UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended April 30, 2020

 

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

 

For the transition period from ____________ to ______________

 

Commission file number: 001-39052

 

Toga Limited

(Exact name of registrant as specified in its charter)

 

Nevada

 

98-0568153

(State or other jurisdiction of incorporation or organization)

 

(IRS Employer Identification No.)

 

2575 McCabe Way, Suite 100

Irvine, CA 92614

(Address of principal executive offices)

 

(949) 333-1603

(Registrant’s telephone number)

 

Securities registered pursuant to Section 12(b) of the Act

 

Title of Each Class

 

Trading Symbol(s)

 

Name of each Exchange on which registered

N/A

 

N/A

 

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 (§232.405 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

x

Non-accelerated filer

¨

Smaller reporting company

x

 

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 ☒

 

The number of shares of the issuer’s common stock outstanding as of June 10, 2020 was 91,011,633 shares, par value $0.0001 per share.

 

 

 

TOGA LIMITED

FORM 10-Q

Quarterly Period Ended April 30, 2020

 

 

Page

 

PART I. FINANCIAL INFORMATION

 

3

 

 

 

 

Item 1.

Financial Statements

 

3

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

26

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

42

 

Item 4.

Controls and Procedures

 

42

 

PART II. OTHER INFORMATION

 

43

 

 

 

 

Item 1.

Legal Proceedings

 

43

 

Item 1A.

Risk Factors

 

43

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

43

 

Item 3.

Defaults Upon Senior Securities

 

43

 

Item 4.

Mine Safety Disclosures

 

43

 

Item 5.

Other Information

 

43

 

Item 6.

Exhibits

 

44

 

SIGNATURES

 

45

 

 
2

Table of Contents

 

PART I. FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

     

 

Page

 

Condensed Consolidated Balance Sheets as of April 30, 2020 and July 31, 2019 (Unaudited)

 

4

Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended April 30, 2020 and 2019 (Unaudited)

 

5

Condensed Consolidated Statements of Changes in Stockholders' Equity for the Nine Months Ended April 30, 2020 and 2019 (Unaudited)

6

 

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended April 30, 2020 and 2019 (Unaudited)

 

8

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

9

 

 
3

Table of Contents

 

Toga Limited and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)

 

 

 

April 30,

 

 

July 31,

 

 

 

2020

 

 

2019

 

ASSETS

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$ 11,269,840

 

 

$ 14,916,556

 

Accounts receivable, net

 

 

633,979

 

 

 

294,266

 

Prepaid expense, deposits and other current assets

 

 

1,364,069

 

 

 

1,199,649

 

Inventories

 

 

889,527

 

 

 

162,985

 

Total Current Assets

 

 

14,157,415

 

 

 

16,573,456

 

 

 

 

 

 

 

 

 

 

Operating lease right-of-use assets

 

 

182,248

 

 

 

-

 

Property and equipment, net

 

 

4,309,445

 

 

 

4,421,252

 

Intangible asset – goodwill

 

 

11,718

 

 

 

11,718

 

TOTAL ASSETS

 

$ 18,660,826

 

 

$ 21,006,426

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$ 5,732,741

 

 

$ 4,221,413

 

Due to related parties

 

 

20,686

 

 

 

1,083

 

Notes due to related parties

 

 

-

 

 

 

24,126

 

Deferred revenue

 

 

5,603,071

 

 

 

1,782,252

 

Income tax payable

 

 

-

 

 

 

52,641

 

Operating lease liabilities, current portion

 

 

161,269

 

 

 

-

 

Total Current Liabilities

 

 

11,517,767

 

 

 

6,081,515

 

 

 

 

 

 

 

 

 

 

Operating lease liabilities, non-current portion

 

 

20,979

 

 

 

-

 

Deferred tax liabilities

 

 

8,344

 

 

 

8,574

 

Total Liabilities

 

 

11,547,090

 

 

 

6,090,089

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity

 

 

 

 

 

 

 

 

Preferred stock, $0.0001 par value, 20,000,000 shares authorized; none issued and outstanding

 

 

-

 

 

 

-

 

Common stock, $0.0001 par value, 1,000,000,000 shares authorized; 91,011,633 and 90,762,893 shares issued and outstanding as of April 30, 2020 and July 31, 2019, respectively

 

 

9,101

 

 

 

9,076

 

Common stock subscribed; 30,000,000 common shares

 

 

-

 

 

 

(3,000 )

Additional paid-in capital

 

 

42,242,668

 

 

 

38,993,002

 

Accumulated other comprehensive income

 

 

(11,142 )

 

 

69,238

 

Accumulated deficit

 

 

(35,153,704 )

 

 

(24,210,347 )

Total Stockholders’ Equity of Toga Ltd.

 

 

7,086,923

 

 

 

14,857,969

 

Non-controlling interest

 

 

26,813

 

 

 

58,368

 

Total Stockholders' Equity

 

 

7,113,736

 

 

 

14,916,337

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$ 18,660,826

 

 

$ 21,006,426

 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

 

  

 
4

Table of Contents

Toga Limited and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

April 30,

 

 

April 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$ 2,176,670

 

 

$ 3,104,032

 

 

$ 8,719,525

 

 

$ 4,703,168

 

Cost of goods sold

 

 

1,950,594

 

 

 

1,641,101

 

 

 

6,335,778

 

 

 

1,885,324

 

Gross profit

 

 

226,076

 

 

 

1,462,931

 

 

 

2,383,747

 

 

 

2,817,844

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, General and administrative expenses

 

 

671,394

 

 

 

431,906

 

 

 

5,830,163

 

 

 

1,725,779

 

Salaries and wages

 

 

650,030

 

 

 

7,576,512

 

 

 

5,751,943

 

 

 

8,224,676

 

Professional fees

 

 

683,938

 

 

 

216,824

 

 

 

1,617,526

 

 

 

846,465

 

Depreciation

 

 

137,468

 

 

 

18,311

 

 

 

323,731

 

 

 

41,974

 

Total Operating Expenses

 

 

2,142,830

 

 

 

8,243,553

 

 

 

13,523,363

 

 

 

10,838,894

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

 

(1,916,754 )

 

 

(6,780,622 )

 

 

(11,139,616 )

 

 

(8,021,050 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income

 

 

5,072

 

 

 

-

 

 

 

115,228

 

 

 

-

 

Interest income

 

 

15,914

 

 

 

4,112

 

 

 

54,448

 

 

 

6,833

 

Interest expense

 

 

(1,775 )

 

 

(118 )

 

 

(4,972 )

 

 

(185 )

Total Other Income (Expense)

 

 

19,211

 

 

 

3,994

 

 

 

164,704

 

 

 

6,648

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before Income Taxes

 

 

(1,897,543 )

 

 

(6,776,628 )

 

 

(10,974,912 )

 

 

(8,014,402 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax Provision

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

$ (1,897,543 )

 

$ (6,776,628 )

 

$ (10,974,912 )

 

$ (8,014,402 )

Less: Net Loss attributable to non-controlling interest

 

 

(23,246 )

 

 

-

 

 

 

(31,555 )

 

 

-

 

Net Loss attributable to Toga Ltd.

 

 

(1,874,297 )

 

 

(6,776,628 )

 

 

(10,943,357 )

 

 

(8,014,402 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER COMPREHENSIVE INCOME (LOSS)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(21,597 )

 

 

(121,785 )

 

 

(80,380 )

 

 

(26,407 )

Total Comprehensive Loss

 

$ (1,919,140 )

 

$ (6,898,413 )

 

$ (11,055,292 )

 

$ (8,040,809 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BASIC AND DILUTED NET LOSS PER COMMON SHARE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING

 

 

91,003,291

 

 

 

8,903,619

 

 

 

90,921,322

 

 

 

8,022,235

 

NET LOSS PER COMMON SHARE

 

$ (0.02 )

 

$ (0.76 )

 

$ (0.12 )

 

$ (1.00 )

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

 

 
5

Table of Contents

Toga Limited and Subsidiaries

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the Nine Months Ended April 30, 2020

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

Common Stock

 

 

 

 

 

Additional

 

 

 

 

 

Comprehensive

 

 

Non-

 

 

Total

 

 

 

Number of Shares

 

 

Amount

 

 

Subscription

Receivable

 

 

Paid-in

Capital

 

 

Accumulated

Deficit

 

 

Income

(Loss)

 

 

controlling

Interest

 

 

Stockholders'

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - July 31, 2019

 

 

90,762,893

 

 

$ 9,076

 

 

$ (3,000 )

 

$ 38,993,002

 

 

$ (24,210,347 )

 

$ 69,238

 

 

$ 58,368

 

 

$ 14,916,337

 

Cancellation of common shares

 

 

(24,614 )

 

 

(2 )

 

 

-

 

 

 

2

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Reissuance of previously cancelled shares

 

 

20,000

 

 

 

2

 

 

 

-

 

 

 

(2 )

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Issuance of stock options

 

 

-

 

 

 

-

 

 

 

-

 

 

 

44,470

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

44,470

 

Other comprehensive loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(40,487 )

 

 

-

 

 

 

(40,487 )

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(3,826,719 )

 

 

-

 

 

 

(1,623 )

 

 

(3,828,342 )

Balance - October 31, 2019

 

 

90,758,279

 

 

 

9,076

 

 

 

(3,000 )

 

 

39,037,472

 

 

 

(28,037,066 )

 

 

28,751

 

 

 

56,745

 

 

 

11,091,978

 

Issuance of common shares for employee compensation

 

 

253,354

 

 

 

25

 

 

 

-

 

 

 

3,294,018

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,294,043

 

Issuance of stock options

 

 

-

 

 

 

-

 

 

 

-

 

 

 

43,589

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

43,589

 

Proceeds from common stock subscribed

 

 

-

 

 

 

-

 

 

 

3,000

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,000

 

Forgiveness of related party note

 

 

-

 

 

 

-

 

 

 

-

 

 

 

24,126

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

24,126

 

Other comprehensive loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(18,296 )

 

 

-

 

 

 

(18,296 )

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(5,242,341 )

 

 

-

 

 

 

(6,686 )

 

 

(5,249,027 )

Balance - January 31, 2020

 

 

91,011,633

 

 

 

9,101

 

 

 

-

 

 

 

42,399,205

 

 

 

(33,279,407 )

 

 

10,455

 

 

 

50,059

 

 

 

9,189,413

 

Redemption of stock options

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(156,537 )

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(156,537 )

Other comprehensive loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(21,597 )

 

 

-

 

 

 

(21,597 )

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,874,297 )

 

 

-

 

 

 

(23,246 )

 

 

(1,897,543 )

Balance - April 30, 2020

 

 

91,011,633

 

 

$ 9,101

 

 

$ -

 

 

$ 42,242,668

 

 

$ (35,153,704 )

 

$ (11,142 )

 

$ 26,813

 

 

$ 7,113,736

 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

 
6

Table of Contents

Toga Limited and Subsidiaries

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the Nine Months Ended April 30, 2019

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

Common Stock

 

 

 

 

Additional

 

 

 

 

Comprehensive

 

 

Total

 

 

 

Number of Shares

 

 

Amount

 

 

Subscription

Receivable

 

 

Paid-in

Capital

 

 

Accumulated

Deficit

 

 

Income

(Loss)

 

 

Stockholders'

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - July 31, 2018

 

 

69,586,517

 

 

$ 6,959

 

 

$ (3,000 )

 

$ 16,942,861

 

 

$ (14,351,459 )

 

$ (53,996 )

 

$ 2,541,365

 

Issuance of common shares for cash

 

 

6,270,762

 

 

 

627

 

 

 

-

 

 

 

1,253,524

 

 

 

-

 

 

 

-

 

 

 

1,254,151

 

Cancellation of common shares

 

 

(20,000 )

 

 

(2 )

 

 

-

 

 

 

2

 

 

 

-

 

 

 

-

 

 

 

-

 

Other comprehensive loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(27,507 )

 

 

(27,507 )

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(335,463 )

 

 

-

 

 

 

(335,463 )

Balance - October 31, 2018

 

 

75,837,279

 

 

 

7,584

 

 

 

(3,000 )

 

 

18,196,387

 

 

 

(14,686,922 )

 

 

(81,503 )

 

 

3,432,546

 

Issuance of common shares for cash

 

 

2,993,121

 

 

 

299

 

 

 

-

 

 

 

598,327

 

 

 

-

 

 

 

-

 

 

 

598,626

 

Issuance of common shares for digital currency

 

 

8,575,916

 

 

 

858

 

 

 

-

 

 

 

3,802,822

 

 

 

-

 

 

 

-

 

 

 

3,803,680

 

Cancellation of common shares

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Other comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

122,885

 

 

 

122,885

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(902,311 )

 

 

-

 

 

 

(902,311 )

Balance - January 31, 2019

 

 

87,406,316

 

 

 

8,741

 

 

 

(3,000 )

 

 

22,597,536

 

 

 

(15,589,233 )

 

 

41,382

 

 

 

7,055,426

 

Issuance of common shares for cash

 

 

1,226,479

 

 

 

123

 

 

 

-

 

 

 

245,173

 

 

 

-

 

 

 

-

 

 

 

245,296

 

Issuance of common shares for digital currency

 

 

396,293

 

 

 

