ITEM 1 Financial
Statements
NOBLE VICI GROUP, INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2019 AND MARCH 31,
2019
(Currency expressed in United States
Dollars (“US$”), except for number of shares)
|
|
December 31, 2019
|
|
|
March 31, 2019
|
|
|
|
(Unaudited)
|
|
|
(Audited)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
682,382
|
|
|
$
|
691,331
|
|
Accounts receivable
|
|
|
1,208,689
|
|
|
|
6,145,460
|
|
Purchase deposits
|
|
|
4,834,731
|
|
|
|
2,600,732
|
|
Amount due from a third party
|
|
|
221,373
|
|
|
|
221,327
|
|
Deposits, prepayment and other receivables
|
|
|
223,137
|
|
|
|
361,884
|
|
Tax recoverable
|
|
|
48,330
|
|
|
|
–
|
|
Inventories
|
|
|
16,640
|
|
|
|
16,636
|
|
Total current assets
|
|
|
7,235,282
|
|
|
|
10,037,370
|
|
|
|
|
|
|
|
|
|
|
Non-current assets:
|
|
|
|
|
|
|
|
|
Intangible assets, net
|
|
|
358,214
|
|
|
|
566,262
|
|
Property, plant and equipment, net
|
|
|
3,658,279
|
|
|
|
3,754,685
|
|
Total non-current assets
|
|
|
4,016,493
|
|
|
|
4,320,947
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
11,251,775
|
|
|
$
|
14,358,317
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
375,929
|
|
|
$
|
–
|
|
Accrued liabilities and other payables
|
|
|
1,806,747
|
|
|
|
964,001
|
|
Commission liabilities
|
|
|
1,210,431
|
|
|
|
1,617,855
|
|
Deferred revenue
|
|
|
2,928,582
|
|
|
|
8,979,352
|
|
Amount due to a director
|
|
|
17,784
|
|
|
|
91,483
|
|
Amounts due to a related party
|
|
|
280,317
|
|
|
|
280,317
|
|
Tax payable
|
|
|
–
|
|
|
|
84,672
|
|
Current portion of obligations under finance leases
|
|
|
252,490
|
|
|
|
246,957
|
|
Total current liabilities
|
|
|
6,872,280
|
|
|
|
12,264,637
|
|
|
|
|
|
|
|
|
|
|
Long-term liabilities:
|
|
|
|
|
|
|
|
|
Obligations under finance leases
|
|
|
1,840,727
|
|
|
|
2,008,708
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
8,713,007
|
|
|
|
14,273,345
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
–
|
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
Common stock, 3,000,000,000 authorized common shares of $0.0001 par value, 210,804,160 and 210,704,160 shares issued and outstanding as of December 31, 2019 and March 31, 2019, respectively
|
|
|
21,080
|
|
|
|
21,070
|
|
Additional paid up capital
|
|
|
136,427,910
|
|
|
|
136,227,920
|
|
Deferred compensation
|
|
|
–
|
|
|
|
(10,936,760
|
)
|
Accumulated other comprehensive (loss) income
|
|
|
(136,423
|
)
|
|
|
20,089
|
|
Accumulated losses
|
|
|
(133,609,887
|
)
|
|
|
(125,141,278
|
)
|
Total NVGI stockholders’ equity
|
|
|
2,702,680
|
|
|
|
191,041
|
|
Non-controlling interest
|
|
|
(163,912
|
)
|
|
|
(106,069
|
)
|
|
|
|
2,538,768
|
|
|
|
84,972
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
$
|
11,251,775
|
|
|
$
|
14,358,317
|
|
See accompanying notes to unaudited condensed
consolidated financial statements.
NOBLE VICI GROUP, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE THREE AND NINE MONTHS ENDED DECEMBER
31, 2019 AND 2018
(Currency expressed in United States
Dollars (“US$”))
(UNAUDITED)
|
|
Three months ended
December 31,
|
|
|
Nine months ended
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE, NET
|
|
$
|
2,063,937
|
|
|
$
|
1,207,151
|
|
|
$
|
14,674,821
|
|
|
$
|
2,170,648
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
|
(2,250,717
|
)
|
|
|
(1,396,126
|
)
|
|
|
(8,311,170
|
)
|
|
|
(1,813,928
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross (loss) profit
|
|
|
(186,780
|
)
|
|
|
(188,975
|
)
|
|
|
6,363,651
|
|
|
|
356,720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
83,651
|
|
|
|
200,505
|
|
|
|
421,972
|
|
|
|
442,651
|
|
General and administrative
|
|
|
1,116,808
|
|
|
|
916,444
|
|
|
|
3,372,306
|
|
|
|
2,033,487
|
|
Stock-based compensation
|
|
|
200,000
|
|
|
|
41,081,998
|
|
|
|
11,136,760
|
|
|
|
41,081,998
|
|
Total operating expenses
|
|
|
1,400,459
|
|
|
|
42,198,947
|
|
|
|
14,931,038
|
|
|
|
43,558,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM OPERATIONS
|
|
|
(1,587,239
|
)
|
|
|
(42,387,922
|
)
|
|
|
(8,567,387
|
)
|
|
|
(43,201,416
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (expense) income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(22,545
|
)
|
|
|
(23,076
|
)
|
|
|
(67,110
|
)
|
|
|
(24,775
|
)
|
Government subsidy income
|
|
|
14,632
|
|
|
|
–
|
|
|
|
14,632
|
|
|
|
1,047
|
|
Management fee income
|
|
|
11,024
|
|
|
|
34,957
|
|
|
|
43,897
|
|
|
|
34,957
|
|
Sundry income
|
|
|
1,346
|
|
|
|
4,807
|
|
|
|
27,392
|
|
|
|
17,193
|
|
Total other income
|
|
|
4,457
|
|
|
|
16,688
|
|
|
|
18,811
|
|
|
|
28,422
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS BEFORE INCOME TAXES
|
|
|
(1,582,782
|
)
|
|
|
(42,371,234
|
)
|
|
|
(8,548,576
|
)
|
|
|
(43,172,994
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax credit (expense)
|
|
|
29,779
|
|
|
|
(174,110
|
)
|
|
|
18,555
|
|
|
|
(174,110
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS
|
|
$
|
(1,553,003
|
)
|
|
$
|
(42,545,344
|
)
|
|
$
|
(8,530,021
|
)
|
|
$
|
(43,347,104
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net loss attributable to non-controlling interest
|
|
|
(126,020
|
)
|
|
|
–
|
|
|
|
(61,412
|
)
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to NVGI
|
|
|
(1,426,983
|
)
|
|
|
(42,545,344
|
)
|
|
|
(8,468,609
|
)
|
|
|
(43,347,104
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS
|
|
$
|
(1,553,003
|
)
|
|
$
|
(42,545,344
|
)
|
|
$
|
(8,530,021
|
)
|
|
$
|
(43,347,104
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
– Foreign currency translation gain (loss)
|
|
|
4,957
|
|
|
|
58,894
|
|
|
|
(156,512
|
)
|
|
|
118,780
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE LOSS
|
|
$
|
(1,548,046
|
)
|
|
$
|
(42,486,450
|
)
|
|
$
|
(8,686,533
|
)
|
|
$
|
(43,228,324
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
– Basic and diluted
|
|
$
|
(0.01
|
)
|
|
$
|
(0.30
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.30
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
– Basic and diluted
|
|
|
210,773,725
|
|
|
|
142,818,378
|
|
|
|
210,727,433
|
|
|
|
146,217,422
|
|
See accompanying notes to unaudited condensed
consolidated financial statements.
NOBLE VICI GROUP, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE NINE MONTHS ENDED DECEMBER 31,
2019 AND 2018
(Currency expressed in United States
Dollars (“US$”))
(UNAUDITED)
|
|
Nine months ended
December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
comprehensive
|
|
|
|
|
|
Total
|
|
|
Non-
|
|
|
|
|
|
|
Common stock
|
|
|
paid up
|
|
|
Deferred
|
|
|
income
|
|
|
Accumulated
|
|
|
stockholders’
|
|
|
controlling
|
|
|
Total
|
|
|
|
No. of shares
|
|
|
Amount
|
|
|
capital
|
|
|
compensation
|
|
|
(loss)
|
|
|
losses
|
|
|
equity
|
|
|
interest
|
|
|
equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of April 1,
2019
|
|
|
210,704,160
|
|
|
$
|
21,070
|
|
|
$
|
136,227,920
|
|
|
$
|
(10,936,760
|
)
|
|
$
|
20,089
|
|
|
$
|
(125,141,278
|
)
|
|
$
|
191,041
|
|
|
$
|
(106,069
|
)
|
|
$
|
84,972
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for legal
service
|
|
|
100,000
|
|
|
|
10
|
|
|
|
199,990
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
200,000
|
|
|
|
–
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interest
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
3,569
|
|
|
|
3,569
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of stock-based
compensation
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
10,936,760
|
|
|
|
–
|
|
|
|
–
|
|
|
|
10,936,760
|
|
|
|
–
|
|
|
|
10,936,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation
adjustment
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(156,512
|
)
|
|
|
–
|
|
|
|
(156,512
|
)
|
|
|
–
|
|
|
|
(156,512
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(8,468,609
|
)
|
|
|
(8,468,609
|
)
|
|
|
(61,412
|
)
|
|
|
(8,530,021
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December
31, 2019
|
|
|
210,804,160
|
|
|
$
|
21,080
|
|
|
$
|
136,427,910
|
|
|
$
|
–
|
|
|
$
|
(136,423
|
)
|
|
$
|
(133,609,887
|
)
|
|
$
|
2,702,680
|
|
|
$
|
(163,912
|
)
|
|
$
|
2,538,768
|
|
NOBLE VICI GROUP, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE NINE MONTHS ENDED DECEMBER 31,
2019 AND 2018
(Currency expressed in United States
Dollars (“US$”))
(continued)
(UNAUDITED)
|
|
Nine months ended
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
comprehensive
|
|
|
|
|
|
Total
|
|
|
Non-
|
|
|
|
|
|
|
Common stock
|
|
|
paid up
|
|
|
(loss)
|
|
|
Accumulated
|
|
|
stockholders’
|
|
|
controlling
|
|
|
Total
|
|
|
|
No. of shares
|
|
|
Amount
|
|
|
capital
|
|
|
income
|
|
|
losses
|
|
|
deficit
|
|
|
interest
|
|
|
deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of April 1, 2018
|
|
|
140,000,000
|
|
|
$
|
14,000
|
|
|
$
|
–
|
|
|
$
|
(46,440
|
)
|
|
$
|
(1,131,214
|
)
|
|
$
|
(1,163,654
|
)
|
|
$
|
–
|
|
|
$
|
(1,163,654
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for acquisition
of legal acquirer
|
|
|
2,663,135
|
|
|
|
266
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(319,234
|
)
|
|
|
(318,968
|
)
|
|
|
–
|
|
|
|
(318,968
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fractional shares from
reverse splits
|
|
|
26
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital injection from
shareholder
|
|
|
–
|
|
|
|
–
|
|
|
|
152,726
|
|
|
|
–
|
|
|
|
–
|
|
|
|
152,726
|
|
|
|
–
|
|
|
|
152,726
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share issued for acquisition
of subsidiaries
|
|
|
1,020,000
|
|
|
|
102
|
|
|
|
2,039,898
|
|
|
|
–
|
|
|
|
–
|
|
|
|
2,040,000
|
|
|
|
–
|
|
|
|
2,040,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued to sales agents for services
|
|
|
20,540,999
|
|
|
|
2,054
|
|
|
|
41,079,944
|
|
|
|
–
|
|
|
|
–
|
|
|
|
41,081,998
|
|
|
|
–
|
|
|
|
41,081,998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interest
from acquisition
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(50,612
|
)
|
|
|
(50,612
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation
adjustment
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
118,780
|
|
|
|
–
|
|
|
|
118,780
|
|
|
|
–
|
|
|
|
118,780
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the period
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(43,347,104
|
)
|
|
|
(43,347,104
|
)
|
|
|
–
|
|
|
|
(43,347,104
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December
31, 2018
|
|
|
164,224,160
|
|
|
$
|
16,422
|
|
|
$
|
43,272,568
|
|
|
$
|
72,340
|
|
|
$
|
(44,797,552
|
)
|
|
$
|
(1,436,222
|
)
|
|
$
|
(50,612
|
)
|
|
$
|
(1,486,834
|
)
|
See accompanying notes to unaudited condensed
consolidated financial statements.
NOBLE VICI GROUP,
INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THREE MONTHS ENDED DECEMBER 31, 2019
AND 2018
(Currency expressed in United States
Dollars (“US$”))
(UNAUDITED)
|
|
Three months ended
December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
other
|
|
|
|
|
|
Total
|
|
|
Non-
|
|
|
|
|
|
|
Common stock
|
|
|
paid up
|
|
|
comprehensive
|
|
|
Accumulated
|
|
|
stockholders’
|
|
|
controlling
|
|
|
Total
|
|
|
|
No. of shares
|
|
|
Amount
|
|
|
capital
|
|
|
loss
|
|
|
losses
|
|
|
equity
|
|
|
interest
|
|
|
equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of October 1, 2019
|
|
|
210,704,160
|
|
|
$
|
21,070
|
|
|
$
|
136,227,920
|
|
|
$
|
(141,380
|
)
|
|
$
|
(132,182,904
|
)
|
|
$
|
3,924,706
|
|
|
$
|
(37,892
|
)
|
|
$
|
3,886,814
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for legal service
|
|
|
100,000
|
|
|
|
10
|
|
|
|
199,990
|
|
|
|
–
|
|
|
|
–
|
|
|
|
200,000
|
|
|
|
–
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation
adjustment
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
4,957
|
|
|
|
–
|
|
|
|
4,957
|
|
|
|
–
|
|
|
|
4,957
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the period
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(1,426,983
|
)
|
|
|
(1,426,983
|
)
|
|
|
(126,020
|
)
|
|
|
(1,553,003
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December
31, 2019
|
|
|
210,804,160
|
|
|
$
|
21,080
|
|
|
$
|
136,427,910
|
|
|
$
|
(136,423
|
)
|
|
$
|
(133,609,887
|
)
|
|
$
|
2,702,680
|
|
|
$
|
(163,912
|
)
|
|
$
|
2,538,768
|
|
|
|
Three months ended
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
other
|
|
|
|
|
|
Total
|
|
|
Non-
|
|
|
|
|
|
|
Common stock
|
|
|
paid up
|
|
|
comprehensive
|
|
|
Accumulated
|
|
|
stockholders’
|
|
|
controlling
|
|
|
Total
|
|
|
|
No. of shares
|
|
|
Amount
|
|
|
capital
|
|
|
income
|
|
|
losses
|
|
|
deficit
|
|
|
interest
|
|
|
deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of October 1, 2018 (restated)
|
|
|
143,683,161
|
|
|
$
|
14,368
|
|
|
$
|
2,192,624
|
|
|
$
|
13,446
|
|
|
$
|
(2,252,208
|
)
|
|
$
|
(31,770
|
)
|
|
$
|
10,872
|
|
|
$
|
(20,898
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued to sales
agents for services
|
|
|
20,540,999
|
|
|
|
2,054
|
|
|
|
41,079,944
|
|
|
|
–
|
|
|
|
–
|
|
|
|
41,081,998
|
|
|
|
–
|
|
|
|
41,081,998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interest
from acquisition
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(61,484
|
)
|
|
|
(61,484
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation
adjustment
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
58,894
|
|
|
|
–
|
|
|
|
58,894
|
|
|
|
–
|
|
|
|
58,894
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the period
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(42,545,344
|
)
|
|
|
(42,545,344
|
)
|
|
|
–
|
|
|
|
(42,545,344
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December
31, 2018
|
|
|
164,224,160
|
|
|
$
|
16,422
|
|
|
$
|
43,272,568
|
|
|
$
|
72,340
|
|
|
$
|
(44,797,552
|
)
|
|
$
|
(1,436,222
|
)
|
|
$
|
(50,612
|
)
|
|
$
|
(1,486,834
|
)
|
See accompanying notes to unaudited condensed
consolidated financial statements.
