This discussion summarizes the significant factors affecting the operating
results, financial condition, liquidity and cash flows of the Company and its
subsidiary for the fiscal years ended March 31, 2021, and 2020. The discussion
and analysis that follows should be read together with the section entitled
"Forward Looking Statements" and our consolidated financial statements and the
notes to the consolidated financial statements included elsewhere in this annual
report on Form 10-K.
Except for historical information, the matters discussed in this section are
forward looking statements that involve risks and uncertainties and are based
upon judgments concerning various factors that are beyond the Company's control.
Consequently, and because forward-looking statements are inherently subject to
risks and uncertainties, the actual results and outcomes may differ materially
from the results and outcomes discussed in the forward-looking statements. You
are urged to carefully review and consider the various disclosures made by us in
this report.
Currency and exchange rate
Unless otherwise noted, all currency figures quoted as "U.S. dollars", "dollars"
or "US$" refer to the legal currency of the United States. References to
"Singapore Dollars" or "S" are to the Singapore Dollar, the legal currency of
Singapore. 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.
15
Other Initiatives
We are generally 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. There can be no assurance, however, that we will be able to successfully
grow our revenues in the future, if ever.
Effective May 27, 2021, we granted Accell Technologies, Inc. ("ATI") an
exclusive license to use, market and sell our E-commerce Aggregator, Reward, AIM
and AdTech system ("System") in North America and South America for a period of
10 years (the "ATI License Agreement"). Pursuant to the terms of the ATI License
Agreement, ATI is obligated to pay a royalty fee of 10% of gross revenues, not
to exceed 20% of EBITDA on a per country basis in addition to other set up and
software maintenance fees. ATI completed its evaluation of our System, and we
expect ATI to complete the general software requirements specification ("SRS")
submission during the calendar quarter ended September 30, 2021. The foregoing
description of the ATI License Agreement is qualified in its entirety by
reference to such agreement which is filed as Exhibit 10.15 to this Annual
Report.
Effective June 25, 2021, we appointed Greatsolutions Pte. Ltd., a Singapore
corporation, ("GSP") to serve as our authorized distributor of our new
biodegradable waste recycling machine for the territory of Singapore in
accordance with the terms of that certain Authorized Distributor Agreement (the
"Authorized Distributor Agreement"). Pursuant to the terms of the Authorized
Distributor Agreement, agreed to purchase 100 units of our machines as well as
other related products and pay a license fee of One Million Dollars for the
first year of the term. The term of the Authorized Distributor Agreement will
begin upon the successful commission of the first machine in Singapore. We are
in the process of working with the relevant governmental agencies to have the
machines commissioned for use in Singapore. As of the date of this Annual
Report, we received $100,000 as a portion of the license fee. The foregoing
description of the Authorized Distributor Agreement is qualified in its entirety
by reference to such agreement which is filed as Exhibit 10.16 to this Annual
Report.
Financial Condition
During the twelve-month period following the date of this annual report, we
anticipate that we will not generate sufficient revenue to finance operations or
to implement our business plan. As of March 31, 2021, the Company suffered from
an accumulated deficit of $139,375,793 and working capital deficit of
$5,241,539. Accordingly, our audited consolidated financial statements have been
prepared using the going concern basis of accounting, which contemplates the
realization of assets and the satisfaction of liabilities in the normal course
of business.
The continuation of the Company as a going concern through March 31, 2022, is
dependent upon the continued financial support from its stockholders and funding
from existing shareholders or third parties. We anticipate that additional
funding will be in the form of equity financing from the sale of our common
stock or debt financing in the form of shareholder or other third party loans.
We do not have any financing arranged and we cannot provide investors with any
assurance that we will be able to raise sufficient funding from the sale of our
common stock or third party or shareholder loans to establish our business.