40

 

 

 

-

 

 

 

79,218

 

 

 

-

 

 

 

-

 

 

 

79,258

 

Issuance of common shares for compensation

 

 

782,948

 

 

 

78

 

 

 

-

 

 

 

6,805,219

 

 

 

-

 

 

 

-

 

 

 

6,805,297

 

Other comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(121,785 )

 

 

(121,785 )

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(6,776,628 )

 

 

-

 

 

 

(6,776,628 )

Balance - April 30, 2019

 

 

89,812,036

 

 

$ 8,981

 

 

$ (3,000 )

 

$ 29,727,147

 

 

$ (22,365,861 )

 

$ (80,403 )

 

$ 7,286,864

 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

 
7

Table of Contents

 

Toga Limited and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

Nine Months Ended

 

 

 

April 30,

 

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net loss

 

$ (10,974,912 )

 

$ (8,014,402 )

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

323,731

 

 

 

41,974

 

Stock based compensation

 

 

3,382,102

 

 

 

6,805,297

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(340,306 )

 

 

149,702

 

Prepaid expenses, deposits and other current assets

 

 

(213,982 )

 

 

(309,220 )

Inventories

 

 

(750,307 )

 

 

(205,406 )

Accounts payable and accrued liabilities

 

 

1,675,810

 

 

 

787,558

 

Deferred revenue

 

 

3,818,863

 

 

 

643,336

 

Income tax payable

 

 

(61,216 )

 

 

-

 

Deferred tax liabilities

 

 

8,344

 

 

 

-

 

Operating lease liabilities

 

 

(141,060 )

 

 

-

 

Net cash used in operating activities

 

 

(3,272,933 )

 

 

(101,161 )

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(247,333 )

 

 

(198,017 )

Net cash used in investing activities

 

 

(247,333 )

 

 

(198,017 )

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Proceeds from common stock subscribed

 

 

3,000

 

 

 

-

 

Proceeds from issuance of common stock

 

 

-

 

 

 

2,098,073

 

Redemption of stock options

 

 

(156,537 )

 

 

-

 

Proceeds from related parties

 

 

105,708

 

 

 

126,813

 

Repayment to related parties

 

 

(86,105 )

 

 

(74,927 )

Net cash provided by (used in) financing activities

 

 

(133,934 )

 

 

2,149,959

 

 

 

 

 

 

 

 

 

 

Effects on changes in foreign exchange rate

 

 

7,484

 

 

 

(98,153 )

 

 

 

 

 

 

 

 

 

Net change in cash and cash equivalents

 

 

(3,646,716 )

 

 

1,752,628

 

Cash and cash equivalents - beginning of period

 

 

14,916,556

 

 

 

1,064,672

 

Cash and cash equivalents - end of period

 

$ 11,269,840

 

 

$ 2,817,300

 

 

 

 

 

 

 

 

 

 

Supplemental Cash Flow Disclosures:

 

 

 

 

 

 

 

 

Cash paid for interest

 

$ -

 

 

$ -

 

Cash paid for income taxes

 

$ -

 

 

$ -

 

 

 

 

 

 

 

 

 

 

Non-Cash Investing and Financing Activity:

 

 

 

 

 

 

 

 

Cancellation of Common Stock

 

$ 2

 

 

$ 2

 

Reissuance of previously cancelled Common Stock

 

$ 2

 

 

$ -

 

Debt forgiven by related party

 

$ 24,126

 

 

$ -

 

Operating lease right-of-use assets

 

$ 333,798

 

 

$ -

 

Common shares issued for digital currency

 

$ -

 

 

$ 3,882,938

 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

 
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Toga Limited

Notes to Condensed Consolidated Financial Statements

April 30, 2020

(Unaudited)

 

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. They do not include all information and notes required by U.S. GAAP for complete financial statements. However, except as disclosed herein, there has been no material change in the information disclosed in the Notes to Consolidated Financial Statements included in the Annual Report on Form 10-K of Toga Limited for the year ended July 31, 2019, that was filed with the Securities and Exchange Commission (the “SEC”) on November 14, 2019.

 

When used in these notes, the terms “Toga Limited,” “Company,” “we,” “us,” and “our” mean Toga Limited and all entities included in our condensed consolidated financial statements. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended April 30, 2020 are not necessarily indicative of the results that may be expected for the year ending July 31, 2020.

 

Reclassification

 

Balance Sheets & Income Statements

 

Certain amounts from prior periods have been reclassified to conform to the current period presentation.

 

Equity Statement

 

The Company has reclassified a balance related to Non-controlling Interest to Accumulated Other Comprehensive Income as of July 31, 2019. The impact was an increase of Non-controlling Interest of $116,736 and a decrease in the Accumulated Other Comprehensive Income of $116,736. The equity reclassification was due to an incorrect classification of the Non-controlling Interest balance during the year-ended July 31, 2019. The net effect of this reclassification on total equity was $0.

 

These reclassifications had no effect on the reported results of operations for the three and nine months ended April 30, 2020.

 

Basis of Consolidation

 

The accompanying condensed consolidated financial statements include the accounts of: (i) the Company’s wholly owned subsidiary, TOGL Technology Sdn. Bhd., a Malaysian company ("TOGL Technology"); (ii) TOGL Technology's Taiwan branch office ("Taiwan Branch Office"); (iii) TOGL Technology's wholly owned subsidiaries, Toga Vietnam Company Limited ("Toga Vietnam") and WGS Discovery Tours & Travel, a Malaysian company ("WGS") which operates under the Company’s brand name “TogaGo”; (iv) the Company’s majority owned (95%) subsidiary, PT. Toga International Indonesia, an Indonesian limited liability company ("Toga International"); and (v) Toga International's majority owned (67%) subsidiary, PT TOGL Technology Indonesia, an Indonesian limited liability company ("PT TOGL Technology Indonesia").

 

Basic and Diluted Earnings per Share

 

Pursuant to authoritative guidance, basic net income and net loss per share are computed by dividing the net income and net loss by the weighted average number of common shares outstanding. Diluted net income and net loss per share is the same as basic net income and net loss per share when their inclusion would have an anti-dilutive effect due to our continuing net losses.

 

 
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Inventories

 

Inventories are stated at the lower of cost or net realizable value, with cost being determined on the first-in, first-out (“FIFO”) method.

 

No reserves are considered necessary for slow moving or obsolete inventory as inventory on hand at year-end was purchased near the end of the year. The Company continuously evaluates the adequacy of these reserves and makes adjustments to these reserves as required.

 

As of April 30, 2020 and July 31, 2019, the Company had inventories consisting of health and beauty products of $889,527 and $162,985, respectively.

  

Leases

 

Effective August 1, 2019, the Company adopted the Financial Accounting Standards Board’s (the “FASB”) Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), and additional ASUs issued to clarify and update the guidance in ASU 2016-02 (collectively, the “new leases standard”), which modifies lease accounting for lessees to increase transparency and comparability by recording lease assets and liabilities for operating leases and disclosing key information about leasing arrangements. The Company adopted the new leases standard utilizing the modified retrospective transition method, under which amounts in prior periods presented were not restated. For contracts existing at the time of adoption, the Company elected to not reassess (i) whether any are or contain leases, (ii) lease classification, and (iii) initial direct costs. Upon adoption, the Company recorded $333,798 of right-of-use (“ROU”) assets and $333,798 of lease liabilities on its Condensed Consolidated Balance Sheet.

 

Equipment and Furniture

 

Property and equipment are stated at cost. Depreciation is computed using the straight-line method. The depreciation and amortization methods are designed to amortize the cost of the assets over their estimated useful lives, in years, of the respective assets as follows:

 

Building

20 years

Renovation

1 to 5 years

Fixtures and Furniture

4 to 5 years

Tools and Equipment

4 to 5 years

Vehicles

3 to 5 years

Computer Equipment

4 to 5 years

 

Maintenance and repairs are charged to expense as incurred. Improvements of a major nature are capitalized. At the time of retirement or other disposition of property and equipment, the cost and accumulated depreciation are removed from the accounts and any gains or losses are reflected in income.

 

The long-lived assets of the Company are reviewed for impairment in accordance with ASC 360, “Property, Plant and Equipment” (“ASC 360”), whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. During the nine months ended April 30, 2020 and 2019, no impairment losses have been identified.

 

 
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Foreign Currency Translations

 

The Company’s functional and reporting currency is the U.S. dollar. We have four subsidiaries and one business division which use various currencies as follows: WGS and TOGL Technology’s functional currency is the Malaysian ringgit (the “MYR”); the functional currency of the Taiwan Branch Office of TOGL Technology is the New Taiwan dollar (“NTD”); Toga Vietnam’s functional currency is the Vietnamese dong (“VND”); PT Toga International Indonesia and PT TOGL Technology Indonesia’s currency is the Indonesian rupiah (“IDR”) and aforementioned currencies are translated into U.S. dollars in accordance with ASC 830-30, “Translation of Financial Statements,” as follows:

 

 

(1)

Monetary assets and liabilities are translated at the rate of exchange in effect at the balance sheet date.

 

(2)

Equity is translated at historical exchange rates at the time of the transaction.

 

(3)

Revenue and expense items are translated at the average rate of exchange prevailing during the period.

 

Adjustments arising from such translations are deferred until realization and are included as a separate component of stockholders’ equity as a component of comprehensive income or loss. Therefore, translation adjustments are not included in determining net income (loss) but reported as other comprehensive income. Gains and losses from foreign currency transactions are included in earnings in the period of settlement.

 

Stock-based Compensation

 

We account for stock-based awards at fair value on the date of grant, and recognize compensation over the service-period that they are expected to vest. We estimate the fair value of stock options and common stock purchase warrants using the Black-Scholes option pricing model. The estimated value of the portion of a stock-based award that is ultimately expected to vest, taking into consideration estimated forfeitures, is recognized as expense over the requisite service periods. The model includes subjective input assumptions that can materially affect the fair value estimates. The expected volatility is estimated based on the most recent historical period of time, of other comparative securities, equal to the weighted average life of the options. The estimate of stock awards that will ultimately vest requires judgment, and to the extent that actual forfeitures differ from estimated forfeitures, such differences are accounted for as a cumulative adjustment to compensation expenses and recorded in the period that estimates are revised.

 

Stock-based compensation incurred for the nine months ended April 30, 2020 and 2019, respectively, are summarized as follows:

 

 

 

Nine Months Ended

 

 

 

April 30,

 

 

 

2020

 

 

2019

 

Vesting of stock options issued to directors and officers

 

$ 88,059

 

 

$ -

 

Common stock issued to employees

 

 

3,294,043

 

 

 

6,805,297

 

Total

 

$ 3,382,102

 

 

$ 6,805,297

 

 

Revenue Recognition

 

In May 2014, the FASB issued new accounting guidance, ASC 606, “Revenue from Contracts with Customers” (“ASC 606”), related to revenue from contracts with customers. The core principle of ASC 606 is that recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new guidance requires that companies disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The Company adopted and applied the standards beginning in the fiscal year ended July 31, 2019, using the modified retrospective approach, which applies ASC 606 to contracts that are not completed as of the date of adoption. The Company concluded that no adjustment to the opening balance of retained earnings was required upon the adoption of ASC 606.

 

In accordance with ASC 606, the Company recognizes revenues when satisfying the performance obligation of the associated contract that reflects the consideration expected to be received based on the terms of the contract.

 

 
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Revenue related to contracts with customers is evaluated utilizing the following steps: (i) identify the contract, or contracts, with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when the Company satisfies a performance obligation.

 

When the Company enters into a contract, the Company analyzes the services required in the contract in order to identify the required performance obligations that would indicate the Company has met and fulfilled its obligations. For the current contracts in place, the Company has identified performance obligations as agreement from both parties (implicit or explicit) that the obligations have been met. To appropriately identify the performance obligations, the Company considers all of the services required to be satisfied pursuant to the contract, whether explicitly stated or implicitly implied. The Company allocates the full transaction price to the single performance obligation being satisfied.

 

The Company recognizes revenue in accordance with ASC 606 as defined above. During the nine months ended April 30, 2020 and 2019, the Company derived its revenues from the following:

 

(1) The sale of products through a direct marketing network (approximately $3.7 million and $3.2 million for nine months ended April 30, 2020 and 2019, respectively and approximately $328,000 and $2.4 million for 3 months ended April 30, 2020 and 2019, respectively). Invoices are prepared for all sales of products through a direct marketing network. In accordance with ASC 606, revenues related to direct marketing network sales are recognized when:

 

 

·

The invoice has been generated and provided to the customer.

 

·

The performance obligations of delivery of products are stated in the invoice.

 

·

The transaction price has been identified in the invoice.

 

·

The Company has allocated the transaction price to performance obligation in the invoice.

 

·

The Company has shipped out the product and, therefore, satisfied the performance obligation.

 

(2) The in-app purchases through the Company’s mobile application called “Yippi” or the “Yippi App” (approximately $3.2 million and $0 for the nine months ended April 30, 2020 and 2019, respectively and approximately $1.3 million and $0 for the three months ended April 30, 2020 and 2019, respectively). In accordance with ASC 606, revenue related to in-app purchases are recognized when:

 

 

·

An invoice or receipt is generated upon the in-app purchase.

