0001213900-18-016243.txt : 20181120 0001213900-18-016243.hdr.sgml : 20181120 20181119191001 ACCESSION NUMBER: 0001213900-18-016243 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 65 CONFORMED PERIOD OF REPORT: 20180930 FILED AS OF DATE: 20181120 DATE AS OF CHANGE: 20181119 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Wave Sync Corp. CENTRAL INDEX KEY: 0000860131 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL ORGANIC CHEMICALS [2860] IRS NUMBER: 742559866 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-34113 FILM NUMBER: 181193875 BUSINESS ADDRESS: STREET 1: 40 WALL STREET, 28TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10005 BUSINESS PHONE: 646-512-5855 MAIL ADDRESS: STREET 1: 40 WALL STREET, 28TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10005 FORMER COMPANY: FORMER CONFORMED NAME: China Bio-Energy Corp. DATE OF NAME CHANGE: 20110203 FORMER COMPANY: FORMER CONFORMED NAME: China INSOnline Corp. DATE OF NAME CHANGE: 20080312 FORMER COMPANY: FORMER CONFORMED NAME: DEXTERITY SURGICAL INC DATE OF NAME CHANGE: 19990330 10-Q 1 f10q0918_wavesynccorp.htm QUARTERLY REPORT

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended 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                   

 

Commission File Number: 001-34113

 

WAVE SYNC CORP.

(Exact Name of Registrant as Specified in Its Charter)

 

Delaware   74-2559866
(State of Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
     

 

11 Middlebury Blvd, Unit 3, Randolph, NJ   07869
(Address of Principal Executive Offices)   (ZIP Code)

 

646-512-5855

(Registrant’s Telephone Number, Including Area Code)

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Sections 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 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, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer Accelerated filer
Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐ No ☒

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

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 the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Class   Outstanding As of November 13, 2018
Common stock, par value $0.001  

21,027,713

 

 

 

 

 

 

TABLE OF CONTENTS

 

PART I-FINANCIAL INFORMATION 1
Item 1. Financial Statements 1
Item 2. Management’s Discussion And Analysis Of Financial Condition And Results Of Operations 2
Item 3. Quantitative and Qualitative Disclosures About Market Risk 10
Item 4. Controls and Procedures 10
PART II-OTHER INFORMATION 11
Item 1. Legal Proceedings 11
Item 1A. Risk Factors 11
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Mine Safety Disclosures 11
Item 5. Other Information 11
Item 6. Exhibits 11
SIGNATURES 12

 

Throughout this Quarterly Report on Form 10-Q, the “Company”, “we,” “us,” and “our,” refer to Wave Sync Corp., a Delaware corporation, and its subsidiaries, unless otherwise indicated or the context otherwise requires.

 

i

 

 

FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q contains certain forward-looking statements. The statements herein which are not historical reflect our current expectations and projections about the Company’s future results, performance, liquidity, financial condition, prospects and opportunities and are based upon information currently available to us and our management and our interpretation of what we believe to be significant factors affecting our business, including many assumptions about future events. Such forward-looking statements include statements regarding, among other things:

 

our ability to produce, market and generate sales of our products and services;

 

our ability to develop and/or introduce new products and services;

 

our projected future sales, profitability and other financial metrics;

 

our future financing plans;

 

our anticipated needs for working capital;

 

the anticipated trends in our industry;

 

our ability to expand our sales and marketing capability;

 

acquisitions of other companies or assets that we might undertake in the future;

 

competition existing today or that will likely arise in the future; and

 

other factors discussed elsewhere herein.

 

Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words “may,” “should,” “will,” “plan,” “could,” “target,” “contemplate,” “predict,” “potential,” “continue,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “seek,” or “project” or the negative of these words or other variations on these or similar words. Actual results, performance, liquidity, financial condition and results of operations, prospects and opportunities could differ materially from those expressed in, or implied by, these forward-looking statements as a result of various risks, uncertainties and other factors, including the ability to raise sufficient capital to continue the Company’s operations. These statements may be found under Part I, Item 2-“Management’s Discussion And Analysis Of Financial Condition And Results Of Operations,” as well as elsewhere in this Quarterly Report on Form 10-Q generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, matters described in this Quarterly Report on Form 10-Q.

 

In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this Quarterly Report on Form 10-Q will in fact occur.

 

Potential investors should not place undue reliance on any forward-looking statements. Except as expressly required by the federal securities laws, there is no undertaking to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.

 

The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Quarterly Report on Form 10-Q. Such statements are presented only as a guide about future possibilities and do not represent assured events, and we anticipate that subsequent events and developments will cause our views to change. You should, therefore, not rely on these forward-looking statements as representing our views as of any date after the date of this Quarterly Report on Form 10-Q.

 

This Quarterly Report on Form 10-Q also contains estimates and other statistical data prepared by independent parties and by us relating to market size and growth and other data about our industry. These estimates and data involve a number of assumptions and limitations, and potential investors are cautioned not to give undue weight to these estimates and data. We have not independently verified the statistical and other industry data generated by independent parties and contained in this Quarterly Report on Form 10-Q. In addition, projections, assumptions and estimates of our future performance and the future performance of the industries in which we operate are necessarily subject to a high degree of uncertainty and risk.

 

Potential investors should not make an investment decision based solely on our projections, estimates or expectations.

 

ii

 

 

PART I.

 

FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

INDEX TO FINANCIAL STATEMENTS

 

Contents

 

  Page(s)
   
Report of Independent Accountant F-1
   
Condensed Consolidated Balance Sheets F-2
   
Condensed Consolidated Statements of Operations and Comprehensive Loss F-3
   
Condensed Consolidated Statements of Cash Flows F-4
   
Notes to Condensed Consolidated Financial Statements  F-5 – F-19

 

1

 

  

REPORT OF REGISTERED INDEPENDENT PUBLIC ACCOUNTING FIRM

 

To: The Board of Directors and Stockholders of
  Wave Sync Corp.

 

Results of Review of Interim Financial Information

 

We have reviewed the condensed balance sheet of Wave Sync Corp. (the Company) as of September 30, 2018, and the related condensed statements of operations and comprehensive income for the three-month and nine-month periods ended September 30, 2018 and 2017, and condensed statements of cash flows for the nine-month periods then ended, and the related notes (collectively referred to as the interim financial statements). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

 

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the balance sheet of the Company as of December 31, 2017 and 2016, and the related statements of operations and comprehensive income, stockholders’ equity, and cash flows for the years then ended (not presented herein); and in our report dated April 13, 2018, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying condensed balance sheet as of December 31, 2017, is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 11 to the financial statements, the Company had incurred substantial losses in previous years, which raises substantial doubt about its ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 11. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Review Results

 

These interim financial statements are the responsibility of the Company’s management. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

San Mateo, California WWC, P.C.
November 19, 2018 Certified Public Accountants

 

F-1

 

 

WAVE SYNC CORP.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 AS OF SEPTEMBER 30, 2018, AND DECEMBER 31, 2017

(Stated in US Dollars)

 

   At
September 30,
   At
December  31,
 
   2018   2017 
ASSETS      (Audited) 
         
Current Assets        
Cash and cash equivalents  $10,179   $10,346 
Other receivable   624    7,343 
Advance to suppliers   34,277    36,175 
Prepaid expenses   -    9,346 
Prepaid taxes   6,679    3,927 
Total Current Assets   51,759    67,137 
           
Non-Current Assets          
Property, plant and equipment, net   56,797    67,277 
Intangible asset, net   -    3,952,052 
Total Non-Current Assets   56,797    4,019,329 
           
Total Assets  $108,556   $4,086,466 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
           
Current Liabilities          
Capital lease – current portion  $-   $9,980 
Accounts payable   266,779    159,766 
Taxes payable   -    6,145 
Other payables   194,475    66,142 
Accrued expenses   18,268    37,440 
Related party payables   832,395    685,180 
Total Current Liabilities   1,311,917    964,653 
           
   $1,311,917   $964,653 
           
Commitment and contingencies          
           
Stockholders’ Deficiency/Equity          
Common stock, $0.001 par value, 100,000,000 shares authorized, 21,027,713 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively   21,027    21,027 
Additional paid in capital   26,128,062    24,776,214 
Accumulated deficit   (27,152,332)   (21,452,071)
Accumulated other comprehensive loss   (200,118)   (223,357)
Total Stockholders’ Deficiency/Equity   (1,203,361)   3,121,813 
           
Total Liabilities and Stockholders’ Equity  $108,556   $4,086,466 

 

The accompanying notes are an integral part of these financial statement

 

F-2

 

 

WAVE SYNC CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2018 AND 2017

(Stated in US Dollars)

 

   For the nine-month
periods ended
September 30,
   For the three-month
periods ended
September 30,
 
   2018   2017   2018   2017 
                 
Revenue  $86,900   $229,153   $-   $20,092 
Cost of revenues   85,317    834    -    8 
Gross profit  $1,583   $228,319   $-   $20,084 
                     
Operating expenses                    
General and administrative expenses   1,754,251    802,121    548,900    244,950 
    1,754,251    802,121    548,900    244,950 
                     
Operating loss  $(1,752,668)  $(573,802)  $(548,900)  $(224,866)
                     
Other income (expenses)                    
Interest income   26    2,076    -    458 
Other expense   (3,947,620)   -    -      
Other income   -    131,348    -    30,187 
Total other income/(expenses)   (3,947,594)   133,424    -    30,645 
                     
Loss before income taxes   (5,700,262)   (440,378)   (548,900)   (194,221)
                     
Income tax   -    -    -    - 
                     
Net loss  $(5,700,262)  $(440,378)  $(548,900)  $(194,221)
                     
Other comprehensive loss                    
Foreign currency translation adjustment   23,239    7,519    (75,443)   230 
                     
Comprehensive loss  $(5,677,023)  $(432,859)  $(624,343)  $(193,991)
                     
Net loss per share                    
Basic  $(0.27)  $(0.02)  $(0.03)  $(0.01)
Diluted  $(0.27)  $(0.02)  $(0.03)  $(0.01)
                     
Weighted average number of common shares outstanding                    
Basic   21,027,713    20,721,968    21,027,713    21,027,162 
Diluted   21,027,713    20,721,968    21,027,713    21,027,162 

 

The accompanying notes are an integral part of these financial statement

 

F-3

 

 

WAVE SYNC CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2018 AND 2017

(Stated in US Dollars)

 

   For the nine-month
periods ended
September 30,
 
   2018   2017 
CASH FLOWS FROM OPERATING ACTIVITIES        
Net loss  $(5,700,262)  $(440,378)
Depreciation and amortization   4,921    13,427 
Stock compensation   1,351,848    - 
Impairment loss on intangible assets   3,952,175    - 
Adjustments to reconcile net loss to net cash provided by operating activities and changes in operating assets and liabilities:          
Decrease/(increase) in accounts receivable   5,825    (250)
Decrease/(increase) in other receivables   895    (9,503)
Increase in related party receivables   -    (152,028)
Decrease in advance to suppliers   1,897    14,236 
Decrease/(increase) in prepaid expenses and taxes   6,594    (1,413)
Increase/(decrease in accounts payable   107,013    (72,382)
Decrease in accrued expenses   (29,151)   (19,648)
Increase/(decrease) in other payables   128,332    (94,466)
Decrease in taxes payable   (6,145)   570 
Net cash provided by (used in) operating activities  $(176,058)  $(761,835)
           
CASH FLOWS FROM INVESTING ACTIVITIES          
Purchase of equipment   -    (63,912)
Decrease in deposits   -    11,795 
Net cash generated from investing activities  $-   $(52,117)
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Increase in related party receivables          
Increase in related party payables   147,215    332,993 
Net cash generated from financing activities  $147,215   $332,993 
           
Net decrease in cash and cash equivalents   (28,843)   (480,959)
           
Effect of foreign currency translation on cash and cash equivalents   28,676    7,465 
           
Cash and cash equivalents, beginning balance   10,346    480,609 
Cash and cash equivalents, ending balance  $10,179   $7,115 
           
SUPPLEMENTAL DISCLOSURES:          
Interest received  $26   $2,076 
Interest paid  $-   $- 
Income tax paid  $-   $- 
           
NON-CASH FINANCING ACTIVITIES:          
Related party payable formalized into convertible note  $-   $2,213,673 
Issuance of stock for conversion of convertible note  $-   $2,213,673 
Related party receivable formalized into intangible assets  $-   $1,502,742 
Purchase of intangible asset  $-   $7,728,167 
Increase in additional paid in capital from purchase of intangible asset  $-   $6,225,425 

 

The accompanying notes are an integral part of these financial statement

 

F-4

 

 

WAVE SYNC CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2018 AND DECEMBER 31, 2017

(Stated in US Dollars)

 

1. THE COMPANY AND PRINCIPAL BUSINESS ACTIVITIES

 

Wave Sync Corp. formerly known as China Bio-Energy Corp. (the “Company”), and prior to that known as China INSOnline Corp., was incorporated on December 23, 1988 as Lifequest Medical, Inc., a Delaware corporation.

 

In June 2010, the Company ceased all operations conducted by its then subsidiaries: Ever Trend Investment Limited, Run Ze Yong Cheng (Beijing) Technology, San Teng Da Fei Technology, and Guang Hua Insurance Agency (“Ever Trend Group”); on January 27, 2015, the Company announced the completion of the disposition of the aforementioned subsidiaries. Accordingly, the Company has excluded the accounts of Ever Trend Group in these financial statements and the accompanying notes contained herein.

 

On November 12, 2010, the Company entered into a share exchange agreement with Ding Neng Holdings Ltd, an investment holdings company incorporated in the British Virgin Islands (“Ding Neng Holdings”); the share exchange agreement was amended on December 6, 2010, whereby the Company, under the share exchange agreement and its related amendment, would have contemplated acquiring 100% of Ding Neng Holdings in exchange for the issuance of 26,162,505 shares of the Company’s common stock, par value $0.001. Under the share exchange agreement, the Company would have contemplated owning and operating Ding Neng Holdings and Ding Neng Holdings’ directly, and indirectly held subsidiaries: Ding Neng Bio-technology Co., Ltd. (“Ding Neng HK”), Zhangzhou Fuhua Biomass Energy Technology Co., Ltd. (“WOFE”), and Ding Neng Bio-tech. Ding Neng HK was incorporated under the laws of Hong Kong on September 10, 2010. Ding Neng HK did not have any operations. Ding Neng HK has been delinquent with its annual regulatory filings in Hong Kong, and should be considered dormant and defunct. Ding Neng HK was wholly-owned by Ding Neng Holdings. Zhangzhou Fuhua Biomass Energy Technology Co., Ltd. (“WFOE”) was incorporated as a wholly-foreign owned entity under the laws of the People’s Republic of China (“PRC”), on November 2, 2010. WFOE was wholly-owned by Ding Neng HK. Ding Neng Bio-tech was incorporated under the laws of the PRC on December 8, 2006. It was located in Zhangzhou city Fujian Province of PRC. Ding Neng Bio-tech was engaged in the production, refinement and distribution of bio-diesel fuel in Southern China. Ding Neng Bio-tech operated a biodiesel manufacturing facility in Zhangzhou city. On October 28, 2010, WFOE and Ding Neng Bio-tech entered into a set of variable interest entity agreements that included: (1) a Consulting Service Agreement with Ding Neng Bio-tech, which entitled WFOE to receive substantially all of the economic benefits of Ding Neng Bio-tech in consideration for services provided by WFOE to Ding Neng Bio-tech, (2) an Option Agreement with Xinfeng Nie, Sanfu Huang, and Shunlong Hu (the shareholders of Ding Neng Bio-tech) allowing the WFOE to acquire all the shares of Ding Neng Bio-tech as permitted by PRC laws, (3) a Voting Rights Proxy Agreement that provides WFOE with the all voting rights of the Ding Neng Bio-tech shareholders, and (4) an Equity Pledge Agreement that pledges the shares in Ding Neng Bio-tech to WFOE (VIE Agreements). These VIE Agreements granted effective control of Ding Neng Bio-tech to WFOE. On June 4, 2015, WFOE filed a civil action in Haicang District People’s Court of Xiamen, Fujian, PRC (the “Court”) against Ding Neng Bio-tech, alleging that the purposes of those certain executed VIE Agreements entered into by WFOE and Ding Neng Bio-Tech on October 28, 2010, had been frustrated, and that these VIE Agreements should be terminated. WFOE alleged that Ding Neng Bio-Tech did not make any payment of service fees to WFOE, and that Ding Neng Bio-Tech failed to perfect the security interest in the pledged stocks. On July 14, 2015, this case was settled via in-court mediation directed by the Court. As a result, WFOE and Ding Neng Bio-Tech entered into binding settlement, among other things, (i) to terminate the VIE Agreements, and (ii) that the litigation fee in the amount of RMB10,000 (approximately $1,610.50) would be borne by Ding Neng Bio-Tech. Ding Neng Holdings is delinquent with its regulatory filings and annual fees to the British Virgin Islands; accordingly, the Ding Neng Holdings should be considered dormant and defunct.

