|
ITEM 1.
|
FINANCIAL
STATEMENTS (UNAUDITED)
|
|
|
|
VITAXEL
GROUP LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(In U.S. dollars)
|
|
|
As
of
|
|
|
As
of
|
|
|
|
|
June
30,
|
|
|
December
31,
|
|
|
|
|
2020
(Unaudited)
|
|
|
2019
(Audited)
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
76,690
|
|
|
$
|
63,436
|
|
|
Amount due from related parties
|
|
|
4,906
|
|
|
|
5,132
|
|
|
Inventories
|
|
|
18,721
|
|
|
|
17,450
|
|
|
Other receivables, prepayments and other current
assets
|
|
|
19,042
|
|
|
|
30,559
|
|
|
Total current assets
|
|
|
119,359
|
|
|
|
116,577
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
49,838
|
|
|
|
62,221
|
|
|
Total non-current assets
|
|
|
49,838
|
|
|
|
62,221
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
169,197
|
|
|
$
|
178,798
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
Amounts due to related parties
|
|
$
|
4,335,357
|
|
|
$
|
4,372,856
|
|
|
Commission payables
|
|
|
123,820
|
|
|
|
133,743
|
|
|
Accounts payable
|
|
|
6,446
|
|
|
|
154
|
|
|
Accrued expense and other payables
|
|
|
327,735
|
|
|
|
340,112
|
|
|
Total current liabilities
|
|
|
4,793,358
|
|
|
|
4,846,865
|
|
|
TOTAL LIABILITIES
|
|
|
4,793,358
|
|
|
|
4,846,865
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies (Note 7(1))
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
|
Preferred stock par value $0.0001: 1,000,000
shares authorized; and 0 outstanding
|
|
|
—
|
|
|
|
—
|
|
|
Common stock par value $0.0001: 70,000,000 shares
authorized; 54,087,903 and 54,087,903 shares issued and outstanding, respectively
|
|
|
5,409
|
|
|
|
5,409
|
|
|
Additional paid-in capital
|
|
|
4,749,798
|
|
|
|
4,749,798
|
|
|
Accumulated deficit
|
|
|
(9,740,650
|
)
|
|
|
(9,587,918
|
)
|
|
Accumulated other comprehensive income
|
|
|
361,281
|
|
|
|
164,644
|
|
|
Total stockholders’ equity
|
|
|
(4,624,162
|
)
|
|
|
(4,668,067
|
)
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’
DEFICIT
|
|
$
|
169,197
|
|
|
$
|
178,798
|
|
The
accompanying notes are an integral part of these condensed consolidated financial statements.
VITAXEL
GROUP LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(In U.S. dollars)
|
|
|
For the
Three Months Ended
June 30,
|
|
|
For the
Six Months Ended
June 30,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
REVENUE
|
|
$
|
2,749
|
|
|
$
|
4,645
|
|
|
$
|
15,644
|
|
|
$
|
19,160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF REVENUE
|
|
|
(2,176
|
)
|
|
|
(4,090
|
)
|
|
|
(12,834
|
)
|
|
|
(13,547
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT
|
|
|
573
|
|
|
|
555
|
|
|
|
2,810
|
|
|
|
5,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling expense
|
|
|
(156
|
)
|
|
|
—
|
|
|
|
(590
|
)
|
|
|
(34
|
)
|
|
General and administrative expenses
|
|
|
(143,632
|
)
|
|
|
(235,890
|
)
|
|
|
(382,019
|
)
|
|
|
(522,734
|
)
|
|
Total operating expenses
|
|
|
(143,788
|
)
|
|
|
(235,890
|
)
|
|
|
(382,609
|
)
|
|
|
(522,768
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM OPERATIONS
|
|
|
(143,215
|
)
|
|
|
(235,335
|
)
|
|
|
(379,799
|
)
|
|
|
(517,155
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME/(EXPENSE), NET
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
108,125
|
|
|
|
132,143
|
|
|
|
228,423
|
|
|
|
258,638
|
)
|
|
Other expense
|
|
|
4,964
|
|
|
|
867
|
|
|
|
(1,357
|
)
|
|
|
(635
|
)
|
|
Total Other income / (Expense), net
|
|
|
113,089
|
|
|
|
133,010
|
)
|
|
|
227,066
|
|
|
|
258,003
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(30,125
|
)
|
|
$
|
(102,325
|
)
|
|
$
|
(152,732
|
)
|
|
$
|
(259,152
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE LOSS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
(33,477
|
)
|
|
|
54,549
|
|
|
|
196,637
|
|
|
|
6,721
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL COMPREHENSIVE INCOME (LOSS)
|
|
$
|
(63,602
|
)
|
|
$
|
(47,776
|
)
|
|
$
|
43,905
|
|
|
$
|
(252,431
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares
outstanding - basic and diluted
|
|
|
54,087,903
|
|
|
|
54,087,903
|
|
|
|
54,087,903
|
|
|
|
54,087,903
|
|
|
Net Income (Loss) per share - basic and diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
0.00
|
|
|
$
|
(0.00
|
)
|
The
accompanying notes are an integral part of these condensed consolidated financial statements.