 

·

The performance obligations of the delivery of in-app purchases are stated or implied on the purchase portal.

 

·

The transaction price has been identified in the in-app purchase.

 

·

The Company has allocated the transaction price to the implied performance obligation. In regards to in-apps purchases, there is a lag in between the time where a customer makes in-apps purchase and the time that the customer spends the in-app purchase and/or points.

 

·

The Company has provided the in-app purchase to the end user. When the end-user utilizes the in-apps purchase and/or points, revenue is recognized at that point in time only to the extent of the in-app point usage. All in-app purchases that have not been utilized by the end-user are recorded as deferred revenue until the point in which they are utilized by the end-user, at which time they will be recorded as revenue.

 

(3) The hotel and flight feature (“TogaGo”) in the Yippi App (approximately $1.0 million and $0 for nine months ended April 30, 2020 and 2019, respectively and approximately $80,000 and $0 for three months ended April 30, 2020 and 2019, respectively). In accordance with ASC 606, revenue related to the TogaGo platform purchases are recognized when:

 

 

·

The invoice or receipt is generated upon a purchase on the TogaGo platform.

 

·

The performance obligations of the delivery of products and services are stated or implied on the purchase portal.

 

·

The transaction price has been identified in the TogaGo platform purchase.

 

·

The Company has allocated the transaction price to the implied performance obligation.

 

·

The Company has received confirmation from the third-party that it has booked the TogaGo platform purchase and, thus; the Company has satisfied the performance obligation.

 

 
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(4) Royalty fees ($360,000 and $180,000 for nine months ended April 30, 2020 and 2019, respectively and $120,000 and $60,000 for three months ended April 30, 2020 and 2019, respectively). In accordance with ASC 606, related to royalty/licensing fees are recognized when:

 

 

·

The contract has been signed by both parties for licensing and/or royalty fees.

 

·

The performance obligations are stated or implied in the contract.

 

·

The transaction price has been identified in the contract.

 

·

The Company has allocated the transaction price to the performance obligations pursuant to the contract.

 

·

The Company has provided the licensing to the end user and, therefore, satisfied the performance obligation.

 

(5) Advertising revenue (approximately $475,000 and $168,000 for nine months ended April 30, 2020 and 2019, respectively and approximately $330,000 and 23,000 for three months ended April 30, 2020 and 2019, respectively). In accordance with ASC 606, related to in-app advertising are recognized when:

 

 

·

The contract has been signed by both parties for advertising to be provided within the Yippi App.

 

·

The performance obligations of the delivery of the in-app advertising are implied in the contract.

 

·

The transaction price has been identified in the contract.

 

·

The Company has allocated the transaction price to the advertising performance obligations pursuant to the contract.

 

·

The Company has provided in-app advertising in accordance with the contract and, therefore, has satisfied the performance obligation.

 

The Company analyses whether gross sales, or net sales should be recorded. Since the Company has control over establishing price, and has control over the related costs with earning revenues, it has recorded all revenues at the gross price.

 

Deferred Revenue from Yippi In-App Purchases

 

For the period ended April 30, 2020, 100% of the deferred revenue was related to Yippi in-app purchases. The Company has created in-app points to use within the Yippi App. These in-app points are called Yipps. Once purchased by a user, Yipps can be used in a variety of different ways within the Yippi App. Yipps can be used to gift or tip other users, or to purchase merchandise and services from vendors.

 

Yipps points are purchased in cash. When these points are initially purchased (but not yet used), they are recognized as deferred revenue. When these points are later used within the Yippi App (for purchases, tipping, gifting, etc.), the revenue is recognized.

 

The Company monitors the following in order to validate the deferred revenue balances and revenue recognized during the period in relation in to the in-apps purchases:

 

 

·

purchase price and quantity of the Yipps points to be utilized in the Yippi App;

 

·

usage of the Yipps points over the reporting period (in order to record revenue); and

 

·

reconciliation between the used and unused points at the end of each reporting period.

 

The increase in deferred revenue for the three and nine months ended April 30, 2020 is due to an increase in the amount of Yipps credits that were purchased (but remained unused) compared to the amount of Yipps credits that were used during that period and, therefore, recognized as revenue during the period. Thus, the total amount of unused Yipps increased during the period.

 

 
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Please refer to the Revenue Recognition policy above with respect to revenue recognition of in-app purchases and Yipps points.

 

Upon use or redemption of the Yipps inside of the Yippi app, the Company pays the price set by the third-party supplier of the desired product or service (approximately 70% of the total cost of the item) and retains the balance as a commission (approximately 30% of the total cost of the item). The exception to this commission breakdown is when Yipps are used to redeem products and services in the Company’s TogaGo travel platform, where the Company currently takes a much lower commission to keep advertised prices low and encourages the use of the TogaGo platform (the Company’s commission is approximately 3-5% of the total cost of the product or service purchased). At the time the Yipps are used and the revenue is recognized, the amount that is paid to third-party suppliers of the goods or services is recorded by the Company as the cost of goods sold.

 

Yipps do not have an expiration date, and this is a relatively new revenue source for the Company (deferred revenue from Yipps was first recorded in May 2019). On an ongoing basis as Yipps are purchased and used in-app, the Company expects to recognize all of the deferred revenue from a Yipps purchase as revenue within 12 months of the original purchase of such Yipps. The Company’s estimate is qualified by the limited data of historical usage.

 

Concentration of Revenue by Customer

 

During the three and nine months ended April 30, 2020 and 2019, the Company’s concentration of revenue for individual customers above 10% are as follows:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

April 30,

 

 

April 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agel Enterprises International Sdn Bhd

 

 

10 %

 

 

20 %

 

 

7 %

 

 

31 %

Shen Zhen Shang Networks Technology Co. Ltd.

 

 

22 %

 

 

-

 

 

 

29 %

 

 

-

 

Success Fortune Trading Limited

 

 

10 %

 

 

-

 

 

 

1 %

 

 

-

 

  

Concentration of Revenue by Country:

 

During the three and nine months ended April 30, 2020 and 2019, the Company’s concentration of revenue by country are as follows:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

April 30,

 

 

April 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Malaysia (TOGL Technology)

 

 

85 %

 

 

34 %

 

 

62 %

 

 

54 %

Indonesia (Toga International)

 

 

10 %

 

 

64 %

 

 

33 %

 

 

42 %

United States (Toga Limited)

 

 

6 %

 

 

2 %

 

 

4 %

 

 

4 %

 

The Company attributes revenue from external customers to individual countries based upon the responsibility of the entity to fulfil the sales obligation and the entity from which the actual service is provided.

 

Accounts Receivable

 

Accounts receivable are recorded in accordance with ASC 310, Receivables.” Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The Company does not currently have any amount recorded as an allowance for doubtful accounts. Based on management’s estimate and based on all accounts being current, the Company has not deemed it necessary to reserve for doubtful accounts at this time.

 

 
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As of April 30, 2020, the largest concentrations of the Company’s accounts receivable by individual customer was 41% with Shen Zhen Ding Shang Networks Technology Co. Ltd. (“Shen Zhen Ding Networks Technology”). As of April 30, 2019, the largest concentration of the Company’s accounts receivable by individual customer was 94% with Agel Enterprise International Sdn. Bhd. (“Agel”).

 

As of April 30, 2020 and April 30, 2019, the largest concentration of the Company’s accounts receivable by country was 91% in Malaysia (TOGL Technology), respectively.

 

COVID-19

 

In March 2020, the World Health Organization declared the outbreak of coronavirus (“COVID-19”) as a pandemic based on the rapid increase in global exposure. COVID-19 continues to spread throughout the world. The Company is closely monitoring developments and is taking steps to mitigate the potential risks related to the COVID-19 pandemic to the Company, its employees, and its customers. To protect the Company’s employees while continuing to provide the services needed by its clients, the Company limited customer contact and minimized employee contact with other employees by having its employees work remotely.

 

On March 19, 2020, a Movement Control Order (”MCO”) was issued by the Malaysian Prime Minister which reduced movement within Malaysia and cancelled all non-essential travel and limited travel from outsiders deemed as non-essential. While the MCO had an original duration of two weeks, it was extended numerous times but eventually the MCO was lifted as of June 9, 2020 with safe-distance and other controlling protocols in place to protect customers and employees.

 

Our office-based employees located in Malaysia have been working remotely since the middle of March and our office-based employees located in the United States have been working remotely since the middle of March. All of our employees have been able to continue to address customer needs in a timely fashion. Travel remains restricted to limit the risk of our employees coming in contact with COVID-19.

 

Through April 30, 2020, there has been a noticeable increase in accounts receivable for the Company. It is likely that if the COVID-19 pandemic persists and state stay-at-home orders remain in place, more customers will be unable to keep their bills current. Further, while we have not yet experienced any interruption to our normal materials and supplies process, it is impossible to predict whether COVID-19 will cause future interruptions and delays.

 

Through April 30, 2020, we have not had any of our employees contract the COVID-19 virus. Should we have a significant number of our employees contract the COVID-19 virus it could have a negative impact on our ability to serve customers in a timely fashion.

 

The Company has been impacted by the MCO order in regards to TogaGo revenue. With the MCO, travel was restricted and customers were not using the Yippi App for travel and hotel bookings.  This resulted in TogaGo revenue decreasing by 90% in the third quarter ended April 30, 2020.  However, we expect for revenue to increase now that the MCO has been lifted.

 

Recent Accounting Pronouncements

 

In November 2018, the FASB issued ASU No. 2018-08, “Collaborative Arrangements (Topic 808) (“ASU 2018-08”), intended to improve financial reporting around collaborative arrangements and align the current guidance under ASC 808 with ASC 606. ASU 2018-08 affects all companies that enter into collaborative arrangements. ASU 2018-08 clarifies when certain transactions between collaborative arrangement participants should be accounted for as revenue under ASC 606 and changes certain presentation requirements for transactions with collaborative arrangement participants that are not directly related to sales to third parties. ASU 2018-08 is effective for fiscal years beginning after December 15, 2019 and interim periods therein. Earlier adoption is permitted for any annual or interim period for which consolidated financial statements have not yet been issued. The Company has not entered into any collaborative arrangements and, therefore, does not currently expect the adoption of ASU 2018-08 to have a material effect on its Consolidated Financial Statements. The Company plans to adopt ASU 2018-08 either on August 1, 2020 (the date of the Company’s fiscal year beginning after December 15, 2019) or possibly in an earlier period if a collaborative arrangement is entered. Upon adoption, the Company will utilize the retrospective transition approach, as prescribed within ASU 2018-08.

 

The Company has reviewed and analyzed the above recent accounting pronouncements and notes no material impact on the financial statements as of April 30, 2020.

 

 
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NOTE 2. PROPERTY AND EQUIPMENT

 

As of April 30, 2020 and July 31, 2019, property and equipment consisted of the following:

 

 

 

April 30,

 

 

July 31,

 

 

 

2020

 

 

2019

 

Building

 

$ 3,849,238

 

 

$ 4,019,563

 

Renovation

 

 

265,237

 

 

 

154,120

 

Fixtures and Furniture

 

 

113,749

 

 

 

69,558

 

Tools and Equipment

 

 

146,215

 

 

 

92,494

 

Vehicles

 

 

147,326

 

 

 

163,969

 

Computer Equipment

 

 

52,454

 

 

 

26,256

 

Total property and equipment

 

 

4,574,219

 

 

 

4,525,960

 

Accumulated depreciation

 

 

(264,774 )

 

 

(104,707 )

Property and equipment net

 

$ 4,309,445

 

 

$ 4,421,253

 

 

Depreciation expense for the nine months ended April 30, 2020 and 2019 was $323,731 and $41,974, respectively.

 

During the nine months ended April 30, 2020 and 2019, the Company acquired property and equipment of $247,333 and $198,017, respectively.

 

NOTE 3. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

 

As of April 30, 2020 and July 31, 2019, accounts payable and accrued liabilities consisted of the following:

 

 

 

April 30,

 

 

July 31,

 

 

 

2020

 

 

2019

 

Trades payable

 

$ 1,633,475

 

 

$ 3,948,695

 

Wages and commission accruals

 

 

1,077,425

 

 

 

166,752

 

Other accruals

 

 

3,021,841

 

 

 

105,966

 

 

 

$ 5,732,741

 

 

$ 4,221,413

 

 

NOTE 4. DEFERRED REVENUE

 

Deferred revenue by geographic segment were as follows:

 

 

 

April 30,

 

 

July 31,

 

 

 

2020

 

 

2019

 

Malaysia

 

$ 5,535,238

 

 

$ 1,548,398

 

Taiwan

 

 

67,833

 

 

 

142,939

 

Indonesia

 

 

-

 

 

 

90,915

 

 

 

$ 5,603,071

 

 

$ 1,782,252

 

 

 
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Changes in deferred revenue were as follows:

 

 

 

Nine Months Ended April 30, 2020

 

Balance, beginning of period – July 31, 2019

 

$ 1,782,252

 

Deferral of revenue

 

 

8,609,287

 

Recognition of deferred revenue

 

 

(4,788,468 )

Balance, end of period – April 30, 2020

 

$ 5,603,071

 

 

Deferred revenue is entirely comprised of revenue associated with Yippi in-apps purchases. Please refer to the Revenue Recognition policy set forth in Note 1, Summary of Significant Accounting Policies, for additional information. Deferred revenue meets the performance obligations required to recognize when the end-user of the in-apps purchases utilizes the points included in their in-app purchases.

