Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark
One)
☒ ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the
fiscal year ended December 31, 2020
or
☐
TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the
transition period from ____________________to
____________________
333-194748
Commission
file number
GigWorld Inc.
(Exact
name of registrant as specified in its charter)
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Delaware
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45-4742558
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(State
or other jurisdiction of incorporation or
organization)
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(I.R.S.
Employer Identification No.)
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4800 Montgomery Lane, Suite 210
Bethesda MD
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20814
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(Address
of principal executive offices)
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(Zip
Code)
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301-971-3940
Registrant’s
telephone number, including area code
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.
Yes ☐ No
☒
Indicate
by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Exchange
Act.
Yes ☐ No ☒
Indicate
by check mark whether the registrant (1) has filed all reports
required by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90
days. Yes ☒
No ☐
Indicate
by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (§232.405 of this chapter) during
the preceding 12 months (or for such shorter period that the
registrant was required to submit such files).
Yes
☐ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated
filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 if the Exchange
Act.
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Large
accelerated filer
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☐
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Accelerated
filer
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☐
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Non-accelerated
filer
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☐
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Smaller
reporting company
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☒
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(Do not
check if a smaller reporting company)
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Emerging
growth company
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☐
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If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant has filed a report on and
attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting
under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b))
by the registered public accounting firm that prepared or issued
its audit report. ☐
Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes ☐ No
☒
State
the aggregate market value of voting and non-voting common equity
held by non-affiliates computer by reference to the price at which
the common equity was last sold, or the average bid and asked price
of such common equity, as of the last business day of the
registrant’s most recently completed second fiscal
quarter. The
Company’s common stock did not trade during the year ended
December 31, 2020. As of June 30, 2020, 777,200 shares
were held by non-affiliates. The most recent known price
for private sales of the registrant’s securities was $1.00
per share, reflecting a total value for the outstanding
non-affiliate shares of our common stock of $777,200.
Indicate
the number of shares outstanding of each the registrant’s
classes of common stock, as of the latest practicable
date. As of March 22, 2021, there were 506,898,576
shares outstanding of the registrant’s common stock $0.0001
par value.
DOCUMENTS INCORPORATED BY REFERENCE
-None
Throughout this Report on Form 10-K, the terms
“Company,” “we,” “us” and
“our” refer to GigWorld Inc., and “our board of
directors” refers to the board of directors of GigWorld
Inc.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
report contains forward-looking statements that involve a number of
risks and uncertainties. Although our forward-looking statements
reflect the good faith judgment of our management, these statements
can be based only on facts and factors of which we are currently
aware. Consequently, forward-looking statements are inherently
subject to risks and uncertainties. Actual results and outcomes may
differ materially from results and outcomes discussed in the
forward-looking statements.
Forward-looking
statements can be identified by the use of forward-looking words
such as “may,” “will,”
“should,” “anticipate,”
“believe,” “expect,” “plan,”
“future,” “intend,” “could,”
“estimate,” “predict,” “hope,”
“potential,” “continue,” or the negative of
these terms or other similar expressions. These statements include,
but are not limited to, statements under the captions “Risk
Factors,” “Management’s Discussion and Analysis
or Plan of Operation” and “Description of
Business,” as well as other sections in this report. Such
forward-looking statements are based on our management’s
current plans and expectations and are subject to risks,
uncertainties and changes in plans that may cause actual results to
differ materially from those anticipated in the forward-looking
statements. You should be aware that, as a result of any of these
factors materializing, the trading price of our common stock may
decline. These factors include, but are not limited to, the
following:
●
the
availability and adequacy of capital to support and grow our
business;
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economic,
competitive, business and other conditions in our local and
regional markets;
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actions
taken or not taken by others, including competitors, as well
as legislative, regulatory, judicial and other governmental
authorities;
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competition
in our industry;
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changes in
our business and growth strategy, capital improvements or
development plans;
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the
availability of additional capital to support development;
and
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other
factors discussed elsewhere in this annual
report.
The
cautionary statements made in this annual report are intended to be
applicable to all related forward-looking statements wherever they
may appear in this report.
We urge
you not to place undue reliance on these forward-looking
statements, which speak only as of the date of this report. We
undertake no obligation to publicly update any forward
looking-statements, whether as a result of new information, future
events or otherwise.
TABLE OF CONTENTS
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PART
I
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PART
II
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PART
III
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PART
IV
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PART I
Item 1. Business.
Business Description
GigWorld
Inc., formerly known as HotApp Blockchain Inc. (the
“Company” or “Group”), was incorporated in
the State of Delaware on March 7, 2012. The Company’s initial
business plan was to be a financial acquisition intermediary which
would serve buyers and sellers for companies that are in highly
fragmented industries. Our Board determined it was in the best
interest of the Company to expand our business plan. On October 15,
2014, through a sale and purchase agreement, the Company acquired
all the issued and outstanding stock of HotApps International Pte
Ltd, subsequently known as HotApp BlockChain Pte. Ltd.
(“HIP”) from Alset International Limited
(“AIL”), formerly known as Singapore eDevelopment
Limited. AIL is presently our largest stockholder. HIP
owned certain intellectual property relating to instant messaging
for portable devices (referred to herein as the “HotApp
Application”).
The
HotApp Application is a cross-platform mobile application that
incorporates instant messaging and ecommerce. This application can
be used on any mobile platform (i.e. IOS Online or
Android). The HotApp Application offered messaging and
calling services for HotApp Application users (text, photo, audio);
however, the messaging and calling services we offered were
terminated in 2017.
In
December of 2017, the Company’s name was changed from
“HotApp International, Inc.” to “HotApp
Blockchain Inc.” to reflect the Board of Directors’
determination that it was in the best interest of the Company to
expand its activities to include the development and
commercialization of blockchain-related
technologies. One area we are presently exploring is
providing technology consulting for security token offerings
(“STO”). Such services, which have not yet commenced
commercially, would include STO white paper development, technology
design and web development. We intend to outsource certain aspects
of these projects to potential partners we have identified. We have
no plans to launch our own token offering, but rather may develop
technologies that could facilitate such offerings by other
companies.
We
believe that the increasing acceptance of distributed ledger
technologies by potential customers will benefit us. The growth of
network marketing throughout the world would impact our
technologies that target that industry. In this rapidly evolving
field, however, technology is advancing quickly and it is possible
that our competitors could create products that gain market
acceptance before our products.
In
2018, one of our main developments was a broadening of our scope of
planned operations into a digital transformation technology
business. As a digital transformation technology business, we are
committed to enabling enterprises we work with to engage in a
digital transformation by providing consulting, implementation and
development services with various technologies, including instant
messaging, blockchain, e-commerce, social media and payment
solutions. We continue to advise businesses like network
marketing and brands in block chain services and mobile
collaboration.
We are
focused on serving business-to-business (B2B) needs in e-commerce,
collaboration and supply chains. We will help enterprises and
community users to transform their business model with digital
economy in a more effective manner. With our platform, users can
discover and build their own communities and create valuable
content. Enterprises can in turn enhance the user experience with
premium content, all of which are facilitated by the transactions
of every stakeholder via e-commerce.
Our
technology platform consists of instant messaging systems, social
media, e-commerce and payment systems, network marketing platforms
and e-real estate. We are focused on business-to-business solutions
such as enterprise messaging and workflow. We have successfully
implemented several strategic platform developments for clients,
including a mobile front-end solution for network marketing, a
hotel e-commerce platform for Asia and a real estate agent
management platform in China. We have also enhanced our
technological capability from mobile application development to
include blockchain architectural design, allowing mobile-friendly
front-end solutions to integrate with software platforms. Our main
digital assets at the present time are our applications. We
continue to strengthen our technology architecture and develop
Application Development Interface (API) for collaboration partners
such as network marketing back end service providers. In addition
we are continuing our development activities in blockchain
preparing for future clients opportunities.
4
In
January 2017, we entered into a revenue-sharing agreement with
iGalen, a network marketing company selling health products (AIL,
our majority stockholder, was a significant stockholder of iGalen).
Under the agreement, we customized a secure app for iGalen’s
communication and management system. The app enables mobile
friendly backend access for iGalen Inc. members, among other
functions. We are continuing to improve this secure app. In
particular, we intend to utilize blockchain supply logistics to
improve its functions (the original iGalen app did not utilize the
latest distributed ledger technology). Once the improvements to
this technology are completed, and initially utilized by iGalen, We
intend to then attempt to sell similar services to other companies
engaged in network marketing, as members of our management
have a particular experience offering services to that industry and
we believe our solutions are particularly suited to that
industry’s needs. This app can be modified to meet the
specific needs of any network marketing company. We believe that
these technologies will, among other benefits, make it easier for
network marketing companies to securely and effectively manage
their systems of compensation. Our current plan is to commence
sales of this technology in 2021.
In
February of 2021, the Company’s name was changed to
“GigWorld Inc.”
According
to a report from McKinsey in October of
2016, Global report, Independent
Work: Choice, Necessity and the Gig Economy, 162
million people in Europe and the United States—or 20 to 30
percent of the working-age population - engage in some form of
independent work.
The
direct selling industry has been adopting gig economy practices and
relying heavily on digital marketing technology in team development
and customer engagement.
We have
positioned ourselves to serve the growing demand in the
transformation of the direct selling industry towards gig
economy.
As of
December 31, 2020, details of the Company’s subsidiaries were
as follows:
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Subsidiaries
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Date of Incorporation
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Place of Incorporation
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Percentage of Ownership
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1st Tier Subsidiary:
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HotApps
International Pte Ltd, subsequently known as HotApp BlockChain Pte.
Ltd. (“HIP”)
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May 23, 2014
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Republic of Singapore
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100% by Company
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Crypto Exchange Inc.
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December 15, 2017
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State of Nevada, the United States of America
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100% by Company
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HWH World Inc.
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August 28, 2018
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State of Delaware, the United States of America
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100% by Company
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2nd Tier Subsidiaries:
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HWH World Pte. Ltd. (formerly known as Crypto Exchange Pte.
Ltd.)
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September 15, 2014
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Republic of Singapore
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100% owned by HIP
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HotApp International Limited*
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July 8, 2014
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Hong Kong (Special Administrative Region)
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100% owned by HIP
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* On
March 25, 2015, HotApps International Pte Ltd, subsequently known
as HotApp BlockChain Pte. Ltd. (“HIP”) acquired 100% of
issued share capital in HotApp International Limited.
5
Our Plan of Operations
We
believe that we have significant opportunities to further enhance
the value we deliver to our users. We intend to pursue
the following strategy:
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focus
in developing technologies in relation to the gig
economy;
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identify
strategic partnership opportunities in digital transformation for
direct selling companies
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Achieved and Target Milestones
In
2020, we have achieved the following milestones:
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transformed
the HotApp platform to serving the gig economy;
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built a
proof-of-concept solution for a direct selling company and
successfully integrated their backend service into the Mobile
App
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Over
the next twelve months we plan to:
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continuous
business development effort to identify licensing and solution
integration opportunities on our platform in the direct selling and
gig economy market place
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Our Business Model and User Monetization Plan
We plan
to generate revenue through the following:
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white
label of Gigworld solutions;
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integration
services for enterprises and
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digital
transformation related consulting services
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6
Our Competitiveness in the Businesses in Which we
Operate
With
the focus on being a service provider, our competitiveness is
strengthened by:
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strengthening
the methodology for project management and development through
continuous improvement through project engagement;
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understanding
the industry’s need, work closely with service providers in
the direct selling industry
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sharpening
technology focus and continuous moving up to new area such as
blockchain enabled services
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operating
within effective overhead to reduce operational risk.
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Our Challenges
Our
ability to execute our growth strategies is subject to risks and
uncertainties, including those relating to our ability
to:
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raise
additional funding for the continuous development of our technology
and project and to pursue our business strategy;
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maintain
the trusted status of our ecosystem;
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grow
our user base, enhance user engagement and create value services
for communities and enterprises;
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market
and profit from our service offerings, monetize our user base and
achieve profitability;
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keep up
with technological developments and evolving user
expectations;
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effectively
manage our growth and control our costs and expenses;
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address
privacy and security concerns relating to our services and the use
of user information;
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identify
a management team with owner mentality and proven track record;
and
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changing
market behavior for those using competitive platform.
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Please
see “Risk Factors” and other information included in
this report for a detailed discussion on the above and other
challenges and risks.
7
Our Key Competitive Strengths
We
believe building the following will provide us with some key
competitive strengthens:
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understanding
local market needs - establish brand presence for local enterprises
and communities based on the implementation know how for the early
adopters
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thin
and lean organization structure - to effectively adapt to the
growth and shrink of operation based on market and sales pipelines;
and
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Gigworld
ecosystem - to work closely with technology developers to further
enhance Gigworld ecosystem to better serve the
industry.
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Our Technology
Based
on our core technology infrastructure, we are building up
additional functions on top of this stable and scalable
infrastructure. The system architecture is designed in modular form
so that we continue to add new applications modules while we are
growing our customer base. In addition, we shall also be able to
incorporate third party application module effectively to continue
building new services to cope with the digital transformation need
of direct selling industry and supporting them capitalizing on the
gig economy opportunity.
Key
aspects or strengths of our technology include:
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scalable
infrastructure;
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quick
adaptation to third party services, such as back end system,
payment and logistics; and
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dedicated
to continuous improvement of user experience in local
context.
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Regulatory Matters
We are
subject to the laws and regulations of those jurisdictions in which
we plan to conduct our services, primarily the United States and
certain countries in Asia, which are generally applicable to
business operations, such as business licensing requirements,
income taxes and payroll taxes. In general, the development
and operation of our business is not subject to special regulatory
and/or supervisory requirements. Please see “Risk
Factors” and other information included in this report for
further discussion on the above matters.
8
Employees and Employment Agreements
Since
the completion of the sale of all of the issued and outstanding
shares of HotApps Information Technology Co. Ltd. (also known as
Guangzhou HotApps Technology Ltd.) on January 14, 2019, we have not
entered into any employment arrangement with any
employees except for our Chief Executive Officer, Lee Wang
Kei. Mr. Lee is paid $2,000 per month by HotApp International
Limited, a subsidiary of the Company. Our largest stockholder, AIL,
has provided staff without charge to our Company. We intend to
outsource many functions of our business for the immediate
future.
Insurance
We do
not maintain property insurance, business interruption insurance or
general third-party liability insurance, nor do we maintain product
liability or key-man insurance.
Item 1A. Risk Factors.
An
investment in our common stock involves a high degree of risk.
Investors should carefully consider the following factors and other
information before deciding to invest in our Company. If any of the
following risks occur, our business, financial condition, results
of operations and prospects for growth would likely suffer. As a
result, you could lose all or part of your investment.
Our business is subject to numerous risk factors, including the
following:
RISKS RELATED TO OUR FINANCIAL CONDITION
There is substantial doubt about the Company’s ability to
continue as a going concern.
The
report of Briggs & Veselka Co., our independent registered
public accounting firm, with respect to our consolidated financial
statements as of and for the year ended December 31, 2020 contains
an explanatory paragraph as to our potential ability to continue as
a going concern. As a result, this may adversely affect
our ability to obtain new financing on reasonable terms or at all.
Investors may be unwilling to invest in a company that will not
have the funds necessary to continue to deploy its business
strategies.
Failure to raise additional capital to fund future operations could
harm our business and results of operations.
As
reflected on our audited consolidated financial statements as of
and for the year ended December 31, 2020 contained herein, we have
incurred net loss, and have a working capital deficit of
$1,389,832. We will require additional financing in
order to maintain our corporate existence and to implement our
business plans and strategy. The timing and amount of our capital
requirements will depend on a number of factors, including our
operational results, the need for other expenditures, and
competitive pressures. If additional funds are raised through the
issuance of equity or convertible debt securities, the percentage
ownership of our then-existing stockholders will likely be reduced
significantly. We cannot make assurances that any financing will be
available on terms favorable to us or at all. If adequate funds are
not available on acceptable terms, our ability to fund our business
strategy, ongoing operations, take advantage of unanticipated
opportunities, and in turn our business, financial condition and
results of operations will be significantly and adversely
affected.
