Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

☒      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2019

 

☐     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File Number 000-54761

 

NOBLE VICI GROUP, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

Delaware		42-1772663
(State or Other Jurisdiction		(I.R.S. Employer
of Incorporation or Organization)		Identification No.)

 

1 Raffles Place, #33-02

One Raffles Place Tower One

Singapore 048616

+65 6491 7998
(Address of Principal Executive Offices and Issuer’s
Telephone Number, including Area Code)

 

Securities registered pursuant to Section 12(b) of the Act: None

 

Securities registered pursuant to Section 12(g) of the Act:

 

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value	NVGI	N/A

 

Indicate by check mark whether the registrant:  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ☒    No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  ☒  No  ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

	Large accelerated filer  ☐	Accelerated filer  ☐
	Non-accelerated filer  ☐	Smaller reporting company  ☒
	Emerging growth company  ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐     No  ☒

 

As of February 7, 2020, the issuer had outstanding 210,804,160 shares of common stock.

 

 

TABLE OF CONTENTS

 

		Page
PART I	FINANCIAL INFORMATION
ITEM 1	Financial Statements	3
	Condensed Consolidated Balance Sheets as of December 31, 2019 (Unaudited) and March 31, 2019 (Audited)	3
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine months Ended December 31, 2019 and 2018 (Unaudited)	4
	Condensed Consolidated Statement of Changes in Stockholders’ Equity (Deficit) for the Three and Nine months ended December 31, 2019 and 2018 (Unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the Nine months Ended December 31, 2019 and 2018 (Unaudited)	8
	Notes to Condensed Consolidated Financial Statements (Unaudited)	9
ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
ITEM 3	Quantitative and Qualitative Disclosures about Market Risk	46
ITEM 4	Controls and Procedures	46
PART II	OTHER INFORMATION	47
ITEM 1	Legal Proceedings	47
ITEM 1A	Risk Factors	47
ITEM 2	Unregistered Sales of Equity Securities and Use of Proceeds	47
ITEM 3	Defaults upon Senior Securities	47
ITEM 4	Mine Safety Disclosures	47
ITEM 5	Other Information	47
ITEM 6	Exhibits	47
SIGNATURES		49

 

 

 

 

PART I   FINANCIAL INFORMATION

 

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.

 

☐	Basis of presentation

 

These accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).

 

☐	Basis of consolidation

 

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

 

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

 

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 recognition

 

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)

 

 

☐	Commission credits

 

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.

 

☐	Income taxes

 

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.

 

☐	Finance leases

 

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

  

☐	Comprehensive income

 

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.

 

☐	Segment reporting

 

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.

 

☐	Related parties

 

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:

 

	☐	UB45 was a company with the operation office building as its main primary asset that was wholly owned by NVGI;
	☐	VESG was a subsidiary of Venvici Private Limited (“VVPL”) with nominal assets and liabilities;
	☐	AIM was formed for the purpose of providing Customer Relation Management system for V-More customers and had nominal assets and liabilities; and
	☐	VM was formed for providing merchants onboarding services into our V-More ecosystem and had nominal assets and liabilities.

 

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:

 

	☐	Formed VMore Holding Limited New Zealand (“VMNZ”) to serve as a holding company for our New Zealand activities; and
	☐	Acquired 51% of ToroV System Private Limited (Singapore) ("TVPL"), with the remaining balance held by Eldee Tang, our Chief Executive Officer and director.

 

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:

 

·

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;

·

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.

 

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:

 

·

breadth of consumer base and advertisers/merchants featured;

·

local presence and understanding of local business trends;

·

ability to deliver a high volume of relevant deals to consumers;

·

ability to produce high purchase rates for deals among users;

·

ability to generate positive return on investment for advertisers/merchants; and

·

strength and recognition of our brand.

 

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.

 

		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.

 

☐	Basis of presentation

 

These accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).

  

☐	Use of estimates

 

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

 

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.

 

 

 

 

 

☐	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
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.

 

☐	Revenue recognition

 

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.

 

☐	Commission credits

 

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.

 

☐	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.

 

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:

 

		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

 

☐	Related parties

 

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.

 

☐	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.
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.

 

☐	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.

 

ITEM 3                   Quantitative and Qualitative Disclosures about Market Risk

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

 

ITEM 4                   Controls and Procedures

 

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

 

We conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act), under the supervision of and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer. Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures, subject to limitations as noted below, as of December 31, 2019, and during the period prior to and including the date of this report, were not effective to ensure that all information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported, within the time periods specified in the Commission’s rule and forms; and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. The Chief Executive Officer and Chief Financial Officer concluded that (i) there continue to be material weaknesses in the Company’s internal controls over financial reporting, that the weaknesses constitute a “deficiency” which could result in misstatements of the foregoing accounts and disclosures that could result in a material misstatement to the financial statements for the period covered by this report that would not be detected, and (ii) accordingly, our disclosure controls and procedures were not effective as of December 31, 2019.

  

Inherent Limitations

 

Because of its inherent limitations, our disclosure controls and procedures may not prevent or detect misstatements. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

 

Changes in Internal Control over Financial Reporting

 

Subject to the foregoing disclosure, there were no changes in our internal control over financial reporting that occurred during our last fiscal quarter ended December 31, 2019, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

  

 

 

PART II OTHER INFORMATION

 

ITEM 1                   Legal Proceedings

 

We are not a party to any legal or administrative proceedings that we believe, individually or in the aggregate, would be likely to have a material adverse effect on our financial condition or results of operations.