 

Revenue allocated to remaining performance obligations, which includes deferred revenue was $5,603,071 as of April 30, 2020. We expect to recognize all of this revenue over the next 12 months.

 

NOTE 5. RELATED PARTY TRANSACTIONS

 

Notes Due to Related Parties

 

The Company had an outstanding notes payable to the Chief Executive Officer of the Company of $24,126 as of July 31, 2019. During the period ended April 30, 2020, the related party forgave this note and the Company recorded this amount to additional paid-in capital.

 

Due to Related Parties

 

During the nine months ended April 30, 2020 and 2019, the Company borrowed a total amount of $20,991 and $122,678, respectively from a related party, Toga Capital Sdn. Bhd. (“Toga Capital”), and repaid $1,741 and $72,959, respectively.

 

During the nine months ended April 30, 2020 and 2019, the Company received advancement of $84,717 and $4,135, respectively, and repaid $84,364 and $1,968, respectively, from the Chief Executive Officer of the Company. The amounts are non-interest bearing, unsecured, and due on demand.

 

At April 30, 2020 and July 31, 2019, $20,686 and $1,083, respectively, was due to related parties. The amounts are non-interest bearing, unsecured, and due on demand.

 

Related Party Compensation

 

During the nine months ended April 30, 2020 and 2019, TOGL Technology paid director fees of $114,202 and $46,025, respectively, to directors of TOGL Technology.

 

During the nine months ended April 30, 2020 and 2019, the Company paid director fees of $39,000 and $0, respectively, to directors of the Company.

 

During the nine months ended April 30, 2020 and 2019, the Company paid consulting fees of $15,000 and $0, respectively, to a director of the Company. The consulting fee was paid for marketing research services during October, November and December 2019.

 

 
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During the nine months ended April 30, 2020 and 2019, the Company paid wages of $133,750 and $0, respectively, to the Company’s Chief Financial Officer.

 

During the nine months ended April 30, 2020, the Company granted stock options exercisable for 6,792 shares of the Company’s common stock to the Chief Financial Officer, valued at $88,059. No stock options were granted in the nine months ended April 30, 2019. On March 25, 2020, the Company redeemed stock options to purchase 18,792 shares of the Company’s common stock from the Chief Financial Officer, for an aggregate purchase price of $156,537 (or $8.33 per share). Such redeemed options included the 6,792 options granted to the Chief Financial Officer during the nine months ended April 30, 2020. Please see Note 6, Changes in Equity, below.

 

NOTE 6. CHANGES IN EQUITY

 

Common Stock

 

During the nine months ended April 30, 2020, the Company issued 273,354 shares of common stock and cancelled 24,614 shares of common stock, as follows:

 

 

·

On September 5, 2019, the Company cancelled 24,614 shares of common stock. These shares issued to employees were cancelled because they were issued in duplicate.

 

·

On September 9, 2019, the Company issued 20,000 shares of common stock to Agel. The shares were issued for no value because of the Company’s error in October 2018 inadvertently cancelling these shares.

 

·

253,039 shares of common stock were issued as employee compensation that, in the aggregate, had a value of $3,289,507 based on the closing prices of the Company’s common stock on the respective date of issuances, as reported by the OTC Markets Group, Inc. (the “OTC Market”).

 

·

315 shares of common stock were issued to directors that, in the aggregate, had a value of $4,536 based on the closing price of the Company’s common stock on the date of issuance, as reported by the OTC Market.

 

During the nine months ended April 30, 2019, the Company issued 20,245,519 shares of common stock, as follows:

 

 

·

Pursuant to the terms of a Subscription Agreement with the Company, Agel Enterprises, who is a related party, purchased 10,490,362 shares of common stock for cash in the amount of $2,098,073, at a price of $0.02 per share. No sales under this agreement has occurred since June 3, 2019.

 

·

8,972,209 shares of common stock issued for $3,882,938 of digital currency (see Note 4).

 

·

782,948 shares of common stock issued valued at $6,805,297 for employee compensation.

 

On October 29, 2018, a shareholder of the Company canceled 20,000 shares of common stock without consideration for such cancellation because such shares were issued in error.

 

Stock Options

 

During the nine months ended April 30, 2020, the Company granted stock options to purchase up to 6,792 shares of common stock to the Chief Financial Officer, at an exercise price of $0.20 per share, and were valued at the fair value calculated using the Black-Scholes-Merton model. The value of the options was $88,059 and recorded as stock-based compensation. The options are subject to a vesting schedule of one-third of the options vesting every thirty (30) days.

 

 
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The following assumptions were used to determine the fair value for the options granted using a Black-Scholes-Merton pricing model during the nine months ended April 30, 2020:

 

 

 

For the nine months

ended

April 30, 2020

 

Fair values

 

$

12.30-14.12

 

Exercise price

 

$ 0.20

 

Expected term at issuance

 

1year

 

Expected average volatility

 

89.04-169.92

%

Expected dividend yield

 

 

 

Risk-free interest rate

 

1.56-1.73

%

 

A summary of the change in stock options outstanding for the nine months ended April 30, 2020 are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

 

 

Weighted

 

 

Weighted

 

 

Remaining

 

 

 

 

 

 

Average

 

 

Average

 

 

Contractual

 

 

 

Options

 

 

Exercise

 

 

Grant Date

 

 

Life

 

 

 

Outstanding

 

 

Price

 

 

Fair Value

 

 

(Years)

 

Balance – July 31, 2019

 

 

12,000

 

 

$ 0.30

 

 

$ 8.84

 

 

$ 1.63

 

Options issued

 

 

6,792

 

 

 

0.20

 

 

 

12.30

 

 

 

1.50

 

Options cancellation

 

 

(18,792 )

 

 

-

 

 

 

-

 

 

 

-

 

Options exercised

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Balance – April 30, 2020

 

 

-

 

 

$ -

 

 

$ -

 

 

$ -

 

 

During the nine months ended April 30, 2020, the Company redeemed stock options to purchase 18,792 shares of the Company’s common stock from the Chief Financial Officer, for an aggregate purchase price of $156,537 (or $8.33 per share). Such redeemed options included the 6,792 options granted to the Chief Financial Officer during the nine months ended April 30, 2020.

 

NOTE 7. LEASES

 

We have operating leases primarily for real estate.

 

As of April 30, 2020, the Company owned ROU assets under operating leases for eight office premises of $182,248 and operating lease liabilities of $182,248.

 

 

 

April 30, 2020

 

Operating lease ROU assets

 

$ 182,248

 

Current portion of operating lease liabilities

 

 

161,269

 

Noncurrent portion of operating lease liabilities

 

 

20,979

 

Total operating lease liabilities

 

$ 182,248

 

 

Information associated with the measurement of our remaining operating lease obligations as of April 30, 2020 is as follows:

 

Weighted-average remaining lease term

 

 

0.71

years

Weighted-average discount rate

 

 

3.99

%

 

 
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The following table summarizes the maturity of our operating lease liabilities as of April 30, 2020:

 

Year Ended July 31 2020

 

$ 163,221

 

Year Ended July 31 2021

 

 

21,024

 

Total operating lease payments

 

$ 184,245

 

Less: Imputed interest

 

 

1,997

 

Total operating lease liabilities

 

$ 182,248

 

 

We had operating lease costs of $151,550 for the nine months ended April 30, 2020, which are included in selling, general and administrative expenses in the statement of operations.

 

Our leases have remaining lease terms of 0.1 month to 1.3 years, inclusive of renewal or termination options that we are reasonably certain to exercise.

 

NOTE 8. SEGEMENTED DISCLOSURE

 

Operating Activities

 

The following table shows operating activities information by geographic segment for the three and nine months ended April 30, 2020 and 2019:

 

Three Months Ended April 30, 2020

 

 

 

USA

 

 

Malaysia

 

 

Taiwan

 

 

Vietnam

 

 

Indonesia

 

 

Total

 

Revenue

 

$ 120,000

 

 

$ 1,714,740

 

 

$ 120,259

 

 

$ -

 

 

$ 221,671

 

 

$ 2,176,670

 

Cost of goods sold

 

 

-

 

 

 

1,783,830

 

 

 

42,187

 

 

 

-

 

 

 

124,577

 

 

 

1,950,594

 

Gross profit

 

 

120,000

 

 

 

(69,090 )

 

 

78,072

 

 

 

-

 

 

 

97,094

 

 

 

226,076

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

34,721

 

 

 

250,601

 

 

 

129,206

 

 

 

4,236

 

 

 

252,630

 

 

 

671,394

 

Salaries and wages

 

 

111,979

 

 

 

455,400

 

 

 

13,031

 

 

 

3,135

 

 

 

66,485

 

 

 

650,030

 

Professional fees

 

 

543,938

 

 

 

21,338

 

 

 

2,067

 

 

 

564

 

 

 

116,031

 

 

 

683,938

 

Depreciation

 

 

32,311

 

 

 

59,785

 

 

 

1,830

 

 

 

-

 

 

 

43,542

 

 

 

137,468

 

Total Operating Expenses

 

 

722,949

 

 

 

787,124

 

 

 

146,134

 

 

 

7,935

 

 

 

478,688

 

 

 

2,142,830

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

 

(602,949 )

 

 

(856,214 )

 

 

(68,062 )

 

 

(7,935 )

 

 

(381,594 )

 

 

(1,916,754 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

1,167

 

 

 

5,091

 

 

 

-

 

 

 

12

 

 

 

12,941

 

 

 

19,211

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

$ (601,782 )

 

$ (851,123 )

 

$ (68,062 )

 

$ (7,923 )

 

$ (368,653 )

 

$ (1,897,543 )

 

During the three months ended April 30, 2020, our Indonesian entities generated revenues of approximately $208,000 from the sale of products through a direct marketing network.

 

During the three months ended April 30, 2020, our Malaysian entity generated revenue from Yippi in-app purchases of approximately $1.3 million and Yippi advertising revenue of approximately $330,000.

 

 
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During the three months ended April 30, 2020, our Taiwan branch generated revenues of approximately $120,000 from the sale of products through a direct marketing network.

 

During the three months ended April 30, 2020, the Company recognized royalty fee revenue of approximately $120,000 from Agel and Toga Japan Co. Ltd. (“Toga Japan”).

 

During the three months ended April 30, 2020, our Malaysian entity incurred selling, general and administrative expenses primarily related to maintenance of applications, corporate overhead, financial and administrative contracted services, professional fees, salaries and wages of the Company, and costs incurred for potential acquisitions in the amount of $561,893.

 

During the three months ended April 30, 2020, our Taiwan branch incurred selling, general and administrative expenses primarily related to financial and administrative contracted services, professional fees, salaries and wages of the Company in the amount of $447,530.

 

During the three months ended April 30, 2020, our Indonesian entities incurred selling, general and administrative expenses primarily related to financial and administrative contracted services, professional fees, salaries and wages of the Company in the amount of $41,159.

 

During the three months ended April 30, 2020, our U.S. entity incurred selling, general and administrative expenses primarily related to corporate overhead, financial and administrative contracted services, professional fees, salaries and wages of the Company in the amount of $7,048,670.

 

Three Months Ended April 30, 2019

 

 

 

USA

 

 

Malaysia

 

 

Taiwan

 

 

Indonesia

 

 

Total

 

Revenue

 

$ 60,000

 

 

$ 568,721

 

 

$ 486,395

 

 

$ 1,988,916

 

 

$ 3,104,032

 

Cost of goods sold

 

 

-

 

 

 

68,017

 

 

 

45,153

 

 

 

1,527,931

 

 

 

1,641,101

 

Gross profit

 

 

60,000

 

 

 

500,704

 

 

 

441,242

 

 

 

460,985

 

 

 

1,462,931

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

35,808

 

 

 

55,716

 

 

 

332,029

 

 

 

8,353

 

 

 

431,906

 

Salaries and wages

 

 

6,835,297

 

 

 

703,082

 

 

 

9,205

 

 

 

28,928

 

 

 

7,576,512

 

Professional fees

 

 

177,565

 

 

 

34,446

 

 

 

4,508

 

 

 

305

 

 

 

216,824

 

Depreciation

 

 

-

 

 

 

12,950

 

 

 

1,788

 

 

 

3,573

 

 

 

18,311

 

Total Operating Expenses

 

 

7,048,670

 

 

 

806,194

 

 

 

347,530

 

 

 

41,159

 

 

 

8,243,553

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) FROM OPERATIONS

 

 

(6,988,670 )

 

 

(305,490 )

 

 

93,712

 

 

 

419,826

 

 

 

(6,780,622 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

-

 

 

 

3,557

 

 

 

(35 )

 

 

472

 

 

 

3,994

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss)

 

$ (6,988,670 )

 

$ (301,933 )

 

$ 93,677

 

 

$ 420,298

 

 

$ (6,776,628 )

 

 
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During the three months ended April 30, 2019, our Indonesian entities generated revenues of approximately $2.0 million from the sale of products through a direct marketing network.

 

During the three months ended April 30, 2019, our Malaysian entity recognized management fee revenue of approximately $530,000 and advertising revenue of approximately $23,000.

