ITEM 1.
|
FINANCIAL
STATEMENTS (UNAUDITED)
|
VITAXEL GROUP LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(In U.S. dollars)
|
|
As of
|
|
|
As of
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2020
(Unaudited)
|
|
|
2019
(Audited)
|
|
ASSETS
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
31,471
|
|
|
$
|
63,436
|
|
Amount due from related parties
|
|
|
24,274
|
|
|
|
5,132
|
|
Inventories
|
|
|
19,479
|
|
|
|
17,450
|
|
Other receivables, prepayments and other current assets
|
|
|
26,465
|
|
|
|
30,559
|
|
Total current assets
|
|
|
101,689
|
|
|
|
116,577
|
|
|
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
45,631
|
|
|
|
62,221
|
|
Total non-current assets
|
|
|
45,631
|
|
|
|
62,221
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
147,320
|
|
|
$
|
178,798
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
Amounts due to related parties
|
|
$
|
4,331,368
|
|
|
$
|
4,372,856
|
|
Commission payables
|
|
|
126,822
|
|
|
|
133,743
|
|
Accounts payable
|
|
|
104
|
|
|
|
154
|
|
Accrued expense and other payables
|
|
|
341,827
|
|
|
|
340,112
|
|
Total current liabilities
|
|
|
4,800,121
|
|
|
|
4,846,865
|
|
TOTAL LIABILITIES
|
|
|
4,800,121
|
|
|
|
4,846,865
|
|
|
|
|
|
|
|
|
|
|
Commitments (Note 8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
(9,644,752
|
)
|
|
|
(9,587,918
|
)
|
Accumulated other comprehensive income
|
|
|
236,744
|
|
|
|
164,644
|
|
Total stockholders’ deficit
|
|
|
(4,652,801
|
)
|
|
|
(4,668,067
|
)
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
$
|
147,320
|
|
|
$
|
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
September 30,
|
|
|
For the Nine Months Ended
September 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
REVENUE
|
|
$
|
3,006
|
|
|
$
|
41,054
|
|
|
$
|
18,650
|
|
|
$
|
60,214
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF REVENUE
|
|
|
(1,466
|
)
|
|
|
(39,351
|
)
|
|
|
(14,300
|
)
|
|
|
(52,898
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT
|
|
|
1,540
|
|
|
|
1,703
|
|
|
|
4,350
|
|
|
|
7,316
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling expense
|
|
|
(30
|
)
|
|
|
(174
|
)
|
|
|
(620
|
)
|
|
|
(208
|
)
|
General and administrative expenses
|
|
|
(138,926
|
)
|
|
|
(210,545
|
)
|
|
|
(520,945
|
)
|
|
|
(733,279
|
)
|
Total operating expenses
|
|
|
(138,956
|
)
|
|
|
(210,719
|
)
|
|
|
(521,565
|
)
|
|
|
(733,487
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM OPERATIONS
|
|
|
(137,416
|
)
|
|
|
(209,016
|
)
|
|
|
(517,215
|
)
|
|
|
(726,171
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME/(EXPENSE), NET
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
234,340
|
|
|
|
178,565
|
|
|
|
462,763
|
|
|
|
437,203
|
|
Other expense
|
|
|
(1,026
|
)
|
|
|
(5,882
|
)
|
|
|
(2,382
|
)
|
|
|
(6,517
|
)
|
Total Other income / (Expense), net
|
|
|
233,314
|
|
|
|
172,683
|
|
|
|
460,381
|
|
|
|
430,686
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income/(Loss)
|
|
$
|
95,898
|
|
|
$
|
(36,333
|
)
|
|
$
|
(56,834
|
)
|
|
$
|
(295,485
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE LOSS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
(124,537
|
)
|
|
|
1,295
|
|
|
|
72,100
|
|
|
|
8,016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL COMPREHENSIVE INCOME (LOSS)
|
|
$
|
(28,639
|
)
|
|
$
|
(35,038
|
)
|
|
$
|
15,266
|
|
|
$
|
(287,469