9
RISKS RELATED TO OUR BUSINESS
Management has identified a material weakness in the design and
effectiveness of our internal controls, which, if not remediated
could affect the accuracy and timeliness of our financial reporting
and result in misstatements in our consolidated financial
statements.
In
connection with the preparation of our Report on Form 10-K, an
evaluation was carried out by management, with the participation of
our Chief Executive Officer and Chief Financial Officer, of the
effectiveness of our disclosure controls and procedures (as defined
in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act
of 1934 (the “Exchange Act”) as of December 31, 2020.
Disclosure controls and procedures are designed to ensure that
information required to be disclosed in reports filed or submitted
under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified, and that such
information is accumulated and communicated to management,
including the Chief Executive Officer and Chief Financial Officer,
to allow timely decisions regarding required
disclosure.
During
evaluation of disclosure controls and procedures as of December 31,
2020 conducted as part of our annual audit and preparation of our
annual consolidated financial statements, management conducted an
evaluation of the effectiveness of the design and operations of our
disclosure controls and procedures and concluded that our
disclosure controls and procedures were not effective. Management
determined that at December 31, 2020, we had a material weakness
that relates to the relatively small number of staff who have
bookkeeping and accounting functions (this staff is provided by
AIL, our largest shareholder, at no cost to us). This
limited number of staff prevents us from segregating duties within
our internal control system.
This
material weakness, which remained unremediated by the Company as of
December 31, 2020, could result in a misstatement to the accounts
and disclosures that would result in a material misstatement to our
annual or interim consolidated financial statements that would not
be prevented or detected. If we do not remediate the material
weakness or if other material weaknesses are identified in the
future, we may be unable to report our financial results accurately
or to report them on a timely basis, which could result in the loss
of investor confidence and have a material adverse effect on our
stock price as well as our ability to access capital and lending
markets.
Our Company cannot predict if it can achieve profitable
operations.
The
Company has only had limited operations to date and requires
significant additional financing to reach its projected milestones,
which include further product development, product marketing and
general overhead expenditures. It may be difficult for the Company
to attract funding necessary to reach its projected milestones.
Moreover, even if it achieves its projected milestones, the Company
cannot predict whether it will reach profitable
operations.
The coronavirus or other adverse public health developments could
have a material and adverse effect on our business operations,
financial condition and results of operations.
In
December 2019, a novel strain of coronavirus (COVID-19) was first
identified in Wuhan, Hubei Province, China, and has since spread to
a number of other countries, including the United States. The
COVID-19 pandemic’s far-reaching impact on the global economy
could negatively affect various aspects of our business. The extent
to which the COVID-19 pandemic may impact our business will depend
on future developments, which are highly uncertain and cannot be
predicted.
The
COVID-19 pandemic may adversely impact our potential to expand our
business activities. The COVID-19 pandemic has impacted, and may
continue to impact, the global supply of certain goods and services
in ways that may impact the sale of products to consumers that we,
or companies we may partner with, will attempt to make. The
COVID-19 pandemic may prevent us from pursuing otherwise attractive
opportunities.
In
addition, the COVID-19 pandemic could directly impact the ability
of our management and service providers to continue to work, and
our ability to conduct our operations in a prompt and efficient
manner. Our management has shifted to mostly working from home
since March 2020, but this has had minimal impact on our operations
to date. However our management’s ability to travel has been
significantly limited, and limitations on the mobility of our
management may slow down our ability to enter into new transactions
and expand existing projects.
10
To
date, we have not been required to expend significant resources
related to employee health and safety matters related to the
COVID-19 pandemic. We have a small management team, however, and
the inability of any significant number of our management team to
work due to illness or the illness of a family member could
adversely impact our operations.
Our business is highly competitive. Competition presents an ongoing
threat to the success of our business.
We face
significant competition in every aspect of our business, including
from companies that provide tools to facilitate the sharing of
information, companies that enable marketers to display advertising
and companies that provide development platforms for applications
developers. We compete with companies that offer full-featured
products that replicate the range of communications and related
capabilities we provide. We also compete with companies that
develop applications, particularly mobile applications, that
provide social or other communications functionality, such as
messaging, photo- and video-sharing and micro-blogging, and
companies that provide web- and mobile-based information and
entertainment products and services that are designed to engage
users and capture time spent online and on mobile devices. In
addition, we face competition from traditional, online, and mobile
businesses that provide media for marketers to reach their
audiences and/or develop tools and systems for managing and
optimizing advertising campaigns.
Most, if not all, of our current and potential competitors may have
significantly greater resources or better competitive positions in
certain product segments, geographic regions or user demographics
than we do. These factors may allow our competitors to respond more
effectively than us to new or emerging technologies and changes in
market conditions.
Our
competitors may develop products, features, or services that are
similar to ours or that achieve greater acceptance, may undertake
more far-reaching and successful product development efforts or
marketing campaigns, or may adopt more aggressive pricing policies.
Certain competitors could use strong or dominant positions in one
or more markets to gain competitive advantage against us in our
target market or markets. As a result, our competitors
may acquire and engage users or generate revenue at the expense of
our own efforts, which may negatively affect our business and
financial results.
We
believe that our ability to compete effectively depends upon many
factors both within and beyond our control, including:
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the
popularity, usefulness, ease of use, performance, and reliability
of our products compared to our competitors' products, particularly
with respect to mobile products;
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the
size and composition of our user base;
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the
engagement of our users with our products and competing
products;
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the
timing and market acceptance of products, including developments
and enhancements to our or our competitors' products;
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our
ability to monetize our products;
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customer
service and support efforts;
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acquisitions
or consolidation within our industry, which may result in more
formidable competitors;
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11
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our
ability to attract, retain, and motivate talented employees,
particularly software engineers, designers, and product
managers;
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our
ability to cost-effectively manage and grow our operations;
and
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our
reputation and brand strength relative to those of our
competitors.
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The regulatory situation regarding ICOs and STOs is dynamic, and
may experience changes that could impact our ability to provide
consulting and other services in this field.
ICOs
and STOs are currently perceived by the public as vulnerable to
misrepresentation, fraud and manipulation. There is a strong
possibility that regulators will make policies to control the risks
associated with ICOs and STOs that might adversely impact our
ability to provide consulting and other services related to ICOs
and STOs.
We are a development stage company and we may never generate
significant revenues which could cause our business to
fail.
We are
a development stage company and have generated limited revenues as
of the date of this Report. Since inception, the Company has
incurred net loss of $5,666,250 and has net working capital deficit
of $1,389,832 at December 31, 2020. We expect to operate with net
loss for the next financial year-ending December 31, 2021 or
longer. We cannot predict the extent of these future net losses, or
when we may attain profitability, if at all. If we are unable to
generate significant revenue or attain profitability, we will not
be able to sustain operations and will have to curtail
significantly or cease operations.
We have a limited operating history that investors can use to
evaluate us, and the likelihood of our success must be considered
in light of the problems, expenses, difficulties, complications and
delays frequently encountered by a small developing
company.
We were
incorporated in Delaware on March 7, 2012. We have no significant
financial resources and have recorded minimal revenues, including
no revenues in the year ended December 31, 2020. The likelihood of
our success must be considered in light of the problems, expenses,
difficulties, complications and delays frequently encountered by a
small developing company starting a new business enterprise and the
highly competitive environment in which we will operate. Since we
have a limited operating history, we cannot assure you that our
business will be profitable or that we will ever generate
sufficient revenues to meet our expenses and support our
anticipated activities.
If we do not successfully develop new products and services, our
business may be harmed.
Our
business and operating results may be harmed if we fail to expand
our various product and service offerings (either through internal
product or capability development initiatives or through
partnerships and acquisitions) in such a way that achieves
widespread market acceptance or that generates significant revenue
and gross profits to offset our operating and other costs. We may
not successfully identify, develop and market new product and
service offerings in a timely manner. If we introduce new products
and services, they may not attain broad market acceptance or
contribute meaningfully to our revenue or profitability.
Competitive or technological developments may require us to make
substantial, unanticipated capital expenditures in new products and
technologies or in new strategic partnerships, and we may not have
sufficient resources to make these expenditures. Because the
markets for many of our products and services are subject to rapid
change, we may need to expand and/or evolve our product and service
offerings quickly. Delays and cost overruns could affect our
ability to respond to technological changes, evolving industry
standards, competitive developments or customer requirements and
harm our business and operating results.
12
The loss of one or more of our key personnel, or our failure to
attract and retain other highly qualified personnel in the future,
could harm our business.
We
depend on the services and performance of our key personnel,
including Chan Heng Fai, Lee Wang Kei and Lum Kan
Fai. The loss of key personnel, including members of
management, could disrupt our operations and have an adverse effect
on our business.
Each of
Mr. Chan, Mr. Lee and Mr. Lum are engaged in other business
ventures, including other technology-related businesses. In order
to successfully implement our businesses plans, we will need to
recruit additional qualified personnel.
We may incur significant costs to be a public company to ensure
compliance with U.S. corporate governance and accounting
requirements, and we may not be able to absorb such
costs.
We may
incur significant costs associated with our public company
reporting requirements, costs associated with corporate governance
requirements, including requirements under the Sarbanes-Oxley Act
of 2002 and other rules implemented by the Securities and Exchange
Commission. We expect these costs to equal at least $50,000 per
year, consisting of $10,000 in legal, $35,000 in audit and $5,000
for financial printing and transfer agent fees. We expect all of
these applicable rules and regulations to significantly increase
our legal and financial compliance costs and to make some
activities more time consuming and costly. We may not be able
to cover these costs from our operations’ revenue and may
need to raise or borrow additional funds. We also expect that
these applicable rules and regulations may make it more difficult
and more expensive for us to obtain director and officer liability
insurance and we may be required to accept reduced policy limits
and coverage or incur substantially higher costs to obtain the same
or similar coverage. As a result, it may be more difficult for
us to attract and retain qualified individuals to serve on our
board of directors or as executive officers. We are currently
evaluating and monitoring developments with respect to these newly
applicable rules, and we cannot predict or estimate the amount of
additional costs we may incur or the timing of such costs. In
addition, we may not be able to absorb these costs of being a
public company which will negatively affect our business
operations.
Alset International Limited owns a significant amount of the
outstanding common stock of the Company and could take actions
which other investors may deem as detrimental to the
Company.
Alset
International Limited beneficially owns approximately 99.724% of
the outstanding common stock of our Company as of the date of this
filing. Through this ownership, this stockholder has the ability to
substantially influence our board, our management, and our policies
and business operations. In addition, the rights of the
holders of our common stock will be subject to and may be adversely
affected by, the rights of holders of any preferred stock that may
be issued in the future. Because of this majority ownership,
AIL may cause the Company to engage in business combinations
without having to seeking other stockholders’
approval.
Such
concentration of ownership also may have the effect of delaying or
preventing a change in control, which may be to the benefit of this
one stockholder but not in the interest of the other investors.
Additionally, minority stockholders would not be able to obtain the
necessary stockholder vote to affect any change in the course of
our business. This concentration of control could prevent minority
stockholders from removing from our Board directors who may be
perceived as not performing at an appropriate level.
We may face liability for information displayed on or accessible
via our website, and for other content and commerce-related
activities, which could cause us to suffer losses.
We
could face claims for errors, defamation, negligence, copyright or
trademark infringement based on the nature and content of
information displayed on or accessible via our website, which could
adversely affect our financial condition. Even to the extent that
claims made against us do not result in liability, we may incur
substantial costs in investigating and defending such
claims.
Our
insurance, if any, may not cover all potential claims to which we
might be exposed to or may not be adequate to indemnify us for all
liabilities that we may incur. Any imposition of liability that is
not covered by insurance or is in excess of insurance coverage
would cause us to suffer losses.
13
If our costs and expenses are greater than anticipated and we are
unable to raise additional working capital, we may be unable to
fully fund our operations and to otherwise execute our business
plan.
We do
not currently have sufficient funds or any agreements for
additional funds, for us to continue our business for the next 12
months. Should our costs and expenses prove to be greater than we
currently anticipate, or should we change our current business plan
in a manner that will increase or accelerate our anticipated costs
and expenses, the depletion of our working capital would be
accelerated. To the extent it becomes necessary to raise additional
cash in the future as our current cash and working capital
resources are depleted, we will seek to raise it through the public
or private sale of debt or equity securities, funding from
joint-venture or strategic partners, debt financing or short-term
loans, or a combination of the foregoing. We may also seek to
satisfy indebtedness without any cash outlay through the private
issuance of debt or equity securities. We currently do not have any
binding commitments for, or readily available sources of,
additional financing. We cannot give you any assurance
that we will be able to secure the additional cash or working
capital that we may require to continue our
operations.
If we require additional capital and even if we are able to raise
additional financing, we might not be able to obtain it on terms
that are not unduly expensive or burdensome to the Company or
disadvantageous to our existing stockholders.
If we
require additional capital and even if we are able to raise
additional cash or working capital through the public or private
sale of debt or equity securities, funding from joint-venture or
strategic partners, debt financing or short-term loans, or the
satisfaction of indebtedness without any cash outlay through the
private issuance of debt or equity securities, the terms of such
transactions may be unduly expensive or burdensome to the Company
or disadvantageous to our existing stockholders. For example, we
may be forced to sell or issue our securities at significant
discounts to market, or pursuant to onerous terms and conditions,
including the issuance of preferred stock with disadvantageous
dividend, voting or veto, board membership, conversion, redemption
or liquidation provisions; the issuance of convertible debt with
disadvantageous interest rates and conversion features; the
issuance of warrants with cashless exercise features; the issuance
of securities with anti-dilution provisions; and the grant of
registration rights with significant penalties for the failure to
quickly register. If we raise debt financing, we may be required to
secure the financing with all of our business assets, which could
be sold or retained by the creditor should we default in our
payment obligations.
We may not timely and effectively scale and adapt our existing
technology and network infrastructure to ensure that our services
and solutions are accessible within an acceptable load time.
Additionally, other catastrophic occurrences beyond our control
could interfere with access to our services.
A key
element to our potential growth is the ability of our users (whom
we define as anyone who downloads and uses the app) in all
geographies to access our services and solutions within acceptable
load times. We may, in the future, experience service disruptions,
outages and other performance problems due to a variety of factors,
including infrastructure changes, human or software errors, and
denial of service, fraud or security attacks. In some instances, we
may not be able to identify the cause or causes of these website
performance problems within an acceptable period of time. If our
services are unavailable when users attempt to access them as
quickly as they expect, users may seek other services to obtain the
information for which they are looking, and may not return to use
our services as often in the future, or at all. This would
negatively impact our ability to attract new users and increase
engagement of our existing users. We expect to continue to make
significant investments to maintain and improve mobile application
performance and to enable rapid releases of new features and
products. To the extent that we do not effectively address capacity
constraints, upgrade our systems as needed and continually develop
our technology and network architecture to accommodate actual and
anticipated changes in technology, our business and operating
results may be harmed.
Our
systems are also vulnerable to damage or interruption from
catastrophic occurrences such as earthquakes, floods, fires, power
loss, telecommunication failures, terrorist attacks and other
similar events. Despite any precautions we may take, the occurrence
of a natural disaster or other unanticipated problems could result
in lengthy interruptions in our services.
We do
not carry business interruption insurance sufficient to compensate
us for the potentially significant losses, including the potential
harm to the growth of our business that may result from
interruptions in our services as a result of system
failures.
If our security measures are compromised, or if our websites are
subject to attacks that degrade or deny the ability of members or
customers to access our solutions, or if our member data is
compromised, members and customers may curtail or stop to use our
solutions.
