| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 3 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES Use of Estimates The preparation
of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these
estimates. Significant estimates during the years ended December 31, 2019 and 2018 include the allowance for doubtful accounts,
the useful life of property and equipment, assumptions used in assessing impairment of long-term assets and goodwill, and valuation
of deferred tax assets. Fair Value of Financial Instruments
and Fair Value Measurements The
Company adopted the guidance of Accounting Standards Codification ("ASC") 820 for fair value measurements which clarifies
the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the
inputs used in measuring fair value as follows
● Level 1-Inputs
are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date
● Level 2-Inputs
are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets
and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or
corroborated by observable market data
● Level
3-Inputs are unobservable inputs which reflect the reporting entity's own assumptions
on what assumptions the market participants would use in pricing the asset or liability based on the best available information The
. Transactions involving
related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive,
free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the
related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless
such representations can be substantiated. It is not, however, practical to determine the fair value of amounts due to related
parties due to their related party nature. Cash
and Cash Equivalents Cash
. Concentrations of Credit Risk Currently,
Property and Equipment Property
.
Estimated
useful life
Office equipment and furniture 3 - 5 Years
Leasehold improvement The lesser of remaining lease term or 2 - 3 Years
Software 1 - 3 Years Goodwill Goodwill represents the excess of the purchase
consideration over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed from the
acquired entity as a result of the Company's acquisitions of interests in its subsidiaries. Goodwill is not depreciated or
amortized but is tested for impairment at the reporting unit level on an annual basis, and between annual tests when an event or
circumstances change occurs that indicate the asset might be impaired. Under ASC 350-20-35, the Company has the option to choose
whether it will apply the qualitative assessment first and then the quantitative assessment, if necessary, or to apply the quantitative
assessment directly. The Company chooses to directly apply the quantitative impairment test, which consists of a two-step quantitative
impairment test. The first step is comparing the carrying amount of the reporting unit to the fair value of the reporting unit.
If the fair value of the reporting unit exceeds the carrying value of the reporting unit, goodwill is not impaired, and the Company
is not required to perform further testing. If the carrying value of the reporting unit exceeds the fair value of the reporting
unit, then the Company must perform the second step of the two-step quantitative goodwill impairment test to measure the amount
of impairment loss by comparing the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill.
Application of a goodwill impairment test requires significant management judgment, including the identification of reporting units,
assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value of each
reporting unit. The judgment in estimating the fair value of reporting units includes estimating future cash flows, determining
appropriate discount rates and making other assumptions. Changes in these estimates and assumptions could materially affect the
determination of fair value for each reporting unit. The acquired entity as a whole is determined to be one reporting unit for
goodwill impairment testing. The Company directly applied the quantitative assessment and performed the goodwill impairment test
by quantitatively comparing the fair values of the reporting unit to its carrying amounts. The
Company recognized $127,717 impairment loss on goodwill, which is Impairment of Long-lived Assets In
Long-term
Investments The Company's
long-term investments primarily consist of equity investment accounted for using the measurement alternative as of December 31,
2019. It also had an equity investment accounted for using the equity method prior to the business combination described in NOTE
9 Equity
Investment Using Measurement Alternative The Company periodically
reviews its equity investment for impairment. At each reporting date, an entity that uses the measurement alternative to measure
an equity investment without a readily determinable fair value is required to make a qualitative assessment of whether the investment
is impaired. The Company regularly evaluates the impairment of these investments based on performance and financial position of
the investee as well as other evidence of market value. Such evaluation includes, but is not limited to, reviewing the investee's
cash position, recent financing, projected and historical financial performance, cash flow forecasts and financing needs. An impairment
loss recognized equal to the excess of the investment cost over its fair value at the end of each reporting period for which the
assessment is made. The fair value would then become the new cost basis of investment. Equity Method
Investment In the event the
Company incurs losses in excess of the carrying amount of an equity investment and reduces the Company's investment balance
to zero, the Company would not record additional losses unless (i) the Company guaranteed obligations of the investee, (ii) the
Company is otherwise committed to provide further financial support for the investee, or (iii) it is anticipated that the investee's
return to profitability is imminent. If the Company provided a commitment to fund losses, it would continue to record losses resulting
in a negative equity method investment, which is presented as a liability. The Company periodically
reviews its equity investment for impairment. Under the equity method of accounting, an impairment loss would be recorded whenever
the fair value of an equity investment is determined to be below its carrying amount and the reduction is considered to be other
