong Kong (“Purchaser”), Guangzhou Hotapps Technology Ltd., a corporation existing and registered in China (“Target”),HotApps International Pte Ltd., a corporation existing and registered in Singapore, the sole-stockholder of Target (“Principal”), and Mr. Chan Heng Fai Ambrose, in his capacity as representative of the Principal (the “Representative”). The Purchaser, Target, Principal and Representative are each individually referred to herein as a “Party” and collectively as the “Parties.”

RECITALS

A. The Principal collectively owns all of the issued and outstanding equity securities of Target (collectively, the “Interests”).

B. The Principal desires to sell to Purchaser, and Purchaser desires to purchase from the Principal, all of the Interests on the terms and subject to the conditions set forth herein.

NOW, THEREFORE, the Parties hereby agree as follows:

ARTICLE I

DEFINITIONS; CONSTRUCTION

1.1 Definitions. Unless the context otherwise requires, capitalized terms used in this Agreement have the meanings ascribed to such terms in Exhibit A attached hereto, which is incorporated herein and made a part hereof.

1.2Rules of Construction. This Agreement is the result of the joint efforts of Purchaser, Target and Principal, and each of them and their respective counsel have reviewed this Agreement and each provision hereof has been subject to the mutual consultation, negotiation and agreement of the Parties, and the language used in this Agreement will be deemed to be the language chosen by the Parties to express their mutual intent, and therefore there will be no construction against any Party based on any presumption of that Party’s involvement in the drafting thereof. Words of any gender include the other gender, as appropriate. Whenever used herein, the words “include”, “includes” and “including” mean “include, without limitation”, “includes, without limitation” and “including, without limitation”, respectively. Terms defined in the singular have a comparable meaning when used in the plural, and vice versa. The word “or” is not exclusive. The word “days” means calendar days unless otherwise specified. Except as otherwise expressly provided herein all references to a specific time of day refer to the specific time of day in the Eastern Time Zone of the United States of America. The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement refer to this Agreement as a whole (including any Schedules and Exhibits hereto) and not to any particular provision of this Agreement, and all Article, Section, Schedule and Exhibit references are to this Agreement unless otherwise specified. Except as otherwise expressly provided herein all references to “$” or “Dollars” refer to the lawful money of the United States of America. Unless the context otherwise requires any references in this Agreement (but not in any Schedule to this Agreement, except to the extent expressly set forth therein) to an agreement, instrument or other document mean such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and by this Agreement. Each reference herein to any specific Governmental Entity shall include any successor Governmental Entity. Each reference herein to a statute or regulatory provision means such statute or regulatory provision as amended from time to time and includes any successor legislation or regulatory provision thereto, and in each case any regulations promulgated thereunder. Each reference herein to “written” or “in writing” includes in electronic form.

1

ARTICLE II

PURCHASE AND SALE OF INTERESTS; CLOSING

2.1Purchase and Sale of Interests. On the terms and subject to the conditions of this Agreement, the Principal hereby sells, transfers, conveys, assigns and delivers to Purchaser, and Purchaser hereby purchases, acquires and accepts from such Principal, all of the Interests owned by such Principal, free and clear of all Liens.

2.2Purchase Price; Closing Payments

(a)The aggregate purchase price (the “Purchase Price”) that the Purchaser shall pay to the Principal for the Interests is:

(i)$100,000, in the form of a two-year, interest free, demand promissory note in the principal amount of $100,000 (the “Promissory Note”) to be delivered to Principal at Closing in the form attached hereto as Exhibit B.

2.3 Closing. The closing of the sale of the Interests (the “Closing”) will be held via the electronic transmittal of executed documents on the date hereof or on such other date as Purchaser and the Representative may mutually agree in writing, effective as of [11:59 p.m.] on the Closing Date. The date on which the Closing actually takes place and the Interests are transferred is referred to herein as the “Closing Date.”

2.4Closing Deliveries.

(a)At the Closing, Target or the Principal, as applicable, will deliver, or cause to be delivered, to Purchaser, the following:

(i)a closing statement (the “Closing Statement”) containing (1) the consolidated balance sheet of Target as of 11:59 p.m. on the day prior to the Closing Date (without giving effect to any of the Transactions), (2) Target’s Net Working Capital, (3) Target Cash, and (4) Transaction Expenses;

(ii)a certificate of good standing for Target issued by Target’s legal jurisidiction of formation and place of principal operation, and a certificate of compliance pertaining to any Permits held by Target, each to be dated within three (3) Business Days prior to the Closing Date;

(iii)a certificate, validly executed by an authorized officer of Target, certifying that (A) the resolutions, as attached to such certificate, were duly adopted by the board of directors and Principal of Target, as applicable, authorizing and approving the execution of this Agreement and the consummation of the Transactions, and that such resolutions remain in full force and effect, (B) the Charter Documents attached to such certificate are true and correct, and include all amendments thereto, (C) Target has not experienced a Material Adverse Effect since its organization or formation, (D) the representations and warranties of Target in this Agreement are true and correct as of the Closing Date, (E) all actions and obligations to be performed by Target under this Agreement have been performed as of the Closing Date, and (F) the Disclosure Schedule is true and accurate as of the Closing Date;

2

(iv)copies reasonably acceptable to Purchaser of all consents, approvals and notices required to be obtained or made to consummate the Transactions;

(v)payoff letters or final invoices in a form reasonably acceptable to Purchaser from each of the parties to which any of the Transaction Expenses are payable;

(vi)executed documents reasonably acceptable to Purchaser to allow Target, effective as of the Closing, to transfer all Target bank account authorizations to representatives designated by Purchaser;

(vii)the minute books and all other books and records of Target and any of its Subsidiaries; and

(viii)all other certificates, instruments and other documents reasonably requested by Purchaser to complete the Transactions.

(b)At the Closing, Purchaser will deliver, or cause to be delivered, to the Principal, the following:

(i)the executed Promissory Note; and

(ii)all other certificates, instruments and other documents reasonably requested by the Representative to complete the Transactions.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF TARGET

Target and Principal hereby jointly and severally represent and warrant to Purchaser, as of the date hereof and as of the Closing Date, as follows:

3.1 Organization

(a). 

(a)Target is a corporation duly organized, validly existing and in good standing under the laws of China. Target is duly qualified, licensed or registered to do business and is in good standing in each jurisdiction in which the character of its properties owned, operated or leased, or the nature of its business conducted, make such qualification, license or registration necessary. Target has the requisite corporate power and Permits to own, lease and operate its properties and to carry on its business as currently conducted. Target has delivered to Purchaser a true and correct copy of Target’s [articles of incorporation and bylaws] (collectively, the “Target Charter Documents”), each as amended to date, and such Charter Documents are in full force and effect. Target is not in violation of any of the provisions of the Charter Documents. Section 3.1 of the Disclosure Schedule lists the directors and officers of Target.

3

3.2Capitalization

(a).

(a)The authorized and the issued capital of Target consists of SGD 3,000,000 and SGD 2,686,500, respectively, which constitutes all of the equity ownership that has been issued by Target (the “Target Shares”), which constitute the Interests. The Interests are set forth in Section 3.2(a) of the Disclosure Schedule. The Interests have been validly issued, are fully paid and nonassessable and are owned of record and beneficially by the Principal.

(b)Except for the Interests, there are no other authorized or issued and outstanding equity securities of Target of any kind, class or character. There are no outstanding subscriptions, options, warrants, or other agreements or commitments obligating Target to issue any additional equity interests or any options or rights with respect thereto, or any securities convertible into any equity or other ownership interets. None of the Interests have been issued in violation of, or are subject to, any preemptive or subscription rights. The consummation of the transactions contemplated hereby shall convey to Purchaser good and valid title to the Interests, free and clear of all Liens. There are no outstanding or authorized share appreciation, share unit, phantom stock or profit participation rights or other similar rights, written or oral, with respect to Target. The Interests will be offered, sold and delivered by Target to Purchaser in compliance with all applicable securities Laws. Target has not repurchased any of its capital stock except in compliance with all applicable Laws and any agreements applicable thereto. There are no declared or accrued but unpaid distributions, dividends or similar payments with respect to the Interests. There are no voting trusts, proxies, or other agreements or understandings with respect to Target or Principal or the Interests.

3.3Subsidiaries

(a).  Target does not have, and has never had, any Subsidiary. The Principal is the registered holder and beneficial owner of all of the issued equity ownership of Target. Target (a) has not agreed and is not obligated to make and is not bound by any Contract under which it is or may become obligated to make any future investment in, or capital contribution to, any other Person, and (b) does not, directly or indirectly, own any equity or similar interest in or any interest convertible, exchangeable or exercisable for, any equity or similar interest in, any Person.

3.4 Authority

(a).  Target has all requisite legal and corporate power and all other necessary authority to enter into this Agreement and to consummate the transactions contemplated hereby (the “Transactions”). The execution and delivery of this Agreement and the consummation of the Transactions have been duly authorized by all necessary action on the part of Target, and no further action is required. This Agreement has been duly executed and delivered by Target, and, assuming the due authorization, execution and delivery by the other parties hereto and thereto, constitutes the valid and binding obligations of Target, enforceable against each entity in accordance with its terms, except as such enforceability may be subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies.

3.5No Conflict

(a).  The execution and delivery by Target of this Agreement and the consummation of the Transactions will not (with or without notice or lapse of time, or both): (a) contravene or result in any violation of any provision of the Charter Documents; (b) result in a material breach of, constitute a material default under, result in the acceleration of any material obligation under, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice or consent under any material Contract to which Target is a party or by which Target is bound or to which any of its assets is subject (or result in the imposition of any Lien upon any such assets); (c) result in any material violation of any Law to which Target is subject or (d) require the consent, authorization or approval of, or require any notification to, any Person.

4

3.6Governmental Consents

(a).  No consent, waiver, approval, order or authorization of, or registration, declaration or filing with, any court, administrative agency or commission or other federal, state, county, local or foreign governmental authority, instrumentality, agency or commission (each, a “Governmental Entity”) is required by or with respect to Target in connection with the execution and delivery of this Agreement or the consummation of the Transactions.

3.7Financial Statements

(a).  Section 3.7 of the Disclosure Schedule sets forth a true, correct and complete copy of the financial statements of Target as of and for the year ended December 31, 2017 and the nine months ended September 30, 2018, consisting of a consolidated balance sheet, an income statement, and a statement of cash flows (the “Financial Statements”).

3.8Liabilities

(a). 

(a)     Target has no Liability, except Liabilities that (i) have been reflected in the Financial Statements, (ii) have arisen in the Ordinary Course of Business since the date of the Financial Statements, or (iii) are executory obligations arising in the Ordinary Course of Business under any Contracts (and not as a result of any breach thereof).

(b)Target has no Indebtedness.

3.9Absence of Certain Changes

(a).  Except as set forth in Section 3.9 of the Disclosure Schedule, since June 30, 2018, Target has conducted its business and operations in the Ordinary Course of Business and there has not been any:

(a)capital expenditure or commitment;

(b)payment, discharge or satisfaction, in any amount of any claim or Liability, other than payment, discharge or satisfaction of claims and Liabilities in the Ordinary Course of Business or of Liabilities reflected or reserved against in the Financial Statements;

(c)destruction of, damage to, or loss of any assets of Target (whether tangible or intangible), whether or not covered by insurance;

(d)change in accounting methods or practices by Target;

(e)change in any election in respect of Taxes, adoption or change in any accounting method in respect of Taxes, agreement or settlement of any claim or assessment in respect of Taxes, or extension or waiver of the limitation period applicable to any claim or assessment in respect of Taxes;

(f)declaration, setting aside or payment of a distribution, dividend or other payment (whether in cash, membership interest, stock or property) in respect of any equity ownership of Target, or any split, combination or reclassification in respect of any equity ownership of Target;

5

(g)increase in the base salary or other compensation payable or to become payable by Target to any Company Personnel, or the declaration, payment, commitment or obligation of any kind for the payment by Target of a severance payment, termination payment, bonus or other additional salary or compensation to any such Person, or changes to any benefit program of any type, or any changes in incentive compensation;

(h)termination, extension, material amendment or modification of the terms of any material Contract to which Target is a party or by which it or any of either of their assets are bound;

(i)sale, lease, license or other disposition of any of the material assets (whether tangible or intangible) or material properties of Target taken as a whole, including the sale of any accounts receivable of Target, or any creation of any security interest in any such material assets or material properties;

(j)(i) loan made by Target to any Person that is outstanding as of the date hereof (other than accounts receivable, deposits and prepaid expenses in the Ordinary Course of Business, including advances to Company Personnel for travel and business expenses in the Ordinary Course of Business), (ii) incurrence by Target of any Indebtedness, (iii) guarantee by Target of any Indebtedness, (iv) issuance or sale of any debt securities of Target or (v) guarantee of any Indebtedness of others;

(k)grant of any waiver or release by Target of any right or claim material to Target, including any write-off or other compromise of any account receivable of Target;

(l)acceleration of the collection of or application of any discount to any accounts receivable of Target or delay of the payment of any accounts payable or deferment of any expenses of Target;

(m)commencement, settlement, notice or, to the Knowledge of Target, threat, of any claim, lawsuit or proceeding or other investigation against Target;

(n)any event or condition that has had or is reasonably likely to have a Material Adverse Effect; or

(o)agreement by Target, or any officer, Employee or director on behalf of Target, to do any of the things described in the preceding clauses (a) through (n) of this Section 3.9.

6

3.10Tax Matters

(a).

(a)Target has prepared and timely filed all returns, declarations, estimates, claims for refunds, information statements and reports, including schedules or attachments thereto and any amendment thereof, relating to any and all Taxes concerning or attributable to Target or its operations or otherwise required by Law (each a “Tax Return”), and such Tax Returns are true and correct and have been completed in accordance with applicable Law.

(b)Target has duly and timely paid all Taxes due and owing (whether or not shown on a Tax Return) that it is required to pay. Target has withheld with respect to Company Personnel, contractors, principals, shareholders, owners, creditors, customers, and other Persons; timely paid over to the appropriate Tax authority all Taxes required to be withheld and paid over; and complied with all information reporting and backup withholding provisions of applicable Law. Target is not and has not been delinquent in the payment of any Tax, nor is there any Tax deficiency outstanding, assessed or proposed against Target, nor has Target executed any waiver of any statute of limitations on or extending the period for the assessment or collection of any Tax.

(c)No audit or other examination of Target in respect of Taxes is presently in progress, nor has Target been notified by any Tax authority (orally or in writing, formally or informally) of any intent or plan to request or initiate such an audit or other examination. No adjustment relating to any Tax Return filed by Target has been proposed by any Tax authority. No claim has ever been made by a Governmental Entity in a jurisdiction where Target does not currently file a particular type of Tax Return or pay a particular type of Tax that Target is or may be required to file such Tax Return or pay such Tax (including obligations to withhold amounts with respect to Tax) in that jurisdiction.

(d)Target has delivered to Purchaser or its legal counsel copies of all foreign, federal, state and local income and all state and local sales and use and/or value added Tax Returns for Target filed for all periods since January 1, 2017, together with all related workpapers and analysis created by or on behalf of Target.

(e)There are (and, immediately following the Closing Date, there will be) no Liens on the assets of Target relating to or attributable to Taxes other than statutory Liens for Taxes not yet due and payable. There is no basis for the assertion of any claim relating or attributable to Taxes, which, if adversely determined, would result in any Lien on the assets of Target.