Our
applications will involve the collection, processing, storage,
sharing, disclosure and usage of members’ and
customers’ information and communications, some of which may
be private. We are vulnerable to computer viruses, break-ins,
phishing attacks, attempts to overload our servers with
denial-of-service or other attacks and similar disruptions from
unauthorized use of our computer systems, any of which could lead
to interruptions, delays, or website shutdowns, causing loss of
critical data or the unauthorized disclosure or use of personally
identifiable or other confidential information. If we experience
compromises to our security that result in website performance or
availability problems, the complete shutdown of our websites, or
the loss or unauthorized disclosure of confidential information,
such as credit card information, our members or customers may be
harmed or lose trust and confidence in us, and decrease the use of
our website and services or stop using our services in their
entirety, and we would suffer reputational and financial
harm.
14
In
addition, we could be subject to regulatory investigations and
litigation in connection with a security breach or related issues,
and we could also be liable to third parties for these types of
breaches. Such litigation, regulatory investigations and our
technical activities intended to prevent future security breaches
are likely to require additional management resources and
expenditures. If our security measures fail to protect this
information adequately or we fail to comply with the applicable
credit card association operating rules, we could be liable to both
our customers for their losses, as well as the vendors under our
agreements with them. In addition, we could be subject to fines and
higher transaction fees, we could face regulatory action, and our
customers and vendors could end their relationships with us. Any of
these developments could harm our business and financial
results.
Public scrutiny of internet privacy and security issues may result
in increased regulation and different industry standards, which
could deter or prevent us from providing our current products and
solutions to our members and customers, thereby harming our
business.
The
regulatory framework for privacy and security issues worldwide is
evolving and is likely to remain in flux for the foreseeable
future. Practices regarding the collection, use, storage, display,
processing, transmission and security of personal information by
companies offering online services have recently come under
increased public scrutiny. The U.S. government, including the White
House, the Federal Trade Commission, the Department of Commerce and
many state governments, are reviewing the need for greater
regulation of the collection, use and storage of information
concerning consumer behavior with respect to online services,
including regulation aimed at restricting certain targeted
advertising practices and collection and use of data from mobile
devices. The FTC in particular has approved consent decrees
resolving complaints and their resulting investigations into the
privacy and security practices of a number of online, social media
companies. Similar actions may also impact us
directly.
Our
business, including our ability to operate and expand
internationally or on new technology platforms, could be adversely
affected if legislation or regulations are adopted, interpreted, or
implemented in a manner that is inconsistent with our current
business practices that may require changes to these practices, the
design of our websites, mobile applications, products, features or
our privacy policy. In particular, the success of our business is
expected to be driven by our ability to responsibly use the data
that our members share with us. Therefore, our business could be
harmed by any significant change to applicable laws, regulations or
industry standards or practices regarding the storage, use or
disclosure of data our members choose to share with us, or
regarding the manner in which the express or implied consent of
consumers for such use and disclosure is obtained. Such changes may
require us to modify our products and features, possibly in a
material manner, and may limit our ability to develop new products
and features that make use of the data that we collect from our
members.
We will rely on outside firms to host our servers and to provide
telecommunication connections, and a failure of service by these
providers could adversely affect our business and
reputation.
We will
rely upon third party providers to host a number of our servers and
provide telecommunication connections. In the event that these
providers experience any interruption in operations or cease
operations for any reason or if we are unable to agree on
satisfactory terms for continued hosting relationships, we would be
forced to enter into a relationship with other service providers or
assume hosting responsibilities ourselves. If we are forced to
switch hosting facilities, we may not be successful in finding an
alternative service provider on acceptable terms or in hosting the
computer server ourselves. We may also be limited in our remedies
against these providers in the event of a failure of service. A
failure or limitation of service or available capacity by any of
these third-party providers could adversely affect our business and
reputation.
Our products and internal systems rely on software that is highly
technical, and if it contains undetected errors, our business could
be adversely affected.
Our
products and internal systems rely on software, including software
developed or maintained internally and/or by third parties, that is
highly technical and complex. In addition, our products and
internal systems depend on the ability of such software to store,
retrieve, process and manage immense amounts of data. The software
on which we rely has contained, and may now or in the future
contain, undetected errors, bugs or vulnerabilities. Some errors
may only be discovered after the code has been released for
external or internal use. Errors or other design defects within the
software on which we rely may result in a negative experience for
users and marketers who use our products, delay product
introductions or enhancements, result in measurement or billing
errors or compromise our ability to protect the data of our users
and/or our intellectual property. Any errors, bugs or defects
discovered in the software on which we rely could result in damage
to our reputation, loss of users, loss of revenue or liability for
damages, any of which could adversely affect our business and
financial results.
15
A significant or prolonged economic downturn would have a material
adverse effect on our results of operations.
Our
results of operations are expected to be affected by the level of
business activity of our users, many of whom are expected to be
businesses. These businesses, in turn, can be affected by general
economic conditions and the level of economic activity in the
industries and markets that they serve. On an aggregate basis, our
clients may be less likely to hire as many senior executives or
consultants during economic downturns and periods of economic
uncertainty. To the extent our clients delay or reduce hiring
senior executives or consultants due to an economic downturn or
economic uncertainty, our results of operations will be adversely
affected. A continued economic downturn or period of economic
uncertainty and a decline in the level of business activity of our
clients would have a material adverse effect on our business,
financial condition and results of operations.
Any intellectual property rights we develop will be valuable and
any inability to protect them could reduce the value of our
products, services and brand.
Any
trademarks, trade secrets, copyrights and other intellectual
property rights that we develop will be important assets to us.
There can be no assurance that the protections provided by these
intellectual property rights will be adequate to prevent our
competitors from misappropriating our technology or that our
competitors will not independently develop technologies that are
substantially equivalent or superior to our technology. There are
events that are outside of our control that could pose a threat to
our intellectual property rights. Additionally, protecting our
intellectual property rights is costly and time consuming. Any
increase in the unauthorized use of our intellectual property could
make it more expensive to do business and harm our operating
results.
We may be subject to intellectual property rights claims in the
future, which may be costly to defend, could require the payment of
damages and could limit our ability to use certain technologies in
the future.
Companies
in the Internet, technology and media industries own large numbers
of patents, copyrights, trademarks and trade secrets and frequently
enter into litigation based on allegations of infringement or other
violations of intellectual property rights. As our product usage
becomes more wide-spread, the possibility of intellectual property
rights claims increases. Our technologies may not be able to
withstand any third-party claims or rights against their use. Any
intellectual property claims, with or without merit, could be time
consuming, expensive to litigate or settle and could divert
management resources and attention. An adverse determination also
could prevent us from offering our products and services to others
and may require that we procure substitute products or services for
these members.
With
respect to any intellectual property rights claim, we may have to
pay damages or stop using technology found to be in violation of a
third party’s rights. We may have to seek a license for the
technology, which may not be available on reasonable terms and may
significantly increase our operating expenses. The technology also
may not be available for license to us at all. As a result, we also
may be required to develop alternative non-infringing technology,
which could require significant effort and expense. If we cannot
license or develop technology for any infringing aspects of our
business in the future, we may be forced to limit our product and
service offerings and may be unable to compete effectively. Any of
these results could harm our brand and operating
results.
RISKS RELATED TO OUR COMMON STOCK
Once publicly trading, the application of the “penny
stock” rules could adversely affect the market price of our
common shares and increase your transaction costs to sell those
shares.
The
Securities and Exchange Commission has adopted Rule 15g-9 which
establishes the definition of a “penny stock,” for the
purposes relevant to us, as any equity security that has a market
price of less than $5.00 per share or with an exercise price of
less than $5.00 per share, subject to certain exceptions. For any
transaction involving a penny stock, unless exempt, the rules
require:
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that a
broker or dealer approve a person's account for transactions in
penny stocks; and
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that a
broker or dealer receive from the investor a written agreement to
the transaction, setting forth the identity and quantity of the
penny stock to be purchased.
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16
In
order to approve a person's account for transactions in penny
stocks, the broker or dealer must:
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obtain
financial information and investment experience objectives of the
person; and
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make a
reasonable determination that the transactions in penny stocks are
suitable for that person and the person has sufficient knowledge
and experience in financial matters to be capable of evaluating the
risks of transactions in penny stocks.
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The
broker or dealer must also deliver, prior to any transaction in a
penny stock, a disclosure schedule prescribed by the Commission
relating to the penny stock market, which, in highlight
form:
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sets
forth the basis on which the broker or dealer made the suitability
determination; and
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that
the broker or dealer received a signed, written agreement from the
investor prior to the transaction.
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Generally, brokers may be less willing to execute transactions in
securities subject to the “penny stock” rules. This may
make it more difficult for investors to dispose of our common stock
and cause a decline in the market value of our stock.
Disclosure
also has to be made concerning the risks of investing in penny
stocks in both public offerings and in secondary trading and
regarding the commissions payable to both the broker-dealer and the
registered representative, current quotations for the securities
and the rights and remedies available to an investor in cases of
fraud in penny stock transactions. Finally, monthly statements have
to be sent disclosing recent price information for the penny stock
held in the account and information on the limited market in penny
stocks.
We do not expect to pay dividends in the future; any return on
investment may be limited to the value of our common
stock.
We do
not currently anticipate paying cash dividends in the foreseeable
future. The payment of dividends on our common stock will depend on
earnings, financial condition and other business and economic
factors affecting it at such time as the Board of Directors may
consider relevant. Our current intention is to apply net earnings,
if any, in the foreseeable future to increasing our capital base
and development and marketing efforts. There can be no assurance
that the Company will ever have sufficient earnings to declare and
pay dividends to the holders of our common stock, and in any event,
a decision to declare and pay dividends is at the sole discretion
of our Board of Directors. If we do not pay dividends, our common
stock may be less valuable because a return on your investment will
only occur if our stock price appreciates.
Our common stock price is likely to be highly volatile which may
subject us to securities litigation thereby diverting our resources
which may affect our profitability and results of
operation.
Once
listed, due to the nature of our Company and its business, the
market price for our common stock is expected to be limited and
highly volatile. The following factors will add to our common stock
price's volatility:
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the
number of users of our applications;
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actual
or anticipated variations in our quarterly operating
results;
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17
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announcements
of acquisitions;
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additions
or departures of our key personnel; and
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sales
of our common stock.
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Some of
these factors are beyond our control. These factors may decrease
the market price of our common stock, regardless of our operating
performance.
In the past, plaintiffs have initiated securities
class action litigation against a company following periods of
volatility in the market price of its securities. We may be the
target of similar litigation in the future. Securities litigation
could result in substantial costs and liabilities and could divert
management’s attention and resources.
In
addition, as a result of the expected volatility of our stock
price, investors may be unable to resell their shares at a fair
price or at a price lower than their entry price.
The trading market for our common stock may be
limited.
If a
market for our common stock develops, it is expected to be limited
and thinly traded, and we can provide no assurance to investors
that a more robust market will develop. If a market for our common
stock does not develop, our stockholders may not be able to resell
the shares of our common stock they have purchased and they may
lose all of their investment.
By issuing preferred stock, we may be able to delay, defer, or
prevent a change of control.
Our
Articles of Incorporation permit us to issue, without approval from
our stockholders, a total of 15,000,000 shares of preferred stock.
Our Board of Directors can determine the rights, preferences,
privileges and restrictions granted to, or imposed upon, the shares
of preferred stock and to fix the number of shares constituting any
series and the designation of such series. It is
possible that our Board of Directors, in determining the rights,
preferences and privileges to be granted when the preferred stock
is issued, may include provisions that have the effect of delaying,
deferring or preventing a change in control, discouraging bids for
our common stock at a premium over the market price, or that
adversely affect the market price of our common stock and the
voting and other rights of the holders of our common
stock.
We have not voluntarily implemented various corporate governance
measures, in the absence of which stockholders may have more
limited protections against interested director transactions,
conflicts of interests and similar matters.
We have
not yet adopted any corporate governance measures and, since our
securities are not yet listed on a national securities exchange, we
are not required to do so. We have not adopted corporate governance
measures such as an audit or other independent committees of our
Board of Directors as we presently have only one independent
director. If we expand our board membership in future periods to
include additional independent directors, we may seek to establish
an audit and other committees of our Board of Directors. It is
possible that if our Board of Directors included additional
independent directors and if we were to adopt some or all of these
corporate governance measures, stockholders would benefit from
somewhat greater assurances that internal corporate decisions were
being made by disinterested directors and that policies had been
implemented to define responsible conduct. For example, in the
absence of audit, nominating and compensation committees comprised
of at least a majority of independent directors, decisions
concerning matters such as compensation packages to our senior
officers and recommendations for director nominees may be made by a
majority of directors who have an interest in the outcome of the
matters being decided. Prospective investors should bear in mind
our current lack of corporate governance measures in formulating
their investment decisions.
18
Securities analysts may not cover our common stock and this may
have a negative impact on our common stock’s market
price.
The
trading market for our common stock in the future may depend on the
research and reports that securities analysts publish about us or
our business. We do not have any control over these analysts. There
is no guarantee that securities analysts will cover our common
stock. If securities analysts do not cover our common stock, the
lack of research coverage may adversely affect our common
stock’s market price, if any. If we are covered by securities
analysts, and our stock is downgraded, our stock price would likely
decline. If one or more of these analysts ceases to cover us or
fails to publish regularly reports on us, we could lose visibility
in the financial markets, which could cause our stock price or
trading volume to decline.
Since some members of our board of directors are not residents of
the United States and certain of our assets are located outside of
the United States, you may not be able to enforce a U.S. judgment
for claims you may bring against such directors or
assets.
Several
members of our senior management team, including our Chief
Executive Officer and Chief Financial Officer, have their primary
residences and business offices in Asia, and a portion of our
assets and a substantial portion of the assets of these directors
are located outside the United States. As a result, it may be more
difficult for you to enforce a lawsuit within the United States
against these non-U.S. residents than if they were residents of the
United States. Also, it may be more difficult for you to enforce
any judgment obtained in the United States against our assets or
the assets of our non-U.S. resident management located outside the
United States than if these assets were located within the United
States. We cannot assure you that foreign courts would enforce
liabilities predicated on U.S. federal securities laws in original
actions commenced in such foreign jurisdiction, or judgments of
U.S. courts obtained in actions based upon the civil liability
provisions of U.S. federal securities laws.
Item 1B. Unresolved Staff Comments.
Not
Applicable
Item 2. Properties
Our US
office is located at 4800 Montgomery Lane, Suite 210, Bethesda MD
20814. We occupy one office at this location free of rent based on
a month-to-month arrangement with an affiliate of AIL, the
Company’s largest stockholder.
Item 3. Legal Proceedings.
The
Company is not a party to any proceedings, and no such proceedings
are known to be contemplated.
There
are no material proceedings to which any director, officer or
affiliate of the Company, or any beneficial owner of record of more
than five percent of any class of voting securities of the Company,
or any associate of any such director, office, affiliate of the
Company, or security holder is a party adverse to the Company or
any of its subsidiaries or has a material interest adverse to the
Company or any of its subsidiaries.
Item 4. Mine Safety Disclosure.
Not
Applicable.
19
PART II
Item 5. Market for Registrant’s
Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities.
Market Information
Presently,
there is no established public trading market for our shares of
common stock. On June 9, 2015, the Financial Industry
Regulatory Authority (“FINRA”), cleared the
Company’s request under Rule 15c2-11 for an unpriced
quotation on the OTC Bulletin Board and in OTC Link under the
symbol HTPN. Since that time, through the date of this Annual
Report, the Company has not had any trading in its
stock. The Company’s stock symbol is now GIGW to
reflect the Company’s new name.
Holders
As of
the date of this filing, we had 94 stockholders of our common
stock.
Dividends
Since
inception we have not paid any dividends on our common stock. We
currently do not anticipate paying any cash dividends in the
foreseeable future on our common stock. Although we intend to
retain our earnings, if any, to finance the exploration and growth
of our business, our Board of Directors will have the discretion to
declare and pay dividends in the future. Payment of dividends in
the future will depend upon our earnings, capital requirements and
other factors, which our Board of Directors may deem
relevant.