 

F-5

 

 

Given that the Company has not been able to exercise effective control over Ding Neng Bio-Tech or to access Ding Neng Bio-tech’s financial information since 2011, and the VIE Agreements were terminated, the Company has excluded the accounts of Ding Neng Bio-Tech’s in these financial statements and the accompanying notes contained herein; the exclusion of such accounts is considered as a type two material subsequent event that occurred prior to the issuance of the financial statements but after the balance sheets dates that required material adjustments to the financial statements presented. Ding Neng Holdings is delinquent and defunct; the Company has determined that the Company was never registered as the sole shareholder of Ding Neng Holdings pursuant to the share exchange agreement dated November 12, 2010, and amended December 6, 2010; accordingly, the Company has excluded the accounts of Ding Neng and its subsidiaries in these financial statements and the accompanying notes as contained herein; the exclusion of such accounts is considered as a type two material subsequent event that occurred prior to the issuance of the financial statements but after the balance sheets dates that required material adjustments to the financial statements presented. The Company accounted for the issuance of shares to the shareholders of Ding Neng Holdings under the contemplated share exchange transaction as a recapitalization of the Company under reverse take-over accounting; accordingly, the Company’s historical stockholders’ equity has been retroactively restated to the first period presented; as a result of the Company not being updated to Ding Neng Holdings shareholder register, and that Ding Neng Holdings being defunct, the Company has written off all investments made in Ding Neng as loss on investment in subsidiary.

 

In connection with the share exchange agreement with the shareholders of Ding Neng Holdings that contemplated the acquisition of Ding Neng Holdings and its subsidiaries, the Company elected to adopt the fiscal year used by Ding Neng Holdings, which was a calendar year; accordingly, the Company’s financial statements presented herein have been, and on a go-forward basis, will be prepared using a December 31 year-end date, and each operating period will cover twelve full calendar months.

 

Share Purchase Agreement

 

On October 19, 2015, the Company entered into a Share Purchase Agreement (the “Share Purchase Agreement”) with EGOOS Mobile Technology Company Limited, a British Virgin Islands holding company (“EGOOS BVI”), which owns 100% of EGOOS Mobile Technology Company Limited, a Hong Kong company (“EGOOS HK”), which owns 100% of Move the Purchase Consulting Management (Shenzhen) Co., Ltd. (“WOFE”), a foreign investment enterprise organized under the laws of the PRC, and which has, through various contractual agreements known as variable interest entity (“VIE”) agreements.  These VIE agreements provide the WOFE management control and the rights to the profits of Guangzhou Yuzhi Information Technology Co., Ltd., a corporation organized under the laws of the PRC as a variable interest entity (“GZYZ”), which owns 100% of Shenzhen Qianhai Exce-card Technology Co., Ltd., a Chinese corporation (“SQEC”), which owns 100% of Guangzhou Rongsheng Information Technology Co., Ltd., a Chinese corporation (“GZRS”) and the sole shareholder of EGOOS BVI.  The VIE agreements include: (1) an Exclusive Service Agreement between WOFE and GZYZ, which entitles WOFE to receive substantially all of the economic benefits of GZYZ in consideration for services provided by WOFE to GZYZ, (2) a Call Option Agreement with the shareholders of GZYZ, Yang Wenbin and Li Ping, allowing the WOFE to acquire all the shares of GZYZ as permitted by PRC laws, (3) a Voting Rights Proxy Agreement that provides WOFE with the all voting rights of the GZYZ’s shareholders, and (4) an Equity Pledge Agreement that pledges the shares in GZYZ to WOFE.  Management has assessed the terms of the VIE agreements and determined that the Company is the primary beneficiary of those agreements based on Management’s ability to direct the use and disposition of GZYZ assets including the payment of future profits to the Company.  Management also determined the Company has implicitly provided financial support to GYZY; accordingly, Management believes that GZYZ and its subsidiaries should be consolidated as variable interest entities of the Company.

 

F-6

 

 

SQEC was incorporated on November 11, 2013. The Company is in the business of design, development, and proliferation of next generation debit and credit cards for financial institutions employing innovative secured encryption technology transmitted via audio wave technology; the Company intends to work with China Union Pay and China Construction Bank under a potential pilot program to develop and market to end user bank customers and business operators to adopt these next generation of cards by developing point of sale and commercial interfaces via software and other solutions to generate demand for these cards as a value-added alternative to current generation debit and credit cards.

 

On January 28, 2015, ownership of SQEC’s was transferred from Bao, Shanshan to Xiang, Zuyue for a consideration of approximately $1,629,062 (RMB 10,000,000). Simultaneously, Xiang, Zuyue transferred 40% of ownership to Li, Na for a consideration of $651,625 (RMB 4,000,000). On July 24, 2015, SQEC entire ownership was collectively transferred from Xiang, Zuyue and Li, Na to Guangzhou Yuzhi Information Technology Co. Ltd. (“GZYZ”) for a consideration of approximately $1,629,062 (RMB 10,000,000).

 

On March 16, 2015, the GZRS was incorporated as a wholly-owned subsidiary of SQEC. GZRS has an authorized capital of RMB 1,000,000. As of the date of this report, GZRS has not been capitalized.

 

Pursuant to the Share Purchase Agreement the Company issued a convertible note to EGOOS BVI’s sole shareholder for 100% equity interest in EGOOS BVI. The note is convertible into 15,000,000 shares of the Company’s common stock contingent on the following conditions: (i) the Company has effectuated a reverse split of all of the issued and outstanding Common Stock as of the date of the issuance of the note (the “Reverse Split”) and (ii) the average closing price of the common stock for 3 business days within any period of 10 consecutive business days exceeds $1.00 per share (the “Conversion Conditions”). Upon conversion of the note, the existing shareholders of the Registrant will own an aggregate of 24.7% of the post-acquisition entity. The note was issued at Par, it is unsecured, interest free, and is due on the second anniversary of the issuance date of the note. In accounting for the note, the Company has assumed that the note does not carry any discount from face that requires accretion as interest expense to its results of operations, including any potential beneficial conversion features. On January 26, 2016, the reverse split was effectuated, and subsequently, on February 4, 2016, the convertible promissory note was converted into 15 million newly issued shares of the Company’s common stock. The conversion of the promissory note has been recognized retroactively to the first period presented as a component of the reverse takeover transactions detailed below.

 

The consolidated financial statements were prepared assuming that the Company has controlled EGOOS BVI and its intermediary holding companies, operating subsidiaries, and variable interest entities: EGOOS HK, WOFE, GZYZ, SQEC, and GZRS from the first period presented. The transactions detailed above have been accounted for as reverse takeover transactions and a recapitalization of the Company, including the conversion of the convertible promissory note; accordingly, the Company (the legal acquirer) is considered the accounting acquiree and EGOOS BVI (the legal acquiree) is considered the accounting acquirer. No goodwill has been recorded. As a result of this transaction, the Company is deemed to be a continuation of the business of EGOOS BVI and SQEC.

  

F-7

 

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

  A. Method of Accounting

 

The Company maintains its general ledger and journals with the accrual method of accounting for financial reporting purposes. The financial statements and notes are representations of management. Accounting policies adopted by the Company conform to generally accepted accounting principles in the United States of America and have been consistently applied in the presentation of financial statements.

 

  B. Basis of Presentation

 

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”).

 

  C. Principles of Consolidation

 

The consolidated financial statements include the accounts of the Company, its subsidiaries for which the Company is the primary beneficiary. All significant inter-company accounts and transactions have been eliminated. The consolidated financial statements include 100% of assets, liabilities, and net income or loss of those wholly-owned subsidiaries.

 

As of September 30, 2018, the detailed identities of the consolidating subsidiaries are as follows:

 

  Name of Company   Place of incorporation   Attributable equity interest %     Registered capital  
  EGOOS Mobile Technology Company Limited (“EGOOS BVI”)   BVI     100 %   $ 1  
  EGOOS Mobile Technology Company Limited (“EGOOS HK”)   Hong Kong     100 %     1,290  
  Move the Purchase Consulting Management (Shenzhen) Co., Ltd. (“WOFE”)   P.R.C. (WOFE)     100 %     -  
  Guangzhou Yuzhi Information Technology Co., Ltd. (“GZYZ”)   P.R.C.     100 %     150,527  
  Shenzhen Qianhai Exce-card Technology Co., Ltd. (“SQEC”)   P.R.C.     100 %     150,527  
  Guangzhou Rongsheng Information Technology Co., Ltd. (“GZRS”)   P.R.C.     100 %     1,505,267  

 

  D. Unaudited Interim Financial Information

 

These unaudited interim condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial reporting and the rules and regulations of the Securities and Exchange Commission that permit reduced disclosure for interim periods. Therefore, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. In the opinion of management, all adjustments of a normal recurring nature necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented have been made. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the year ending December 31, 2018.

 

F-8

 

 

The consolidated balance sheets and certain comparative information as of December 31, 2017 are derived from the audited consolidated financial statements and related notes for the year ended December 31, 2017 (“2017 Annual Financial Statements”), included in the Company’s 2017 Annual Report on Form 10-K. These unaudited interim condensed consolidated financial statements should be read in conjunction with the 2017 Annual Financial Statements.

 

  E. Use of estimates

 

The preparation of the 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 disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates are used for, but not limited to, the accounting for certain items such as allowance for doubtful accounts, depreciation and amortization, impairment, inventory allowance, taxes and contingencies.

 

  F. Contingencies

 

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company’s management evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought.

 

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed.

 

Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.

 

  G. Cash and cash equivalents

 

The Company classifies the following instruments as cash and cash equivalents: cash on hand, unrestricted bank deposits, and all highly liquid investments purchased with original maturities of three months or less.

 

  H. Accounts receivable

 

Trade receivables are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An estimate for doubtful accounts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred.

 

F-9

 

 

  I. Other receivables 

 

Other receivables are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An allowance for doubtful accounts is made when recovery of the full amount is doubtful.

 

  J. Property, plant and equipment

 

Plant and equipment are carried at cost less accumulated depreciation. Depreciation is provided over their estimated useful lives, using the straight-line method with a salvage value of 10%. Estimated useful lives of the plant and equipment are as follows:

 

  Computer equipment 3 years
  Office furniture 5 years

 

The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statement of income. The cost of maintenance and repairs is charged to income as incurred, whereas significant renewals and betterments are capitalized.

 

  K. Accounting for the Impairment of Long-lived assets

 

The long-lived assets held by the Company are reviewed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 360-10-35, “Accounting for the Impairment or Disposal of Long-Lived Assets,” for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. It is reasonably possible that these assets could become impaired as a result of technology or other industry changes. Impairment is present if carrying amount of an asset is less than its undiscounted cash flows to be generated.

 

If an asset is considered impaired, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. The Company believes no impairment has occurred to its assets during 2018.

 

  L. Income taxes

 

The Company uses the accrual method of accounting to determine income taxes for the year. The Company has implemented FASB ASC 740 Accounting for Income Taxes. Income tax liabilities computed according to the United States, People’s Republic of China (PRC), and Hong Kong tax laws provide for the tax effects of transactions reported in the financial statements and consists of taxes currently due, plus deferred taxes, related primarily to differences arising from the recognition of expenses related to the depreciation of plant and equipment, amortization of intangible assets, and provisions for doubtful accounts between financial and tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will be either taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes also are recognized for operating losses that are available to offset future income taxes.

 

A valuation allowance is recognized for deferred tax assets if it is more likely than not, that the deferred tax assets will either expire before the Company is able to realize that tax benefit, or that future realization is uncertain.

 

F-10

 

 

  M. Stock-based compensation

 

The Company has elected to use the Black-Scholes-Merton (“BSM”) pricing model to determine the fair value of stock options on the dates of grant. Also, the Company recognizes stock-based compensation using the straight-line method over the requisite service period.

 

The Company values stock awards using the market price on or around the date the shares were awarded and includes the amount of compensation as a period compensation expense over the requisite service period.

 

For the three-month periods ended September 30, 2018 and 2017, $477,261 and $0 stock-based compensation was recognized.

 

For the nine-month periods ended September 30, 2018 and 2017, $1,351,848 and $0 stock-based compensation was recognized.

 

  N. Foreign currency translation

 

The accompanying financial statements are presented in United States dollars. The functional currency of the Company is the Renminbi (RMB) and Hong Kong dollar (HKD). The financial statements are translated into United States dollars from RMB at year-end exchange rates as to assets and liabilities and average exchange rates as to revenues and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred.

 

  Exchange Rates   9/30/2018     12/31/2017     9/30/2017  
  Year-end/period-end RMB : US$ exchange rate     6.8665       6.5064       6.6545  
  Average annual/period RMB : US$ exchange rate     6.5137       6.7570       6.8057  
                           
  Year-end/period-end HKD : US$ exchange rate     7.8277       7.8149       7.8110  
  Average annual/period HKD : US$ exchange rate     7.8398       7.7922       7.7870  

 

The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US Dollar at the rates used in translation.

 

  O. Revenue recognition

 

The Company recognizes services revenue when the following criteria have been met: 1.) it has agreed and entered into a contract for service with it customers, 2.) the contract has set forth a fixed fee for the services to be rendered, 3.) the Company has fully rendered service to its customers, and there are no additional obligations that exist that under the terms of the contract that the Company has not fulfilled, and 4.) the Company has either received payment, or reasonably expects payment from the customer in accordance to the payment terms set forth in the contract.

 

  P. Earnings per share

 

Basic earnings per share is computed on the basis of the weighted average number of common stock outstanding during the period. Diluted earnings per share is computed on the basis of the weighted average number of common stock and common stock equivalents outstanding. Dilutive securities having an anti-dilutive effect on diluted earnings per share are excluded from the calculation.

 

Dilution is computed by applying the treasury stock method for options and warrants. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

 

F-11

 

 

  Q. Comprehensive loss

 

Comprehensive income (loss) is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. The Company presents components of comprehensive income with equal prominence to other financial statements. The Company’s current component of other comprehensive income is the foreign currency translation adjustment.

 

  R. Subsequent events

 

The Company evaluates subsequent events that have occurred after the balance sheet date but before the financial statements are issued. There are two types of subsequent events: (1) recognized, or those that provide additional evidence with respect to conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements, and (2) non-recognized, or those that provide evidence with respect to conditions that did not exist at the date of the balance sheet but arose subsequent to that date.

 

  S. Recent accounting pronouncements

 

In January 2017, the Financial Accounting Standard Board (“FASB”) issued guidance, which simplifies the accounting for goodwill impairment. The updated guidance eliminates Step 2 of the impairment test, which requires entities to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. The Company is still assessing the impact of this pronouncement to its financial statements.

 

As of September 30, 2018, except for the above, there are no recently issued accounting standards not yet adopted that would have a material effect on the Company’s financial statements.

 

  T. Fair Value of Financial Instruments

 

ASC 825, Financial Instruments, requires that the Company discloses estimated fair values of financial instruments. The carrying amounts reported in the balance sheets for current assets and current liabilities qualifying as financial instruments are a reasonable estimate of fair value.

 

The Company applies the provisions of ASC 820-10, Fair Value Measurements and Disclosures. ASC 820-10 defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. For certain financial instruments, including cash and cash equivalents, loan receivables and short-term bank loans, the carrying amounts approximate fair value due to their relatively short maturities. The three levels of valuation hierarchy are defined as follows:

 

  Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.

 

  Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

 

  Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.

 

F-12

 

 

The Company analyzes all financial instruments with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities from Equity,” and ASC 815.

 

The following tables present the Company’s financial assets and liabilities at fair value in accordance to ASC 820-10

 

  As of September 30, 2018:               
     Quoted in             
     Active Markets   Significant
Other
   Significant     
     for Identical   Observable   Unobservable     
     Assets   Inputs   Inputs     
     (Level 1)   (Level 2)   (Level 3)   Total 
  Financial assets:                    
  Cash  $10,179   $      -   $      -   $10,179 
  Total financial assets  $10,179   $-   $-   $10,179 
                       
  Financial liabilities:                    
  Capital lease  $-   $-   $-   $- 
  Total financial liabilities  $-   $-   $-   $- 

 

  As of December 31, 2017:               
     Quoted in             
     Active Markets   Significant
Other
   Significant     
     for Identical   Observable   Unobservable     
     Assets   Inputs   Inputs     
     (Level 1)   (Level 2)   (Level 3)   Total 
  Financial assets:                    
  Cash  $10,346   $       -   $       -   $10,346 
  Total financial assets  $10,346   $-   $-   $10,346 
                       
  Financial liabilities:                    
  Capital lease  $9,980   $-   $-   $9,980 
  Total financial liabilities  $9,980   $-   $-   $9,980 

 

F-13

 

 

3. RELATED PARTY PAYABLES

 

Related party payable consisted of the following:

 

     9/30/2018   12/31/2017 
           
  Beijing Yuxin Shangfang Technology Co., Ltd.  $286,306   $302,155 
  Xiang, Zuyue, director of SQEC and shareholder   10,827    60,198 
  Lim, Jehn Ming, shareholder of EGOOS BVI   1,289    1,289 
  Wang, Yue, director of EGOOS HK   161,233    161,942 
  Yang, Mei, shareholder   368,963    157,110 
  Li, Ping, director of WOFE   3,777    2,486 
     $832,395   $685,180 

 

The amounts were provided as working capital to financial the Company’s operations. The amounts are unsecured, interest-free and due on demand.

 

4. PROPERTY, PLANT AND EQUIPMENT

 

Property, plant, and equipment consisted of the following as of September 30, 2018 and December 31, 2017:

 

     9/30/2018   12/31/2017 
  At Cost:          
  Machinery  $68,083   $71,852 
  Office equipment   18,346    19,362 
  Office furniture   12,741    13,446 
     $99,170   $104,660 
             
  Less: Accumulated depreciation   (42,373)   (37,383)
             
     $56,797   $67,277 

 

Depreciation expense for the three-month periods ended September 30, 2018 and 2017 was $756 and $7,606, respectively.

