The information set forth in this Management's Discussion and Analysis of
Financial Condition and Results of Operations contains certain "forward-looking
statements". Forward-looking statements are statements other than historical
information or statements of current condition. Some forward-looking statements
may be identified by use of terms such as "believes", "anticipates", "intends"
or "expects". These forward-looking statements relate to our plans, liquidity,
ability to complete financing and purchase capital expenditures, growth of our
business including entering into future agreements with companies, and plans to
successfully develop and obtain approval to market our product. We have based
these forward-looking statements largely on our current expectations and
projections about future events and financial trends that we believe may affect
our financial condition, results of operations, business strategy and financial
needs.
You should read the following discussion and analysis in conjunction with the
Financial Statements and Notes attached hereto, and the other financial data
appearing elsewhere in this report.
US Dollars are denoted herein by "USD", "$" and "dollars".
Overview
Umatrin Holding Limited ("UMHL") was incorporated in the state of Delaware on
February 2, 2005. UMHL was originally incorporated in order to locate and
negotiate with a targeted business entity for the combination of that target
company with the Company.
On January 6, 2016, UMHL acquired 80% of the equity interests of UMatrin
Worldwide SDN. BHD. ("Umatrin") in exchange for the issuance of a total of
100,000,000 shares of its common stock to the two holders of Umatrin, Dato' Sri
Eu Hin Chai and Dato' Liew Kok Hong. Immediately following the Share Exchange,
the business of Umatrin became the business of UMHL. The Company's operation
office remained in Malaysia and the business market will remain focus in Asia.
Umatrin, formerly known as OLC Worldwide SDN. BHD., was incorporated in Malaysia
on July 22, 1993. Umatrin has curated nontoxic beauty, personal care to health
and wellness products. We market our products through three primary methods:
direct contact, online distribution and/or by our dealer program. We apply
leading O2O (Online to Offline) marketing strategy to both retail and wholesale
trade. We provide technology and services to enable consumers, merchants and
other participants to conduct business in our cloud based trading system. We use
advanced network technology and rigorous management system to create unlimited
business brand space. Without allocating large sums of operating cost, it
continuously introduces new products, combined with O2O internet business model
and career opportunities.
Results of Operations
Comparison of Results of Operations for the three months ended September 30,
2019 and 2018
Sales
For the three months ended September 30, 2019, the Company generated $308,784 in
revenues, which is an increase of $175,104, or 130% compared to the three months
ended September 30, 2018. This is due to increase in sales volume for Akero
product series and old products. Increasing in sales is also attributed to the
fact that the Company has increased its marketing staff to promote its products
since April 2019 and, the market and consumer confidence in Malaysia have
improved since the 2018 general election.
Gross profit and gross margin
The Company was able to generate a gross profit margin of $185,504 for the three
months ended September 30, 2019, which is an increase of $55,664 or 42% compared
to the three months ended September 30, 2018. This is due to increase in sales
volume for new Akero product series which has a higher profit margin.
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Selling, general and administrative costs
Major operating costs include salaries and wages, advertising and promotional
costs for the three months ended September 30, 2019 and 2018. Selling, general
and administrative costs increased from $139,107 for the three months ended
September 30, 2018 to $194,161 for the three months ended September 30, 2019.
The increase is due to increase in operating cost such as increase in commission
expenses, printing and stationeries.
Net income
For the three months ended September 30, 2019, the Company had $14,662 in net
loss as compared to $15,368 in net loss for the three months ended September 30,
2018, which was a decrease in net loss of $706. The Company will continue to
implement new marketing strategies to improve its financial position.
Comparison of Results of Operations for the nine months ended September 30, 2019
and 2018
Sales
For the nine months ended September 30, 2019, the Company generated $902,750 in
revenues, which has an increase of $623,857, or 223% compared to the nine months
ended September 30, 2018. This is due to increase in sales volume for Akero
product series.
Gross profit and gross margin
The Company was able to generate a gross profit margin of $685,079 for the nine
months ended September 30, 2019, which has an increase of $428,391 or 166%
compared to the nine months ended September 30, 2018. This is due to increase in
sales volume for new Akero product series which has higher profit margin.
Selling, general and administrative costs
Major operating costs include salaries and wages, advertising and promotional
costs for the nine months ended September 30, 2019 and 2018. Selling, general
and administrative costs increased from $404,874 for the nine months ended
September 30, 2018 to $549,483 for the nine months ended September 30, 2019. The
increase is due to increase in operating cost such as increase in commission
expenses, printing and stationeries.
Net income
For the nine months ended September 30, 2019, the Company had $117,453 in net
profit as compared to $166,990 in net loss for the nine months ended September
30, 2018, which was an increase in net profit of $284,443. The Company will
continue to implement new marketing strategies to improve its financial
position.