Securities authorized for issuance under equity compensation
plans
On July
30, 2018, the Company adopted an Equity Incentive Plan (the
“Plan”). The Plan is intended to encourage ownership of
our shares by employees, directors and certain consultants to the
Company, in order to attract and retain such people, to induce them
to work for the benefit of the Company. The Plan provides for the
grant of options and/or other stock-based or stock-denominated
awards. Subject to adjustment in accordance with the terms of the
Plan, 50,000,000 shares of Common Stock of the Company have been
reserved for issuance pursuant to awards under the Plan. The Plan
will be administered by the Company’s Board of Directors.
This Plan shall terminate ten (10) years from the date of its
adoption by the Board of Directors. The Plan was
approved by the stockholder holding a majority of the
Company’s issued and outstanding shares of common
stock.
20
Recent sales of unregistered securities; use of proceeds from
registered securities
On
March 27, 2017, the Company sold 500,988,889 shares of common stock
to AIL in exchange for the conversion of $450,890 of debt owed by
the Company to AIL at a conversion price of $0.0009 per share. The
issuance of these shares was completed in accordance with the
exemption provided by Section 4(a)(2) of the Securities Act of
1933, as amended.
Performance Graph
Not
applicable to smaller reporting companies.
Purchases of Equity Securities by the issuer and affiliated
purchasers
During
the period covered by this report, the Company did not repurchase
any shares of the Company’s common stock.
Item 6. Selected Financial Data.
Not
applicable to smaller reporting companies.
21
Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations.
RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2020 COMPARED
TO
YEAR ENDED DECEMBER 31, 2019
Results of Operations
For the years ended December 31, 2020 and 2019
Revenue
The
Company had no revenue during the years ended December 31, 2020 and
2019.
Cost of revenue
Total
cost of revenue for the years ended December 31, 2020 and 2019 were
$0
General and Administrative
General
and administrative expenses consist primarily of salary and
benefits, professional fees, rental expenses and maintenance
expenses of existing software framework. We expect to maintain our
general and administrative expenses with moderate changes in line
with business activities. Total general and administrative expenses
for the years ended December 31, 2020 and 2019 for continuing
operations were $88,155 and $323,585. Total general and
administrative expenses for the years ended December 31, 2020 and
2019 for discontinued operations were $0 and $3,710, of which $0
and $48 were depreciation expenses, respectively.
Other (Expenses) / Income
For the
years ended December 31, 2020 and 2019, we have incurred a net
balance of $38,809 and $34,113 in foreign exchange gain, of which
$719 and $0 are realized foreign exchange gain, $0 and $299,255 in
gain on disposal of investment, and $4 and $55 in interest income,
respectively for continuing operations. For the years ended
December 31, 2020 and 2019, we have incurred $0 and $(2) in
unrealized foreign exchange (loss), respectively for discontinued
operations.
Liquidity and Capital Resources
At
December 31, 2020, we had cash of $158,057 and a working capital
deficit of $1,389,832. The increase in cash during the year ended
December 31, 2020 was primarily due to the cash received upon the
maturity of a promissory note. The increase in the working
capital deficit during the year ended December 31, 2020 was due to
the increase in the amount due to AIL.
22
We had
a total stockholders’ deficit of $1,389,730 and an
accumulated deficit of $5,666,250 as of December 31, 2020 compared
with a total stockholders’ deficit of $1,272,320 and an
accumulated deficit of $5,616,908 as of December 31, 2019. This
difference is primarily due to the net loss incurred and the loss
in foreign currency translation during the year.
For the
year ended December 31, 2020, we recorded a net loss of
$49,342.
We had
net cash generated from operating activities of $50,140 for the
year ended December 31, 2020. We had a positive change of $100,000
due to promissory note of a related party and a negative change of
$518 due to accounts payable and accrued expenses.
For the
year ended December 31, 2019, we recorded a net income of
$6,126.
We had
net cash used in operating activities of $389,488 for the year
ended December 31, 2019. We had a positive change of $588 due to
prepaid expenses and a positive change of $462 due to security
deposit and other assets. We had a negative change of $100,000 due
to promissory note of a related party. We had a negative change of
$12,756 due to accounts payable and accrued expenses.
In the
year ended December 31, 2020, we did not pursue any investing
activities.
In the
year ended December 31, 2019, we spent $102 in other non-current
assets and have a net cash inflow $68,940 on the disposal of
subsidiary, resulting in net cash provided by investing activities
of $68,838 for the year.
For the
year ended December 31, 2020, we had net cash provided by financial
activities of $94,568 due to advances from related
parties.
For the
year ended December 31, 2019, we had net cash provided by financial
activities of $274,867 due to advances from related
parties.
We will
need to raise additional capital through equity or debt financings.
However, we cannot be certain that such capital (from AIL or third
parties) will be available to us or whether such capital will be
available on a term that is acceptable to us. Any such financing
likely would be dilutive to existing stockholders and could result
in significant financial and operating covenants that would
negatively impact our business. If we are unable to raise
sufficient additional capital on acceptable terms, we will have
insufficient funds to operate our business and pursue our business
plan.
Consistent
with Section 144 of Delaware General Corporation Law, it is our
current policy that all transactions between us and our officers,
directors and their affiliates will be entered into only if such
transactions are approved by a majority of the disinterested
directors, are approved by vote of the stockholders, or are fair to
us as corporation as of the time it is authorized, approved or
ratified by the board. We will conduct an appropriate review of all
related party transactions on an ongoing basis.
Critical Accounting Policies
Our
discussion and analysis of the consolidated financial condition and
results of operations are based upon the Company’s
consolidated financial statements, which have been prepared in
accordance with generally accepted accounting principles in the
United States (“GAAP”). The preparation of these
consolidated financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities,
revenues and expenses and related disclosure of contingent assets
and liabilities. We believe that the estimates, assumptions and
judgments involved in the accounting policies described below have
the greatest potential impact on our consolidated financial
statements, so we consider these to be our critical accounting
policies. Because of the uncertainty inherent in these matters,
actual results could differ from the estimates we use in applying
the critical accounting policies. Certain of these critical
accounting policies affect working capital account balances,
including the policies for revenue recognition, allowance for
doubtful accounts, inventory reserves and income taxes. These
policies require that we make estimates in the preparation of our
consolidated financial statements as of a given date.
23
Within
the context of these critical accounting policies, we are not
currently aware of any reasonably likely events or circumstances
that would result in materially different amounts being
reported.
Revenue recognition
Accounting
Standards Codification ("ASC") 606, Revenue from Contracts with
Customers ("ASC 606"), establishes principles for reporting
information about the nature, amount, timing and uncertainty of
revenue and cash flows arising from the entity's contracts to
provide goods or services to customers. Under the new standard,
revenue is recognized when a customer obtains control of promised
goods or services in an amount that reflects the consideration the
entity expects to receive in exchange for those goods or services.
The Company adopted this new standard on January 1, 2018 under the
modified retrospective method to all contracts not completed as of
January 1, 2018 and the adoption did not have a material effect on
our consolidated financial statements but we expanded our
disclosures related to contracts with customers below.
Revenue
is recognized when (or as) the Company transfers promised goods or
services to its customers in amounts that reflect the consideration
to which the Company expects to be entitled to in exchange for
those goods or services, which occurs when (or as) the Company
satisfies its contractual obligations and transfers over control of
the promised goods or services to its customers. Costs to obtain or
fulfill a contract are expensed as incurred.
Income taxes
Current
income taxes are provided for in accordance with the laws of the
relevant tax authorities. Deferred income taxes are recognized when
temporary differences exist between the tax bases of assets and
liabilities and their reported amounts in the consolidated
financial statements. Net operating loss carry forwards and credits
are applied using enacted statutory tax rates applicable to future
years. Deferred tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more-likely-than-not that
a portion of or all of the deferred tax assets will not be
realized. The components of the deferred tax assets and liabilities
are individually classified as current and non-current based on
their characteristics.
The
impact of an uncertain income tax position on the income tax return
is recognized at the largest amount that is more-likely-than-not to
be sustained upon audit by the relevant tax authority. An uncertain
income tax position will not be recognized if it has less than a
50% likelihood of being sustained. Interest and penalties on income
taxes will be classified as a component of the provisions for
income taxes. The Group did not recognize any income tax due to
uncertain tax position or incur any interest and penalties related
to potential underpaid income tax expenses for the years ended
December 31, 2020 or 2019, respectively.
Off –Balance Sheet Arrangements
As of
December 31, 2020, we do not have any off-balance sheet
arrangements, as defined under applicable SEC rule.
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk.
Not
applicable.
24
Item 8. Financial
Statements.
GIGWORLD INC. (FORMERLY KNOWN AS HOTAPP BLOCKCHAIN
INC.)
INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED
DECEMBER 31, 2020 and 2019
|
Reports
of Independent Registered Public Accounting Firms
|
|
24
|
|
|
|
|
|
Consolidated
Financial Statements
|
|
|
|
|
|
|
|
Consolidated
Balance Sheets as of December 31, 2020 and 2019
|
|
27
|
|
|
|
|
|
Consolidated
Statements of Operations and Comprehensive Loss for the Years Ended
December 31, 2020 and 2019
|
|
28
|
|
|
|
|
|
Consolidated
Statements of Stockholders’ Deficit for the Period from
January 1, 2019 through
December
31, 2020
|
|
29
|
|
|
|
|
|
Consolidated
Statements of Cash Flows for the Years Ended December 31, 2020 and
2019
|
|
30
|
|
|
|
|
|
Notes
to Consolidated Financial Statements
|
|
31
|
25
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and Stockholders of
GigWorld,
Inc.
Opinion on the Financial Statements
We have
audited the accompanying consolidated balance sheet of GigWorld,
Inc. and subsidiaries (the Company) as of December 31, 2020, and
the related consolidated statements of operations, comprehensive
loss, stockholders’ deficit, and cash flows for the year
ended December 31, 2020, and the related notes (collectively
referred to as the financial statements). In our opinion, the
financial statements present fairly, in all material respects, the
financial position of the Company as of December 31, 2020, and the
results of its operations and its cash flows for the year ended
December 31, 2020, in conformity with accounting principles
generally accepted in the United States of America.
Going Concern Matter
The
accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note
1 to the financial statements, the Company has suffered recurring
losses from operations and has a net capital deficiency that raises
substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in
Note 1. The financial statements do not include any adjustments
that might result from the outcome of this
uncertainty.
Basis for Opinion
These
financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audit. 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.
We
conducted our audit in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements
are free of material misstatement, whether due to error or fraud.
The Company is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting.
As part of our audit, we are required to obtain an understanding of
internal control over financial reporting, but not for the purpose
of expressing an opinion on the effectiveness of the
Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
Our
audit included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial
statements. Our audit also included evaluating the accounting
principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial
statements. We believe that our audit provides a reasonable basis
for our opinion.
26
Critical Audit Matters
The
critical audit matters communicated below are matters arising from
the current period audit of the financial statements that were
communicated or required to be communicated to the audit committee
and that: (1) relate to accounts or disclosures that are material
to the financial statements and (2) involved our especially
challenging, subjective, or complex judgments. The communication of
critical audit matters does not alter in any way our opinion on the
financial statements, taken as a whole, and we are not, by
communicating the critical audit matters below, providing separate
opinions on the critical audit matters or on the accounts or
disclosures to which they relate.
We did
not identify any critical audit matters during the course of our
audit of the financial statements as of and for the year ended
December 31, 2020.
|
/s/
Briggs & Veselka Co.
|
|
|
|
|
|
We have
served as the Company’s auditor since 2021.
|
|
|
|
|
|
Houston,
Texas
March
22, 2021
|
|
27
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and
Stockholders
of GigWorld, Inc. (formerly HotApp Blockchain, Inc.)
Opinion on the Financial Statements
We have
audited the accompanying consolidated balance sheets of GigWorld,
Inc. (formerly HotApp Blockchain), Inc. (the “Company”)
as of December 31, 2019, and the related consolidated statements of
operations and comprehensive loss, stockholders’ equity
(deficit), and cash flows for the year ended December 31, 2019, and
the related notes (collectively referred to as the financial
statements). In our opinion, the consolidated financial statements
present fairly, in all material respects, the financial position of
the Company as of December 31, 2019, and the results of its
operations and its cash flows for the year ended December 31, 2019,
in conformity with accounting principles generally accepted in the
United States of America.
Basis for Opinion
These
financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on the
Company’s consolidated financial statements based on our
audits. 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.
We
conducted our audit in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements
are free of material misstatement, whether due to error or fraud.
The Company is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting.
As part of our audit, we are required to obtain an understanding of
internal control over financial reporting, but not for the purpose
of expressing an opinion on the effectiveness of the
Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
Our
audit included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial
statements. Our audit also included evaluating the accounting
principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial
statements. We believe that our audit provides a reasonable basis
for our opinion.
The
accompanying consolidated financial statements have been prepared
assuming the Company will continue as a going concern. As more
fully discussed in Note 1 to the consolidated financial statements,
the Company has incurred net losses, net cash used in operating
activities, and has a working capital deficit at December 31, 2019.
These conditions raise substantial doubt about its ability to
continue as a going concern. Management’s plans in regard to
these matters are also described in Note 1. The consolidated
financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
|
/s/
Rosenberg Rich Baker Berman P.A.
|
|
|
|
|
|
|
|
|
Somerset,
New Jersey
|
|
|
|
|
|
March
30, 2020
|
|
28
GIGWORLD INC. (FORMERLY KNOWN AS HOTAPP BLOCKCHAIN
INC.)
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2020 AND 2019
|
|
December
31,
2020
|
December
31,
2019
|
|
ASSETS
|
|
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash
|
$158,057
|
$55,752
|
|
Promissory
note-related parties
|
-
|
100,000
|
|
|
|
|
|
TOTAL CURRENT
ASSETS
|
158,057
|
155,752
|
|
|
|
|
|
Other non-current
assets
|
102
|
102
|
|
|
|
|
|
TOTAL
ASSETS
|
$158,159
|
$155,854
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Accounts payable
and accrued expenses
|
$18,043
|
$18,561
|
|
Accrued
taxes
|
7,742
|
7,742
|
|
Amount due to
related parties
|
1,522,104
|
1,401,871
|
|
|
|
|
|
TOTAL CURRENT
LIABILITIES
|
1,547,889
|
1,428,174
|
|
|
|
|
|
TOTAL
LIABILITIES
|
1,547,889
|
1,428,174
|
|
|
|
|
|
STOCKHOLDERS'
DEFICIT:
|
|
|
|
Preferred stock,
$0.0001 par value, 15,000,000 shares authorized, 0 issued and
outstanding as of December 31, 2020 and December 31,
2019
|
-
|
-
|
|
Common stock,
$0.0001 par value, 1,000,000,000 shares authorized, 506,898,576
shares issued and outstanding, as of December 31, 2020 and December
31, 2019
|
50,690
|
50,690
|
|
Accumulated other
comprehensive loss
|
(378,361)
|
(310,293)
|
|
Additional paid-in
capital
|
4,604,191
|
4,604,191
|
|
Accumulated
deficit
|
(5,666,250)
|
(5,616,908)
|
|
TOTAL
STOCKHOLDERS' DEFICIT
|
(1,389,730)
|
(1,272,320)
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
$158,159
|
$155,854
|
The
accompanying notes to the consolidated financial statements are an
integral part of these statements.
