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 ("HWGC", the "Company", "we", "our", or "us") offers digital banking services by providing the tools, skills and solutions to facilitate payment services to merchants, offering a variety of secured, online and fully managed transactions and settlements.

We provide a financial layered ecosystem built on a broad technology infrastructure that enables financial institutions to offer a consolidated experience. We support different verticals serving the business-to-business, business-to-consumer and consumer-to-business landscape.

? Merchants are increasingly adopting various software solutions and new digital

tools to operate their business and remain competitive. The scale and

complexity of managing these software systems that are sourced from different

providers, while seamlessly accepting payments, is challenging for merchants of


   any size.





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Our payments platform hosts a full suite of integrated payment products and services that can be used across multiple channels (in-store, online, mobile and tablet-based) and industry verticals, including:

? end-to-end payment processing for a broad range of payment types;

? merchant acquiring and issuing;

? multiple methods of mobile, contactless and QR code-based payments;

? complementary software integrations;

? virtual international bank account number or IBAN issuing;

? integrated and mobile point of sale or POS solutions;

? security and risk management solutions; and

? reporting and analytical tools.

We integrate e-money remittance services working in the global marketplace, ranging from open banking and credit card processing, to wire solutions enabling customers to coordinate payments across a multitude of payment methods.

Our solution is delivered as a Software as a Service, or SaaS, to clients, enabling them to focus their time and energies on their operations and sales. We give clients and merchants the ability to streamline their onboarding procedures and increase customer retention, which thereby creates additional revenue.

We aim to build our market share and become a recognized leader in the payments and banking space on a global scale. Our team comprises of experienced and knowledgeable personnel in the areas of operations, sales, tech, onboarding, support, legal and compliance.

Our vision is to minimize and automate the hassle to send and receive funds globally, while ensuring security. We aim to provide merchants with a true merchant payment ecosystem or MPE where they can combine all payment needs under one system. Our technology platform uses an innovative Gateway Cashier Technology to provide our services.

Our merchants include small and medium enterprises, or SMEs, and large enterprises across numerous verticals including hospitality, e-gaming, consulting, retail, marketing and eCommerce.

Although we provide a SaaS, we believe that technology should be free and accessible to everyone. We therefore generate our revenue from our extra value-added services. We derive the majority of our revenue from fees paid by our merchants, which principally include processing fees charged as a percentage of end-to-end payment volumes. In cases where merchants subscribe only to our gateway, we generate revenue from transaction fees charged in the form of a fixed fee per transaction and a monthly fee.

Our revenue is continuous, as merchants only pay for the specific amount of service or usage they consume, rather than a flat fee for access to the service. Because of our different layers as described below, merchants sign up for different services which increases revenue for the company. We believe we can maintain long-term relationships with our clients due our customer relationship team as well as the high barriers of entry of the payment market including high switching costs resulting from set-up fees, onboarding costs and integration costs with various other providers. We also benefit from a high degree of operating leverage given the combination of our highly scalable payments platform and strong customer unit.





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Results of Operations

For the year ended December 31, 2022 compared to December 31, 2021





Revenue

We recognized revenue of $3,084,279 for the year ended December 31, 2022, an increase of $3,081,155 from sales of $3,142 for the year ended December 31, 2021. The significant increase in revenue primarily resulted from the restructuring transactions that occurred during 2022; acquisition of HWGG Capital and acquisition of Fintech as mentioned in Corporate History and Structure. Revenue recognized during the year are mainly from transaction fees earned through financial payment and settlement services provided by HWGG Capital and Fintech.





Cost of Sales

Cost of sales for the year ended December 31, 2022 was $15,274 compared to $2,861 for the year ended December 31, 2021. The increase for the year ended December 31, 2022 resulted primarily from the restructuring transactions mentioned above.





Gross Profit

Gross profit for the year ended December 31, 2022 was $3,069,005 compared to $263 for the year ended December 31, 2021. The increase resulted primarily from the restructuring transactions that led to additional sources of revenue from HWGG Capital and Fintech.





Operating Expenses

For the year ended December 31, 2022, we incurred total operating expenses in the amount of $2,288,779 comprised of selling expenses of $2,278,989 and general and administrative expenses of $9,790. 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. The increase of $9,767, or 42665 % for the selling expenses, and the increase of $1,827,835, or 405% for the administrative expenses, caused total operating expenses to increase by $1,837,602 or 407%.

Liquidity and Capital Resources

For the year ended December 31, 2022, we had a cash balance of $3,791,378. For the year ended December 31, 2022, net cash used in operating activities totaled $320,584, net cash generated by investing activities totaled $3,715,989 and net cash generated by financing activities totaled $391,805. The resulting change in cash for the period was $3,754,345.

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, 2022, we had current liabilities of $4,943,467, including $2,463,833 due to related parties, other payables of $348,246 and accounts payable of $2,131,388.

For the year ended December 31, 2021, we had current liabilities of $4,766,376, including $4,267,033 due to related parties, other payables of $342,661, commission payables of $126,315, lease obligation of $30,289 and accounts payable of $78.

For the years ended December 31, 2022 and December 31, 2021, we had net assets of $58,881,794 and net liabilities of $4,585,965, respectively.

We have recognized goodwill of $55,794,524 as a result from the acquisition of Fintech during the year ended December 31, 2022. We believe no impairment is required during the year ended December 31, 2022. However, due to the significant carrying amount of goodwill recognized, any indication of impairment that causes losses and give rise to substantial doubt about our ability to continue as going concern.





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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 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.

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