Item
1.02 Termination of a Material Definitive Agreement
As
previously reported, Vitaxel Group Limited (the “
Company
”), a Nevada corporation, entered into an agreement
for the acquisition (the “
Acquisition
”) of Grande Legacy Inc., a British Virgin Islands Company (“
Grande
Legacy
”), pursuant to a Share Sale Agreement (as amended from time to time, the “
Agreement
”) effective
December 15, 2017 with Lim Hui Sing and Leong Yee Ming (together, the “
Sellers
”) and Vitaxel Sdn. Bhd., a wholly-owned
subsidiary of the Company as purchaser (the “
Purchaser
”) (See, Current Report on Form 8-K dated December 19,
2017, and Current Report on Form 8-K dated June 11, 2018). As the consideration for the transaction, the company was required
to issue to each of the Sellers 37,500,000 shares of the Company’s common stock, or at total of 75,000,000 shares (the “
Consideration
Shares
”).
Among
the conditions to closing of the Acquisition, the parties agreed that:
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The
Company and Grande Legacy were required to complete the audit of Grande Legacy and the
consolidated audited financial statements of the Company and Grande Legacy reflecting
such transaction.
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The
Company would issue the 75,000,000 Consideration Shares to the Sellers within 30 days
of the Company’s obtaining all shareholder approvals necessary to approve the issuance
of said shares and to amend the Company’s Certificate of Incorporation by increasing
its capitalization to facilitate such issuance.
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While
Grande Legacy was able to deliver its audited financial statements, the Company did not obtain the consents necessary to increase
its capitalization so that it can issue the Consideration Shares.
Effective
as of September 17, 2018, the Company has been advised by Grande Legacy that, as the Company did not obtain the requisite approvals
for issuance of its shares, the Acquisition had been terminated. Nonetheless the Company continued to negotiate said termination
in good faith.
In
addition, the Company believes that the cost in completing the transaction would likely outweigh the benefits of completion of
the acquisition at this point. Accordingly, the Company’s board has determined to allow the Acquisition to terminate and,
entered into a Termination and Release Agreement relating to the foregoing termination, dated December 5, 2018. A copy of the
Termination and Release Agreement is filed as an Exhibit to this Report.
Other
than expenses incurred in connection with the Acquisition transaction, the Company has not paid any consideration and no Consideration
Shares were issued. In addition, no penalties are payable by either party. Leong Yee Ming, the current principal executive officer
and a director of the Registrant, is one of the two shareholders of Grande Legacy and did not receive consideration from the Agreement
or termination thereof.
Notwithstanding
the foregoing termination of the Acquisition, the License Agreement between the Company and Grande Legacy entered into on January
5, 2017, as amended, is still in full force and effect (See, Current Report on Form 8-K Dated January 23, 2018) as is the Company’s
Management Agreement with them dated July 1, 2018, as amended. This agreement grants Grande Legacy the exclusive license to operate
a direct selling, multi-level marketing platform offering travel, entertainment, lifestyle and other products and services using
some of the Company’s marks and materials in countries other than Malaysia, Singapore and Thailand. Grande Legacy also continues
to utilize the Credit Card portal of Vitaxel Sdn Bhd., a subsidiary of the Company.