29
GIGWORLD INC. (FORMERLY KNOWN AS HOTAPP BLOCKCHAIN
INC.)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
|
|
Year Ended
December 31,
|
|
|
|
2020
|
2019
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
General and
administrative
|
$88,155
|
$323,585
|
|
Total
operating expenses
|
88,155
|
323,585
|
|
|
|
|
|
Loss
from operations
|
(88,155)
|
(323,585)
|
|
|
|
|
|
Other
income:
|
|
|
|
Interest
income
|
4
|
55
|
|
Gain on disposal of
subsidiary
|
-
|
299,255
|
|
Foreign exchange
gain
|
38,809
|
34,113
|
|
Total
other income
|
38,813
|
333,423
|
|
|
|
|
|
(Loss)
income before taxes
|
(49,342)
|
9,838
|
|
Income
tax provision
|
-
|
-
|
|
Net (loss) income
from continuing operations
|
(49,342)
|
9,838
|
|
(Loss) from
discontinued operations, net of tax
|
-
|
(3,712)
|
|
Net
(loss) income applicable to common shareholders
|
$(49,342)
|
$6,126
|
|
|
|
|
|
Net
(loss) income from continuing operations per share - basic and
diluted
|
$(0.00)
|
$0.00
|
|
Net
(loss) from discontinued operations per share - basic and
diluted
|
$(0.00)
|
$(0.00)
|
|
|
|
|
|
Weighted number of
shares outstanding -
|
|
|
|
Basic and
diluted
|
506,898,576
|
506,898,576
|
|
|
|
|
|
Comprehensive
Income (loss):
|
|
|
|
Net (loss)
income
|
$(49,342)
|
$6,126
|
|
Foreign currency
translation (loss)
|
(68,068)
|
(85,174)
|
|
Total
comprehensive (loss)
|
$(117,410)
|
$(79,048)
|
The
accompanying notes to the consolidated financial statements are an
integral part of these statements.
30
GIGWORLD INC. (FORMERLY KNOWN AS HOTAPP BLOCKCHAIN INC.)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE PERIOD FROM JANUARY 1, 2019 TO DECEMBER 31,
2020
|
|
Common
|
|
Accumulated
Other
Comprehensive
|
|
||
|
|
Shares
|
Par
Value
|
Paid-In
Capital
|
Income
(Loss)
|
Accumulated
Deficit
|
Stockholders'
Deficit
|
|
Balance December
31, 2018
|
506,898,576
|
$50,690
|
$4,604,191
|
$(225,119)
|
$(5,623,034)
|
$(1,193,272)
|
|
Net income for
period
|
-
|
-
|
-
|
-
|
6,126
|
6,126
|
|
Foreign currency
translation adjustment
|
-
|
-
|
-
|
(85,174)
|
-
|
(85,174)
|
|
|
|
|
|
|
|
|
|
Balance December
31, 2019
|
506,898,576
|
$50,690
|
$4,604,191
|
$(310,293)
|
$(5,616,908)
|
$(1,272,320)
|
|
Net loss for
period
|
-
|
-
|
-
|
-
|
(49,342)
|
(49,342)
|
|
Foreign currency
translation adjustment
|
-
|
-
|
-
|
(68,068)
|
-
|
(68,068)
|
|
|
|
|
|
|
|
|
|
Balance December
31, 2020
|
506,898,576
|
$50,690
|
$4,604,191
|
$(378,361)
|
$(5,666,250)
|
$(1,389,730)
|
The
accompanying notes to the consolidated financial statements are an
integral part of these statements.
31
GIGWORLD INC. (FORMERLY KNOWN AS HOTAPP BLOCKCHAIN
INC.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
|
|
Year Ended
December 31,
|
|
|
|
2020
|
2019
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
Net
(loss) income including noncontrolling interests from continuing
operations:
|
$(49,342)
|
$9,838
|
|
Net
(loss) including noncontrolling interests from discontinued
operations:
|
-
|
(3,712)
|
|
Net
(loss) income including noncontrolling interests,
total
|
(49,342)
|
6,126
|
|
Adjustments
to reconcile net (loss) income to cash used in
operations:
|
|
|
|
Depreciation
expense
|
-
|
48
|
|
Gain on disposal of
subsidiary
|
-
|
(299,255)
|
|
Impairment loss on
accounts receivable
|
-
|
49,410
|
|
Foreign exchange
gain
|
-
|
(34,111)
|
|
|
|
|
|
Change
in operating assets and liabilities:
|
|
|
|
Security deposit
and other assets
|
-
|
462
|
|
Prepaid
expenses
|
-
|
588
|
|
Promissory
note-related party
|
100,000
|
(100,000)
|
|
Accounts payable
and accrued expenses
|
(518)
|
(12,756)
|
|
Net
cash provided by (used in) operating activities
|
$50,140
|
$(389,488)
|
|
|
|
|
|
CASH
FLOW FROM INVESTING ACTIVITIES:
|
|
|
|
Other non-current
assets
|
-
|
(102)
|
|
Net cash inflow on
disposal of subsidiary
|
-
|
68,940
|
|
Net
cash provided by investing activities
|
$-
|
$68,838
|
|
|
|
|
|
CASH
FLOW FROM FINANCING ACTIVITIES:
|
|
|
|
Advances from
related parties
|
94,568
|
274,867
|
|
Net
cash provided by financing activities
|
$94,568
|
$274,867
|
|
|
|
|
|
NET
INCREASE / (DECREASE) IN CASH
|
144,708
|
(45,783)
|
|
Effects of exchange
rates on cash
|
(42,403)
|
(16,510)
|
|
|
|
|
|
CASH
AND CASH EQUIVALENTS at beginning of year
|
55,752
|
118,045
|
|
CASH
AND CASH EQUIVALENTS at end of year
|
$158,057
|
$55,752
|
|
|
|
|
|
Supplemental
disclosure of cash flows information
|
|
|
|
Cash paid
for:
|
|
|
|
Interest
|
$-
|
$-
|
|
Income
taxes
|
$-
|
$-
|
The
accompanying notes to the consolidated financial statements are an
integral part of these statements.
32
GIGWORLD INC. (FORMERLY KNOWN AS HOTAPP BLOCKCHAIN
INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1.
ORGANIZATION AND PRINCIPAL
BUSINESS ACTIVITIES
GigWorld
Inc., formerly HotApp Blockchain, Inc. (the “Company”
or “Group”) was incorporated in the State of Delaware
on March 7, 2012 and established a fiscal year end of December 31.
The Company business is focused on serving business-to-business
(B2B) needs in e-commerce, collaboration and social networking
functions. We will help enterprises and community users to
transform their business model with digital economy in a more
effective manner. With our platform, users can discover and build
their own communities and create valuable content. Enterprises can
in turn enhance the user experience with premium content, all of
which are facilitated by the transactions of every stakeholder via
e-commerce.
Our
go-to-market model includes working closely with business entities,
which are primarily on a membership based business, direct selling
being one of them, to provide membership collaboration tools for
communications, commerce and social media management. We work with
backend systems providers that provide the order processing,
commission management capability and enable them with
mobile friendly interface and access to the relevant backend
services.
The
pricing model will be based on subscription model with possible one
time integration support fee.
GigWorld
Inc. will be the development house that work closely with business
development consultants to promote our platform to
enterprises.
As of
December 31, 2020, details of the Company’s subsidiaries are
as follows:
|
Subsidiaries
|
Date of Incorporation
|
Place of Incorporation
|
Percentage of Ownership
|
|
1st Tier Subsidiary:
|
|
|
|
|
HotApps
International Pte Ltd, subsequently known as HotApp BlockChain Pte.
Ltd. (“HIP”)
|
May 23, 2014
|
Republic of Singapore
|
100% by Company
|
|
Crypto Exchange Inc.
|
December 15, 2017
|
State of Nevada, the United States of America
|
100% by Company
|
|
HWH World Inc.
|
August 28, 2018
|
State of Delaware, the United States of America
|
100% by Company
|
|
2nd Tier Subsidiaries:
|
|
|
|
|
HWH World Pte. Ltd. (formerly known as Crypto Exchange Pte.
Ltd.)
|
September 15, 2014
|
Republic of Singapore
|
100% owned by HIP
|
|
HotApp International Limited*
|
July 8, 2014
|
Hong Kong (Special Administrative Region)
|
100% owned by HIP
|
* On
March 25, 2015, HotApps International Pte Ltd, subsequently known
as HotApp BlockChain Pte. Ltd. (“HIP”) acquired 100% of
issued share capital in HotApp International Limited.
33
Going Concern
The
consolidated financial statements have been prepared using
accounting principles generally accepted in the United States of
America applicable for a going concern, which assumes that the
Company will realize its assets and discharge its liabilities in
the ordinary course of business. Since inception, the Company has
incurred net losses of $5,666,250 and has net working capital
deficit of $1,389,832 at December 31, 2020. Management
has concluded that due to the conditions described above, there is
a substantial doubt about the entity’s ability to continue as
a going concern through March 22, 2022. We have
evaluated the significance of the conditions in relation to our
ability to meet our obligations and believe that our current cash
balance along with our current operations will not provide
sufficient capital to continue operations through 2021. Our ability
to continue as a going concern is dependent upon achieving sales
growth, management of operating expenses and ability of the Company
to obtain the necessary financing to meet its obligations and pay
its liabilities arising from normal business operations when they
come due, and upon profitable operations.
Our
majority stockholder has advised us not to depend solely on it for
financing. We have increased our efforts to raise additional
capital through equity or debt financings from other sources.
However, we cannot be certain that such capital (from our
stockholders or third parties) will be available to us or whether
such capital will be available on terms that are acceptable to us.
Any such, financing likely would be dilutive to existing
stockholders and could result in significant financial operating
covenants that would negatively impact our business. If we are
unable to raise sufficient additional capital on acceptable terms,
we will have insufficient funds to operate our business or pursue
our planned growth.
These
consolidated financial statements do not include any adjustments
relating to the recoverability and classification of recorded asset
amounts, or amounts and classification of liabilities that might
result from this uncertainty.
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of presentation
The
consolidated financial statements have been prepared in accordance
with the accounting principles generally accepted in the United
States of America (“U.S. GAAP”).
Basis of consolidation
The
consolidated financial statements of the Group include the
financial statements of GigWorld Inc. and its subsidiaries. All
inter-company transactions and balances have been eliminated upon
consolidation.
Use of estimates
The
preparation of consolidated financial statements in conformity with
U.S. GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets, liabilities, revenues,
cost and expenses in the consolidated financial statements and
accompanying notes. Significant accounting estimates reflected in
the Group’s consolidated financial statements include revenue
recognition, the useful lives and impairment of property and
equipment, valuation allowance for deferred tax
assets.
Cash and cash equivalents
The
Company considers all highly liquid investments with a maturity of
three months or less at the date of acquisition to be cash
equivalents. There were no cash equivalents as of December 31, 2020
and 2019.
34
Foreign currency risk
Because
of its foreign operations, the Company holds cash in non-US
dollars. As of December 31, 2020, cash of the Group include, on an
as converted basis to US dollars, $24,448, and $122,671, in Hong
Kong Dollars (“HK$”), and Singapore Dollars
(“S$”), respectively. As of December 31, 2019, cash of
the Group include, on an as converted basis to US dollars, $32,283,
and $23,131, in Hong Kong Dollars (“HK$”), and
Singapore Dollars (“S$”), respectively.
Concentrations
Financial
instruments that potentially expose the Group to concentration of
credit risk consist primarily of cash. Although the cash at each
particular bank in the United States is insured up to $250,000 by
Federal Deposit Insurance Corporation (FDIC), the Group is exposed
to risk due to its concentration of cash in foreign countries. The
Group places its cash with financial institutions with high-credit
ratings and quality.
Fair value
Fair Value of Financial Instruments
The
carrying value of cash, accounts payable and accrued liabilities,
and short-term borrowings, as reflected in the balance sheets,
approximate fair value because of the short-term maturity of these
instruments. All other significant financial assets, financial
liabilities and equity instruments of the Company are either
recognized or disclosed in the consolidated financial statements
together with other information relevant for making a reasonable
assessment of future cash flows, interest rate risk and credit
risk. Where practicable the fair values of financial assets and
financial liabilities have been determined and disclosed; otherwise
only available information pertinent to fair value has been
disclosed. The Company classifies and discloses assets and
liabilities carried at fair value in one of the following three
categories:
|
●
|
Level 1
- quoted prices in active markets for identical assets and
liabilities;
|
|
●
|
Level 2
- observable market based inputs or unobservable inputs that are
corroborated by market data; and
|
|
●
|
Level 3
- significant unobservable inputs in which little or no market data
exists, therefore requiring an entity to develop
its own assumptions.
|
Revenue recognition
Accounting
Standards Codification ("ASC") 606, Revenue from Contracts with
Customers ("ASC 606"), establishes principles for reporting
information about the nature, amount, timing and uncertainty of
revenue and cash flows arising from the entity's contracts to
provide goods or services to customers. Under the new standard,
revenue is recognized when a customer obtains control of promised
goods or services in an amount that reflects the consideration the
entity expects to receive in exchange for those goods or services.
The Company adopted this new standard on January 1, 2018 under the
modified retrospective method to all contracts not completed as of
January 1, 2018 and the adoption did not have a material effect on
our consolidated financial statements but we expanded our
disclosures related to contracts with customers below.
35
Revenue
is recognized when (or as) the Company transfers promised goods or
services to its customers in amounts that reflect the consideration
to which the Company expects to be entitled to in exchange for
those goods or services, which occurs when (or as) the Company
satisfies its contractual obligations and transfers over control of
the promised goods or services to its customers. Costs to obtain or
fulfill a contract are expensed as incurred when the amortization
period is less than one-year.
The
Company had no revenue for the years ended December 31, 2020 and
2019.
Contract assets and contract liabilities
Based
on our contracts, we normally invoice customers once our
performance obligations have been satisfied, at which point payment
is unconditional. Accordingly, our contracts do not give rise to
contract assets or liabilities under ASC 606. Accounts receivable
are recorded when the right to consideration becomes
unconditional.
Income taxes
Current
income taxes are provided for in accordance with the laws of the
relevant tax authorities. Deferred income taxes are recognized when
temporary differences exist between the tax bases of assets and
liabilities and their reported amounts in the consolidated
financial statements. Net operating loss carry forwards and credits
are applied using enacted statutory tax rates applicable to future
years. Deferred tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more-likely-than-not that
a portion of or all of the deferred tax assets will not be
realized. The components of the deferred tax assets and liabilities
are individually classified as current and non-current based on
their characteristics.
The
impact of an uncertain income tax position on the income tax return
is recognized at the largest amount that is more-likely-than-not to
be sustained upon audit by the relevant tax authority. An uncertain
income tax position will not be recognized if it has less than a
50% likelihood of being sustained. Interest and penalties on income
taxes will be classified as a component of the provisions for
income taxes. The Group did not recognize any income tax due to
uncertain tax position or incur any interest and penalties related
to potential underpaid income tax expenses for the years ended
December 31, 2020 or 2019, respectively.
Foreign currency translation
Items
included in the consolidated financial statements of each entity in
the Group are measured using the currency of the primary economic
environment in which the entity operates (“functional
currency”).
The
functional and reporting currency of the Company is the United
States dollar (“U.S. dollar”). The financial records of
the Company’s subsidiaries located in Singapore and Hong Kong
are maintained in their local currencies, the Singapore Dollar (S$)
and Hong Kong Dollar (HK$), which are also the functional
currencies of these entities.
Monetary
assets and liabilities denominated in currencies other than the
functional currency are translated into the functional currency at
the rates of exchange ruling at the balance sheet date.
Transactions in currencies other than the functional currency
during the year are converted into functional currency at the
applicable rates of exchange prevailing when the transactions
occurred. Transaction gains and losses are recognized in the
consolidated statements of operations.
The
Company’s entities with functional currency of Renminbi, Hong
Kong Dollar and Singapore Dollar, translate their operating results
and financial positions into the U.S. dollar, the Company’s
reporting currency. Assets and liabilities are translated using the
exchange rates in effect on the balance sheet date. Revenues,
expenses, gains and losses are translated using the average rate
for the year. Translation adjustments are reported as cumulative
translation adjustments and are shown as a separate component of
comprehensive income (loss).