NOBLE VICI GROUP, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED DECEMBER 31,
2019 AND 2018
(Currency expressed in United States
Dollars (“US$”))
(UNAUDITED)
|
|
Nine months ended December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Cash flow from operating activities:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(8,530,021
|
)
|
|
$
|
(43,347,104
|
)
|
Adjustments for:
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
206,390
|
|
|
|
44,279
|
|
Depreciation of property, plant and equipment
|
|
|
147,031
|
|
|
|
183,289
|
|
Stock based compensation
|
|
|
11,136,760
|
|
|
|
41,081,998
|
|
Gain on disposal of property, plant and equipment
|
|
|
(3,604
|
)
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
Change in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
4,895,929
|
|
|
|
–
|
|
Deposits, prepayment and other receivables
|
|
|
137,637
|
|
|
|
(3,385,254
|
)
|
Amounts due from related companies
|
|
|
–
|
|
|
|
(316,409
|
)
|
Accounts payable
|
|
|
372,722
|
|
|
|
(382,356
|
)
|
Accrued liabilities and other payables
|
|
|
835,358
|
|
|
|
856,593
|
|
Commission liabilities
|
|
|
(404,283
|
)
|
|
|
1,489,999
|
|
Deferred revenue
|
|
|
(6,001,010
|
)
|
|
|
4,038,460
|
|
Purchase deposits
|
|
|
(2,214,407
|
)
|
|
|
–
|
|
Tax payable
|
|
|
(131,886
|
)
|
|
|
(254,100
|
)
|
Net cash generated from operating activities
|
|
|
446,616
|
|
|
|
9,395
|
|
|
|
|
|
|
|
|
|
|
Cash flow from investing activities:
|
|
|
|
|
|
|
|
|
Proceeds from disposal of property, plant and equipment
|
|
|
52,676
|
|
|
|
–
|
|
Purchase of property, plant and equipment
|
|
|
(99,741
|
)
|
|
|
(3,487,021
|
)
|
Purchase of intangible assets
|
|
|
–
|
|
|
|
(183,986
|
)
|
Cash from acquisition of subsidiaries
|
|
|
–
|
|
|
|
37,576
|
|
Net cash used in investing activities
|
|
|
(47,065
|
)
|
|
|
(3,633,431
|
)
|
|
|
|
|
|
|
|
|
|
Cash flow from financing activities:
|
|
|
|
|
|
|
|
|
Capital injection
|
|
|
–
|
|
|
|
160,362
|
|
(Repayment to) proceeds from a director
|
|
|
(73,089
|
)
|
|
|
21,292
|
|
Proceeds from finance lease
|
|
|
–
|
|
|
|
2,349,421
|
|
Repayment of finance lease
|
|
|
(161,528
|
)
|
|
|
(130,912
|
)
|
Net cash (used in) generated from financing activities
|
|
|
(234,617
|
)
|
|
|
2,400,163
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
(173,883
|
)
|
|
|
(95,821
|
)
|
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents
|
|
|
(8,949
|
)
|
|
|
(1,319,694
|
)
|
|
|
|
|
|
|
|
|
|
BEGINNING OF PERIOD
|
|
|
691,331
|
|
|
|
1,536,980
|
|
|
|
|
|
|
|
|
|
|
END OF PERIOD
|
|
$
|
682,382
|
|
|
$
|
217,286
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
Cash paid for taxes
|
|
$
|
126,312
|
|
|
$
|
–
|
|
Cash paid for interest
|
|
$
|
67,110
|
|
|
$
|
33,665
|
|
See accompanying notes to unaudited condensed
consolidated financial statements.
NOBLE VICI GROUP,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED DECEMBER 31,
2019
(Currency expressed in United States
Dollars (“US$”), except for number of shares)
(UNAUDITED)
NOTE —1 BASIS
OF PRESENTATION
The accompanying unaudited condensed consolidated
financial statements have been prepared by management in accordance with both accounting principles generally accepted in the United
States (“GAAP”), and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and note disclosures
normally included in audited financial statements prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate
to make the information not misleading.
In the opinion of management, the consolidated
balance sheet as of March 31, 2019 which has been derived from audited financial statements and these unaudited condensed consolidated
financial statements reflect all normal and recurring adjustments considered necessary to state fairly the results for the periods
presented. The results for the period ended December 31, 2019 are not necessarily indicative of the results to be expected for
the entire fiscal year ending March 31, 2020 or for any future period.
These unaudited condensed consolidated
financial statements and notes thereto should be read in conjunction with the Management’s Discussion and the audited financial
statements and notes thereto included in the Annual Report on Form 10-K for the year ended March 31, 2019.
NOTE—2 DESCRIPTION
OF BUSINESS AND ORGANIZATION
Noble Vici Group, Inc. (the “Company”),
formerly known as Gold Union Inc., was incorporated under the laws of the State of Delaware on July 6, 2010 under the name of Advanced
Ventures Corp. Effective January 6, 2014, the Company changes its name to “Gold Union Inc.” Effective March 26, 2019,
the Company changes its current name to Noble Vici Group, Inc (“NVGI”).
The Company is currently engaged in the
IoT, Big Data, Blockchain and E-commerce business.
NOBLE VICI GROUP,
INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE NINE MONTHS ENDED DECEMBER 31,
2019
(Currency expressed in United States
Dollars (“US$”), except for number of shares)
(UNAUDITED)
Description of subsidiaries
Name
|
|
Place of incorporation
and kind of
legal entity
|
|
Principal activities
and place of operation
|
|
Particulars of issued/
registered share
capital
|
|
Effective interest
held
|
|
|
|
|
|
|
|
|
|
Noble Vici Pte Ltd
|
|
Republic of Singapore
|
|
Holding company
|
|
S$200,001
|
|
100%
|
|
|
|
|
|
|
|
|
|
Noble Infotech Applications Pte Ltd
|
|
Republic of Singapore
|
|
Development of software for interactive digital media and software consultancy
|
|
S$ 1
|
|
100%
|
|
|
|
|
|
|
|
|
|
Noble Digital Apps Sendirian Berhad
|
|
Federation of Malaysia
|
|
Digital apps and big data business
|
|
MYR1,000
|
|
51%
|
|
|
|
|
|
|
|
|
|
The Digital Agency Pte. Ltd.
|
|
Republic of Singapore
|
|
Business and management consultancy services
|
|
$1
|
|
51%
|
|
|
|
|
|
|
|
|
|
Venvici Pte Ltd
|
|
Republic of Singapore
|
|
Business and management consultancy services on e-commerce service
|
|
S$100,000
|
|
100%
|
|
|
|
|
|
|
|
|
|
Venvici Ltd
|
|
Republic of Seychelles
|
|
Business and management consultancy services on e-commerce service
|
|
US$50,000
|
|
100%
|
|
|
|
|
|
|
|
|
|
Ventrepreneur (SG) Pte Ltd
|
|
Republic of Singapore
|
|
Online retailing
|
|
S$10,000
|
|
100%
|
|
|
|
|
|
|
|
|
|
UB45 Pte Limited
|
|
Republic of Singapore
|
|
Investment holding
|
|
S$10,000
|
|
100%
|
|
|
|
|
|
|
|
|
|
ToroV System Private Limited
|
|
Republic of Singapore
|
|
IoT Retailing
|
|
S$10,000
|
|
51%
|
|
|
|
|
|
|
|
|
|
VMore Holding Limited
|
|
New Zealand
|
|
New Zealand holding company
|
|
NZ$10,000
|
|
100%
|
|
|
|
|
|
|
|
|
|
VMore Merchants Pte Ltd
|
|
Republic of Singapore
|
|
Merchants onboarding
|
|
S$1,000
|
|
100%
|
|
|
|
|
|
|
|
|
|
AIM System Pte Ltd
|
|
Republic of Singapore
|
|
Affiliate System Provider
|
|
S$1,000
|
|
100%
|
The Company and its subsidiaries are hereinafter
referred to as (the “Company”).
NOBLE VICI GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE NINE MONTHS ENDED DECEMBER 31,
2019
(Currency expressed in United States
Dollars (“US$”), except for number of shares)
(UNAUDITED)
NOTE—3 SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying condensed consolidated
financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere
in the accompanying condensed consolidated financial statements and notes.
These accompanying condensed consolidated
financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America
(“US GAAP”).
The condensed consolidated financial statements
include the accounts of the Company and its subsidiaries. All significant inter-company balances and transactions within the Company
have been eliminated upon consolidation.
☐
|
Use of estimates and assumptions
|
In preparing these condensed consolidated
financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in
the balance sheet and revenues and expenses during the periods reported. Actual results may differ from these estimates. Significant
estimates in the nine months ended December 31, 2019 and 2018 include the useful life of property and equipment and intangible
assets, assumptions used in assessing impairment of goodwill and the value of stock-based compensation.
☐
|
Cash and cash equivalents
|
Cash and cash equivalents are carried at
cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments
with an original maturity of three months or less as of the purchase date of such investments.
Accounts receivable consist of amounts
due from customers in connection with our normal business activities and are carried at sales value less allowance for doubtful
accounts. The allowance for doubtful accounts is established to reflect the expected losses of accounts receivable based on past
collection history, age, account payment status compared to invoice payment terms and specific individual risks identified. The
delinquency of a receivable account is determined based on these factors. The Company does not accrue interest on aged accounts
receivable. As of December 31, 2019, there were no allowances for doubtful accounts.
Intangible assets represented the acquired
game right from a related party, which are stated at acquisition cost, less accumulated amortization. The Company amortizes its
intangible assets with definite lives over their estimated useful lives and reviews these assets for impairment when an indicator
for potential impairment exists. The Company is currently amortizing its intangible assets with definite lives over periods of
3 years.
NOBLE VICI GROUP,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED DECEMBER 31,
2019
(Currency expressed in United States
Dollars (“US$”), except for number of shares)
(UNAUDITED)
☐
|
Property, plant and equipment
|
Property, plant and equipment are stated
at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line
basis over the following expected useful lives from the date on which they become fully operational and after taking into account
their estimated residual values:
|
|
Expected useful lives
|
|
Building
|
|
38 years or lesser than term of lease
|
|
Leasehold improvements
|
|
3-10 years or lesser than term of lease
|
|
Furniture and fittings
|
|
3 years
|
|
Office equipment and computers
|
|
1- 3 years
|
|
Motor vehicle
|
|
2 years
|
|
Expenditures for repairs and maintenance
are expensed as incurred. When assets have been retired or sold, the cost and related accumulated depreciation are removed from
the accounts and any resulting gain or loss is recognized in the results of operations.
Depreciation expense for the three months
ended December 31, 2019 and 2018 were $49,011 and $120,356, as part of operating expenses, respectively.
Depreciation expense for the nine months
ended December 31, 2019 and 2018 were $147,031 and $183,289, as part of operating expenses, respectively.
☐
|
Impairment of long-lived assets
|
In accordance with Accounting Standards
Codification ("ASC") Topic 360-10-5, “ Impairment or Disposal of Long-Lived Assets ”, the Company
reviews its long-lived assets, including property, plant and equipment, as well as intangible assets for impairment whenever events
or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable or that useful lives are
no longer appropriate. If the total of the expected undiscounted future net cash flows is less than the carrying amount of the
asset, a loss is recognized for the difference between the fair value and carrying amount of the asset. There has been no impairment
charge as of December 31, 2019.
Revenue is recognized when it is realized
or realizable and earned, in accordance with ASC 605 Revenue Recognition (“ASC 605”). Revenue from the sale
of products is recognised when all of the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery
has occurred or services have been performed; (3) the seller’s price to the buyer is fixed or determinable; and (4) collectability
is reasonably assured. Product sales are recorded net of good and service taxes and product returns.
The Company records revenues from the sales
of third-party products on a “gross” basis pursuant to ASC 605-45 Revenue Recognition - Principal Agent Considerations,
when we are the primary obligor in the arrangement with the end customer and have the risks and rewards as principal in the transaction,
such as responsibility for fulfillment, retaining the risk for collection, and establishing the price of the products. If these
indicators have not been met, or if indicators of net revenue reporting specified in ASC 605-45 are present in the arrangement,
revenue is recognized net of related direct costs.
NOBLE VICI GROUP,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED DECEMBER 31,
2019
(Currency expressed in United States
Dollars (“US$”), except for number of shares)
(UNAUDITED)
The Company maintains a membership program,
whereby certain members earn commission credits, based on the sales volume of certain other members who are sponsored directly
or indirectly by the member. Commission credits are redeemable on future spending of the products purchased or playing online games.
Commission credits are recorded and classified as operating expense when the products are delivered and revenue is recognized.
The estimated liability for unredeemed commission credit is included in commission liability on the accompanying balance sheets.
Management reviews the adequacy for the accrual for unredeemed commission credits by periodically evaluating the historical redemption
and projected trends.
The Company adopted the ASC 740 Income
tax provisions of paragraph 740-10-25-13, which addresses the determination of whether tax benefits claimed or expected to
be claimed on a tax return should be recorded in the consolidated financial statements. Under paragraph 740-10-25-13, the Company
may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained
on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated
financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent
(50%) likelihood of being realized upon ultimate settlement. Paragraph 740-10-25-13 also provides guidance on de-recognition, classification,
interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had no material
adjustments to its liabilities for unrecognized income tax benefits according to the provisions of paragraph 740-10-25-13.
The estimated future tax effects of temporary
differences between the tax basis of assets and liabilities are reported in the accompanying balance sheets, as well as tax credit
carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its balance
sheets and provides valuation allowances as management deems necessary.
☐
|
Uncertain tax positions
|
The Company did not take any uncertain
tax positions and had no adjustments to its income tax liabilities or benefits pursuant to the ASC 740 provisions of Section 740-10-25
for the three and nine months ended December 31, 2019 and 2018.
Leases that transfer substantially all
the rewards and risks of ownership to the lessee, other than legal title, are accounted for as finance leases. Substantially all
of the risks or benefits of ownership are deemed to have been transferred if any one of the four criteria is met: (i) transfer
of ownership to the lessee at the end of the lease term, (ii) the lease containing a bargain purchase option, (iii) the lease term
exceeding 75% of the estimated economic life of the leased asset, (iv) the present value of the minimum lease payments exceeding
90% of the fair value. At the inception of a finance lease, the Company as the lessee records an asset and an obligation at an
amount equal to the present value of the minimum lease payments. The leased asset is amortized over the shorter of the lease term
or its estimated useful life if title does not transfer to the Company, while the leased asset is depreciated in accordance with
the Company’s depreciation policy if the title is to eventually transfer to the Company. The periodic rent payments made
during the lease term are allocated between a reduction in the obligation and interest element using the effective interest method
in accordance with the provisions of ASC Topic 835-30, “Imputation of Interest”.
☐
|
Foreign currencies translation
|
Transactions denominated in currencies
other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of
the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into
the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are
recorded in the consolidated statement of operations.