(f)Target is and has at all times been resident for Tax purposes in China and is not and has not at any time been treated as a resident in any other country or jurisdiction outside of China for any Tax purpose (including any double taxation arrangement). Target is not subject to and no Tax authority has made a claim that Target is subject to, Tax in any jurisdiction other than China and the soverign urisdiction of China.

(a)Target has not made any tax classification election for United States federal income Tax purposes or, if applicable, any similar state or foreign Laws.

7

3.11Real and Personal Property

(a).

(a)Target does not own any fee interest in any real property. Section 3.11(a) of the Disclosure Schedule sets forth a correct and complete list of all real property currently leased by Target or otherwise currently used or occupied by Target (the “Leased Real Property”). Section 3.11(a) of the Disclosure Schedule lists all leases, lease guaranties, subleases, agreements for the leasing, use or occupancy of, or otherwise granting a right in or relating to the Leased Real Property, including all amendments, terminations and modifications thereof (the “Lease Agreements”), and there are no other Lease Agreements affecting the real property used by Target or to which Target is bound. Target has provided Purchaser with correct and complete copies of each Lease Agreement. Target has not received any notice of a default, alleged failure to perform, or any offset or counterclaim with respect to any Lease Agreement, which has not been fully remedied and withdrawn. The Leased Real Property is in good operating condition and repair, free from structural, physical and mechanical defects and has been maintained in accordance with applicable Law. As of the Closing, all Lease Agreements may be terminated by Target, in accordance with their respective terms without Liability.

(b)Target has good and valid title to, or, in the case of leased properties and assets, valid leasehold interests in, all of its tangible properties and assets, real, personal and mixed, used or held for use in its business, free and clear of any judgments or Liens. The tangible properties and assets of Target are (i) in good operating condition and properly maintained, subject to normal wear and tear, and (ii) sufficient for the conduct of the Business. The assets of Target constitute (x) all of the assets necessary for the operation of the Business and (y) all of the assets currently used in the Business.

3.12 Contracts

(a). 

(a)Section 3.12 of the Disclosure Schedule sets forth a correct and complete list of all of the following Contracts to which Target is a party or by which Target or its assets or properties are bound (collectively, the “Material Contracts”):

(i)Contracts with any current or former owner, officer, director, member, representative or Affiliate of Target or any Company Personnel;

(ii)Contracts related to the sale or disposition of any of the assets of Target other than in the Ordinary Course of Business;

(iii)Contracts containing change of control or similar provisions or providing for severance, notice of termination, termination pay, retention, change in control or other similar payments;

(iv)Contracts for joint ventures, strategic alliances, partnerships, licensing arrangements, or sharing of profits or proprietary information;

8

(v)Contracts containing covenants of Target not to compete in any line of business or with any Person in any geographical area or not to solicit or hire any person with respect to employment;

(vi)Contracts containing any most-favored nations undertakings, rights of first refusal, price protection mechanisms or any other similar provisions restricting the business of Target;

(vii)Contracts relating to the acquisition (by merger, purchase of stock or assets or otherwise) by Target of any operating business or material assets or the equity of any other Person;

(viii)Contracts relating to the incurrence, assumption or guarantee of any Indebtedness or imposing a Lien on any of the assets of Target, including indentures, guarantees, loan or credit agreements, sale and leaseback agreements, purchase money obligations incurred in connection with the acquisition of property, mortgages, pledge agreements, security agreements, or conditional sale or title retention agreements;

(ix)Contracts obligating Target to purchase, sell or provide a stated portion of its requirements or outputs;

(x)Contracts for the employment of any individual on a full-time, part-time or consulting or other basis;

(xi)Contracts with independent contractors or consultants (or similar arrangements) that are not cancelable without penalty or further payment and without more than 30 days’ notice;

(xii)Contracts providing for indemnification, direct or indirect, by Target;

(xiii)Contracts that require performance by any party more than six (6) months from the date hereof and that are not cancelable without penalty or further payment and without more than thirty (30) days’ notice;

(xiv)Contracts or plans regarding rights to or the issuance of equity of Target or any other profit sharing plan, including any stock option plan, stock appreciation rights plan, phantom stock plan or stock purchase plan;

(xv)the Lease Agreements;

(xvi)Contracts with any Governmental Entity;

(xvii)Contracts related to the compromise or settlement of any litigation or arbitration or other proceeding;

9

(xviii)Contracts with any labor union or any collective bargaining agreement;

(xix)Contracts involving any outstanding powers of attorney executed by or on behalf of Target;

(xx)any other Contracts that involve $5,000 individually or $20,000 in the aggregate or more and are not cancelable without penalty within thirty (30) days;

(xxi)any other Contracts that involve (i) minimum purchase commitments by Target, or (ii) ongoing service or support obligations and is not cancelable without penalty or refund within thirty (30) days; and

(xxii)any Contracts that include any type of exclusive dealing arrangement.

(b)Target has not materially breached, violated or defaulted under, or received notice that it has materially breached, violated or defaulted under, any of the terms or conditions of any Material Contract, nor is Target aware of any event that would constitute such a breach, violation or default with the lapse of time, giving of notice or both. To the Knowledge of Target, no other party to any Material Contract is in material default thereunder. Each Material Contract is in full force and effect. The consummation of the Transactions will neither violate nor result in the breach, modification, cancellation, termination or suspension of any Material Contract. The consummation of the Transactions will not require the consent of any party to such Material Contracts. Following the Closing, Purchaser and Target will all be permitted to exercise all of Target’s rights under the Material Contracts to the same extent Target would have been able to had the Transactions not occurred and without being required to pay any additional amounts or consideration other than fees, royalties or payments which Target would otherwise be required to pay had such Transactions not occurred.

(c)Other than as set forth on Schedule 3.13(c), Target has not terminated any Contracts during the immediately preceding twelve (12) month period.

3.13Interested Party Transactions

(a).  No officer, director, member or equity holder of Target (nor any ancestor, sibling, descendant or spouse of any of such Persons, or any trust, partnership, corporation or other entity in which any of such Persons has or has had an interest) has or has had, directly or indirectly, (i) an economic interest in any entity which furnished or sold, or furnishes or sells, services, products or technology that Target furnishes or sells, or proposes to furnish or sell, or (ii) any economic interest in any entity that purchases from or sells or furnishes to Target, any services, products or technology, or (iii) a beneficial interest in any Contract to which Target is a party, except in the case of clause (iii) in any such Person’s capacity as an officer, director or equity holder of Target.

3.14Legal Proceedings

(a).  There is no action, suit, claim or proceeding of any nature pending or threatened against either Target, any of its properties (tangible or intangible) or any of its Principals, officers, directors, Employees, trustees or representatives in their respective capacities as such. There is no investigation, inquiry or similar proceeding pending or threatened against Target, any of its properties (tangible or intangible) or any of its Principals, officers, directors, Employees, trustees or representatives in their respective capacities as such by or before any Governmental Entity. No Governmental Entity has provided Target with written notice challenging or questioning the legal right of Target to conduct its operations as conducted at that time or as presently conducted. There is no action, suit, claim or proceeding of any nature pending, or which Target has commenced preparations to initiate, by Target against any Person.

10

3.15Employee Benefits

(a). 

(a)Neither Target nor any of its Affiliates has made any plan or commitment to establish, adopt or enter into any Employee Plan or any new Employee Agreement, or to modify any Employee Agreement.

3.16Employees

(a). 

(a)The Target:

(i)has complied in all material respects with all applicable foreign, federal, state and local Laws, collective agreements, works agreements, rules, practices and regulations respecting employment, employment practices, employment registration, life collective insurance, medical coverage contributions, terms and conditions of employment, employment standards, accessibility, and wages and hours;

(ii)has correctly paid, withheld and reported all amounts required by law or agreement to be paid, withheld and reported with respect to wages (inclusive of overtime and premium pay), salaries and other payments to Company Personnel;

(iii)is not liable for any arrears of wages, Taxes or penalties for failure to comply with any of the foregoing, and

(iv)is not liable for any payment to any trust or other fund governed by or maintained by or on behalf of any Governmental Entity, with respect to unemployment compensation benefits, pension plan, or other benefits or obligations for Company Personnel (other than routine payments to be made in the Ordinary Course of Business), except for any such liability that would not, individually or in the aggregate, be material to Target.

(b)   There are no actions, suits, claims, charges, labor disputes or grievances pending or threatened or reasonably anticipated relating to any labor, occupational health and safety, discrimination, accessibility, pay equity or other matters involving any Company Personnel. There are no notice, severance or other similar obligations, by Law or Contract, with respect to the termination of any Employee’s employment; no Employee is subject to an employment Contract that is not terminable at will in accordance with applicable Law; the engagement of Target’s consultants and independent contractors may be terminated on thirty (30) days’ notice or less at any time without liability; and there are no Contracts with any Company Personnel providing for severance, change in control benefits, cash, other compensation, benefits or contingent rights on Closing.

3.17Insurance

(a).  All insurance policies of Target are upon terms that are reasonable and adequate for and are of the type and in amounts customarily carried by Persons with businesses, operations, properties and locales similar to those of Target. There is no claim by Target pending under any of such policies and no facts or circumstances exist which would give rise to a claim under such policies. All potentially insurable claims have been properly tendered to the appropriate insurance carrier in compliance with any applicable insurance policy notice provisions. All premiums due and payable under all such policies have been fully paid, and such policies are in material compliance. All such insurance policies are valid and binding in accordance with their terms, except as such enforceability may be subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies, and are in full force and effect. There is no threat of termination of, or premium increase with respect to, any of such policies.

11

3.18Compliance with Laws; Permits

(a). 

(a)Target (i) has been and is currently in compliance in all material respects with all Laws applicable to it or by which any of its property or assets is bound and (ii) has not received any notices of material violation with respect to any Laws.

(b)Target is in possession of all Permits required under applicable Law for the current operation of the Business and in compliance in all material respects with the requirements and limitations included in such Permits, each of which is in full force and effect. There is no investigation or proceeding pending or threatened that would result in the termination, revocation, suspension or restriction of any Permit or the imposition of any fine, penalty or other sanctions for violation of any legal or regulatory requirements relating to any Permit. Target has not received written notice from a Governmental Entity alleging the failure to hold any Permit or the violation of any term thereof.

3.19Anti-Bribery Laws

(a).  Target has not made any payment, directly or indirectly, to any person in violation of any applicable federal, state, local or foreign Laws, including Laws relating to bribes, gratuities, kickbacks, lobbying expenditures, political contributions and contingent fee payments. Neither Target nor any third party acting on behalf of Target, has offered, paid, promised to pay, or authorized, or will offer, pay, promise to pay, or authorize, directly or indirectly, the giving of money or anything of value to any appointed or elected official, any government employee, any political party, party official, or candidate for political office, or any officer, director or employee of any Governmental Entity, or to any other Person for the purpose of influencing any act or decision of such Person in his, her or its official capacity or inducing such Person to use his, her or its influence with any Governmental Entity to affect or influence any act or decision of such Governmental Entity, or to obtain an improper advantage in order to assist Target or any third party in obtaining or retaining business for, or directing business to, Target.

3.20 Privacy

(a).  Target has complied in all material respects with, is not in material violation of, and has not received any notices of violation with respect to, any applicable Laws, including applicable Privacy Laws, Contracts, privacy policies, database registry obligations, or any other commitments, obligations or representations concerning privacy and personal data protection, whether relating to its Employees, customers, suppliers, service providers or any other third parties from or about whom Target has obtained Personal Information (“Privacy Obligations”). Target has full right and authority to transfer to Purchaser all personal data, including all Personal Information, in the possession of Target. The consummation of the Transactions will not violate any Privacy Obligation, nor require Target to provide any notice to, or seek any consent from, any Employee, customer, supplier, service provider, grower or other third party under any privacy policy or Privacy Law.

3.21Minute Books

(a).  The minutes of the proceedings of meetings and written resolutions of the Board of Directors of Target provided to Purchaser are the only minutes and resolutions of Target as of the date of this Agreement and contain accurate summaries of all meetings and written resolutions passed by the Board of Directors (or committees thereof) of Target.

12

3.22Bank Accounts

(a).  Section 3.22 of the Disclosure Schedule lists (a) the names of all banks, trust companies, savings and loan associations and other financial institutions at which Target maintains safe deposit boxes, checking accounts or other accounts of any nature with respect to the Business, and (b) the names of all persons authorized to draw thereon, make withdrawals therefrom or have access thereto.

3.23Accounts Receivable

(a).  All accounts receivable of Target are set forth in Section 3.24 of the Disclosure Schedule. All accounts receivable of Target (a) are reflected accurately on the Financial Statements, (b) arose from bona fide sales of products or services to Persons not affiliated with Target and in the Ordinary Course of Business and (c) constitute valid, undisputed claims of Target not subject to valid claims of setoff or other defenses or counterclaims.

3.24Brokers

(a).  Target has not incurred or will incur, directly or indirectly, any liability for investment banking fees or for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with this Agreement or the Transactions.

3.25Suppliers and Customers

(a).  All of the customers and suppliers of Target are set forth in Section 3.25 of the Disclosure Schedule. No licensor, vendor, supplier or material customer of Target has canceled or otherwise modified its relationship with Target in a materially adverse manner, and no such Person has communicated (orally or in writing) to the officers, directors or other senior managers of Target any intention to do so. The consummation of the Transactions will not adversely affect any such relationships, nor will the consummation of the Transactions constitute a breach of any Contract with the licensors, vendors, suppliers or customers of Target.

3.26Representations Complete

(a).  None of the representations or warranties made by Target or Principal (as modified by the Disclosure Schedule) in this Agreement contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements contained herein or therein, in the light of the circumstances under which made, not misleading.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PRINCIPAL

Principal hereby represents and warrants to Purchaser as follows:

4.1Authority. Principal, as an entity, has all requisite corporate power and authority to enter into this Agreement and to consummate the Transactions. This Agreement has been duly executed and delivered by Principal and constitutes the valid and binding obligations of Principal, enforceable against such Principal in accordance with its terms, except as such enforceability may be subject to the laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies.

13

4.2No Conflicts. The execution and delivery by Principal of this Agreement and the consummation of the Transactions, will not (with or without notice or lapse of time, or both): (a) violate any organizational documents of Principal; (b) result in a material breach of, constitute a material default under, result in the acceleration of any material obligation under, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice or consent under any material Contract to which Principal is a party or by which Principal is bound or to which any of Principal’s assets is subject; or (c) result in any material violation of any Law to which Principal is subject.

4.3Title to Interests. Principal is the sole record and beneficial owner of the Interests, which constitute all of the equity interests in the capital of Target held by Principal. Principal has good and valid title to such Interests, free and clear of all Liens, claims, demands and restrictions on transfer, and has full power, right and authority to transfer such Interests hereunder.

4.4Litigation. Principal is not a party to any pending litigation that seeks to enjoin or restrict its ability to sell or transfer the Interests hereunder, which, if decided adversely to Principal, could reasonably be expected to adversely affect Principal’s ability to consummate the transactions contemplated hereby.

4.5Brokers. Principal has not incurred, nor will it incur, directly or indirectly, any liability for investment banking fees or for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with this Agreement or the Transactions.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser hereby represents and warrants to Principal as follows:

5.1Organization. Purchaser is a corporation duly organized, validly existing and in good standing under the laws of Hong Kong. Purchaser has the corporate power to own its properties and to carry on its business as currently being conducted.