16
Results of Operations
Comparison of the years ended March 31, 2021 and March 31, 2020
The following table sets forth certain operational data for the year ended March
31, 2021, compared to the year ended March 31, 2020:
Year ended March 31,
2021 2020
Net Revenue $ 3,074,720 $ 13,405,499
Cost of revenue $ (1,851,942 ) $ (7,555,268 )
Gross profit $ 1,222,778 $ 5,850,231
Operating expenses:
Sales and marketing expense $ 163,741 $ 434,568
General and operating expenses $ 3,014,433 $ 7,525,068
Total operating expenses* $ (3,178,174 ) $ (7,959,636 )
Loss from operations* $ (1,955,396 ) $ (2,109,405 )
Loss before income taxes* $ (1,675,207 ) $ (1,904,952 )
NET LOSS* $ (1,676,479 ) $ (1,700,917 )
Stock based compensation $ - $ (10,810,357 )
NET LOSS (INCLUDING STOCK BASED COMPENSATION) $ (1,676,479 ) $ (12,511,274 )
*Excluding one-time, non-cash Stock based compensation for the year ended March
31, 2020.
Net Revenue. We generated net revenue of $3,074,720 and $13,405,499 for the
years ended March 31, 2021 and 2020, respectively.
For the year ended March 31, 2021, our net revenues were attributable to sales
from Singapore (86%), Malaysia (7%) and Philippines (5%). Net revenues were
primarily derived from VX vending machines (88%) with the balance consisting
mainly of administrative charges and service fees income.
For the year ended March 31, 2020, our net revenues were attributable to sales
from Singapore (46%), Malaysia (27%) and Philippines (13%). Our net revenues
were primarily attributable to V-More ecommerce (39%), Cerfrion backorder
deliveries (44%) and VX (software programming) (12%). The balance of net
revenues consisted mainly of administrative charges and course fees income.
In the near future, we expect to increase our focus on VX machine sales and
increase the full ecosystem adoption from IoT to VMore e-commerce.
17
For the years ended March 31, 2021 and 2020, the following geographic regions
accounted for 10% or more of our total net revenues:
Country March 31, 2021 March 31, 2020
Singapore 86% 46%
Malaysia 7% 27%
Philippines 5% 13%
Thailand 0% 6%
Indonesia 1% 3%
Greater China Region 0% 1%
Rest of the World 1% 4%
Total 100% 100%
For the years ended March 31, 2021 and 2020, no customers accounted for 10% or
more of our total net revenues.
Major Vendors.
For the year ended March 31, 2021, the following vendor representing more than
10% of the Company's purchase.
March 31, 2021 March 31, 2021
Vendor Amount for the year Accounts Payable
Barista Uno Private Limited* $ 275,071 $ 127,574
* Eldee Tang, our Chief Executive Officer and Director owns 31% of Barista Uno
Private Limited.
For the year ended March 31, 2020, no single vendor accounted for more than 10%
of the Company's purchases.
Gross Profit. We achieved a gross profit of $1,222,778 and $5,850,231 for the
years ended March 31, 2021, and 2020, respectively. The attributing factor for
the decreased in gross profit was due to lower sales during the Covid-19
pandemic climate. Singapore Covid-19 pandemic circuit breaker & heightened
measures (restricted movement of people, goods and services) were officially
imposed by the Singapore Government on April 7, 2020. However, prior to this
date (on 24 March, 2020), the Multi-Ministry Task Force had announced more
stricter measures to combat the spread of COVID-19, after a huge spike in cases
originating from returning Singaporeans in the community occurred. These
measures included the closure of entertainment venues, tuition and enrichment
centres and places of worship. Malls, retail establishments and tourist
attractions were required to reduce their crowd density in order to stay open.
Gatherings of more than 10 people outside of work and school were prohibited. As
of today, the measures are still in place. As Singapore is our key country of
operation and management, the circuit breaker measures have significantly and
adversely impacted our operations and revenues.
Operating Expenses. During the years ended March 31, 2021, and 2020, we incurred
operating expenses (excluding stock based compensation) of $3,178,174 and
$7,959,636 respectively. The decrease in operating expenses was due to the
streamlining of processes to improve efficiencies and cost cutting measures
taken amid the Covid-19 pandemic.