 

During the three months ended April 30, 2019, our Taiwan branch office generated revenue of approximately $486,000 from the sale of products through a direct marketing network.

 

During the three months ended April 30, 2019, the Company recognized royalty fee revenue of approximately $60,000 from Agel.

 

During the three months ended April 30, 2019, our Malaysian entity incurred selling, general and administrative expenses primarily related to maintenance of applications, corporate overhead, financial and administrative contracted services, professional fees, salaries and wages of the Company, and costs incurred for potential acquisitions.

 

Nine Months Ended April 30, 2020

 

 

 

USA

 

 

Malaysia

 

 

Taiwan

 

 

Vietnam

 

 

Indonesia

 

 

Total

 

Revenue

 

$ 360,000

 

 

$ 4,517,910

 

 

$ 743,777

 

 

$ -

 

 

$ 3,097,838

 

 

$ 8,719,525

 

Cost of goods sold

 

 

 

 

 

 

4,690,785

 

 

 

113,356

 

 

 

-

 

 

 

1,531,637

 

 

 

6,335,778

 

Gross profit

 

 

360,000

 

 

 

(172,875 )

 

 

630,421

 

 

 

-

 

 

 

1,566,201

 

 

 

2,383,747

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

202,342

 

 

 

1,488,766

 

 

 

935,999

 

 

 

8,948

 

 

 

3,194,108

 

 

 

5,830,163

 

Salaries and wages

 

 

3,604,081

 

 

 

1,794,378

 

 

 

41,509

 

 

 

9,405

 

 

 

302,570

 

 

 

5,751,943

 

Professional fees

 

 

1,148,049

 

 

 

77,819

 

 

 

5,686

 

 

 

1,324

 

 

 

384,648

 

 

 

1,617,526

 

Depreciation

 

 

65,103

 

 

 

151,472

 

 

 

11,289

 

 

 

3,965

 

 

 

91,902

 

 

 

323,731

 

Total Operating Expenses

 

 

5,019,575

 

 

 

3,512,435

 

 

 

994,483

 

 

 

23,642

 

 

 

3,973,228

 

 

 

13,523,363

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

 

(4,659,575 )

 

 

(3,685,310 )

 

 

(364,062 )

 

 

(23,642 )

 

 

(2,407,027 )

 

 

(11,139,616 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

5,244

 

 

 

30,745

 

 

 

260

 

 

 

17

 

 

 

128,438

 

 

 

164,704

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

$ (4,654,331 )

 

$ (3,654,565 )

 

$ (363,802 )

 

$ (23,625 )

 

$ (2,278,589 )

 

$ (10,974,912 )

 

During the nine months ended April 30, 2020, our Indonesian entities generated revenues of approximately $2.9 million from the sale of products through a direct marketing network and revenues of approximately $181,000 from Yippi in-app purchases.

 

During the nine months ended April 30, 2020, our Malaysian entity generated revenue of approximately $3.2 million from Yippi in-app purchases, revenues of approximately $855,000 from the TogaGo platform, and advertising revenue of approximately $475,000.

 

 
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Table of Contents

  

During the nine months ended April 30, 2020, our Taiwan branch generated revenues of approximately $745,000 from the sale of products through a direct marketing network.

 

During the nine months ended April 30, 2020, the Company recognized royalty fee revenue of approximately $360,000 from Agel and Toga Japan.

 

During the nine months ended April 30, 2020, our Malaysian and Indonesian entities incurred selling, general and administrative expenses primarily related to maintenance of applications, corporate overhead, financial and administrative contracted services, professional fees, salaries and wages of the Company, and costs incurred for potential acquisitions.

 

Nine Months Ended April 30, 2019

 

 

 

USA

 

 

Malaysia

 

 

Taiwan

 

 

Indonesia

 

 

Total

 

Revenue

 

$ 180,000

 

 

$ 1,352,578

 

 

$ 1,181,674

 

 

$ 1,988,916

 

 

$ 4,703,168

 

Cost of goods sold

 

 

-

 

 

 

244,952

 

 

 

112,441

 

 

 

1,527,931

 

 

 

1,885,324

 

Gross profit

 

 

180,000

 

 

 

1,107,626

 

 

 

1,069,233

 

 

 

460,985

 

 

 

2,817,844

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, General and administrative expenses

 

 

101,422

 

 

 

481,812

 

 

 

1,111,785

 

 

 

30,760

 

 

 

1,725,779

 

Salaries and wages

 

 

6,835,297

 

 

 

1,296,518

 

 

 

35,106

 

 

 

57,755

 

 

 

8,224,676

 

Professional fees

 

 

708,836

 

 

 

108,673

 

 

 

8,748

 

 

 

20,208

 

 

 

846,465

 

Depreciation

 

 

-

 

 

 

27,617

 

 

 

5,140

 

 

 

9,217

 

 

 

41,974

 

Total Operating Expenses

 

 

7,645,555

 

 

 

1,914,619

 

 

 

1,160,779

 

 

 

117,940

 

 

 

10,838,894

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

 

(7,465,555 )

 

 

(806,993 )

 

 

(91,546 )

 

 

343,045

 

 

 

(8,021,050 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

-

 

 

 

5,787

 

 

 

119

 

 

 

741

 

 

 

6,648

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

$ (7,465,555 )

 

$ (801,206 )

 

$ (91,427 )

 

$ 343,786

 

 

$ (8,014,402 )

 

During the nine months ended April 30, 2019, our Indonesian entities generated revenues of approximately $2.0 million from the sale of products through a direct marketing network.

 

During the nine months ended April 30, 2019, our Malaysian entity recognized management fee revenue of $1.1 million and advertising revenue of approximately $168,000.

 

During the nine months ended April 30, 2019, our Taiwan branch generated revenue of approximately $1.2 million from the sale of products through a direct marketing network.

 

During the nine months ended April 30, 2019, the Company recognized royalty fee revenue of approximately $180,000 from Agel.

 

 
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Table of Contents

  

During the nine months ended April 30, 2019, our Malaysian entity incurred selling, general and administrative expenses primarily related to maintenance of applications, corporate overhead, financial and administrative contracted services, professional fees, salaries and wages the Company, and costs incurred for potential acquisitions.

 

Asset Information

 

The following table shows asset information by geographic segment at April 30, 2020:

 

 

 

USA

 

 

Malaysia

 

 

Taiwan

 

 

Vietnam

 

 

Indonesia

 

 

Total

 

Current assets

 

$ 8,601,593

 

 

$ 2,353,089

 

 

$ 445,110

 

 

$ 27,203

 

 

$ 2,730,420

 

 

$ 14,157,415

 

Operating lease right-of-use assets

 

 

37,362

 

 

 

7,489

 

 

 

2,030

 

 

 

1,337

 

 

 

134,030

 

 

 

182,248

 

Property and equipment, net

 

 

33,402

 

 

 

4,093,785

 

 

 

13,539

 

 

 

-

 

 

 

168,719

 

 

 

4,309,445

 

Intangible assets - goodwill

 

 

-

 

 

 

11,718

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

11,718

 

Total assets

 

$ 8,672,357

 

 

$ 6,466,081

 

 

$ 460,679

 

 

$ 28,540

 

 

$ 3,033,169

 

 

$ 18,660,826

 

 

As of April 30, 2020, the Company had current assets of $8.6 million, which primarily included cash and cash equivalents of $8.4 million.

 

As of April 30, 2020, our Malaysian entity had current assets of $2.4 million, which primarily included cash and cash equivalents of $1.5 million, prepaid expenses and other current assets of $310,000, and accounts receivable of $575,000.

 

As of April 30, 2020, our Malaysian entity had property and equipment of $4.1 million, which included land and a building of $3.8 million, automobiles of $111,000, renovation costs of $88,000, and tools and equipment of $87,000.

 

As of April 30, 2020, our Taiwan branch had current assets of $445,000, which primarily included cash and cash equivalents of $224,000, and inventory of $200,000.

 

As of April 30, 2020, our Indonesian entities had current assets of $2.7 million, which primarily included cash and cash equivalents of $1.1 million, inventory of $679,000, and prepaid expenses and other current assets of $886,000.

 

As of April 30, 2020, our Indonesian entities had property and equipment of $169,000, which included renovation costs of $75,000.

 

As of April 30, 2020, our Indonesian entities had operating lease right-of-use assets of $134,000.

 

NOTE 9. SUBSEQUENT EVENTS

 

Acquisition of Eostre Sdn. Bhd., a Malaysian corporation

 

On May 31, 2020, the Company entered into two Stock Purchase Agreements (the “Stock Purchase Agreements”) with Toh Kok Soon (“Toh”), the Company’s President, Chief Executive Officer and Director, Lim Jun Hao (“Lim”), a former board member and current shareholder, and the two shareholders of Eostre Sdn Bhd, a Malaysia corporation (“Eostre”), pursuant to which the Company will, subject to the terms and conditions of each Stock Purchase Agreement and other related agreements (“Transaction Documents”), acquire 100% of the equity of Eostre (comprised of 5,000,000 ordinary shares of stock, par value of RM 1.00 per share) (the “Acquisition”) for MYR 5 Million (approximately USD $1,250,000) (the “Purchase Price”). The Acquisition is subject to certain approvals by the relevant governmental authorities in Malaysia, which approvals are still being obtained by the Company.

 

Eostre was incorporated in Malaysia on May 29, 2019. Its principal place of business is Selangor, Malaysia. At the time of the Acquisition, Eostre was a shell entity with no current business or operations. Its sole asset was a direct selling license (the “License”) to operate a business in the “direct sales” space in Malaysia. Subject to the “Direct Sales and Anti-Pyramid Scheme Act 1933,” this License is a pre-requisite to operating a company in the direct sales space in Malaysia. The expiration date of the License is November 21, 2021; however, the Company anticipates that it will renew the License at such time.

 

 
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The Acquisition is expected to be completed in two phases to meet certain regulations under Malaysian law. In the first phase, (i) the Company will acquire 20% of Eostre, consisting of 1,000,000 ordinary shares of stock; (ii) Toh and Lim will acquire 20% (1,000,000 ordinary shares) and 25% (1,250,000 ordinary shares) of Eostre, respectively; and (iii) a current owner of Eostre will acquire the balance of 1,350,000 shares, which, combined with his current ownership of 400,000 ordinary shares, will result in his owning 35% (1,750,000 ordinary shares) of Eostre. Toh, Lim, and the current owner of Eostre will be referred to herein as the “Individual Purchasers.”

 

The Company will deposit the Purchase Price directly into the bank account of Eostre, which will be controlled by the Company or its designees subsequent to the closing date of the first phase. Pursuant to the Stock Purchase Agreements, Toh, Lim and the two original owners of Eostre are not entitled to receive any profit in connection. The Individual Purchasers will execute demand notes in favor of the Company for their respective portions of the Purchase Price. Such demand notes will bear interest at a rate of 4% per annum. In addition, the Individual Purchasers will each execute a security and pledge agreement in favor of the Company pledging their shares in Eostre as collateral, until such time as the second phase is completed. The Individual Purchasers will also grant irrevocable proxies to the Company to vote their shares in Eostre until such time as the second phase of the Acquisition is completed.

 

In the second phase of the Acquisition, the promissory notes issued by the Individual Purchasers will be cancelled and deemed paid in full, and the remaining 80% of the equity in Eostre will be transferred to the Company. The second phase of the Acquisition is expected to close as soon as practicable after the six-month anniversary of the signing date of the Stock Purchase Agreements, based on the expected timing required to obtain the necessary approvals from the Malaysian Ministry of Trade.

 

The Stock Purchase Agreements contain representations and warranties made by and to the parties thereto as of specific dates. The statements embodied in those representations and warranties were made for the purpose of allocating risk between the parties rather than establishing matters as facts, and are subject to qualifications and limitations agreed upon by the parties in connection with negotiating the terms of the Stock Purchase Agreements. In addition, certain representations and warranties were made as of a specified date and may be subject to a contractual standard of materiality different from those generally applicable to investors.

  

As of June 12, 2020, the purchase price has not been deposited into the bank account of Eostre, and the shares have yet to be issued.

 

Termination of Agel and Toga Japan License Agreements

 

On April 1, 2018, and as subsequently amended on August 1, 2019, the Company entered into a Trademark License Agreement with Agel (the “Agel License Agreement”) to allow Agel to use the “Yippi” and “Eostre” trademarks for marketing purposes. As set forth in the Agel License Agreement, the Company granted Agel a non-exclusive, non-sublicensable, non-transferable license to reproduce and display the trademarks for certain promotional activities, merchandise, and events. As consideration for the license, Agel paid the Company a monthly fee in the amount of $20,000 USD.

 

On April 1, 2019, and as subsequently amended on August 1, 2019, the Company entered into a Trademark License Agreement with Toga Japan (the “Toga Japan License Agreement” and, together with the Agel License Agreement, the “License Agreements”) to allow Toga Japan to use all the trademarks associated with the Yippi App and the “Eostre” trademark for marketing purposes. As set forth in the Toga Japan License Agreement, the Company granted Toga Japan a non-exclusive, non-sublicensable, non-transferable license to reproduce and display the trademarks for certain promotional merchandise and events. As consideration for the license, Toga Japan paid the Company a monthly fee in the amount of $20,000 USD.