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
)
|
|
$
|
(0.01
|
)
|
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 Nine Months Ended
September 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(56,834
|
)
|
|
$
|
(295,485
|
)
|
Items not involving cash:
|
|
|
|
|
|
|
|
|
Depreciation – property and equipment
|
|
|
19,633
|
|
|
|
22,875
|
|
Property, plant and equipment written off
|
|
|
—
|
|
|
|
2,247
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
Accounts Receivable
|
|
|
—
|
|
|
|
82
|
|
Other receivables, prepayments and other current assets
|
|
|
4,094
|
|
|
|
31,495
|
|
Inventories
|
|
|
(2,029
|
)
|
|
|
(9,244
|
)
|
Accounts Payable
|
|
|
(50
|
)
|
|
|
(10,414
|
)
|
Commission payables
|
|
|
(6,921
|
)
|
|
|
(4,460
|
)
|
Accrued expense and other payables
|
|
|
1,715
|
|
|
|
(47,679
|
)
|
Net cash used in operating activities
|
|
|
(40,392
|
)
|
|
|
(310,583
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
(4,317
|
)
|
|
|
(24,823
|
)
|
Net cash used in investing activities
|
|
|
(4,317
|
)
|
|
|
(24,823
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from (repayments to)
related parties
|
|
|
14,151
|
|
|
|
(612,520
|
)
|
Net cash provided by (used in) financing activities
|
|
|
14,151
|
|
|
|
(612,520
|
)
|
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE RATES ON CASH
|
|
|
(1,407
|
)
|
|
|
(1,558
|
)
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
|
|
(31,965
|
)
|
|
|
(949,484
|
)
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
|
|
63,436
|
|
|
|
1,004,397
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
|
$
|
31,471
|
|
|
$
|
54,913
|
|
|
|
|
|
|
|
|
|
|
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 September 30, 2020,
results of operations for the nine months ended September 30, 2020 and 2019, and cash flows for the nine months ended September
30, 2020 and 2019. All significant intercompany transactions and balances are eliminated on consolidation. The results of operations
for the nine months ended September 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 September
30, 2020, the Company reported a net loss of $56,834 and had negative working capital of $4,698,432. The Company had an accumulated
deficit of $9,644,752 as of September 30, 2020 due to the fact that the Company incurred losses during the years prior to September
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:
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Deposits (1)
|
|
|
$
|
14,851
|
|
|
$
|
20,824
|
|
Prepayments (2)
|
|
|
|
11,614
|
|
|
|
9,203
|
|
Others (3)
|
|
|
|
—
|
|
|
|
532
|
|
|
|
|
$
|
26,465
|
|
|
$
|
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:
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
|
|
|
|
|
|
|
Office equipment
|
|
$
|
28,067
|
|
|
$
|
28,100
|
|
Computer equipment
|
|
|
103,967
|
|
|
|
101,614
|
|
Furniture and fittings
|
|
|
7,993
|
|
|
|
8,123
|
|
Software and website
|
|
|
16,323
|
|
|
|
16,589
|
|
|
|
|
156,350
|
|
|
|
154,426
|
|
Less: Accumulated depreciation
|
|
|
(110,719
|
)
|
|
|
(92,205
|
)
|
Balance at end of period/year
|
|
$
|
45,631
|
|
|
$
|
62,221
|
|
Depreciation expenses charged to the statements of
operations and comprehensive loss for the periods ended September 30, 2020 and 2019 were $19,633 (3 months $6,386) and $22,875
(3 months $6,691) respectively.