5.2Authority. Purchaser has all requisite corporate power and authority to enter into this Agreement and the Promissory Note, and to consummate the Transactions. The execution and delivery of this Agreement and the Promissory Note have been duly authorized by all necessary action on the part of Purchaser, and no further action is required. This Agreement and the Promissory Note have been duly executed and delivered by Purchaser and, assuming the due authorization, execution and delivery by the other Parties hereto and thereto, constitute the valid and binding obligations of Purchaser, enforceable against it in accordance with their respective terms, except as such enforceability may be subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies.

14

5.3No Conflicts. The execution and delivery by Purchaser of this Agreement and the Promissory Note, and the consummation of the Transactions, will not (with or without notice or lapse of time, or both): (a) contravene or result in any violation of any provision of the organizational documents of Purchaser; (b) result in a material breach of, constitute a material default under, result in the acceleration of any material obligation under, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice or consent under any material Contract to which Purchaser is a party or by which Purchaser is bound or to which any of Purchaser’s assets is subject; (c) result in any material violation of any Law to which Purchaser is subject or (d) require the consent, authorization or approval of, or require any notification to, any Person.

5.4Litigation. There is no action, suit, claim or proceeding of any nature pending, or to the knowledge of Purchaser, threatened, against Purchaser which, if adversely determined, would reasonably be expected to prohibit or materially restrain the ability of Purchaser to enter into this Agreement or the Promissory Note or to consummate the Transactions.

5.5Brokers. Purchaser has not incurred, nor will it incur, directly or indirectly, any liability for investment banking fees or for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with this Agreement or the Transactions.

ARTICLE VI

ADDITIONAL AGREEMENTS

6.1Further Assurances. Each Party hereto, at the request of another Party hereto, will execute and deliver such other instruments and do and perform such other acts and things as may be reasonably necessary or proper for effecting completely the consummation of the Transactions. In case, at any time after the Closing Date, any further action is necessary or desirable to carry out the purposes of this Agreement and the Transactions, each Party will use commercially reasonable efforts to take all such action.

6.2Tax Matters.

(a)Tax Returns for Periods Ending Before the Closing Date. The Purchaser will prepare or cause to be prepared and file or cause to be timely filed all Tax Returns for Target for all periods ending on or before the Closing Date (each a “Pre-Closing Tax Period”) that are filed on or after the Closing Date, which Tax Returns will be prepared (i) in accordance with applicable Law and (ii) consistent with past practice of Target except as otherwise required by applicable Law.

(b)Tax Returns for Periods Beginning Before and Ending After the Closing Date. Purchaser will prepare, or cause to be prepared, and file or cause to be filed any and all Tax Returns of Target for a Tax period that begins on or before the Closing Date and ends after the Closing Date (each a “Straddle Tax Period”), which Tax Returns will be prepared (i) in accordance with applicable Law and (ii) consistent with the past practices of Target except as otherwise required by applicable Law.

15

(c)Liability for Taxes. The Principal will be liable for, pay and indemnify and hold harmless the Purchaser Indemnified Parties from and against (i) any Tax with respect to the Principal or Target that is attributed to, relates to, or arises in respect of any Pre-Closing Tax Period or that portion of a Straddle Tax Period through the end of the Closing Date; (ii) any Tax attributable to any breach of or inaccuracy in any representation or warranty made in Section 3.10; (iii) any Tax attributable to any breach or violation of, or failure to fully perform, any covenant, agreement, undertaking or obligation in this Section 6.3; and (iv) any and all Taxes of any person imposed on Target arising under the principles of transferee or successor liability or by contract, relating to an event or transaction occurring before the Closing Date. In each of the above cases, together with any out-of-pocket fees and expenses (including attorneys' and accountants' fees) incurred in connection therewith. Any amount payable by Principal pursuant to this Section 6.3(c) must be paid to Purchaser no later than the earlier of (x) five (5) days after such payments are requested by Purchaser and (y) five (5) days before the Tax liability is required to be paid to the applicable Tax authority. For the avoidance of doubt, this Section 6.3(c), and not Article VII, will control with respect to indemnification obligations of Principal with respect to such Taxes. Notwithstanding any provision of this Agreement to the contrary, the indemnification obligations of Principal pursuant to this Section 6.3(c) will survive the Closing until thirty (30) days after the expiration of the longest applicable statute of limitations, including any extensions or waivers thereof, for the Taxes involved.

(d)Cooperation on Tax Matters. Purchaser, Target and the Principal, will cooperate fully in connection with the preparation and filing of Tax Returns and any audit, litigation or other proceeding with respect to Taxes for any Pre-Closing Tax Period and Straddle Period of Target. Such cooperation will include the retention and (upon another Party’s request) the provision of records and information that are reasonably relevant to any such Tax Return, audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder, to the extent reasonably available to such Party. Purchaser agrees to retain all books and records with respect to Tax matters pertinent to Target relating to any taxation period beginning before the Closing Date until the expiration of the statute of limitations (and, to the extent notified by the Principal, any extensions thereof) of the respective taxation periods, and to abide by all record-retention requirements under applicable Law and pursuant to agreements entered into with any Governmental Entity.

(e)Audits and Contests with Respect to Taxes. So long as taxation periods of Target ending on or before, or including, the Closing Date remain open for an assessment of Tax, Purchaser and the Principal will notify the other in writing within fifteen (15) Business Days after receipt by Purchaser or the Principal of written or oral notice of any pending or threatened audit or assessment with respect to Taxes of Target relating to any Pre-Closing Tax Period or Straddle Period. Within fifteen (15) Business Days after the Principal’s receipt of such a notice for a Pre-Closing Tax Period, the Principal may elect, so long as Principal may reasonably be expected to have an obligation to indemnify the Purchaser Indemnified Parties hereunder with respect to such audit for the Pre-Closing Tax Period, by written notice to Purchaser, to participate in the audit or assessment in the name of Purchaser or Target, at the Principal’s sole cost and expense. If the Principal so elects, it will be solely responsible for the costs and expenses of such participation. If the Principal elects to participate in such a tax matter, Purchaser will inform the Principal of all material developments and events relating to such matter (including providing to the Principal copies of relevant portions of all written or oral materials and communications relating to such matter) and the Principal or its authorized representative will be entitled, at the expense of the Principal, to attend and participate in, all conferences, meetings and proceedings relating to such defense. With respect to any such audit or assessment that may reasonably be expected to cause the Principal to have an obligation to indemnify the Purchaser Indemnified Parties hereunder, Purchaser will not, and will not permit Target to, compromise or otherwise settle such audit or assessment without the prior written consent of the Principal, which consent will not be unreasonably withheld, conditioned or delayed.

16

(f)Transfer Taxes. All transfer, documentary, sales, use, stamp, registration and other such Taxes, and all conveyance fees, recording charges and other fees and charges (including any penalties and interest) incurred by Principal in connection with the consummation of the Transactions must be paid by or on behalf of Principal when due, and Principal will, at its own expense, file or cause to be filed all necessary Tax Returns and other documentation with respect to all such Taxes, fees and charges. If required by applicable law, the Parties will, and will cause their Affiliates to, join in the execution of any such Tax Returns and other documentation.

ARTICLE VII

INDEMNIFICATION

7.1Survival. All of the representations, warranties and covenants of the Parties contained in this Agreement will survive the Closing and continue in full force and effect after the Closing Date.

7.2Indemnification by Principal.

(a)Subject to the terms and conditions of this Article VII, from and after the Closing, the Principal agree to defend, indemnify and hold harmless Purchaser and its officers, directors, managers, Affiliates, agents, representatives, successors and assigns (including, after the Closing, Target) (each individually, a “Purchaser Indemnified Party” and collectively, the “Purchaser Indemnified Parties”) from, against and in respect of any claims, losses, liabilities, damages, deficiencies, costs and expenses, including reasonable attorneys’ fees and expenses of investigation and defense (individually, a “Loss” and collectively, “Losses”) arising out of or resulting from:

(i)any breach or inaccuracy of any representation or warranty made by Target or Principal in Article III of this Agreement;

(ii)any breach or inaccuracy of any representation or warranty made by Principal in Article IV of this Agreement; or

(iii)any failure by Principal to perform or comply with any of its covenants, agreements or obligations contained in this Agreement.

(b)For purpose of this Article VII, all representations and warranties in Article III will be deemed to have been made without giving effect to any limitation or qualification as to materiality, including the word or phrase “material” and “Material Adverse Effect.”

(c)Principal agrees that it will have no right of contribution from Target with respect to any Loss claimed by a Purchaser Indemnified Party.

(d)The representations and warranties made under this Agreement by Target or Principal will not be affected or deemed waived by reason of any investigation made by or on behalf of Purchaser (including by any of its Affiliates or Purchaser’s or its Affiliates’ advisors, consultants, agents or representatives) or by reason of the fact that Purchaser or any such Affiliates, advisors, consultants, agents or representatives knew or should have known that any such representation or warranty is or might be inaccurate.

17

7.3Indemnification by Purchaser.

(a)Subject to the terms and conditions of this Article VII, from and after the Closing, Purchaser agrees to defend, indemnify and hold harmless Principal, and its Affiliates, agents, representatives, successors and assigns (each individually, a “Principal Indemnified Party” and collectively, the “Principal Indemnified Parties” and, each of the Principal Indemnified Parties and the Purchaser Indemnified Parties being an “Indemnified Party”) for any Losses arising out of or resulting from:

(i)any breach or inaccuracy of any representation or warranty made by Purchaser in Article V of this Agreement; or

(ii)any failure by Purchaser to perform or comply with any covenant or other agreement applicable to it contained in this Agreement (including any covenant by or with respect to Target after the Closing) or the Promissory Note.

7.4Claims for Indemnification. The procedures for indemnification under this Agreement are as follows:

(a)The Indemnified Party seeking indemnification hereunder (a “Claimant”) will promptly give notice to the Parties from which indemnification is claimed (the “Indemnifying Party”) of any demand, suit, assertion of liability or claim. If the claim relates to an action, suit or proceeding filed by another Person against the Claimant (a “Third Party Claim”), then such notice will be given by the Claimant within twenty (20) Business Days after written notice of such action, suit or proceeding is given to the Claimant and will include true, correct and complete copies of all suit, service and claim documents; provided, however, that the failure or delay of the Claimant to provide any such notice or deliver such copies will not release the Indemnifying Party from any of its obligations under this Article VII unless (and then solely to the extent that) the Indemnifying Party is materially prejudiced thereby.

(b)With respect to claims solely between the Parties, following receipt of notice from the Claimant of a claim, the Indemnifying Party will have forty-five (45) days to make such investigation of the claim as the Indemnifying Party reasonably deems necessary or desirable, and the Claimant agrees to make available to the Indemnifying Party and its authorized representatives all information relevant and necessary to substantiate the claim, except to the extent any attorney-client privilege would thereby be violated. If the Claimant and the Indemnifying Party agree at or prior to the expiration of such forty-five (45)-day period to the validity and amount of such claim, then the Indemnifying Party will promptly pay to the Claimant the full amount of the claim, subject to the terms and limitations hereof. If the Claimant and the Indemnifying Party do not reach any such agreement within such forty-five (45)-day period, then the Claimant may seek an appropriate remedy at law or in equity, as applicable, subject to the terms and limitations hereof.

18

(c)With respect to any Third Party Claim, if (i) the Third Party Claim seeks solely monetary damages, (ii) the Indemnifying Party confirms, in writing, its obligation to indemnify and hold the Claimant harmless with respect to such Losses, (iii) the Indemnifying Party reasonably demonstrates that it has the financial resources necessary to defend the matter and fulfill its indemnity obligation, (iv) settlement of, or consent to entry of judgment with respect to, the Third Party Claim is not likely to establish a precedent materially adverse to the Claimant, and (v) the Indemnifying Party covenants to and will defend the Third Party Claim actively, diligently and in good faith, then the Indemnifying Party will, subject to the rights of or duties to any insurer or other third Person having liability therefor, be entitled to, and the Claimant will provide the Indemnifying Party with the right to be exercised within thirty (30) days after receipt of such notice to, assume and maintain control of the defense and settlement of such Third Party Claim (with counsel reasonably satisfactory to the Claimant, which counsel will be at the sole expense of the Indemnifying Party); provided, however, that, if the Indemnifying Party will have exercised such right to assume such control, then the Claimant will be entitled to participate in the defense, compromise or settlement of such Third Party Claim and to employ counsel at its own expense to assist in the handling of such Third Party Claim and, in such event, counsel selected by the Indemnifying Party (and reasonably acceptable to the Claimant) will be required to reasonably cooperate with such counsel of the Claimant in such defense, compromise or settlement. If the Indemnifying Party does not assume the defense of the Third Party Claim, does not comply with the foregoing provisions of this Section 7.4(c), or is not entitled to assume such defense, then the Claimant will be entitled to assume and control such defense and to settle or agree to pay in full such Third Party Claim without the consent of the Indemnifying Party without prejudice to the ability of the Claimant to enforce its claim for indemnification against the Indemnifying Party hereunder. So long as the Indemnifying Party that is permitted and has assumed such control and defense is defending actively, diligently and in good faith any such Third Party Claim against the Claimant, and otherwise complying with the terms of this Section 7.4(c), the Claimant will not settle or compromise such claim or demand. If the Indemnifying Party is permitted and has assumed and is diligently maintaining the defense of any such claim or demand as set forth above, then it will have the power and authority to settle or consent to the entry of judgment of such Third Party Claim without the consent of the Claimant only if the judgment or settlement results solely in the payment by the Indemnifying Party of the full amount of money damages and includes a full and complete release of the Claimant from any and all liability thereunder; provided, that the Indemnifying Party will have made arrangements for the payment of all such damages in a manner reasonably satisfactory to the Claimant. In all other events, the Indemnifying Party will not consent to the entry of judgment or enter into any settlement without the prior written consent of the Claimant.

7.5Tax Treatment of Indemnification Payments. All indemnification payments under this Agreement will be treated as an adjustment to the Purchase Price, except to the extent that applicable tax Law does not permit such treatment.

7.6No Duplication. Any Losses for which any Indemnified Party is entitled to indemnification under this Article VII will be determined without duplication of recovery by reason of the state of facts giving rise to such Losses constituting a breach of more than one representation, warranty, covenant or agreement.

19

ARTICLE VIII

GENERAL PROVISIONS

8.1Fees and Expenses. Except as otherwise provided in this Agreement, each Party will pay its own fees, costs and expenses incurred in connection with the authorization, preparation, execution and performance of this Agreement and the consummation of the transactions contemplated hereby (including all fees and expenses of counsel, accountants, agents and representatives).

8.2Amendments and Waivers. No amendment of any provision of this Agreement will be valid unless the same is in writing and signed by each of the Parties. No waiver by any Party of any provision of this Agreement or any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, will be valid unless the same is in writing and signed by the party making such waiver nor will such waiver be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.

8.3Notices. All notices and other communications hereunder will be in writing and will be deemed duly delivered (i) three (3) Business Days after being sent by registered or certified mail, return receipt requested, postage prepaid, (ii) one (1) Business Day after being sent for next Business Day delivery, fees prepaid, via a reputable nationwide overnight courier service, or (iii) on the first Business Day following the date of confirmation of receipt of transmission by facsimile or electronic mail, in each case to the intended recipient as set forth below:

(a)if to Purchaser:

Units 9-10, 22/Floor

Metro Centre II

21 Lam Hing Street, Kowloon Bay, Kowloon, Hong Kong

Attention: Vincent Lum

E-mail: vincent@dsssecure.com

(b)if to Principal or the Representative:

7 Temasek Boulevard #29-01B

Suntec Tower One

Singapore 038987

Attention: Mr. Fai H. Chan

Facsimile No.: +65-6333-9164

E-mail: fai@sed.com.sg

8.4Counterparts; Facsimiles. This Agreement may be executed by facsimile and in one or more counterparts, all of which will be considered one and the same agreement and will become effective when one or more counterparts have been signed by each of the Parties and delivered to the other Parties, it being understood that all parties need not sign the same counterpart. Signatures delivered by facsimile or by electronic data file will have the same effect as originals.