  

Due to the COVID-19 pandemic and subsequent lockdown, Agel and Toga Japan have advised the Company that they have been unable to sell the Company’s Eostre line of products since February 2020. On or about May 27, 2020, Agel and Toga Japan formally requested the termination of their respective License Agreements with the Company. The Company subsequently terminated the License Agreements effective May 31, 2020. Going forward, independent agents in Malaysia and Japan will be able to purchase Eostre products directly from Eostre or the Company, as applicable.

 

Entry into Subtle Collaboration Agreement

 

On June 1, 2020, the Company entered into a Collaboration Agreement (the “Collaboration Agreement”) with Subtle Energy Sciences, LLC, an Indiana Limited Liability Company (“Subtle”), for a period of two (2) years, which grants the Company the exclusive right in Asia and certain parts of the Middle East to market and sell Subtle’s products on Toga Limited’s websites and mobile applications. The Company will pay Subtle a monthly fee of the greater of 1% of gross sales of Subtle’s products or sixteen thousand dollars ($16,000), per month, and the parties to the Collaboration Agreement will revisit this financial arrangement six (6) months after June 1, 2020.

 

The Company has evaluated subsequent events from April 30, 2020 through the date these financial statements were issued and determined there are no additional events requiring disclosure.

 

 
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS

 

The following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q (this “Quarterly Report”). The following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Our unaudited consolidated financial statements are stated in United States Dollars and are prepared in accordance with GAAP.

 

Forward-Looking Statement

 

This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and is subject to the “safe harbor” created by those sections. Any statements that are not statements of historical fact should be considered to be forward-looking statements. Words such as “anticipates,” “believes,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “seek,” “should,” “targets,” “will,” “would,” and similar expressions or variations or negatives of such words are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements in this Quarterly Report. Additionally, forward-looking statements include, but are not limited to:

 

 

·

our plans to develop and market new products, enhancements or technologies and the timing of these development and marketing plans;

 

·

our estimates regarding our capital requirements and our needs for additional financing;

 

·

our estimates of our expenses, future revenues and profitability;

 

·

our estimates of the size of the markets for our products and services;

 

·

our expectations related to the rate and degree of market acceptance of our products; and

 

·

our estimates of the success of other competing technologies that may become available.

 

Although forward-looking statements in this Quarterly Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known and understood by us. Consequently, forward-looking statements involve inherent risks and uncertainties and actual financial results and outcomes may differ materially and adversely from the results and outcomes discussed in or anticipated by the forward-looking statements. A number of important factors could cause actual financial results to differ materially and adversely from those in the forward-looking statements. We urge you to consider the risks and uncertainties discussed elsewhere in this Quarterly Report and in the other documents filed by us with the SEC in evaluating our forward-looking statements. We have no plans, and undertake no obligation, to revise or update our forward-looking statements to reflect any event or circumstance that may arise after the date of this report. We caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made.

 

 
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In this document, the words “we,” “our,” “ours,” “us,” “Toga Limited,” and “the Company” refer only to Toga Limited, and its consolidated subsidiaries and not any other person or entity.

 

Overview

 

The Company was incorporated in the State of Delaware on October 23, 2003, under the name Fashionfreakz International Inc. On December 2, 2005, the Company changed its name to Blink Couture, Inc. Until March 4, 2008, the Company’s principal business was the online retail marketing of trendy clothing and accessories produced by independent designers.

 

In July 2016, the Company changed its name from “Blink Couture, Inc.”, to “Toga Limited.” The Company effected this name change by forming a wholly-owned subsidiary in the State of Delaware on July 21, 2016, with the name Toga Limited. This subsidiary never had any operations, business, or assets and was formed purely for the purpose of effecting the Company’s name change pursuant to Delaware General Corporation Law Title 8, Section 251(f). On July 21, 2016, the Company entered into an Agreement and Plan of Merger with the subsidiary, pursuant to which the Company was intended to merge with the subsidiary. This merger was consummated on July 22, 2016 upon the Company’s filing of a Certificate of Merger with the Secretary of State of the State of Delaware and as a result the separate existence of the subsidiary ceased, and the name of the Company became “Toga Limited.”

 

The name change to Toga Limited became effective in the market on December 16, 2016, following approval by the Financial Industry Regulatory Authority, Inc. (“FINRA”), and in conjunction with the name change, the quotation symbol for the Company’s common stock, $0.0001 per share (“Common Stock”), was changed to “TOGL.”

 

The Company incorporated a wholly-owned subsidiary, TOGL Technology in Malaysia on September 26, 2017. TOGL Technology offers technology and professional services to facilitate the use of technology by enterprises and end users. These services include software development, integration, maintenance, mobile services, and web applications. TOGL Technology also provides development of, and upgrades to the Yippi App.

 

The Company incorporated a subsidiary, PT. Toga International Indonesia (“PT Toga Indonesia”), in Indonesia on November 23, 2017. The Company owns a 95% interest in PT Toga Indonesia in partnership with an Indonesian citizen owning a 1.5% interest, a Malaysian citizen owning a 2% interest, and a Malaysian citizen owning a 1.5% interest. Its main business activities are selling of health-related and facial products via retail stores or through direct selling agents that sell our products at exhibitions and healthy introduction seminars.

 

In 2017, the Company commenced development of a social media app for mobile devices called “Yippi,” or the “Yippi App.” The Company commenced development with the hiring of a Chief Technology Officer and development team.

 

On July 10, 2018, we changed our state of incorporation from the State of Delaware to the State of Nevada (the “Reincorporation”) due to the annual cost of incorporation in Delaware. The Reincorporation was accomplished by filing Articles of Incorporation and Articles of Domestication with the Secretary of State of the State of Nevada, as a well as a Certificate of Conversion with the Secretary of State of the State of Delaware.

 

On May 28, 2018, the Company’s wholly-owned subsidiary, TOGL Technology, formed a branch office in Taiwan. This office was formed for the purpose of selling health-related products via retail stores or through direct selling agents that sell our products at exhibitions and health introduction seminars in Taiwan.

 

 
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On January 11, 2019, the Company’s wholly-owned subsidiary, TOGL Technology, formed a subsidiary in Vietnam, named Toga Vietnam. Toga Vietnam was formed for the purpose of providing customer services support for Yippi users located in Vietnam.

 

On May 1, 2019, TOGL Technology entered into a Yipps Agreement with Agel for the purchase and distribution of Yipps, points that can be used by the Yippi App users located in Malaysia.

 

On May 1, 2019, Toga Limited entered into a Yipps Agreement with Toga Japan, an entity unrelated to Toga Limited and its subsidiaries and branch office, for the purchase and distribution of Yipps to the Yippi App users located in Japan.

 

On May 24, 2019, the Company’s wholly-owned subsidiary TOGL Technology formed a subsidiary in Indonesia, named PT TOGL Technology Indonesia.  TOGL Technology owns a 67% interest in PT TOGL Technology Indonesia in partnership with PT. Aviva Tata Karya, an Indonesian entity which owns the remaining 33% interest. PT TOGL Technology Indonesia provides technology and professional services to facilitate the use of technology by enterprises and end users. These services include software development, integration, maintenance, mobile services, and web applications.

 

On June 24, 2019, TOGL Technology acquired 100% shares of WGS Discovery Tours & Travel, a Malaysian based company.

 

On April 1, 2018, and as subsequently amended on August 1, 2019, the Company entered into a License Agreement to allow Agel to use the “Yippi” and “Eostre” trademarks for marketing purposes. As set forth in the Agel License Agreement, the Company granted Agel a non-exclusive, non-sublicensable, non-transferable license to reproduce and display the trademarks for certain promotional activities, merchandise, and events. As consideration for the license, Agel paid the Company a monthly fee in the amount of $20,000 USD.

 

On April 1, 2019, and as subsequently amended on August 1, 2019, the Company entered into a  License Agreement and, together with the Agel License Agreement, the “License Agreements”) to allow Toga Japan to use all the trademarks associated with the Yippi App and the “Eostre” trademark for marketing purposes. As set forth in the Toga Japan License Agreement, the Company granted Toga Japan a non-exclusive, non-sublicensable, non-transferable license to reproduce and display the trademarks for certain promotional merchandise and events. As consideration for the license, Toga Japan paid the Company a monthly fee in the amount of $20,000 USD.

 

Due to the COVID-19 pandemic and subsequent lockdown, Agel and Toga Japan have advised the Company that they have been unable to sell the Company’s Eostre line of products since February 2020. On or about May 27, 2020, Agel and Toga Japan formally requested the termination of their respective License Agreements with the Company. The Company subsequently terminated the License Agreements effective May 31, 2020. Going forward, independent agents in Malaysia and Japan will be able to purchase Eostre products directly from Eostre or the Company, as applicable.

 

On May 31, 2020, the Company entered into the Stock Purchase Agreement with Toh the Company’s President, Chief Executive Officer and Director, Lim, a former board member and current shareholder, and the two shareholders of Eostre, pursuant to which the Company will, subject to the terms and conditions of each Stock Purchase Agreement and other related agreements, acquire 100% of the equity of Eostre (comprised of 5,000,000 ordinary shares of stock, par value of RM 1.00 per share) for MYR 5 Million (approximately USD $1,250,000) (the “Purchase Price”). The Acquisition is subject to certain approvals by the relevant governmental authorities in Malaysia, which approvals are still being obtained by the Company.

 

 
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Eostre was incorporated in Malaysia on May 29, 2019. Its principal place of business is Selangor, Malaysia. At the time of the Acquisition, Eostre was a shell entity with no current business or operations. Its sole asset was the License to operate a business in the “direct sales” space in Malaysia. Subject to the “Direct Sales and Anti-Pyramid Scheme Act 1933,” this License is a pre-requisite to operating a company in the direct sales space in Malaysia. The expiration date of the License is November 21, 2021; however, the Company anticipates that it will renew the License at such time.

 

The Acquisition is expected to be completed in two phases to meet certain regulations under Malaysian law. In the first phase, (i) the Company will acquire 20% of Eostre, consisting of 1,000,000 ordinary shares of stock; (ii) Toh and Lim will acquire 20% (1,000,000 ordinary shares) and 25% (1,250,000 ordinary shares) of Eostre, respectively; and (iii) a current owner of Eostre will acquire the balance of 1,350,000 shares, which, combined with his current ownership of 400,000 ordinary shares, will result in his owning 35% (1,750,000 ordinary shares) of Eostre. Toh, Lim, and the current owner of Eostre will be referred to herein as the “Individual Purchasers.”

 

The Company will deposit the Purchase Price directly into the bank account of Eostre, which will be controlled by the Company or its designees subsequent to the closing date of the first phase. Pursuant to the Stock Purchase Agreements, Toh, Lim and the two original owners of Eostre are not entitled to receive any profit in connection. The Individual Purchasers will execute demand notes in favor of the Company for their respective portions of the Purchase Price. Such demand notes will bear interest at a rate of 4% per annum. In addition, the Individual Purchasers will each execute a security and pledge agreement in favor of the Company pledging their shares in Eostre as collateral, until such time as the second phase is completed. The Individual Purchasers will also grant irrevocable proxies to the Company to vote their shares in Eostre until such time as the second phase of the Acquisition is completed.

 

In the second phase of the Acquisition, the promissory notes issued by the Individual Purchasers will be cancelled and deemed paid in full, and the remaining 80% of the equity in Eostre will be transferred to the Company. The second phase of the Acquisition is expected to close as soon as practicable after the six-month anniversary of the signing date of the Stock Purchase Agreements, based on the expected timing required to obtain the necessary approvals from the Malaysian Ministry of Trade.

 

The Stock Purchase Agreements contain representations and warranties made by and to the parties thereto as of specific dates. The statements embodied in those representations and warranties were made for the purpose of allocating risk between the parties rather than establishing matters as facts, and are subject to qualifications and limitations agreed upon by the parties in connection with negotiating the terms of the Stock Purchase Agreements. In addition, certain representations and warranties were made as of a specified date and may be subject to a contractual standard of materiality different from those generally applicable to investors.

 

On June 1, 2020, the Company entered into the Collaboration Agreement with Subtle for a period of two (2) years, which grants the Company the exclusive right in Asia and certain parts of the Middle East to market and sell Subtle’s products on Toga Limited’s websites and mobile applications. The Company will pay Subtle a monthly fee of the greater of 1% of gross sales of Subtle’s products or sixteen thousand dollars ($16,000), per month, and the parties to the Collaboration Agreement will revisit this financial arrangement six (6) months after June 1, 2020.

 

Business Development

 

The Yippi App is a messaging app with a focus on entertainment and security. It is fast, simple, secure, and free. Yippi seamlessly syncs a user’s normal messages and secret messages into one application. Users can send an unlimited number of messages, photos, and voice messages. Yippi groups allow users to send broadcasts up to 100 contacts at a time. Users can download the Yippi App through the Apple App Store and Google Play Store. Users in China can download the Yippi App (International version) through the Apple App Store or the Huawei App Store. The Yippi App (Chinese version) can be downloaded through the Baidu App Store, the 360 App Store, or the Oppo App Store. Revenue is generated from selling advertising, emoji stickers, and special filters, effects, and features for use with Yippi.