Liquidity and Capital Resources
We had cash and cash equivalent of $150,037 and $36,431 as of September 30, 2019
and December 31, 2018, respectively.
Our company's operations have been funded through an equity financing and a
series of debt transactions, primarily with shareholders, directors, and
officers of our company and affiliated entities. These related party debt
transactions such as advances have operated as informal lines of credit since
the inception of our company, and related parties have extended credit as needed
which our company has repaid at its convenience. We anticipate that we will
incur operating losses in the foreseeable future and we believe we will need
additional cash to support our daily operations while we are attempting to
execute our business plan and produce revenues. If our related parties are
unable or unwilling to provide additional capital, we would likely require
financing from third parties. There can be no assurance that any additional
financing will be available to us, on terms we believe to be favorable or at
all. The inability to obtain additional capital would have a material adverse
effect on our operations and financial condition and could force us to curtail
or discontinue operations entirely and/or file for protection under bankruptcy
laws.
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The following table sets forth information about our net cash flow for the nine
months ended September 30, 2019 and 2018:
For the nine months ended
September 30, September 30,
2019 2018
Net cash provided by (used in) operating
activities 248,207 (224,383 )
Net cash provided by (used in) investing
activities (2,841 ) -
Net cash provided by (used in) financing
activities (130,316 ) 169,760
Operating Activities
For the nine months ended September 30, 2019 we generated $248,207 in operating
activities as compared to using $224,383 in operating activities during the nine
months ended September 30, 2018. The movement in net cash used in operating
activities resulted from the movement in inventory, prepaid tax, other
receivables and deposits, accounts payable and accrued expenses and other
payables.
Investing Activities
During the nine months ended September 30, 2019 we used $2,841 in investing
activities as compared to using $nil in investing activities during the nine
months ended September 30, 2018. The movement in net cash used in investing
activity resulted from purchase of equipment.
Financing Activities
During the nine months ended September 30, 2019, we used $130,316 in financing
activities as compared to generating $169,760 in financing activities during the
nine months ended September 30, 2018.
During the nine months ended September 30, 2019, the net cash provided by
financing activities resulted from net repayment to related party of $80,131 and
net repayment to term loan of $50,184.
During the nine months ended September 30, 2018, the net cash provided by
financing activities resulted from net proceeds received from related party of
$184,372 and net repayment to term loan of $14,612.
Loan Commitment
On December 23, 2014, MYR 2,300,000 (approximately $657,507) term loan was
granted to Umatrin for the purchase of four Story Shop Offices located at No.32,
32-1, 32-2, 32-3, Jalan Radin Bagus 3, Bandar Baru Seri Petaling, 57000, Kuala
Lumpur with a repayment period of 240 months. This term loan was secured by (i)
title deed for the said property, and (ii) way of guarantee by directors of the
Company. This term loan is subject to an interest charges at 2.10% per annum
below the Bank's Base Lending Rate ("BLR") with daily rests. The BLR is
currently at 6.85% for both September 30, 2019 and December 31, 2018.
On July 27, 2015, the drawdown of MYR2,300,000 (approximately $609,554) was made
and repayment effectively starts on December 1, 2015 with a fixed installment of
MYR14,863.14 (approximately $3,561) for 240 installments.
Interest expenses were $18,143 and $18,804 for the nine months ended September
30, 2019 and 2018, respectively.
We have no known demands or commitments and we are not aware of any events or
uncertainties as of September 30, 2019 that will result in or that are
reasonably likely to materially increase or decrease our current liquidity.
We had no material commitments for capital expenditure for the nine months ended
September 30, 2019 and 2018 except mentioned above.
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Going Concern
Our financial statements have been prepared on a going concern basis. As
reflected in the accompanying financial statements, the Company had accumulated
deficit of $3,339,354 as of September 30, 2019 which include a profit of
$117,453 for the nine months ended September 30, 2019. We expect to finance our
operations primarily through our existing cash, our operations and any future
financing. However, there exists substantial doubt about our ability to continue
as a going concern because we will be required to obtain additional capital in
the future to continue our operations and there is no assurance that we will be
able to obtain such capital, through equity or debt financing, or any
combination thereof, or on satisfactory terms or at all. Additionally, no
assurance can be given that any such financing, if obtained, will be adequate to
meet our capital needs. If adequate capital cannot be obtained on a timely basis
and on satisfactory terms, our operations would be materially negatively
impacted. Therefore, our auditor has substantial doubt as to our ability to
continue as a going concern. Our ability to complete additional offerings is
dependent on the state of the debt and/or equity markets at the time of any
proposed offering, and such market's reception of the Company and the offering
terms. There is no assurance that capital in any form would be available to us,
and if available, on terms and conditions that are acceptable.
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