VITAXEL
GROUP LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In U.S. dollars)
|
|
|
For
the Period Ended June 30,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(152,732
|
)
|
|
$
|
(259,152
|
)
|
|
Items not involving cash:
|
|
|
|
|
|
|
|
|
|
Depreciation – property and equipment
|
|
|
13,247
|
|
|
|
16,184
|
|
|
Property, plant and equipment written off
|
|
|
—
|
|
|
|
2,256
|
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
Accounts Receivable
|
|
|
—
|
|
|
|
(14,026
|
)
|
|
Other receivables, prepayments and other current
assets
|
|
|
11,517
|
|
|
|
41,447
|
|
|
Inventories
|
|
|
(1,271
|
)
|
|
|
(10,116
|
)
|
|
Accounts Payable
|
|
|
6,292
|
|
|
|
(112
|
)
|
|
Commission payables
|
|
|
(9,923
|
)
|
|
|
(3,427
|
)
|
|
Accrued expense and other payables
|
|
|
(12,377
|
)
|
|
|
(46,646
|
)
|
|
Net cash used in operating activities
|
|
|
(145,247
|
)
|
|
|
(273,592
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
(1,701
|
)
|
|
|
(27,132
|
)
|
|
Net cash used in investing activities
|
|
|
(1,701
|
)
|
|
|
(27,132
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Repayments to) / Proceeds from related parties
|
|
|
162,829
|
|
|
|
(651,637
|
)
|
|
Net cash provided by (used in) financing activities
|
|
|
162,829
|
|
|
|
(651,637
|
)
|
|
|
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE RATES ON CASH
|
|
|
(2,627
|
)
|
|
|
2,072
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
|
|
13,254
|
|
|
|
(950,289
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
|
|
63,436
|
|
|
|
1,004,397
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
|
$
|
76,690
|
|
|
$
|
54,108
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest expenses
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Cash paid for income tax
|
|
$
|
—
|
|
|
$
|
—
|
|
The
accompanying notes are an integral part of these condensed consolidated financial statements.
VITAXEL GROUP LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In U.S. dollars)
|
1.
|
ORGANIZATION AND BUSINESS
|
Vitaxel Group Limited (the “Company”
or “Vitaxel”), incorporated in Nevada, is engaged in direct selling industry and online shopping platform primarily
through its operating entities in Malaysia.
Vitaxel SDN BHD (“Vitaxel
SB”), was incorporated in Malaysia on August 10, 2012. Vitaxel SB is primarily engaged in the direct selling industry utilizing
a multi-level marketing model with an emphasis on travel, entertainment and lifestyle products and services.
Vitaxel Online Mall SDN BHD (“Vionmall”),
was incorporated in Malaysia on September 22, 2015. Vionmall is primarily engaged in developing online shopping platforms geared
to Vitaxel and its members and the third-party suppliers of products and services.
|
2.
|
UNAUDITED INTERIM FINANCIAL STATEMENTS
|
The accompanying unaudited condensed
consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted
in the United States of America (“U.S. GAAP”) for interim financial information under Article 8 of Regulation S-X.
They do not include all information and foot notes required by U.S. GAAP for complete financial statements. Except as disclosed
herein, there have been no material changes in the information disclosed in the notes to the consolidated financial statement for
the year ended December 31, 2019, included in the Company’s Form 10-K filed with the Security and Exchange Commission (“SEC”).
The interim unaudited consolidated financial statements should be read in conjunction with those audited consolidated financial
statements included in Form 10-K.