 

Depreciation expense for the nine-month periods ended September 30, 2018 and 2017 was $4,921 and $13,427, respectively.

 

F-14

 

 

5. INTANGIBLE ASSET

 

Intangible assets consisted of the following as of September 30, 2018 and December 31, 2017:

 

      9/30/2018     12/31/2017  
  At Cost:            
  Patent   $ -     $ 3,952,052  
  Software     1,299       1,322  
      $ 1,299     $ 3,953,374  
                   
  Less: Accumulated amortization     (1,299 )     (1,322 )
                   
      $ -     $ 3,952,052  

 

On July 7, 2017, SQEC and the director and CEO of the Company, Mr. Zuyue Xiang (“Xiang”), entered into an intangible asset transfer agreement. Xiang transferred his rights and ownership of the patent to a voice smart card and trading system for a consideration of RMB 10,000,000 (equivalent to USD 1,447,696). The patent was impaired during the period ended September 30, 2018 and was written off to other expense.

 

Amortization expense for the three-month periods ended September 30, 2018 and 2017 was $0 and $24, respectively.

 

Amortization expense for the nine-month periods ended September 30, 2018 and 2017 was $0 and $209, respectively.

 

6. ACCRUED EXPENSES

 

Accrued expenses consisted of the followings as of September 30, 2018 and December 31, 2017:

 

      9/30/2018     12/31/2017  
               
  Audit fee   $ 6,500     $ 35,000  
  Utilities     11,768       2,440  
      $ 18,268     $ 37,440  

 

7. TAXES PAYABLES

 

Taxes payable consisted of the followings as of September 30, 2018 and December 31, 2017:

 

      9/30/2018     12/31/2017  
               
  Payroll tax   $       -     $ 5,270  
  Individual income tax     -       875  
      $ -     $ 6,145  

 

F-15

 

 

8. STOCKHOLDERS’ EQUITY

 

Common stock

 

As of January 1, 2017, the Company had 100,000,000 shares of common stock authorized, 19,920,325 shares issued and outstanding at par value of $0.001 per share.

 

On March 17, 2017, the Company and each of the two holders (the “Noteholders”) of the Company’s convertible notes (the “Convertible Notes”) entered into a convertible note exchange agreement (the “Agreement”). Pursuant to the Agreement, the Company issued to the two noteholders an aggregate of approximately 1,106,837 shares of common stock (the “Common Stock”) of the Company, par value $0.001, upon the conversion notice from the two Noteholders with respect to converting the Convertible Notes in an aggregate principal amount of $2,213,673. Common stock was subsequently issued to the two note holders on April 6, 2017 and April 7, 2017, respectively – please refer to note 3 related party receivables and payables.

 

As of September 30, 2018, the Company has 100,000,000 shares of common stock authorized, 21,027,713 shares issued and outstanding at par value of $0.001 per share.

 

Stock option compensation

 

On October 20, 2017, the Company issued to Mr. Yang Liu, the option to purchase 1,050,000 shares of the Company’s common stock to be issued upon his exercise of such option. The option vests in three tranches according to the following schedule: 350,000 shares at October 19, 2018, 350,000 shares at October 19, 2019, and 350,000 at October 19, 2020. All three tranches expire on October 19, 2022. The Company has used the widely accepted Black Scholes Merton Option Pricing Model to measure the fair value of these securities, because of their plain vanilla nature of this option. The Company employed the followings assumptions to calculate the fair value of the option: expected forfeiture rate: 0%, risk free rate: 2.03%, expiration date: October 19, 2022, exercise price: $1.00, annualized volatility: 602.71%, dividend yield: 0%, and the Company’s closing stock price at year end. For the three-month periods ended September 30, 2018 and 2017, the Company recorded stock option compensation expense of $477,261 and $0. For the nine-month periods ended September 30, 2018 and 2017, the Company recorded stock option compensation expense of $1,351,848 and $0.

 

9. INCOME TAXES

 

The Company was incorporated in the United States of America (“USA”). The Company did not generate any taxable income from its operations for the nine-month periods ended September 30, 2018 and 2017.

 

The provision for income taxes consists of the following:

 

      For the nine-month periods
September 30,
 
  Current:   2018     2017  
  USA   $      -     $     -  
                   
  Deferred:                
  USA     -       -  
  Provision for income taxes     -       -  

 

F-16

 

 

The reconciliation of USA statutory income tax rate to the Company’s effective income tax rate is as follows:

 

      For the nine-month periods
September 30,
 
      2018     2017  
               
  Income tax at USA statutory rate of 21%   $      -     $    -  
  Others     -       -  
  Provision for income taxes     -       -  

 

Uncertain Tax Positions

 

Interest associated with unrecognized tax benefits are classified as income tax, and penalties are classified in selling, general and administrative expenses in the statements of operations.  For the nine-month periods ended September 30, 2018 and 2017, the Company had no unrecognized tax benefits and related interest and penalties expenses.  Currently, the Company is not subject to examination by major tax jurisdictions.

 

Deferred Income Tax Benefits

 

Deferred income tax benefits arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, which will result in taxable or deductible amounts in the future. In evaluating the Company’s ability to recover the deferred tax assets, the management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies, and results of recent operations. In projecting future taxable income, the Company begins with historical results adjusted for the results of discontinued operations and incorporate assumptions about the amount of future state, federal, and foreign pretax operating income adjusted for items that do not have tax consequences. The assumptions about future taxable income require the use of significant judgment and are consistent with the plans and estimates that the Company is using to manage the underlying businesses. As of September 30, 2018, management was uncertain as to whether or not the Company would be able to utilize the potential deferred tax assets arising from net operating losses’ since the Company is not currently generating any revenue; accordingly, the Company has not recognized a deferred tax asset.

 

10. LOSS PER SHARE

 

Basic loss per common share from operations attributable to the Company is based on the weighted-average common shares outstanding during the relevant period. Diluted loss per common share from continuing operations attributable to the Company is based on the weighted-average common shares outstanding during the relevant period adjusted for the dilutive effect of share-based awards. The Company did not have significant share-based awards outstanding that were antidilutive and not included in the calculation of diluted loss per common share from operations attributable to the Company for the nine month periods ended September 30, 2018 and 2017.

 

F-17

 

 

The following table sets forth the computation of basic and diluted earnings per share of common stock:

 

     For the nine-month
periods ended
September 30,
   For the three-month periods ended
September 30,
 
     2018   2017   2018   2017 
                   
  Basic loss per share:                
  Numerator:                    
  Net loss used in computing basic earnings per share  $(5,700,262)  $(440,378)  $(548,900)  $(194,221)
                       
  Denominator:                    
  Weighted average common shares outstanding   21,027,162    20,721,968    21,027,162    21,027,162 
  Basic loss per share  $(0.27)  $(0.02)  $(0.03)  $(0.01)
                       
  Diluted earnings per share:                    
  Numerator:                    
  Net loss used in computing diluted loss per share  $(5,700,262)  $(440,378)  $(548,900)  $(194,221)
                       
  Denominator:                    
  Weighted average common shares outstanding                    
  Diluted loss per share  $(0.27)  $(0.02)  $(0.03)  $(0.01)

 

Dilutive securities having an anti-dilutive effect on diluted (loss) earnings per share are excluded from the calculation.

 

11. GOING CONCERN UNCERTAINTIES

 

These financial statements have been prepared assuming that Company will continue as a going concern, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future.

 

As of September 30, 2018, the Company had accumulated deficits of $27,152,332 and working capital deficit of current liabilities exceeding current assets by $1,260,159. Management’s plan to support the Company in operations and to maintain its business strategy is to raise funds through public and private offerings and to rely on officers and directors to perform essential functions with minimal compensation. If we do not raise all of the money we need from public or private offerings, we will have to find alternative sources, such as loans or advances from our officers, directors or others. Such additional financing may not become available on acceptable terms and there can be no assurance that any additional financing that the Company does obtain will be sufficient to meet its needs in the long term. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in the case of equity financing. If we require additional cash and cannot raise it, we will either have to suspend operations or cease business entirely.

 

The accompanying financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

F-18

 

 

12. COMMITMENTS

 

  (a.) On June 2, 2016, the Company entered into a lease agreement for office space in Guangzhou city, Guangdong Province, P.R.C. commencing on June 1, 2016 for a three-year lease term. The Company terminated its lease in May 2018 and vacated the premise.

 

  (b.) On September 1, 2016, Mr. Zuyue Xiang entered into a lease agreement on behalf of the Company for office space in Guangdong Province, P.R.C. commencing on September 1, 2016 for a three-year lease term. The Company terminated its lease in May 2018 and vacated the premise.

 

  (c.) On April 23, 2018, the Company entered into a sublease agreement for office space in New Jersey commencing on April 23, 2018 for a nine-month lease term. The monthly rental expense is $833.33.

 

13. CONCENTRATION OF RISKS

 

  A. Major Customer

 

The Company has certain customers who represented 10% or more of the Company’s total sales. For the nine-month period ended September 30, 2018, the Company generated service revenue from one customer which represented 100% of the revenue. For the nine-month period ended September 30, 2017, the Company generated service revenue from three customers which represented 33%, 30%, and 35% of the revenue. The Company is unable to forecast if re-occurring services revenue will be generated from these customers.

 

  B. Major Vendors and Accounts Payable

 

The Company has certain vendors who represented 10% or more of the Company’s total cost of sales or expenses, or whose accounts payable balances individually represented 10% or more of the Company’s total accounts payable. For the nine-month period ended September 30, 2018, there was no concentration in any specific vendor. For the nine-month period ended September 30, 2017, two vendors accounted for 20% and 80% of accounts payable, respectively.

 

  C. Credit Risk

 

The Company maintains cash balances at several financial institutions located in the United States and the PRC. Accounts located in the United States are insured by the Federal Deposit Insurance Corporation up to $100,000. Accounts located outside of the United States are not insured and may be subject to such risk.

 

14. SUBSEQUENT EVENT

 

Management evaluated all events subsequent to the balance sheet date through to November 19, 2018, the date the financial statements were available to be issued and determined there are no events to report.

 

F-19

 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion and analysis of our results of operations and financial condition since the Company’s inception should be read in conjunction with our financial statements and the notes to those financial statements that are included elsewhere in this quarterly report. All statements, other than statements of historical facts, included in this report are forward-looking statements. When used in this report, the words “may,” “will,” “should,” “would,” “anticipate,” “estimate,” “possible,” “expect,” “plan,” “project,” “continuing,” “ongoing,” “could,” “believe,” “predict,” “potential,” “intend,” and similar expressions are intended to identify forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks and uncertainties include, but are not limited to, availability of additional equity or debt financing, changes in sales or industry trends, competition, retention of senior management and other key personnel, availability of materials or components, ability to make continued product innovations, adverse results of lawsuits against us and currency exchange rates. Forward-looking statements are based on assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. Readers of this report are cautioned not to place undue reliance on these forward-looking statements, as there can be no assurance that these forward-looking statements will prove to be accurate and speak only as of the date hereof. Management undertakes no obligation to publicly release any revisions to these forward-looking statements that may reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. This cautionary statement is applicable to all forward-looking statements contained in this report.

 

Overview of Business

 

The Company is a development stage in the business of design, development, and proliferation of next generation debit and credit cards for financial institutions employing innovative secured encryption technology transmitted via audio wave technology. The Company has partnered with China Union Pay and China Construction Bank under a pilot program to develop its audio bank cards and market to the end using bank customers and business operators to adopt the next generation of bank cards. The Company is developing point of sale and commercial interfaces via software and other solutions to generate demand for these new audio cards as a value-added alternative to current generation debit and credit cards.

 

Critical Accounting Policies

 

We prepare our consolidated financial statements in conformity with GAAP, which requires management to make certain estimates and apply judgments. We base our estimates and judgments on historical experience, current trends and other factors that management believes to be important at the time the consolidated financial statements are prepared. Due to the need to make estimates about the effect of matters that are inherently uncertain, materially different amounts could be reported under different conditions or using different assumptions. On a regular basis, we review our critical accounting policies and how they are applied in the preparation of our consolidated financial statements.

 

While we believe that the historical experience, current trends and other factors considered support the preparation of our consolidated financial statements in conformity with GAAP, actual results could differ from our estimates and such differences could be material.

 

  A. Method of Accounting

 

The Company maintains its general ledger and journals with the accrual method of accounting for financial reporting purposes. The financial statements and notes are representations of management. Accounting policies adopted by the Company conform to generally accepted accounting principles in the United States of America and have been consistently applied in the presentation of financial statements.

 

  B. Basis of Presentation

 

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”).

 

2

 

 

  C. Principles of Consolidation

 

The consolidated financial statements include the accounts of the Company, its subsidiaries for which the Company is the primary beneficiary. All significant inter-company accounts and transactions have been eliminated. The consolidated financial statements include 100% of assets, liabilities, and net income or loss of those wholly-owned subsidiaries.

 

As of September 30, 2018, the detailed identities of the consolidating subsidiaries are as follows:

 

  Name of Company   Place of incorporation   Attributable equity interest %     Registered capital  
  EGOOS Mobile Technology Company Limited (“EGOOS BVI”)   BVI     100 %   $ 1  
  EGOOS Mobile Technology Company Limited (“EGOOS HK”)   Hong Kong     100 %     1,290  
  Move the Purchase Consulting Management (Shenzhen) Co., Ltd. (“WOFE”)   P.R.C. (WOFE)     100 %     -  
  Guangzhou Yuzhi Information Technology Co., Ltd. (“GZYZ”)   P.R.C.     100 %     150,527  
  Shenzhen Qianhai Exce-card Technology Co., Ltd. (“SQEC”)   P.R.C.     100 %     150,527  
  Guangzhou Rongsheng Information Technology Co., Ltd. (“GZRS”)   P.R.C.     100 %     1,505,267  

 

  D. Unaudited Interim Financial Information

 

These unaudited interim condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial reporting and the rules and regulations of the Securities and Exchange Commission that permit reduced disclosure for interim periods. Therefore, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. In the opinion of management, all adjustments of a normal recurring nature necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented have been made. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the year ending December 31, 2018.

 

3

 

 

The consolidated balance sheets and certain comparative information as of December 31, 2017 are derived from the audited consolidated financial statements and related notes for the year ended December 31, 2017 (“2017 Annual Financial Statements”), included in the Company’s 2017 Annual Report on Form 10-K. These unaudited interim condensed consolidated financial statements should be read in conjunction with the 2017 Annual Financial Statements.

 

  E. Use of estimates

 

The preparation of the 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 disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates are used for, but not limited to, the accounting for certain items such as allowance for doubtful accounts, depreciation and amortization, impairment, inventory allowance, taxes and contingencies.

 

  F. Contingencies

 

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company’s management evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought.

 

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed.

 

Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.

 

  G. Cash and cash equivalents

 

The Company classifies the following instruments as cash and cash equivalents: cash on hand, unrestricted bank deposits, and all highly liquid investments purchased with original maturities of three months or less.

 

  H. Accounts receivable

 

Trade receivables are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An estimate for doubtful accounts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred.

 

4

 

 

  I. Other receivables 

 

Other receivables are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An allowance for doubtful accounts is made when recovery of the full amount is doubtful.

 

  J. Property, plant and equipment

 

Plant and equipment are carried at cost less accumulated depreciation. Depreciation is provided over their estimated useful lives, using the straight-line method with a salvage value of 10%. Estimated useful lives of the plant and equipment are as follows:

 

  Computer equipment 3 years
  Office furniture 5 years

 

The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statement of income. The cost of maintenance and repairs is charged to income as incurred, whereas significant renewals and betterments are capitalized.

 

  K. Accounting for the Impairment of Long-lived assets

 

The long-lived assets held by the Company are reviewed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 360-10-35, “Accounting for the Impairment or Disposal of Long-Lived Assets,” for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. It is reasonably possible that these assets could become impaired as a result of technology or other industry changes. Impairment is present if carrying amount of an asset is less than its undiscounted cash flows to be generated.

 

If an asset is considered impaired, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. The Company believes no impairment has occurred to its assets during 2018.

 

  L. Income taxes

 

The Company uses the accrual method of accounting to determine income taxes for the year. The Company has implemented FASB ASC 740 Accounting for Income Taxes. Income tax liabilities computed according to the United States, People’s Republic of China (PRC), and Hong Kong tax laws provide for the tax effects of transactions reported in the financial statements and consists of taxes currently due, plus deferred taxes, related primarily to differences arising from the recognition of expenses related to the depreciation of plant and equipment, amortization of intangible assets, and provisions for doubtful accounts between financial and tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will be either taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes also are recognized for operating losses that are available to offset future income taxes.

 

A valuation allowance is recognized for deferred tax assets if it is more likely than not, that the deferred tax assets will either expire before the Company is able to realize that tax benefit, or that future realization is uncertain.

 

5

 

 

  M. Stock-based compensation

 

The Company has elected to use the Black-Scholes-Merton (“BSM”) pricing model to determine the fair value of stock options on the dates of grant. Also, the Company recognizes stock-based compensation using the straight-line method over the requisite service period.