NOBLE VICI GROUP,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED DECEMBER 31,
2019
(Currency expressed in United States
Dollars (“US$”), except for number of shares)
(UNAUDITED)
The reporting currency of the Company is
United States Dollar ("US$") and the accompanying consolidated financial statements have been expressed in US$. In addition,
the Company’s operating subsidiaries in Singapore and Seychelles maintain their books and record in its local currency, Singapore
Dollars (“S$”), which is a functional currency as being the primary currency of the economic environment in which their
operations are conducted. In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency
is not US$ are translated into US$, in accordance with ASC Topic 830-30, “ Translation of Financial Statement”,
using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the
year. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate
component of accumulated other comprehensive income within the statements of changes in stockholder’s equity.
Translation of amounts from S$ into US$1
has been made at the following exchange rates for the period ended December 31, 2019 and 2018:
|
|
December 31, 2019
|
|
|
December 31, 2018
|
|
Period-end S$:US$1 exchange rate
|
|
|
1.3552
|
|
|
|
1.3632
|
|
Period average S$:US$1 exchange rate
|
|
|
1.3668
|
|
|
|
1.3588
|
|
ASC Topic 220, “Comprehensive
Income”, establishes standards for reporting and display of comprehensive income, its components and accumulated balances.
Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive
income, as presented in the accompanying consolidated statements of changes in stockholders’ equity, consists of changes
in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of
income tax expense or benefit.
ASC Topic 280, “Segment Reporting”
establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal
organization structure as well as information about geographical areas, business segments and major customers in consolidated financial
statements. For the three and nine months ended December 31, 2019 and 2018, the Company operates in one reportable operating segment
in Singapore and Asian Region.
The Company follows the ASC 850-10, Related
Party for the identification of related parties and disclosure of related party transactions.
Pursuant to section 850-10-20 the related
parties include a) affiliates of the Company; b) entities for which investments in their equity securities would be required,
absent the election of the fair value option under the Fair Value Option Subsection of section 825–10–15, to be accounted
for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and Income-sharing
trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the
Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management
or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its
own separate interests; and g) other parties that can significantly influence the management or operating policies of the
transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other
to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
NOBLE VICI GROUP,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED DECEMBER 31,
2019
(Currency expressed in United States
Dollars (“US$”), except for number of shares)
(UNAUDITED)
The consolidated financial statements shall
include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other
similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of
consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature
of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts
were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to
an understanding of the effects of the transactions on the consolidated financial statements; c) the dollar amounts of transactions
for each of the periods for which income statements are presented and the effects of any change in the method of establishing the
terms from that used in the preceding period; and d) amount due from or to related parties as of the date of each balance
sheet presented and, if not otherwise apparent, the terms and manner of settlement.
☐
|
Commitments and contingencies
|
The Company follows the ASC 450-20, Commitments
to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which
may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The
Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss
contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings,
the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the
amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates
that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated
liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material
loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent
liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are
generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe,
based upon information available at this time that these matters will have a material adverse effect on the Company’s financial
position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely
affect the Company’s business, financial position, and results of operations or cash flows.
☐
|
Fair value of financial instruments
|
The Company follows paragraph 825-10-50-10
of the FASB ASC for disclosures about fair value of its financial instruments and has adopted paragraph 820-10-35-37 of the FASB
ASC (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 of the
FASB ASC establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures
about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, paragraph
820-10-35-37 of the FASB ASC establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure
fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active
markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value
hierarchy defined by paragraph 820-10-35-37 of the FASB ASC are described below:
Level 1
|
|
Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
|
|
|
|
Level 2
|
|
Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
|
|
|
|
Level 3
|
|
Pricing inputs that are generally observable inputs and not corroborated by market data.
|
NOBLE VICI GROUP,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED DECEMBER 31,
2019
(Currency expressed in United States
Dollars (“US$”), except for number of shares)
(UNAUDITED)
Financial assets are considered Level 3
when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least
one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest
priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable
inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the
categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
The carrying amounts of the Company’s
financial assets and liabilities, such as cash and cash equivalents, approximate their fair values because of the short maturity
of these instruments.
☐
|
Recent accounting pronouncements
|
In February 2016, the FASB issued ASU 2016-02,
“Leases (Topic 842)”. Under ASU 2016-02, lessees will be required to recognize all leases (with the exception of short-term
leases) at the commencement date including a lease liability, which is a lessee’s obligation to make lease payments arising
from a lease, measured on a discounted basis; and a right-of-use (ROU) asset, which is an asset that represents the lessee’s
right to use, or control the use of, a specified asset for the lease term. Leases with a term of twelve months or less will be
accounted for similar to existing guidance for operating leases. In December 2017, January 2018, July 2018, December 2018 and March
2019, the FASB issued ASU 2017-13, ASU 2018-01, ASU 2018-10 & 11, ASU 2018-20 and ASU 2019-01, respectively, which contain
modifications and improvements to ASU 2016-02. The amendments provide entities with an additional (and optional) transition method
to adopt the new leases standard. Under the Optional Transition Method, an entity initially applies the new leases standard at
the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.
On January 1, 2019, the Company adopted ASC Topic 842 using the modified retrospective approach and elected to utilize the Optional
Transition Method. In addition, the Company elected the land easement transition practical expedient and did not reassess whether
an existing or expired land easement is a lease or contains a lease if it has not historically been accounted for as a lease. The
adoption did not impact the Company’s previously reported consolidated financial statements nor did it result in a cumulative
effect adjustment to retained earnings as of January 1, 2019.
In June 2018, the FASB issued ASU 2018-07,
Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment. ASU 2018-07 aligns the accounting
for share based payments granted to non-employees with that of share based payments granted to employees. The Company early adopted
ASU No. 2018-07 in the fourth quarter of 2018 and there was no cumulative effect of adoption. The adoption of this ASU did not
have a material impact on our financial position, results of operations, cash flows, or presentation thereof.
NOTE—4 REVENUE
|
|
Nine months ended December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Products sales, as principal
|
|
$
|
11,266,471
|
|
|
$
|
44,735
|
|
Products sales, as agent (net basis)
|
|
|
–
|
|
|
|
1,721,612
|
|
Sales programming
|
|
|
947,171
|
|
|
|
–
|
|
Other operating revenue
|
|
|
2,461,179
|
|
|
|
404,301
|
|
|
|
$
|
14,674,821
|
|
|
$
|
2,170,648
|
|
NOBLE VICI GROUP,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED DECEMBER 31,
2019
(Currency expressed in United States
Dollars (“US$”), except for number of shares)
(UNAUDITED)
NOTE—5 INTANGIBLE
ASSETS
|
|
December 31, 2019
|
|
|
March 31, 2019
|
|
|
|
|
|
|
|
|
(Audited)
|
|
Gaming right and software
|
|
|
|
|
|
|
|
|
Gross carrying value
|
|
$
|
1,238,510
|
|
|
$
|
1,238,254
|
|
Less: accumulated amortization
|
|
|
(880,296
|
)
|
|
|
(671,992
|
)
|
Net carrying value
|
|
|
358,214
|
|
|
|
566,262
|
|
Non-amortising portion
|
|
|
–
|
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
Intangible assets, net
|
|
$
|
358,214
|
|
|
$
|
566,262
|
|
Amortization expense for the three months
ended December 31, 2019 and 2018 were $69,007 and $18,353, as part of operating expenses, respectively.
Amortization expense for the nine months
ended December 31, 2019 and 2018 were $206,390 and $44,279, as part of operating expenses, respectively.
The following table outlines the annual
amortization expense for the next two years:
Years ending December 31:
|
|
|
|
2020
|
|
$
|
277,553
|
|
2021
|
|
|
80,661
|
|
|
|
|
|
|
Total
|
|
$
|
358,214
|
|
NOTE—6 AMOUNT
DUE FROM A THIRD PARTY
As of December 31, 2019, the Company
made temporary advance of $221,373 to a third party, which is secured by the stocks held and becomes mature on or before
February 17, 2020. Interest is charged at the rate of 5% per annum.
NOTE—7 AMOUNT
DUE TO A DIRECTOR
As of December 31, 2019, amount due to
a director of the Company, Mr. TANG Wai Chong Eldee, which was unsecured, interest-free and had no fixed terms of repayment. Imputed
interest from related party loan is not significant.
NOTE—8 AMOUNT
DUE TO A RELATED PARTY
As of December 31, 2019, the Company owed
the amount of $280,317 due to the former shareholder of the Company, Miss Kao. The balance is unsecured, interest-free and has
no fixed terms of repayment. Imputed interest from related party loan is not significant.
NOBLE VICI GROUP,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED DECEMBER 31,
2019
(Currency expressed in United States
Dollars (“US$”), except for number of shares)
(UNAUDITED)
NOTE—9 OBLIGATIONS
UNDER FINANCE LEASES
The Company purchased several motor vehicles
and properties under finance lease agreements with the effective interest rate ranging from 3.75% to 22.8% per annum, due through
March 10, 2026, with principal and interest payable monthly. The obligations under the finance leases are as follows:
|
|
December 31, 2019
|
|
|
March 31, 2019
|
|
|
|
|
|
|
(Audited)
|
|
Finance lease
|
|
$
|
2,865,439
|
|
|
$
|
3,089,747
|
|
Less: interest expense
|
|
|
(772,222
|
)
|
|
|
(834,082
|
)
|
|
|
|
|
|
|
|
|
|
Net present value of finance lease
|
|
$
|
2,093,217
|
|
|
$
|
2,255,665
|
|
|
|
|
|
|
|
|
|
|
Current portion
|
|
$
|
252,490
|
|
|
$
|
246,957
|
|
Non-current portion
|
|
|
1,840,727
|
|
|
|
2,008,708
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,093,217
|
|
|
$
|
2,255,665
|
|
As of December 31, 2019, the maturities
of the finance leases for each of the five years and thereafter are as follows:
Years ending December 31:
|
|
|
|
2020
|
|
$
|
252,490
|
|
2021
|
|
|
252,490
|
|
2022
|
|
|
238,977
|
|
2023
|
|
|
238,977
|
|
2024
|
|
|
235,782
|
|
Thereafter
|
|
|
874,501
|
|
|
|
|
|
|
Total
|
|
$
|
2,093,217
|
|
Included in the consolidated balance sheet
as of December 31, 2019 under property, plant and equipment are cost and accumulated depreciation related to capitalized leases
of $3,527,314 and $149,807, respectively. Included in the consolidated balance sheet as of March 31, 2019 under property, plant
and equipment are cost and accumulated depreciation related to capitalized leases of $3,422,556 and $45,482, respectively.
The building under finance lease is personally
guaranteed by the director of the Company, Eldee Tang.
NOBLE VICI GROUP,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED DECEMBER 31,
2019
(Currency expressed in United States
Dollars (“US$”), except for number of shares)
(UNAUDITED)
NOTE—10 INCOME
TAX
The Company generated an operating loss
for the nine months ended December 31, 2019 and 2018, recorded tax credit of $18,555 for the nine months ended December 31, 2019.
The Company has operations in various countries and is subject to tax in the jurisdictions in which they operate, as follows:
United States of America
NVGI is registered in the State of Delaware
and is subject to United States of America tax law. No provision for income taxes have been made as NVGI has generated no taxable
income for the periods presented. The Company’s policy is to recognize accrued interest and penalties related to unrecognized
tax benefits in its income tax provision. The Company has not accrued or paid interest or penalties which were not material to
its results of operations for the period presented.
As of December 31, 2019, the Company incurred
$909,352 of cumulative net operating losses which can be carried forward to offset future taxable income. The net operating loss
carryforwards begin to expire in 2039, if unutilized. The Company has provided for a full valuation allowance against the deferred
tax assets of $190,964 on the expected future tax benefits from the net operating loss carryforwards as the management believes
it is more likely than not that these assets will not be realized in the future.
Republic of Singapore
The Company’s operating subsidiaries
are registered in Republic of Singapore and are subject to the Singapore corporate income tax at a standard income tax rate of
17% on the assessable income arising in Singapore during its tax year.
The Company’s subsidiary in Republic
of Seychelles is also subject to the Singapore corporate income tax regime.
The reconciliation of income tax rate to
the effective income tax rate based on income (loss) before income taxes for the nine months ended December 31, 2019 and 2018 are
as follows:
|
|
Nine months ended December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
$
|
2,620,467
|
|
|
$
|
(43,172,994
|
)
|
Statutory income tax rate
|
|
|
17%
|
|
|
|
17%
|
|
Income tax expense at statutory rate
|
|
|
445,479
|
|
|
|
(7,339,409
|
)
|
Tax effect of (non-taxable income) non-deductible expenses
|
|
|
(464,034
|
)
|
|
|
7,513,519
|
|
Income tax (credit) expense
|
|
$
|
(18,555
|
)
|
|
$
|
174,110
|
|
NOTE - 11 STOCKHOLDERS’
EQUITY
In October 2019, the Company issued 100,000
shares of its common stock to its legal counsel for legal services provided to the Company at the fair value of $200,000, equal
to $2 per share.
As of December
31, 2019 and March 31, 2019, the Company had a total of 210,804,160 and 210,704,160 shares of its common stock issued and outstanding,
respectively.
NOBLE VICI GROUP,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED DECEMBER 31,
2019
(Currency expressed in United States
Dollars (“US$”), except for number of shares)
(UNAUDITED)
NOTE—12 RELATED
PARTY TRANSACTIONS
From time to time, the stockholder and
director of the Company advanced funds to the Company for working capital purpose. Those advances are unsecured, non-interest bearing
and due on demand. The imputed interest on the loan from a related party was not significant.
Royalty charges and marketing expenses
paid to a related company totaled $83,651 and $200,505 for the three months ended December 31, 2019 and 2018.
Royalty charges and marketing expenses paid to a related company totaled $421,972 and $442,651 for the nine months ended December
31, 2019 and 2018.
Apart from the transactions and balances
detailed elsewhere in these accompanying consolidated financial statements, the Company has no other significant or material related
party transactions during the periods presented.
NOTE—13 CONCENTRATIONS
OF RISK
The Company is exposed to the following concentrations of risk:
(a) Major
customers
For the three and nine months ended December
31, 2019 and 2018, there is no single customer representing more than 10% of the Company’s revenue.
(b) Major
vendors
For the three months ended December 31,
2019, this is one single vendor representing more than 10% of the Company’s purchase. This vendor (Vendor A) accounted for
24% of the Company’s purchase amounting to $544,751 with $355,913 of accounts payable.
Eldee Tang, our Chief Executive Officer
and Director, owns 31% of Vendor A.
For the three months ended December 31,
2018, there were no vendors representing more than 10% of the Company’s purchase.
For the nine months ended December 31,
2019, this is one single vendor representing more than 10% of the Company’s purchase. This vendor (Vendor A) accounted for
19% of the Company’s purchase amounting to $1,580,300 with $355,913 of accounts payable.
Eldee Tang, our Chief Executive Officer
and Director, owns 31% of Vendor A.
For the nine months ended December 31,
2018, there were no vendors representing more than 10% of the Company’s purchase.