20

8.5Entire Agreement; Assignment. This Agreement, the Disclosure Schedule, the Exhibits, the Promissory Note and the documents and instruments and other agreements among the parties hereto referenced herein: (i) constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and understandings both written and oral, among the parties with respect to the subject matter hereof; (ii) are not intended to confer upon any other Person any rights or remedies hereunder; and (iii) will not be assigned by operation of law or otherwise without the prior written consent of the parties hereto, except that Purchaser may assign its rights and delegate its obligations hereunder to its Affiliates so long as Purchaser remains obligated to perform those obligations required to be performed by Purchaser hereunder. This Agreement will be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns.

8.6Severability. In the event that any provision of this Agreement or the application thereof, becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such provision to other Persons or circumstances will be interpreted so as reasonably to effect the intent of the Parties. The Parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable provision.

8.7Governing Law. Except as otherwise provided herein, this Agreement will be governed by and construed in accordance with the Laws of Hong Kong without giving effect to any choice or conflict of law provision or rule that would cause the application of the Laws of any jurisdiction other than Hong Kong. Each of the parties irrevocably agrees that any legal action or proceeding arising out of or relating to this Agreement brought by the other party or its successors or assigns will be brought and determined in a court sitting in Hong Kong, and each of the parties hereby irrevocably submits to the exclusive jurisdiction of the aforesaid court for itself and with respect to its property, generally and unconditionally, with regard to any such action or proceeding arising out of or relating to this Agreement and the Transactions contemplated hereby. Each of the parties agrees not to commence any action, suit or proceeding relating thereto except in the courts described above in Hong Kong. Each of the parties further agrees that notice as provided herein will constitute sufficient service of process and the parties further waive any argument that such service is insufficient. Each of the parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, (a) any claim that it is not personally subject to the jurisdiction of the courts in Hong Kong as described herein for any reason, (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) that (i) the suit, action or proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.

8.8WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY AND ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF ANY PARTY HERETO IN NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.

[Remainder of Page Intentionally Left Blank;

The Next Page is the Signature Page]

21

IN WITNESS WHEREOF, the Parties have caused this Agreement to be signed as of the date first above written.

PURCHASER:

DSS Asia Limited

By: /s/ Vincent Lum

Name: Vincent Lum

Title: Director

TARGET:

Guangzhou Hotapps Technology Ltd.

By: /s/ Chan Heng Fai Ambrose

Name: Chan Heng Fai Ambrose

Title: Director

PRINCIPAL REPRESENTATIVE:

By: /s/ Chan Heng Fai Ambrose

Name: Chan Heng Fai Ambrose

Title: Director

[Signature Page to Equity Purchase Agreement]

22

PRINCIPAL:

HotApps International Pte Ltd.

By: /s/ Chan Heng Fai Ambrose

Name: Chan Heng Fai Ambrose

Title: Director

[Signature Page to Equity Purchase Agreement]

23

Exhibit A

Defined Terms

Capitalized terms used in the Agreement to which this Exhibit A is attached will have the following respective meanings, and all references to Sections, Schedules or Exhibits in the following definitions will refer to Sections, Schedules or Exhibits of or to such Agreement:

“Affiliate” means, with respect to any Person, any other Person directly or indirectly through one or more intermediaries controlling, controlled by or under common control with such other Person. For purposes hereof, “control” means, as to any Person, the possession of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

“Agreement” has the meaning set forth in the preamble.

“Business” means the business of Target as (a) conducted immediately prior to the Closing and (b) the Parties presently anticipate will be conducted following the Closing.

“Business Day” means any day other than (a) a Saturday or Sunday or (b) a day on which banking institutions located in New York, New York are permitted or required by Law, executive order or governmental decree to remain closed.

“Charter Documents” has the meaning set forth in Section 3.1.

“Claimant” has the meaning set forth in Section 7.4(a).

“Closing” has the meaning set forth in Section 2.3.

“Closing Date” has the meaning set forth in Section 2.3.

“Closing Indebtedness” means the Indebtedness of Target as of 11:59 p.m. on the Closing Date.

“Closing Statement” has the meaning set forth in Section 2.4(a)(i).

 “Company Personnel” means any current or former Employee, independent contractor or consultant or director of Target or any of its Affiliates.

“Confidential Information” means any information of or concerning Purchaser, Target, this Agreement and the Transactions that is confidential or propriety by nature and not already generally available to the public; provided, that Confidential Information will not include: (a) information that at the time of disclosure is generally available to the public or is otherwise available to the receiving party other than on a confidential basis; (b) information that, after disclosure, becomes generally available to the public by publication or otherwise through no fault of the receiving party; (c) information disclosed to the receiving party by a third party not under an obligation of confidentiality to the disclosing party; or (d) information that is or has been developed by the receiving party independently of the disclosures by the disclosing party.

A-1

“Contract” means any contract, agreement, indenture, note, bond, mortgage, loan, instrument, lease, license, commitment or other arrangement, understanding, undertaking, commitment or obligation, whether written or oral.

“Copyrights” means any and all copyrights, copyrights registrations and applications therefor, and all other rights corresponding thereto throughout the world including moral and economic rights of authors and inventors, however denominated.

“Disclosure Schedule” means the disclosure schedule delivered by Target to Purchaser simultaneously with the execution of this Agreement and in connection herewith in form reasonably acceptable to Purchaser.

“Domain Name” means any or all of the following and all worldwide rights in, arising out of, or associated therewith: domain names, uniform resource locators and other names and locators associated with the Internet.

“Employee” means any employee of Target.

“Employee Agreement” means each management, employment, severance, notice of termination, termination pay, contractor, consulting, relocation, repatriation, expatriation, visas, work permit, non-competition, non-solicitation, intellectual property, confidentiality or other agreement, or contract between Target or any of its Affiliates and any Company Personnel.

“Employee Plan” means any plan, program, policy, practice, contract, agreement or other material arrangement providing for compensation, severance, termination pay, change of control payments, deferred compensation, bonus, incentive or performance awards, stock or stock-related awards, statutory, fringe, pension, supplemental pension, retirement, death, disability or medical benefits or any other employee benefits or remuneration of any kind, whether written, unwritten or otherwise, funded or unfunded.

“Financial Statements” has the meaning set forth in Section 3.7.

“Governmental Entity” has the meaning set forth in Section 3.6.

“Indebtedness” means (a) any indebtedness for borrowed money, (b) any other indebtedness evidenced by bonds, debentures, notes or other similar instruments, (c) any obligations as lessee under leases for personal property, (d) any indebtedness created or arising under any conditional sale or other title retention agreement with respect to acquired property, (e) any obligations, contingent or otherwise, under acceptance credit, letters of credit or similar facilities, (f) all obligations arising from cash/book overdrafts, (g) all obligations secured by a Lien, (h) all indebtedness for the deferred purchase price of property or services with respect to which a Person is liable, contingently or otherwise, as obligor or otherwise, (i) any liability for earned and unused vacation or personal time off of the Employees, (j) all accrued interest, prepayment premiums or penalties related to any of the foregoing, (k) and (l) any guaranty of any of the foregoing.

“Indemnified Party” has the meaning set forth in Section 7.3(a).

“Indemnifying Party” has the meaning set forth in Section 7.4(a).

A-2

 “Interests” has the meaning set forth in the recitals.

“Knowledge of Target” means the actual knowledge of Target’s, Target’s officers and directors, Principal and Principal’s officers and directors and the knowledge that such Persons should have in performing their day-to-day duties for Target.

“Law” means any law, statute, ordinance, rule, regulation, code, order, judgment, injunction, decree or other provision having the force or effect of law enacted, issued, promulgated, enforced or ordered by a Governmental Entity.

“Lease Agreements” has the meaning set forth in Section 3.11(a).

“Leased Real Property” has the meaning set forth in Section 3.11(a).

“Liability” means, with respect to any Person, any liability or obligation of such Person of any kind, character or description, whether known or unknown, absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due, vested or unvested, executory, determined, determinable or otherwise, and whether or not the same is required to be accrued on the financial statements of such Person.

 “Lien” means any mortgage, deed of trust, pledge, security interest, encumbrance, claim, Liability, adverse claim of ownership or use, lease, option, easement, reversion, violation, adverse claim, servitude, hypothecation, restriction on transfer (such as a right of first refusal or other similar right), defect of title, lien or charge of any kind, or restriction of any kind.

“Loss” has the meaning set forth in Section 7.2.

“Material Adverse Effect” means any event, condition, effect, change, development or circumstance that, individually or when considered together with all other events, conditions, effects, changes, developments or circumstances, has had or would reasonably be expected to have a materially adverse effect on (a) the business, assets, financial condition or results of operations of Target, or (b) the ability of Target or the Principal to consummate the transactions contemplated by this Agreement or perform their obligations under this Agreement; provided, however, that in no event will any of the following, alone or in combination, be deemed to constitute, nor will any of the following be taken into account in determining whether there has occurred, a Material Adverse Effect: (i) effects resulting from changes in applicable Law; (ii) effects resulting from factors generally affecting the economy, financial markets or capital markets; (iii) effects resulting from changes or conditions generally affecting the industry in which Target operates; (iv) effects of any war, act of terrorism, civil unrest or similar event; or (v) effects resulting from any action taken, or any omission to act, by Purchaser or any of its Affiliates other than the closing of the Transactions; provided, further, however, that any effect referred to in clauses (i), (ii) or (iii) may be taken into account in determining whether or not there has been a Material Adverse Effect to the extent any such Effect adversely affects Target in a disproportionate manner relative to other companies in the same industry.

“Material Contracts” has the meaning set forth in Section 3.12(a).

A-3

 “Net Working Capital” means, as of the Closing Date: (i) the total current assets of the Target, as determined in accordance with Target’s financial statements, less (ii) the total current liabilities of Target, excluding debt, as determined in accordance with the Target’s compiled financial statements.

“Ordinary Course of Business” means the ordinary and usual course of day-to-day operations of the Business through the date hereof consistent with past custom and practice (including with respect to quantity and frequency).

 “Principal Indemnified Party” has the meaning set forth in Section 7.3(a).

“Principal” has the meaning set forth in the preamble.

 “Target Cash” means all cash and cash equivalents of each of Target as of 11:59 p.m. on the Closing Date (without giving effect to any of the Transactions). For the avoidance of doubt, Target Cash will be calculated net of issued but uncleared checks and drafts and inclusive of deposits in transit.

“Target Charter Documents” has the meaning set forth in Section 3.1(a).

“Party” and “Parties” has the meaning set forth in the preamble.

“Patents” means any patents and applications therefor and all reissues, divisions, renewals, extensions, provisionals, continuations and continuations-in-part thereof throughout the world.

“Permits” means any permits, consents, licenses, certificates, registrations, certificate of occupancy or use, variances, orders, governmental authorizations or approvals, or any other permits.

“Person” means any natural person, company, corporation, limited liability company, general or limited partnership, trust, proprietorship, joint venture, or other business entity, unincorporated association, organization or enterprise, or any Governmental Entity.

“Personal Information” means all information regarding or capable of being associated with an individual person or device, including: (a) information that identifies, could be used to identify or is otherwise identifiable with an individual, including name, physical address, telephone number, email address, financial account number or government-issued identifier, medical, health or insurance information, gender, date of birth, educational or employment information, religious or political views or affiliations, marital or other status, and any other data used or intended to be used to identify, contact or precisely locate an individual (e.g., geolocation data); (b) information that is created, maintained, or accessed by an individual (e.g., videos, audio or individual contact information); and (c) Internet Protocol addresses, unique device identifiers or other persistent identifiers. Personal Information may relate to any individual, including a current, prospective or former customer, service user, or employee of any Person. Personal Information includes information in any form, including paper, electronic and other forms.

“Pre-Closing Tax Period” has the meaning set forth in Section 6.2(a).

A-4

“Privacy Laws” means any Laws, legal requirements, and self-regulatory guidelines and principles governing the receipt, collection, compilation, use, storage, processing, transmission, sharing, safeguarding, security, disposal, destruction, disclosure or transfer (including cross-border transfers) of Personal Information.

“Privacy Obligations” has the meaning set forth in Section 3.20.

“Purchase Price” has the meaning set forth in Section 2.2(a).

“Purchaser” has the meaning set forth in the preamble.

“Purchaser Indemnified Party” has the meaning set forth in Section 7.2.

“Representative” has the meaning set forth in the preamble.

“Restricted Business” has the meaning set forth in Section Error! Reference source not found..

“Restricted Territory” means worldwide, but if the foregoing definition is deemed by a court of competent jurisdiction to be too broad to be enforced, the “Restricted Territory” will mean the United States, China, Singapore and Hong Kong.

“Software” means all (a) software programs in all forms of expression, including firmware, all versions of source code, object code, assembly language, compiler language, machine code, and all other computer instructions, code, and languages embodied in computer software of any media, and whether for use in or in conjunction with a mainframe computer, personal computer (desktop, laptop or hand held), mobile device, personal digital assistant, smartphone or any other programmable hardware or device, computer systems, computer hardware, network infrastructure and related equipment, and all error corrections, updates, upgrades, enhancements, translations, modifications, adaptations, derivative works thereto, and other changes or functionality additions thereto; and (b) all designs and design documents (whether detailed or not), technical summaries, and documentation (including flow charts, logic diagrams, white papers, manuals, guides and specifications) associated with the foregoing.

“Straddle Tax Period” has the meaning set forth in Section 6.2(b).

“Subsidiary” means any entity of which (i) a majority of the outstanding share capital, voting securities or other equity interests are owned, directly or indirectly, by Target or (ii) Target is entitled, directly or indirectly, to appoint a majority of the board of directors, board of managers or comparable governing body of such Person.

“Tax” or, collectively, “Taxes” means (a) any and all federal, provincial, state, local and foreign taxes, assessments and other governmental charges, duties, impositions and liabilities, including gross receipts, income, profits, capital, sales, goods and services, harmonized sales, use, occupation, value added, ad valorem, transfer, business, franchise, environmental, minimum or add-on minimum, premium, stamp, disability, withholding, payroll, recapture, employment, excise and property taxes, duties or similar charges, public imposts, fees, social security charges (including health, unemployment and pension insurance), escheat or unclaimed property charges and obligations, or other taxes, fees, assessment or charges of any kind whatsoever, together with all interest, penalties, fines and additions imposed with respect to such amounts, (b) any Liability for the payment of any amounts of the type described in clause (a) of this paragraph as a result of being a member of an affiliated, consolidated, combined or unitary group for any period, and (c) any Liability for the payment of any amounts of the type described in clauses (a) or (b) of this paragraph as a result of any express or implied obligation to indemnify any other Person or as a result of any obligation under any agreement or arrangement with any other Person with respect to such amounts and including any Liability for taxes of a transferor or predecessor entity.

A-5

“Tax Return” has the meaning set forth in Section 3.10(a).

“Third-Party Claim” has the meaning set forth in Section 7.4(a).

“Trade Secrets” means any and all trade secrets (including, those trade secrets defined in the Uniform Trade Secrets Act and under corresponding foreign statutory and common law) and proprietary business, technical and know-how information, non-public information, and confidential information and rights to limit the use or disclosure thereof by any Person, including databases and data collections.