 

The Company values stock awards using the market price on or around the date the shares were awarded and includes the amount of compensation as a period compensation expense over the requisite service period.

 

For the three-month periods ended September 30, 2018 and 2017, $477,261 and $0 stock-based compensation was recognized.

 

For the nine-month periods ended September 30, 2018 and 2017, $1,351,848 and $0 stock-based compensation was recognized.

 

  N. Foreign currency translation

 

The accompanying financial statements are presented in United States dollars. The functional currency of the Company is the Renminbi (RMB) and Hong Kong dollar (HKD). The financial statements are translated into United States dollars from RMB at year-end exchange rates as to assets and liabilities and average exchange rates as to revenues and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred.

 

  Exchange Rates   9/30/2018     12/31/2017     9/30/2017  
  Year-end/period-end RMB : US$ exchange rate     6.8665       6.5064       6.6545  
  Average annual/period RMB : US$ exchange rate     6.5137       6.7570       6.8057  
                           
  Year-end/period-end HKD : US$ exchange rate     7.8277       7.8149       7.8110  
  Average annual/period HKD : US$ exchange rate     7.8398       7.7922       7.7870  

 

The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US Dollar at the rates used in translation.

 

  O. Revenue recognition

 

The Company recognizes services revenue when the following criteria have been met: 1.) it has agreed and entered into a contract for service with it customers, 2.) the contract has set forth a fixed fee for the services to be rendered, 3.) the Company has fully rendered service to its customers, and there are no additional obligations that exist that under the terms of the contract that the Company has not fulfilled, and 4.) the Company has either received payment, or reasonably expects payment from the customer in accordance to the payment terms set forth in the contract.

 

  P. Earnings per share

 

Basic earnings per share is computed on the basis of the weighted average number of common stock outstanding during the period. Diluted earnings per share is computed on the basis of the weighted average number of common stock and common stock equivalents outstanding. Dilutive securities having an anti-dilutive effect on diluted earnings per share are excluded from the calculation.

 

Dilution is computed by applying the treasury stock method for options and warrants. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

 

6

 

 

  Q. Comprehensive loss

 

Comprehensive income (loss) is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. The Company presents components of comprehensive income with equal prominence to other financial statements. The Company’s current component of other comprehensive income is the foreign currency translation adjustment.

 

  R. Subsequent events

 

The Company evaluates subsequent events that have occurred after the balance sheet date but before the financial statements are issued. There are two types of subsequent events: (1) recognized, or those that provide additional evidence with respect to conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements, and (2) non-recognized, or those that provide evidence with respect to conditions that did not exist at the date of the balance sheet but arose subsequent to that date.

 

Management evaluated all events subsequent to the balance sheet date through to November 19, 2018, the date the financial statements were available to be issued and determined there are no events to report.

 

  S. Recent accounting pronouncements

 

In January 2017, the Financial Accounting Standard Board (“FASB”) issued guidance, which simplifies the accounting for goodwill impairment. The updated guidance eliminates Step 2 of the impairment test, which requires entities to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. The Company is still assessing the impact of this pronouncement to its financial statements.

 

As of September 30, 2018, except for the above, there are no recently issued accounting standards not yet adopted that would have a material effect on the Company’s financial statements.

 

  T. Fair Value of Financial Instruments

 

ASC 825, Financial Instruments, requires that the Company discloses estimated fair values of financial instruments. The carrying amounts reported in the balance sheets for current assets and current liabilities qualifying as financial instruments are a reasonable estimate of fair value.

 

The Company applies the provisions of ASC 820-10, Fair Value Measurements and Disclosures. ASC 820-10 defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. For certain financial instruments, including cash and cash equivalents, loan receivables and short-term bank loans, the carrying amounts approximate fair value due to their relatively short maturities. The three levels of valuation hierarchy are defined as follows:

 

  Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.

 

  Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

 

  Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.

 

7

 

 

The Company analyzes all financial instruments with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities from Equity,” and ASC 815.

 

The following tables present the Company’s financial assets and liabilities at fair value in accordance to ASC 820-10

 

  As of September 30, 2018:               
     Quoted in             
     Active Markets   Significant
Other
   Significant     
     for Identical   Observable   Unobservable     
     Assets   Inputs   Inputs     
     (Level 1)   (Level 2)   (Level 3)   Total 
  Financial assets:                    
  Cash  $10,179   $        -   $         -   $10,179 
  Total financial assets  $10,179   $-   $-   $10,179 
                       
  Financial liabilities:                    
  Capital lease  $-   $-   $-   $- 
  Total financial liabilities  $-   $-   $-   $- 

 

  As of December 31, 2017:               
     Quoted in             
     Active Markets   Significant
Other
   Significant     
     for Identical   Observable   Unobservable     
     Assets   Inputs   Inputs     
     (Level 1)   (Level 2)   (Level 3)   Total 
  Financial assets:                    
  Cash  $10,346   $      -   $        -   $10,346 
  Total financial assets  $10,346   $-   $-   $10,346 
                       
  Financial liabilities:                    
  Capital lease  $9,980   $-   $-   $9,980 
  Total financial liabilities  $9,980   $-   $-   $9,980 

 

8

 

 

Results of Operations

 

We are a development stage company and have generated minimal revenues from operations since our inception on November 11, 2013 to September 30, 2018. As of September 30, 2018, we had total assets of $108,556 and total liabilities of $1,311,917. We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.

 

We are in the process of developing our products and services. Consequently, we generated minimal revenues as of the date of this report. We have an accumulated deficit and have incurred operating losses since our inception and expect losses to continue during 2018. As of September 30, 2018, the Company had accumulated deficits of $27,152,332 and working capital deficit of current liabilities exceeding current assets by $1,260,159. The Company’s management plans to raise capital through public and private offerings to fund its business operations and to rely on officers and directors to perform essential functions with minimal expenditure and compensation. If we do not raise the money we need from public or private offerings, we will have to find alternative sources, such as loans or advances from our officers, directors or others. Such additional financing may not become available on acceptable terms and there can be no assurance that any additional financing that the Company obtains will be sufficient to meet its needs in the long term. Even if the Company is able to obtain additional financing, the terms of such financing may contain undue restrictions on our operations in the case of debt financing, or cause substantial dilution for our stockholders in the case of equity financing. If we require additional cash and cannot raise it, we will either have to suspend operations or cease business entirely.

 

Three Months ended September 30, 2018 and 2017

  

Revenue

 

We generated revenues from our audio banking card operations (including software and hardware) in the past. We have no revenues during this quarter ended September 30, 2018 as compared to $20,092 of revenues during the three months ended September 30, 2017. Our revenue decreased by $20,092, or 100% during the three-month periods ended September 30, 2018 and 2017 primarily because the sales department failed to meet the target.

 

Expenses

 

General and administrative and professional fee expenses were generally related to corporate overhead, financial and administrative contracted services, such as legal and accounting, developmental costs, and marketing expenses. During the three month periods ended September 30, 2018 and 2017, we incurred general and administrative expenses and professional fees of $548,900 and $244,950, respectively, which reflects an increase of $303,950 or approximately 124%. Such increase in our general and administrative expenses was primarily attributed to incurrence of certain stock compensation.

 

Nine Months ended June 30, 2018 and 2017

 

Revenue

 

We generated revenues from our audio banking card operations (including software and hardware) in the nine-month periods ended September 30, 2018 and 2017. We have earned $86,900 during the nine months ended September 30, 2018 as compared to $229,153 of revenues during the nine months ended September 30, 2017. Our revenue decreased by $142,253, or 62% during the nine-month periods ended September 30, 2018 and 2017 primarily because the sales department failed to meet the target.

 

Expenses

 

General, administrative and professional fee and expenses were generally related to corporate overhead, financial and administrative contracted services, such as legal and accounting, developmental costs, and marketing expenses. During the nine month periods ended September 30, 2018 and 2017, we incurred general and administrative expenses and professional fees of $1,754,251 and $802,121, respectively, which reflects an increase of $952,130 or approximately 119%. Such increase in our general and administrative expenses was primarily attributed to the incurrence of equity compensation.

 

9

 

 

LIQUIDITY AND CAPITAL RESOURCES

 

Our primary liquidity and capital resource needs are to finance the costs of our operations, make capital expenditures and service our debt. We continue to be dependent on our ability to generate revenues, positive cash flows and additional financing.

 

Cash Flows

 

Cash Flow from Operating Activities

 

During the nine months ended September 30, 2018 and 2017, the net cash used in operating activities were $176,058 and $761,835, respectively. The decrease in net cash used in operating activities of $585,777 was primarily due to the stock compensation, impairment loss on intangible assets and increase in other payable.

 

Cash Flow from Investing Activities

 

During the nine months ended September 30, 2018 and 2017, the net cash used in investing activities was $0 and $52,117, reflecting a decrease of $52,117. Such decrease in net cash used in investing activities was caused by purchase of certain equipment in the nine months ended September 30, 2017.

 

Cash Flow from Financing Activities

 

During the nine months ended September 30, 2018 and 2017, the net cash generated from financing activities was $147,215 and $332,993, reflecting an decrease of $185,788. Our net cash generated from financing activities decreased mainly because the decline in related party payable.

 

Off-Balance Sheet Arrangements

 

As of September 30, 2018, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

 

Quantitative and Qualitative Disclosures About Market Risk

 

As a “smaller reporting company”, we are not required to provide the information required by this Item.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

Not applicable.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

We conducted an evaluation of the effectiveness of our “disclosure controls and procedures” (“Disclosure Controls”), as defined by Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, as of September 30, 2018, the end of the period covered by this Quarterly Report. The Disclosure Controls evaluation was done under the supervision and with the participation of management, including our chief executive officer and chief financial officer. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon this evaluation, our chief executive officer and chief financial officer concluded that, due to our limited internal accounting staff, our disclosure controls were not effective as of September 30, 2018, such information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to the president and treasurer, as appropriate to allow timely decisions regarding disclosure.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in the Company’s internal control over financial reporting that occurred during the period covered by this Quarterly Report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

10

 

 

PART II OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm business. We are currently not aware of any such legal proceedings or claims that will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.

 

ITEM 1A. RISK FACTORS

 

There have been no material changes for the risk factors disclosed in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed on April 16, 2018.

 

ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

Not applicable.

 

ITEM 3. DEFAULT UPON SENIOR SECURITIES.

 

Not applicable.

 

ITEM 4. MINE SAFETY DISCLOSURE.

 

Not applicable.

 

ITEM 5. OTHER INFORMATION.

 

Not applicable.

 

ITEM 6. EXHIBITS

 

The following exhibits are filed herewith:

 

Exhibit No.   Description
     
10.1   Convertible Note Exchange Agreement  by and among Wave Sync Corp,  Zaixian Wang and Mei Yang, dated March 17, 2017 (Incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the SEC on March 23, 2017)
31.1   Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
31.2   Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
32.1   Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2   Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS   XBRL Instance Document
101.SCH   XBRL Taxonomy Extension Schema Document
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document
101.LAB   XBRL Taxonomy Extension Label Linkbase Document
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document

 

11

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. 

 

  WAVE SYNC CORP.
     
November 19, 2018 By: /s/ Mei Yang
    Mei Yang
    Chief Executive Officer
    (Principal Executive Officer)

 

12

 

 

EX-31.1 2 f10q0918ex31-1_wavesync.htm CERTIFICATION

EXHIBIT 31.1

 

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

 

I, Mei Yang, certify that:

 

1 I have reviewed this Quarterly Report on Form 10-Q of Wave Sync Corp.;
   
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(s) 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 Quarterly 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(s) 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 19, 2018 By /s/ Mei Yang
    Mei Yang
    Chief Executive Officer
    (Principal Executive Officer)

EX-31.2 3 f10q0918ex31-2_wavesync.htm CERTIFICATION

EXHIBIT 31.2

 

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

 

I, Hon Man Yun, certify that:

 

1 I have reviewed this Quarterly Report on Form 10-Q of Wave Sync Corp.;
   
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(s) 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 Quarterly 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(s) 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 19, 2018  By /s/ Hon Man Yun
    Hon Man Yun
    Chief Financial Officer
    (Principal Finance and Accounting Officer)

 

EX-32.1 4 f10q0918ex32-1_wavesync.htm CERTIFICATION

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO

SECTION 906 OF SARBANES-OXLEY ACT OF 2002

 

I, Mei Yang, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

 

  1. The Quarterly Report on Form 10-Q of Wave Sync Corp. (the “Company”) for the period ended September 30, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (U.S.C. 78m or 78o(d)); and
     
  2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

  

Date: November 19, 2018 By: /s/ Mei Yang 
    Mei Yang
   

Chief Executive Officer

(Principal Executive Officer)

 

The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of a separate disclosure document.

EX-32.2 5 f10q0918ex32-2_wavesync.htm CERTIFICATION

EXHIBIT 32.2

 

CERTIFICATION PURSUANT TO

SECTION 906 OF SARBANES-OXLEY ACT OF 2002

 

I, Hon Man Yun, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

 

  1. The Quarterly Report on Form 10-Q of Wave Sync Corp. (the “Company”) for the period ended September 30, 2018 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (U.S.C. 78m or 78o(d)); and
     
  2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: November 19, 2018 By: /s/ Hon Man Yun
    Hon Man Yun
   

Chief Financial Officer

(Principal Financial and Accounting Officer)

 

The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of a separate disclosure document.

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Nov. 13, 2018
Document and Entity Information [Abstract]    
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Trading Symbol WAYS  
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Dec. 31, 2017
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Other receivable 624 7,343
Advance to suppliers 34,277 36,175
Prepaid expenses 9,346
Prepaid taxes 6,679 3,927
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Non-Current Assets    
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Intangible asset, net 3,952,052
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Total Assets 108,556 4,086,466
Current Liabilities    
Capital lease - current portion 9,980
Accounts payable 266,779 159,766
Taxes payable 6,145
Other payables 194,475 66,142
Accrued expenses 18,268 37,440
Related party payables 832,395 685,180
Total Current Liabilities 1,311,917 964,653
Total Liabilities 1,311,917 964,653
Commitment and contingencies
Stockholders' Deficiency/Equity    
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Additional paid in capital 26,128,062 24,776,214
Accumulated deficit (27,152,332) (21,452,071)
Accumulated other comprehensive loss (200,118) (223,357)
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Dec. 31, 2017
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3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Income Statement [Abstract]        
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Gross profit   20,084 1,583 228,319
Operating expenses        
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Other income (expenses)        
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Other expense     (3,947,620)  
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Loss before income taxes (548,900) (194,221) (5,700,262) (440,378)
Income tax
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Other comprehensive loss        
Foreign currency translation adjustment (75,443) 230 23,239 7,519
Comprehensive loss $ (624,343) $ (193,991) $ (5,677,023) $ (432,859)
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Diluted $ (0.03) $ (0.01) $ (0.27) $ (0.02)
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Diluted 21,027,713 21,027,162 21,027,713 20,721,968
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9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES    
Net loss $ (5,700,262) $ (440,378)
Depreciation and amortization 4,921 13,427
Stock compensation 1,351,848
Impairment loss on intangible assets 3,952,175
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Decrease/(increase) in accounts receivable 5,825 (250)
Decrease/(increase) in other receivables 895 (9,503)
Increase in related party receivables (152,028)
Decrease in advance to suppliers 1,897 14,236
Decrease/(increase) in prepaid expenses and taxes 6,594 (1,413)
Increase/(decrease) in accounts payable 107,013 (72,382)
Decrease in accrued expenses (29,151) (19,648)
Increase/(decrease) in other payables 128,332 (94,466)
Decrease in taxes payable (6,145) 570
Net cash provided by (used in) operating activities (176,058) (761,835)
CASH FLOWS FROM INVESTING ACTIVITIES    
Purchase of equipment (63,912)
Decrease in deposits 11,795
Net cash generated from investing activities (52,117)
CASH FLOWS FROM FINANCING ACTIVITIES    
Increase in related party payables 147,215 332,993
Net cash generated from financing activities 147,215 332,993
Net decrease in cash and cash equivalents (28,843) (480,959)
Effect of foreign currency translation on cash and cash equivalents 28,676 7,465
Cash and cash equivalents, beginning balance 10,346 480,609
Cash and cash equivalents, ending balance 10,179 7,115
SUPPLEMENTAL DISCLOSURES:    
Interest received 26 2,076
Interest paid
Income tax paid
NON-CASH FINANCING ACTIVITIES:    
Related party payable formalized into convertible note 2,213,673
Issuance of stock for conversion of convertible note 2,213,673
Related party receivable formalized into intangible assets 1,502,742
Purchase of intangible asset 7,728,167
Increase in additional paid in capital from purchase of intangible asset $ 6,225,425
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The Company and Principal Business Activities
9 Months Ended
Sep. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
THE COMPANY AND PRINCIPAL BUSINESS ACTIVITIES
1.THE COMPANY AND PRINCIPAL BUSINESS ACTIVITIES

 

Wave Sync Corp. formerly known as China Bio-Energy Corp. (the “Company”), and prior to that known as China INSOnline Corp., was incorporated on December 23, 1988 as Lifequest Medical, Inc., a Delaware corporation.

 

In June 2010, the Company ceased all operations conducted by its then subsidiaries: Ever Trend Investment Limited, Run Ze Yong Cheng (Beijing) Technology, San Teng Da Fei Technology, and Guang Hua Insurance Agency (“Ever Trend Group”); on January 27, 2015, the Company announced the completion of the disposition of the aforementioned subsidiaries. Accordingly, the Company has excluded the accounts of Ever Trend Group in these financial statements and the accompanying notes contained herein.