NOBLE VICI GROUP,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED DECEMBER 31,
2019
(Currency expressed in United States
Dollars (“US$”), except for number of shares)
(UNAUDITED)
The Company considers its business activities
to constitute one single reportable segment. The Company’s chief operating decision makers use consolidated results to make
operating and strategic decisions. The geographic distribution analysis of the Company’s revenues by region is as follows:
|
|
Three months ended December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
China
|
|
$
|
9,011
|
|
|
$
|
1,100,799
|
|
Singapore
|
|
|
1,928,059
|
|
|
|
8,784
|
|
Malaysia
|
|
|
22,171
|
|
|
|
–
|
|
Philippines
|
|
|
131
|
|
|
|
–
|
|
Thailand
|
|
|
5,039
|
|
|
|
–
|
|
Indonesia
|
|
|
14,986
|
|
|
|
–
|
|
Other countries in Asia Pacific
|
|
|
84,540
|
|
|
|
97,568
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,063,937
|
|
|
$
|
1,207,151
|
|
|
|
Nine months ended December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
China
|
|
$
|
225,641
|
|
|
$
|
1,801,612
|
|
Singapore
|
|
|
7,399,810
|
|
|
|
269,685
|
|
Malaysia
|
|
|
3,669,216
|
|
|
|
–
|
|
Philippines
|
|
|
1,646,733
|
|
|
|
–
|
|
Thailand
|
|
|
802,893
|
|
|
|
–
|
|
Indonesia
|
|
|
412,002
|
|
|
|
–
|
|
Other countries in Asia Pacific
|
|
|
518,526
|
|
|
|
99,351
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
14,674,821
|
|
|
$
|
2,170,648
|
|
All of the Company’s long-lived
assets are located in Singapore.
(c) Interest rate risk
As the Company has no significant interest-bearing
assets, the Company’s income and operating cash flows are substantially independent of changes in market interest rates.
The Company’s interest-rate risk
arises from borrowings under finance leases. The Company manages interest rate risk by varying the issuance and maturity dates
variable rate debt, limiting the amount of variable rate debt, and continually monitoring the effects of market changes in interest
rates. As of December 31, 2019, borrowing under finance lease was at fixed rates.
NOBLE VICI GROUP,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED DECEMBER 31,
2019
(Currency expressed in United States
Dollars (“US$”), except for number of shares)
(UNAUDITED)
(d) Economic and political
risk
The Company’s major operations are
conducted in Republic of Singapore. Accordingly, the political, economic, and legal environments in Singapore, as well as the general
state of Singapore’s economy may influence the Company’s business, financial condition, and results of operations.
(e) Exchange rate risk
The Company cannot guarantee that the current
exchange rate will remain steady; therefore there is a possibility that the Company could post the same amount of profit for two
comparable periods and because of the fluctuating exchange rate actually post higher or lower profit depending on exchange rate
of S$ converted to US$ on that date. The exchange rate could fluctuate depending on changes in political and economic environments
without notice.
NOTE—14 COMMITMENTS
AND CONTINGENCIES
(a) Operating lease
commitments
During the three and nine months ended
December 31, 2019 and 2018, the Company leased its properties under operating leases. The leases typically commence for a period
ranging for 1 to 3 years. None of the leases includes contingent rentals.
As of December 31, 2019, the Company has
future rental payables under non-cancellable operating leases of $37,473 in the next twelve months.
(b) Capital commitment
On April 1, 2019, the Company entered into
a binding Memorandum of Understanding (the “MOU”) with Eldee Wai Chong Tang, our Chief Executive Officer and Director,
whereby we agreed to reorganize Elusyf Global Private Limited, a Singapore corporation (“EGPL”), into the Company in
accordance with the terms of the MOU. Upon the consummation of such reorganization, EGPL will become a 51% owned subsidiary of
the Company. EGPL is engaged in the business of marketing and distribution of health and beauty products, such as Elusyf Mitos
Activa and Cell Activa Phytomask, among other offerings, through its wide network of channels. The consummation of the acquisition
is subject to the satisfactory completion of financial, tax and legal due diligence of EGPL by the Company, among other conditions.
The Company is in the process of completing its due diligence review of EGPL and has not yet consummated the acquisition.
The Company’s director, Mr. Tang
owns Fifty-Nine Thousand Nine Hundred Eighty (59,980) ordinary shares of EGPL, representing 51% of the issued and outstanding securities
of EGPL. It is considered as related party transaction.
NOTE—15 SUBSEQUENT
EVENTS
In accordance with ASC Topic 855, “Subsequent
Events”, which establishes general standards of accounting for and disclosure of events that occur after the balance
sheet date but before consolidated financial statements are issued, the Company has evaluated all events or transactions that occurred
after December 31, 2019, up through February 14, 2020, the Company issued the unaudited condensed consolidated financial statements.
During the period, the Company has no material recognizable subsequent events.
ITEM 2
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-looking statements
The following discussion
of our financial condition and results of operations should be read in conjunction with the financial statements and the related
notes thereto included elsewhere in this quarterly report on Form 10-Q. This quarterly report on Form 10-Q contains certain forward-looking
statements and our future operating results could differ materially from those discussed herein. Certain statements contained in
this discussion, including, without limitation, statements containing the words "believes," "anticipates,"
"expects" and the like, constitute "forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). However,
as we issue “penny stock,” as such term is defined in Rule 3a51-1 promulgated under the Exchange Act, we are ineligible
to rely on these safe harbor provisions. Such forward-looking statements involve known and unknown risks, uncertainties and other
factors which may cause our actual results, performance or achievements to be materially different from any future results, performance
or achievements expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to
place undue reliance on such forward-looking statements. We disclaim any obligation to update any such factors or to announce publicly
the results of any revisions of the forward-looking statements contained herein to reflect future events or developments.
Currency and exchange
rate
Unless otherwise
noted, all currency figures quoted as “U.S. dollars”, “dollars” or “$” refer to the legal currency
of the United States. Throughout this report, assets and liabilities of the Company’s subsidiaries are translated into U.S.
dollars using the exchange rate on the balance sheet date. Revenue and expenses are translated at average rates prevailing during
the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate
component of accumulated other comprehensive income within the statement of stockholders’ equity.
Overview
We were incorporated
under the laws of the State of Delaware on July 6, 2010 under the name “Advanced Ventures Corp.” Effective January
6, 2014, we changed our name to “Gold Union Inc.” Effective March 26, 2018, we changed our name to Noble Vici Group,
Inc. and our trading symbol was changed to NVGI. On August 8, 2018, we consummated the acquisition of Noble Vici Private Limited,
a corporation organized under the laws of Singapore (“NVPL”), which was wholly owned by Eldee Tang, our sole director
and Chief Executive Officer. NVPL is engaged in the IoT, Big Data, Blockchain and E-commerce business. As a result of our acquisition
of NVPL, we entered into the IoT, Big Data, Blockchain and E-commerce business. We are headquartered in Singapore and operate a
branch office in Taiwan. Certain of our resellers are operating “V-More” branded satellite offices in Shenzhen, China.
History
On July 27, 2010, we
entered into an exclusive worldwide patent sale agreement (the “Patent Transfer and Sales Agreement”) with Ilanit Appelfeld
(the “Seller”), in relation to a patented technology, U.S. Patent Number: 6,743,209 (the “Patent”), for
a catheter with an integral anchoring mechanism. The patent and technology were transferred to us in exchange of payment to Ilanit
Appelfeld of $17,500 (seventeen thousand five hundred United States Dollars), according to the terms and conditions specified in
the Patent Transfer and Sales Agreement related to U.S. Patent Number: 6,743,209.
During the second quarter
of 2011 the Company raised gross proceeds of $75,000 pursuant to an effective Form S-1 Registration Statement and issued 37,500,000
post forward stock split shares of common stock that were registered pursuant to the Form S-1 Registration Statement.
Effective March 7,
2012, we increased the number of our authorized shares of common stock to three billion shares (3,000,000,000) and engaged in a
forward stock split of its common shares whereby each one share of our common stock was split into fifteen shares of our common
stock.
During the second fiscal
quarter of 2014, we elected to discontinue our business of exploiting the Patent and began to consider other business opportunities
that may bring quicker and greater value to our stockholders. We initially considered entering into the business of trading precious
metal bullion primarily in the Asia Pacific region. Therefore, effective January 6, 2014, we changed our name to “Gold Union
Inc.” to more adequately reflect our initial intended business operations.
On December 31, 2015,
we consummated a Share Exchange Agreement with G.U. International Limited, a limited company incorporated under the laws of the
Republic of Seychelles and our wholly owned subsidiary (“GUI”), and Kao Wei-Chen, an individual representing herself
and 8 other individuals (collectively, the “Golden Corridor Shareholders”), which agreement was amended several times
to extend the closing date of the acquisition (collectively, the “Share Exchange Agreement”). Pursuant to the Share
Exchange Agreement, we, through GUI, purchased 480 shares of Phnom Penh Golden Corridor Trading Co. Limited (the “GC Shares”),
from 9 private Golden Corridor Shareholders, representing 48% of the issued and outstanding shares of common stock of Golden Corridor.
As consideration, we issued to the Golden Corridor Shareholders 2,500,000,000 shares of our common stock, at a value of US $0.002
per share, for an aggregate value of US $5,000,000.
As a result of our
acquisition of the GC Shares, we ceased our metal bullion trading business and entered into the real estate development and rental
business located in the Kingdom of Cambodia. Golden Corridor owns three parcels of land located at National Road 44, Phum Phkung,
Chbarmorn Commune, Chbarmorn District, Kampong Speu Province, Kingdom of Cambodia, measuring an aggregate of 172,510 square meters
(collectively, the “Properties”). We intended to develop the Properties into an industrial park for rental income.
Due to difficulties
in entering the real estate development and rental business, on February 2, 2018, we engaged in a corporate reorganization and
distributed the GC Shares to our shareholders. On March 18, 2018, our subsidiary, G.U. Asia Limited was dissolved.
Change in Control
On March 27, 2018,
Lim Yew Chuan, the director, Chief Executive Officer, Chief Financial Officer and Secretary of Noble Vici Group, Inc. (the “Company”),
resigned from all of his positions as director, Chief Executive Officer, Chief Financial Officer and Secretary of the Company.
Mr. Lim’s decision to leave the Board and his executive officer positions with the Company is due to personal reasons and
not due to any dispute or disagreement with the Company on any matter relating to the Company's operations, policies or practices.
Effective March 27,
2018, the following individuals were appointed to serve in the capacities set forth next to their names until his successor(s)
shall be duly elected or appointed, unless he resigns, is removed from office or is otherwise disqualified from serving as an executive
officer or director of the Company:
Name
|
Office(s)
|
Eldee Tang
|
Chief Executive Officer and Director
|
Sin Chi Yip
|
Chief Financial Officer
|
Jon Yee Chuan Lim
|
Chief Operating Officer and Secretary
|
On January 29, 2018,
Eldee Tang entered into Share Sale Agreements with four shareholders and former affiliates of the Company to purchase up to 1,675,000,000
shares of the Company’s common stock at a per share purchase price of US$0.00008, for an aggregate price of US$134,000. On
June 15, 2018, the Company effectuated a 1 for 1,000 reverse stock split whereby every 1,000 shares of the Company’s common
stock were reduced to one share. The parties effectuated Mr. Tang’s purchase of 750,000 shares such securities (expressed
on a post reverse split basis) effective June 15, 2018. Mr. Tang hopes to purchase the balance of the 925,000 shares from Kao Wei-Chen,
a former affiliate of the Company, in the near future. The foregoing description of the Share Sale Agreement with Kao Wei-Chen
is qualified in its entirety by reference to such agreement which is filed as Exhibit 10.2 to this Quarterly Report and is incorporated
herein by reference.
Effective June 15,
2018, we:
|
1.
|
Increased the Company’s authorized capital from 3,000,000,000 shares of common stock, par value $0.0001 (the “Common Stock”), to 3,050,000,000 shares, consisting of 3,000,000,000 shares of Common Stock and 50,000,000 shares of undesignated preferred stock, par value $0.0001 (the “Preferred Stock”);
|
|
2.
|
Effected a 1-for-1000 reverse stock split of our issued and outstanding Common Stock (the “Reverse Stock Split”);
|
|
3.
|
Elected not to be governed by Section 203 of the Delaware General Corporation Law;
|
|
4.
|
Changed the Company’s fiscal year end from December 31st to March 31st, for all purposes (including tax and financial accounting);
|
|
5.
|
Adopted Amended and Restated Certificate of Incorporation for the purpose of consolidating the amendments to the Company’s Certificate of Incorporation; and
|
|
6.
|
Adopted the Amended and Restated Bylaws of the Company.
|
Acquisition of NVPL
On August 8, 2018,
we consummated the acquisition of Noble Vici Private Limited, a corporation organized under the laws of Singapore (“NVPL”),
in accordance with the terms of a Share Exchange Agreement. NVPL is wholly owned by Eldee Tang, our Chief Executive Officer and
Director. Pursuant to the Share Exchange Agreement, we purchased One Million and One (1,000,001) shares of NVPL (the “NVPL
Shares”), representing all of the issued and outstanding shares of common stock of NVPL, in consideration of One Hundred
Forty Million (140,000,000) shares of our common stock, at a value of US $1.70 per share, for an aggregate value of US $238,000,000.
It is our understanding that Mr. Tang is not a U.S. Person within the meaning of Regulations S. Accordingly, the Shares are being
sold pursuant to the exemption provided by Section 4(a)(2) of the Securities Act of 1933, as amended, Regulation D and Regulation
S promulgated thereunder.
Acquisition of TDA
and NDA
On September 17, 2018,
we consummated the acquisition of a 51% controlling interest in The Digital Agency Private Limited, a private limited company organized
under the laws of Singapore (“TDA”), and a start-up digital marketing company, in accordance with the terms of that
certain Share Exchange Agreement by and among the Company, Noble Infotech Applications Private Limited, a private limited company
organized under the laws of Singapore and our wholly owned subsidiary (“NIA”), TDA and Mok Jo Han (“the “TDA
Share Exchange Agreement”). Pursuant to the terms of the TDA Share Exchange Agreement, we acquired 51 ordinary shares of
TDA, representing approximately fifty-one percent (51%) of the issued and outstanding ordinary shares of TDA, in exchange for 510,000
shares of common stock of the Company, par value $0.0001 (the “TDA Shares”), representing an exchange ratio of ONE
(1) ordinary share of TDA for Ten Thousand (10,000) shares of common stock of the Company, at a valuation of $2.00 per share of
the Company, for an aggregate value of $1,020,000. It is our understanding that Mr. Mok is not a U.S. Person within the meaning
of Regulations S. The TDA Shares were sold pursuant to the exemption provided by Section 4(a)(2) of the Securities Act of 1933,
as amended, and Regulation S promulgated thereunder.
On September 17, 2018,
we consummated the acquisition of a 51% controlling interest in Noble Digital Apps Sendirian Berhad,
a private limited company organized under the laws of Malaysia (“NDA”), and a start-up digital apps and big data company
in accordance with the terms of that certain Share Exchange Agreement by and among the Company, NIA, NDA, Cheng Bok Woon, Tan Yew
Fui, and Yong Swee Sun (“the “NDA Share Exchange Agreement”). Pursuant to the terms of the NDA Share Exchange
Agreement, we acquired 510 ordinary shares of NDA, representing approximately fifty-one percent (51%) of the issued and outstanding
ordinary shares of NDA, in exchange for 510,000 shares of common stock of the Company, par value $0.0001 (the “NDA Shares”),
representing an exchange ratio of ONE (1) ordinary share of NDA for One Thousand (1,000) shares of common stock of the Company,
at a valuation of $2.00 per share of the Company, for an aggregate value of $1,020,000. It is our understanding that Mr. Cheng,
Mr. Tan and Mr. Yong are not U.S. Person within the meaning of Regulations S. The NDA Shares were sold pursuant to the exemption
provided by Section 4(a)(2) of the Securities Act of 1933, as amended, and Regulation S promulgated thereunder.
