Green Vision Biotechnology Corp. (the "Company"), formerly known as VibeWireless Corp., also formerly known as Any Translation Corp., was incorporatedunder the laws of the State of Nevada on July 5, 2012. We were founded to be inthe business of translation and interpretation. The Company undertooktranslation and interpretation projects for various fields from business,economics, to science issues. The Company later adopted a business plan topursue business opportunities in the global telecommunications industry.
On September 2, 2015, a change in control of the Company took place by virtue ofthe Company's largest shareholder and sole officer and director at that time,selling 4,000,000 shares of the Company's common stock to Forestbay CapitalPartners II, LLC, a Delaware limited liability company. Such shares represented65.8% of the Company's total issued and outstanding shares of common stock. Aspart of the sale of the shares, Forestbay Capital Partners arranged with theformer officer and director, prior to his resignation as the sole officer anddirector of the Company Board, to appoint Mr. Edward Mooney as the sole officerand director of the Company. Mr. Mooney is the Manager of Forestbay CapitalPartners II, LLC.
On November 12, 2015, we changed our name to Vibe Wireless Corp in connectionwith merging with our wholly-owned subsidiary. This name change and our tickersymbol change was acknowledged by FINRA and effected in the market on November23, 2015.
The Company was originally incorporated under the laws of the State of Nevada onJuly 5, 2012 as Any Translation Corp.
On September 30, 2016, the Company filed a Certificate of Amendment with theNevada Secretary of State (the "Nevada SOS") whereby it amended its Articles ofIncorporation to increase the Company's authorized number of shares of commonstock from 75 million to 750 million and forward split all of its issued andoutstanding shares of common stock at a ratio of ten (10) shares for every one(1) share held. The Company's Board of Directors approved this amendment onSeptember 30, 2016.
On September 30, 2016, the Company filed Articles of Merger with the Nevada SOSwhereby it entered into a statutory merger with its wholly-owned subsidiary,Green Vision Biotechnology Corp. pursuant to Nevada Revised Statutes 92A.200 et.seq. The effect of such merger is that the Company is the surviving entity andchanged its name to "Green Vision Biotechnology Corp."
On September 30, 2016, the Company filed an Issuer Company-Related ActionNotification Form with FINRA requesting that the aforementioned forward splitand name change be effected in the market. The Company also requested that itsticker symbol be changed to "GVBT". This name change and our ticker symbolchange was acknowledged by FINRA and effected in the market on November 27,2016.
As disclosed in our Current Report on Form 8-K dated May 12, 2017 there was achange in our management. Effective May 3, 2017, the Company accepted theresignation of Edward P. Mooney as the sole officer of the Company and as thesole member of the Company's board of directors. Simultaneously, Mr. Ma Wai Kin,was elected as the Company's President, Secretary, Treasurer and a member of theBoard of Directors.
Our financial statements have been prepared assuming that we will continue as agoing concern and, accordingly, do not include adjustments relating to therecoverability and realization of assets and classification of liabilities thatmight be necessary should we be unable to continue our operation.
We expect we will require additional capital to meet our long-term operatingrequirements. We expect to raise additional capital through, among other things,the sale of equity or debt securities.
Result of Operations for the Three months ended March 31, 2019 and 2018
Revenue was $29,834 for the three months ended March 31, 2019 ("Q1"), decreasedby $23,083, or 43.6% from $52,917 for the three months ended March 31, 2018("Comparable Quarter"). The decrease in revenue during the Q1 as compared to theComparable Quarter was due to the restrictions on our production capacity as aresult of the enforcement on new environmental regulations over industrialproduction by coal-fired boilers by local authorities in Shanxi. In thisquarter, our company has conducted various field trials in Guangxi,Heilongjiang, and Yunnan in order to promote our products.
Cost of sales was decreased by $8,245, or 22.1% from $37,255 in the ComparableQuarter to $29,010 in Q1. The decrease was due to the decrease in productioncorresponding to the decrease in the sales revenue. In terms of percentage ofrevenue, cost of sales was 97.2% in Q1 as compared to 70.4% in the ComparableQuarter. The decrease in cost of sales with the increase in percentage torevenue, was due to the significant decrease in the production level whichworsen the mass of production effect.
Gross profit was decreased by $14,838, or 94.7% from $15,662 in the ComparableQuarter to $824 in Q1. The decrease reflected the correlation in reduction ofrevenue. In terms of percentage of revenue, the gross profit percentage wasdecreased to 2.8% for Q1 as compared to 29.6% for the Comparable Quarter. Thedecrease was primarily due to the significant drop in the sales revenue withresulted to the decrease in the production level.
Selling expenses were decreased by $3,851 or 98.8% from $3,898 for theComparable Quarter to $47 in Q1. In terms of percentage of revenue, the rateswere 0.2% in Q1 compared to 7.4% in the Comparable Quarter. The decrease isprimarily due to the decrease of testing expenses and shipping andtransportation expenses which were correlated to the decrease in sales.