 

On November 12, 2010, the Company entered into a share exchange agreement with Ding Neng Holdings Ltd, an investment holdings company incorporated in the British Virgin Islands (“Ding Neng Holdings”); the share exchange agreement was amended on December 6, 2010, whereby the Company, under the share exchange agreement and its related amendment, would have contemplated acquiring 100% of Ding Neng Holdings in exchange for the issuance of 26,162,505 shares of the Company’s common stock, par value $0.001. Under the share exchange agreement, the Company would have contemplated owning and operating Ding Neng Holdings and Ding Neng Holdings’ directly, and indirectly held subsidiaries: Ding Neng Bio-technology Co., Ltd. (“Ding Neng HK”), Zhangzhou Fuhua Biomass Energy Technology Co., Ltd. (“WOFE”), and Ding Neng Bio-tech. Ding Neng HK was incorporated under the laws of Hong Kong on September 10, 2010. Ding Neng HK did not have any operations. Ding Neng HK has been delinquent with its annual regulatory filings in Hong Kong, and should be considered dormant and defunct. Ding Neng HK was wholly-owned by Ding Neng Holdings. Zhangzhou Fuhua Biomass Energy Technology Co., Ltd. (“WFOE”) was incorporated as a wholly-foreign owned entity under the laws of the People’s Republic of China (“PRC”), on November 2, 2010. WFOE was wholly-owned by Ding Neng HK. Ding Neng Bio-tech was incorporated under the laws of the PRC on December 8, 2006. It was located in Zhangzhou city Fujian Province of PRC. Ding Neng Bio-tech was engaged in the production, refinement and distribution of bio-diesel fuel in Southern China. Ding Neng Bio-tech operated a biodiesel manufacturing facility in Zhangzhou city. On October 28, 2010, WFOE and Ding Neng Bio-tech entered into a set of variable interest entity agreements that included: (1) a Consulting Service Agreement with Ding Neng Bio-tech, which entitled WFOE to receive substantially all of the economic benefits of Ding Neng Bio-tech in consideration for services provided by WFOE to Ding Neng Bio-tech, (2) an Option Agreement with Xinfeng Nie, Sanfu Huang, and Shunlong Hu (the shareholders of Ding Neng Bio-tech) allowing the WFOE to acquire all the shares of Ding Neng Bio-tech as permitted by PRC laws, (3) a Voting Rights Proxy Agreement that provides WFOE with the all voting rights of the Ding Neng Bio-tech shareholders, and (4) an Equity Pledge Agreement that pledges the shares in Ding Neng Bio-tech to WFOE (VIE Agreements). These VIE Agreements granted effective control of Ding Neng Bio-tech to WFOE. On June 4, 2015, WFOE filed a civil action in Haicang District People’s Court of Xiamen, Fujian, PRC (the “Court”) against Ding Neng Bio-tech, alleging that the purposes of those certain executed VIE Agreements entered into by WFOE and Ding Neng Bio-Tech on October 28, 2010, had been frustrated, and that these VIE Agreements should be terminated. WFOE alleged that Ding Neng Bio-Tech did not make any payment of service fees to WFOE, and that Ding Neng Bio-Tech failed to perfect the security interest in the pledged stocks. On July 14, 2015, this case was settled via in-court mediation directed by the Court. As a result, WFOE and Ding Neng Bio-Tech entered into binding settlement, among other things, (i) to terminate the VIE Agreements, and (ii) that the litigation fee in the amount of RMB10,000 (approximately $1,610.50) would be borne by Ding Neng Bio-Tech. Ding Neng Holdings is delinquent with its regulatory filings and annual fees to the British Virgin Islands; accordingly, the Ding Neng Holdings should be considered dormant and defunct.

 

Given that the Company has not been able to exercise effective control over Ding Neng Bio-Tech or to access Ding Neng Bio-tech’s financial information since 2011, and the VIE Agreements were terminated, the Company has excluded the accounts of Ding Neng Bio-Tech’s in these financial statements and the accompanying notes contained herein; the exclusion of such accounts is considered as a type two material subsequent event that occurred prior to the issuance of the financial statements but after the balance sheets dates that required material adjustments to the financial statements presented. Ding Neng Holdings is delinquent and defunct; the Company has determined that the Company was never registered as the sole shareholder of Ding Neng Holdings pursuant to the share exchange agreement dated November 12, 2010, and amended December 6, 2010; accordingly, the Company has excluded the accounts of Ding Neng and its subsidiaries in these financial statements and the accompanying notes as contained herein; the exclusion of such accounts is considered as a type two material subsequent event that occurred prior to the issuance of the financial statements but after the balance sheets dates that required material adjustments to the financial statements presented. The Company accounted for the issuance of shares to the shareholders of Ding Neng Holdings under the contemplated share exchange transaction as a recapitalization of the Company under reverse take-over accounting; accordingly, the Company’s historical stockholders’ equity has been retroactively restated to the first period presented; as a result of the Company not being updated to Ding Neng Holdings shareholder register, and that Ding Neng Holdings being defunct, the Company has written off all investments made in Ding Neng as loss on investment in subsidiary.

 

In connection with the share exchange agreement with the shareholders of Ding Neng Holdings that contemplated the acquisition of Ding Neng Holdings and its subsidiaries, the Company elected to adopt the fiscal year used by Ding Neng Holdings, which was a calendar year; accordingly, the Company’s financial statements presented herein have been, and on a go-forward basis, will be prepared using a December 31 year-end date, and each operating period will cover twelve full calendar months.

 

Share Purchase Agreement

 

On October 19, 2015, the Company entered into a Share Purchase Agreement (the “Share Purchase Agreement”) with EGOOS Mobile Technology Company Limited, a British Virgin Islands holding company (“EGOOS BVI”), which owns 100% of EGOOS Mobile Technology Company Limited, a Hong Kong company (“EGOOS HK”), which owns 100% of Move the Purchase Consulting Management (Shenzhen) Co., Ltd. (“WOFE”), a foreign investment enterprise organized under the laws of the PRC, and which has, through various contractual agreements known as variable interest entity (“VIE”) agreements.  These VIE agreements provide the WOFE management control and the rights to the profits of Guangzhou Yuzhi Information Technology Co., Ltd., a corporation organized under the laws of the PRC as a variable interest entity (“GZYZ”), which owns 100% of Shenzhen Qianhai Exce-card Technology Co., Ltd., a Chinese corporation (“SQEC”), which owns 100% of Guangzhou Rongsheng Information Technology Co., Ltd., a Chinese corporation (“GZRS”) and the sole shareholder of EGOOS BVI.  The VIE agreements include: (1) an Exclusive Service Agreement between WOFE and GZYZ, which entitles WOFE to receive substantially all of the economic benefits of GZYZ in consideration for services provided by WOFE to GZYZ, (2) a Call Option Agreement with the shareholders of GZYZ, Yang Wenbin and Li Ping, allowing the WOFE to acquire all the shares of GZYZ as permitted by PRC laws, (3) a Voting Rights Proxy Agreement that provides WOFE with the all voting rights of the GZYZ’s shareholders, and (4) an Equity Pledge Agreement that pledges the shares in GZYZ to WOFE.  Management has assessed the terms of the VIE agreements and determined that the Company is the primary beneficiary of those agreements based on Management’s ability to direct the use and disposition of GZYZ assets including the payment of future profits to the Company.  Management also determined the Company has implicitly provided financial support to GYZY; accordingly, Management believes that GZYZ and its subsidiaries should be consolidated as variable interest entities of the Company.

 

SQEC was incorporated on November 11, 2013. The Company is in the business of design, development, and proliferation of next generation debit and credit cards for financial institutions employing innovative secured encryption technology transmitted via audio wave technology; the Company intends to work with China Union Pay and China Construction Bank under a potential pilot program to develop and market to end user bank customers and business operators to adopt these next generation of cards by developing point of sale and commercial interfaces via software and other solutions to generate demand for these cards as a value-added alternative to current generation debit and credit cards.

 

On January 28, 2015, ownership of SQEC’s was transferred from Bao, Shanshan to Xiang, Zuyue for a consideration of approximately $1,629,062 (RMB 10,000,000). Simultaneously, Xiang, Zuyue transferred 40% of ownership to Li, Na for a consideration of $651,625 (RMB 4,000,000). On July 24, 2015, SQEC entire ownership was collectively transferred from Xiang, Zuyue and Li, Na to Guangzhou Yuzhi Information Technology Co. Ltd. (“GZYZ”) for a consideration of approximately $1,629,062 (RMB 10,000,000).

 

On March 16, 2015, the GZRS was incorporated as a wholly-owned subsidiary of SQEC. GZRS has an authorized capital of RMB 1,000,000. As of the date of this report, GZRS has not been capitalized.

 

Pursuant to the Share Purchase Agreement the Company issued a convertible note to EGOOS BVI’s sole shareholder for 100% equity interest in EGOOS BVI. The note is convertible into 15,000,000 shares of the Company’s common stock contingent on the following conditions: (i) the Company has effectuated a reverse split of all of the issued and outstanding Common Stock as of the date of the issuance of the note (the “Reverse Split”) and (ii) the average closing price of the common stock for 3 business days within any period of 10 consecutive business days exceeds $1.00 per share (the “Conversion Conditions”). Upon conversion of the note, the existing shareholders of the Registrant will own an aggregate of 24.7% of the post-acquisition entity. The note was issued at Par, it is unsecured, interest free, and is due on the second anniversary of the issuance date of the note. In accounting for the note, the Company has assumed that the note does not carry any discount from face that requires accretion as interest expense to its results of operations, including any potential beneficial conversion features. On January 26, 2016, the reverse split was effectuated, and subsequently, on February 4, 2016, the convertible promissory note was converted into 15 million newly issued shares of the Company’s common stock. The conversion of the promissory note has been recognized retroactively to the first period presented as a component of the reverse takeover transactions detailed below.

 

The consolidated financial statements were prepared assuming that the Company has controlled EGOOS BVI and its intermediary holding companies, operating subsidiaries, and variable interest entities: EGOOS HK, WOFE, GZYZ, SQEC, and GZRS from the first period presented. The transactions detailed above have been accounted for as reverse takeover transactions and a recapitalization of the Company, including the conversion of the convertible promissory note; accordingly, the Company (the legal acquirer) is considered the accounting acquiree and EGOOS BVI (the legal acquiree) is considered the accounting acquirer. No goodwill has been recorded. As a result of this transaction, the Company is deemed to be a continuation of the business of EGOOS BVI and SQEC.

XML 18 R7.htm IDEA: XBRL DOCUMENT v3.10.0.1
Summary of Significant Accounting Policies
9 Months Ended
Sep. 30, 2018
Accounting Policies [Abstract]  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

  A. Method of Accounting

 

The Company maintains its general ledger and journals with the accrual method of accounting for financial reporting purposes. The financial statements and notes are representations of management. Accounting policies adopted by the Company conform to generally accepted accounting principles in the United States of America and have been consistently applied in the presentation of financial statements.

 

  B. Basis of Presentation

 

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”).

 

  C. Principles of Consolidation

 

The consolidated financial statements include the accounts of the Company, its subsidiaries for which the Company is the primary beneficiary. All significant inter-company accounts and transactions have been eliminated. The consolidated financial statements include 100% of assets, liabilities, and net income or loss of those wholly-owned subsidiaries.

 

As of September 30, 2018, the detailed identities of the consolidating subsidiaries are as follows:

 

  Name of Company   Place of incorporation   Attributable equity interest %     Registered capital  
  EGOOS Mobile Technology Company Limited (“EGOOS BVI”)   BVI     100 %   $ 1  
  EGOOS Mobile Technology Company Limited (“EGOOS HK”)   Hong Kong     100 %     1,290  
  Move the Purchase Consulting Management (Shenzhen) Co., Ltd. (“WOFE”)   P.R.C. (WOFE)     100 %     -  
  Guangzhou Yuzhi Information Technology Co., Ltd. (“GZYZ”)   P.R.C.     100 %     150,527  
  Shenzhen Qianhai Exce-card Technology Co., Ltd. (“SQEC”)   P.R.C.     100 %     150,527  
  Guangzhou Rongsheng Information Technology Co., Ltd. (“GZRS”)   P.R.C.     100 %     1,505,267  

 

  D. Unaudited Interim Financial Information

 

These unaudited interim condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial reporting and the rules and regulations of the Securities and Exchange Commission that permit reduced disclosure for interim periods. Therefore, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. In the opinion of management, all adjustments of a normal recurring nature necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented have been made. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the year ending December 31, 2018.

 

The consolidated balance sheets and certain comparative information as of December 31, 2017 are derived from the audited consolidated financial statements and related notes for the year ended December 31, 2017 (“2017 Annual Financial Statements”), included in the Company’s 2017 Annual Report on Form 10-K. These unaudited interim condensed consolidated financial statements should be read in conjunction with the 2017 Annual Financial Statements.

 

  E. Use of estimates

 

The preparation of the 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 disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates are used for, but not limited to, the accounting for certain items such as allowance for doubtful accounts, depreciation and amortization, impairment, inventory allowance, taxes and contingencies.

 

  F. Contingencies

 

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company’s management evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought.

 

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed.

 

Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.

 

  G. Cash and cash equivalents

 

The Company classifies the following instruments as cash and cash equivalents: cash on hand, unrestricted bank deposits, and all highly liquid investments purchased with original maturities of three months or less.

 

  H. Accounts receivable

 

Trade receivables are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An estimate for doubtful accounts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred.

  

  I. Other receivables 

 

Other receivables are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An allowance for doubtful accounts is made when recovery of the full amount is doubtful.

 

  J. Property, plant and equipment

 

Plant and equipment are carried at cost less accumulated depreciation. Depreciation is provided over their estimated useful lives, using the straight-line method with a salvage value of 10%. Estimated useful lives of the plant and equipment are as follows:

 

  Computer equipment 3 years
  Office furniture 5 years

 

The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statement of income. The cost of maintenance and repairs is charged to income as incurred, whereas significant renewals and betterments are capitalized.

 

  K. Accounting for the Impairment of Long-lived assets

 

The long-lived assets held by the Company are reviewed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 360-10-35, “Accounting for the Impairment or Disposal of Long-Lived Assets,” for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. It is reasonably possible that these assets could become impaired as a result of technology or other industry changes. Impairment is present if carrying amount of an asset is less than its undiscounted cash flows to be generated.

 

If an asset is considered impaired, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. The Company believes no impairment has occurred to its assets during 2018.

 

  L. Income taxes

 

The Company uses the accrual method of accounting to determine income taxes for the year. The Company has implemented FASB ASC 740 Accounting for Income Taxes. Income tax liabilities computed according to the United States, People’s Republic of China (PRC), and Hong Kong tax laws provide for the tax effects of transactions reported in the financial statements and consists of taxes currently due, plus deferred taxes, related primarily to differences arising from the recognition of expenses related to the depreciation of plant and equipment, amortization of intangible assets, and provisions for doubtful accounts between financial and tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will be either taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes also are recognized for operating losses that are available to offset future income taxes.

 

A valuation allowance is recognized for deferred tax assets if it is more likely than not, that the deferred tax assets will either expire before the Company is able to realize that tax benefit, or that future realization is uncertain.

 

  M. Stock-based compensation

 

The Company has elected to use the Black-Scholes-Merton (“BSM”) pricing model to determine the fair value of stock options on the dates of grant. Also, the Company recognizes stock-based compensation using the straight-line method over the requisite service period.

 

The Company values stock awards using the market price on or around the date the shares were awarded and includes the amount of compensation as a period compensation expense over the requisite service period.

 

For the three-month periods ended September 30, 2018 and 2017, $477,261 and $0 stock-based compensation was recognized.

 

For the nine-month periods ended September 30, 2018 and 2017, $1,351,848 and $0 stock-based compensation was recognized.

 

  N. Foreign currency translation

 

The accompanying financial statements are presented in United States dollars. The functional currency of the Company is the Renminbi (RMB) and Hong Kong dollar (HKD). The financial statements are translated into United States dollars from RMB at year-end exchange rates as to assets and liabilities and average exchange rates as to revenues and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred.

 

  Exchange Rates   9/30/2018     12/31/2017     9/30/2017  
  Year-end/period-end RMB : US$ exchange rate     6.8665       6.5064       6.6545  
  Average annual/period RMB : US$ exchange rate     6.5137       6.7570       6.8057  
                           
  Year-end/period-end HKD : US$ exchange rate     7.8277       7.8149       7.8110  
  Average annual/period HKD : US$ exchange rate     7.8398       7.7922       7.7870  

 

The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US Dollar at the rates used in translation.

 

  O. Revenue recognition

 

The Company recognizes services revenue when the following criteria have been met: 1.) it has agreed and entered into a contract for service with it customers, 2.) the contract has set forth a fixed fee for the services to be rendered, 3.) the Company has fully rendered service to its customers, and there are no additional obligations that exist that under the terms of the contract that the Company has not fulfilled, and 4.) the Company has either received payment, or reasonably expects payment from the customer in accordance to the payment terms set forth in the contract.

 

  P. Earnings per share

 

Basic earnings per share is computed on the basis of the weighted average number of common stock outstanding during the period. Diluted earnings per share is computed on the basis of the weighted average number of common stock and common stock equivalents outstanding. Dilutive securities having an anti-dilutive effect on diluted earnings per share are excluded from the calculation.