6.
|
ACCRUED EXPENSE AND OTHER PAYABLES
|
Accrued expense and other payables
consist of the following:
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
|
|
|
|
|
|
|
Provisions and accruals
|
|
$
|
43,391
|
|
|
$
|
38,224
|
|
Others (1)
|
|
|
298,436
|
|
|
|
301,888
|
|
Balance at end of period/year
|
|
$
|
341,827
|
|
|
$
|
340,112
|
|
(1)
|
Other payables mainly consist of members allocated redemption points for commissions.
|
7.
|
RELATED PARTY BALANCES AND TRANSACTIONS
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Amount due from related parties
|
|
|
|
|
|
|
|
|
Asia Food People Sdn Bhd (1)
|
|
$
|
2,970
|
|
|
$
|
—
|
|
G2lux Sdn Bhd (2)
|
|
|
11,978
|
|
|
|
—
|
|
Ho Wah Genting Berhad (3)
|
|
|
5,050
|
|
|
|
5,132
|
|
Snatch Asia Sdn Bhd (4)
|
|
|
4,276
|
|
|
|
—
|
|
Total Amount due from related parties
|
|
$
|
24,274
|
|
|
$
|
5,132
|
|
|
|
|
|
|
|
|
|
|
Amount of due to related parties
|
|
|
|
|
|
|
|
|
Dato’ Lim Hui Boon (5)
|
|
|
48,097
|
|
|
|
—
|
|
Ho Wah Genting Holding Sdn Bhd (6)
|
|
|
60,121
|
|
|
|
—
|
|
Grande Legacy Inc. (7)
|
|
|
4,223,150
|
|
|
|
4,372,856
|
|
Total Amount due to related parties
|
|
$
|
4,331,368
|
|
|
$
|
4,372,856
|
|
The related party balances are
unsecured, interest-free and repayable on demand.
|
(1)
|
A director of the Company, Leong Yee Ming, is also a director of Asia Food People Sdn Bhd (“AFP”). The amount due from AFP as at September 30, 2020 were advances made to AFP.
|
|
|
|
|
(2)
|
A director of the Company, Leong Yee Ming, is also a director of G2lux Sdn Bhd (“G2lux”). The amount due from G2lux as at September 30, 2020 were advances made to G2lux.
|
|
|
|
|
(3)
|
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 $15,239 to HWGB for the nine months ended September 30, 2020 and 2019 respectively.
During the year ended December
31, 2019, the Company has mutually agreed to terminate the lease with HWGB.
|
|
|
|
(4)
|
A director of the Company, Leong Yee Ming,
is also a director of Snatch Asia Sdn Bhd (“SASB”). The amount due from SASB as at September 30, 2020 were advances
made to SASB.
|
|
(5)
|
The amount due to the President of the Company, Dato’ Lim Hui Boon, as at September 30, 2020 were advances made to the Company.
|
|
|
|
|
(6)
|
A former director of the Company, Lim Wee
Kiat who resigned during period ended September 30, 2020, is also a director of Ho Wah Genting Holding Sdn Bhd.
|
|
|
|
|
(7)
|
A director of the Company, Leong Yee Ming, is also a director of Grande Legacy Inc. (“GL”).
|
The Company recognized management
fee income of $360,000 and $360,000 charged to GL for the nine months ended September 30, 2020 and 2019 respectively.
The
Company also recognized royalty income of $294 and $11,906 charged to GL for the nine months ended September 30, 2020 and 2019
respectively.
The
Company billed GL for sales of $17,363 and $49,350 for the nine months ended September 30, 2020 and 2019 respectively.
|
(8)
|
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:
|
|
|
September 30,
2020
|
|
|
September 30,
2019
|
|
Dato’ Lim Hui Boon
|
|
$
|
—
|
|
|
$
|
40,000
|
|
Lim Wee Kiat
|
|
|
35,856
|
|
|
|
39,185
|
|
Leong Yee Ming
|
|
|
33,864
|
|
|
|
37,008
|
|
|
|
$
|
69,720
|
|
|
$
|
116,193
|
|
On September 29, 2020, the Company signed a tenancy
agreement for its office lease at a monthly fee of $3,780 for a period of one year starting from October 1, 2020 to September 30,
2021.
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 September 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 September 30, 2020 Compared to Three Months Ended September 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 September 30, 2020 and 2019 and the related notes thereto.
Revenue
We
recognized $3,006 and $41,054 revenues for the periods ended September 30, 2020 and 2019, respectively. The overall decrease in
revenue was attributable to decrease in sales from VTrip under Vionmall in current period as compare to the same period last year
whilst offset by the product sales in VitaxelSB and from the Vionmall’s VMall e-commerce site in current period.