“Trademarks” means any and all trade names, logos, common law trademarks and service marks, trademark and service mark registrations and applications therefor and all goodwill associated therewith throughout the world.

“Transaction Expenses” means (a) all fees, costs and expenses of any brokers, financial advisors, consultants, accountants, attorneys or other professionals engaged by Target or Principal in connection with the sale process for Target and the structuring, negotiation or consummation of the Transactions and (b) any bonuses, severance payments or similar compensation (including Target’s portion of any employment or payroll Taxes or any payments or charges under any Employee Plan arising in connection with such payments) payable by Target to Employees, officers, directors, independent contractors, consultants, representatives or agents in connection with the Transactions, in each case to the extent unpaid as of the Closing.

“Transactions” has the meaning set forth in Section 3.4.

A-6

EXHIBIT B

THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER ANY FEDERAL SECURITIES ACT OR LAW, NOR ANY APPLICABLE FOREIGN OR STATE LAW, AND MAY NOT BE SOLD, OFFERED FOR SALE, DISTRIBUTED, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS (A) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE OR FOREIGN SECURITIES LAWS COVERING ANY SUCH TRANSACTION OR (B) SUCH TRANSACTION IS EXEMPT FROM REGISTRATION UNDER SUCH ACT AND APPLICABLE STATE OR FOREIGN SECURITIES LAWS.

PROMISSORY NOTE

$100,000.00 October__, 2018

FOR VALUE RECEIVED, DSS Asia Limited (the “Borrower”), promises to pay to HotApps International Pte Ltd. (the “Lender”), or to its order, the principal sum of $100,000 (the “Principal Amount”), on the following terms.

1.           Maturity. The aggregate outstanding Principal Amount shall be due and payable in full on October __, 2020.

2.           Interest. This Note shall not accrue interest.

3.           Borrower Prepayment Option. At any time on or before the Maturity Date, the Borrower shall have the right to prepay all or part of the then outstanding principal of this Note.

4.           Late Charge.  If the Principal Amount is not received within thirty (30) days of its due date, Borrower shall pay a late charge equal to two and one-half percent (2.5%) of the delinquent amount.

5.           Collateral. This Note is unsecured.

6.           Replacement of Note. If this Note is mutilated, lost, stolen or destroyed, the Borrower shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this Note, a new Note, but only upon receipt of evidence reasonably satisfactory to the Borrower of such loss, theft or destruction and customary and reasonable bond or indemnity, if requested.

7.           Events of Default.  The following constitute an event of default (“Event of Default”):

a.           Borrower fails to pay the Principal Amount when due, and said failure continues for a period of thirty (30) days;

b.           Borrower fails or neglects to perform, keep or observe any of the covenants, conditions or agreements contained in this Note, and such failure continues for a period of thirty (30) days;

c.           A proceeding under any bankruptcy, reorganization, arrangement of debt, insolvency, readjustment of debt or receivership law or statute is filed against Borrower which is not dismissed within sixty (60) days of its filing, or a proceeding under any bankruptcy, reorganization, arrangement of debt, insolvency, readjustment of debt or receivership law or statute is filed by Borrower or the Borrower makes an assignment for the benefit of creditors; and

d.           Borrower becomes insolvent or fails generally to pay its debts as they become due, and said failure continues for a period of thirty (30) days.

B-1

8.           Purpose.  The Principal Amount constitutes the financial consideration for an Equity Purchase Agreement entered into by the parties on October __, 2018.

9.           Miscellaneous.

a.           Authority and Enforceability; Etc. The Borrower hereby represents and warrants to the Lender that:

i.           it has full power and authority and has taken or shall take all required action necessary to permit it to execute, deliver, and perform all of its obligations contained in this Note, and to borrow hereunder, and such actions to the best of its knowledge will not violate any provision of law applicable to the Borrower, or result in the breach of or constitute a default under any material agreement or instrument to which the Borrower is a party or by which it is bound, which default has not been waived in writing on or prior to the date hereof;

ii.           this Note has been duly authorized and validly executed by and is the valid and binding obligation of the Borrower enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, or other laws affecting creditors’ rights and remedies generally, and by general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law); and

iii.           neither the execution and delivery by the Borrower of this Note, nor the performance by the Borrower of its obligations hereunder, requires the consent, approval or authorization of any person or governmental authority, which consent, approval, or authorization has not been obtained.

b.           Notices. All notices to any party required or permitted hereunder shall be in writing and shall be sent to the mailing address or email address set forth for such party as follows:

i.            If to Lender:

7 Temasek Boulevard #29-01B, Suntec Tower One, Singapore 038987

Mr. Chan - fai@sed.com.sg

ii.           If to Borrower:

Units 9-10, 22/Floor, Metro Centre II, 21 Lam Hing Street

Kowloon Bay, Kowloon, Hong Kong

Mr. Vincent Lum – vlum@dsssecure.com

Any such notice shall be deemed duly delivered (i) three (3) Business Days after being sent by registered or certified mail, return receipt requested, postage prepaid, (ii) one (1) Business Day after being sent for next Business Day delivery, fees prepaid, via a reputable nationwide overnight courier service, or (iii) on the first Business Day following the date of confirmation of receipt of transmission by facsimile or electronic mail.

c.           Waiver. No failure to exercise, and no delay in exercising, on the part of the Lender, any right, power, or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power, or privilege. The rights and remedies herein provided are cumulative and not exclusive of any rights or remedies provided by law.

d.           Amendments. Any term, covenant, or condition of this Note may be amended or waived only by written consent of the Borrower and the Lender.

e.           Expenses. Any reasonable expense incurred by the Lender (including, without limitation, reasonable attorneys’ fees and disbursements) in connection with the administration or enforcement of this Note, or the exercise of any right or remedy upon the occurrence of an Event of Default, including, without limitation, the costs of collection and reasonable attorneys’ fees and expenses, shall be paid by the Borrower within fifteen (15) days of receiving written notice thereof from the Lender. Any such expense incurred by the Lender and not timely paid by the Borrower shall be added to the other obligations hereunder and shall not earn interest but shall be subject to the late charge as set forth in Section 4 hereof.

B-2

f.           Governing Law. This Note shall be governed by and construed in accordance with the laws of Hong Kong without giving effect to any conflict or choice of laws principles.

g.           Transfer; Successors and Assigns. The terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. This Note shall not be assignable by Lender without the prior written consent of the Borrower, provided that the Lender may assign or transfer any of its rights, privileges, or obligations set forth in, arising under, or created by this Note to any entity controlled by, controlling or under common control with the Lender. The Borrower may not assign this Note without prior written consent of the Lender.

h.           Entire Agreement. This Note contains the entire agreement of the Borrower and the Lender with respect to the subject matter hereof.

IN WITNESS WHEREOF, the Borrower and Lender have caused this Note to be executed as of the day and year first above written.

DSS Asia Limited (Borrower)
By:	/s/ Vincent Lum
	Name: Vincent Lum
	Title: Director

HotApps International Pte Ltd. (Lender)
By:	/s/ Chan Heng Fai Ambrose
	Name: Chan Heng Fai Ambrose
	Title: Director

B-3

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer

Pursuant to

Rule 13a­14(a) and 15d-14(a) under the Securities Exchange Act of 1934

As Adopted Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Chan Heng Fai certify that:

1. 

I have reviewed this report on Form 10­Q of HotApp Blockchain Inc.

2. 

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3. 

Based on my knowledge, the financial statements, and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

4. 

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. 

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) 

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) 

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 14, 2018	By:	/s/ Chan Heng Fai
		Chan Heng Fai
		Acting Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

Pursuant to

Rule 13a­14(a) and 15d-14(a) under the Securities Exchange Act of 1934

As Adopted Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Lui Wai Leung, Alan certify that:

1. 

I have reviewed this Form 10­Q of HotApp Blockchain Inc..

2. 

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3. 

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

4. 

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) 

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) 

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) 

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) 

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. 

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) 

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) 

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 14, 2018	By:	/s/ Lui Wai Leung, Alan
		Lui Wai Leung, Alan
		Chief Financial Officer (Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES­OXLEY ACT OF 2002

In connection with the quarterly report on Form 10-Q of HotApp Blockchain Inc. (the “Company”) for the nine month period ended September 30, 2018, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officers, certify pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of his or her knowledge:

1. 

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. 

The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: November 14, 2018	By:	/s/ Chan Heng Fai
		Chan Heng Fai
		Acting Chief Executive Officer (Principal Executive Officer)

Date: November 14, 2018	By:	/s/ Lui Wai Leung, Alan
		Lui Wai Leung, Alan
		Chief Financial Officer (Principal Financial Officer)

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Nov. 14, 2018
Document And Entity Information
Entity Registrant Name	HotApp Blockchain Inc.
Entity Central Index Key	0001600347
Document Type	10-Q
Document Period End Date	Sep. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Small Business	true
Entity Common Stock, Shares Outstanding		506,898,576
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2018

XML

CONDENSED BALANCE SHEETS (Unaudited) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
CURRENT ASSETS:
Cash	$ 66,912	$ 95,038
Accounts receivable-related parties	39,427	89,427
Accounts receivable-trade	10,220	17,914
Prepaid expenses	3,870	7,532
Deposit and other receivable	8,176	8,189
Current assets of discontinued operations	15,370	35,038
TOTAL CURRENT ASSETS	143,975	253,138
Fixed assets, net	8,313	14,628
Non-current assets of discontinued operations	2,320	8,309
TOTAL ASSETS	154,608	276,075
CURRENT LIABILITIES:
Accounts payable and accrued expenses	35,713	33,141
Accrued taxes and franchise fees	7,742	7,742
Amount due to related parties	987,206	825,107
Current liabilities of discontinued operations	164,485	171,566
TOTAL CURRENT LIABILITIES	1,195,146	1,037,556
TOTAL LIABILITIES	1,195,146	1,037,556
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, $0.0001 par value, 15,000,000 shares authorized, 0 issued and outstanding as of September 30, 2018 and December 31, 2017	0	0
Common stock, $0.0001 par value, 1,000,000,000 shares authorized, 506,898,576 shares issued and outstanding, as of September 30, 2018 and December 31, 2017	50,690	50,690
Accumulated other comprehensive loss	(198,836)	(289,398)
Additional paid-in capital	4,604,191	4,604,191
Accumulated deficit	(5,496,583)	(5,126,964)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)	(1,040,538)	(761,481)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 154,608	$ 276,075

XML

CONDENSED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Preferred stock, Par Value	$ 0.0001	$ 0.0001
Preferred stock, Share Authorized	15,000,000	15,000,000
Preferred stock, Issued	0	0
Preferred stock, Outstanding	0	0
Common stock, Par Value	$ 0.0001	$ 0.0001
Common stock, Shares Authorized	1,000,000,000	1,000,000,000
Common stock, Issued	506,898,576	506,898,576
Common stock, Outstanding	506,898,576	506,898,576

XML

CONDENSED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Revenues:
Project fee - related parties	$ 23,018	$ 33,694	$ 115,107	$ 103,548
Project fee-others	10,203	48,538	20,408	38,869
Total Revenues	33,221	82,232	135,515	142,417
Cost of revenues	20,652	39,135	74,111	46,715
Gross profit	12,569	43,097	61,404	95,702
Operating expenses:
Deposits written off	0	25	0	2,705
Depreciation	2,207	3,954	7,833	9,138
Loss on disposal of fixed assets	0	0	0	131
General and administrative	71,137	123,106	293,161	483,818
Total operating expenses	73,344	127,085	300,994	495,792
(Loss) from operations	(60,775)	(83,988)	(239,590)	(400,090)
Other income (expenses):
Interest income	0	0	7	1
Foreign exchange gain (loss)	(3,359)	31,567	(49,773)	147,424
Total other income (expenses)	(3,359)	31,567	(49,766)	147,425
Loss before taxes	(64,134)	(52,421)	(289,356)	(252,665)
Income tax provision	0	0	0	0
Net income from continuing operations	(64,134)	(52,421)	(289,356)	(252,665)
Loss from discontinued operations, net of tax	(32,143)	(75,492)	(80,263)	(191,262)
Net loss applicable to common shareholders	$ (96,277)	$ (127,913)	$ (369,619)	$ (443,927)
Net loss from continuing operations per share - basic and diluted	$ (0.00)	$ (0.00)	$ (0.00)	$ (0.00)
Net loss from discontinued operations per share - basic and diluted	(0.00)	(0.00)	(0.00)	(0.00)
Net loss per share - basic and diluted	$ (0.00)	$ (0.00)	$ (0.00)	$ (0.00)
Weighted number of shares outstanding - Basic and diluted	506,898,576	506,898,576	506,898,576	214,041,100
Net loss	$ (96,277)	$ (127,913)	$ (369,619)	$ (443,927)
Foreign currency translation gain (loss)	21,899	(44,241)	90,562	(165,908)
Total comprehensive loss	$ (74,378)	$ (172,154)	$ (279,057)	$ (609,835)

XML

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) - USD ($)	Preferred Stock	Common Stock	Paid-In Capital	Accumulated Other Comprehensive Income (Loss) [Member]	Accumulated Deficit	Total
Beginning Balances, Shares at Dec. 31, 2017	0	506,898,576
Beginning Balance, Amount at Dec. 31, 2017	$ 0	$ 50,690	$ 4,604,191	$ (289,398)	$ (5,126,964)	$ (761,481)
Net loss for period					(70,645)	(70,645)
Foreign currency translation adjustment				(59,452)		(59,452)
Ending Balance, Shares at Mar. 31, 2018	0	506,898,576
Ending Balance, Amount at Mar. 31, 2018	$ 0	$ 50,690	4,604,191	(348,850)	(5,197,609)	(891,578)
Beginning Balances, Shares at Dec. 31, 2017	0	506,898,576
Beginning Balance, Amount at Dec. 31, 2017	$ 0	$ 50,690	4,604,191	(289,398)	(5,126,964)	(761,481)
Net loss for period						(369,619)
Ending Balance, Shares at Sep. 30, 2018	0	506,898,576
Ending Balance, Amount at Sep. 30, 2018	$ 0	$ 50,690	4,604,191	(198,836)	(5,496,583)	(1,040,538)
Beginning Balances, Shares at Mar. 31, 2018	0	506,898,576
Beginning Balance, Amount at Mar. 31, 2018	$ 0	$ 50,690	4,604,191	(348,850)	(5,197,609)	(891,578)
Net loss for period					(202,697)	(202,697)
Foreign currency translation adjustment				128,115		128,115
Ending Balance, Shares at Jun. 30, 2018	0	506,898,576
Ending Balance, Amount at Jun. 30, 2018	$ 0	$ 50,690	4,604,191	(220,735)	(5,400,306)	(966,160)
Net loss for period					(96,277)	(96,277)
Foreign currency translation adjustment				21,899		21,899
Ending Balance, Shares at Sep. 30, 2018	0	506,898,576
Ending Balance, Amount at Sep. 30, 2018	$ 0	$ 50,690	$ 4,604,191	$ (198,836)	$ (5,496,583)	$ (1,040,538)

XML

CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (289,356)	$ (252,665)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation	7,833	9,138
Deposit written off	0	2,705
Loss on disposal of fixed asset	0	131
Foreign exchange transaction loss (gain)	49,773	(147,424)
Change in operating assets and liabilities:
Costs in excess of billings and accounts receivable	0	30,332
Accounts receivable - related parties	50,000	(58,088)
Accounts receivable - trade	7,694	(35,848)
Security deposit and other receivables	13	3,628
Prepaid expenses	3,662	(7,199)
Accounts payable and accrued expenses	2,572	(5,102)
Deferred revenue	0	5,377
Net cash used in operating activities	(167,809)	(455,015)
Discontinued Operations
Net Loss from discontinued operations, including noncontrolling interests	(80,263)	(191,262)
Depreciation	5,989	18,894
Deposit written off	0	0
Loss on disposal of fixed asset	0	0
Foreign exchange transaction loss (gain)	9,123	6,612
Change in operating assets and liabilities:
Accounts receivable - trade	(2,913)	0
Security deposit and other receivable	279	0
Prepaid expenses	0	2,921
Accounts payable and accrued expenses	(7,081)	(16,990)
Net cash used in operations of Discontinued Operations	(74,866)	(179,825)
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of fixed asset	(1,518)	(12,529)
Net cash used in investing activities	(1,518)	(12,529)
CASH FLOW FROM FINANCING ACTIVITIES:
Advance from related parties	162,099	719,455
Net cash provided by financing activities	162,099	719,455
NET (DECREASE)/INCREASE IN CASH	(82,094)	72,086
Effects of exchange rates on cash	31,666	(25,096)
CASH AND CASH EQUIVALENTS at beginning of period	124,739	102,776
CASH AND CASH EQUIVALENTS at end of period	74,311	149,766
Supplemental schedule of non-cash investing and financing activities
Conversion of shareholder loan into common stock	$ 0	$ 450,890

XML

1. The Company History and Nature of the Business

9 Months Ended

Sep. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

The Company History and Nature of the Business

HotApp Blockchain Inc., formerly HotApp International, Inc., (the “Company” or “Group”) was incorporated in the State of Delaware on March 7, 2012 and established a fiscal year end of December 31. 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 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 (“HIP”) from Singapore eDevelopment Limited (“SeD”). HIP owned certain intellectual property relating to instant messaging for portable devices (“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). Started from a cross platform mobile application that incorporate messaging and eCommerce, HotApp has evolved as a platform service provider with application framework serving vertical industry such as multilevel marketing. The messaging and calling services was terminated in 2017. HotApp can be used on any mobile platform (i.e. IOS Online or Android).