 

Dilution is computed by applying the treasury stock method for options and warrants. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

 

  Q. Comprehensive loss

 

Comprehensive income (loss) is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. The Company presents components of comprehensive income with equal prominence to other financial statements. The Company’s current component of other comprehensive income is the foreign currency translation adjustment.

 

  R. Subsequent events

 

The Company evaluates subsequent events that have occurred after the balance sheet date but before the financial statements are issued. There are two types of subsequent events: (1) recognized, or those that provide additional evidence with respect to conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements, and (2) non-recognized, or those that provide evidence with respect to conditions that did not exist at the date of the balance sheet but arose subsequent to that date.

 

  S. Recent accounting pronouncements

 

In January 2017, the Financial Accounting Standard Board (“FASB”) issued guidance, which simplifies the accounting for goodwill impairment. The updated guidance eliminates Step 2 of the impairment test, which requires entities to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. The Company is still assessing the impact of this pronouncement to its financial statements.

 

As of September 30, 2018, except for the above, there are no recently issued accounting standards not yet adopted that would have a material effect on the Company’s financial statements.

 

  T. Fair Value of Financial Instruments

 

ASC 825, Financial Instruments, requires that the Company discloses estimated fair values of financial instruments. The carrying amounts reported in the balance sheets for current assets and current liabilities qualifying as financial instruments are a reasonable estimate of fair value.

 

The Company applies the provisions of ASC 820-10, Fair Value Measurements and Disclosures. ASC 820-10 defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. For certain financial instruments, including cash and cash equivalents, loan receivables and short-term bank loans, the carrying amounts approximate fair value due to their relatively short maturities. The three levels of valuation hierarchy are defined as follows:

 

  Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.

 

  Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

 

  Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.

 

The Company analyzes all financial instruments with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities from Equity,” and ASC 815.

 

The following tables present the Company’s financial assets and liabilities at fair value in accordance to ASC 820-10

 

  As of September 30, 2018:               
     Quoted in             
     Active Markets   Significant
Other
   Significant     
     for Identical   Observable   Unobservable     
     Assets   Inputs   Inputs     
     (Level 1)   (Level 2)   (Level 3)   Total 
  Financial assets:                    
  Cash  $10,179   $      -   $      -   $10,179 
  Total financial assets  $10,179   $-   $-   $10,179 
                       
  Financial liabilities:                    
  Capital lease  $-   $-   $-   $- 
  Total financial liabilities  $-   $-   $-   $- 

 

  As of December 31, 2017:               
     Quoted in             
     Active Markets   Significant
Other
   Significant     
     for Identical   Observable   Unobservable     
     Assets   Inputs   Inputs     
     (Level 1)   (Level 2)   (Level 3)   Total 
  Financial assets:                    
  Cash  $10,346   $       -   $       -   $10,346 
  Total financial assets  $10,346   $-   $-   $10,346 
                       
  Financial liabilities:                    
  Capital lease  $9,980   $-   $-   $9,980 
  Total financial liabilities  $9,980   $-   $-   $9,980 
XML 19 R8.htm IDEA: XBRL DOCUMENT v3.10.0.1
Related Party Payables
9 Months Ended
Sep. 30, 2018
Related Party Transactions [Abstract]  
RELATED PARTY PAYABLES
3.RELATED PARTY PAYABLES

 

Related party payable consisted of the following:

 

     9/30/2018   12/31/2017 
           
  Beijing Yuxin Shangfang Technology Co., Ltd.  $286,306   $302,155 
  Xiang, Zuyue, director of SQEC and shareholder   10,827    60,198 
  Lim, Jehn Ming, shareholder of EGOOS BVI   1,289    1,289 
  Wang, Yue, director of EGOOS HK   161,233    161,942 
  Yang, Mei, shareholder   368,963    157,110 
  Li, Ping, director of WOFE   3,777    2,486 
     $832,395   $685,180 

 

The amounts were provided as working capital to financial the Company’s operations. The amounts are unsecured, interest-free and due on demand.

XML 20 R9.htm IDEA: XBRL DOCUMENT v3.10.0.1
Property, Plant and Equipment
9 Months Ended
Sep. 30, 2018
Property, Plant and Equipment [Abstract]  
PROPERTY, PLANT AND EQUIPMENT
4. PROPERTY, PLANT AND EQUIPMENT

 

Property, plant, and equipment consisted of the following as of September 30, 2018 and December 31, 2017:

 

     9/30/2018   12/31/2017 
  At Cost:          
  Machinery  $68,083   $71,852 
  Office equipment   18,346    19,362 
  Office furniture   12,741    13,446 
     $99,170   $104,660 
             
  Less: Accumulated depreciation   (42,373)   (37,383)
             
     $56,797   $67,277 

 

Depreciation expense for the three-month periods ended September 30, 2018 and 2017 was $756 and $7,606, respectively.

 

Depreciation expense for the nine-month periods ended September 30, 2018 and 2017 was $4,921 and $13,427, respectively.

XML 21 R10.htm IDEA: XBRL DOCUMENT v3.10.0.1
Intangible Asset
9 Months Ended
Sep. 30, 2018
Goodwill and Intangible Assets Disclosure [Abstract]  
INTANGIBLE ASSET
5.INTANGIBLE ASSET

 

Intangible assets consisted of the following as of September 30, 2018 and December 31, 2017:

 

     9/30/2018   12/31/2017 
           
  At Cost:        
  Patent  $-   $3,952,052 
  Software   1,299    1,322 
     $1,299   $3,953,374 
             
  Less: Accumulated amortization   (1,299)   (1,322)
             
     $-   $3,952,052 

 

On July 7, 2017, SQEC and the director and CEO of the Company, Mr. Zuyue Xiang (“Xiang”), entered into an intangible asset transfer agreement. Xiang transferred his rights and ownership of the patent to a voice smart card and trading system for a consideration of RMB 10,000,000 (equivalent to USD 1,447,696). The patent was impaired during the period ended September 30, 2018 and was written off to other expense.

 

Amortization expense for the three-month periods ended September 30, 2018 and 2017 was $0 and $24, respectively.

 

Amortization expense for the nine-month periods ended September 30, 2018 and 2017 was $0 and $209, respectively.

XML 22 R11.htm IDEA: XBRL DOCUMENT v3.10.0.1
Accrued Expenses
9 Months Ended
Sep. 30, 2018
Payables and Accruals [Abstract]  
ACCRUED EXPENSES
6.ACCRUED EXPENSES

 

Accrued expenses consisted of the followings as of September 30, 2018 and December 31, 2017:

 

     9/30/2018   12/31/2017 
         
  Audit fee  $6,500   $35,000 
  Utilities   11,768    2,440 
     $18,268   $37,440 

 

XML 23 R12.htm IDEA: XBRL DOCUMENT v3.10.0.1
Taxes Payables
9 Months Ended
Sep. 30, 2018
Taxes Payables [Abstract]  
TAXES PAYABLES
7.TAXES PAYABLES

 

Taxes payable consisted of the followings as of September 30, 2018 and December 31, 2017:

 

     9/30/2018   12/31/2017 
           
  Payroll tax  $-   $5,270 
  Individual income tax   -    875 
     $-   $6,145 
XML 24 R13.htm IDEA: XBRL DOCUMENT v3.10.0.1
Stockholders' Equity
9 Months Ended
Sep. 30, 2018
Equity [Abstract]  
STOCKHOLDERS' EQUITY
8. STOCKHOLDERS’ EQUITY

 

Common stock

 

As of January 1, 2017, the Company had 100,000,000 shares of common stock authorized, 19,920,325 shares issued and outstanding at par value of $0.001 per share.

 

On March 17, 2017, the Company and each of the two holders (the “Noteholders”) of the Company’s convertible notes (the “Convertible Notes”) entered into a convertible note exchange agreement (the “Agreement”). Pursuant to the Agreement, the Company issued to the two noteholders an aggregate of approximately 1,106,837 shares of common stock (the “Common Stock”) of the Company, par value $0.001, upon the conversion notice from the two Noteholders with respect to converting the Convertible Notes in an aggregate principal amount of $2,213,673. Common stock was subsequently issued to the two note holders on April 6, 2017 and April 7, 2017, respectively – please refer to note 3 related party receivables and payables.

 

As of September 30, 2018, the Company has 100,000,000 shares of common stock authorized, 21,027,713 shares issued and outstanding at par value of $0.001 per share.

 

Stock option compensation

 

On October 20, 2017, the Company issued to Mr. Yang Liu, the option to purchase 1,050,000 shares of the Company’s common stock to be issued upon his exercise of such option. The option vests in three tranches according to the following schedule: 350,000 shares at October 19, 2018, 350,000 shares at October 19, 2019, and 350,000 at October 19, 2020. All three tranches expire on October 19, 2022. The Company has used the widely accepted Black Scholes Merton Option Pricing Model to measure the fair value of these securities, because of their plain vanilla nature of this option. The Company employed the followings assumptions to calculate the fair value of the option: expected forfeiture rate: 0%, risk free rate: 2.03%, expiration date: October 19, 2022, exercise price: $1.00, annualized volatility: 602.71%, dividend yield: 0%, and the Company’s closing stock price at year end. For the three-month periods ended September 30, 2018 and 2017, the Company recorded stock option compensation expense of $477,261 and $0. For the nine-month periods ended September 30, 2018 and 2017, the Company recorded stock option compensation expense of $1,351,848 and $0.

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Income Taxes
9 Months Ended
Sep. 30, 2018
Income Tax Disclosure [Abstract]  
INCOME TAXES
9. INCOME TAXES

 

The Company was incorporated in the United States of America (“USA”). The Company did not generate any taxable income from its operations for the nine-month periods ended September 30, 2018 and 2017.

 

The provision for income taxes consists of the following:

 

      For the nine-month periods
September 30,
 
  Current:   2018     2017  
  USA   $      -     $     -  
                   
  Deferred:                
  USA     -       -  
  Provision for income taxes     -       -  

 

The reconciliation of USA statutory income tax rate to the Company’s effective income tax rate is as follows:

 

      For the nine-month periods
September 30,
 
      2018     2017  
               
  Income tax at USA statutory rate of 21%   $      -     $    -  
  Others     -       -  
  Provision for income taxes     -       -  

 

Uncertain Tax Positions

 

Interest associated with unrecognized tax benefits are classified as income tax, and penalties are classified in selling, general and administrative expenses in the statements of operations.  For the nine-month periods ended September 30, 2018 and 2017, the Company had no unrecognized tax benefits and related interest and penalties expenses.  Currently, the Company is not subject to examination by major tax jurisdictions.

 

Deferred Income Tax Benefits

 

Deferred income tax benefits arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, which will result in taxable or deductible amounts in the future. In evaluating the Company’s ability to recover the deferred tax assets, the management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies, and results of recent operations. In projecting future taxable income, the Company begins with historical results adjusted for the results of discontinued operations and incorporate assumptions about the amount of future state, federal, and foreign pretax operating income adjusted for items that do not have tax consequences. The assumptions about future taxable income require the use of significant judgment and are consistent with the plans and estimates that the Company is using to manage the underlying businesses. As of September 30, 2018, management was uncertain as to whether or not the Company would be able to utilize the potential deferred tax assets arising from net operating losses’ since the Company is not currently generating any revenue; accordingly, the Company has not recognized a deferred tax asset.

XML 26 R15.htm IDEA: XBRL DOCUMENT v3.10.0.1
Loss Per Share
9 Months Ended
Sep. 30, 2018
Net loss per share  
LOSS PER SHARE
10.LOSS PER SHARE

 

Basic loss per common share from operations attributable to the Company is based on the weighted-average common shares outstanding during the relevant period. Diluted loss per common share from continuing operations attributable to the Company is based on the weighted-average common shares outstanding during the relevant period adjusted for the dilutive effect of share-based awards. The Company did not have significant share-based awards outstanding that were antidilutive and not included in the calculation of diluted loss per common share from operations attributable to the Company for the nine month periods ended September 30, 2018 and 2017.

 

The following table sets forth the computation of basic and diluted earnings per share of common stock:

 

     For the nine-month
periods ended
September 30,
   For the three-month periods ended
September 30,
 
     2018   2017   2018   2017 
                   
  Basic loss per share:                
  Numerator:                
  Net loss used in computing basic earnings per share  $(5,700,262)  $(440,378)  $(548,900)  $(194,221)
                       
  Denominator:                    
  Weighted average common shares outstanding   21,027,162    20,721,968    21,027,162    21,027,162 
  Basic loss per share  $(0.27)  $(0.02)  $(0.03)  $(0.01)
                       
  Diluted earnings per share:                    
  Numerator:                    
  Net loss used in computing diluted loss per share  $(5,700,262)  $(440,378)  $(548,900)  $(194,221)
                       
  Denominator:                    
  Weighted average common shares outstanding                    
  Diluted loss per share  $(0.27)  $(0.02)  $(0.03)  $(0.01)

 

Dilutive securities having an anti-dilutive effect on diluted (loss) earnings per share are excluded from the calculation.

XML 27 R16.htm IDEA: XBRL DOCUMENT v3.10.0.1
Going Concern Uncertainties
9 Months Ended
Sep. 30, 2018
Going Concern Uncertainties [Abstract]  
GOING CONCERN UNCERTAINTIES
11.GOING CONCERN UNCERTAINTIES

 

These financial statements have been prepared assuming that Company will continue as a going concern, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future.

 

As of September 30, 2018, the Company had accumulated deficits of $27,152,332 and working capital deficit of current liabilities exceeding current assets by $1,260,159. Management’s plan to support the Company in operations and to maintain its business strategy is to raise funds through public and private offerings and to rely on officers and directors to perform essential functions with minimal compensation. If we do not raise all of the money we need from public or private offerings, we will have to find alternative sources, such as loans or advances from our officers, directors or others. Such additional financing may not become available on acceptable terms and there can be no assurance that any additional financing that the Company does obtain will be sufficient to meet its needs in the long term. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in the case of equity financing. If we require additional cash and cannot raise it, we will either have to suspend operations or cease business entirely.

 

The accompanying financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

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Commitments
9 Months Ended
Sep. 30, 2018
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS
12.COMMITMENTS

 

(a.)On June 2, 2016, the Company entered into a lease agreement for office space in Guangzhou city, Guangdong Province, P.R.C. commencing on June 1, 2016 for a three-year lease term. The Company terminated its lease in May 2018 and vacated the premise.

 

(b.)On September 1, 2016, Mr. Zuyue Xiang entered into a lease agreement on behalf of the Company for office space in Guangdong Province, P.R.C. commencing on September 1, 2016 for a three-year lease term. The Company terminated its lease in May 2018 and vacated the premise.

 

(c.)On April 23, 2018, the Company entered into a sublease agreement for office space in New Jersey commencing on April 23, 2018 for a nine-month lease term. The monthly rental expense is $833.33.
XML 29 R18.htm IDEA: XBRL DOCUMENT v3.10.0.1
Concentration of Risks
9 Months Ended
Sep. 30, 2018
Risks and Uncertainties [Abstract]  
CONCENTRATION OF RISKS
13.CONCENTRATION OF RISKS

 

A.Major Customer

 

The Company has certain customers who represented 10% or more of the Company’s total sales. For the nine-month period ended September 30, 2018, the Company generated service revenue from one customer which represented 100% of the revenue. For the nine-month period ended September 30, 2017, the Company generated service revenue from three customers which represented 33%, 30%, and 35% of the revenue. The Company is unable to forecast if re-occurring services revenue will be generated from these customers.

 

B.Major Vendors and Accounts Payable

 

The Company has certain vendors who represented 10% or more of the Company’s total cost of sales or expenses, or whose accounts payable balances individually represented 10% or more of the Company’s total accounts payable. For the nine-month period ended September 30, 2018, there was no concentration in any specific vendor. For the nine-month period ended September 30, 2017, two vendors accounted for 20% and 80% of accounts payable, respectively.

 

C.Credit Risk

 

The Company maintains cash balances at several financial institutions located in the United States and the PRC. Accounts located in the United States are insured by the Federal Deposit Insurance Corporation up to $100,000. Accounts located outside of the United States are not insured and may be subject to such risk.

XML 30 R19.htm IDEA: XBRL DOCUMENT v3.10.0.1
Subsequent Event
9 Months Ended
Sep. 30, 2018
Subsequent Events [Abstract]  
SUBSEQUENT EVENT
14. SUBSEQUENT EVENT

 

Management evaluated all events subsequent to the balance sheet date through to November 19, 2018, the date the financial statements were available to be issued and determined there are no events to report.

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Summary of Significant Accounting Policies (Policies)
9 Months Ended
Sep. 30, 2018
Accounting Policies [Abstract]  
Method of Accounting
A. Method of Accounting

 

The Company maintains its general ledger and journals with the accrual method of accounting for financial reporting purposes. The financial statements and notes are representations of management. Accounting policies adopted by the Company conform to generally accepted accounting principles in the United States of America and have been consistently applied in the presentation of financial statements.

Basis of Presentation
B. Basis of Presentation

 

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”). 

Principles of Consolidation
C. Principles of Consolidation

 

The consolidated financial statements include the accounts of the Company, its subsidiaries for which the Company is the primary beneficiary. All significant inter-company accounts and transactions have been eliminated. The consolidated financial statements include 100% of assets, liabilities, and net income or loss of those wholly-owned subsidiaries.