Issuance of shares
to sales affiliates
On September 17, 2018,
and September 25, 2018, we approved the issuance of Nine Million One Hundred Thirty Five Thousand Seven Hundred Ninety Four (9,135,794)
shares and Five Hundred Sixty Seven Thousand Sixty-Four (567,064) shares of our common stock, par value $0.0001, respectively,
representing a total of approximately 6.3% of our issued and outstanding common stock, at a per share price of One Dollars and
Ninety Nine Cents (US $1.99), to approximately 460 sales associates for prior sales and marketing services provided to us and our
subsidiaries and affiliates. As a condition of receipt of such securities, each recipient executed a Stockholder Representation
Letters, which contained, among other things, restrictions prohibiting the transfer of such securities for a minimum period of
18 months up to a maximum period of 66 months after the execution of such letter. For ease of administration, the recipients appointed
Noble Infotech Limited (“NIL”) as nominee to hold, manage, administer and effectuate the distribution of such securities
upon the expiration of the applicable restricted periods. The shares were issued on October 18, 2018 to NIL. The securities were
issued pursuant to the exemption provided by Regulation S promulgated under the Securities Act of 1933, as amended. The foregoing
description of the Stockholder Representation Letters are qualified in its entirety by reference to such agreements which are filed
as Exhibit 10.3 to this Quarterly Report and are incorporated herein by reference.
On December 3, 2018,
we approved the issuance of up to an aggregate of Ten Million Eight Hundred Thirty Eight Thousand One Hundred Forty One (10,838,141)
shares of our common stock, par value $0.0001, representing approximately 7.1% of our issued and outstanding common stock, at a
per share price of Two Dollars (US $2.00), to about 690 sales associates for prior sales and marketing services provided to us
and our subsidiaries and affiliates. As a condition of receipt of such securities, each recipient was required to execute one of
two standard forms of Stockholder Representation Letters, which contained, among other things, restrictions prohibiting the transfer
of such securities for a minimum period of 18 or 24 months up to a maximum period of 72 months after the execution of such letter.
For ease of administration, the recipients appointed Venvici Partners Limited (“VVP”) as nominee to hold, manage, administer
and effectuate the distribution of such securities upon the expiration of the applicable restricted periods. The shares were issued
on January 4, 2019 to VVP. The securities were issued pursuant to the exemption provided Regulation S promulgated under the Securities
Act of 1933, as amended. The foregoing description of the Stockholder Representation Letters and the appointment of VVP as trustee
are qualified in its entirety by reference to such agreements which are filed as Exhibits 10.4 and 10.5 to this Quarterly Report
and are incorporated herein by reference.
On March 11, 2019,
our Board of Directors, approved the issuance of up to an aggregate of Fifteen Million (15,000,000) shares of our common stock,
par value $0.0001, representing approximately 8.4% of our issued and outstanding common stock (collectively, the “Shares”),
at a per share price of Two Dollars (US $2.00), to about 700 sales associates for prior sales and marketing services provided to
us and our subsidiaries and affiliates. As a condition of receipt of such securities, each recipient was required to execute one
of two standard forms of Stockholder Representation Letters, which contained, among other things, restrictions prohibiting the
transfer of such securities for a minimum period of 18 months up to a maximum period of 66 months after the execution of such letter.
For ease of administration, the recipients appointed Venvici Partners Limited (“VVP”) as nominee to hold, manage, administer
and effectuate the distribution of the Shares upon the expiration of the applicable restricted periods. For so long as VVP is the
stockholder of record of the Shares, VVP shall serve as the attorney in fact to vote such Shares at any annual, special or other
meeting of the stockholders of the Company, and at any adjournment or adjournments thereof, or pursuant to any consent in lieu
of a meeting or otherwise, with respect to any matter that may be submitted for a vote of stockholders of the Company. The securities
will be issued pursuant to the exemption provided by Regulation S promulgated under the Securities Act of 1933, as amended. The
foregoing description of the Stockholder Representation Letters and the appointment of VVP as trustee are qualified in its entirety
by reference to such agreements which are filed as Exhibits 10.6 and 10.7 to this Quarterly Report and are incorporated herein
by reference.
V-More Merchant Acquisition Agreements
On March 19, 2019,
we entered into a V-More Merchant Acquisition Agreement with each of the Consultants pursuant to which each Consultant agreed to
provide certain services related to the identification, due diligence, acquisition and retention of potential merchants in certain
designated territories for inclusion in our V-More platform. As consideration for these services, each Consultant received up to
an aggregate of Fourteen Million Three Hundred Twenty Thousand (14,320,000) shares of our common stock, for an aggregate of up
to Forty-Two Million Nine Hundred Sixty Thousand (42,960,000) shares of our common stock, subject to the achievement of certain
performance milestones and certain clawback rights. We registered Twenty-One Million Four Hundred Eighty Thousand (21,480,000)
shares of the amount of shares issuable under the V-More Merchant Acquisition Agreement on a Registration Statement on Form S-8
filed with the Securities and Exchange Commission on March 19, 2019. The foregoing description of the V-More Merchant Acquisition
Agreements is qualified in its entirety by reference to the V-More Merchant Acquisition Agreements dated March 19, 2019, which
are filed as Exhibits 10.8, 10.9 and 10.10 to this Quarterly Report and incorporated herein by reference.
Consulting Agreement
During the period from
March 19, 2019 till December 31, 2019, one of V-More’s merchants and vendors, Fame Reserve Limited, a subcontractor of Ms.
Sukullayanee Suwunnavid (the “Digital Consultant”), which distributes digital vouchers, ran a promotion through V-More
platform to promote and sell their digital vouchers (the “Promotion”). As a consideration for purchasing these vouchers
for the promotion, the Board approved the issuance of up to an aggregate of Ten Million (10,000,000) shares of our common stock,
par value $0.0001, of our issued and outstanding common stock, at a per share price of Two Dollars (US$2.00).
In connection to the
Promotion, we entered into a Consulting Agreement with pursuant to which the Digital Consultant agreed to supply certain digital
offerings and services to our customers, including without limitation, order fulfilment services with respect to orders from our
customers received through the Digital Consultant’s online platform and its related digital offerings. We issued Ten Million
(10,000,000) shares of the Corporation’s Common Stock, par value $0.0001 (the “Shares”), at a per share price
of US$2.00, as payment in full for the Services and the satisfaction of all of our obligations to the Digital Consultant with respect
to such services. These securities were registered on a Registration Statement on Form S-8 filed with the Securities and Exchange
Commission on March 19, 2019. The foregoing description of the Consulting Agreement is qualified in its entirety by reference to
the V-Consulting Agreement dated March 19, 2019, which is filed as Exhibit 10.11 to this Quarterly Report and incorporated herein
by reference.
Reorganization of
UB45, Ventrepreneur (SG), AIM System and Vmore Merchants
On September 17, 2018,
NVGI acquired from Eldee Tang, our Chief Executive Officer and Director, 100% of UB45 Private Limited, a private limited company
organized under the laws of Singapore (“UB45”), that has no existing business, assets or liabilities.
In January and May
2019, we completed a series of reorganizations pursuant to which we reorganized UB45, Ventrepreneur (SG) Private Limited, a private
limited company formed under the laws of Singapore (“VESG”), AIM System Private Limited (“AIM”) and VMore
Merchants Private Limited (“VM”) into NVGI. Prior to the reorganization:
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UB45 was a company with the operation office building as its main primary asset that was wholly owned by NVGI;
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VESG was a subsidiary of Venvici Private Limited (“VVPL”) with nominal assets and liabilities;
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AIM was formed for the purpose of providing Customer Relation Management system for V-More customers and had nominal assets and liabilities; and
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VM was formed for providing merchants onboarding services into our V-More ecosystem and had nominal assets and liabilities.
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Prior to the reorganization, AIM and VM
were owned by our non-affiliate shareholders, Chia Poh Wah Jason and Desmond Tan Ching Teck respectively.
In August and September
2019, to achieve proximity to New Zealand and Australia markets and to expand our IoT business, we further reorganized our company
as follows:
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Formed VMore Holding Limited New Zealand (“VMNZ”) to serve as a holding company for our New Zealand activities; and
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Acquired 51% of ToroV System Private Limited (Singapore) ("TVPL"), with the remaining balance held by Eldee Tang, our Chief Executive Officer and director.
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Our current corporate
structure is as below:
Entry into a Material
Definitive Agreement
On April 1, 2019, we
entered into a binding Memorandum of Understanding (the “Elusyf MOU”) with Eldee Wai Chong Tang, our Chief Executive
Officer and Director, whereby we agreed to reorganize Elusyf Global Private Limited, a Singapore corporation (“EGPL”),
into the Company in accordance with the terms of the Elusyf MOU. Upon the consummation of such reorganization, EGPL will become
a 51% owned subsidiary of the Company. EGPL is engaged in the business of marketing and distribution of health and beauty products,
such as Elusyf Mitos Activa and Cell Activa Phytomask, among other offerings, through its wide network of channels. Mr. Tang owns Fifty-Nine
Thousand Nine Hundred Eighty (59,980) ordinary shares of EGPL, representing 51% of the issued and outstanding securities of EGPL.
We are still in the process of due diligence of EG. The foregoing description of the Elusyf MOU is qualified in its entirety by
reference to such Elusyf MOU which is filed as Exhibit 10.12 to this Quarterly Report and are incorporated herein by reference.
On June 17, 2019, we
entered into a binding Memorandum of Understanding (the “Kootoro MOU”) with Kootoro Vietnam Inc., a limited liability
company organized under the laws of Vietnam (“KVI”), whereby the parties agreed to form a strategic partnership to
expand V-More’s footprint and ecosystem into Vietnam. Due to a delay in achieving the mutually agreeable milestones, we terminated
the Partnership in good faith on November 6, 2019, and determined to pursue our own expansion into our IoT business.
Departure of Officer
and Change in Office Bearers
On May 10, 2019, Noble
Vici Group, Inc. (the “Company”) accepted the resignation of Jon Yee Chuan Lim from his positions as Chief Operating
Officer and Secretary of the Company. Mr. Lim’s resignation became effective May 31, 2019. Mr. Lim’s departure was
for personal reasons and not due to any disagreement with the Company on any matter related to the Company’s operations,
policies or practices. In connection with Mr. Lim’s resignation from his positions, the Board appointed Sin Chi Yip, our
Chief Financial Officer, to serve as the interim Secretary and interim Chief Operating Officer.
On June 21, 2019, Noble
Vici Group, Inc. (the “Company”) approved the establishment of the office of the Chief Corporate Officer with oversight
responsibilities in the areas of legal and compliance, human resources and administration, and system integration, as a replacement
for the office of Chief Operating Officer. The Company created this office in connection with its efforts to re-align priorities
and increase effectiveness of the ongoing operations of the Company in light of the vacancy resulting from the resignation of Jon
Yee Chuan Lim from his positions as Chief Operating Officer and Secretary of the Company. In connection with the such efforts,
the Board appointed Sin Chi Yip to serve as the Chief Corporate Officer and Secretary effective immediately. Mr. Yip relinquished
his role as Chief Financial Officer and Interim Chief Operating Officer, Eldee Wai Chong Tang, our Chief Executive Officer, was
appointed to serve as interim Chief Financial Officer, effective immediately.
Our Operations and
Future Plans
Ecommerce Platform
We are focused on providing
users with innovative tools to live and interact in the modern mobile world through our ecosystem of IoT, Big Data, Blockchain
and E-commerce products and services. We integrate blockchain technology with our E-commerce platform to connect consumers and
merchants in a dynamic global marketplace via blockchain transactions. We onboard users, consumers and referrers through our Affiliate
Incentivized Marketing to Advertising Dollar Sharing (formerly known as Affiliate Incentivized Marketing (AIM)) model while merchants
are onboarded via our Merchant Incentivized Marketing (MIM) model. Some products and services offered in our ecosystem include
procurement of discounted goods and services, referral reward system, mobile games and digital marketing, financial markets apps
and a “Business Centre” within the same app. Our E-commerce platform not only offers users the ability to make online
purchases, but also the convenience of an O2O (Online to Offline) platform whereby consumers can transact at a discount online
while goods and services are distributed at a physical location. This drives traffic to the already weakened retail industry. The
Business Centre within our ecosystem is offered through a mobile app and allows users to create their own referral platform within
our ecosystem.
Advertising Dollar
Sharing (ADS)
We have rebranded
our Affiliate Incentivized Marketing to Advertising Dollar Sharing. Similar to the AIM model, the ADS business model also involves
driving online and physical traffic and increasing sales and marketing of targeted products and services. Its enhanced function
includes distribution of advertising dollars via ADS system to agencies, affiliate marketers, advertiser, users and referrals.
Sale and Distribution
of IoT Smart Devices / ToroV System Private Limited
In addition to the
E-commerce platform, we intend to focus on the sales and distribution of IoT smart devices and appliances. In September, 2019,
we began to sell our first IoT appliance, our smart coffee dispensing machines (the V-More Express (“VX”)). We hope
to begin distributing the machines on or about the second calendar quarter of 2020 and expect them to be progressively placed into
operation in Singapore on or around the third quarter of 2020. We expect to derive income from sales of our VX IoT hardware, the
core consumables in VX and the advertising services we provide to our customers in connection with the VX.
Features of the VX;
Revenue Sources:
Machine Capacity: The
VX offers 9 types of beverage, holds 60 litres of distilled water tank and is able to produce 400 cups of beverages. VX currently
offers barista-grade coffee in 9 different varieties in both hot and ice options. VX can be modified to allow for other offerings
to be sold. We expect to adopt regional pricing for core products sales, aligning to each specific market’s demand and supply.
AdTech:
In addition to sales of core products, we expect to rely on advertisements placed through the VX to drive revenue. We intend to
seek advertisers that are proximate to each specific VX to display their advertisements through our smart machine. We believe
that the use of local advertisements (Proximate Location Ads, or PLA) will drive relevant traffic to nearby physical merchants
as well as online merchants. Advertisements can be static or dynamic and may be interactive, allowing user interaction. We expect
to provide services to advertisers to assist them in creating and placing effective ads in the VX.
Smart Technology: The
VX features a 42 inch touch screen with Smart Digital Panel Advertising Technology (“SDPAT”) that allows users to interact
with advertisements via its interactive touch screen. Through the VX, we hope to capture users’ spending behaviour, advertisement
interactions and other quantitative data, while developing our Big Data analytics. Data from our machines can be integrated with
our ecommerce platform to facilitate the offering of discounts, rewards or other products and services across our e-commerce platform.
We believe that additional data will allow us to: (i) deliver and improve our offerings and services of our online VMore E-commerce
platform; (ii) improve synergy with offline merchants; (iii) improve the efficacy of our advertising services; and (iv) improve
sales of products offered by the VX.
VX Operations
Our
VX business operations are segregated into the following core functions to address the needs of our advertisers, VX IoT hardware
purchasers and consumers.
Sales and Marketing
Team. Our team will focus on the sale of the VX IoT hardware. Its targeted industries are primarily from real estate and property
owners such as commercial offices, retails and buildings, where the VX will be installed. In addition to the sale of VX, the team
will also create brand awareness of the VX and its core offerings in the VX.
Advertiser Onboarding
Team. Once an advertiser engages us online to have its advertisement placed in VX, a member of our advertiser onboarding team
will initiate the first of several communications with the merchant to introduce the advertiser to the technology involved in our
PLA ecosystem. Before the advertisement goes live on the VX, the team will work with the advertiser to build and create the advertisement.
We will provide tools such as an app to ensure the advertisement traffic monitoring and management are aligned. All advertisements
will be proximate locality based, ensuring relevance for targeted traffic to be driven.