As of September 30, 2018, details of the Company’s subsidiaries are as follows:

Subsidiaries	Date of Incorporation	Place of Incorporation	Percentage of Ownership
1st Tier Subsidiary:
HotApps International Pte Ltd (“HIP”)	May 23, 2014	Republic of Singapore	100% by Company
Crypto Exchange Inc.	December 15, 2017	State of Nevada, the United States of America	100% by Company
2nd Tier Subsidiaries:
HWH World Pte. Ltd., formerly Crypto Exchange Pte. Ltd. and HotApps Call Pte Ltd	September 15, 2014	Republic of Singapore	100% owned by HIP
HotApps Information Technology Co Ltd	November 10, 2014	People’s Republic of China	100% owned by HIP
HotApp International Limited*	July 8, 2014	Hong Kong (Special Administrative Region)	100% owned by HIP

* On March 25, 2015, HotApps International Pte Ltd acquired 100% of the issued and outstanding shares of HotApp International Limited.

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 $5,496,583 and has net working capital deficit of $1,051,171 at September 30, 2018. 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, 2019. 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 2018. 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 them 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 shareholders or 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.

XML

2. Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Basis of presentation

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“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, 2017. Results of operations for the nine month periods ended September 30, 2018 are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2018. The other information in these condensed consolidated financial statements is unaudited but, in the opinion of management, reflects 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.

Basis of consolidation

The consolidated financial statements of the Group include the financial statements of HotApp Blockchain Inc. and its subsidiaries. All inter-company transactions and balances have been eliminated upon consolidation.

Use of estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and revenues, cost and expenses in the financial statements and accompanying notes. Significant accounting estimates reflected in the Group’s consolidated financial statements include revenue recognition, the useful lives and impairment of property and equipment.

Cash and cash equivalents

The Company considers all highly liquid investments with a maturity of three months or less at the date of acquisition to be cash equivalents. There were no cash equivalents as of September 30, 2018 and December 31, 2017.

Foreign currency risk

Because of its foreign operations, the Company holds cash in non-US dollars. As of September 30, 2018, cash and cash equivalents of the Group includes, on an as converted basis to US dollars $51,872, $7,399 and $14,102 in Hong Kong Dollars (“HK$”), Reminbi (“RMB”) and Singapore Dollars (“S$”), respectively.

The Renminbi (“RMB”) is not a freely convertible currency. The State Administration for Foreign Exchange, under the authority of the People’s Bank of China, controls the conversion of RMB into foreign currencies. The value of the RMB is subject to changes in central government policies and to international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market.

Concentrations

Financial instruments that potentially expose the Group to concentration of credit risk consist primarily of cash. Although the cash at each particular bank in the United States is insured up to $250,000 by Federal Deposit Insurance Corporation (FDIC), the Group exposes to risk due to its concentration of cash in foreign countries. The Group places their cash with financial institutions with high-credit ratings and quality. The Group also exposes to credit risk due to its concentration for customers with revenue in excess of 10%.

	Total		Related parties		Related parties			Trade		Trade
	Amount		Amount		Percentage			Amount		Percentage
Accounts receivables
As of September 30, 2018	$	52,560	$	39,427		75	%	$	13,133		25	%
As of December 31, 2017	$	107,341	$	89,427		83	%	$	17,914		17	%
Revenue
For the nine months ended September 30, 2018	$	142,952	$	115,107		81	%	$	27,845		19	%
For the nine months ended September 30, 2017	$	186,596	$	103,548		55	%	$	83,048		45	%

Fixed assets, net

Property and equipment are stated at cost less accumulated depreciation. Depreciation is calculated on a straight-line basis over the following estimated useful lives:

Office equipment	3 years
Computer equipment	3 years
Furniture and fixtures	3 years
Motor vehicles	10 years

Fair value

The carrying value of cash and cash equivalents, accounts payable and accrued liabilities, and borrowings, as reflected in the balance 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 disclosed in the financial statements together with other information relevant for making a reasonable 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 has been disclosed.

Revenue recognition

Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers ("ASC 606"), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide goods or services to customers. Under the new standard, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. The Company adopted this new standard on January 1, 2018 under the modified retrospective method to all contracts not completed as of January 1, 2018 and the adoption did not have a material effect on our financial statements but we expanded our disclosures related to contracts with customers below.

Revenue is recognized when (or as) the Company transfers promised goods or services to its customers in amounts that reflect the consideration to which the Company expects to be entitled to in exchange for those goods or services, which occurs when (or as) the Company satisfies its contractual obligations and transfers over control of the promised goods or services to its customers. Costs to obtain or fulfill a contract are expensed as incurred.

Disaggregation of Revenue

We generate revenue from the project involving provision of services and web/software development to customers. In respect to the provision of services, the agreement span over the length of one year with cancellable clause and are typically billed on a monthly basis. The following table depicts the disaggregation of revenue according to revenue type and is consistent with how we evaluate our financial performance:

	For the nine months ended September 30, 2018
Segments	Provision of Services		Web / Software Development		Total
Primary Geographical Markets
North America	$	115,107	$	-	$	115,107
Asia		-		27,845		27,845
	$	115,107	$	27,845	$	142,952
Timing of Revenue Recognition
Goods transferred at a point in time	$	-	$	27,845	$	27,845
Services transferred over time		115,107		-		115,107
	$	115,107	$	27,845	$	142,952

	For the nine months ended September 30, 2017
Segments	Provision of Services		Web / Software Development		Total
Primary Geographical Markets
North America	$	-	$	103,548	$	103,548
Asia		48,521		34,527		83,048
	$	48,521	$	138,075	$	186,596
Timing of Revenue Recognition
Goods transferred at a point in time	$	-	$	138,075	$	138,075
Services transferred over time		48,521		-		48,521
	$	48,521	$	138,075	$	186,596

Contract assets and contract liabilities

Based on our contracts, we normally invoice customers once our performance obligations have been satisfied, at which point payment is unconditional. Accordingly, our contracts do not give rise to contract assets or liabilities under ASC 606. Accounts receivable are recorded when the right to consideration becomes unconditional.

Remaining performance obligations

As of September 30, 2018, the aggregate amount of the transaction price allocated to the remaining performance obligation is $5,110, and the Group will recognize this revenue as the web development is completed, which is expected to occur over the next 3 months.

Research and development expenses

Research and development expenses primarily consist of salaries and benefits for research and development personnel. The Company’s research and development activities primarily consist of the research and development of new features for its mobile platform and its self-developed mobile games. Expenditures incurred during the research phase are expensed as incurred.

Income taxes

Current income taxes are provided for in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements. Net operating loss carry forwards and credits are applied using enacted statutory tax rates applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that a portion of or all of the deferred tax assets will not be realized. The components of the deferred tax assets and liabilities are individually classified as 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 period ended September 30, 2018 or 2017, respectively.

Uncertainties exist with respect to the application of the New EIT Law to our operations, specifically with respect to our tax residency. The New EIT Law specifies that legal entities organized outside of the PRC will be considered residents for PRC income tax purposes if their “de facto management bodies” as “establishments that carry on substantial and overall management and control over the operations, personnel, accounting, properties, etc. of the Company.” Because of the uncertainties that have resulted from limited PRC guidance on the issue, it is uncertain whether our legal entities outside the PRC constitute residents under the New EIT Law. If one or more of our legal entities organized outside the PRC were characterized as PRC residents, the impact would adversely affect our results of operations.

Foreign currency translation

Items included in the financial statements of each entity in the group are measured using the currency of the primary economic environment in which the entity operates (“functional currency”).

The functional and reporting currency of the Company is the United States dollar (“U.S. dollar”). The financial records of the Company’s subsidiaries located in Singapore, Hong Kong and the PRC are maintained in their local currencies, the Singapore Dollar (S$), Hong Kong Dollar (HK$) and Renminbi ("RMB"), which are also the functional currencies of these entities.

Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at the rates of exchange ruling at the balance sheet date. Transactions in currencies other than the functional currency during the year are converted into functional currency at the applicable rates of exchange prevailing when the transactions occurred. Transaction gains and losses are recognized in the statement of operations.

The Company’s entities with functional currency of Renminbi, Hong Kong Dollar and Singapore Dollar, translate their operating results and financial positions into the U.S. dollar, the Company’s reporting currency. Assets and liabilities are translated using the exchange rates in effect on the balance sheet date. Revenues, expenses, gains and losses are translated using the average rate for the year. Translation adjustments are reported as cumulative translation adjustments and are shown as a separate component of comprehensive income (loss).

For the three and nine months ended September 30, 2018, the Company recorded other comprehensive income from translation gain of $21,899 and $90,562 in the consolidated financial statements. For the three and nine months ended September 30, 2017, the Company recorded other comprehensive income from translation loss of $44,241 and $165,908 in the consolidated financial statements.

Operating leases

Leases where the rewards and risks of ownership of assets primarily remain with the lessor are accounted for as operating leases. Payments made under operating leases are charged to the consolidated statements of operations on a straight-line basis over the lease periods.

Comprehensive income (loss)

Comprehensive income (loss) includes gains (losses) from foreign currency translation adjustments. Comprehensive income (loss) is reported in the consolidated statements of operations and comprehensive loss.

Loss per share

Basic loss per share is computed by dividing net loss attributable to shareholders by the weighted average number of shares outstanding during the period.

The Company's convertible preferred shares are not participating securities and have no voting rights until converted to common stock. As of September 30, 2018, no shares of preferred stock are eligible for conversion into voting common stock.

As of September 30, 2018, there are no potentially dilutive securities that were excluded from the computation of diluted EPS.

Recent accounting pronouncements not yet adopted

On Feb. 25, 2016, the Financial Accounting Standards Board (FASB) released Accounting Standards Update No. 2016-02, Leases (Topic 842) (the Update). The new leasing standard presents dramatic changes to the balance sheets of lessees. Lessor accounting is updated to align with certain changes in the lessee model and the new revenue recognition standard. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018. The Company is currently evaluating the potential impacts of this Update.

In February 2018, the FASB issued Accounting Standards Update No. 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from accumulated Other Comprehensive Income, or ASU 2018-02, which requires the reclassification from accumulated other comprehensive income to retained earnings for the stranded tax effects arising from the change in the reduction of the U.S. federal statutory income tax rate to 21% from 35%. ASU 2018-02 is effective for interim and annual periods beginning after December 15, 2018. We will adopt ASU 2018-02 on January 1, 2019. The Company is currently evaluating the potential impacts of this Update.

In June 2018, the FASB issued Accounting Standards Update No. 2018-07, which simplifies several aspects of the accounting for nonemployee share-based payment transactions resulting from expanding the scope of Topic 718, Compensation-Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. Some of the areas for simplification apply only to nonpublic entities. The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Company is currently evaluating the potential impacts of this Update.

XML

3. Fixed Assets, Net

9 Months Ended

Sep. 30, 2018

Fixed Assets Net

Fixed assets, net

Fixed assets, net consisted of the following:

	September 30,			December 31,
	2018			2017
Computer equipment	$	78,078		$	76,662
Office equipment		22,945			22,843
Furniture and fixtures		10,599			10,599
	$	111,622		$	110,104
Less: accumulated depreciation		(100,989	)		(87,167	)
Fixed assets, net	$	10,633		$	22,937

Depreciation expenses charged to the consolidated statements of operations for the three months ended September 30, 2018 and 2017 were $3,400 and $9,965, respectively. Depreciation expenses charged to the consolidated statements of operations for the nine months ended September 30, 2018 and 2017 were $13,822 and $28,032, respectively.

XML

4. Accounts Payable and Accrued Expenses

9 Months Ended

Sep. 30, 2018

Accounts Payable And Accrued Expense

Accounts Payable and Accrued Expenses

Accrued expenses and other current liabilities consisted of the following:

	September 30,		December 31,
	2018		2017
Accrued payroll & benefits	$	173,250	$	170,915
Accrued professional fees		18,532		20,666
Other		8,416		13,126
Total	$	200,198	$	204,707

XML

5. Share Capitalization

9 Months Ended

Sep. 30, 2018

Share Capitalization

Share Capitalization

The Company is authorized to issue 1 billion 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, 2018 and December 31, 2017, the Company had issued and outstanding, 506,898,576 of common stock, and 0 shares of preferred stock.

Common Shares:

Pursuant to the Purchase Agreement, dated October 15, 2014, the Company issued 1,000,000 shares of common stock to SeD. Such amount represented 19% ownership in the Company.

On July 13, 2015, Singapore eDevelopment Limited (“SeD”) acquired 777,687 shares of the Company common stock by converting outstanding loans made to the Company into common stock of the Company at a rate of $5.00 per share (rounded to the nearest full share). After such transactions SeD owned 98.17% of the Company.

On March 27, 2017, the Company entered into a Loan Conversion Agreement with SeD, pursuant to which SeD agreed to convert $450,890 of debt owed by Company to SeD into 500,988,889 common shares at a conversion price of $0.0009. The captioned shares were issued on June 9, 2017, and SeD owned 99.979% of the Company after such transactions.