 

As of September 30, 2018, the detailed identities of the consolidating subsidiaries are as follows:

 

  Name of Company   Place of incorporation   Attributable equity interest %     Registered capital  
  EGOOS Mobile Technology Company Limited (“EGOOS BVI”)   BVI     100 %   $ 1  
  EGOOS Mobile Technology Company Limited (“EGOOS HK”)   Hong Kong     100 %     1,290  
  Move the Purchase Consulting Management (Shenzhen) Co., Ltd. (“WOFE”)   P.R.C. (WOFE)     100 %     -  
  Guangzhou Yuzhi Information Technology Co., Ltd. (“GZYZ”)   P.R.C.     100 %     150,527  
  Shenzhen Qianhai Exce-card Technology Co., Ltd. (“SQEC”)   P.R.C.     100 %     150,527  
  Guangzhou Rongsheng Information Technology Co., Ltd. (“GZRS”)   P.R.C.     100 %     1,505,267  

 

Unaudited Interim Financial Information
D. Unaudited Interim Financial Information

 

These unaudited interim condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial reporting and the rules and regulations of the Securities and Exchange Commission that permit reduced disclosure for interim periods. Therefore, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. In the opinion of management, all adjustments of a normal recurring nature necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented have been made. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the year ending December 31, 2018.

 

The consolidated balance sheets and certain comparative information as of December 31, 2017 are derived from the audited consolidated financial statements and related notes for the year ended December 31, 2017 (“2017 Annual Financial Statements”), included in the Company’s 2017 Annual Report on Form 10-K. These unaudited interim condensed consolidated financial statements should be read in conjunction with the 2017 Annual Financial Statements.  

Use of estimates
E. Use of estimates

 

The preparation of the 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 disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates are used for, but not limited to, the accounting for certain items such as allowance for doubtful accounts, depreciation and amortization, impairment, inventory allowance, taxes and contingencies.

  

Contingencies
F. Contingencies

 

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company’s management evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought.

 

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed.

 

Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.  

Cash and cash equivalents
G. Cash and cash equivalents

 

The Company classifies the following instruments as cash and cash equivalents: cash on hand, unrestricted bank deposits, and all highly liquid investments purchased with original maturities of three months or less. 

Accounts receivable
H. Accounts receivable

 

Trade receivables are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An estimate for doubtful accounts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred.

Other receivables
I. Other receivables 

 

Other receivables are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An allowance for doubtful accounts is made when recovery of the full amount is doubtful.

Property, plant and equipment
J. Property, plant and equipment

 

Plant and equipment are carried at cost less accumulated depreciation. Depreciation is provided over their estimated useful lives, using the straight-line method with a salvage value of 10%. Estimated useful lives of the plant and equipment are as follows:

 

  Computer equipment 3 years
  Office furniture 5 years

 

The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statement of income. The cost of maintenance and repairs is charged to income as incurred, whereas significant renewals and betterments are capitalized.

Accounting for the Impairment of Long-lived assets
K. Accounting for the Impairment of Long-lived assets

 

The long-lived assets held by the Company are reviewed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 360-10-35, “Accounting for the Impairment or Disposal of Long-Lived Assets,” for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. It is reasonably possible that these assets could become impaired as a result of technology or other industry changes. Impairment is present if carrying amount of an asset is less than its undiscounted cash flows to be generated.

 

If an asset is considered impaired, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. The Company believes no impairment has occurred to its assets during 2018.

Income taxes
L. Income taxes

 

The Company uses the accrual method of accounting to determine income taxes for the year. The Company has implemented FASB ASC 740 Accounting for Income Taxes. Income tax liabilities computed according to the United States, People’s Republic of China (PRC), and Hong Kong tax laws provide for the tax effects of transactions reported in the financial statements and consists of taxes currently due, plus deferred taxes, related primarily to differences arising from the recognition of expenses related to the depreciation of plant and equipment, amortization of intangible assets, and provisions for doubtful accounts between financial and tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will be either taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes also are recognized for operating losses that are available to offset future income taxes.

 

A valuation allowance is recognized for deferred tax assets if it is more likely than not, that the deferred tax assets will either expire before the Company is able to realize that tax benefit, or that future realization is uncertain.

Stock-based compensation
M. Stock-based compensation

 

The Company has elected to use the Black-Scholes-Merton (“BSM”) pricing model to determine the fair value of stock options on the dates of grant. Also, the Company recognizes stock-based compensation using the straight-line method over the requisite service period.

 

The Company values stock awards using the market price on or around the date the shares were awarded and includes the amount of compensation as a period compensation expense over the requisite service period.

 

For the three-month periods ended September 30, 2018 and 2017, $477,261 and $0 stock-based compensation was recognized.

 

For the nine-month periods ended September 30, 2018 and 2017, $1,351,848 and $0 stock-based compensation was recognized.

Foreign currency translation
N. Foreign currency translation

 

The accompanying financial statements are presented in United States dollars. The functional currency of the Company is the Renminbi (RMB) and Hong Kong dollar (HKD). The financial statements are translated into United States dollars from RMB at year-end exchange rates as to assets and liabilities and average exchange rates as to revenues and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred.

 

  Exchange Rates   9/30/2018     12/31/2017     9/30/2017  
  Year-end/period-end RMB : US$ exchange rate     6.8665       6.5064       6.6545  
  Average annual/period RMB : US$ exchange rate     6.5137       6.7570       6.8057  
                           
  Year-end/period-end HKD : US$ exchange rate     7.8277       7.8149       7.8110  
  Average annual/period HKD : US$ exchange rate     7.8398       7.7922       7.7870  

 

The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US Dollar at the rates used in translation.

Revenue recognition
O. Revenue recognition

 

The Company recognizes services revenue when the following criteria have been met: 1.) it has agreed and entered into a contract for service with it customers, 2.) the contract has set forth a fixed fee for the services to be rendered, 3.) the Company has fully rendered service to its customers, and there are no additional obligations that exist that under the terms of the contract that the Company has not fulfilled, and 4.) the Company has either received payment, or reasonably expects payment from the customer in accordance to the payment terms set forth in the contract.

 

Earnings per share
P. Earnings per share

 

Basic earnings per share is computed on the basis of the weighted average number of common stock outstanding during the period. Diluted earnings per share is computed on the basis of the weighted average number of common stock and common stock equivalents outstanding. Dilutive securities having an anti-dilutive effect on diluted earnings per share are excluded from the calculation.

 

Dilution is computed by applying the treasury stock method for options and warrants. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

Comprehensive loss
Q. Comprehensive loss

 

Comprehensive income (loss) is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. The Company presents components of comprehensive income with equal prominence to other financial statements. The Company’s current component of other comprehensive income is the foreign currency translation adjustment.

Subsequent events
R. Subsequent events

 

The Company evaluates subsequent events that have occurred after the balance sheet date but before the financial statements are issued. There are two types of subsequent events: (1) recognized, or those that provide additional evidence with respect to conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements, and (2) non-recognized, or those that provide evidence with respect to conditions that did not exist at the date of the balance sheet but arose subsequent to that date.

Recent accounting pronouncements
S. Recent accounting pronouncements

 

In January 2017, the Financial Accounting Standard Board (“FASB”) issued guidance, which simplifies the accounting for goodwill impairment. The updated guidance eliminates Step 2 of the impairment test, which requires entities to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. The Company is still assessing the impact of this pronouncement to its financial statements.

 

As of September 30, 2018, except for the above, there are no recently issued accounting standards not yet adopted that would have a material effect on the Company’s financial statements.

Fair Value of Financial Instruments
T. Fair Value of Financial Instruments

 

ASC 825, Financial Instruments, requires that the Company discloses estimated fair values of financial instruments. The carrying amounts reported in the balance sheets for current assets and current liabilities qualifying as financial instruments are a reasonable estimate of fair value.

 

The Company applies the provisions of ASC 820-10, Fair Value Measurements and Disclosures. ASC 820-10 defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. For certain financial instruments, including cash and cash equivalents, loan receivables and short-term bank loans, the carrying amounts approximate fair value due to their relatively short maturities. The three levels of valuation hierarchy are defined as follows:

 

  Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.

 

  Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

 

  Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.

  

The Company analyzes all financial instruments with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities from Equity,” and ASC 815.

 

The following tables present the Company’s financial assets and liabilities at fair value in accordance to ASC 820-10

 

  As of September 30, 2018:               
     Quoted in             
     Active Markets   Significant
Other
   Significant     
     for Identical   Observable   Unobservable     
     Assets   Inputs   Inputs     
     (Level 1)   (Level 2)   (Level 3)   Total 
  Financial assets:                    
  Cash  $10,179   $      -   $      -   $10,179 
  Total financial assets  $10,179   $-   $-   $10,179 
                       
  Financial liabilities:                    
  Capital lease  $-   $-   $-   $- 
  Total financial liabilities  $-   $-   $-   $- 

 

  As of December 31, 2017:               
     Quoted in             
     Active Markets   Significant
Other
   Significant     
     for Identical   Observable   Unobservable     
     Assets   Inputs   Inputs     
     (Level 1)   (Level 2)   (Level 3)   Total 
  Financial assets:                    
  Cash  $10,346   $       -   $       -   $10,346 
  Total financial assets  $10,346   $-   $-   $10,346 
                       
  Financial liabilities:                    
  Capital lease  $9,980   $-   $-   $9,980 
  Total financial liabilities  $9,980   $-   $-   $9,980 
XML 32 R21.htm IDEA: XBRL DOCUMENT v3.10.0.1
Summary of Significant Accounting Policies (Tables)
9 Months Ended
Sep. 30, 2018
Accounting Policies [Abstract]  
Schedule of consolidating subsidiaries
  Name of Company  Place of incorporation  Attributable equity interest %   Registered capital 
  EGOOS Mobile Technology Company Limited ("EGOOS BVI")  BVI   100%  $1 
  EGOOS Mobile Technology Company Limited ("EGOOS HK")  Hong Kong   100%   1,290 
  Move the Purchase Consulting Management (Shenzhen) Co., Ltd. (“WOFE”)  P.R.C. (WOFE)   100%   - 
  Guangzhou Yuzhi Information Technology Co., Ltd. (“GZYZ”)  P.R.C.   100%   150,527 
  Shenzhen Qianhai Exce-card Technology Co., Ltd. (“SQEC”)  P.R.C.   100%   150,527 
  Guangzhou Rongsheng Information Technology Co., Ltd. (“GZRS”)  P.R.C.   100%   1,505,267 
Schedule of estimated useful lives of the plant and equipment
  Computer equipment 3 years
  Office furniture 5 years
Schedule of foreign currency translation exchange rates to assets and liabilities
  Exchange Rates   9/30/2018     12/31/2017     9/30/2017  
  Year-end/period-end RMB : US$ exchange rate     6.8665       6.5064       6.6545  
  Average annual/period RMB : US$ exchange rate     6.5137       6.7570       6.8057  
                           
  Year-end/period-end HKD : US$ exchange rate     7.8277       7.8149       7.8110  
  Average annual/period HKD : US$ exchange rate     7.8398       7.7922       7.7870  
Schedule of financial assets and liabilities at fair value
  As of September 30, 2018:               
     Quoted in             
     Active Markets   Significant
Other
   Significant     
     for Identical   Observable   Unobservable     
     Assets   Inputs   Inputs     
     (Level 1)   (Level 2)   (Level 3)   Total 
  Financial assets:                    
  Cash  $10,179   $      -   $      -   $10,179 
  Total financial assets  $10,179   $-   $-   $10,179 
                       
  Financial liabilities:                    
  Capital lease  $-   $-   $-   $- 
  Total financial liabilities  $-   $-   $-   $- 

 

  As of December 31, 2017:               
     Quoted in             
     Active Markets   Significant
Other
   Significant     
     for Identical   Observable   Unobservable     
     Assets   Inputs   Inputs     
     (Level 1)   (Level 2)   (Level 3)   Total 
  Financial assets:                    
  Cash  $10,346   $       -   $       -   $10,346 
  Total financial assets  $10,346   $-   $-   $10,346 
                       
  Financial liabilities:                    
  Capital lease  $9,980   $-   $-   $9,980 
  Total financial liabilities  $9,980   $-   $-   $9,980 
XML 33 R22.htm IDEA: XBRL DOCUMENT v3.10.0.1
Related Party Payables (Tables)
9 Months Ended
Sep. 30, 2018
Related Party Transactions [Abstract]  
Schedule of related party payable
     9/30/2018   12/31/2017 
           
  Beijing Yuxin Shangfang Technology Co., Ltd.  $286,306   $302,155 
  Xiang, Zuyue, director of SQEC and shareholder   10,827    60,198 
  Lim, Jehn Ming, shareholder of EGOOS BVI   1,289    1,289 
  Wang, Yue, director of EGOOS HK   161,233    161,942 
  Yang, Mei, shareholder   368,963    157,110 
  Li, Ping, director of WOFE   3,777    2,486 
     $832,395   $685,180 
XML 34 R23.htm IDEA: XBRL DOCUMENT v3.10.0.1
Property, Plant and Equipment (Tables)
9 Months Ended
Sep. 30, 2018
Property, Plant and Equipment [Abstract]  
Schedule of property, plant, and equipment
     9/30/2018   12/31/2017 
           
  At Cost:        
  Machinery  $68,083   $71,852 
  Office equipment   18,346    19,362 
  Office furniture   12,741    13,446 
     $99,170   $104,660 
             
  Less: Accumulated depreciation   (42,373)   (37,383)
             
     $56,797   $67,277 
XML 35 R24.htm IDEA: XBRL DOCUMENT v3.10.0.1
Intangible Asset (Tables)
9 Months Ended
Sep. 30, 2018
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of Intangible assets
     9/30/2018   12/31/2017 
           
  At Cost:        
  Patent  $-   $3,952,052 
  Software   1,299    1,322 
     $1,299   $3,953,374 
             
  Less: Accumulated amortization   (1,299)   (1,322)
             
     $-   $3,952,052 
XML 36 R25.htm IDEA: XBRL DOCUMENT v3.10.0.1
Accrued Expenses (Tables)
9 Months Ended
Sep. 30, 2018
Payables and Accruals [Abstract]  
Schedule of accrued expenses
     9/30/2018   12/31/2017 
         
  Audit fee  $6,500   $35,000 
  Utilities   11,768    2,440 
     $18,268   $37,440 
XML 37 R26.htm IDEA: XBRL DOCUMENT v3.10.0.1
Taxes Payables (Tables)
9 Months Ended
Sep. 30, 2018
Taxes Payables [Abstract]  
Schedule of taxes payable
     9/30/2018   12/31/2017 
           
  Payroll tax  $-   $5,270 
  Individual income tax   -    875 
     $-   $6,145 
XML 38 R27.htm IDEA: XBRL DOCUMENT v3.10.0.1
Income Taxes (Tables)
9 Months Ended
Sep. 30, 2018
Income Tax Disclosure [Abstract]  
Schedule of provision for income taxes
   For the nine-month periods
September 30,
 
  Current:  2018   2017 
           
  USA  $-   $- 
             
  Deferred:          
  USA   -    - 
  Provision for income taxes   -    - 
Schedule of reconciliation of USA statutory income tax rate
     For the nine-month periods
September 30,
 
     2018   2017 
           
  Income tax at USA statutory rate of 21%  $-   $- 
  Others   -    - 
  Provision for income taxes   -    - 
XML 39 R28.htm IDEA: XBRL DOCUMENT v3.10.0.1
Loss Per Share (Tables)
9 Months Ended
Sep. 30, 2018
Net loss per share  
Schedule of computation of basic and diluted earnings per share of common stock
     For the nine-month
periods ended
September 30,
   For the three-month periods ended
September 30,
 
     2018   2017   2018   2017 
                   
  Basic loss per share:                
  Numerator:                
  Net loss used in computing basic earnings per share  $(5,700,262)  $(440,378)  $(548,900)  $(194,221)
                       
  Denominator:                    
  Weighted average common shares outstanding   21,027,162    20,721,968    21,027,162    21,027,162 
  Basic loss per share  $(0.27)  $(0.02)  $(0.03)  $(0.01)
                       
  Diluted earnings per share:                    
  Numerator:                    
  Net loss used in computing diluted loss per share  $(5,700,262)  $(440,378)  $(548,900)  $(194,221)
                       