18
Net Loss (excluding stock based compensation). We recorded a net loss of
$1,676,479 and a net loss of $1,700,917 for the year ended March 31, 2021, and
2020, respectively. For the year ended March 31, 2021, the decrease in net loss
year-on-year is due to a decrease in operating expenses from the cost cutting
measures due to the Covid-19 pandemic. For the year ended March 31, 2020, the
net loss was due to higher operating expenses supporting higher sales activities
before Covid-19 pandemic cost cutting measures took place for the year ended
March 31, 2021.
Stock Based Compensation. For the year ended March 31, 2021, there was no stock
based compensation charge. For the year ended March 31, 2020, we incurred a
one-time, non-cash stock based compensation charge of $10,810,357 through an
aggregate issuance of 5,516,327 shares of our common stock, at a market value of
$2 per share, which primarily consisted of shares that were issued to our
digital consultant pursuant to the V-Consulting Agreement in connection to the
supply of 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. For the same period, we also entered into a
Consulting Agreement with pursuant to which Jenny Chen-Drake (the "Consultant")
agreed to render certain legal services in connection with its business (the
"Services"). We issued One Hundred Thousand (100,000) shares of the
Corporation's Common Stock, 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
Consultant with respect to such Services.
Net Loss (including stock based compensation). We recorded a net loss of
$1,676,479 and a net loss of $12,511,274 for the years ended March 31, 2021, and
2020, respectively. The improvement in the net loss is primarily due to an
absence of a stock based compensation charge for the year ended March 31, 2021.
For the year ended March 31, 2020 an one-time, non-cash stock based compensation
charge of $10,810,357 was incurred for the fulfillment through our digital
consultant vendor and legal consultant.
Liquidity and Capital Resources
As of March 31, 2021, we had current assets of $5,291,014 and current
liabilities of $10,532,553. Our current assets consisted of $48,214 of cash and
cash equivalents, deferred cost of $3,160,539, $79,951 of accounts receivable,
purchase deposits of $1,711,865, $275,293 of deposits, prepayment and other
receivables, inventories of $15,152. Our current liabilities consisted of
$4,288,981 of account payables and accrued liabilities, $4,085,010 of deferred
revenue, $1,488,322 of amount due to Eldee Tang, our Chief Executive Officer and
Director, $280,317 of amount due to related party consisting of unsecured
non-interest bearing advances from our shareholder Ms. Kao Wei-Chen, income tax
payable of $ 28,976 and current portion of borrowing of $360,947.
As of March 31, 2020, we had current assets of $6,746,428 and current
liabilities of $10,056,164. Our current assets consisted of $223,527 of cash and
cash equivalents, deferred cost of $4,252,107, $152,545 of accounts receivable,
purchase deposits of $1,619,966, $418,541 of deposits, prepayment and other
receivables, inventories of $14,339 and tax recoverable of $65,403. Our current
liabilities consisted of $2,216,563 of account payables and accrued liabilities,
$1,045,568 of commission liabilities, $6,239,296 of deferred revenue, $17,662 of
amount due to Eldee Tang, our Chief Executive Officer and Director, $280,317 of
amount due to related party consisting of unsecured non-interest bearing
advances from our shareholder Ms. Kao Wei-Chen and current portion of borrowing
of $256,758.
We had accumulated deficits of $139,375,793 and $137,703,504 as of March 31,
2021 and March 31, 2020, respectively. The increase in accumulated deficit is
mainly due to lower sales and operating expenses incurrence.
Related Party Transactions
From time to time, our shareholders advance funds to the Company on an
unsecured, non-interest bearing basis, which funds are due on demand. As of
March 31, 2021 and March 31, 2020, Ms. Kao Wei-Chen, our shareholder, advanced
$280,317, all of which is outstanding.
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During the years ended March 31, 2021 and 2020, we made payments to the related
parties as follow:
March 31, 2021 March 31, 2021
Vendor Amount for the year Accounts Payable
Barista Uno Private Limited $ 275,071 $ 127,574
March 31, 2020 March 31, 2020
Vendor Amount for the year Accounts Payable
Barista Uno Private Limited $ 3,601,886 $ 130,169
Eldee Tang, our Chief Executive Officer and Director, owns 31% of Barista Uno
Private Limited.