Cost
of Sales
Cost
of sales for the period ended September 30, 2020 was $1,466 compared to $39,351 for the period ended September 30, 2019. The decrease
was due to decrease in revenue in current period.
Gross
Profit
Gross
profit for the period ended September 30, 2020 was $1,540 compared to $1,703 for the period ended September 30, 2019. The increase
was due to product sales of Vionmall’s VMall e-commerce site in current period has a higher margin as compare to VTrip sales
in the same period last year.
Operating
Expenses
For
the period ended September 30, 2020, we incurred total operating expenses in the amount of $138,956, composed of selling expenses
of $30 and general and administrative expenses totalling $138,926. Whilst, for the period ended September 30, 2019, we incurred
total operating expenses in the amount of $210,719, composed of selling expenses of $174 and general and administrative expenses
totalling $210,545. The decrease of $144 or 83% for the selling expenses, along with the decrease of $71,619 or 34% for the administrative
expenses, caused total operating expenses to decrease by $71,763 or 34%.
Nine
Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019
The
following discussion should be read in conjunction with our unaudited consolidated financial statements in Item 1, Financial
Statements, for the nine months ended September 30, 2020 and 2019 and the related notes thereto.
Revenue
We
recognized $18,650 and $60,214 revenues for the periods ended September 30, 2020 and 2019, respectively. The overall decrease
in revenue was attributable to decrease in sales from VTrip under Vionmall in current period as compare to the same period last
year whilst offset by the product sales in VitaxelSB and from the Vionmall’s VMall e-commerce site in current period.
Cost
of Sales
Cost
of sales for the period ended September 30, 2020 was $14,300 compared to $52,898 for the period ended September 30, 2019. The
decrease was due to decrease in revenue in current period.
Gross
Profit
Gross
profit for the period ended September 30, 2020 was $4,350 compared to $7,316 for the period ended September 30, 2019. The decrease
was due to decrease in revenue in current period.
Operating
Expenses
For
the period ended September 30, 2020, we incurred total operating expenses in the amount of $521,565, composed of selling expenses
of $620 and general and administrative expenses totalling $520,945. Whilst, for the period ended September 30, 2019, we incurred
total operating expenses in the amount of $733,487, composed of selling expenses of $208 and general and administrative expenses
totalling $733,279. The increase of $412 or 198% for the selling expenses, along with the decrease of $212,334 or 29% for the
administrative expenses, caused total operating expenses to decrease by $211,922 or 29%.
Liquidity
and Capital Resources
As of September 30, 2020, we had a cash
balance of $31,471. During the period ended September 30, 2020, net cash used in operating activities totalled $40,392. Net cash
used in investing activities totalled $4,317. Net cash provided by financing activities during the period totalled
$14,151. The resulting change in cash for the period was a decrease of $31,965, which was primarily due to operating expenses
in current period.
As
of September 30, 2020, we had current liabilities of $4,800,121, which was composed of amount due to related parties of $4,331,368,
commission payables of $126,822, accounts payable of $104 and accruals and other payable of $341,827.
As
of September 30, 2019, we had a cash balance of $54,913. During the period ended September 30, 2019, net cash used in operating
activities totalled $310,583. Net cash used in investing activities totalled $24,823. Net cash used in financing activities during
the period totalled $612,520. The resulting change in cash for the period was a decrease of $949,484, which was primarily due
to repayment to related parties during the period.
As
of September 30, 2019, we had current liabilities of $4,707,848, which was composed of amount due to related parties of $4,240,355,
commission payables of $133,658, and accruals and other payable of $333,835.
We had net liabilities of $4,652,801 and
$4,668,067 as of September 30, 2020 and December 31, 2019, respectively.
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 and Form 10-Q, filed on April 22, 2020 and August 19, 2020 respectively, 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. On August 28,2020, the Malaysian government extended the Recovery Movement
Control Order to last till December 31, 2020.
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.