36
For the
year ended December 31, 2020, the Company recorded other
comprehensive loss from a translation loss of $68,068 in the
consolidated financial statements. For the year ended December 31,
2019, the Company recorded other comprehensive loss from a
translation loss of $85,174 in the consolidated financial
statements.
Comprehensive income (loss)
Comprehensive
income (loss) includes gains (losses) from foreign currency
translation adjustments. Comprehensive income (loss) is reported in
the consolidated statements of operations and comprehensive
loss.
Loss per share
Basic
loss per share is computed by dividing net loss attributable to
stockholders by the weighted average number of shares outstanding
during the year.
As of
December 31, 2020, there are no potentially dilutive securities
that were excluded from the computation of diluted
EPS.
Recent accounting pronouncement
Management
does not believe that any recently issued, but not effective,
accounting standards, if currently adopted, would have a material
effect on the Company’s consolidated financial
statements.
Note 3. ACCOUNTS PAYABLE AND ACCRUED
EXPENSES
Accrued
expenses consisted of the following:
|
|
As of December
31,
|
|
|
|
2020
|
2019
|
|
Accrued
professional fees
|
$16,892
|
$16,712
|
|
Other
|
1,151
|
1,849
|
|
Total
|
$18,043
|
$18,561
|
37
Note 4. INCOME TAXES
The
provision for income taxes for the years ended December 31, 2020
and 2019, was as follows:
|
|
Year Ended
December 31,
|
|||||
|
|
2020
|
2019
|
||||
|
|
Domestic
|
Foreign
|
Total
|
Domestic
|
Foreign
|
Total
|
|
Loss
from continuing operations, before income taxes
|
$16,659
|
$(66,001)
|
$(49,342)
|
$(6,756)
|
$16,594
|
$9,838
|
|
Income tax at
statutory rate
|
3,498
|
(10,985)
|
(7,487)
|
(1,419)
|
3,209
|
1,790
|
|
Items not taxable
for tax purposes
|
(14,995)
|
-
|
(14,995)
|
(10,584)
|
(58,649)
|
(69,233)
|
|
Items not
deductible for tax purposes
|
-
|
10,985
|
10,985
|
9
|
7,535
|
7,544
|
|
Change in valuation
allowance
|
11,497
|
-
|
11,497
|
11,994
|
47,905
|
59,899
|
|
Income
tax expense
|
$-
|
$-
|
$-
|
$-
|
$-
|
$-
|
|
|
|
|
|
|
|
|
|
Deferred income tax assets/(liabilities):
|
|
|
|
|
|
|
|
Operating
loss carry forwards
|
183,831
|
856,725
|
1,040,556
|
172,334
|
856,725
|
1,029,059
|
|
Unrealized
exchange (gain)/loss
|
(14,995)
|
-
|
(14,995)
|
(10,575)
|
3,249
|
(7,326)
|
|
Total
deferred assets
|
$168,836
|
$856,725
|
$1,025,561
|
$161,759
|
$859,974
|
$1,021,733
|
|
Less: valuation allowance
|
(168,836)
|
$(856,725)
|
$(1,025,561)
|
$(161,759)
|
$(859,974)
|
$(1,021,733)
|
|
Total
net deferred tax assets
|
$-
|
$-
|
$-
|
$-
|
$-
|
$-
|
On
December 22, 2017, the Tax Cuts and Jobs Act was signed into
legislation, lowering the corporate income tax rate to 21%
effective January 1, 2018 and making many other significant changes
to the US income tax code. Under ASC740, the effects of changes in
tax rates and laws are recognized in the period in which the new
legislation is enacted.
The
Company provided a valuation allowance equal to the deferred income
tax assets for period ended December 31, 2020 because it is not
presently known whether future taxable income will be sufficient to
utilize the loss carry-forwards.
As of
December 31, 2020, the Company had approximately $5,159,012 in tax
loss carry-forwards that can be utilized in future periods to
reduce taxable income, and which expire by the year 2035. The
Company did not identify any material uncertain tax positions. The
Company did not recognize any interest or penalties for
unrecognized tax benefits.
The
federal income tax returns of the Company are subject to
examination by the IRS, generally for three years after they are
filed. The tax returns for the years ended December 31, 2019, 2018
and 2017 are still subject to examination by the taxing
authorities.
38
Note 5. SHARE CAPITALIZATION
The
Company is authorized to issue 1 billion shares of common stock and
15 million shares of preferred stock. The authorized share capital
of the Company’s common stock was increased from 500 million
to 1 billion on May 5, 2017. Both share types have a $0.0001 par
value. As of December 31, 2020 and 2019, the Company had
issued and outstanding, 506,898,576 of common stock, and 0 shares
of preferred stock.
Common Shares:
Pursuant
to the Purchase Agreement, dated October 15, 2014, the Company
issued 1,000,000 shares of common stock to AIL. Such amount
represented 19% ownership in the Company.
On July
13, 2015, AIL acquired 777,687 shares of the Company’s common
stock by converting outstanding loans made to the Company into
common stock of the Company at a rate of $5.00 per share (rounded
to the nearest full share). After such transactions AIL owned
98.17% of the Company.
On
March 27, 2017, the Company entered into a Loan Conversion
Agreement with AIL, pursuant to which AIL agreed to convert
$450,890 of debt owed by the Company to AIL into 500,988,889 common
shares at a conversion price of $0.0009. The captioned shares were
issued on June 9, 2017, and AIL owned 99.979% of the Company after
such transactions.
On
December 20, 2018, the Board of Directors of AIL announced its
intention to sell up to 3,200,000 shares of the Company to
independent third parties at US$0.50 per share for an aggregate
cash consideration of up to US$1,600,000. The purpose of
this proposed sale was to raise funds to continue to support the
general corporate and working capital of the Company, including but
not limited to the operating costs of the Company. As of
December 31, 2020, AIL has sold 1,129,200 shares of the Company to
independent third parties, and AIL owned 99,756% of the Company
after such transactions.
Preferred Shares:
No
Preferred Stock were issued as of December 31, 2020 and
2019.
Note 6. EQUITY INCENTIVE PLAN
On July
30, 2018, the Company adopted the Equity Incentive Plan (“The
Plan”). The Plan is intended to encourage ownership of shares
by employees, directors and certain consultants to the Company in
order to attract and retain such people, to induce them to work for
the benefit of the Company. The Plan provides for the grant of
options and/or other stock-based or stock-denominated awards.
Subject to adjustment in accordance with the terms of the Plan,
50,000,000 shares of Common Stock of the Company have been reserved
for issuance pursuant to awards under the Plan. The Plan will be
administered by the Company’s Board of Directors. This Plan
shall terminate ten (10) years from the date of its adoption by the
Board of Directors. There have been no awards issued under the Plan
as of December 31, 2020 and 2019.
Note 7. DISCONTINUED OPERATIONS
On
October 25, 2018, HotApps International Pte. Ltd., subsequently
known as HotApp BlockChain Pte. Ltd. (“HIP”) entered
into an Equity Purchase Agreement with DSS Asia Limited (“DSS
Asia”), a Hong Kong subsidiary of DSS International Inc.
(“DSS International”), pursuant to which HIP agreed to
sell to DSS Asia all of the issued and outstanding shares of
HotApps Information Technology Co. Ltd., also known as Guangzhou
HotApps Technology Ltd. (“Guangzhou HotApps”).
Guangzhou HotApps was a wholly owned subsidiary of HIP, which was
primarily engaged in engineering work for software development,
mainly voice over internet protocol. Guangzhou HotApps was also
involved in a number of outsourcing projects, including projects
related to real estate and lighting.
39
The
parties to the Equity Purchase Agreement agreed that the purchase
price for this transaction would be $100,000, which would be paid
in the form of a two-year, interest free, unsecured, demand
promissory note in the principal amount of $100,000, and that such
note would be due and payable in full in two years. The closing of
the Equity Purchase Agreement was subject to certain conditions;
these conditions were met and the transaction closed on January 14,
2019.
The
composition of assets and liabilities included in discontinued
operations was as follows:
|
|
December
31,
2020
|
December
31,
2019
|
|
ASSETS
|
|
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash
|
$-
|
$-
|
|
Deposit and other
receivable
|
-
|
-
|
|
TOTAL CURRENT
ASSETS
|
-
|
-
|
|
|
|
|
|
Fixed assets,
net
|
-
|
-
|
|
TOTAL
ASSETS
|
$-
|
$-
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Accounts payable
and accrued expenses
|
$-
|
$-
|
|
TOTAL CURRENT
LIABILITIES
|
-
|
-
|
|
TOTAL
LIABILITIES
|
$-
|
$-
|
|
|
|
|
40
The
aggregate financial results of discontinued operations were as
follows:
|
|
Year
Ended
December
31,
2020
|
Year
Ended
December
31,
2019
|
|
|
|
|
|
Revenues:
|
|
|
|
Project
fee-others
|
$-
|
$-
|
|
|
-
|
-
|
|
|
|
|
|
Cost
of revenues
|
-
|
-
|
|
|
|
|
|
Gross
profit
|
$-
|
$-
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
Depreciation
|
-
|
48
|
|
General and
administrative
|
-
|
3,662
|
|
Total
operating expenses
|
-
|
3,710
|
|
|
|
|
|
(Loss)
from operations
|
-
|
(3,710)
|
|
|
|
|
|
Other income
(expenses):
|
|
|
|
Other sundry
income
|
-
|
-
|
|
Foreign exchange
(loss)
|
-
|
(2)
|
|
Total
other (expenses) income
|
-
|
(2)
|
|
|
|
|
|
Loss
from discontinued operations
|
$-
|
$(3,712)
|
41
Note 8. RELATED PARTY BALANCES AND
TRANSACTIONS
Effective
as of September 1, 2020, Chan Heng Fai has resigned as the Acting
Chief Executive Officer of the Company, and the Company’s
Board of Directors has appointed Lee Wang Kei
(“Nathan”) as the Company’s Chief Executive
Officer. AIL is the Company’s majority stockholder. Chan Heng
Fai, the Executive Chairman of the Company’s Board of
Directors, is also the Chief Executive Officer and a member of
AIL’s Board of Directors, as well as the majority stockholder
of AIL. Lui Wai Leung Alan, the Company’s Chief Financial
Officer, is also the Executive Director and Chief Financial
Officer of AIL. Both Chan Heng Fai and Lui Wai Leung Alan are being
paid by AIL, the Company’s majority stockholder.
As of
December 31, 2020, the Company has amount due to AIL of $1,521,999
plus an amount due to an associated company of AIL of
$105. As of December 31, 2019, the Company has amount
due to AIL of $1,396,426, an amount due to a director of $5,343,
plus an amount due to an associated company of AIL of
$102.
The
account receivable as of December 31, 2020 includes a trade
receivable from an affiliate by common ownership amounting to
$39,427 resulting from the revenue earned from that affiliate
during the year 2017, and the company has put up a full allowance
for the said amount in 2019.
On
October 25, 2018, HotApps International Pte. Ltd., subsequently
known as HotApp BlockChain Pte. Ltd. (“HIP”) entered
into an Equity Purchase Agreement with DSS Asia Limited (“DSS
Asia”), a Hong Kong subsidiary of DSS International Inc.
(“DSS International”), pursuant to which HIP agreed to
sell to DSS Asia all of the issued and outstanding shares of
HotApps Information Technology Co. Ltd., also known as Guangzhou
HotApps Technology Ltd. (“Guangzhou HotApps”).
Guangzhou HotApps was a wholly owned subsidiary of HIP, which was
primarily engaged in engineering work for software development,
mainly voice over internet protocol. Guangzhou HotApps was also
involved in a number of outsourcing projects, including projects
related to real estate and lighting.
The
parties to the Equity Purchase Agreement agreed that the purchase
price for this transaction would be $100,000, which would be paid
in the form of a two-year, interest free, unsecured, demand
promissory note in the principal amount of $100,000, and that such
note would be due and payable in full in two years. The closing of
the Equity Purchase Agreement was subject to certain conditions;
these conditions were met and the transaction closed on January 14,
2019. The Company has collected the $100,000 in full for
the promissory note on October 14, 2020.
Mr.
Chan Heng Fai is also the Chief Executive Officer and Chairman of
DSS International and a significant stockholder and a member of the
Board of Document Security Systems Inc., which is the sole owner of
DSS International. Lum Kan Fai, a member of the Board of Directors
of the Company, is also an employee of DSS
International.
Since
the completion of the sale of all of the issued and outstanding
shares of HotApps Information Technology Co. Ltd. (also known as
Guangzhou HotApps Technology Ltd.) on January 14, 2019, we have not
entered into any employment arrangement with any employees except
for our Chief Executive Officer, Lee Wang Kei. Mr. Lee is paid
$2,000 per month by HotApp International Limited, a subsidiary of
the Company. Our largest stockholder, AIL, has provided staff
without charge to our Company. We intend to outsource
many functions of our business for the immediate
future.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None
42
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
In
connection with the preparation of our Report on Form 10-K, an
evaluation was carried out by management, with the participation of
our Chief Executive Officer and Chief Financial Officer, of the
effectiveness of our disclosure controls and procedures (as defined
in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act
of 1934 (Exchange Act) as of December 31, 2020. Disclosure controls
and procedures are designed to ensure that information required to
be disclosed in reports filed or submitted under the Exchange Act
is recorded, processed, summarized and reported within the time
periods specified, and that such information is accumulated and
communicated to management, including the Chief Executive Officer
and Chief Financial Officer, to allow timely decisions regarding
required disclosure.
During
evaluation of disclosure controls and procedures as of December 31,
2020 conducted as part of our annual audit and preparation of our
annual consolidated financial statements, management conducted an
evaluation of the effectiveness of the design and operations of our
disclosure controls and procedures and concluded that our
disclosure controls and procedures were not effective. Management
determined that at December 31, 2020, we had a material weakness
that relates to the relatively small number of employees, provided
by AIL, who have bookkeeping and accounting functions and therefore
prevents us from segregating duties within our internal control
system.
Management’s Report on Internal Control over Financial
Reporting
Management
is responsible for the preparation and fair presentation of the
consolidated financial statements included in this annual report.
The consolidated financial statements have been prepared in
conformity with accounting principles generally accepted in the
United States of America and reflect management’s judgment
and estimates concerning effects of events and transactions that
are accounted for or disclosed.
Management
is also responsible for establishing and maintaining adequate
internal control over financial reporting. Our internal control
over financial reporting includes those policies and procedures
that pertain to our ability to record, process, summarize and
report reliable data. Management recognizes that there
are inherent limitations in the effectiveness of any internal
control over financial reporting, including the possibility of
human error and the circumvention or overriding of internal
control. Accordingly, even effective internal control over
financial reporting can provide only reasonable assurance with
respect to financial statement presentation. Further, because of
changes in conditions, the effectiveness of internal control over
financial reporting may vary over time.
In
order to ensure that our internal control over financial reporting
is effective, management regularly assesses controls and did so
most recently for its financial reporting as of December 31, 2020.
This assessment was based on criteria for effective internal
control over financial reporting described in the Internal Control
Integrated Framework issued by the Committee of Sponsoring
Organizations (COSO) of the Treadway Commission. Based on this
assessment, management has concluded that, as of December 31, 2020,
we had a material weakness that relates to the relatively small
number of employees, provided by AIL, who have bookkeeping and
accounting functions and therefore prevents us from segregating
duties within our internal control system. The inadequate
segregation of duties is a weakness because it could lead to the
untimely identification and resolution of accounting and disclosure
matters or could lead to a failure to perform timely and effective
reviews. The Company also noted the internal staff has limited US
GAAP and SEC Reporting experience.
This
annual report filed on Form 10-K does not include an attestation
report of the Company’s registered public accounting firm
regarding internal control over financial reporting.