Operation and Maintenance
Team(O&M). Once the VX are deployed, O&M team will monitor the performance of each VX deployed for its ingredients
supply, hardware status and data collection efficiency. Maintenance of the hardware for performance to prevent downtime and refilling
the ingredients into the VX will be undertaken by the O&M team.
Customer/User
Service Representatives. Our customer service representatives will be reachable via the app or email 24 hours a day, seven
days a week. The customer service team will also work with our technology team to improve the experience of VX owners, consumers
and advertisers on the mobile application based on their feedback.
Technology.
We employ technology to improve the experience we offer to VX owners, users and advertisers, increase the rate at which our
users use our V-More Pro platform and enhance the efficiency of our business operations. A component of our strategy is to
continue developing and refining our technology. With the future use of blockchain technology for recording and collecting
data, we believe the security of transactional records will be increased, protecting the accuracy of data held by VX owners,
advertisers and users. We believe that basing transactional data on a private blockchain network will facilitate a smoother
and faster transaction completion.
We
expect to use an algorithm to analyze data collected through our VX ecosystem. As the volume of transactions grow organically
through increased deployment of VXs, we expect to increase the amount of data that we can collect and analyze. We believe that
such data will allow us to continue to improve the experience of our VX owners, advertisers and consumers which, in turn, will
help us improve the way the ecosystem flows.
Cybersecurity. We
have integrated our technology with encryption algorithm “SHA3-256” & RSA Public/Private-Key, which is designed
to withstand timing attacks. It also accepts any 32-byte string as a valid public key and does not require validation. We believe
that the security of transaction records within our current system is adequate.
Advertising
Dollar Sharing (ADS). We believe our ADS model will allow users and advertisers to benefit from reduced costs to consumers
and higher traffic for advertisers. We expect users to benefit from discounts and advertising dollar rebates offered through our
PLA ecosystem from online and offline merchants, referrals, and internal marketing efforts, with advertisers benefitting from increased
retail sales volume offline or online.
Core
Product/User Scale. We hope to include other products from mass market merchants, such as food and other beverages, as part
of our product and service offerings. We believe that outreach to the mass market will be more effective to drive traffic for the
advertisers/merchants where simple to complex transactions can be achieved through adoption of an incentivized model.
Brand. A
substantial portion of our VX owners, advertisers and users are acquired through agencies, word-of-mouth & social network/platforms.
We believe that relying on the referral process, in turn, will improve the quality of our user base, advertisers and VX owners
as well as brand awareness. We expect that higher confidence in our brand will facilitate acquiring more users, advertisers and
VX owners for our ecosystem.
We
operate our IoT Smart Device business through ToroV System Private Limited, our 51% owned subsidiary. TVPL was incorporated in
Singapore on July 22, 2019, and operates with our subsidiary AIM System Private Limited (“ASPL”), a Singapore private
limited corporation incorporated on April 1, 2019, as described below:
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TVPL – engages in sales and marketing
of VX and barista grade coffee to owners and consumers, operates and maintains the VX including support, both technical and non-technical;
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ASPL – engages in VX software technology
integration; Proximate Location Ads (“PLA”) activities such as advertisement
sales, build, create and deploy its proprietary software technology (“PropST”); distribute advertising dollars via
an Advertising Dollar Sharing (“ADS”) system to agencies, affiliate marketers,
advertisers, users and referrals; provide technical and non-technical support in relation to PLA; and engages in brand management,
marketing, promotions and media engagement activities.
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Forty Nine percent (49%) of the issued
and outstanding securities of ToroV System Private Limited is owned by Eldee
Tang.
VX vendor
We expect to
rely on Barista Uno Private Limited (“BUPL”) to provide TVPL with VX IoT hardware and coffee sourcing,
distribution, and logistical upstream and downstream fulfilment services. Eldee Tang, our Chief Executive Officer and
Director owns 31% of BUPL.
Trends, Markets and Regions
Advertisement Spending
*It
is estimated that advertising spending worldwide will surpass 560 billion U.S. dollars in 2019, representing a growth
of roughly four percent compared with the previous year. North America is expected to remain the largest regional ad
market, closely followed by Asia Pacific. Western Europe ranks third, with ad spends amounting to approximately half of these
of North America. (*Source: https://www.statista.com/statistics/
236943/global-advertising-spending/) **Meanwhile, digital advertising
spending worldwide – which includes both desktop and laptop computers as well as mobile devices – stood at an
estimate at 194.6 billion U.S. dollars in 2016. This figure is forecast to constantly increase in the coming years, reaching
a total of 335 billion U.S. dollars by 2020. (**Source: https://www.statista.com/statistics/237974/online-advertising-spending-worldwide/)
In addition to the
advertising spending study, we examined various consumer models such as cashback models for direct compensation to affiliate marketing
(e.g., https://www.shopback.sg), discounted coupons sales model (e.g. https://www.groupon.com)
and incentivized reward model (e.g. https://www.dollarshaveclub.com).
We believe that advertising
spending, including digital advertising spending will continue to increase in the near future. We intend to innovate the way advertisement
is used in the marketplace through digital advertisements and effective channeling relevant traffic.
Market and Region:
Bank and Unbanked in Southeast Asia
*With a population
of 570 million and a booming GDP expected to reach $4.7 trillion by 2025, the six largest countries in Southeast Asia represent
one of the world’s largest and fastest-growing regions. Within the region, we believe that the financial services industry
holds tremendous if fundamental underlying challenges are addressed. For example, cash is still the primary means of transaction.
More than 70% of the adult population is either “underbanked” or “unbanked,” with limited access to financial
services. (*Source: https://www.bain.com/insights/fufilling-its-promise/)
Currently, only
50% of adults in ASEAN have an account at a financial institution. ASEAN is discussing a specific financial inclusion target for
2020. There is a consensus to set the target at around 70% for 2020. Rates of financial “exclusion” are higher among
the poor, those living in rural areas, and those who are less-educated. Interestingly, neither gender nor age are relevant factors
that explain financial exclusion in ASEAN countries. In ASEAN countries, only 29% of workers reported receiving their monthly salaries
through an account from a financial institution, while the remaining 71% is paid in cash by their employers. (Source: http://blogs.worldbank.org/eastasiapacific/how-to-scale-up-financial-inclusion-in-asean-countries).
We believe the unbanked
population in the ASEAN region represents an untapped opportunity, as individuals without accounts at financial institutions are
limited in their ability to shop or engage in other financial transactions online. We intend to focus on the ASEAN region, especially
the unbanked market which is generally not the main focus of many large corporations. We believe that our model of converting VX
spending into reward incentives and rebates that are redeemable on our platform allows the unbanked market to access our online
platform for new and additional spending experiences without the requirement of having an account at a financial institution.
INTELLECTUAL PROPERTY AND PATENTS
We
expect to rely on patents, trade secrets, copyrights, know-how, trademarks, license agreements and contractual provisions to establish
our intellectual property rights and protect our “VMore Express” brand and services. These legal means, however, afford
only limited protection and may not adequately protect our rights. Litigation may be necessary in the future to enforce our intellectual
property rights, protect our trade secrets or determine the validity and scope of the proprietary rights of others. Litigation
could result in substantial costs and diversion of resources and management attention. Any unauthorized disclosure or use of our
intellectual property could make it more expensive to do business and harm our operating results.
The laws
of Singapore and our target countries may not protect our brand and services and intellectual property to the same extent as U.S.
laws, if at all. We may be unable to fully protect our intellectual property rights in these countries. Further, companies in the
internet, social media technology and other industries may own large numbers of patents, copyrights and trademarks and may frequently
request license agreements, threaten litigation or file suit against us based on allegations of infringement or other violations
of intellectual property rights.
We intend to seek the
widest possible protection for significant product and process developments in our major markets through a combination of trade
secrets, trademarks, copyrights and patents, if applicable. We anticipate that the form of protection will vary depending upon
the level of protection afforded by the particular jurisdiction. Initially, we expect that our revenue will be derived principally
from our operations in Singapore and other parts of Southeast Asia where intellectual property protection may be more limited and
difficult to enforce. In such instances, we may seek protection of our intellectual property through measures taken to increase
the confidentiality of our findings.
We intend to register
trademarks as a means of protecting the brand names of TVPL, its products, and systems. We intend protect our trademarks against
infringement and also seek to register design protection where appropriate.
We rely on trade secrets
and unpatentable know-how that we seek to protect, in part, by confidentiality agreements. We expect that, where applicable, we
will require our employees to execute confidentiality agreements upon the commencement of employment with us. We expect these agreements
to provide that all confidential information developed or made known to the individual during the course of the individual's relationship
with us is to be kept confidential and not disclosed to third parties except in specific limited circumstances. The agreements
will also provide that all inventions conceived by the individual while rendering services to us shall be assigned to us as the
exclusive property of our company. There can be no assurance, however, that all persons who we desire to sign such agreements will
sign, or if they do, that these agreements will not be breached, that we would have adequate remedies for any breach, or that our
trade secrets or unpatentable know-how will not otherwise become known or be independently developed by competitors.
COMPETITION
We operate in a highly
competitive and fragmented industry that is sensitive to price and service. We compete with leading beverage companies such as
Luckin Coffee (China), Toastbox (Singapore) which may offer substantially the same or similar product offerings as us. We also
compete with businesses that focus on particular merchant categories or markets as well as traditional cash payments and other
popular online shopping websites and apps, and other traditional media companies that provide discounts on products and services.
We believe the principal competitive factors in our market include the following:
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breadth of consumer base and advertisers/merchants
featured;
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local presence and understanding of local
business trends;
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ability to deliver a high volume of relevant
deals to consumers;
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ability to produce high purchase rates
for deals among users;
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ability to generate positive return on
investment for advertisers/merchants; and
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strength and recognition of our brand.
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Although we believe
we compete favorably on the factors described above, we anticipate that larger, more established companies may directly compete
with us as we continue to demonstrate the viability of a local online-to-offline & offline-to-online solution provider. Many
of our current and potential competitors have longer operating histories, significantly greater financial, technical, marketing
and other resources, larger product and services offerings, larger customer base and greater brand recognition. These factors may
allow our competitors to benefit from their existing customer or subscriber base with lower acquisition costs or to respond more
quickly than we can to new or emerging technologies and changes in customer requirements. These competitors may engage in more
extensive research and development efforts, undertake more far-reaching marketing campaigns and adopt more aggressive pricing policies,
which may allow them to build a larger subscriber base or to monetize that subscriber base more effectively than us. Our competitors
may develop products or services that are similar to our products and services or that achieve greater market acceptance than our
products and services. In addition, although we do not believe that merchant payment terms are a principal competitive factor in
our market, they may become such a factor and we may be unable to compete fairly on such terms.
We are pursuing a plan
of expansion and hope to achieve revenue growth through mass adoption by users and merchants of our platform/ecosystem. We seek
to increase our user and merchant base through user incentive programs and brand awareness marketing programs, among other things.
We expect to focus on users and merchants located in China and the Asia Pacific region in the foreseeable future. Similarly, we
intend to seek corporate growth by listing our securities on a national exchange such as the Nasdaq Capital Markets in the future.
Our principal office
is located at 1 Raffles Place, #33-02, One Raffles Place Tower One, Singapore 048616. This service office is subjected to one year
service agreement pursuant to which we are permitted to use the service office space for a period of one year at a monthly rate
of S$24,000, or approximately US$17,778. The service office agreement expired on May 31, 2019. We are in discussions with the service
provider regarding the extension on the reduced size of the use by half for the service office with effect from February 1, 2020
for a period of thirteen months. We are in the process of memorializing the agreement in due course. The foregoing description
of the service office usage is qualified in its entirety by reference to the Service Agreement dated May 2, 2018, which is filed
as Exhibit 10.14 to this Quarterly Report and incorporated herein by reference.
On October 1, 2018,
we purchased a building subject to a sixty year leasehold located at 45 Ubi Crescent, Singapore 408590 to serve as our primary
operational center. The four storey building is approximately 13,000 square feet with a remaining lease term of thirty-eight years.
The purchase price of S$4,480,000 (approximately US$3,295,819) was financed by a loan with Ethoz Capital Limited in the principal
amount of S$3,136,000 (approximately US$2,307,073) at an annual rate of 3.75%, payable over 120 months commencing October 1, 2018.
The loan is personally guaranteed by our Chief Executive Officer and Director, Eldee Tang. The foregoing description of the loan
is qualified in its entirety by reference to the Secured Term Loan Facility dated September 14, 2018, which is filed as Exhibit
10.15 to this Quarterly Report and incorporated herein by reference.
On January 19, 2019,
we opened a branch office in Taiwan to service merchants and customers of our online platform, V-more, located within the Greater
China Region. Our Taiwan branch office also oversees the operations of a V-More branded office located in China and is operated
by one of our sales affiliates. The Taiwan branch office is currently operated through our subsidiary VESG. The Taiwan branch office
is a party to a lease agreement, a summary of which is as follows:
Name of Branch
|
Ventrepreneur (SG) Private Limited, Taiwan Branch
|
Office Address
|
282 Zheng Bei Road 2, Level 5 Unit 3, Xitun District, Taichung, Taiwan
|
Tenancy Period
|
December 1, 2018 to November 30, 2020
|
Premises Size
|
Approximately 3,000 square feet
|
Yearly Lease Amount
|
US$37,473 for Taiwan branch
|
In addition to our
Taiwan office and China affiliate office, certain of our sales affiliates also operate additional V-More branded affiliate offices
in the following regions: Indonesia, Thailand and Malaysia. We hope to memorialize the terms of operations of these affiliate offices
in the near future.
Intellectual Property
We continue to own
the rights, title and interests in Patent for a receptacle catheter with integral anchoring means, which Patent is associated with
our former business. The Patent was issued on September 1, 2004 and will expire on September 6, 2022. We do not expect to exploit
these Patents in the near future.
Results of Operations
Comparison of the three months ended
December 31, 2019 and December 31, 2018
The following table
sets forth certain operational data for the three months ended December 31, 2019, as compared to the three months ended December
31, 2018:
|
|
Three months ended December 31,
|
|
|
|
2019
|
|
|
2018
|
|
Net revenue
|
|
$
|
2,063,937
|
|
|
$
|
1,207,151
|
|
Cost of revenue
|
|
|
(2,250,717
|
)
|
|
|
(1,396,126
|
)
|
Gross loss
|
|
|
(186,780
|
)
|
|
|
(188,975
|
)
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Sales and marketing expense
|
|
|
(83,651
|
)
|
|
|
(200,505
|
)
|
General and operating expenses
|
|
|
(1,316,808
|
)
|
|
|
(41,998,442
|
)
|
Total operating expenses
|
|
|
(1,400,459
|
)
|
|
|
(42,198,947
|
)
|
Loss from operations
|
|
|
(1,587,239
|
)
|
|
|
(42,387,922
|
)
|
Loss before income taxes
|
|
|
(1,582,782
|
)
|
|
|
(42,371,234
|
)
|
NET LOSS
|
|
$
|
(1,553,003
|
)
|
|
$
|
(42,545,344
|
)
|
Net Revenue.
We generated net revenue of $2,063,937 and $1,207,151 for the three months ended December 31, 2019, and 2018, respectively. For
the three months ended December 31, 2019, 15% of our net revenue was derived from income from V-More, our ecommerce platform, while
78% of our net revenue was contributed by our IoT business, mainly from smart coffee dispensing machines sales. The balance of
net revenues consisted of mainly of administrative charges income and service income. For the three months ended December 31, 2018,
91% of our net revenue were attributable to sales of our Cerfrion and Cordyceps. The balance of net revenues consisted of mainly
of administrative charges income and service income.