than temporary. In judging "other than temporary," the Company considers the length of time and extent to which the
fair value of the investment has been less than the carrying amount of the equity investment, the near-term and long-term operating
and financial prospects of the entity and the Company's longer-term intent of retaining its investment in the entity. The
Company considers whether the fair value of its equity method investment has declined below its carrying value whenever adverse
events or changes in circumstances indicate that recorded value may not be recoverable. If the Company considers any decline to
be other than temporary (based on various factors, including historical financial results and the overall health of the investee),
then a write-down would be recorded to estimated fair value. See NOTE 8 Value Added Tax Gujia is subject to a value added tax ("VAT")
of 3% for performing professional services. The amount of VAT liability is determined by applying the applicable tax rate to the
invoiced amount of professional services provided. The Company reports revenue net of PRC's value added tax for all the periods
presented in the consolidated statements of operations. Revenue Recognition The Company has adopted Accounting
Standards Codification Topic 606, "Revenue from Contracts with Customers" ("ASC 606") effective
January 1, 2018. Under ASC 606, the Company recognizes revenue when a customer obtains control of promised goods, in an
amount that reflects the consideration which the Company expects to receive in exchange for the goods. To determine revenue
recognition for arrangements within the scope of ASC 606, the Company performs the following five steps: (1) identify the
contracts with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4)
allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when or as the
entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that
the entity will collect the consideration it is entitled to in exchange for the goods it transfers to the customer. The
Company does not offer promotional payments, customer coupons, rebates or other cash redemption offers to its customers. Market data services and investor relation
management services revenue The Company generate these revenues by
providing services under written service contracts with its customers. Revenue related to its service offered is recognized over
time as the services are performed when the performance obligation is satisfied. Commissions The Company generated revenue from commissions
through customers' transactions in stocks by providing brokerage service for its customers. Commission revenue is recognized
at a point in time on the trade date when the performance obligation is satisfied. The following tables disaggregate the Company's
revenue by revenue type:
For the Year Ended
2018 2019
US$ US$
Market data services $ 26,882 $ 75,044
Investor relations management services - 86,788
Commissions - 33,680
Other revenue - 5,285
Total revenues $ 26,882 $ 200,797 Deferred revenue represents income collected but not earned
as of the reporting date. As of December 31, 2019, deferred revenue totaled $63,246. As of December 31, 2018 deferred revenue was
$79,182, of which $69,899 was recognized as revenue in the year ended December 31, 2019. Cost of Revenue Cost of
revenue consists primarily of internal labor cost and related benefits, and other overhead costs that are directly attributable
to service provided Research and Development Expenditures
for research and product development costs are expensed as incurred. For the years
ended December 31, 2019 and 2018, research and development expenses were $737,329 and $828,367, respectively. Selling and
Marketing Costs All
costs related to selling and marketing are expensed as incurred. For the year ended December 31, 2019 and 2018, selling and marketing
costs were $389,750 and $171,016 Government
Subsidy The Company's PRC based subsidiary received government
subsidies according to related policy from local government. Government subsidies are recognized when received and all the conditions
specified in the grant have been met. For the year ended December 31, 2019, the Company recognized government subsidy of RMB5,000,000
(approximately $725,000) for completing its initial public offering on the NASDAQ Capital
Market Operating Leases On January 1,
2019, the Company adopted ASU No. 2016-02, Leases (Topic 842), as amended, which supersedes the lease accounting guidance under
Topic 840, and generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use
assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising
from leasing arrangements. The Company elected
to apply practical expedients permitted under the transition method that allow the Company to use the beginning of the period of
adoption as the date of initial application, to not recognize lease assets and lease liabilities for leases with a term of twelve
months or less, to not separate non-lease components from lease components, and to not reassess lease classification, treatment
of initial direct costs, or whether an existing or expired contract contains a lease. The Company used modified retrospective method
and did not adjust the prior comparative periods. Under the new lease standard, the Company determines if an arrangement is or
contains a lease at inception. Right-of-use assets and liabilities are recognized at lease commencement date based on the present
value of remaining lease payments over the lease terms. The Company considers only payments that are fixed and determinable at
the time of lease commencement. See NOTE 15 Segment Information ASC 280 "Segment reporting" establishes standards
for reporting information on operating segments in interim and annual financial statements. Operating segments are defined as the
components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing performance. Our chief operating decision makers direct the
allocation of resources to operating segments based on the profitability, cash flows, and growth opportunities of each respective
segment. The Company currently has two operating segments, Gujia and
MM Global. See NOTE 17 Income Taxes The
The
Company follows the accounting guidance for uncertainty in income taxes using the provisions of ASC 740 "Income Taxes".