Management’s report was not subject to attestation by our
registered public accounting firm pursuant to temporary rules of
the Securities and Exchange Commission that permit us to provide
only management’s report in this annual report.
Changes in Internal Control over Financial Reporting
There
has been no change in our internal control over financial reporting
(as defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange
Act) that occurred during the quarterly period ended December 31,
2020 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial
reporting.
Item 9B. Other Information.
None
43
PART III
Item 10. Directors, Executive
Officers and Corporate Governance.
Identification of directors and officers
The
following table sets forth the name and age of officers and
director as of the date hereof. Our executive officers are elected
annually by our board of directors. Our executive officers hold
their offices until they resign, are removed by the Board, or his
successor is elected and qualified.
Directors and Executive Officers
|
Name
|
Age
|
Position
|
|
Chan Heng
Fai
|
76
|
Executive Chairman
of the Board
|
|
Lee Wang
Kei
|
30
|
Chief Executive
Officer
|
|
Lum Kan
Fai
|
58
|
Vice Chairman of
the Board
|
|
Sanjib
Kalita
|
48
|
Director
|
|
Lui Wai Leung
Alan
|
50
|
Chief Financial
Officer
|
On
October 21, 2014, the Company reported under Form 8-K the Sale
& Purchase Agreement (“Purchase Agreement”) with
Alset International Limited, formerly known as Singapore
eDevelopment Limited, a Singapore exchange listed company, dated
October 15, 2014. The Purchase Agreement also granted AIL the right
to nominate one member to the Company’s Board of
Directors.
The
mailing address for each of the officers and directors named above
is c/o the Company at: 4800 Montgomery Lane, Suite 210, Bethesda,
Maryland 20814.
Business Experience
Mr. Chan has served as a Director since October 23, 2014, as
the Executive Chairman of the Company’s Board of Directors
since December 1, 2017, and the Acting Chief Executive Officer from
August 8, 2018 until September 1, 2020. Mr. Chan previously served
as the Company’s Chief Executive Officer from December 31,
2014 until June 21, 2017. Mr. Chan is an expert in banking and
finance, with 45 years of experience in these industries. He has
also restructured numerous companies in various industries and
countries during the past 40 years. Mr. Chan has served as the
Chief Executive Officer of Alset International Limited, a
diversified holding company listed on the Catalist of the Singapore
Exchange Securities Trading Limited, since April 2014, and has
served as a director of that company since May of 2013. Since
March, 2018, Mr. Chan has served as a Chairman of the Board and
Chief Executive Officer of Alset EHome International Inc., a Nasdaq
listed company. Mr. Chan has served as a member of the Board of
Directors of LiquidValue Development Inc. since January 10, 2017,
and has served as Co-Chief Executive Officer of LiquidValue
Development Inc. since December 29, 2017. He has served
as a non-executive director of Document Security Systems, Inc., an
NYSE listed company, since January 2017 and as Chairman of the
Board since March of 2019. Mr. Chan has also served as a
non-executive director of Holista CollTech Ltd., an ASX listed
company, since July 2013 and has served as a director of Vivacitas
Oncology Inc. since May of 2017. Mr. Chan has served as a director
of OptimumBank Holdings, Inc. and Optimum Bank since June 2018. Mr.
Chan has served as a member of the Board of Directors of Sharing
Services Global Corporation since April of 2020.
44
Mr.
Chan’s previous experiences include serving as Managing
Chairman of ZH International Holdings Limited (formerly known as
Heng Fai Enterprises Limited), an investment holding company listed
on the HKSE, from 1992 to 2015. Mr. Chan was formerly the Managing
Director of SingHaiyi Group Ltd., a property development,
investment and management company listed on the Singapore Exchange
Mainboard, from November 2003 to September 2013, and the Executive
Chairman of China Gas Holdings Limited, a Hong Kong listed investor
and operator of city gas pipeline infrastructure in China from 1997
to 2002. Mr. Chan served on the Board of RSI International Systems,
Inc., the developer of RoomKeyPMS, a web based property management
system, from June 2014 to February 2019.
Mr.
Chan has also served as a director of Global Medical REIT Inc., a
healthcare facility real estate company, from December 2013 to July
2015. He was a director of American Housing REIT Inc. from October
of 2013 to July of 2015. He served as a director of Skywest Ltd., a
public Australian airline company from 2005 to 2006. Mr. Chan was a
director of Global Med Technologies, Inc., a medical company
engaged in the design, development, marketing and support
information for management software products for healthcare-related
facilities, from May 1998 until December 2005.
Director
Qualifications of Chan Heng Fai:
The
board of directors appointed Mr. Chan in recognition of his
abilities to assist the Company in expanding its business and the
contributions he can make to the Company’s strategic
direction.
Mr. Lee has served as the Company’s Chief Executive
Officer since September 1, 2020. Mr. Lee previously
served as the Company’s Chief Executive Officer from December
2017 until August 2018 and served as the Company’s Chief
Technology Officer from June 2017 until August 2018. Mr. Lee has
served as a System Architect for the Company since August of 2015,
where he has helped lead the Company’s software development,
and from April of 2015 to July of 2015, Mr. Lee served as a
Consultant to the Company. Mr. Lee has served as Head of
Development for DSS Asia Limited since August 2018. Prior to
joining the Company, Mr. Lee served as Software Project Manager for
Appcraft Asia from 2014-2015 and served as Software Architect for
myFunboxx from 2012-2014.
Mr. Lum has served as a member of the Company’s Board
of Directors since June of 2015. Mr. Lum served as Chief
Technology Officer (“CTO”) from June of 2015 until June
of 2017. In June of 2017, the Company appointed Mr. Lum
Kan Fai as the Company’s CEO and President, and Mr. Lum
resigned as CTO. In December of 2017, Mr. Lum Kan Fai
resigned as CEO and President of the Company and was appointed as
Vice Chairman of the Company’s Board of Directors. Mr. Lum
currently is the President, Digital Group of Document Security
Systems, Inc. (“DSS”), a NYSE listed company and the
President of DSS Asia, a subsidiary of DSS. Mr. Lum is
responsible for P&L long term development of DSS’ digital
product division and the Asia Pacific operations of DSS. Mr. Lum
was the founder, and since 2009 has served as Chief Executive
Officer, of FUNboxx Ltd. Prior to that, Mr. Lum held
senior management positions with Vitop Holding, a HK listed
company, York International (Now Johnson Controls), Apple and
Datacraft Asia. Mr. Lum graduated from the University of
Essex (UK) in 1985, with a first class honor degree in Computer and
Communication Engineering.
Director
Qualifications of Mr. Lum Kan Fai:
The
board of directors appointed Mr. Lum in recognition of his
extensive knowledge in information technology business and his
ability to assist in the Company’s continuous growth. He has
over 30 years of technology business experience in multinational
corporations.
Mr. Kalita has served as a member of the Company’s
Board of Directors since February of 2018. Mr. Kalita is presently
the Chief Executive Officer of the Guppy Group, a next generation
credit bureau built on blockchain technology. Mr. Kalita has held
this position since June of 2016. In addition, since April of 2013
Mr. Kalita has worked for and helped build Money 20/20, a leading
fintech industry event focusing on disruptive technology in
financial technology and payments. His positions at Money 20/20
have included Knowledge Director (from April of 2013 until December
of 2014), Head of Marketing (from January of 2015 until August of
2016) and Chief Marketing Officer (since August of 2016). He is
also an advisor to multiple startups including MPOWER Financing, an
alternative lender for international students studying in the USA,
and Impact Analytics, which provides advanced analytics and data
services for the retail industry. Mr. Kalita is also a Member of
the Advisory Board to the SXSW Accelerator. Previously, Mr. Kalita
served in business development for Google Wallet from April 2012 to
April 2013. Prior to that position, Mr. Kalita was involved with
several successful startups including TxVia, a payment platform
building technology company acquired by Google in 2012, and
Irynsoft, a mobile education app company. Mr. Kalita has also
worked for Intel and Citibank. Mr. Kalita has an M.B.A. from the
Kellogg School of Management, as well as a B.S. and Masters in
Engineering from Cornell University where he majored in Electrical
Engineering.
45
Director
Qualifications of Sanjib Kalita:
Mr.
Kalita’s service as an officer, director and employee of
various entities has provided him with significant knowledge and
experience regarding financial technology and
payments.
Mr. Lui Wai Leung Alan has served as Chief Financial Officer
since May 12, 2016. Mr. Lui has been Chief Financial
Officer of Alset International Limited, the Company’s
majority stockholder, since November 2016 and served as its Acting
Chief Financial Officer from June 2016 until November 2016. Since
October of 2016, Mr. Lui has also served as a director of BMI
Capital Partners International Ltd, a Hong Kong investment
consulting company. He has also served as a director of LiquidValue
Asset Management Pte Limited (formerly known as Hengfai Asset
Management Pte. Ltd.), a Singapore fund management company, since
April, 2018. Mr. Lui has served as Co-Chief Financial Officer of
LiquidValue Development Inc. since December 2017. Mr.
Lui has served a Co-Chief Financial Officer of Alset EHome
International Inc., a Nasdaq listed company, since March 2018. From
June of 1997 through March of 2016, Mr. Lui served in various
executive roles at ZH International Holdings Ltd. (a Hong
Kong-listed company formerly known as Heng Fai Enterprises Ltd),
including as Financial Controller. Mr. Lui oversaw the financial
and management reporting and focusing on its financing operations,
treasury investment and management. He has extensive experience in
financial reporting, taxation and financial consultancy and
management in Hong Kong. Mr. Lui is a Certified Practicing
Accountant in Australia and received a Bachelor’s Degree in
Business Administration from the Hong Kong Baptist University in
1993.
Section 16(a) Beneficial Ownership Reporting
Compliance
Not
Applicable.
Corporate Governance
Board of Directors
The
varying business experience of each of our directors led to the
conclusion that each such party should be a member of our Board of
Directors. The minimum number of directors we are
authorized to have is one and the maximum is eight. In
no event may we have less than one director.
Directors
on our Board of Directors are elected for one-year terms and serve
until the next annual security holders’ meeting or until
their death, resignation, retirement, removal, disqualification, or
until a successor has been elected and qualified. All officers are
appointed annually by the Board of Directors and serve at the
discretion of the Board. Currently, directors receive no
compensation for their services on our Board.
All
directors will be reimbursed by us for any accountable expenses
incurred in attending directors' meetings provided that we have the
resources to pay these fees. We will consider applying for officers
and directors’ liability insurance at such time when we have
the resources to do so.
Committees of the Board of Directors
Concurrent
with having sufficient members and resources, our Board of
Directors intends to establish an audit committee and a
compensation committee. The audit committee will review the results
and scope of the audit and other services provided by the
independent auditors and review and evaluate the system of internal
controls. The compensation committee will review and recommend
compensation arrangements for the officers and employees. No final
determination has yet been made as to the memberships of these
committees or when we will have sufficient members to establish
committees. We believe that we will need a minimum of three
independent directors to have effective committee
systems.
As of
the date hereof, we have not established any Board
committees.
46
Family Relationships
No
family relationship exists between any director, executive officer,
or any person contemplated to become such.
Director Independence
In
light of the relationships between certain members of our Board and
our majority stockholder, only one of our directors, Mr. Sanjib
Kalita, may be deemed to be independent. Our board of directors has
voluntarily adopted the corporate governance standards defining the
independence of our directors imposed by the NASDAQ Capital
Market's requirements for independent directors pursuant to Rule
5605(a)(2) of the Marketplace Rules of The NASDAQ Stock Market
LLC.
Potential Conflicts
None of
the members of our management work for the Company on a full-time
basis. Both our Executive Chairman and our Chief Financial Officer
are employed by our largest stockholder, Alset International
Limited, formerly known as Singapore Development Limited, and their
services are being temporarily provided to us at no
cost. Certain conflicts of interest may arise between us
and our officer(s) and director(s) in that they may have other
business interests in the future to which they devote their
attention, and they may be expected to continue to do so although
management time must also be devoted to our business. As a result,
conflicts of interest may arise that can be resolved only through
their exercise of such judgment as is consistent with each
officer's understanding of his/her fiduciary duties to
us.
We will
seek to add additional officer(s) and/or director(s) as and when
the proper personnel are located and terms of employment are
mutually negotiated and agreed, and we have sufficient capital
resources and cash flow to make such offers.
We
cannot provide assurances that our efforts to eliminate the
potential impact of conflicts of interest will be
effective.
Involvement in Certain Legal Proceedings
None of
our directors or executive officers has, during the past ten
years:
|
●
|
had any
bankruptcy petition filed by or against any business of which he
was a general partner or executive officer, either at the time of
the bankruptcy or within two years prior to that time;
|
|
●
|
been
convicted in a criminal proceeding or been subject to a pending
criminal proceeding (excluding traffic violations and other minor
offences);
|
|
●
|
been
subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining, barring,
suspending or otherwise limiting his involvement in any type of
business, securities, futures, commodities or banking
activities;
|
|
●
|
been
found by a court of competent jurisdiction (in a civil action), the
Securities and Exchange Commission or the Commodity Futures Trading
Commission to have violated a federal or state securities or
commodities law, and the judgment has not been reversed, suspended,
or vacated; and
|
|
●
|
been
subject or a party to or any other disclosable event required by
Item 401(f) of Regulation S-K.
|
47
Code of Business Conduct and Ethics
We
currently do not have a Code of Business Conduct and
Ethics. We intend to adopt one in the immediate
future.
Item
11.
Executive Compensation.
EXECUTIVE COMPENSATION
Summary Compensation Table
The
following table presents summary information regarding the total
compensation awarded to, earned by, or paid to each of the named
executive officers for services rendered to us for the calendar
years ended December 31, 2020 and December 31, 2019.
|
Name and
Principal Position
|
Fiscal
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
All
Other
Compensation
($)
|
Total
($)
|
|
Chan Heng Fai, Executive Chairman,
Acting CEO
|
2020
|
--
|
--
|
--
|
--
|
--
|
|
(resigned as Acting CEO as of
September 1, 2020)
|
2019
|
--
|
--
|
--
|
--
|
--
|
|
Lee Wang Kei,
CEO
|
2020
|
--
|
--
|
--
|
8,000
|
8,000
|
|
(effective as of September 1, 2020,
appointed as CEO)
|
2019
|
--
|
--
|
--
|
--
|
--
|
|
Lum Kan
Fai
|
2020
|
--
|
--
|
--
|
--
|
--
|
|
Director, Vice
Chairman
|
2019
|
--
|
--
|
--
|
--
|
--
|
|
Sanjib Kalita
|
2020
|
--
|
--
|
--
|
--
|
--
|
|
Director
|
2019
|
--
|
--
|
--
|
--
|
--
|
|
Lui Wai Leung
Alan
|
2020
|
--
|
--
|
--
|
--
|
--
|
|
CFO
|
2019
|
--
|
--
|
--
|
--
|
--
|
Alset International Limited compensates Mr. Chan and Mr. Lui for
their services to a number of divisions and subsidiaries of Alset
International Limited. Each of these individuals works on a number
of matters for Alset International Limited, including devoting
various amounts of time to matters related to the Company. The
Company does not compensate these
individuals
Other
than as set forth in the table above, there has been no cash or
non-cash compensation awarded to, earned by or paid to any of our
officers and directors by the Company in 2019 and 2020. On July 30,
2018, the Company adopted the Equity Incentive Plan intended to
encourage ownership of Shares by Employees and directors of and
certain consultants to the Company in order to attract and retain
such people, to induce them to work for the benefit of the
Company.
48
Director Compensation
Our
directors will not receive a fee for attending each board of
directors meeting or meeting of a committee of the board of
directors. All directors will be reimbursed for their reasonable
out-of-pocket expenses incurred in connection with attending board
of director and committee meetings.