From time to time, Eldee Tang, our Chief Executive Officer and Director,
advances funds to the Company for working capital purposes. Those advances are
unsecured, non-interest bearing and due on demand. The imputed interest on the
loan from a related party was not significant. As of March 31, 2021 and 2020 the
Company owed Eldee Tang a balance of $1,488,322 and $17,662 respectively.
Year ended
March 31, 2021 March 31, 2020Net cash (used in) generated from operating activities $ (1,405,488 ) $ 62,619
Net cash used in investing activities
$ (161,591 ) (66,337 )
Net cash generated from (used in) financing activities $ 1,356,848 $ (119,664 )
Net Cash (Used In) Generated From Operating Activities
Net cash used in operating activities was $1,405,488 for the year ended March
31, 2021, and consisted primarily of a net loss of $1,676,479, adjusted for
amortization of intangible assets of $2,309, depreciation of property, plant and
equipment of $249,807, a loss on disposal of property, plant and equipment of
$6,156, a decrease in deferred costs of $1,337,650, an increase in account
payables and accrued liabilities of $1,953,781 offset by a decrease in account
receivable of $81,544, a decrease in deposits, prepayments and other receivable
of $273,179, a decrease in commission liabilities of $1,108,914, a decrease in
deferred revenue of $2,517,390 and a decrease in tax payable of $7,131.
Net cash generated from operating activities was $62,619 for the year ended
March 31, 2020, and consisted primarily of a net loss of $12,511,274, adjusted
for amortization of intangible of $273,790, intangible assets written-off of
$286,304, impairment loss on receivables of $1,390,996, loss on disposal of a
subsidiary of $72,922, receivables written-off of $178,560, unrealized foreign
exchange of $107,239, reversal of payables of $182,573, depreciation of
property, plant and equipment of $226,743, a gain on disposal of property, plant
and equipment of $3,593 and a one-time non-cash stock based compensation of
$11,010,357, decrease in inventories of $1,558, a decrease in account receivable
of $5,916,068, an increase in account payables and accrued liabilities of
$1,530,842 offset by an increase in deposits, prepayments and other receivable
of $255,369, an increase in deferred costs of $4,414,333, an increase in
purchase deposit of $502,093, a decrease in commission liabilities of $513,698,
a decrease in deferred revenue of $2,398,235 and a decrease in tax payable of
$151,592.
20
Net Cash Used In Investing Activities
Net cash used in investing activities was $161,591 for the year ended March 31,
2021, and consisted primarily of the proceed from disposal of property, plant
and equipment of $12,658 and purchases of property, plant and equipment of
$174,249.
Net cash used in investing activities was $66,337 for the year ended March 31,
2020, and consisted primarily of the proceed from disposal of property, plant
and equipment of $52,505, proceed from disposal of a subsidiary of $1, purchases
of property, plant and equipment of $112,061 and purchase of intangible assets
of $6,782.
Net Cash Generated from (Used In) Financing Activities
Net cash generated from financing activities for the year ended March 31, 2021
was $1,356,848 and consisted primarily of advances from Eldee Tang, our Chief
Executive Officer and director of $1,475,023, proceed from finance lease
$96,849, repayment of loan $153,319 and repayment of borrowings $61,705.
Net cash used in financing activities for the year ended March 31, 2020 was
$119,664 and consisted primarily of repayment to Eldee Tang, our Chief Executive
Officer and director of $72,090, advances from third parties of $218,769 and
repayment of borrowings $266,343.
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 sufficient 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 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.
21
· Basis of presentation
These accompanying 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 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.
· Related parties
The Company follows subtopic 850-10 of the FASB Accounting Standards
Codification 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 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 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.
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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 accounts payable and accrued expenses, approximate their fair values
because of the short maturity of these instruments.
Transactions involving related parties cannot be presumed to be carried out on
an arm's-length basis, as the requisite conditions of competitive, free-market
dealings may not exist. Representations about transactions with related parties,
if made, shall not imply that the related party transactions were consummated on
terms equivalent to those that prevail in arm's-length transactions unless such
representations can be substantiated.
· Recent accounting pronouncements
The Company has reviewed all recently issued, but not yet effective, accounting
pronouncements and does 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.
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