Statement Regarding Forward-Looking Information
The following management's discussion and analysis should be read in conjunction
with the historical financial statements and the related notes thereto contained
in this report. The management's discussion and analysis contains
forward-looking statements, such as statements of our plans, objectives,
expectations and intentions. Any statements that are not statements of
historical fact are forward-looking statements. When used, the words "believe,"
"plan," "intend," "anticipate," "target," "estimate," "expect" and the like,
and/or future tense or conditional constructions ("will," "may," "could,"
"should," etc.), or similar expressions, identify certain of these
forward-looking statements. These forward-looking statements are subject to
risks and uncertainties that could cause actual results or events to differ
materially from those expressed or implied by the forward-looking statements.
The Company's actual results and the timing of events could differ materially
from those anticipated in these forward-looking statements as a result of
several factors. The Company does not undertake any obligation to update
forward-looking statements to reflect events or circumstances occurring after
the date of this report.
The following discussion highlights the Company's results of operations and the
principal factors that have affected our financial condition, as well as our
liquidity and capital resources for the periods described, and provides
information that management believes is relevant for an assessment and
understanding of the statements of financial condition and results of operations
presented herein. The following discussion and analysis are based on the
Company's unaudited financial statements contained in this Quarterly Report,
which we have prepared in accordance with United States generally accepted
accounting principles. You should read this discussion and analysis together
with such financial statements and the related notes thereto.
As used in this Quarterly Report, the terms "we,""us,""Company," and "our" mean
Vitaxel Group Limited and its subsidiaries on a consolidated basis, unless
otherwise indicated or the context requires otherwise.
Overview
HWGC Holdings Limited is the holding company for Vitaxel SDN BHD ("VitaxelSB"),
and Vitaxel Online Mall SDN BHD ("Vionmall"), both of which are wholly owned
subsidiaries of the Company, incorporated under the laws of the Country of
Malaysia.
VitaxelSB is a global direct selling, multi-level marketing ("MLM") company
offering travel, entertainment, lifestyle and other products and services
principally through electronic commerce commonly referred to as e-commerce.
Vionmall is involved in e-commerce business, through its platforms: Vionmarket,
VTrips and VMall. Vionmarket is a rebate website that provide retail sales
direct to consumers. However, Vionmarket do not develop or manufacture the
products and services. VTrips is a platform that provides concessionary and
travel packages to the public and members of Vitaxel. VMall is an e-commerce
platform launched in prior year first quarter.
We presently have approximately 5,700 total members. As of March 31, 2022,
approximately: 62.3% of our members reside in Malaysia, 28.9% of our members
reside in Singapore, 3.7% members reside in China, approximately 2.7% members
reside in Hong Kong and approximately 2.4% members reside in other countries.
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Recent Developments
On April 8, 2022, Financial Industry Regulatory Authority, Inc. ("FINRA")
notified the Company that (i) the change of the Company's name from "Vitaxel
Group Limited" to "HWGC Holdings Limited" and (ii) the 1-for-10 reverse stock
split of the Company's common stock took effect on the Over-The-Counter Market
on April 11, 2022. On May 9, 2022, the trading symbol of the Company was changed
to "HWGC" to reflect the name change of the Company .
As a result of the filing of the Certificate of Amendment to its Amended and
Restated Articles of Incorporation with the Secretary of State of the State of
Nevada on March 8, 2022, the authorized share capital of the Company increased
to 425,000,000 shares, consisting of 400,000,000 shares of common stock and
25,000,000 shares of preferred stock.
On March 10, 2022, the Company filed with the Secretary of State of the State of
Nevada a Certificate of Designation of the Relative Rights and Preferences of
The Redeemable Convertible Preferred Stock (the "Certificate of Designation").
Pursuant to the Certificate of Designation, the Board of Directors of the
Company authorized the creation 25,000,000 shares of Redeemable Convertible
Preferred Stock, par value $0.0001 per share (the "RCPS"). The RCPS is ranked
senior to all classes or series of the Company's common stock and does not have
any voting rights. However, the holders of the RCPS are entitled to receive,
when declared by the Board of Directors, cumulative cash dividends at the rate
of 6% per annum on each $1.00 per RCPS. Commencing on the date of issuance, the
dividends on the RCPS shall accrue and be cumulative, payable annually in
arrears on the 30th business day on each anniversary of the issue date.
Dividends will accumulate whether or not the Company has earnings or whether
funds are legally available or declared by the Board, and no interest will be
payable on any dividends which may be in arrears. Each share of RCPS shall be
convertible into one share of common stock of the Company, upon the Board
approving the initiation of the listing process to list the shares of the
Company on any stock exchange, or upon the written approval of the Company. The
Company may also, at its option, redeem the RCPS for cash at a redemption price
of $1.00 per share plus any accumulated and unpaid dividends thereon.
Notwithstanding, all outstanding RCPS shall be redeemable by the Company on the
second anniversary of the issuance date thereof.
