Our Management's Discussion and Analysis contains forward-looking statements
relating to future events or our future financial performance. In some cases,
you can identify forward-looking statements by terminology such as "may",
"should", "intends", "expects", "plans", "anticipates", "believes", "estimates",
"predicts", "potential", or "continue" or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors which may cause our or our
industry's actual results, levels of activity or performance to be materially
different from any future results, levels of activity or performance expressed
or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity or performance. You should not place undue reliance on these
statements, which speak only as of the date of this Annual Report. These
cautionary statements should be considered with any written or oral
forward-looking statements that we may issue in the future. You should read this
Annual Report on Form 10-K with the understanding that our actual future results
may be materially different from what we expect. All forward-looking statements
speak only as of the date on which they are made. We undertake no obligation to
update such statements to reflect events that occur or circumstances that exist
after the date on which they are made, except as required by applicable law.
Management's discussion and analysis of our financial condition and results of
operations is based upon our consolidated financial statements which have been
prepared in accordance with accounting principles generally accepted in the
United States of America ("GAAP"). The following discussion and analysis of
financial condition and results of operations of the Company is based upon, and
should be read in conjunction with, the audited consolidated financial
statements and related notes elsewhere in this Annual Report on Form 10-K.
Overview
HWGC Holdings Limited is a holding company incorporated under the laws of
Nevada. Through our two wholly-owned subsidiaries, namely Vitaxel and Vionmall
incorporated under the laws of the Country of Malaysia, we run and operate the
e-commerce business. Vitaxel was organized and commenced business operations in
2014 and Vionmall was organized and commenced business operations in 2015.
Vitaxel is a global direct selling, multi-level marketing ("MLM") company
offering travel, entertainment, lifestyle and other products and services
principally through electronic commerce commonly referred to as e-commerce.
Vionmall is an e-commerce business for retail sales direct to consumers. We do
not develop or manufacture the products and services which we offer.
Results of Operations
For the year ended December 31, 2021 compared to December 31, 2020
Revenue
We recognized revenue of $3,124 for the year ended December 31, 2021, a decrease
of $15,748 from sales of 18,872 for the year ended December 31, 2020. The
significant decrease in revenue of approximately 84%, was attributable to
decrease in sales from VTrip under Vionmall in the current year as compared to
revenue in December 31, 2020.
17
Cost of Sales
Cost of sales for the year ended December 31, 2021 was $2,861 compared to
$14,404 for the year ended December 31, 2020. The decrease for the year ended
December 31, 2021 was due to the decrease of revenue for the year ended December
31, 2021 as compared to the revenue for the year ended December 31, 2020.
Gross Profit
Gross profit for the year ended December 31, 2021 was $263 compared to $4,468
for the year ended December 31, 2020. The decrease was due to decrease in sales
from VTrip under Vionmall in the year ended December 31, 2021 as compared to
last year.
Operating Expenses
For the year ended December 31, 2021, we incurred total operating expenses in
the amount of $451,177, comprised of selling expenses of $23 and general and
administrative expenses of $451,154. For the year ended December 31, 2020, we
incurred total operating expenses in the amount of $642,794, comprised of
selling expenses of $553 and general and administrative expenses of $642,241.
The decrease of $530, or 96% for the selling expenses, and the decrease of
$191,087, or 30% for the administrative expenses, caused total operating
expenses to decrease by $191,617 or 30%.
Liquidity and Capital Resources
For the year ended December 31, 2021, we had a cash balance of $37,033. For the
year ended December 31, 2021, net cash generated by operating activities totaled
$16,539, net cash used in investing activities totaled $nil and net cash used in
financing activities totaled $24,464. The resulting change in cash for the
period was $9,518.
For the year ended December 31, 2020, we had a cash balance of $46,551. For the
year ended December 31, 2020, net cash generated by operating activities totaled
$76,797, net cash used in investing activities totaled $4,348 and net cash used
in financing activities totaled $89,758. The resulting change in cash for the
period was $16,885.
For the year ended December 31, 2021, we had current liabilities of $4,766,376,
including $4,267,033 due to related parties, other payable of $342,661,
commission payables of $126,315, lease obligation of $30,289 and accounts
payable of $78.
For the year ended December 31, 2020, we had current liabilities of $4,934,483,
including $4,401,809 due to related parties, other payable of $353,213,
commission payables of $131,257, lease obligation of $47,974 and accounts
payable of $230.
for the year ended December 31, 2021 and December 31, 2020, we had net
liabilities of $4,585,965 and $4,733,262, respectively.
We have incurred losses since its inception resulting in an accumulated deficit
of $9,598,819 and $9,576,061 for the year ended December 31, 2021 and 2020,
respectively, and further losses are anticipated in the development of its
business raising substantial doubt about our ability to continue as a going
concern. The ability to continue as a going concern is dependent upon us
generating profitable operations in the future and/or obtaining the necessary
financing to meet our obligations and repay our liabilities arising from normal
business operations when they become due. Our failure to do so may result in us
not being able to continue as an operating company.