 

 
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In addition, our users bring business opportunities from all over the world to other users all over the world. We offer different platforms through the Yippi App, including online-to-offline, business-to-business, business-to-customer, and customer-to-customer to help business owners promote their businesses on Yippi.

 

The Company is focused on the development of the Yippi App and attracting active users to Yippi and the sale of products through direct marketing network.

 

The Company has created in-app points to use within the Yippi App. These in-app points are called Yipps. Once purchased by a user, Yipps can be used in a variety of different ways within the Yippi App. Yipps can be used to gift or tip other users, or to purchase merchandise and services from vendors.

 

Yipps points are purchased in cash. When these points are initially purchased (but not yet used), they are recognized as deferred revenue. When these points are later used within the Yippi App (for purchases, tipping, gifting, etc.), the revenue is recognized.

 

Upon use or redemption of the Yipps inside of the Yippi app, the Company pays the price set by the third-party supplier of the desired product or service (approximately 70% of the total cost of the item) and retains the balance as a commission (approximately 30% of the total cost of the item). The exception to this commission breakdown is for when Yipps are used to redeem products and services in the Company’s TogaGo travel platform, where the Company currently takes a much lower commission to keep advertised prices low and encourages the use of the TogaGo platform (the Company’s commission is approximately 3-5% of the total cost of the product or service purchased). At the time the Yipps are used and the revenue is recognized, the amount that is paid to third-party suppliers of the goods or services is recorded by the Company as the cost of goods sold.

 

Yipps do not have an expiration date, and this is a relatively new revenue source for the Company (deferred revenue from Yipps was first recorded in May 2019). On an ongoing basis as Yipps are purchased and used in-app, the Company expects to recognize all of the deferred revenue from a Yipps purchase as revenue within 12 months of the original purchase of such Yipps. The Company’s estimate is qualified by the limited data of historical usage.

 

Yippi App Features

 

Social Messaging

 

Messaging

 

Yippi has embedded and enhanced the quality of voice and video calls for the ease of connectivity to anyone anywhere. We expanded on the functions of our chat application in making the action of contacting friends and family with choices of text, voice, and video calls that are parallel with leading chat applications in the market.

 

The quality of voice and video calls made via Yippi is clear, and, as with other chat applications, is dependent on network strength. We believe the simplicity of placing a call or a video call will be further enhanced with the advancement of technology and data speed packets as 5G connectivity is upon us.

 

From its launch in July 2017, we have continued to develop and expand this messaging feature within the Yippi App, not just with regards to peer-to-peer calls, but also improving group calls. Group video calls enable a tele-conference from individual smartphones, anytime and anywhere; in line with the ease of communications on the go. Yippi offers a group video call of up to 9 video feeds at the moment. Continued enhancement of this feature is important to us as we strive to offer the market standard of quality of voice and video calls to our users.

 

Stickers

 

Since its release in July 2017, the Yippi App has been packed with pre-loaded stickers (“Stickers”) that are suitable for any occasion.

 

We firmly believe that Stickers opens up a whole new avenue for aspiring graphic designers to create and sell their artwork stickers.

 

 
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For example, the revenue-generating sticker pioneered by the Line chat app has achieved tremendous success in generating revenue from its users through affordable e-stickers ever since its inception in 2010 and has steadily been a part of the its source of income; albeit with extensive competition from other chat apps’ introduction of their own stickers.

 

We are committed to bringing the next evolution of Stickers to market and providing creative creators an opportunity to share in our technological advances. The Yippi App provides a platform for sticker creations and development, with written tutorials and market trends provided to the creators upon request. This may include the next evolution of “Motion Stickers,” “Animated GIFs,” and cinemographs with snippets of sound/voice, which would further differentiate and modernize all our Stickers compared to our major sticker competitors. In doing so, we believe we will be able to derive revenue from this digital product.

 

Secret Chat

 

Our “Secret Chat” feature was developed with an enhanced level of security in mind. Launched in January 2017, this feature is a secretive function that self–destructs chat messages upon leaving the chat conversation without a record on the Yippi App or our server. We believe the Secret Chat feature negates the function of encrypting messages found in other chat apps, which we believe provides our users with a chat that is safe and, virtually un-hackable because it does not have a trace on either server once our proprietary system purges the chat thread.

 

Within the chat conversation, the user has the same functionalities of a regular chat, such as sending images/videos, recording voice messages, sending stickers or gifting eggs.

 

Eggs

 

The Yippi App contains the feature of giving and receiving “Yipps” in the form of “Eggs” in individual chats or group chats. Yipps may be used for rewarding contents on Social (as defined below) and as a form of payment for the purchase of discounts from third- party shops and TogaGo. Eggs can contain any number of Yipps, as determined by the sender.

 

Whiteboard

 

We developed and launched “Whiteboard” as a Yippi App feature in July 2017. Whiteboard enables users to simultaneously write on the screen display. A user can currently share a Whiteboard with another user, and both parties can write and talk on the Whiteboard remotely within a single session.

 

Whiteboard also has a voice function with an on/off switch so that users can communicate while sketching together on the shared Whiteboard.

 

In addition, the Whiteboard can be “erased” by either party at any time to clear the Whiteboard for another new Whiteboard for continuous writing. Sharing of information or ideas could be sketched out over the Whiteboard or dictated to the other user with ease, rather than the conventional method of writing on a piece of paper before snapping a picture.

 

This is an excellent feature for sketches and scribbles as it engages a real-time experience, as well as a fun tool for leisure.

 

Auto Translate

 

“Auto Translate” is a built-in function in Yippi. Users can chat with other users in a foreign language and this feature will auto translate into your spoken language.

 

 
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Social

 

The Yippi App contains an embedded social media platform called “Social”, which is fully developed and functioning. Social incorporates a personal social media timeline with integrated functions such as: (i) sharing of updates; (ii) following video channels; (iii) receiving event invitations; (iv) sharing photo and video links; and (v) joining groups of interests.

 

Social enables users to share their content internally and externally via other platforms (social media or communication applications within their devices) in contrast to WeChat Moments’ or Facebook Timeline’s internal-only sharing capability.

 

Tips Rewards

 

The “Tips Rewards” feature enables the Yippi user to give rewards to other Yippi user’s photos, videos and stickers.

 

Beauty Camera

 

This trendy and advanced video camera feature allows Yippi users to beautify and add animated filters as 3D Face Technology on a video call (the “Beauty Camera”). Currently in use, this feature has a number of different filters and augmented reality (“AR”) skins exclusive to Yippi App users.

 

Users making video calls can use options to enhance both the caller and recipient with beauty skins, fun stickers, or facial-recognition AR caricatures or cartoons for a shared fun experience.

 

Artificial Intelligence

 

Artificial Intelligence (“AI”) is the simulation of human intelligence processes by machines, especially computer systems. These processes include learning, reasoning and self-correction.

 

AI within Yippi was launched in June 2018 with the introduction of Hungry Bear, an AI robot customer service chat box. When a user enters a question in Hungry Bear, the AI chat box will provide immediate answers to the questions.

 

People Nearby

 

With its launch in July 2017, users can use this “People Nearby” feature to seek out other Yippi users within their immediate area to communicate and network, or chat for leisure.

 

Yippi users can arrange a meeting and make new friends, or seek out business opportunities by networking through this feature. With the impending official brand accounts, we could evolve this further with geo-location push notification on promotions and offers for Yippi users that switch their People Nearby feature on. Currently, there are no brand accounts.

 

Market Place

 

TogaGo

 

TogaGo, a hotel and flight feature in Yippi boasts an impressive array of hotel, cruise, and flight partners that enable users to search for the best price for their travel needs. Currently, prices are relatively cheaper and comparable to major travel applications in the market, and with this feature we have bridged these two different applications into one comprehensive application.

 

These extensions are developed and functioning and are bridged within Yippi with a link to the target platform while the user is still logged into their Yippi account.

 

Games

 

As with most social chat applications, Yippi has 9 games built into the application.

 

 
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We are also anticipating the acquisition of additional games to add to our collection, in order to cater to a wider gaming audience.

 

Globally, a large share of gaming revenues are generated from mobile gaming. It is our intention to identify, invest in and partner with up-and-coming developers, which we believe will allow us to compete for additional gaming revenue within the market.

 

Toga-Resonance Technology

 

Toga Resonance Technology (“TRT”) is the brand behind the use of “quantum resonance technology” found in certain of our physical products sold through our direct sales network, and in certain of our digital applications distributed through our Yippi App. This technology was developed by an independent consultant and is utilized by our Company.

 

With respect to all of the features and functionalities of the Yippi App, we are looking at trends and opportunities to enhance Yippi’s current features and functionalities and to add new features.

 

The market for our Yippi App is characterized by rapid technological change, particularly in the technical capabilities of smartphones and tablets, and changing end-user preferences. Therefore, we will be required to continuously invest capital to innovate and modify our Yippi App and publish new applications. We cannot provide assurances that we will have adequate capital to modify our Yippi App or develop new applications.

 

Eostre

 

The Company is in the business of selling wellness products through direct marketing networks. As of June 1, 2020, in accordance with the Company’s strategic business plan, the Company will engage in the sale of such wellness products through Eostre, which is anticipated to become the Company’s wholly-owned subsidiary upon the closing of the second phase of the Acquisition.

 

Sources, significant classes of products sold, and distribution channels: The Company sells products based on traditional, eastern wellness principles under its “Eostre” brand. The Company’s products include pendants (necklaces with crystals on them), home goods, supplements and topical sprays, serums and creams. The products offered by the Company are as follows:

 

 

1.

Eostre Energy Crystal Pendant (*Available in Indonesia, Taiwan, Malaysia and Japan)

 

 

 

 

2.

Eostre Quantum Disc (*Available in Indonesia, Taiwan, Malaysia and Japan)

 

 

 

 

3.

Eostre Vitality Pendant (*Available in Indonesia and Malaysia)

 

 

 

 

4.

Eostre Sanare Sleep Mat (*Available in Indonesia and Malaysia)

 

 

 

 

5.

Eostre Life Force Diffuser (humidifier) (*Available in Indonesia and Malaysia)

 

 

 

 

6.

Eostre Ohrus (light) (*Available in Indonesia and Malaysia)

 

 

 

 

7.

Essential Young Serum (*Available in Indonesia)

 

 

 

 

8.

Perfect Hydrating Spray (*Available In Indonesia)

 

 

 

 

9.

Healthy 99 (*Available In Taiwan and Japan)

 

 

 

 

10.

Beauty 99 (*Available in Taiwan)

 

 

 

 

11.

Cadalobs Chlorella (*Available In Taiwan)

 

 

 

 

12.

Toga Dammarane (*Available In Taiwan and Japan)

 

 

 

 

13.

Dammarane Sapogenin (*Available In Taiwan and Japan)

 

 
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The product branding “Eostre” is owned by the Company and the Company licenses the brand to agents with direct marketing networks in Malaysia (Agel) and Japan (Toga Japan), while it sells branded products directly to independent agents to sell within the agents’ own networks in Taiwan and Indonesia. The Company has a registered trademark for “Eostre” in Malaysia and is pursuing trademark registrations in additional jurisdictions.

 

As of May 31, 2020, the Company terminated its trademark license agreements with Agel and Toga Japan, as more fully discussed above. The Company anticipates entering into a license agreement to license the “Eostre” trademark to Eostre. The anticipated terms of the agreement will grant Eostre a non-exclusive, non-sublicensable, and non-transferable license to use the trademark: on products which will be manufactured, sold and/or distributed by Eostre; on marketing materials; and for events organized by Eostre. The term of the license is anticipated to be for one year, with the agreement automatically renewing for additional one year terms unless either party provides notice to the other of its intention to terminate the agreement within 60 days before the beginning of the next term. In consideration for the license, Eostre will pay the Company a fee of $20,000 USD on a monthly basis.

 

The products Eostre Energy Crystal Pendant, Eostre Quantum Disc, Eostre Vitality Pendant, Eostre Sanare Sleep Mat, Eostre Life Force Diffuser and Eostre Ohrus are manufactured in Hong Kong. The Eostre Smart LED Desk Lamp is manufactured in Malaysia. The products Essential Young Serum and Perfect Hydrating Spray are manufactured in Indonesia. The products Healthy 99, Beauty 99, Cadalobs Chlorella, Toga Dammarane, and Dammarane Sapogenin are manufactured in Taiwan.

 

The products are manufactured by unaffiliated third-party companies, who ship finished products containing the Company’s Eostre branding. For products sold in Malaysia and Japan, the manufacturers directly ship products to the customers with direct marketing networks in those jurisdictions.

 

For the products sold in Taiwan and Indonesia, orders are placed by independent agents to the Company. The Company then receives fully manufactured products from the manufacturers, which the Company sells through wholesale distribution to independent agents who have their own respective direct marketing networks for selling the products.

 

Principal markets: The Company currently sells its products to agents in Malaysia, Japan, Taiwan, and Indonesia. The Company does not sell its products directly to consumers, but instead sells exclusively to independent agents who distribute such products through direct marketing networks in the Company’s principal markets, as described below. The products are marketed to wellness-minded consumers, typically adults (between approximately 20 and 80 years old), both men and women, located in urban centers.