In the opinion of management,
the Company has made all adjustments necessary to present a fair statement of the financial position as of June 30, 2020, results
of operations for the six months ended June 30, 2020 and 2019, and cash flows for the six months ended June 30, 2020 and 2019.
All significant intercompany transactions and balances are eliminated on consolidation. The results of operations for the six months
ended June 30, 2020 are not necessarily indicative of the results of operations for the entire fiscal year.
Recently
issued accounting pronouncements
In August 2018, the FASB issued
ASU 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which improves fair
value disclosure requirements by removing disclosures that are not cost beneficial, clarifying disclosures’ specific requirements
and adding relevant disclosure requirements. This ASU is effective for fiscal years, and interim periods within those fiscal years,
beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of
significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty
should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption.
All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted
and an entity can choose to early adopt any removed or modified disclosures upon issuance of this ASU and delay adoption of the
additional disclosures until their effective date. The adoption of ASU 2018-13 did not to have a material impact on the consolidated
financial statements.
In December 2019, the FASB issued
ASU2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, with the intent to reduce the complexity
in accounting for income taxes. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning
after December 15, 2020, and early adoption is permitted. The accounting update removes certain exceptions to the general principles
in ASC 740 as well as provides simplification by clarifying and amending existing guidance. The Company is currently assessing
the impact of the new standard on the consolidated financial statements.
Other recent accounting pronouncements
issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC did not, or are not believed by management,
to have a material impact on the Company’s present and future consolidated financial statements.
Reclassification: Certain
reclassifications have been made to the prior period amounts to conform to the current period’s presentation.
These unaudited consolidated
financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization
of assets and the discharge of liabilities in the normal course of business for the foreseeable future.
For the period ended June 30,
2020, the Company reported a net loss of $152,732 and had negative working capital of $4,673,999. The Company had an accumulated
deficit of $9,740,650 as of June 30, 2020 due to the fact that the Company incurred losses during the years prior to June 30, 2020.
The continuation of the Company
as a going concern is dependent upon improving the profitability and the continuing financial support from its stockholders or
other capital sources. Management believes that the continuing financial support from the existing shareholders or external debt
financing will provide the additional cash to meet the Company’s obligations as they become due. There is no certainty that
further funding will be available as needed. These factors raise substantial doubt about the ability of the Company to continue
operating as a going concern.
In March 2020 the World Health
Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread,
and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally,
potentially leading to an economic downturn. The impact on the Company is not currently determinable but management continues to
monitor the situation.
These consolidated financial
statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets
or the amounts and classification of liabilities that may result from the outcome of the Company’s ability to continue as
a going concern.
|
4.
|
OTHER RECEIVABLES, PREPAYMENTS AND OTHER CURRENT ASSETS
|
Other receivables, prepayments
and other current assets consist of the following:
|
|
|
June 30,
2020
|
|
|
December 31,
2019
|
|
|
Deposits (1)
|
|
$
|
16,056
|
|
|
$
|
20,824
|
|
|
Prepayments (2)
|
|
|
2,986
|
|
|
|
9,203
|
|
|
Others (3)
|
|
|
—
|
|
|
|
532
|
|
|
|
|
$
|
19,042
|
|
|
$
|
30,559
|
|
(1) Deposits
represented payments for rental and utilities.
(2) Prepayments
mainly consists of prepayment for insurance and IT related fees.
(3) Others
mainly consists other miscellaneous payments
|
5.
|
PROPERTY AND EQUIPMENT, NET
|
Property and equipment, net consist of the following:
|
|
|
June 30,
2020
|
|
|
December 31,
2019
|
|
|
|
|
|
|
|
|
|
|
Office equipment
|
|
$
|
27,263
|
|
|
$
|
28,100
|
|
|
Computer equipment
|
|
|
100,245
|
|
|
|
101,614
|
|
|
Furniture and fittings
|
|
|
7,764
|
|
|
|
8,123
|
|
|
Software and website
|
|
|
15,856
|
|
|
|
16,589
|
|
|
|
|
|
151,128
|
|
|
|
154,426
|
|
|
Less: Accumulated depreciation
|
|
|
(101,290
|
)
|
|
|
(92,205
|
)
|
|
Balance at end of period/year
|
|
$
|
49,838
|
|
|
$
|
62,221
|
|
Depreciation expenses charged to the statements of
operations and comprehensive loss for the periods ended June 30, 2020 and 2019 were $13,247 (3 months $6,428) and $16,184 (3 months
$7,418) respectively.