Preferred Shares:

Pursuant to the Purchase Agreement, dated October 15, 2014, the Company issued 13,800,000 shares of a class of preferred stock called Perpetual Preferred Stock (“Preferred Stock”) to SeD . The Preferred Stock has no dividend or voting rights. The Preferred Stock is convertible to common stock of the Company dependent upon the number of commercial users of the Software. For each 1,000,000 commercial users of the Software (without duplication), SeD shall have the right to convert 1,464,000 shares of Perpetual Preferred Stock into 7,320,000 shares of Common Stock, so that there must be a minimum of 9,426,230 commercial users in order for all of the shares of the Perpetual Preferred Stock to be converted into common stock of the Company (13,800,000 shares of Preferred Stock convertible into 69,000,000 shares of common stock).

On March 27, 2017, SeD and the Company entered into a Preferred Stock Cancellation Agreement, by which SeD agreed to cancel its 13,800,000 shares Perpetual Preferred Stock issued by the Company. On June 8, 2017, a Certificate of Retirement for 13,800,000 shares of the Perpetual Preferred Stock has been filed to the office of Secretary of State of the State of Delaware.

Other than the conversion rights described above, the Preferred Stock has no voting, dividend, redemption or other rights.

XML

6. Equity Incentive Plan

9 Months Ended

Sep. 30, 2018

Equity Incentive Plan

Equity Incentive Plan

On July 30, 2018, the Company adopted the Equity Incentive Plan (the “Equity Plan”). The Equity Plan is intended to encourage ownership of shares of common stock by employees, directors, and certain consultants to the Company in order to attract and retain such people and, to induce them to work for the benefit of the Company. The Equity Plan provides for the grant of options and/or other stock-based or stock-denominated awards. Subject to adjustment in accordance with the terms of the Equity Plan, 50,000,000 shares of Common Stock of the Company have been reserved for issuance pursuant to awards under the Equity Plan. The Equity Plan will be administered by the Company’s Board of Directors. This Equity Plan shall terminate ten (10) years from the date of its adoption by the Board of Directors.

XML

7. Discontinued Operations

9 Months Ended

Sep. 30, 2018

Discontinued Operations Abstract

Discontinued Operations

	September 30, 2018		December 31, 2017
ASSETS
CURRENT ASSETS:
Cash	$	7,399	$	29,701
Accounts receivable-trade		2,913		-
Deposit and other receivable		5,058		5,337
TOTAL CURRENT ASSETS		15,370		35,038
Fixed assets, net		2,320		8,309
TOTAL ASSETS	$	17,690	$	43,347
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	164,485	$	171,566
TOTAL CURRENT LIABILITIES		164,485		171,566
TOTAL LIABILITIES	$	164,485	$	171,566

	Quarter Ended September 30, 2018			Quarter Ended September 30, 2017			Nine Months Ended September 30, 2018			Nine Months Ended September 30, 2017
Revenues:
Project fee-others	$	-		$	-		$	7,437		$	44,179
		-			-			7,437			44,179
Cost of revenues		-			-			4,596			9,071
Gross profit	$	-		$	-		$	2,841		$	35,108
Operating expenses:
Research and product development	$	-		$	59,242		$	-		$	162,013
Depreciation		1,193			6,011			5,989			18,894
General and administrative		21,279			11,404			68,413			38,851
Total operating expenses		22,472			76,657			74,402			219,758
(Loss) from operations		(22,472	)		(76,657	)		(71,561	)		(184,650	)
Other income (expenses):
Other sundry income		81			-			421			-
Foreign exchange gain (loss)		(9,752	)		1,165			(9,123	)		(6,612	)
Total other income (expenses)		(9,671	)		1,165			(8,702	)		(6,612	)
Loss from discontinued operations	$	(32,143	)	$	(75,492	)	$	(80,263	)	$	(191,262	)

XML

8. Commitments and Contingencies

9 Months Ended

Sep. 30, 2018

Commitments And Contingencies

Commitments and Contingencies

On May 9, 2016, the Company entered into a lease agreement for 1,231 square feet of office space in Guangzhou, China. The lease commenced on May 9, 2016 and runs through May 8, 2018 with monthly payments of $2,366. The Company has renewed the lease agreement for another year until May 29, 2019 with monthly payments of $2,484. The Company was required to put up a security deposit of $4,498. For the nine months ended September 30, 2018, the Company recorded rent expense of $21,883 for the Guangzhou office.

On April 10, 2015, the Company entered into a lease agreement for 347 square feet of office space in Kowloon, Hong Kong. This lease commenced on April 20, 2015 and runs through April 19, 2017 with monthly payments of $2,574. The Company was required to put up a security deposit of $5,147. On March 16, 2017, the Company entered into a lease agreement for 1,504 square feet of office space in Kowloon, Hong Kong. This lease commenced on March 16, 2017 and runs through March 31, 2019 with monthly payments of $3,253. The Company was required to put up a security deposit of $6,515. For the three and nine months ended September 30, 2018, the Company recorded rent expense of $10,577 and $30,894 for the office. For the three and nine months ended September 30, 2017, the Company recorded rent expense of $12,043 and $31,561 for the office. The lease was terminated on September 30, 2018 and the security deposit is expected to be returned in the coming quarter.

The following is a schedule by years of future minimum lease payments under non-cancellable operating leases:

2018	$	7,452
2019		4,968
Total	$	12,420

XML

9. Related Party Balances and Transactions

9 Months Ended

Sep. 30, 2018

Related Party Transactions [Abstract]

Related Party Balances and Transactions

The Company’s Acting Chief Executive Officer, Mr. Chan Heng Fai is also the Chief Executive Officer of SeD.  SeD is the majority shareholder of the Company.  As of the date of this report, the Company has not entered into any employment arrangement with any director or officer.

On March 1, 2018, the Company’s subsidiary HotApp International Ltd. entered into an Outsource Technology Development Agreement (the “Agreement”) with Document Security Systems, Inc. (“Document Security Systems”), which may be terminated by either party on 30-days’ notice. The purpose of the Agreement is to facilitate Document Security Systems’ development of a software application to be included as part of Document Security Systems’ AuthentiGuard® Technology suite. Under this agreement, Document Security Systems agreed to pay $23,000 per month for access to HotApp International Ltd.’s software programmers. The agreement was terminated on July 31, 2018. Mr. Chan Heng Fai is a member of the Company’s Board of Directors and, through his control of the Company’s majority shareholder, the beneficial owner of a majority of the Company’s common stock. Mr. Chan is also a member of the Board of Document Security Systems and a shareholder of Document Security Systems. The agreement was terminated on July 31, 2018.

As of September 30, 2018, the Company has amount due to SeD for $981,951, plus an amount due to a director of $5,255 and has an amount due from an affiliate for $2,192. The Company has made full impairment provision for the amount due from the affiliate.

The account receivable as of September 30, 2018 included a trade receivable from an affiliate by common ownership amounting to $39,428 resulting from the revenue earned from that affiliate during the year 2017.

On October 25, 2018, HotApps International Pte. Ltd. (“HotApps International”), a wholly owned subsidiary of the Company entered into an Equity Purchase Agreement with DSS Asia Limited (“DSS Asia”), a Hong Kong subsidiary of DSS International Inc. (“DSS International”), pursuant to which HotApps International will sell to DSS Asia all of the issued and outstanding shares of Guangzhou HotApps Technology Ltd. (“Guangzhou HotApps”).  Mr. Chan Heng Fai is the Acting Chief Executive Officer and a Member of the Board of Directors of the Company.  He is also the Chief Executive Officer, Chairman and controlling shareholder of Singapore eDevelopment Limited, the majority shareholder of the Company.  Mr. Chan is also the Chief Executive Officer and Chairman of DSS International and a significant shareholder and a member of the Board of Document Security Systems Inc., which is the sole owner of DSS International.  Mr. Chan Heng Fai is also a member of the Board of Directors of Document Security Systems and a shareholder of Document Security Systems.  Lum Kan Fai, a member of the Board of Directors of the Company, is also an employee of DSS International.  The closing of the Equity Purchase Agreement is subject to conditions and the parties expect to close in 2018.  Guangzhou HotApps is primarily engaged in engineering work for software development, mainly voice over internet protocol.  Guangzhou HotApps is also involved in a number of outsourcing projects, including projects related to real estate and lighting.  The purchase price for this transaction is $100,000, which shall be paid in the form of a two-year, interest free, unsecured, demand promissory note in the principal amount of $100,000.  The note shall be due and payable in full on two years from the closing of the Equity Purchase Agreement. 

XML

10. Subsequent Events

9 Months Ended

Sep. 30, 2018

Subsequent Events [Abstract]

Subsequent Events

On October 25, 2018, HotApps International Pte. Ltd. (“HotApps International”), a wholly owned subsidiary of the Company entered into an Equity Purchase Agreement with DSS Asia Limited (“DSS Asia”), a Hong Kong subsidiary of DSS International Inc. (“DSS International”), pursuant to which HotApps International will sell to DSS Asia all of the issued and outstanding shares of Guangzhou HotApps Technology Ltd. (“Guangzhou HotApps”). Mr. Chan Heng Fai is the Acting Chief Executive Officer and a Member of the Board of Directors of the Company. He is also the Chief Executive Officer, Chairman and controlling shareholder of Singapore eDevelopment Limited, the majority shareholder of the Company. Mr. Chan is also the Chief Executive Officer and Chairman of DSS International and a significant shareholder and a member of the Board of Document Security Systems Inc., which is the sole owner of DSS International. Mr. Chan Heng Fai is also a member of the Board of Directors of Document Security Systems and a shareholder of Document Security Systems. Lum Kan Fai, a member of the Board of Directors of the Company, is also an employee of DSS International. The closing of the Equity Purchase Agreement is subject to conditions and the parties expect to close in 2018. Guangzhou HotApps is primarily engaged in engineering work for software development, mainly voice over internet protocol. Guangzhou HotApps is also involved in a number of outsourcing projects, including projects related to real estate and lighting. The purchase price for this transaction is $100,000, which shall be paid in the form of a two-year, interest free, unsecured, demand promissory note in the principal amount of $100,000. The note shall be due and payable in full on two years from the closing of the Equity Purchase Agreement.

XML

2. Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2018

Summary Of Significant Accounting Policies Policies

Basis of Presentation

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“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, 2017. Results of operations for the nine month periods ended September 30, 2018 are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2018. The other information in these condensed consolidated financial statements is unaudited but, in the opinion of management, reflects 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.

Basis of consolidation

The consolidated financial statements of the Group include the financial statements of HotApp Blockchain Inc. and its subsidiaries. All inter-company transactions and balances have been eliminated upon consolidation.

Use of estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and revenues, cost and expenses in the financial statements and accompanying notes. Significant accounting estimates reflected in the Group’s consolidated financial statements include revenue recognition, the useful lives and impairment of property and equipment.

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less at the date of acquisition to be cash equivalents. There were no cash equivalents as of September 30, 2018 and December 31, 2017.

Foreign currency risk

<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Because of its foreign operations, the Company holds cash in non-US dollars. As of September 30, 2018, cash and cash equivalents of the Group includes, on an as converted basis to US dollars $51,872, $7,399 and $14,102 in Hong Kong Dollars (“HK$”), Reminbi (“RMB”) and Singapore Dollars (“S$”), respectively.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Renminbi (“RMB”) is not a freely convertible currency. The State Administration for Foreign Exchange, under the authority of the People’s Bank of China, controls the conversion of RMB into foreign currencies. The value of the RMB is subject to changes in central government policies and to international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>

Concentrations

Financial instruments that potentially expose the Group to concentration of credit risk consist primarily of cash. Although the cash at each particular bank in the United States is insured up to $250,000 by Federal Deposit Insurance Corporation (FDIC), the Group exposes to risk due to its concentration of cash in foreign countries. The Group places their cash with financial institutions with high-credit ratings and quality. The Group also exposes to credit risk due to its concentration for customers with revenue in excess of 10%.

	Total		Related parties		Related parties			Trade		Trade
	Amount		Amount		Percentage			Amount		Percentage
Accounts receivables
As of September 30, 2018	$	52,560	$	39,427		75	%	$	13,133		25	%
As of December 31, 2017	$	107,341	$	89,427		83	%	$	17,914		17	%
Revenue
For the nine months ended September 30, 2018	$	142,952	$	115,107		81	%	$	27,845		19	%
For the nine months ended September 30, 2017	$	186,596	$	103,548		55	%	$	83,048		45	%

Fixed assets, net

Property and equipment are stated at cost less accumulated depreciation. Depreciation is calculated on a straight-line basis over the following estimated useful lives:

Office equipment	3 years
Computer equipment	3 years
Furniture and fixtures	3 years
Motor vehicles	10 years

Fair Value

The carrying value of cash and cash equivalents, accounts payable and accrued liabilities, and borrowings, as reflected in the balance 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 disclosed in the financial statements together with other information relevant for making a reasonable 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 has been disclosed.

Revenue Recognition

Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers ("ASC 606"), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide goods or services to customers. Under the new standard, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. The Company adopted this new standard on January 1, 2018 under the modified retrospective method to all contracts not completed as of January 1, 2018 and the adoption did not have a material effect on our financial statements but we expanded our disclosures related to contracts with customers below.

Revenue is recognized when (or as) the Company transfers promised goods or services to its customers in amounts that reflect the consideration to which the Company expects to be entitled to in exchange for those goods or services, which occurs when (or as) the Company satisfies its contractual obligations and transfers over control of the promised goods or services to its customers. Costs to obtain or fulfill a contract are expensed as incurred.

Disaggregation of Revenue

We generate revenue from the project involving provision of services and web/software development to customers. In respect to the provision of services, the agreement span over the length of one year with cancellable clause and are typically billed on a monthly basis. The following table depicts the disaggregation of revenue according to revenue type and is consistent with how we evaluate our financial performance:

	For the nine months ended September 30, 2018
Segments	Provision of Services		Web / Software Development		Total
Primary Geographical Markets
North America	$	115,107	$	-	$	115,107
Asia		-		27,845		27,845
	$	115,107	$	27,845	$	142,952
Timing of Revenue Recognition
Goods transferred at a point in time	$	-	$	27,845	$	27,845
Services transferred over time		115,107		-		115,107
	$	115,107	$	27,845	$	142,952

	For the nine months ended September 30, 2017
Segments	Provision of Services		Web / Software Development		Total
Primary Geographical Markets
North America	$	-	$	103,548	$	103,548
Asia		48,521		34,527		83,048
	$	48,521	$	138,075	$	186,596
Timing of Revenue Recognition
Goods transferred at a point in time	$	-	$	138,075	$	138,075
Services transferred over time		48,521		-		48,521
	$	48,521	$	138,075	$	186,596

Contract assets and contract liabilities

Based on our contracts, we normally invoice customers once our performance obligations have been satisfied, at which point payment is unconditional. Accordingly, our contracts do not give rise to contract assets or liabilities under ASC 606. Accounts receivable are recorded when the right to consideration becomes unconditional.

Remaining performance obligations

As of September 30, 2018, the aggregate amount of the transaction price allocated to the remaining performance obligation is $5,110, and the Group will recognize this revenue as the web development is completed, which is expected to occur over the next 3 months.

Research and development expenses

Research and development expenses primarily consist of salaries and benefits for research and development personnel. The Company’s research and development activities primarily consist of the research and development of new features for its mobile platform and its self-developed mobile games. Expenditures incurred during the research phase are expensed as incurred.

Income Taxes

Current income taxes are provided for in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements. Net operating loss carry forwards and credits are applied using enacted statutory tax rates applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that a portion of or all of the deferred tax assets will not be realized. The components of the deferred tax assets and liabilities are individually classified as 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 period ended September 30, 2018 or 2017, respectively.