Using that guidance, tax positions initially need to be recognized in the financial statements when it is more likely than not
the position will be sustained upon examination by the tax authorities. As of December 31, 2019 and 2018, the Company had no significant
uncertain tax positions that qualify for either recognition or disclosure in the financial statements. Tax years that remain subject
to examination are the years ended December 31, 2019, 2018 and 2017. The Company recognizes interest and penalties related to significant
uncertain income tax positions in other expense. No such interest and penalties incurred for the years ended December 31, 2019
and 2018. Foreign Currency Translation The
Transactions denominated
in foreign currencies are translated into the functional currency at the exchange rates prevailing on the transaction dates. Assets
and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing
at the balance sheet date with any transaction gains and losses that arise from exchange rate fluctuations on transactions denominated
in a currency other than the functional currency are included in the results of operations as incurred. All
. The
. Comprehensive
Loss Comprehensive
. Business Combinations The Company accounts
for its business combination using the acquisition method of accounting in accordance with ASC 805, Business Combinations.
The cost of an acquisition is measured as the aggregate of the acquisition date fair values of the assets transferred and liabilities
incurred by the Company to the sellers and equity instruments issued. Transaction costs directly attributable to the acquisition
are expensed as incurred. Identifiable assets and liabilities acquired or assumed are measured separately at their fair values
as of the acquisition date, irrespective of the extent of any noncontrolling interests. The excess of (i) the total costs
of acquisition, fair value of the noncontrolling interests and acquisition date fair value of any previously held equity interest
in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill. If the cost
of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly
in the consolidated statements of operations and comprehensive loss. During the measurement period, which can be up to one year
from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding
offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities
assumed, whichever comes first, any subsequent adjustments are recorded on the consolidated statements of operations
and comprehensive loss. In a business
combination achieved in stages, the Company remeasures the previously held equity interests in the acquiree when obtaining control
at its acquisition date fair value and the remeasurement gain or loss, if any, is recognized on the consolidated statements of
operations and comprehensive loss. See NOTE 9 Per Share Data ASC
Basic
Year Ended Year Ended
Net loss for basic and diluted net loss per share of common stock $ (2,243,234 ) $ (2,349,002 )
Weighted average common stock outstanding – basic and diluted 20,013,288 39,600,000
Net loss per common share - basic and diluted (0.11 ) (0.06 ) The
. Related Parties Parties
NOTE 11 Fiscal Year End The Company has
adopted a fiscal year end of December 31st. Recent Accounting
Pronouncements January 2017,
the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The update
simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step
2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit's goodwill with the carrying
amount of that goodwill. A public entity that is a U.S. Securities and Exchange Commission ("SEC") filer should adopt
the amendments in this update for its annual or any interim goodwill impairment tests in fiscal years beginning after December
15, 2019. The Company does not expect the adoption to have a material impact on its consolidated financial statements. In August 2018,
the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements
for Fair Value Measurement, which eliminates, adds and modifies certain disclosure requirements for fair value measurements. Under
the guidance, public companies will be required to disclose the range and weighted average used to develop significant unobservable
inputs for Level 3 fair value measurements. The guidance is effective for all entities for fiscal years beginning after December
15, 2019 and for interim periods within those fiscal years. The Company does not expect the adoption to have a material impact
on its consolidated financial statements. In
February 2016, the FASB issued ASU 2016–02, Leases (Topic 842). The guidance supersedes existing guidance on accounting
for leases with the main difference being that operating leases are to be recorded in the statement of financial position as right–of–
use assets and lease liabilities, initially measured at the present value of the lease payments. For operating leases with a term
of 12 months or less, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities.
For public companies, the guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within
those fiscal years. Early application of the guidance is permitted. In July 2018, ASU 2016-02 was updated with ASU No. 2018-11,
Targeted Improvements to ASC 842, which provides entities with relief from the costs of implementing certain aspects of the new
leasing standard. Specifically, under the amendments in ASU 2018-11, (1) entities may elect not to recast the comparative periods
presented when transitioning to ASC 842 and (2) lessors may elect not to separate lease and non-lease components when certain conditions
are met. Before ASU 2018-11 was issued, transition to the new lease standard required application of the new guidance at the beginning
of the earliest comparative period presented in the financial statements. The
adopted Topic 842 on January 1, 2019 using the modified retrospective transition
approach allowed under ASU 2018-11, without adjusting the comparative periods presented. The elected
the practical expedients under ASU 2016-02 which includes the use of hindsight in determining the lease term and the practical
expedient package to not reassess whether any expired or existing contracts are or contain leases, to not reassess the classification
of any expired or existing leases, and to not reassess initial direct costs for any existing leases. Upon adoption of Topic 842,
the recognized both a right-of-use assets and corresponding lease liabilities
on the consolidated balance sheet as described in NOTE 1 5 . The adoption
did not have a material impact on the 's consolidated statements of operations
or consolidated statements of cash flows upon adoption. The adoption of Topic 842 also did not result in a cumulative-effect adjustment
to retained earnings. |