|
6.
|
ACCRUED EXPENSE AND OTHER PAYABLES
|
Accrued expense and other payables
consist of the following:
|
|
|
June 30,
2020
|
|
|
December 31,
2019
|
|
|
|
|
|
|
|
|
|
|
Provisions and accruals
|
|
$
|
35,870
|
|
|
$
|
38,224
|
|
|
Others (1)
|
|
|
291,865
|
|
|
|
301,888
|
|
|
Balance at end of period/year
|
|
$
|
327,735
|
|
|
$
|
340,112
|
|
|
(1)
|
Other payables mainly consist of members allocated redemption points for commissions.
|
|
7.
|
RELATED PARTY BALANCES AND TRANSACTIONS
|
|
|
|
June 30,
2020
|
|
|
December 31,
2019
|
|
|
Amount due from related parties
|
|
|
|
|
|
|
|
|
|
Ho Wah Genting Berhad (1)
|
|
$
|
4,906
|
|
|
$
|
5,132
|
|
|
Total Amount due from related parties
|
|
$
|
4,906
|
|
|
$
|
5,132
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of due to related parties
|
|
|
|
|
|
|
|
|
|
Ho Wah Genting Holding Sdn Bhd (2)
|
|
|
58,400
|
|
|
|
—
|
|
|
Grande Legacy Inc. (3)
|
|
|
4,276,957
|
|
|
|
4,372,856
|
|
|
Total Amount due to related parties
|
|
$
|
4,335,357
|
|
|
$
|
4,372,856
|
|
The related party balances are
unsecured, interest-free and repayable on demand.
|
|
(1)
|
The President of the Company, Dato’ Lim Hui Boon, is also the Group President of Ho Wah Genting Berhad (“HWGB”), a company listed in Bursa Malaysia Main Market.
|
The Company recognized rent expenses
of $nil and $5,135 to HWGB for the six months ended June 30, 2020 and 2019 respectively.
During the year ended December
31, 2019, the Company has mutually agreed to terminate the lease with HWGB.
|
|
(2)
|
A former director of the Company, Lim Wee
Kiat who resigned subsequent to June 30, 2020 , is also a director of Ho Wah Genting Holding Sdn Bhd.
|
|
|
(3)
|
A director of the Company, Leong Yee Ming, is also a director of Grande Legacy Inc. (“GL”).
|
The Company recognized management
fee income of $240,000 and $240,000 charged to GL for the six months ended June 30, 2020 and 2019 respectively.
The
Company also recognized royalty income of $293 and $9,473 charged to GL for the six months ended June 30, 2020 and 2019 respectively.
The
Company billed GL for product sales of $13,597 and $nil for the six months ended June 30, 2020 and 2019 respectively.
|
|
(4)
|
Total payment made in the form of compensation, which includes salary, bonus, stock awards and all other compensation have been made to the following officers of the Company:
|
|
|
|
June 30,
2020
|
|
|
June 30,
2019
|
|
|
Dato’ Lim Hui Boon
|
|
$
|
—
|
|
|
$
|
40,000
|
|
|
Lim Wee Kiat
|
|
|
23,852
|
|
|
|
29,477
|
|
|
Leong Yee Ming
|
|
|
22,527
|
|
|
|
24,762
|
|
|
|
|
$
|
46,378
|
|
|
$
|
94,239
|
|
|
|
ITEM
2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Statement
Regarding Forward-Looking Information
The
following management’s discussion and analysis should be read in conjunction with the historical financial statements and
the related notes thereto contained in this report. The management’s discussion and analysis contain forward-looking statements,
such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical
fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,”
“target,” “estimate,” “expect” and the like, and/or future tense or conditional constructions
(“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain
of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause
actual results or events to differ materially from those expressed or implied by the forward-looking statements. The Company’s
actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as
a result of several factors. The Company does not undertake any obligation to update forward-looking statements to reflect events
or circumstances occurring after the date of this report.
The
following discussion highlights the Company’s results of operations and the principal factors that have affected our financial
condition, as well as our liquidity and capital resources for the periods described, and provides information that management
believes is relevant for an assessment and understanding of the statements of financial condition and results of operations presented
herein. The following discussion and analysis are based on the Company’s unaudited financial statements contained in this
Quarterly Report, which we have prepared in accordance with United States generally accepted accounting principles. You should
read this discussion and analysis together with such financial statements and the related notes thereto.