General and administrative expenses were decreased by $144,405, or 59.3% from$243,371 for the Comparable Quarter to $98,966 for Q1. The decrease is primarilydue to the salary and consultation fee in Q1.
The following is a summary of general and administrative expenses for the threemonths ended March 31, 2019, and 2018.
Salary and payroll expenses 15,507 54,832 (39,325 )Professional fees
Consulting fees were decreased by $42,977, or 73.4%, from $58,585 in ComparableQuarter to $15,608 in Q1, owing to the engagement of less external consultantsto improve the Company's operating activities in the Comparable Quarter.
Our salary and payroll expenses were decreased by $39,325, or 71.7%, to $15,507in Q1, as compared to $54,832 in the Comparable Quarter. We anticipate thatsalary and payroll expenses will rise in future periods as it becomes necessaryto increase our staff in order to enhance our management quality for the listingrequirement and to increase our production activities.
Professional fees were decreased by $501, from $7,909 in Comparable Quarter to$7,408 in Q1. The decrease of professional fees was due to the engagement ofless independent professionals such as international lawyers and accountants.
Travel and entertainment expenses were decreased by $11,404, or 55.0%, from$20,735 in Comparable Quarter to $9,331 in Q1. The decrease of travel andentertainment expenses was due to the reduction of project-based travellingactivities.
Research and Development expenses were decreased to $Nil in Q1 from $786 inComparable Quarter.
Depreciation and amortization expenses were decreased by $12,750, or 23.0%, from$55,428 in Comparable Quarter to $42,678 in Q1.
Other expenses include items such as office expenses, software related costs,telephone and a variety of other miscellaneous expenses. None of these expensesalone changed significantly except transportation fee, as the difference was$36,662, or 81.3% decrease from $45,096 in Comparable Quarter to $8,434 in Q1.
We anticipate that we will incur higher general and administrative expenses as apublic company. We expect that our professional fees, cost of transfer agent,investor relations costs and other stock related costs will increase.
We also anticipate that selling, general and administrative expenses willconcurrently increase with our increased activity in the future but will notincrease in the same proportion to that of revenue.
Our loss from operations was decreased by $133,418 or 57.6%, to negative $98,189in Q1, from $231,607 in Comparable Quarter.
Non-operating income (expenses) was increased by $24,201, or 1419%, to income of$22,495 in Q1, from expenses of negative $1,706 in Comparable Quarter, of whichmainly due to the increase of other income increase $28,135 from $124 inComparable Quarter to $28,259 in Q1.
The net loss attributed to the Company was reduced by $157,619, or 67.6% tonegative $75,694 in Q1, as compared to negative $233,313 in Comparable Quarter.
Liquidity and Capital Resources
The Company's liquidity and capital is dependent on whether the Company iscapable of generating its revenues and increasing its capital for thedevelopment and expansion of its business.
Management plans to support the Company's operation and its business strategy byraising funds through public and private offerings and relying on officers anddirectors to perform essential management functions with minimal compensation.If we do not raise all of the money we need from a public offering, we will haveto find alternative sources, such as a private placement of securities, or loansfrom our officers, directors or others. The loans are likely to be unsecured,non-interest bearing and repayable at demand.
Moreover, management has actively taken steps to revise its operating andfinancial needs. Management believes that the Company's current and availablecapital resources will allow it to continue its operations throughout thisfiscal year.
At March 31, 2019, we had a working capital deficit of $9,718,626, as comparedto a working capital deficit of $9,596,914 at December 31, 2018. Of the workingcapital deficit at March 31, 2019, $9,454,171 was amount due to related partiesand shareholder. Excluding the amounts due to related parties and shareholder,we would have had a negative working capital of $264,455 at March 31, 2019. Ascomparison, the working capital deficit at December 31, 2018, $9,361,322 wasamount due to related parties and holding company. Excluding the amounts due torelated parties and holding company, we would have had a negative workingcapital of $235,592 at December 31, 2018. The amounts due to related parties andshareholder are unsecured, interest free and repayable on demand.
During the three months ended March 31, 2019, operating activities used cash of$4,550, and for the comparable three months ended March 31, 2018, operatingactivities used cash in operations of $122,676. The use of cash in operatingactivities for the three months ended March 31, 2019 was mainly derived from anet loss of $75,694 with a non-cash item of $42,678 ($36,710 plus $5,968) indepreciation and amortization and negative $66,640 in inventory provisionreversal ; moreover, there was an increase in cash of $66,640 in inventories; anincrease in cash of $38,113 in other payable and an increase in cash of $21,813in accrued expenses, which were offset by a decrease in cash of $1,883 inaccounts receivable; a decrease in cash of 2,402 in accounts payable; a decreasein cash of $25,084 in accrued payroll and a decrease in cash of $2,509 in amountdue to related parties. As comparison, the use of cash in operating activitiesfor the comparable three months ended March 31, 2018 was mainly derived from anet loss of $ $233,313 with a non-cash item of $67,498 ($61,167 plus $6,331) indepreciation and amortization; moreover, there was an increase in cash of$10,230 in inventories; an increase in cash of $13,843 in other receivables; anincrease in cash of $26,664 in other payable and an increase in cash of $55,215in amount due to related parties, which were offset by a decrease in cash of$33,882 in accounts receivable; a decrease in cash of 10,613 in tax payables;and a decrease in cash of $34,942 in accrued expenses.
