The information set forth in this Management's Discussion and Analysis of
Financial Condition and Results of Operations ("MD&A") contains certain
"forward--looking statements". Forward-looking statements are statements other
than historical information or statements of current condition. Some
forward--looking statements may be identified by use of terms such as
"believes", "anticipates", "intends" or "expects". These forward--looking
statements relate to our plans, liquidity, ability to complete financing and
purchase capital expenditures, growth of our business including entering into
future agreements with companies, and plans to successfully develop and obtain
approval to market our product. We have based these forward--looking statements
largely on our current expectations and projections about future events and
financial trends that we believe may affect our financial condition, results of
operations, business strategy and financial needs.
You should read the following discussion and analysis in conjunction with the
Financial Statements and Notes attached hereto, and the other financial data
appearing elsewhere in this report.
US Dollars are denoted herein by "USD", "$" and "dollars".
Overview
Umatrin Holding Limited (formerly known as Golden Opportunities Corporation)
("UMHL") was incorporated in the state of Delaware on February 2, 2005. UMHL was
originally incorporated in order to locate and negotiate with a targeted
business entity for the combination of that target company with the Company.
On January 6, 2016, UMHL acquired 80% of the equity interests of UMatrin
Worldwide SDN. BHD. ("Umatrin") in exchange for the issuance of a total of
100,000,000 shares of its common stock to the two holders of Umatrin, Dato' Sri
Eu Hin Chai and Dato' Liew Kok Hong. Immediately following the Share Exchange,
the business of Umatrin became the business of UMHL. The Company's operation
office remained in Malaysia and the business market will remain focus in Asia.
Umatrin, formerly known as OLC Worldwide SDN. BHD., was incorporated in Malaysia
on July 22, 1993. Umatrin has curated non-toxic beauty, personal care to health
and wellness products. We market our products through three primary methods:
direct contact, online distribution and/or by our dealer program. We apply
leading O2O (Online to Offline) marketing strategy to both retail and wholesale
trade. We provide technology and services to enable consumers, merchants and
other participants to conduct business in our cloud- based trading system. We
use advanced network technology and rigorous management system to create
unlimited business brand space. Without allocating large sums of operating cost,
it continuously introduces new products, combined with O2O internet business
model and career opportunities.
Results of Operations
Comparison for the three months ended June 30, 2020 and 2019
Sales
For the three months ended June 30, 2020, the Company generated $1,022,045 in
revenues, which has an increase of $582,878, or 133% compared to the three
months ended June 30, 2019. This is due to increase in sales volume for Akero
product series as the economy was improving.
Gross profit and gross margin
The Company was able to generate a gross profit margin of $570,755 for the three
months ended June 30, 2020, which has an increase of $200,005 or 54% compared to
the three months ended June 30, 2019. This is due to increase in sales volume
for new Akero product series which has higher profit margin and improvement in
the overall market condition.
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Selling, general and administrative costs
Major operating costs include salaries and wages, advertising and promotional
costs for the three months ended June 30, 2020 and 2019. Selling, general and
administrative costs increased from $252,309 for the three months ended June 30,
2019 to $277,607 for the three months ended June 30, 2020. The increase is due
to increase in operating cost such as increase in commission expenses, printing
and stationeries.
Net income
For the three months ended June 30, 2020, the Company had $287,121 in net profit
as compared to $112,414 in net profit for the three months ended June 30, 2019,
which was an increase in net profit of $174,707. The Company will continue to
implement new marketing strategies to improve its financial position.
Comparison for the six months ended June 30, 2020 and 2019
Sales
For the six months ended June 30, 2020, the Company generated $1,812,636 in
revenues, which has an increase of $1,218,670, or 205% compared to the six
months ended June 30, 2019. This is due to increase in sales volume for Akero
product series as the economy was improving.
Gross profit and gross margin
The Company was able to generate a gross profit margin of $1,302,599 for the six
months ended June 30, 2020, which has an increase of $803,024 or 160% compared
to the six months ended June 30, 2019. This is due to increase in sales volume
for new Akero product series which has higher profit margin and improvement in
the overall market condition.
Selling, general and administrative costs
Major operating costs include salaries and wages, advertising and promotional
costs for the six months ended June 30, 2020 and 2019. Selling, general and
administrative costs increased from $355,322 for the six months ended June 30,
2019 to $502,996 for the six months ended June 30, 2020. The increase is due to
increase in operating cost such as increase in commission expenses, printing and
stationeries.
Net income
For the six months ended June 30, 2020, the Company had $787,465 in net profit
as compared to $132,115 in net profit for the six months ended June 30, 2019,
which was an increase in net profit of $655,350. The Company will continue to
implement new marketing strategies to improve its financial position.
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Liquidity and Capital Resources
We had cash and cash equivalent of $132,500 and $171,678 as of June 30, 2020 and
December 31, 2019, respectively.