18
Grand Legacy License; Transaction With Affiliate
On January 5, 2017, we entered into a License Agreement (the "Grande Agreement")
with Grande Legacy Inc., a company incorporated in the British Virgin Islands
("Grande Legacy"). Pursuant to the Agreement, we granted Grande Legacy Inc. an
exclusive, non-transferable, revocable license to use our trademarks, brands,
logos or service marks to market and operate our business and commercialize our
online shopping and service platform, including but not limited to our online
shopping mall known as "Vionmall", in the United States of America, South Korea,
Japan and other parts of the world as agreed to by the Company from time to
time. The term of the Agreement is three years with a possibility of renewal for
another three years. The Agreement provides that Grande Legacy is in charge of
all initial costs of setting up its business in United State of America, South
Korea, Japan and other parts of the world agreed to by the Company. Grande
Legacy is required to pay us a revenue share of 55% of the net profits for every
three-month period.
On July 1, 2018, the Company and Grande Legacy entered into an Amendment to
Grande Agreement ("Grande Amendment 1"), revising the terms of royalty payment.
Per Grande Amendment 1, Grande Legacy shall pay the Company royalty equal to 55%
of net profits on a quarterly basis, commencing from July 1, 2018.
On July 1, 2018, Vitaxel entered into a management and administrative services
agreement with Grande Legacy ("Management Agreement") for a term of 3 years. Per
the Management Agreement, Vitaxel shall provide certain management and
administrative support services for the operation of Grande Legacy. In
consideration for providing such services, Grande Legacy shall pay a monthly
management fee of $40,000 to Vitaxel. For the year ended December 31, 2021 and
2020, Vitaxel received management fees of $480,000 and $480,000, respectively,
from Grande Legacy.
On January 1, 2019, the Company and Grande Legacy entered into another Amendment
to Grande Agreement ("Grande Amendment 2"), allowing them to provide their
marketing activities in Singapore and further changing our royalty payment from
55% of net profit to 4% of revenue, commencing from January 1, 2019. We believe
that these changes will allow us to generate revenue regardless of whether
Grande Legacy is able to generate net profit or not, and will also avoid dispute
as to calculations of net profits.
As of the date of this Annual Report, the Grande Agreement has expired but the
Grande Legacy license is still effective through oral agreement with Grande
Legacy. The Company is currently in discussions with Grande Legacy with respect
to the amendment or renewal to the Grande Amendment, but it is not likely that
the Grande Amendment will be renewed.
For the year ended December 31, 2021 and December 31, 2020, the Company received
royalty income of $nil and $296, respectively, from Grande Legacy.
We have the following related party relationships with Grande Legacy: (i) our
Chief Executive Officer, Leong Yee Ming owns 2 shares, or 50% of Grande Legacy
Inc.'s issued and outstanding shares, and is a principal executive officer and a
director Grande Legacy Inc.; and (ii) our President, Dato Lim Hui Boon's brother
Lim Hui Sing, owns 2 shares, or 50% of Grande Legacy Inc.'s issued and
outstanding shares, and is a director of Grande Legacy Inc. However, Lim Hui
Sing does not reside with any of the immediate family of the President of the
Company, Mr Lim Hui Boon. He is considered to be independent party towards the
said family. He is also not an officer nor a director of the Company.
Grand Legacy Acquisition Termination; Continuation of License Agreement
On December 15, 2017, we entered into an agreement for the acquisition of Grand
Legacy with its shareholders, Lim Hui Sing and Leong Yee Ming (together, the
"Sellers") and Vitaxel Sdn. Bhd., our wholly-owned subsidiary for the
acquisition of Grande Legacy (the "Acquisition"), a company incorporated in the
British Virgin Islands. As consideration for the transaction, the Company was
required to issue to each of the Sellers 37,500,000 shares of the Company's
common stock, or at total of 75,000,000 shares (the "Consideration Shares").
19
Among the conditions to closing of the Acquisition, the parties agreed that:
? The Company and Grande Legacy were required to complete the audit of
Grande Legacy and the consolidated audited financial statements of
the Company and Grande Legacy reflecting such transaction.
? The Company would issue the 75,000,000 Consideration Shares to the
Sellers within 30 days of the Company's obtaining all shareholder
approvals necessary to approve the issuance of said shares and to
amend the Company's Certificate of Incorporation by increasing its
capitalization to facilitate such issuance.
While Grande Legacy was able to deliver its audited financial statements, the
Company did not obtain the shareholder approval consents necessary to increase
its capitalization so that it can issue the Consideration Shares.
On September 17, 2018, the Company was notified by Grande Legacy of their intent
to terminate the Acquisition since the requisite approvals for issuance of the
Consideration Shares and the audit was not completed. After extended
deliberation and negotiation, the Company determined that the cost in completing
the transaction would likely outweigh the benefits of completion of the
Acquisition. Accordingly, the Company allowed the Acquisition to terminate and
entered into a Termination and Release Agreement with Grande Legacy on December
5, 2018.
Other than expenses incurred in connection with the Acquisition transaction, the
Company did not pay any consideration and no Consideration Shares were issued.
In addition, no penalties were payable by either party.
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 in 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 for disclosures regarding the critical accounting
policies related to our business.
Recently Issued Accounting Standards
Our recently issued accounting standards are included in Note 2 Summary of
Significant Accounting Policies of the Financial Statements for disclosures
regarding the critical accounting policies related to our business.
© Edgar Online, source Glimpses
FINTECH SCION LIMITED 