During the three months ended March 31, 2019, investing activities used $Nil ofcash; and for comparable three months ended March 31, 2018, investing activitiesused $2,112 of cash.
During the three months ended March 31, 2019, financing activities provided cashof $8,730; and for comparable three months ended March 31, 2018, financingactivities provided cash of $104,692. The change of cash provided by financingactivities was derived from the changes in the amounts due to our shareholder.
As at March 31, 2019, net cash and cash equivalents balance was $13,447 ascompared to balance $9,114 as at December 31, 2018.
As of March 31, 2019, stockholder's equity was negative $6,489,388, compared toa negative equity of $6,405,098 at December 31, 2018.
The source of fund for supporting the Company's business operation was loansfrom directors and shareholders. In the event the directors and shareholders donot continue to support the Company's business operation, the Company could beshort of funds and may not be able to operate any longer. The amounts due torelated parties and director are interest-free loans. These loans are unsecuredand have no fixed repayment terms.
Plan of Operation and Funding
We expect that working capital requirements will continue to be funded through acombination of our existing funds, loans from third parties, other debtfacilities, or further issuances of securities. Our working capital requirementsare expected to increase in line with the growth of our business.
Existing working capital, further advances and debt instruments, and anticipatedcash flow are expected to fund our operations over the next three months. Wehave no lines of credit or other bank financing arrangements. In connection withour business plan, management anticipates additional increases in operatingexpenses and capital expenditures relating to: (i) developmental expensesassociated with a growing business; and (ii) marketing expenses. We intend tofinance these expenses with further issuances of securities, and debt issuances.Thereafter, we expect we will need to raise additional capital and generaterevenues to meet long-term operating requirements. Additional issuances ofequity or convertible debt securities will result in dilution to theshareholdings of our current shareholders. Further, such securities might haverights, preferences or privileges senior to our common stock. Additionalfinancing may not be available upon acceptable terms, or at all. If adequatefunds are not available or are not available on acceptable terms, we may not beable to take advantage of prospective new business endeavors or opportunities,which could significantly and materially restrict our business operations. Wewill have to raise additional funds in the next twelve months in order tosustain and expand our operations. We currently do not have a specific plan ofhow we will obtain such funding; however, we anticipate that additional fundingwill be in the form of equity financing from the sale of our common stock. Wehave and will continue to seek to obtain short-term loans from our directors,although no future arrangement for additional loans has been made. We do nothave any agreements with our directors concerning these loans. We do not haveany arrangements in place for any future equity financing.
Since 2017, local government of Jinzhong City, Shanxi Province, China (whereShanxi Lutu and our production plant is located) has promulgated a new set ofenvironmental regulations restricting the use of coal-fired boilers infactories. Since coal-powered generators were used in our production plant, ourproduction activities in 2019 were restricted to a certain extent.
We cannot ensure that we can comply with the new environmental regulations intime. If that is the case, our production and our production capacity may bereduced as a result. This will affect our ability to generate income and to meetthe demand of our customers, which in turn could have a material adverse effecton our financial condition and results of operations.
Due to the enforcement on new environmental regulations over industrialproduction by coal-fired boilers by local authorities in Shanxi, the Company'sproduction was restricted to a certain extent in 2017. In order to fully complywith the new environmental regulations in place, management of the Company hadplanned to carry our rectification work and expected that the rectification workcould be completed by mid of 2018 and full-scale production might resume in thesecond half of 2018. However, due to the shortage of funding to carry out therectification work on our coal-powered generators, our production activitieswere restricted since second quarter in 2018. Our production and our productioncapacity was reduced as a result, significantly affected our ability to generateincome and to meet the demand of our customers, which in turn had a materialadverse effect on our financial condition and results of operations. Themanagement had decided to maintain our business by way of sub-contracting orassignment of the production. Furthermore, the management had further researchedfor other business opportunity to utilize the reduced capacity of the propertyand equipment, in order to make better the worsened revenue.
Off-Balance Sheet Arrangements
As of the date of this Quarterly Report, we do not have any off-balance sheetarrangements that have or are reasonably likely to have a current or futureeffect on our financial condition, changes in financial condition, revenues orexpenses, results of operations, liquidity, capital expenditures or capitalresources that are material to investors.
The independent auditors' report accompanying our December 31, 2018 auditedfinancial statements filed in Form 10-K on May 15, 2020 contained an explanatoryparagraph expressing substantial doubt about our ability to continue as a goingconcern. The financial statements have been prepared "assuming that we willcontinue as a going concern," which contemplates that we will realize our assetsand satisfy our liabilities and commitments in the ordinary course of business.
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GREEN VISION BIOTECHNOLOGY : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION (form 10-Q) - marketscreener.com
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