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Results of Operations
Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021
The following discussion should be read in conjunction with our unaudited
consolidated financial statements in Item 1, Financial Statements, for the three
months ended March 31, 2022 and 2021 and the related notes thereto.
Revenue
We recognized $17 and $134 revenues for the periods ended March 31, 2022 and
2021, respectively. The decrease in revenue was attributable to decrease in
sales in VitaxelSB in the current period compared to the same period last year.
Cost of Sales
Cost of sales for the period ended March 31, 2022 was $11 compared to $98 for
the period ended March 31, 2021. The decrease was attributable to the decrease
in sales.
Gross Profit
Gross profit for the period ended March 31, 2022 was $6 compared to $36 for the
period ended March 31, 2021. The decrease was attributable to the decrease in
sales.in current period as compared to the same period last year.
Operating Expenses
For the period ended March 31, 2022, we incurred total operating expenses in the
amount of $127,055, composed of selling expenses of $nil and general and
administrative expenses totalling $127,055. Whilst, for the period ended March
31, 2021, we incurred total operating expenses in the amount of $122,163,
composed of selling expenses of $23 and general and administrative expenses
totalling $122,140. The decrease of $23 or 100% for the selling expenses, along
with the decrease of $4,915 or 4% for the administrative expenses, caused total
operating expenses to decrease by $4,892 or 4%
Liquidity and Capital Resources
As of March 31, 2022, we had a cash balance of $47,588. During the period ended
March 31, 2022, net cash used in operating activities totalled $108,483. Net
cash used in investing activities totalled $nil. Net cash provided by financing
activities during the period totalled $119,316. The resulting change in cash for
the period was a increase of $10,555, which was primarily due to proceeds from
related parties.
As of March 31, 2022, we had current liabilities of $4,850,403, which was
composed of amount due to related parties of $4,371,719, commission payables of
$125,507, accounts payable of $3,213, accruals and other payable of $329,679 and
lease obligation of $20,285.
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We had net liabilities of $4,679,662 and $4,585,965 as of March 31, 2022 and
December 31, 2021, respectively.
Going Concern
For the period ended March 31, 2022, the Company reported a net loss of $123,352
and had negative working capital of $4,724,673. The Company had an accumulated
deficit of $9,722,171 as of March 31, 2022 due to the fact that the Company
incurred losses during the years prior to March 31, 2022.
The continuation of the Company as a going concern is dependent upon improving
the profitability and the continuing financial support from its stockholders or
other capital sources. Management believes that the continuing financial support
from the existing shareholders or external debt financing will provide the
additional cash to meet the Company's obligations as they become due. There is
no certainty that further funding will be available as needed.
These factors raise substantial doubt about the ability of the Company to
continue operating as a going concern.
Impact of Current Coronavirus (COVID-19) Pandemic on the Company
As many parts of the world is currently under lockdown or restrictive movement
orders due to the current COVID-19 pandemic, we believe that all companies
related to the travel, entertainment and lifestyle industry have been negatively
impacted. Our Company is not spared either. We do not foresee any income
contribution from this business, until the destination areas (in particular
South-East Asia and Europe) reopen their countries to allow foreign visitors
again.
Our multi-level marketing ("MLM") business is negatively impacted due to the
fact that being a business built on fostering personal relationship and
expanding new contacts, most distributors are unable to carry out the more
important aspects of regular face to face visits and appointments, promotional
events and direct coaching to continuously improve their team's skills,
motivation and knowledge of our products. Fortunately, we are still able to
connect to our leaders via calls, emails and backoffice announcements and other
form of online communication such as Skype and Zoom to keep the leaders and
members abreast with our status and development. As such, our MLM operation is
still ongoing amid slower than usual.
In the Annual Report on Form 10-K for the year ended December 31, 2021 filed on
March 29, 2022, we provided an update that the Malaysian Government issued a
National Recovery Plan to cater for both the pandemic period and post-pandemic
period. The National Recovery Plan, which basically spell out 4 different phases
of control order, are still in effect until to date of this report; Phase 4 are
no longer having all states under lockdown and that all business and social
activities within the country are permitted to operate. Although to date, many
restrictions have been lifted, the Company is still uncertain of the effect of
the post-pandemic, where the Company may still expect long-term disruptions on
its existing operations.
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Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements, financings, or other
relationships with unconsolidated entities or other persons.
Critical Accounting Policies and Estimates
There are no material changes from the critical accounting policies set forth in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations". Please refer to Note 2 Summary of Significant Accounting Policies
of the Financial Statements on Form 10-K filed with the SEC on March 29, 2022,
for disclosures regarding the critical accounting policies related to our
business.
Recently Issued Accounting Standards
The recently issued accounting pronouncement are included in Note 2 Unaudited
Interim Financial Statements for disclosures on accounting policies related to
our business.
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FINTECH SCION LIMITED 