 

ITEM 1A                Risk Factors

 

None.

 

ITEM 2                   Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

ITEM 3                   Defaults upon Senior Securities

 

None.

 

ITEM 4                   Mine Safety Disclosures

 

Not applicable.

 

ITEM 5                   Other Information

 

 

ITEM 6                   Exhibits

 

Exhibit No.	Name of Exhibit
3.1	Amended and Restated Certificate of Incorporation (1)
3.	Amended and Restated Bylaws (1)
4.1	Form of common stock certificate (2)
4.2	Description of Capital Stock (3)
10.1	Patent Transfer and Sales Agreement dated July 27, 2010 (2)
10.2	Share Sale Agreement, dated January 29, 2018, by and between Eldee Wai Chong Tang and Kao Wei Chen (4)
10.3	Form of Stockholder Representation Letters (5)
10.4	Form of Stockholder Representation Letters (6)
10.5	Form of Trustee Letter (7)
10.6	Form of Stockholder Representation Letters (8)
10.7	Form of Trustee Letter (9)
10.8	V-More Merchant Acquisition Agreement dated March 19, 2019, by and between Noble Vici Group, Inc. and Frank Chia Kok Meng (10)
10.9	V-More Merchant Acquisition Agreement dated March 19, 2019, by and between Noble Vici Group, Inc. and Lew Chuen Cheah (11)

 

 

 

 

10.10	V-More Merchant Acquisition Agreement dated March 19, 2019, by and between Noble Vici Group, Inc. and Yang Shang Yue (12)
10.11	Consulting Agreement dated March 19, 2019, by and between Noble Vici Group, Inc. and Sukullayanee Suwunnavid (13)
10.12	Binding Memorandum of Understanding, dated April 1, 2019, by and between the Company and Eldee Wai Chong Tang. (14)
10.13	Service Agreement, dated May 2, 2018, by and between Neo & Partners Global and Noble Vici Private Limited (15)
10.14	Secured Term Loan Facility dated September 14, 2018, by Ethoz Capital Ltd. in favor of UB45 Pte. Ltd. (16)
10.15	Employment Letter, dated March 29, 2018, by and between Noble Vici Private Limited and Eldee Tang Wai Chong (15)
10.16	Employment Agreement, dated March 29, 2018, by and between Noble Vici Private Limited and Yip Sin Chi (17)
14	Code of Business Conduct and Ethics (18)
21	List of Subsidiaries *
31.1	Certification required under Rule 13a-14(a)/15d-14(a) under the Exchange Act.*
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

  

101.INS	XBRL Instance Document*
101.SCH	XBRL Schema Document*
101.CAL	XBRL Calculation Linkbase Document*
101.DEF	XBRL Definition Linkbase Document*
101.LAB	XBRL Label Linkbase Document*
101.PRE	XBRL Presentation Linkbase Document*

*Filed herewith.

 

(1)		Incorporated by reference from the Exhibits to the Definitive Information Statement on Schedule 14C with the Securities and Exchange Commission on May 7, 2018, and incorporated herein by reference.
(2)		Incorporated by reference from the Exhibits to our Registration Statement on Form S-1 filed with the Securities and Exchange Commission on October 12, 2010, and incorporated herein by reference.
(3)		Incorporated by reference from the Exhibits to our Annual Report on Form 10-K filed with the Securities and Exchange Commission on July 15, 2019
(4)		Incorporated by reference from the Exhibits to our Current Report on Form 8-K filed with the Securities and Exchange Commission on August 8, 2018.
(5)		Incorporated by reference from Exhibit 10.3 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on September 17, 2018.

(6)		Incorporated by reference from Exhibit 10.2 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on December 6, 2018.
(7)		Incorporated by reference from Exhibit 10.3 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on December 6, 2018.
(8)		Incorporated by reference from Exhibits 10.2 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on March 11, 2019.
(9)		Incorporated by reference from Exhibits 10.3 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on March 11, 2019.
(10)		Incorporated by reference from Exhibit 10.1 to our Registration Statement on Form S-8 filed with the Securities and Exchange Commission on March 19, 2019.
(11)		Incorporated by reference from the Exhibit 10.2 to our Registration Statement on Form S-8 filed with the Securities and Exchange Commission on March 19, 2019.
(12)		Incorporated by reference from Exhibit 10.3 to our Registration Statement on Form S-8 filed with the Securities and Exchange Commission on March 19, 2019.
(13)		Incorporated by reference from Exhibit 10.4 to our Registration Statement on Form S-8 filed with the Securities and Exchange Commission on March 19, 2019.
(14)		Incorporated by reference from Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on April 1, 2019.
(15)		Incorporated by reference from the Exhibits to our Current Report on Form 8-K filed with the Securities and Exchange Commission on August 8, 2018.
(16)		Incorporated by reference from Exhibit 10.4 to our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on February 2, 2019.
(17)		Incorporated by reference from Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on June 17, 2019.
(18)		Incorporated by reference from Exhibit 14 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on May 16, 2018.

 

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

	NOBLE VICI GROUP, INC.
	By:	/s/ Eldee Wai Chong Tang
		Eldee Wai Chong Tang
		Chief Executive Officer
Date:       February 14, 2020