Employment Agreements
As of
the date of this report, the Company has not entered into any
employment arrangement with any director or officer, except for our
Chief Executive Officer, Lee Wang Kei. Mr. Lee is paid $2,000 per
month by HotApp International Limited, a subsidiary of the
Company.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
The
following table sets forth certain information as of March 22, 2021
with respect to the beneficial ownership of our common stock, the
sole outstanding class of our voting securities, by (i) any person
or group owning more than 5% of each class of voting securities,
(ii) each director, (iii) each executive officer named in the
Summary Compensation Table in the section entitled “Executive
Compensation” above and (iv) all executive officers and
directors as a group. As March 22, 2021, we had 506,898,576 shares
of common stock issued and outstanding.
Beneficial
ownership is determined under the rules of the Securities and
Exchange Commission and generally includes voting or investment
power over securities. Except in cases where community property
laws apply or as indicated in the footnotes to this table, we
believe that each stockholder identified in the table possesses
sole voting and investment power over all shares of common stock
shown as beneficially owned by the stockholder.
Shares
of common stock subject to options or warrants that are currently
exercisable or exercisable within 60 days of the date of this Form
10-K are considered outstanding and beneficially owned by the
person holding the options for the purpose of computing the
percentage ownership of that person but are not treated as
outstanding for the purpose of computing the percentage ownership
of any other person.
|
Name and Address
(1)
|
Beneficially
Owned
|
Percentage
Owned
|
|
Greater
than 5% Holders
|
|
|
|
Alset International
Limited (2)
|
505,501,376
|
99.724%
|
|
Officers
and Directors
|
|
|
|
Chan Heng Fai
(3)
|
505,501,376
|
99.724%
|
|
Lee Wang
Kei
|
0
|
0%
|
|
Sanjib
Kalita
|
0
|
0%
|
|
Lum Kan
Fai
|
0
|
0%
|
|
Lui Wai Leung
Alan
|
0
|
0%
|
|
All directors and
officers as a group (5 persons)
|
|
|
_____________________
|
(1)
(2)
(3)
|
Unless
otherwise stated, the address is 4800 Montgomery Lane, Suite 210,
Bethesda MD 20814, the address of the Company
The
address is: 7 Temasek Boulevard #29-01B, Suntec Tower One,
Singapore 038987.
Chan
Heng Fai may be deemed to be the beneficial owner of those
505,501,376 shares of the Company’s common stock owned by
Alset International Limited. Mr. Chan is the Chairman and Chief
Executive Officer of Alset International Limited, a diversified
holding company listed on the Catalist of the Singapore Exchange
Securities Trading Limited and the Chairman and Chief Executive
Officer of Alset EHome International Inc., a Nasdaq listed company.
Alset International Limited’s majority stockholder is a
wholly-owned subsidiary of Alset EHome International Inc. Mr. Chan
owns a majority of the issued and outstanding shares of Alset EHome
International Inc. through HFE Holdings Limited, a holding company
owned by Mr. Chan.
|
49
Item 13. Certain Relationships
and Related Transactions, and Director Independence.
AIL is
the Company’s majority stockholder. Chan Heng Fai, the
Executive Chairman of the Company’s Board of Directors, is
also the Chairman and Chief Executive Officer of AIL, as well as
the majority stockholder of AIL, through shares owned personally
and through a Nasdaq-listed company, Alset EHome International
Inc., which Mr. Chan is also the majority stockholder, Chairman and
Chief Executive Officer of. Lui Wai Leung Alan, the
Company’s Chief Financial Officer, is also the Chief
Financial Officer of AIL and the Co-Chief Financial Officer of
Alset EHome International Inc. As of the date of this report, the
Company has not entered into any employment arrangement with any
director or officer, except for our Chief Executive Officer, Lee
Wang Kei. Mr. Lee is paid $2,000 per month by HotApp International
Limited, a subsidiary of the Company.
On
December 31, 2014, the Company owed Alset International Limited
(AIL), its majority stockholder, $4,428,438. This amount reflects a
loan of $50,000 and the US equivalent of S$5,702,500. It also
includes $32,574 in payments made by AIL on behalf of the
Company. On December 28, 2014, AIL loaned the Company
under a promissory note (the “Note”) $3,988,831
(S$5,250,533.93). The Note is non-interest bearing and matures on
June 25, 2015. The Note has no prepayment penalty. The other loans
and expenses covered by AIL for the benefit of the Company are not
covered under a loan document.
On July
13, 2015, the Company entered into a Loan Conversion Agreement with
AIL, pursuant to which AIL converted outstanding loans made to the
Company into common stock of the Company at a rate of $5.00 per
share (rounded to the nearest full share). The total amount
converted consists of outstanding principal in the amount of
$5,250,554 Singapore Dollars or $3,888,437 USD as of exchange rate
on July 10, 2015, which amount was evidenced by a promissory note
in favor of AIL effective December 28, 2014 (“AIL Promissory
Note”). The principal amount of $3,888,437 was converted to
common stock of the Company, and in exchange, AIL received 777,687
shares of common stock of the Company. The other loans and expenses
covered by AIL for the benefit of the Company are not covered under
a loan document.
On
March 25, 2015, HotApps International Pte Ltd., subsequently known
as HotApp BlockChain Pte. Ltd. (“HIP”)
acquired 100% of issued share capital in HotApp International
Limited, a Hong Kong company, for a cash consideration of HK$1.00
from Mr. Chan Heng Fai, a substantial stockholder and the
Company’s Chairman and former CEO. HotApp International
Limited is a corporation incorporated in Hong Kong Special
Administrative Region of the People’s Republic of China with
a total issued share capital of HK$1.00 represented by one (1)
issued share at HK$1.00 each. The consideration of the acquisition
was based on the issued share capital of HotApp International
Limited, which is principally engaged in the sales and marketing of
mobile application. HotApp International Limited was dormant and
has a net equity deficiency of HK$5,456 due to incorporation
expenses as at the date of acquisition.
On
January 25, 2017, the Company entered into an Agreement for
Services with iGalen International Inc. (“iGalen”), a
company specializing in dietary supplements, to provide iGalen with
a mobile enterprise resource planning platform (“Mobile
App”) for iGalen’s members. Under the terms of the
agreement, iGalen, a U.S.-based network marketing company which was
53% owned by AIL, agreed to share 3% of its entire annual global
revenue with the Company for the financial year ending December 31,
2017. In exchange, the Company assumed responsibility
for maintaining and upgrading the Mobile App platform, as well as
providing the required cloud infrastructure. The Company agreed to
absorb the cost of development of the Mobile App, and agreed not to
charge individual members for use of the Mobile App’s
standard functions.
On
March 27, 2017, the Company entered into a Loan Conversion
Agreement with AIL, pursuant to which AIL agreed to convert
$450,890 of debt owed by the Company to AIL into 500,988,889 common
shares at a conversion price of $0.0009. The captioned shares were
issued on June 9, 2017, and AIL owned 99.979% of the Company after
such transactions.
On
December 20, 2018, the Board of Directors of AIL announced its
intention to sell up to 3,200,000 shares of the Company to
independent third parties at US$0.50 per share for an aggregate
cash consideration of up to US$1,600,000. The purpose of
this proposed sale was to raise funds to continue to support the
general corporate and working capital of the Company, including but
not limited to the operating costs of the Company. As of
December 31, 2020, AIL has sold 1,129,200 shares of the Company to
independent third parties, and AIL owned 99.756% of the Company
after such transactions.
On
March 27, 2017, AIL and the Company entered into a Preferred Stock
Cancellation Agreement, by which AIL agreed to cancel its
13,800,000 shares of Perpetual Preferred Stock issued by the
Company. On June 8, 2017, a Certificate of Retirement for
13,800,000 shares of the Perpetual Preferred Stock has been filed
with the office of Secretary of State of the State of
Delaware.
On
October 25, 2018, HotApps International Pte. Ltd., subsequently
known as HotApp BlockChain Pte. Ltd. (“HIP”) entered
into an Equity Purchase Agreement with DSS Asia Limited (“DSS
Asia”), a Hong Kong subsidiary of DSS International Inc.
(“DSS International”), pursuant to which HIP agreed to
sell to DSS Asia all of the issued and outstanding shares of
HotApps Information Technology Co. Ltd., also known as Guangzhou
HotApps Technology Ltd. (“Guangzhou HotApps”).
Guangzhou HotApps was a wholly owned subsidiary of HIP, which was
primarily engaged in engineering work for software development,
mainly voice over internet protocol. Guangzhou HotApps was also
involved in a number of outsourcing projects, including projects
related to real estate and lighting.
50
The
parties to the Equity Purchase Agreement agreed that the purchase
price for this transaction would be $100,000, which would be paid
in the form of a two-year, interest free, unsecured, demand
promissory note in the principal amount of $100,000, and that such
note would be due and payable in full in two years. The closing of
the Equity Purchase Agreement was subject to certain conditions;
these conditions were met and the transaction closed on January 14,
2019.
Mr.
Chan Heng Fai is the Executive Chairman and a Member of the Board
of Directors of the Company. He is also the Chief Executive Officer
and Chairman of Alset International Limited, the majority
stockholder of the Company. Mr Chan is the majority stockholder of
Alset EHome International Inc., which, through subsidiaries, is the
majority stockholder of Alset International Limited. Mr. Chan is
also the Chief Executive Officer and Chairman of DSS International
and a significant stockholder and a member of the Board of Document
Security Systems Inc., which is the sole owner of DSS
International. Lum Kan Fai, a member of the Board of Directors of
the Company, is also an employee of DSS International.
We
believe that the foregoing transactions were in our best interests.
Consistent with Section 144 of the Delaware General Corporation
Law, it is our current policy that all transactions between us and
our officers, directors and their affiliates will be entered into
only if such transactions are approved by a majority of the
disinterested directors, are approved by vote of the stockholders
or are fair to us as a corporation as of the time they were
authorized, approved or ratified by the board. We will conduct an
appropriate review of all related party transactions on an ongoing
basis, and, where appropriate, we will utilize our audit committee
for the review of potential conflicts of interest.
Except
as set forth above, none of the following persons has any direct or
indirect material interest in any transaction to which we are a
party since our incorporation or in any proposed transaction to
which we are proposed to be a party:
|
|
(A)
|
Any of
our directors or officers;
|
|
|
(B)
|
Any
proposed nominee for election as our director;
|
|
|
(C)
|
Any
person who beneficially owns, directly or indirectly, shares
carrying more than 10% of the voting rights attached to our common
stock; or
|
|
|
(D)
|
Any
relative or spouse of any of the foregoing persons, or any relative
of such spouse, who has the same house as such person or who is a
director or officer of any parent or subsidiary of our
Company.
|
Item 14. Principal Accounting Fees and Services.
The
following table indicates the fees paid by us for services
performed for the:
|
|
Year Ended
December 31,
|
|
|
|
2020
|
2019
|
|
Audit
Fees
|
$36,500
|
$40,000
|
|
Tax
Fees
|
5,000
|
4,000
|
|
Total
|
$41,500
|
$44,000
|
51
PART IV
Item 15. Exhibits, Financial Statement Schedules
(a)(1) List
of Financial Statements included in Part II hereof:
Consolidated
Balance Sheets as of December 31, 2020 and 2019
Consolidated
Statements of Operations and Comprehensive Loss for the Years Ended
December 31, 2020 and 2019
Consolidated
Statements of Stockholder Equity (Deficit) for the Period from
January 1, 2019 to December 31, 2020
Consolidated
Statements of Cash Flows for the Years Ended December 31, 2020 and
2019
(a)(2) List
of Financial Statement schedules included in Part IV
hereof:
None
(a)(3) Exhibits
The
following exhibits are included herewith:
|
Exhibit
Number
|
|
Description
|
|
|
Certificate
of Incorporation (incorporated herein by reference to Exhibit 3.1
to the Company’s Registration Statement on Form S-1 filed on
March 21, 2014).
|
|
|
|
Certificate
of Amendment to the Certificate of Incorporation (incorporated
herein by reference to Exhibit 3.1.1 to the Company’s Current
Report on Form 8-K filed on December 9, 2014).
|
|
|
|
Certificate
of Amendment to the Certificate of Incorporation (incorporated
herein by reference to Exhibit 3.1.2 to the Company’s Annual
Report on Form 10-K for the period ended December 31, 2017 filed on
April 2, 2018).
|
|
|
|
Certificate
of Amendment to the Certificate of Incorporation (incorporated
herein by reference to Exhibit 3.1.3 to the Company’s Current
Report on Form 8-K filed on February 5, 2021).
|
|
|
|
Bylaws
(incorporated herein by reference to Exhibit 3.2.1 to the
Company’s Annual Report on Form 10-K for the period ended
December 31, 2017 filed on April 2, 2018).
|
|
|
|
Outsource
Technology Development Agreement, by and between Document Security
Systems, Inc. and HotApp International Ltd., dated as of March 1,
2018 (incorporated by reference to Exhibit 10.1 to the
Company’s Quarterly Report on Form 10-Q for the period ended
March 31, 2018, filed on May 15, 2018).
|
|
|
|
HotApp
Blockchain Inc. 2018 Equity Incentive Plan (incorporated herein by
reference to Exhibit 10.1 to the Company’s Current Report on
Form 8-K filed on August 3, 2018).
|
|
|
|
Term
Sheet, by and between HotApps International Pte Ltd and Alpha Mind
Pte Ltd, dated as of September 14, 2018 (incorporated herein by
reference to Exhibit 10.1 to the Company’s Current Report on
Form 8-K filed on September 20, 2018).
|
|
|
|
Guangzhou
HotApp Equity Purchase Agreement (incorporated herein by reference
to Exhibit 10.1 to the Company’s Quarterly Report on Form
10-Q for the period ended September 30, 2018 filed on November 14,
2018).
|
|
|
|
Subsidiaries
of the Registrant
|
|
|
|
Certification
of Chief Executive Officer Pursuant to Rules 13a-14(a) and
15d-14(a) under the Securities Exchange Act of 1934, as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
|
|
Certification
of Chief Financial Officer Pursuant to Rules 13a-14(a) and
15d-14(a) under the Securities Exchange Act of 1934, as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
|
|
Certification
of Chief Executive and Financial Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
52
|
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
|
* Filed
with this document
**
Furnished with this document
Item 16. Form 10-K Summary
None.
53
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
|
|
GIGWORLD
INC.
|
|
|
|
Date: March 22, 2021
|
By:
|
/s/ Lee
Wang Kei
|
|
|
|
|
Lee
Wang Kei
|
|
|
|
|
Chief
Executive Officer
(Principal
Executive Officer)
|
|
|
Date: March 22, 2021
|
By:
|
/s/ Lui Wai Leung, Alan
|
|
|
|
|
Lui Wai Leung, Alan
|
|
|
|
|
Chief Financial Officer
(Principal Financial and Principal Accounting Officer)
|
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of
the registrant and in the capacities indicated and on the dates
indicated.
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
/s/ Lee
Wang Kei
|
|
Chief
Executive Officer
|
|
March
22, 2021
|
|
Lee
Wang Kei
|
|
(Principal
Executive Officer)
|
|
|
|
|
|
|
|
|
|
/s/ Lui
Wai Leung, Alan
|
|
Chief
Financial Officer
|
|
March
22, 2021
|
|
Lui Wai
Leung, Alan
|
|
(Principal
Financial Officer and
Principal
Accounting Officer)
|
|
|
|
|
|
|
|
|
|
/s/
Chan Heng Fai
|
|
Executive
Chairman of the Board
|
|
March
22, 2021
|
|
Chan
Heng Fai
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Lum
Kan Fai
|
|
Vice
Chairman of the Board
|
|
March
22, 2021
|
|
Lum Kan
Fai
|
|
|
|
|
|
|
|
|
|
|
|
/s/
Sanjib Kalita
|
|
Director
|
|
March
22, 2021
|
|
Sanjib
Kalita
|
|
|
|
|
54