As
used in this Quarterly Report, the terms “we,”“us,”“Company,” and “our” mean Vitaxel
Group Limited and its subsidiaries on a consolidated basis, unless otherwise indicated or the context requires otherwise.
Overview
Vitaxel
Group Limited is the holding company for Vitaxel SDN BHD (“Vitaxel”), and Vitaxel Online Mall SDN BHD (“Vionmall”),
both of which are wholly owned subsidiaries of the Company, Incorporated under the laws of the Country of Malaysia.
Vitaxel
is a global direct selling, multi-level marketing (“MLM”) company offering travel, entertainment, lifestyle and other
products and services principally through electronic commerce commonly referred to as e-commerce.
Vionmall
is an e-commerce business for retail sales direct to consumers. We do not develop or manufacture the products and services which
we offer.
We
presently have approximately 5,700 total members. As of June 30, 2020, approximately: 62.3% of our members reside in Malaysia,
28.9% of our members reside in Singapore, 3.7% members reside in China, approximately 2.7% members reside in Hong Kong and approximately
2.4% members reside in other countries
Results
of Operations
Three
Months Ended June 30, 2020 Compared to Three Months Ended June 30, 2019
The
following discussion should be read in conjunction with our unaudited consolidated financial statements in Item 1, Financial
Statements, for the three months ended June 30, 2020 and 2019 and the related notes thereto.
Revenue
We
recognized $2,749 and $4,645 revenues for the periods ended June 30, 2020 and 2019, respectively. The overall slight decrease
in revenue was attributable to decrease in our product sales in VitaxelSB in the current period compared to the same period last
year, whilst offset by the product sales generated from VTrip and the newly launch VMall e-commerce site, both which were from
Vionmall in current period.
Cost
of Sales
Cost
of sales for the period ended June 30, 2020 was $2,176 compared to $4,090 for the period ended June 30, 2019. The decrease was
due to decrease in revenue in current period.
Gross
Profit
Gross
profit for the period ended June 30, 2020 was $573 compared to $555 for the period ended June 30, 2019. The increase
was due to product sales of VitaxelSB in the same period last year has a lower margin as compare to sales from Vionmall in current
period..
Operating
Expenses
For
the period ended June 30, 2020, we incurred total operating expenses in the amount of $143,788, composed of selling expenses of
$156 and general and administrative expenses totalling $143,632. Whilst, for the period ended June 30, 2019, we incurred total
operating expenses in the amount of $235,890, composed of selling expenses of $nil and general and administrative expenses totalling
$235,890. The increase of $156 or -% for the selling expenses, along with the decrease of $92,258 or 39% for the administrative
expenses, caused total operating expenses to decrease by $92,102 or 39%.
Six
Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019
The
following discussion should be read in conjunction with our unaudited consolidated financial statements in Item 1, Financial
Statements, for the six months ended June 30, 2020 and 2019 and the related notes thereto.
Revenue
We
recognized $15,644 and $19,160 revenues for the periods ended June 30, 2020 and 2019, respectively. Revenue in current period
are mainly contributed by Vionmall’s sales as compare to the same period last year, which were contributed by Vitaxel. The
decrease in revenue is attributable to the decrease in Vitaxel’s sales in the current period compared to the same period
last year.
Cost
of Sales
Cost
of sales for the period ended June 30, 2020 was $12,834 compared to $13,547 for the period ended June 30, 2019. The decrease was
due to decrease in revenue in current period.
Gross
Profit
Gross
profit for the period ended June 30, 2020 was $2,810 compared to $5,613 for the period ended June 30, 2019. The decrease was attributable
to the decrease in revenue in current period as compared to the same period last year.
Operating
Expenses
For
the period ended June 30, 2020, we incurred total operating expenses in the amount of $382,609, composed of selling expenses of
$590 and general and administrative expenses totalling $382,019. Whilst, for the period ended June 30, 2019, we incurred total
operating expenses in the amount of $522,768, composed of selling expenses of $34 and general and administrative expenses totalling
$522,734. The increase of $556 or 1635% for the selling expenses, along with the decrease of $140,714 or 27% for the administrative
expenses, caused total operating expenses to decrease by $137,355 or 27%.