On a going forward
basis, we expect to generate revenue from our IoT products such as our smart coffee dispensing machines, e-commerce platform as
well as any products that we distribute for our merchants, as more merchants are progressively on boarded.
For the three months
ended December 31, 2019 and 2018, the following geographic regions accounted for 10% or more of our total net revenues:
Country
|
|
December 31, 2019
|
|
|
December 31, 2018
|
|
Singapore
|
|
|
94%
|
|
|
|
1%
|
|
Malaysia
|
|
|
1%
|
|
|
|
–
|
|
Philippines
|
|
|
–
|
|
|
|
–
|
|
Thailand
|
|
|
–
|
|
|
|
–
|
|
Indonesia
|
|
|
1%
|
|
|
|
–
|
|
Greater China Region
|
|
|
–
|
|
|
|
91%
|
|
Rest of the World
|
|
|
4%
|
|
|
|
8%
|
|
Total
|
|
|
100%
|
|
|
|
100%
|
|
For the three months
ended December 31, 2019 and 2018, no customers accounted for 10% or more of our total net revenues.
Key Performance
Indicators: Gross Cash Receipts, Supplier Product & Logistics Allowance and Commission Payout
In addition to Net
Revenue, we focus on several non-GAAP key performance indicators to assist us in assessing the strength of product sales and our
supply chain across different geographical regions: Gross Cash Receipts, Supplier Product & Logistics Allowance, and
Commission Payout.
“Gross Cash Receipts”
means proceeds actually received from products sold. This is a non-GAAP indicator that does not correlate to gross revenue and
may not be comparable to similarly-titled measures used by other companies.
“Undelivered
items” refers to products sold for which we have received payment but have not yet been delivered to the purchaser. This
is a non-GAAP indicator on which we rely to assess the strength and performance of our supply chain, product delivery obligations,
product trends and the like.
“Supplier
Product & Logistics Allowances” means the fees and costs that we pay to the applicable product supplier to
manufacture, package and ship our products to our end customer. This is a non-GAAP indicator on which we rely to determine
the cost of manufacturing, packaging and delivering our products.
“Commission Payout”
refers to the commission payments that we make to resellers of our products.
The criteria we use
to determine how and when we recognize the foregoing key performance indicators are not identical to our revenue recognition policies
under U.S. GAAP. By way of example, unlike net sales, which are generally recognized when the product is delivered and both the
title and risk and rewards pass to the buyer, as discussed in greater detail in Note 3, Summary of Significant Accounting
Policies, to the Consolidated Financial Statements, we recognize Gross Cash Receipts when we receive funds from the buyer,
which is generally prior to the product being delivered to the buyer.
The following describes
the relationship between our key performance indicators and US GAAP reporting:
|
|
Three Months Ended December 31,
|
|
|
|
2019
|
|
|
2018
|
|
Gross Cash Receipts
|
|
$
|
2,035,088
|
|
|
$
|
8,808,023
|
|
Less: Undelivered items
|
|
$
|
(46,900
|
)
|
|
$
|
(1,840,007
|
)
|
Less: Supplier’s product & logistics allowances
|
|
$
|
(25,081
|
)
|
|
$
|
(2,601,521
|
)
|
Less: Commission payout
|
|
$
|
(32,270
|
)
|
|
$
|
(3,302,601
|
)
|
Net Cash Receipts
|
|
$
|
1,930,837
|
|
|
$
|
1,063,894
|
|
|
|
|
|
|
|
|
|
|
Other Sales
|
|
$
|
133,100
|
|
|
$
|
143,257
|
|
|
|
|
|
|
|
|
|
|
Net Revenue
|
|
$
|
2,063,937
|
|
|
$
|
1,207,151
|
|
For the three months
ended December 31, 2019, our Gross Cash Receipts net of sales returns was $2,035,088, representing a decrease from $8,808,023 for
the same period ended 2018. This was attributed to change in product mix from sale of Cordyceps in China in the same period
of 2018 to increased sales from our IoT business which currently is mainly comprised of smart coffee dispensing machines sales
in new markets in Singapore, Malaysia and Indonesia. For the three months ended December 31, 2019, VMore and Digital offering sales
contributed $418,384 or approximately 21% of our Gross Cash Receipts while sales of smart coffee machines contributed the balance
of the Gross Cash Receipts. Moving forward, in addition to our digital offerings and e-commerce business, we intend to increase
our focus on the distribution IoT related products such as smart coffee dispensing machines.
Our undelivered items
for the three months ended December 31, 2019, was $46,900 and consisted primarily of digital products paid for but not yet delivered.
Our undelivered items for the three months ended December 31, 2018, was $1,840,007 and consisted primarily of Cordyceps and Cerfrion.
We expect undelivered items to be fulfilled within three months generally.
Our Supplier Product
& Logistics Allowances for the three months ended December 31, 2019 and 2018 was $25,081 and $2,601,521 respectively. The decrease
in Supplier Product & Logistics Allowance was attributable to the major shift from the physical sale of Cordyceps in China
within the same period in 2018 to the online sale of merchant’s offerings from our V-More platform.
Commission Payout for
the three months ended December 31, 2019 was $32,270 as compared to $3,302,601 for the three months ended December 31, 2018. The
decrease in Commission Payout was due to a change in product mix.
For the three months
ended December 31, 2019, other sales of $133,100 consisted mainly of courses and V-More administrative fees income as compared
to $143,257 for the same period of 2018 where other sales consisted of primarily of service fee income, subscription proceeds and
V-More income.
Major Vendors.
|
|
Three Months Ended December 31, 2019
|
|
Vendors
|
|
Purchase
|
|
|
Accounts Payable
|
|
Barista Uno Private Limited
|
|
$
|
544,751
|
|
|
$
|
355,913
|
|
For the three months
ended December 31, 2019, Barista Uno Private Limited accounted for 24% of the Company’s purchases amounting to $544,751 with
$355,913 of accounts payable. Eldee Tang, our Chief Executive Officer and Director, owns 31% of Barista Uno Private Limited.
For the three months
ended December 31, 2018, no vendors account for more than 10% of the Company’s purchase.
Gross Loss.
We achieved a gross loss of $186,780 and $188,975 for the three months ended December 31, 2019, and 2018, respectively. The attributing factor for the relatively flat change
in gross profit year on year was due to the initial change in product mix. We expect to increase focus on the new IoT product line.
Operating Expenses.
|
|
Three months ended December 31,
|
|
|
|
2019
|
|
|
2018
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Sales and marketing expense
|
|
$
|
83,651
|
|
|
$
|
200,505
|
|
General and operating expenses
|
|
$
|
1,316,808
|
|
|
$
|
41,998,442
|
|
Total operating expenses
|
|
$
|
1,400,459
|
|
|
$
|
42,198,947
|
|
Less: Stock based compensation
|
|
$
|
200,000
|
|
|
$
|
41,081,998
|
|
Total operating expenses (Excluding stock based compensation)
|
|
$
|
1,200,459
|
|
|
$
|
1,116,949
|
|
During the three months
ended December 31, 2019, and 2018, we incurred operating expenses of $1,400,459 and $42,198,947, respectively. Excluding the stock
based compensation in the same period of 2018, the increase in operating expenses is primarily attributable to an increase in our
manpower and other resources to support our change in business focus and re-alignment of our strategy.
Net Loss.
|
|
Three months ended December 31,
|
|
|
|
2019
|
|
|
2018
|
|
NET LOSS (INCLUDING STOCK BASED COMPENSATION)
|
|
$
|
(1,553,003
|
)
|
|
$
|
(42,545,344
|
)
|
Less: Stock Based Compensation
|
|
$
|
(200,000
|
)
|
|
$
|
(41,081,998
|
)
|
NET LOSS (EXCLUDING STOCK BASED COMPENSATION)
|
|
$
|
(1,353,003
|
)
|
|
$
|
(1,463,346
|
)
|
We recorded a
net loss of $1,553,003 and $42,545,344 for the three months ended December 31, 2019, and 2018, respectively. Excluding the
stock based compensation for the three months ended December 2019 and 2018, the decrease in net loss was attributed to change in
product mix from sale of Cordyceps in China for the three months ended December 31, 2018, to smart coffee dispensing machine
sales and V-More’s increased presence in new markets in Malaysia, Philippines and Thailand for the three months ended
December 31, 2019, coupled with increase in resources due to the shift in focus. We hope to make progressive changes to our
business model in the near future to further improve our net income.
Comparison of the nine months ended
December 31, 2019 and December 31, 2018
The following table
sets forth certain operational data for the nine months ended December 31, 2019, as compared to the nine months ended December
31, 2018:
|
|
Nine months ended December 31,
|
|
|
|
2019
|
|
|
2018
|
|
Net revenue
|
|
$
|
14,674,821
|
|
|
$
|
2,170,648
|
|
Cost of revenue
|
|
|
(8,311,170
|
)
|
|
|
(1,813,928
|
)
|
Gross profit
|
|
|
6,363,651
|
|
|
|
356,720
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Sales and marketing expense
|
|
|
(421,972
|
)
|
|
|
(442,651
|
)
|
General and operating expenses
|
|
|
(14,509,066
|
)
|
|
|
(43,115,485
|
)
|
Total operating expenses
|
|
|
(14,931,038
|
)
|
|
|
(43,558,136
|
)
|
Loss from operations
|
|
|
(8,567,387
|
)
|
|
|
(43,201,416
|
)
|
Loss before income taxes
|
|
|
(8,548,576
|
)
|
|
|
(43,172,994
|
)
|
NET LOSS
|
|
$
|
(8,530,021
|
)
|
|
$
|
(43,347,104
|
)
|
Net Revenue.
We generated net revenue of $14,674,821 and $2,170,648 for the nine months ended December 31, 2019 and 2018, respectively. For
the nine months ended December 31, 2019, 77% of our net revenues were derived from income from V-More, our ecommerce platform.
Sales from our IoT’s coffee machines contributed 20% to our revenue for the nine months ended December 31, 2019. The balance
of net revenues consisted of mainly of administrative charges income, service income. For the nine months ended December 31, 2018,
83% of our net revenues were attributable to sales of our Cerfrion and Cordyceps. The balance of net revenues consisted of mainly
of administrative charges, service income and V-More, our e-commerce platform.
On a going forward
basis, we expect to generate revenue from our IoT products such as smart coffee dispensing machines and e-commerce platform as
well as any products that we distribute for our merchants, as more merchants are progressively on boarded progressively.
For the nine months
ended December 31, 2019 and 2018, the following geographic regions accounted for 10% or more of our total net revenues:
Country
|
|
December 31, 2019
|
|
|
December 31, 2018
|
|
Singapore
|
|
|
50%
|
|
|
|
12%
|
|
Malaysia
|
|
|
25%
|
|
|
|
–
|
|
Philippines
|
|
|
11%
|
|
|
|
–
|
|
Thailand
|
|
|
5%
|
|
|
|
–
|
|
Indonesia
|
|
|
3%
|
|
|
|
–
|
|
Greater China Region
|
|
|
2%
|
|
|
|
83%
|
|
Rest of the World
|
|
|
4%
|
|
|
|
5%
|
|
Total
|
|
|
100%
|
|
|
|
100%
|
|
For the nine months
ended December 31, 2019 and 2018, no customers accounted for 10% or more of our total net revenues.
Key Performance
Indicators: Gross Cash Receipts, Supplier Product & Logistics Allowance and Commission Payout
The following describes
the relationship between our key performance indicators and US GAAP reporting:
|
|
Nine months Ended December 31,
|
|
|
|
2019
|
|
|
2018
|
|
Gross Cash Receipts
|
|
$
|
17,666,905
|
|
|
$
|
20,460,105
|
|
Less: Undelivered items
|
|
$
|
(455,938
|
)
|
|
$
|
(5,166,054
|
)
|
Less: Supplier’s product & logistics allowances
|
|
$
|
(325,109
|
)
|
|
$
|
(5,728,809
|
)
|
Less: Commission payout
|
|
$
|
(2,753,172
|
)
|
|
$
|
(7,798,896
|
)
|
Net Cash Receipts
|
|
$
|
14,132,686
|
|
|
$
|
1,766,346
|
|
|
|
|
|
|
|
|
|
|
Other Sales
|
|
$
|
542,135
|
|
|
$
|
404,302
|
|
|
|
|
|
|
|
|
|
|
Net Revenue
|
|
$
|
14,674,821
|
|
|
$
|
2,170,648
|
|
For the nine months
ended December 31, 2019, our Gross Cash Receipts net of sales returns was $17,666,905, representing a decrease from $20,460,105
for the same period ended 2018. The decrease was attributable to changes in product mix from sale of Cordyceps in China in
the nine months ended December 31, 2018, to sales of our VX and V-more’s increased presence in new markets in Malaysiam Phillipines
and Thailand. Revenue from IoT’s coffee dispensing machines and V-more e-commere platform comprised of approximately 16%
and 84%, respectively, of the overall Gross Cash Receipts.
Our undelivered items
for the nine months ended December 31, 2019, was $455,938 and consisted primarily of digital products paid for but not yet delivered.
Our undelivered items for the nine months ended December 31, 2018, was $5,166,054 and consisted primarily of Cordyceps and Cerfrion.
We expect undelivered items to be fulfilled within three months generally.
Our Supplier Product
& Logistics Allowances for the nine months ended December 31, 2019 was $325,109, representing a substantial decrease from $5,728,809
for the same period in 2018. The decrease in Supplier Product & Logistics Allowance was attributable to the major shift
from the physical sale of Cordyceps in China within the nine months ended December 31, 2018 to the online sale of merchant’s
offerings using our V-More platform during the nine month ended December 31, 2019.
Commission Payout for
the nine months ended December 31, 2019 was $2,753,172 as compared to $7,798,896 for the nine months ended December 31, 2018. The
decrease in Commission Payout was due to a change in product mix.
For the nine months
ended December 31, 2019, other sales of $542,135 consisted mainly of V-More administrative fees income as compared to $404,302
for the same period of 2018 where other sales consisted mainly of service fee income, subscription proceeds and V-More income.
Major Vendors.
|
|
Nine months ended December 31, 2019
|
|
Vendors
|
|
Purchase
|
|
|
Accounts Payable
|
|
Barista Uno Private Limited
|
|
$
|
1,580,300
|
|
|
$
|
355,913
|
|
For the nine months
ended December 31, 2019, Barista Uno Private Limited accounted for 19% of the Company’s purchase amounting to $1,580,300
with $355,913 of accounts payable. Eldee Tang, our Chief Executive Officer and Director, owns 31% of Barista Uno Private Limited.
For the nine months
ended December 31, 2018, no vendors account for more than 10% of the Company’s purchase.
Gross
Profit. We achieved a gross profit of $6,363,651 and $356,720 for the nine months ended December 31, 2019, and
2018, respectively. The increase in gross profit is primarily attributable to the major shift in product and offering mix.
During the nine months ended December 31, 2019, 76% of our gross profit was derived from income from V-More, our ecommerce
platform and 19% of our gross profit was contributed by our IoT business, mainly from smart coffee dispensing machine sales
while the balance of gross profit consisted of mainly of administrative charges income and service income. For the nine months
ended December 31, 2018, 13% of our gross profit was derived from China sales of Cordyceps and Cerfrion while the balance of
gross profit consisted of mainly of administrative charges income and service income.