  Denominator:                    
  Weighted average common shares outstanding                    
  Diluted loss per share  $(0.27)  $(0.02)  $(0.03)  $(0.01)
XML 40 R29.htm IDEA: XBRL DOCUMENT v3.10.0.1
The Company and Principal Business Activities (Details) - USD ($)
1 Months Ended 9 Months Ended
Feb. 04, 2016
Jul. 14, 2015
Dec. 06, 2010
Jul. 24, 2015
Jan. 28, 2015
Oct. 28, 2010
Sep. 30, 2018
Mar. 16, 2015
The Company and Principal Business Activities (Textual)                
Equity method investment, description             <p style="margin: 0pt">On October 19, 2015, the Company entered into a Share Purchase Agreement (the “Share Purchase Agreement”) with EGOOS Mobile Technology Company Limited, a British Virgin Islands holding company (“EGOOS BVI”), which owns 100% of EGOOS Mobile Technology Company Limited, a Hong Kong company (“EGOOS HK”), which owns 100% of Move the Purchase Consulting Management (Shenzhen) Co., Ltd. (“WOFE”), a foreign investment enterprise organized under the laws of the PRC, and which has, through various contractual agreements known as variable interest entity (“VIE”) agreements.  These VIE agreements provide the WOFE management control and the rights to the profits of Guangzhou Yuzhi Information Technology Co., Ltd., a corporation organized under the laws of the PRC as a variable interest entity (“GZYZ”), which owns 100% of Shenzhen Qianhai Exce-card Technology Co., Ltd., a Chinese corporation (“SQEC”), which owns 100% of Guangzhou Rongsheng Information Technology Co., Ltd., a Chinese corporation (“GZRS”) and the sole shareholder of EGOOS BVI.</p>  
EGOOS Mobile Technology Company Limited [Member]                
The Company and Principal Business Activities (Textual)                
Acquired interest from investment holdings company             100.00%  
Business combination, consideration transferred description             (i) the Company has effectuated a reverse split of all of the issued and outstanding Common Stock as of the date of the issuance of the note (the "Reverse Split") and (ii) the average closing price of the common stock for 3 business days within any period of 10 consecutive business days exceeds $1.00 per share (the "Conversion Conditions"). Upon conversion of the note, the existing shareholders of the Registrant will own an aggregate of 24.7% of the post-acquisition entity.  
Note converted into share 15,000,000           15,000,000  
Ding Neng Holdings [Member]                
The Company and Principal Business Activities (Textual)                
Acquired interest from investment holdings company     100.00%          
Issuance of common stock for acquisition     26,162,505          
Common stock par value     $ 0.001          
Litigation settlement fee   $ 1,611            
Ding Neng Holdings [Member] | Subsidiary of Common Parent [Member]                
The Company and Principal Business Activities (Textual)                
Entity agreements, description           (1) a Consulting Service Agreement with Ding Neng Bio-tech, which entitled WFOE to receive substantially all of the economic benefits of Ding Neng Bio-tech in consideration for services provided by WFOE to Ding Neng Bio-tech, (2) an Option Agreement with Xinfeng Nie, Sanfu Huang, and Shunlong Hu (the shareholders of Ding Neng Bio-tech) allowing the WFOE to acquire all the shares of Ding Neng Bio-tech as permitted by PRC laws, (3) a Voting Rights Proxy Agreement that provides WFOE with the all voting rights of the Ding Neng Bio-tech shareholders, and (4) an Equity Pledge Agreement that pledges the shares in Ding Neng Bio-tech to WFOE (VIE Agreements).    
Ding Neng Holdings [Member] | RMB [Member]                
The Company and Principal Business Activities (Textual)                
Litigation settlement fee   $ 10,000            
Shenzhen Qianhai Exce-card Technology Co., Ltd. [Member]                
The Company and Principal Business Activities (Textual)                
Business combination, consideration transferred       $ 1,629,062 $ 1,629,062      
Shenzhen Qianhai Exce-card Technology Co., Ltd. [Member] | RMB [Member]                
The Company and Principal Business Activities (Textual)                
Business combination, consideration transferred       $ 10,000,000 $ 10,000,000      
Xiang Zuyue [Member]                
The Company and Principal Business Activities (Textual)                
Acquired interest from investment holdings company         40.00%      
Business combination, consideration transferred         $ 651,625      
Xiang Zuyue [Member] | RMB [Member]                
The Company and Principal Business Activities (Textual)                
Business combination, consideration transferred         $ 4,000,000      
Guangzhou Rongsheng Information Technology Co., Ltd. [Member] | RMB [Member]                
The Company and Principal Business Activities (Textual)                
Authorized capital               $ 1,000,000
XML 41 R30.htm IDEA: XBRL DOCUMENT v3.10.0.1
Summary of Significant Accounting Policies (Details)
9 Months Ended
Sep. 30, 2018
USD ($)
Schedule of consolidating subsidiaries  
Attributable equity interest % 100.00%
Subsidiaries [Member]  
Schedule of consolidating subsidiaries  
Name of Company EGOOS Mobile Technology Company Limited (“EGOOS BVI”)</font>
Place of incorporation BVI
Attributable equity interest % 100.00%
Registered capital $ 1
Subsidiaries One [Member]  
Schedule of consolidating subsidiaries  
Name of Company EGOOS Mobile Technology Company Limited (“EGOOS HK”)</font>
Place of incorporation Hong Kong
Attributable equity interest % 100.00%
Registered capital $ 1,290
Subsidiaries Two [Member]  
Schedule of consolidating subsidiaries  
Name of Company Move the Purchase Consulting Management (Shenzhen) Co., Ltd. ("WOFE")
Place of incorporation P.R.C. (WOFE)
Attributable equity interest % 100.00%
Registered capital
Subsidiaries Three [Member]  
Schedule of consolidating subsidiaries  
Name of Company Guangzhou Yuzhi Information Technology Co., Ltd. ("GZYZ")
Place of incorporation P.R.C.
Attributable equity interest % 100.00%
Registered capital $ 150,527
Subsidiaries Four [Member]  
Schedule of consolidating subsidiaries  
Name of Company Shenzhen Qianhai Exce-card Technology Co., Ltd. ("SQEC")
Place of incorporation P.R.C.
Attributable equity interest % 100.00%
Registered capital $ 150,527
Subsidiaries Five [Member]  
Schedule of consolidating subsidiaries  
Name of Company Guangzhou Rongsheng Information Technology Co., Ltd. ("GZRS")
Place of incorporation P.R.C.
Attributable equity interest % 100.00%
Registered capital $ 1,505,267
XML 42 R31.htm IDEA: XBRL DOCUMENT v3.10.0.1
Summary of Significant Accounting Policies (Details 1)
9 Months Ended
Sep. 30, 2018
Computer equipment [Member]  
Schedule of estimated useful lives of the plant and equipment  
Estimated useful lives of the plant and equipment 3 years
Office furniture [Member]  
Schedule of estimated useful lives of the plant and equipment  
Estimated useful lives of the plant and equipment 5 years
XML 43 R32.htm IDEA: XBRL DOCUMENT v3.10.0.1
Summary of Significant Accounting Policies (Details 2)
Sep. 30, 2018
Dec. 31, 2017
Sep. 30, 2017
Exchange Rates [Member]      
Intercompany Foreign Currency Balance [Line Items]      
Foreign currency translation, exchange rates 6.8665 6.5064 6.6545
Exchange Rates One [Member]      
Intercompany Foreign Currency Balance [Line Items]      
Foreign currency translation, exchange rates 6.5137 6.7570 6.8057
Exchange Rates Two [Member]      
Intercompany Foreign Currency Balance [Line Items]      
Foreign currency translation, exchange rates 7.8277 7.8149 7.811
Exchange Rates Three [Member]      
Intercompany Foreign Currency Balance [Line Items]      
Foreign currency translation, exchange rates 7.8398 7.7922 7.787
XML 44 R33.htm IDEA: XBRL DOCUMENT v3.10.0.1
Summary of Significant Accounting Policies (Details 3) - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Financial assets:    
Cash $ 10,179 $ 10,346
Total financial assets 10,179 10,346
Financial liabilities:    
Capital lease 9,980
Total financial liabilities 9,980
Quoted in Active Markets for Identical Assets (Level 1) [Member]    
Financial assets:    
Cash 10,179 10,346
Total financial assets 10,179 10,346
Financial liabilities:    
Capital lease 9,980
Total financial liabilities 9,980
Significant Other Observable Inputs (Level 2) [Member]    
Financial assets:    
Cash
Total financial assets
Financial liabilities:    
Capital lease
Total financial liabilities
Significant Unobservable Inputs (Level 3) [Member]    
Financial assets:    
Cash
Total financial assets
Financial liabilities:    
Capital lease
Total financial liabilities
XML 45 R34.htm IDEA: XBRL DOCUMENT v3.10.0.1
Summary of Significant Accounting Policies (Details Textual) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Summary of Significant Accounting Policies (Textual)        
Percentage of consolidated financial statements 100.00%   100.00%  
Percentage of salvage value 10.00%   10.00%  
Stock-based compensation $ 477,261 $ 1,351,848
XML 46 R35.htm IDEA: XBRL DOCUMENT v3.10.0.1
Related Party Payables (Details) - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Related Party Transaction [Line Items]    
Related party payable $ 832,395 $ 685,180
Beijing Yuxin Shangfang Technology Co., Ltd. [Member]    
Related Party Transaction [Line Items]    
Related party payable 286,306 302,155
Xiang, Zuyue, director of SQEC and shareholder [Member]    
Related Party Transaction [Line Items]    
Related party payable 10,827 60,198
Lim, Jehn Ming, shareholder of EGOOS BVI [Member]    
Related Party Transaction [Line Items]    
Related party payable 1,289 1,289
Wang, Yue, director of EGOOS HK [Member]    
Related Party Transaction [Line Items]    
Related party payable 161,233 161,942
Yang, Mei, shareholder [Member]    
Related Party Transaction [Line Items]    
Related party payable 368,963 157,110
Li, Ping, director of WOFE [Member]    
Related Party Transaction [Line Items]    
Related party payable $ 3,777 $ 2,486
XML 47 R36.htm IDEA: XBRL DOCUMENT v3.10.0.1
Property, Plant and Equipment (Details) - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Property, Plant and Equipment [Line Items]    
Property, plant, and equipment, gross $ 99,170 $ 104,660
Less: Accumulated depreciation (42,373) (37,383)
Property, plant and equipment, net 56,797 67,277
Machinery [Member]    
Property, Plant and Equipment [Line Items]    
Property, plant, and equipment, gross 68,083 71,852
Office equipment [Member]    
Property, Plant and Equipment [Line Items]    
Property, plant, and equipment, gross 18,346 19,362
Office furniture [Member]    
Property, Plant and Equipment [Line Items]    
Property, plant, and equipment, gross $ 12,741 $ 13,446
XML 48 R37.htm IDEA: XBRL DOCUMENT v3.10.0.1
Property, Plant and Equipment (Details Textual) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Property, Plant and Equipment (Textual)        
Depreciation expense $ 756 $ 7,606 $ 4,921 $ 13,427
XML 49 R38.htm IDEA: XBRL DOCUMENT v3.10.0.1
Intangible Asset (Details) - USD ($)
Sep. 30, 2018
Dec. 31, 2017
At Cost:    
Intangible assets, gross $ 1,299 $ 3,953,374
Less: Accumulated amortization (1,299) (1,322)
Intangible assets, net 3,952,052
Patent [Member]    
At Cost:    
Intangible assets, gross 3,952,052
Software [Member]    
At Cost:    
Intangible assets, gross $ 1,299 $ 1,322
XML 50 R39.htm IDEA: XBRL DOCUMENT v3.10.0.1
Intangible Asset (Details Textual) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Jul. 07, 2017
Intangible Asset (Textual)          
Ownership transfer payment         $ 1,447,696
Amortization expenses $ 0 $ 24 $ 0 $ 209  
RMB [Member]          
Intangible Asset (Textual)          
Ownership transfer payment         $ 10,000,000
XML 51 R40.htm IDEA: XBRL DOCUMENT v3.10.0.1
Accrued Expenses (Details) - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Payables and Accruals [Abstract]    
Audit fee $ 6,500 $ 35,000
Utilities 11,768 2,440
Accrued expenses $ 18,268 $ 37,440
XML 52 R41.htm IDEA: XBRL DOCUMENT v3.10.0.1
Taxes Payables (Details) - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Taxes Payables [Abstract]    
Payroll tax $ 5,270
Individual income tax 875
Taxes payable $ 6,145
XML 53 R42.htm IDEA: XBRL DOCUMENT v3.10.0.1
Stockholders' Equity (Details)
1 Months Ended 3 Months Ended 9 Months Ended
Oct. 20, 2017
$ / shares
shares
Mar. 17, 2017
USD ($)
Vendors
$ / shares
shares
Sep. 30, 2018
USD ($)
$ / shares
shares
Sep. 30, 2017
USD ($)
Sep. 30, 2018
USD ($)
$ / shares
shares
Sep. 30, 2017
USD ($)
Dec. 31, 2017
$ / shares
shares
Dec. 31, 2016
$ / shares
shares
Dec. 31, 2015
$ / shares
shares
Stockholders' Equity (Textual)                  
Common stock, par value (in dollars per share) | $ / shares     $ 0.001   $ 0.001   $ 0.001    
Common stock, shares authorized     100,000,000   100,000,000   100,000,000    
Common stock, shares issued     21,027,713   21,027,713   21,027,713    
Common stock, shares outstanding     21,027,713   21,027,713   21,027,713    
Option issued to purchase common stock 1,050,000                
Tranches expire, date Oct. 19, 2022                
Expected forfeiture rate 0.00%                
Risk free rate 2.03%                
Expiration date Oct. 19, 2022                
Exercise price | $ / shares $ 1.00                
Annualized volatility 602.71%                
Dividend yield 0.00%                
Stock option compensation expense | $     $ 477,261 $ 1,351,848      
Common stock [Member]                  
Stockholders' Equity (Textual)                  
Common stock, par value (in dollars per share) | $ / shares   $ 0.001           $ 0.001 $ 0.001
Common stock, shares authorized               100,000,000 100,000,000
Common stock, shares issued   1,106,837           19,920,325 19,920,325
Common stock, shares outstanding               19,920,325 19,920,325
Number of noteholders | Vendors   2              
Aggregate principal amount | $   $ 2,213,673              
Issued to note holders, description   The two note holders on April 6, 2017 and April 7, 2017.              
October 19, 2018 [Member]                  
Stockholders' Equity (Textual)                  
Option vests, shares 350,000                
October 19, 2019 [Member]                  
Stockholders' Equity (Textual)                  
Option vests, shares 350,000                
October 19, 2020 [Member]                  
Stockholders' Equity (Textual)                  
Option vests, shares 350,000                
XML 54 R43.htm IDEA: XBRL DOCUMENT v3.10.0.1
Income Taxes (Details) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Current:        
USA    
Deferred:        
USA    
Provision for income taxes
XML 55 R44.htm IDEA: XBRL DOCUMENT v3.10.0.1
Income Taxes (Details 1) - USD ($)
9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Income Tax Disclosure [Abstract]    
Income tax at USA statutory rate of 21%
Others
Provision for income taxes
XML 56 R45.htm IDEA: XBRL DOCUMENT v3.10.0.1
Income Taxes (Details Textual)
9 Months Ended
Sep. 30, 2018
USA [Member]  
Income Taxes (Textual)  
Statutory rate 21.00%
XML 57 R46.htm IDEA: XBRL DOCUMENT v3.10.0.1
Loss Per Share (Details) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Numerator:        
Net loss used in computing basic earnings per share $ (548,900) $ (194,221) $ (5,700,262) $ (440,378)
Denominator:        
Weighted average common shares outstanding 21,027,713 21,027,162 21,027,713 20,721,968
Basic loss per share $ (0.03) $ (0.01) $ (0.27) $ (0.02)
Numerator:        
Net loss used in computing diluted loss per share $ (548,900) $ (194,221) $ (5,700,262) $ (440,378)
Denominator:        
Weighted average common shares outstanding 21,027,713 21,027,162 21,027,713 20,721,968
Diluted loss per share $ (0.03) $ (0.01) $ (0.27) $ (0.02)
XML 58 R47.htm IDEA: XBRL DOCUMENT v3.10.0.1
Going Concern Uncertainties (Details) - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Going Concern Uncertainties (Textual)    
Accumulated deficits $ (27,152,332) $ (21,452,071)
Working capital deficit of current liabilities exceeding current assets $ 1,260,159  
XML 59 R48.htm IDEA: XBRL DOCUMENT v3.10.0.1
Commitments (Details) - USD ($)
1 Months Ended
Sep. 01, 2016
Jun. 02, 2016
Apr. 23, 2018
Commitments (Textual)      
Monthly rental expense     $ 833
Term of lease     9 months
Lease agreement [Member]      
Commitments (Textual)      
Term of lease 3 years 3 years  
XML 60 R49.htm IDEA: XBRL DOCUMENT v3.10.0.1
Concentration of Risks (Details)
9 Months Ended
Sep. 30, 2018
USD ($)
Customers
Sep. 30, 2017
Vendors
Customers
United States [Member]    
Concentration of Risks (Textual)    
Federal deposit insurance amount | $ $ 100,000  
Total sales [Member]    
Concentration of Risks (Textual)    
Concentration risk, Percentage 10.00%  
Revenue [Member]    
Concentration of Risks (Textual)    
Concentration risk, Percentage 100.00%  
Number of customer | Customers 1 3
Revenue [Member] | Customer One [Member]    
Concentration of Risks (Textual)    
Concentration risk, Percentage   33.00%
Revenue [Member] | Customer Two [Member]    
Concentration of Risks (Textual)    
Concentration risk, Percentage   30.00%
Revenue [Member] | Customer Three [Member]    
Concentration of Risks (Textual)    
Concentration risk, Percentage   35.00%
Accounts payable [Member]    
Concentration of Risks (Textual)    
Concentration risk, Percentage 10.00%  
Number of vendors | Vendors   2
Accounts payable [Member] | Vendor One [Member]    
Concentration of Risks (Textual)    
Concentration risk, Percentage   20.00%
Accounts payable [Member] | Vendor Two [Member]    
Concentration of Risks (Textual)    
Concentration risk, Percentage   80.00%
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