Uncertainties exist with respect to the application of the New EIT Law to our operations, specifically with respect to our tax residency. The New EIT Law specifies that legal entities organized outside of the PRC will be considered residents for PRC income tax purposes if their “de facto management bodies” as “establishments that carry on substantial and overall management and control over the operations, personnel, accounting, properties, etc. of the Company.” Because of the uncertainties that have resulted from limited PRC guidance on the issue, it is uncertain whether our legal entities outside the PRC constitute residents under the New EIT Law. If one or more of our legal entities organized outside the PRC were characterized as PRC residents, the impact would adversely affect our results of operations.

Foreign currency translation

Items included in the financial statements of each entity in the group are measured using the currency of the primary economic environment in which the entity operates (“functional currency”).

The functional and reporting currency of the Company is the United States dollar (“U.S. dollar”). The financial records of the Company’s subsidiaries located in Singapore, Hong Kong and the PRC are maintained in their local currencies, the Singapore Dollar (S$), Hong Kong Dollar (HK$) and Renminbi ("RMB"), which are also the functional currencies of these entities.

Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at the rates of exchange ruling at the balance sheet date. Transactions in currencies other than the functional currency during the year are converted into functional currency at the applicable rates of exchange prevailing when the transactions occurred. Transaction gains and losses are recognized in the statement of operations.

The Company’s entities with functional currency of Renminbi, Hong Kong Dollar and Singapore Dollar, translate their operating results and financial positions into the U.S. dollar, the Company’s reporting currency. Assets and liabilities are translated using the exchange rates in effect on the balance sheet date. Revenues, expenses, gains and losses are translated using the average rate for the year. Translation adjustments are reported as cumulative translation adjustments and are shown as a separate component of comprehensive income (loss).

For the three and nine months ended September 30, 2018, the Company recorded other comprehensive income from translation gain of $21,899 and $90,562 in the consolidated financial statements. For the three and nine months ended September 30, 2017, the Company recorded other comprehensive income from translation loss of $44,241 and $165,908 in the consolidated financial statements.

Operating leases

Leases where the rewards and risks of ownership of assets primarily remain with the lessor are accounted for as operating leases. Payments made under operating leases are charged to the consolidated statements of operations on a straight-line basis over the lease periods.

Comprehensive income (loss)

Comprehensive income (loss) includes gains (losses) from foreign currency translation adjustments. Comprehensive income (loss) is reported in the consolidated statements of operations and comprehensive loss.

Loss per share

Basic loss per share is computed by dividing net loss attributable to shareholders by the weighted average number of shares outstanding during the period.

The Company's convertible preferred shares are not participating securities and have no voting rights until converted to common stock. As of September 30, 2018, no shares of preferred stock are eligible for conversion into voting common stock.

As of September 30, 2018, there are no potentially dilutive securities that were excluded from the computation of diluted EPS.

Recent Accounting Pronouncements Not Yet Adopted

On Feb. 25, 2016, the Financial Accounting Standards Board (FASB) released Accounting Standards Update No. 2016-02, Leases (Topic 842) (the Update). The new leasing standard presents dramatic changes to the balance sheets of lessees. Lessor accounting is updated to align with certain changes in the lessee model and the new revenue recognition standard. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018. The Company is currently evaluating the potential impacts of this Update.

In February 2018, the FASB issued Accounting Standards Update No. 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from accumulated Other Comprehensive Income, or ASU 2018-02, which requires the reclassification from accumulated other comprehensive income to retained earnings for the stranded tax effects arising from the change in the reduction of the U.S. federal statutory income tax rate to 21% from 35%. ASU 2018-02 is effective for interim and annual periods beginning after December 15, 2018. We will adopt ASU 2018-02 on January 1, 2019. The Company is currently evaluating the potential impacts of this Update.

In June 2018, the FASB issued Accounting Standards Update No. 2018-07, which simplifies several aspects of the accounting for nonemployee share-based payment transactions resulting from expanding the scope of Topic 718, Compensation-Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. Some of the areas for simplification apply only to nonpublic entities. The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Company is currently evaluating the potential impacts of this Update.

XML

1. The Company History and Nature of the Business (Tables)

9 Months Ended

Sep. 30, 2018

Company History And Nature Of Business Tables

Summary of subsidiaries

Subsidiaries	Date of Incorporation	Place of Incorporation	Percentage of Ownership
1st Tier Subsidiary:
HotApps International Pte Ltd (“HIP”)	May 23, 2014	Republic of Singapore	100% by Company
Crypto Exchange Inc.	December 15, 2017	State of Nevada, the United States of America	100% by Company
2nd Tier Subsidiaries:
HWH World Pte. Ltd., formerly Crypto Exchange Pte. Ltd. and HotApps Call Pte Ltd	September 15, 2014	Republic of Singapore	100% owned by HIP
HotApps Information Technology Co Ltd	November 10, 2014	People’s Republic of China	100% owned by HIP
HotApp International Limited*	July 8, 2014	Hong Kong (Special Administrative Region)	100% owned by HIP

XML

2. Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2018

Summary Of Significant Accounting Policies Tables

Concentrations

	Total		Related parties		Related parties			Trade		Trade
	Amount		Amount		Percentage			Amount		Percentage
Accounts receivables
As of September 30, 2018	$	52,560	$	39,427		75	%	$	13,133		25	%
As of December 31, 2017	$	107,341	$	89,427		83	%	$	17,914		17	%
Revenue
For the nine months ended September 30, 2018	$	142,952	$	115,107		81	%	$	27,845		19	%
For the nine months ended September 30, 2017	$	186,596	$	103,548		55	%	$	83,048		45	%

Fixed Assets estimated useful life

Office equipment	3 years
Computer equipment	3 years
Furniture and fixtures	3 years
Motor vehicles	10 years

Disaggregation of Revenue

	For the nine months ended September 30, 2018
Segments	Provision of Services		Web / Software Development		Total
Primary Geographical Markets
North America	$	115,107	$	-	$	115,107
Asia		-		27,845		27,845
	$	115,107	$	27,845	$	142,952
Timing of Revenue Recognition
Goods transferred at a point in time	$	-	$	27,845	$	27,845
Services transferred over time		115,107		-		115,107
	$	115,107	$	27,845	$	142,952

	For the nine months ended September 30, 2017
Segments	Provision of Services		Web / Software Development		Total
Primary Geographical Markets
North America	$	-	$	103,548	$	103,548
Asia		48,521		34,527		83,048
	$	48,521	$	138,075	$	186,596
Timing of Revenue Recognition
Goods transferred at a point in time	$	-	$	138,075	$	138,075
Services transferred over time		48,521		-		48,521
	$	48,521	$	138,075	$	186,596

XML

3. Fixed Assets, Net (Tables)

9 Months Ended

Sep. 30, 2018

Fixed Assets Net Tables

Fixed Assets, Net

	September 30,			December 31,
	2018			2017
Computer equipment	$	78,078		$	76,662
Office equipment		22,945			22,843
Furniture and fixtures		10,599			10,599
	$	111,622		$	110,104
Less: accumulated depreciation		(100,989	)		(87,167	)
Fixed assets, net	$	10,633		$	22,937

XML

4. Accounts Payable and Accrued Expense (Tables)

9 Months Ended

Sep. 30, 2018

Accounts Payable And Accrued Expense Tables

Schedule of accounts payable and accrued expenses

	September 30,		December 31,
	2018		2017
Accrued payroll & benefits	$	173,250	$	170,915
Accrued professional fees		18,532		20,666
Other		8,416		13,126
Total	$	200,198	$	204,707

XML

7. Discontinued Operations (Tables)

9 Months Ended

Sep. 30, 2018

Discontinued Operations Tables Abstract

Discontinued operations

	September 30, 2018		December 31, 2017
ASSETS
CURRENT ASSETS:
Cash	$	7,399	$	29,701
Accounts receivable-trade		2,913		-
Deposit and other receivable		5,058		5,337
TOTAL CURRENT ASSETS		15,370		35,038
Fixed assets, net		2,320		8,309
TOTAL ASSETS	$	17,690	$	43,347
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	164,485	$	171,566
TOTAL CURRENT LIABILITIES		164,485		171,566
TOTAL LIABILITIES	$	164,485	$	171,566

	Quarter Ended September 30, 2018			Quarter Ended September 30, 2017			Nine Months Ended September 30, 2018			Nine Months Ended September 30, 2017
Revenues:
Project fee-others	$	-		$	-		$	7,437		$	44,179
		-			-			7,437			44,179
Cost of revenues		-			-			4,596			9,071
Gross profit	$	-		$	-		$	2,841		$	35,108
Operating expenses:
Research and product development	$	-		$	59,242		$	-		$	162,013
Depreciation		1,193			6,011			5,989			18,894
General and administrative		21,279			11,404			68,413			38,851
Total operating expenses		22,472			76,657			74,402			219,758
(Loss) from operations		(22,472	)		(76,657	)		(71,561	)		(184,650	)
Other income (expenses):
Other sundry income		81			-			421			-
Foreign exchange gain (loss)		(9,752	)		1,165			(9,123	)		(6,612	)
Total other income (expenses)		(9,671	)		1,165			(8,702	)		(6,612	)
Loss from discontinued operations	$	(32,143	)	$	(75,492	)	$	(80,263	)	$	(191,262	)

XML

8. Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2018

Commitments And Contingencies Tables Abstract

Future minimum lease payments

2018	$	7,452
2019		4,968
Total	$	12,420

XML

1. The Company History and Nature of the Business (Details)	9 Months Ended
	Sep. 30, 2018
HotApps International Pte Ltd ("HIP")
Date of Incorporation	May 23, 2014
Place of Incorporation	Republic of Singapore
Percentage of Ownership	100.00%
Crypto Exchange Inc.
Date of Incorporation	Dec. 15, 2017
Place of Incorporation	State of Nevada, the United States of America
Percentage of Ownership	100.00%
Crypto Exchange Pte. Ltd.
Date of Incorporation	Sep. 15, 2014
Place of Incorporation	Republic of Singapore
Percentage of Ownership	100.00%
HotApps Information Technology Co Ltd
Date of Incorporation	Nov. 10, 2014
Place of Incorporation	People’s Republic of China
Percentage of Ownership	100.00%
HotApp International Limited
Date of Incorporation	Jul. 08, 2014
Place of Incorporation	Hong Kong (Special Administrative Region)
Percentage of Ownership	100.00%

XML

1. The Company History and Nature of the Business (Details Narrative)	9 Months Ended
	Sep. 30, 2018 USD ($)
Company History And Nature Of Business
Incurred net losses	$ (5,496,583)
Net working capital deficit	$ (1,051,171)

XML

2. Summary of Significant Accounting Policies (Details) - USD ($)	9 Months Ended		12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Accounts receivables	$ 52,560		$ 107,341
Revenue	142,952	$ 186,596
Related parties
Accounts receivables	39,427		$ 89,427
Revenue	$ 115,107	103,548
Related parties | Accounts receivables
Concentration risk	75.00%		83.00%
Related parties | Revenue
Concentration risk	81.00%		55.00%
Trade
Accounts receivables	$ 13,133		$ 17,914
Revenue	$ 27,845	$ 83,048
Trade | Accounts receivables
Concentration risk	25.00%		17.00%
Trade | Revenue
Concentration risk	19.00%	45.00%

XML

2. Summary of Significant Accounting Policies (Details 1)	9 Months Ended
	Sep. 30, 2018
Office Equipment
Estimated useful life	3 years
Computer Equipment
Estimated useful life	3 years
Furniture and Fixtures
Estimated useful life	3 years
Motor Vehicles
Estimated useful life	10 years

XML

2. Summary of Significant Accounting Policies (Details 2) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Revenues	$ 33,221	$ 82,232	$ 135,515	$ 142,417
Goods transferred at a point in time
Revenues			27,845	138,075
Services transferred over time
Revenues			115,107	48,521
North America
Revenues			115,107	103,548
Asia
Revenues			27,845	83,048
Provision of Services
Revenues			115,107	48,521
Provision of Services | Goods transferred at a point in time
Revenues			0	0
Provision of Services | Services transferred over time
Revenues			115,107	48,521
Provision of Services | North America
Revenues			115,107	0
Provision of Services | Asia
Revenues			0	48,521
Software Development
Revenues			27,845	138,075
Software Development | Goods transferred at a point in time
Revenues			27,845	138,075
Software Development | Services transferred over time
Revenues			0	0
Software Development | North America
Revenues			0	103,548
Software Development | Asia
Revenues			$ 27,845	$ 34,527

XML

2. Summary of Significant Accounting Policies (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Summary Of Significant Accounting Policies
Foreign currency translation gain (loss)	$ 90,562	$ (165,908)

XML

3. Fixed Assets, Net (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Fixed Assets Net Details
Computer equipment	$ 78,078	$ 76,662
Office equipment	22,945	22,843
Furniture and fixtures	10,599	10,599
Fixed assets, gross	111,622	110,104
Less: accumulated depreciation	(100,989)	(87,167)
Fixed assets, net	$ 10,633	$ 22,937

XML

3. Fixed Assets, Net (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Fixed Assets Net Details Narrative Abstract
Depreciation expense	$ 3,400	$ 9,965	$ 13,822	$ 28,032

XML

4. Accounts Payable and Accrued Expense (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Accounts Payable And Accrued Expense Details
Accrued payroll & benefits	$ 173,250	$ 170,915
Accrued professional fees	18,532	20,666
Other	8,416	13,126
Total	$ 200,198	$ 204,707

XML

5. Share Capitalization (Details Narrative) - shares	Sep. 30, 2018	Dec. 31, 2017
Share Capitalization Details Narrative Abstract
Common stock, Issued	506,898,576	506,898,576
Common stock, Outstanding	506,898,576	506,898,576
Preferred stock, Issued	0	0
Preferred stock, Outstanding	0	0

XML

7. Discontinued Operations (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Discontinued Operations Details Abstract
Cash	$ 7,399	$ 29,701
Accounts receivable-trade	2,913	0
Deposit and other receivable	5,058	5,337
TOTAL CURRENT ASSETS	15,370	35,038
Fixed assets, net	2,320	8,309
TOTAL ASSETS	17,690	43,347
Accounts payable and accrued expenses	164,485	171,566
TOTAL CURRENT LIABILITIES	164,485	171,566
TOTAL LIABILITIES	$ 164,485	$ 171,566

XML

7. Discontinued Operations (Details 1) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Revenues:
Project fee-others	$ 0	$ 0	$ 7,437	$ 44,179
Cost of revenues	0	0	4,596	9,071
Gross profit	0	0	2,841	35,108
Operating expenses:
Research and product development	0	59,242	0	162,013
Depreciation	1,193	6,011	5,989	18,894
General and administrative	21,279	11,404	68,413	38,851
Total operating expenses	22,472	76,657	74,402	219,758
(Loss) from operations	(22,472)	(76,657)	(71,561)	(184,650)
Other income (expenses):
Other sundry income	81	0	421	0
Foreign exchange gain (loss)	(9,752)	1,165	(9,123)	(6,612)
Total other income (expenses)	(9,671)	1,165	(8,702)	(6,612)
Loss from discontinued operations	$ (32,143)	$ (75,492)	$ (80,263)	$ (191,262)

XML

8. Commitments and Contingencies (Details)	Sep. 30, 2018 USD ($)
Commitments And Contingencies Details Abstract
2018	$ 7,452
2019	4,968
Total	$ 12,420

XML

8. Commitments and Contingencies (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Guangzhou
Rent expense			$ 21,883
Security deposit	$ 4,498		4,498
Hong Kong
Rent expense	10,577	$ 12,043	30,894	$ 31,561
Security deposit	$ 5,147		$ 5,147