Liquidity
and Capital Resources
As
of June 30, 2020, we had a cash balance of $76,690. During the period ended June 30, 2020, net cash used in operating activities
totalled $145,247. Net cash used in investing activities totalled $1,701. Net cash provided by financing activities during the
period totalled $162,829. The resulting change in cash for the period was an increase of $13,254, which was primarily due to proceeds
received from related parties in current period.
As
of June 30, 2020, we had current liabilities of $4,793,358, which was composed of amount due to related parties of $4,335,357,
commission payables of $123,820, accounts payable of $6,446 and accruals and other payable of $327,735.
As
of June 30, 2019, we had a cash balance of $54,108. During the period ended June 30, 2019, net cash used in operating activities
totalled $273,592. Net cash used in investing activities totalled $27,132. Net cash used in financing activities during the period
totalled $651,637. The resulting change in cash for the period was a decrease of $950,289, which was primarily due to repayment
to related parties during the period.
As
of June 30, 2019, we had current liabilities of $4,686,087, which was composed of amount due to related parties of $4,206,226,
commission payables of $134,691, accounts payable of $10,302 and accruals and other payable of $334,868.
Management
estimates that the general operating costs for the next 12 months will be approximately $600,000. At present, the Company may
not have sufficient capital resources to meet its anticipated operating and capital requirements for the next 12 months. Management
is also evaluating other options, including obtaining financing through private placements, charging licensees administration
fees, and entering additional licensing agreements. The Company will continue to monitor the current economic and financial market
conditions and evaluate their impact on the Company’s liquidity and future prospects.
Recent
Developments:
Impact
of Current Coronavirus (COVID-19) Pandemic on the Company
As
many parts of the world is currently under lockdown or restrictive movement orders due to the current COVID-19 pandemic, we believe
that all companies related to the travel, entertainment and lifestyle industry have been negatively impacted. Our Company is not
spared either. We do not foresee any income contribution from this business from January 2020 until the destination areas (in
particular South-East Asia and Europe) reopen their countries to allow foreign visitors again.
Our
MLM business is also negatively impacted due to the fact that being a business built on fostering personal relationship and expanding
new contacts, most distributors are unable to carry out the more important aspects of regular face to face visits and appointments,
promotional events and direct coaching to continuously improve their team’s skills, motivation and knowledge of our products.
Fortunately, we are still able to connect to our leaders via calls, emails and backoffice announcements and other form of online
communication such as Skype and Zoom to keep the leaders and members abreast with our status and development. As such, our MLM
operation is still ongoing amid slower than usual.
In
our previously Form 8-K, filed April 22, 2020, we announced that in connection with the COVID-19 pandemic, the Malaysian government
has enforced a Movement Control Order (the “MCO”) effective March 18, 2020, closing all offices within the country
that are non-essential forcing all of the Company’s staff to work from home. Subsequently, the MCO was replaced with the
Conditional Movement Control Order on May 4, 2020 easing restrictions on most of Malaysia’s economic sectors until June
9, 2020. The Company opened its offices, but on an alternative day basis allowing staff to work on the Company’s backlogs.
Afterwards, the Malaysian government announced the Recovery Movement Control Order beginning on June 10 and lasting till August
31, 2020, allowing most business to reopen and further eases COVID regulations on the country’s list of restricted activities.
The Company’s management will continue to monitor the situation in Malaysia and ensure compliance towards enforced control
order. Due to the uncertainties surrounding the economy in Malaysia and the enforcement of movement control, amid relaxed restrictions,
at the time of issuance of this Report on Form 10Q, the Company is unable to reasonably estimate the full extent of the impact
of COVID-19 pandemic on its future business, financial conditions, and results of operations.
Off-Balance
Sheet Arrangements
We
do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons.
Critical
Accounting Policies and Estimates
There
are no material changes from the critical accounting policies set forth in “Management’s Discussion and Analysis of
Financial Condition and Results of Operations”. Please refer to Note 2 Summary of Significant Accounting Policies of the
Financial Statements on Form 10-K filed with the SEC on April 6, 2020, for disclosures regarding the critical accounting policies
related to our business.
Recently
Issued Accounting Standards
The
recently issued accounting pronouncement are included in Note 2 Unaudited Interim Financial Statements for disclosures on accounting
policies related to our business.