Our company's operations have been funded through an equity financing and a
series of debt transactions, primarily with shareholders, directors, and
officers of our company and affiliated entities. These related party debt
transactions such as advances have operated as informal lines of credit since
the inception of our company, and related parties have extended credit as needed
which our company has repaid at its convenience. We anticipate that we will
incur operating losses in the foreseeable future and we believe we will need
additional cash to support our daily operations while we are attempting to
execute our business plan and produce revenues. If our related parties are
unable or unwilling to provide additional capital, we would likely require
financing from third parties. There can be no assurance that any additional
financing will be available to us, on terms we believe to be favorable or at
all. The inability to obtain additional capital would have a material adverse
effect on our operations and financial condition and could force us to curtail
or discontinue operations entirely and/or file for protection under bankruptcy
laws.
The following table sets forth information about our net cash flow for the six
months ended June 30, 2020 and 2019:
For the six months ended
June 30, June 30,
2020 2019
Net cash provided by (used in) operating activities 436,888 180,313
Net cash provided by (used in) investing activities
(2,636 ) (2,851 )
Net cash provided by (used in) financing activities (471,054 ) (61,385 )
Operating Activities
For the six months ended June 30, 2020 we generated $436,888 in operating
activities as compared to generated $180,313 in operating activities during the
six months ended June 30, 2019. The increase in net cash provided by operating
activities resulted from increase in net income.
Investing Activities
During the six months ended June 30, 2020 we used $2,636 in investing activities
as compared to using $2,851 in investing activities during the six months ended
June 30, 2019. The movement in net cash used in investing activity resulted from
purchase of equipment.
Financing Activities
During the six months ended June 30, 2020, we used $471,054 in financing
activities as compared to generating $61,385 in financing activities during the
six months ended June 30, 2019.
During the six months ended June 30, 2020, the net cash provided by financing
activities resulted from net repayment to related party of $352,031 and net
repayment for borrowings of $119,023.
During the six months ended June 30, 2019, the net cash provided by financing
activities resulted from net proceeds received from related party of $51,859 and
net repayment to term loan of $9,526.
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Loan Commitment
On December 23, 2014, MYR 2,300,000 (approximately $657,507) term loan was
granted to Umatrin for the purchase of four Story Shop Offices located at No.32,
32-1, 32-2, 32-3, Jalan Radin Bagus 3, Bandar Baru Seri Petaling, 57000, Kuala
Lumpur with a repayment period of 240 months. This term loan was secured by (i)
title deed for the said property, and (ii) way of guarantee by directors of the
Company. This term loan is subject to an interest charges at 2.10% per annum
below the Bank's Base Lending Rate ("BLR") with daily rests. The BLR is
currently at 6.85% for both June 30, 2020 and December 31, 2019.
On July 27, 2015, the drawdown of MYR2,300,000 (approximately $609,554) was made
and repayment effectively starts on December 1, 2015 with a fixed installment of
MYR14,863.14 (approximately $3,561) for 240 installments.
Interest expenses were $12,318 and $12,318 for the three months ended June 30,
2020 and 2019, respectively.
We have no known demands or commitments and we are not aware of any events or
uncertainties as of June 30, 2020 that will result in or that are reasonably
likely to materially increase or decrease our current liquidity.
We had no material commitments for capital expenditure for the six months ended
June 30, 2019 and December 31, 2019 except mentioned above.
Going Concern
Our financial statements have been prepared on a going concern basis. As
reflected in the accompanying financial statements, the Company had accumulated
deficit of $2,746,870 as of June 30, 2020 which include a profit of $787,465 for
the six months ended June 30, 2020. We expect to finance our operations
primarily through our existing cash, our operations and any future financing.
However, there exists substantial doubt about our ability to continue as a going
concern because we will be required to obtain additional capital in the future
to continue our operations and there is no assurance that we will be able to
obtain such capital, through equity or debt financing, or any combination
thereof, or on satisfactory terms or at all. Additionally, no assurance can be
given that any such financing, if obtained, will be adequate to meet our capital
needs. If adequate capital cannot be obtained on a timely basis and on
satisfactory terms, our operations would be materially negatively impacted.
Therefore, our auditor has substantial doubt as to our ability to continue as a
going concern. Our ability to complete additional offerings is dependent on the
state of the debt and/or equity markets at the time of any proposed offering,
and such market's reception of the Company and the offering terms. There is no
assurance that capital in any form would be available to us, and if available,
on terms and conditions that are acceptable.
Critical Accounting Policies and Estimates
Please refer to Note 2 of our Consolidated Financial Statements included in the
financial statements for the year ended December 31, 2020 for details of our
critical accounting policies.
Off Balance Sheet Arrangements
We do not have any off balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, sales or expenses, results of operations, liquidity or
capital expenditures, or capital resources that are material to an investment in
our securities.
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UMATRIN HOLDING LIMITED 