Operating Expenses.
|
|
Nine months ended December 31,
|
|
|
|
2019
|
|
|
2018
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Sales and marketing expense
|
|
$
|
421,972
|
|
|
$
|
442,651
|
|
General and operating expenses
|
|
$
|
14,509,066
|
|
|
$
|
43,115,485
|
|
Total operating expenses
|
|
$
|
14,931,038
|
|
|
$
|
43,558,136
|
|
Less: Stock based compensation
|
|
$
|
11,136,760
|
|
|
$
|
41,081,998
|
|
Total operating expenses (excluding stock based compensation)
|
|
$
|
3,794,278
|
|
|
$
|
2,476,138
|
|
During the nine months
ended December 31, 2019, and 2018, we incurred operating expenses of $14,931,038 and $43,558,136 respectively. Our operating expenses
for the nine months ended December 31, 2019 and 2018 included a one-time charge of $11,136,760 and $41,081,998 respectively, arising
from the issuance of shares of our common stock as compensation to our sales affiliates, merchant acquisition consultants and digital
offerings consultant. Excluding the one-time stock based compensation charge, our operating expenses would be $3,794,278 for the
nine months ended December 31, 2019, as compared to $2,476,138 for the same period ended December 31, 2018. Excluding the one-time
stock based compensation charge, the increase in operating expenses is primarily attributable to an increase in our manpower and
other resources to support our shift in business focus and re-alignment of our strategy.
Net Income (Loss).
|
|
Nine months ended December 31,
|
|
|
|
2019
|
|
|
2018
|
|
NET LOSS (INCLUDING STOCK BASED COMPENSATION)
|
|
$
|
(8,530,021
|
)
|
|
$
|
(43,347,104
|
)
|
Less: Stock Based Compensation
|
|
$
|
(11,136,760
|
)
|
|
$
|
(41,081,998
|
)
|
NET INCOME/(LOSS) (EXCLUDING STOCK BASED COMPENSATION)
|
|
$
|
2,606,739
|
|
|
$
|
(2,265,106
|
)
|
We recorded a net loss
of $8,530,021 and $43,347,104 for the nine months ended December 31, 2019, and 2018, respectively. Net loss consisted primarily
of one-time stock based compensation charge of $11,136,760 and $41,081,998 for the nine months ended December 31, 2019 and 2018,
respectively. Excluding the effect of such one-time charge, during the nine months ended December 31, 2019, we realized a net income
of $2,606,739 as compared to a net loss of $2,265,106 for the same period ended December 31, 2018. The increase in net income (excluding
the effect of our stock based compensation charge) was attributed to our change in product mix from sale of Cordyceps in China
in the same period of 2018 to increased revenue from IoT’s coffee machines sales and V-More’s increased presence in
new markets in Malaysia, Philippines and Thailand for the nine months ended December 31, 2019. We hope to make progressive changes
to our business model over the next few months to further improve our net income.
Stock Based
Compensation. During the nine months ended December 31, 2019 and 2018, we incurred a one-time charge of $11,136,760
arising from the issuance of 5,568,380 shares of our common stock, at a market value of $2 per share. The issuance was made
to sales associates for prior sales and marketing services and legal counsel for legal services provided to us and our
subsidiaries, affiliates and merchant acquisition consultants and digital offerings consultant. Stock based compensation of
$41,081,998 was incurred during the nine months ended December 31, 2018 for issuance of shares at $2.
Net
Income/Loss (including stock based compensation). We recorded a net loss of $8,530,021 and a net loss of $43,347,104
for the nine months ended December 31, 2019, and 2018, respectively. The decrease in the net loss is primarily due to a
change in one-time, non-cash stock based compensation of $11,136,760 and $41,081,998 as of December 31, 2019 and 2018
respectively. The issuances were to sales associates for prior sales and marketing services and legal counsel for legal
services provided to us and our subsidiaries, affiliates and merchant acquisition consultants and digital offerings
consultant.
Liquidity and Capital Resources
As of December 31,
2019, we had current assets of $7,235,282 and current liabilities of $6,872,280. Our current assets consisted of $682,382 of cash
and cash equivalents, $1,208,689 of accounts receivable, purchase deposits of $4,834,731, amount due from a third party of $221,373,
$223,137 of deposits, prepayment and other receivables, tax recoverable of $48,330 and inventories
of $16,640. Our current liabilities consisted of $1,806,747 of accrued liabilities and other payables, $375,929 of accounts payable,
$1,210,431 of commission liabilities, $2,928,582 of deferred revenue, $17,784 of amount due to Eldee Tang, our Chief Executive
Officer and Director, $252,490 of finance leases and $280,317 of amount due to a related party for which it represents a unsecured
non-interest bearing advance from our shareholder Ms. Kao Wei-Chen.
As of March 31, 2019,
we had current assets of $10,037,370 and current liabilities of $12,264,637. Our current assets consisted of $691,331 of cash and
cash equivalents, $6,145,460 of accounts receivable, purchase deposits of $2,600,732, an amount due from a third party of $221,327,
$361,884 of deposits, prepayment and other receivables, and inventories of $16,636. Our current liabilities consisted of $1,617,855
of commission liabilities, $8,979,352 of deferred revenue, $964,001 of accrued liabilities and other payables, $91,483 of amount
due to Eldee Tang, our Chief Executive Officer and Director, $280,317 of amount due to a related party consisting of unsecured
non-interest bearing advances from our shareholder Ms. Kao Wei-Chen, $84,672 of tax payable and $246,957 of finance lease.
We had accumulated
losses of $133,609,887 and $125,141,278 as of December 31, 2019 and March 31, 2019, respectively. The increase in accumulated losses
is mainly due change in one-time, non-cash stock based compensation from $41,081,998 as at March 31, 2019 to $11,136,760 as at
December 31, 2019 to sales associates for prior sales and marketing services provided to us and our subsidiaries and affiliates,
merchant acquisition consultants and digital offerings consultant.
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|
Nine months ended December 31,
|
|
|
|
2019
|
|
|
2018
|
|
Net cash generated from operating activities
|
|
$
|
446,616
|
|
|
$
|
9,395
|
|
Net cash used in investing activities
|
|
$
|
(47,065
|
)
|
|
$
|
(3,633,431
|
)
|
Net cash (used in) generated from financing activities
|
|
$
|
(234,617
|
)
|
|
$
|
2,400,163
|
|
Net Cash Generated
from Operating Activities
Net cash
generated from operating activities was $446,616 for the nine months ended December 31, 2019, and consisted primarily of a
net loss of $8,530,021, adjusted for amortization of intangible assets of $206,390, depreciation of property, plant and
equipment of $147,031, a gain on disposal of property, plant and equipment of $3,604 and a one-time non-cash stock based
compensation of $11,136,760, a decrease in account receivable of $4,895,929, an increase in account payables of $372,722, an
increase in accrued liabilities and other payables of $835,358, an decrease in deposits, prepayments and other receivable of
$137,637, a decrease in tax payable of $131,886, decrease in commission liabilities of $404,283 by an increase in purchase
deposits of $2,214,407, and a decrease in deferred revenue of $6,001,010.
Net cash generated
from operating activities was $9,395 for the nine months ended December 31, 2018, and consisted primarily of a net loss of $43,347,104,
adjusted for amortization of intangible assets of $44,279, depreciation of property, plant and equipment of $183,289 and a one-time
non-cash stock based compensation of $41,081,998, an increase in accrued liabilities and other payables of $856,593, an increase
in commission liabilities of $1,489,999, an increase in deferred revenue of $4,038,460, offset by an increase in deposits, prepayments
and other receivable of $3,385,254, an increase in amount due from related companies of $316,409, a decrease in account payables
of $382,356 and a decrease in tax payable of $254,100.
Net Cash Used In
Investing Activities
Net cash used in investing
activities was $47,065 for the nine months ended December 31, 2019, and consisted primarily of proceeds from disposal of property,
plant and equipment of $52,676 and purchase of property, plant and equipment of $99,741. Net cash used in investing activities
was $3,633,431 for the nine months ended December 31, 2018, and consisted primarily of purchases of property, plant and equipment
of $3,487,021, intangible assets of $183,986 and cash received from acquisition of subsidiaries of $37,576.
Net Cash (Used in)
Generated From Financing Activities
Net cash used in financing
activities for the nine months ended December 31, 2019, was $234,617 and consisted primarily of repayment to director $73,089 and
repayment of finance lease of $161,528. Net cash generated from financing activities for the nine months ended December 31, 2018,
was $2,400,163 and consisted primarily of proceeds from the issuance of our securities of $160,362, proceeds from Eldee Tang, our
Chief Executive Officer and director, of $21,292, proceed from finance lease $2,349,421, offset by repayment of finance lease of
$130,912.
We have never paid
dividends on our Common Stock. Our present policy is to apply cash to investments in product development, acquisitions or expansion;
consequently, we do not expect to pay dividends on Common Stock in the foreseeable future.
The success of our
growth strategy is dependent upon the availability of additional capital resources on terms satisfactory to management as we are
not generating revenues from our business operations. Our sources of capital in the past have included the sale of equity securities,
which include common stock sold in private transactions, capital leases and stockholder advances. There can be no assurance that
we can raise such additional capital resources on satisfactory terms. We believe that our current cash and other sources of liquidity
discussed above are adequate to support operations for at least the next 12 months. We anticipate continuing to rely on equity
sales of our common shares and shareholder loans in order to continue to fund our business operations. Issuances of additional
shares will result in dilution to our existing shareholders. There is no assurance that we will achieve any additional sales of
our equity securities or arrange for debt or other financing to fund our plan of operations.
Off-Balance Sheet Arrangements
We have no outstanding
off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities
involving non-exchange traded contracts.
Critical Accounting Policies and Estimates
The preparation of
financial statements in conformity with accounting principles generally accepted in the United States requires our management to
make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures
of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation
of our financial statements. These accounting policies are important for an understanding of our financial condition and results
of operations. Critical accounting policies are those that are most important to the presentation of our financial condition and
results of operations and require management's subjective or complex judgment, often as a result of the need to make estimates
about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are
particularly sensitive because of their significance to financial statements and because of the possibility that future events
affecting the estimate may differ significantly from management's current judgments. We believe the following accounting policies
are critical in the preparation of our financial statements.
These accompanying condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).
In preparing these condensed consolidated financial statements,
management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets and
revenues and expenses during the periods reported. Actual results may differ from these estimates.
Intangible assets represented the acquired
game right from a related party, which are stated at acquisition cost, less accumulated amortization. The Company amortizes its
intangible assets with definite lives over their estimated useful lives and reviews these assets for impairment when an indicator
for potential impairment exists. The Company is currently amortizing its intangible assets with definite lives over periods of
3 years.
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Property, plant and equipment
|
Property, plant and equipment are stated
at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line
basis over the following expected useful lives from the date on which they become fully operational and after taking into account
their estimated residual values:
|
|
Expected useful lives
|
|
Building
|
|
38 years
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|
Leasehold improvements
|
|
3-10 years or lesser than term of lease
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|
Furniture and fittings
|
|
3 years
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|
Office equipment and computers
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|
1- 3 years
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|
Motor vehicle
|
|
2 years
|
|
Expenditures for repairs and maintenance
are expensed as incurred. When assets have been retired or sold, the cost and related accumulated depreciation are removed from
the accounts and any resulting gain or loss is recognized in the results of operations.
Revenue is recognized when it is realized
or realizable and earned, in accordance with ASC 605 Revenue Recognition (“ASC 605”). Revenue from the sale
of products is recognized when all of the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery
has occurred or services have been performed; (3) the seller’s price to the buyer is fixed or determinable; and (4) collectability
is reasonably assured. Product sales are recorded net of good and service taxes and product returns.
The Company records revenues from the sales
of third-party products on a “gross” basis pursuant to ASC 605-45 Revenue Recognition - Principal Agent Considerations,
when we are the primary obligor in the arrangement with the end customer and have the risks and rewards as principal in the transaction,
such as responsibility for fulfilment, retaining the risk for collection, and establishing the price of the products. If these
indicators have not been met, or if indicators of net revenue reporting specified in ASC 605-45 are present in the arrangement,
revenue is recognized net of related direct costs.
The Company maintains a membership program,
whereby certain members earn commission credits, based on the sales volume of certain other members who are sponsored directly
or indirectly by the member. Commission credits are redeemable on future spending of the products purchased or playing online games.
Commission credits are recorded and classified as operating expense when the products are delivered and revenue is recognized.
The estimated liability for unredeemed commission credit is included in commission liability on the accompanying balance sheets.
Management reviews the adequacy for the accrual for unredeemed commission credits by periodically evaluating the historical redemption
and projected trends.
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Foreign currencies translation
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Transactions denominated in currencies
other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of
the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into
the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are
recorded in the consolidated statement of operations.
The reporting currency of the Company is
United States Dollar ("US$") and the accompanying consolidated financial statements have been expressed in US$. In addition,
the Company’s operating subsidiaries in Singapore and Seychelles maintain their books and record in its local currency, Singapore
Dollars (“S$”), which is a functional currency as being the primary currency of the economic environment in which their
operations are conducted. In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency
is not US$ are translated into US$, in accordance with ASC Topic 830-30, “ Translation of Financial Statement”,
using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the
year. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate
component of accumulated other comprehensive income within the statements of changes in stockholder’s equity.
Translation of amounts from S$ into US$1
has been made at the following exchange rates for the three months ended December 31, 2019 and 2018:
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|
December 31, 2019
|
|
|
December 31, 2018
|
|
Period-end S$:US$1 exchange rate
|
|
|
1.3552
|
|
|
|
1.3632
|
|
Period average S$:US$1 exchange rate
|
|
|
1.3668
|
|
|
|
1.3588
|
|
The Company follows the ASC 850-10, Related
Party for the identification of related parties and disclosure of related party transactions.
Pursuant to section 850-10-20 the
related parties include a) affiliates of the Company; b) entities for which investments in their equity securities would be
required, absent the election of the fair value option under the Fair Value Option Subsection of section
825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of
employees, such as pension and Income-sharing trusts that are managed by or under the trusteeship of management; d) principal
owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party
controls or can significantly influence the management or operating policies of the other to an extent that one of the
transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can
significantly influence the management or operating policies of the transacting parties or that have an ownership interest in
one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting
parties might be prevented from fully pursuing its own separate interests.
The consolidated financial statements shall
include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other
similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of
consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature
of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts
were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to
an understanding of the effects of the transactions on the consolidated financial statements; c) the dollar amounts of transactions
for each of the periods for which income statements are presented and the effects of any change in the method of establishing the
terms from that used in the preceding period; and d) amount due from or to related parties as of the date of each balance
sheet presented and, if not otherwise apparent, the terms and manner of settlement.
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|
Fair value of financial instruments
|
The Company follows paragraph 825-10-50-10
of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and has adopted paragraph
820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of
its financial instruments. Paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a framework for measuring
fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. To increase
consistency and comparability in fair value measurements and related disclosures, paragraph 820-10-35-37 of the FASB Accounting
Standards Codification establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure
fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active
markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value
hierarchy defined by paragraph 820-10-35-37 of the FASB Accounting Standards Codification are described below:
Level 1
|
|
Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
|
|
|
|
Level 2
|
|
Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
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|
|
|
Level 3
|
|
Pricing inputs that are generally observable inputs and not corroborated by market data.
|
Financial assets are considered Level 3
when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least
one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest
priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable
inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the
categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
The carrying amounts of the Company’s
financial assets and liabilities, such as cash and cash equivalents, approximate their fair values because of the short maturity
of these instruments.
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|
Recent accounting pronouncements
|
The Company has reviewed all recently issued,
but not yet effective, accounting pronouncements and do not believe the future adoption of any such pronouncements may be expected
to cause a material impact on its financial condition or the results of its operations.