 

Competitive conditions: The Company purchases white labeled products and brands them with its “Eostre” trademark. The Company then produces sales and marketing materials for such products. Because the Company owns the Eostre brand, it has no competitors selling identically branded products without its authorization. However, the Company does not own the underlying intellectual property to the products that it sells, nor does it have exclusive rights to sell such products. The Company has competition risk in that it cannot ensure that it will continue to be able to source its products from its third-party suppliers, at competitive prices.

 

In addition, the Company is aware that those third-party suppliers sell the same white labeled products to other companies (with differed branding applied), who compete directly or indirectly with the Company in its principal markets. Except for the “Eostre” product branding and marketing, the Company is aware of one such competitor who sells identical products (with the competitor’s own marketing and branding applied to the underlying product) to the Eostre Energy Crystal Pendant, Eostre Vitality Pendant, Eostre Quantum Disc, Eostre Ohrus, Eostre Life Force Diffuser, Essential Young Serum, and Perfect Hydrating Spray. This provides additional direct sales competition with respect to those products and provides competition for talent for those agents who may want to sell these or similar wellness products through a direct marketing network.

 

 
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Table of Contents

  

Furthermore, the Company has competition in each jurisdiction in which it operates with the entire market of other companies and individuals who sell health and wellness products, especially those that are in the business of selling natural products (including crystals, topical sprays, serums and cremes, home goods, supplements, and similar items) based on traditional, eastern wellness principles.

 

Employees: As of June 1, 2020, Eostre has hired 16 employees, who are professionals in the health and direct sales industry, and Eostre will begin to retain a team of independent agents to sell Eostre’s products. In light of the COVID-19 pandemic, Eostre’s agents will primarily use e-commerce as their main sales channel.

 

Sales and Marketing: The Company will primarily focus on sales and marketing of its products online though e-commerce. It will pursue paid marking opportunities such as Facebook ads with targeting marketing and hiring product ambassadors to promote the product. The Company will also pursue organic marketing strategies such as using Eostre social media accounts and search engine optimization to promote the product.

 

Independent Agents: Eostre will rely on its network of independent agents to sell the products. The agents will be eligible to receive compensation on a number of different levels, ranging from retaining profit from retail sales, to bonuses which may be achieved as each such agent becomes a leader of their own network.

 

COVID-19

 

In March 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic based on the rapid increase in global exposure. COVID-19 continues to spread throughout the world. The Company is closely monitoring developments and is taking steps to mitigate the potential risks related to the COVID-19 pandemic to the Company, its employees, and its customers. To protect the Company’s employees while continuing to provide the services needed by its clients, the Company limited customer contact and minimized employee contact with other employees by having its employees work remotely.

 

On March 19, 2020, the MCO was issued by the Malaysian Prime Minister which reduced movement within Malaysia and cancelled all non-essential travel and limited travel from outsiders deemed as non-essential. While the MCO had an original duration of two weeks, it was extended numerous times but the MCO was ultimately lifted as of June 9, 2020 with safe-distance and other controlling protocols in place to protect customers and employees.

 

Our office-based employees located in Malaysia have been working remotely since the middle of March and our office-based employees located in the United States have been working remotely since the middle of March. All of our employees have been able to continue to address customer needs in a timely fashion. Travel remains restricted to limit the risk of our employees coming in contact with COVID-19.

 

Through April 30, 2020, there has been a noticeable increase in accounts receivable for the Company. It is likely that if the COVID-19 pandemic persists and state stay-at-home orders remain in place, more customers will be unable to keep their bills current. Further, while we have not yet experienced any interruption to our normal materials and supplies process, it is impossible to predict whether COVID-19 will cause future interruptions and delays.

 

Through April 30, 2020, we have not had any of our employees contract the COVID-19 virus. Should we have a significant number of our employees contract the COVID-19 virus it could have a negative impact on our ability to serve customers in a timely fashion.

 

The Company was impacted by the MCO order in regards to TogaGo revenue. The MCO restricted travel, which resulted in customers not booking travel and hotel through the Yippi app.  TogaGo’s revenue decreased by 90% in the third quarter ended April 30, 2020.  However, we expect TogaGo’s revenue to increase now that the MCO has been lifted.

 

 
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Table of Contents

  

Results of Operations

 

The Company is focused on the development of the Yippi App and attracting active users to Yippi and the sale of products through direct marketing network. The Company commenced generating advertising revenue from Yippi during the fourth quarter of the year ended July 31, 2019.

 

Three-Months Ended April 30, 2020 Compared to April 30, 2019

 

 

 

Three months ended

 

 

 

 

 

 

 

 

 

April 30,

 

 

 

 

 

 

 

 

 

2020

 

 

2019

 

 

Change

 

 

%

 

Revenue

 

$ 2,176,670

 

 

$ 3,104,032

 

 

$ (927,362 )

 

(30

%)

Cost of Goods Sold

 

 

1,950,594

 

 

 

1,641,101

 

 

 

309,493

 

 

 

19 %

Gross Profit

 

$ 226,076

 

 

$ 1,462,931

 

 

$ (1,236,855 )

 

(85

%)

Gross Margin

 

 

10 %

 

 

47 %

 

 

 

 

 

 

 

 

 

Gross Margin by product for the three-month ended April 30, 2020

 

 

 

Product Sales

 

 

Advertising

 

 

Royalty Fee

 

 

Yippi

 

 

TogaGo

 

 

Total

 

Revenue

 

 

328,418

 

 

 

330,108

 

 

 

120,000

 

 

 

1,317,423

 

 

 

80,721

 

 

 

2,176,670

 

Cost of goods sold

 

 

145,521

 

 

 

-

 

 

 

-

 

 

 

1,678,018

 

 

 

127,055

 

 

 

1,950,594

 

Gross profit (loss)

 

 

182,897

 

 

 

330,108

 

 

 

120,000

 

 

 

(360,595 )

 

 

(46,334 )

 

 

226,076

 

Gross Margin

 

 

56 %

 

 

100 %

 

 

100 %

 

(27

%)

 

(57

%)

 

 

10 %

 

Gross Margin by product for the three-month ended April 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

Management 

 

 

 

 

 

 

 

 

Software Maintenance &

 

 

 

 

 

 

Product Sales

 

 

Advertising

 

 

Royalty Fee

 

 

Fee

 

 

Yippi

 

 

TogaGo

 

 

Subscription

 

 

Total

 

Revenue

 

 

2,475,312

 

 

 

22,720

 

 

 

60,000

 

 

 

530,487

 

 

 

-

 

 

 

-

 

 

 

15,513

 

 

 

3,104,032

 

Cost of goods sold

 

 

1,573,083

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

66,894

 

 

 

1,124

 

 

 

-

 

 

 

1,641,101

 

Gross profit (loss)

 

 

902,229

 

 

 

22,720

 

 

 

60,000

 

 

 

530,487

 

 

 

(66,894 )

 

 

(1,124 )

 

 

15,513

 

 

 

1,462,931

 

Gross Margin

 

 

36 %

 

 

100 %

 

 

100 %

 

 

100 %

 

 

-

 

 

 

-

 

 

 

100 %

 

 

47 %

 

Despite the steady growth of Yippi in-apps purchases and TogaGo platform sales over the last three quarters, total revenue decreased by approximately $927,000, or 30%, during the quarter ended April 30, 2020 due to the decrease in direct marketing network revenue of approximately $2.1 million.  There have been no management fees during the first three quarters.

 

Gross profit decreased by approximately $1.2 million, or 85%, during the quarter ended April 30, 2020 due to the decrease in direct marketing network revenue. Gross margin percentage decreased from 47% to 10% driven by sales mix shift from the higher margin businesses of management and information technology to the lower margin business of Yippi in-app purchases and TogaGo platform sales. The Company has invested significantly on the development of system and platform in support of the Yippi App and TogaGo platform operations in the early implementation stage but management expects reductions in cost of sales and increases in gross margin gradually over time.

 

 
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Table of Contents

  

 

 

Three months ended

 

 

 

 

 

 

 

 

April 30,

 

 

 

 

 

 

 

 

2020

 

 

2019

 

 

Change

 

 

%

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

$ 671,394

 

 

$ 431,906

 

 

$ 239,488

 

 

 

55 %

Salaries and wages

 

 

650,030

 

 

 

7,576,512

 

 

 

(6,926,482 )

 

(91

%)

Professional fees

 

 

683,938

 

 

 

216,824

 

 

 

467,114

 

 

 

215 %

Depreciation

 

 

137,468

 

 

 

18,311

 

 

 

119,157

 

 

 

651 %

Total operating expenses

 

 

2,142,830

 

 

 

8,243,553

 

 

 

(6,100,723 )

 

(74

%)

Loss from Operations

 

 

1,916,754

 

 

 

6,780,622

 

 

 

(4,863,868 )

 

(72

%)

Other Income

 

 

19,211

 

 

 

3,994

 

 

 

15,217

 

 

 

381 %

Net Loss

 

$ 1,897,543

 

 

$ 6,776,628

 

 

$ (4,879,085 )

 

(72

%)

 

Net loss decreased by approximately $4.9 million, or 72%, in the quarter ended April 30, 2020, compared to the prior year period, due to the decrease in operating expenses primarily attributed to the decrease in stock-based compensation of approximately $6.8 million. During the three months ended April 30, 2019, the Company issued 782,948 shares of the Company’s common stock as employee compensation.

 

Segment Operating Performance

 

Our operating performance by segment are as follows for the three months ended April 30, 2020 and 2019:

 

Three months ended April 30, 2020:

 

 

 

USA

 

 

Malaysia

 

 

Taiwan

 

 

Vietnam

 

 

Indonesia

 

 

Total

 

Revenue

 

$ 120,000

 

 

$ 1,714,740

 

 

$ 120,259

 

 

$ -

 

 

$ 221,671

 

 

$ 2,176,670

 

Gross Profit (Loss)

 

$ 120,000

 

 

$ (69,090 )

 

$ 78,072

 

 

$ -

 

 

$ 97,094

 

 

$ 226,076

 

Gross Margin

 

 

100 %

 

(4

%)

 

 

65 %

 

 

-

 

 

 

100 %

 

 

100 %

Net Loss

 

$ (601,782 )

 

$ (851,123 )

 

$ (68,062 )

 

$ (7,923 )

 

$ (368,653 )

 

$ (1,897,543 )

 

Three months ended April 30, 2019:

 

 

 

USA

 

 

Malaysia

 

 

Taiwan

 

 

Indonesia

 

 

Total

 

Revenue

 

$ 60,000

 

 

$ 568,721

 

 

$ 486,395

 

 

$ 1,988,916

 

 

$ 3,104,032

 

Gross Profit (Loss)

 

$ 60,000

 

 

$ 500,704

 

 

$ 441,242

 

 

$ 460,985

 

 

$ 1,462,931

 

Gross Margin

 

 

100 %

 

 

88 %

 

 

91 %

 

 

23 %

 

 

47 %

Net Income (Loss)

 

$ (6,988,670 )

 

$ (301,933 )

 

$ 93,677

 

 

$ 420,298

 

 

$ (6,776,628 )

 

Despite the steady growth of Yippi-in apps purchases and TogaGo platform sales over the last three quarters, total revenue decreased by approximately $927,000 in the three months ended April 30 2020, compared to the prior year period, due to the decrease in direct marketing network revenue in Indonesia and Taiwan and the absence of a management fee in Malaysia. The Company gradually restructured its business operations from direct marketing network, management, and information technology to Yippi in-app purchases and TogaGo platform sales.

 

Net loss decreased by approximately $4.9 million in the three months ended April 30, 2020, compared to the prior year period, due to the decrease in salaries and wages primarily attributed to the decrease of stock-based compensation of approximately $6.8 million. In the three months ended April 30, 2019, the Company issued 782,948 shares of the Company’s common stock as employee compensation. In addition, net loss in Malaysia and Indonesia both increased due to the increase in sales and marketing commissions and increased payroll costs for workforce reinforcement in support of business operations.

 

 
37

Table of Contents

  

Nine-Months Ended April 30, 2020 Compared to April 30, 2019

 

 

 

Nine months ended

 

 

 

 

 

 

 

 

 

April 30,

 

 

 

 

 

 

 

 

 

2020

 

 

2019

 

 

Change

 

 

%

 

Revenue

 

$ 8,719,525

 

 

$ 4,703,168

 

 

$ 4,016,357

 

 

 

85 %

Cost of Goods Sold

 

 

6,335,778

 

 

 

1,885,324

 

 

 

4,450,454

 

 

 

236 %

Gross Profit

 

$ 2,383,747

 

 

$ 2,817,844

 

 

 

(434,097 )

 

(15

%)

Gross Margin

 

 

27 %

 

 

60 %

 

 

 

 

 

 

 

 

 

Gross Margin by product for the nine-month ended April 30, 2020

 

 

 

Product Sales

 

 

Advertising

 

 

Royalty Fee

 

 

Yippi

 

 

TogaGo

 

 

Total

 

Revenue

 

 

3,656,589

 

 

 

474,543

 

 

 

360,000

 

 

 

3,200,370

 

 

 

1,028,023

 

 

 

8,719,525

 

Cost of goods sold

 

 

1,448,255

 

 

 

-

 

 

 

-

 

 

 

3,965,691

 

 

 

921,832

 

 

 

6,335,778

 

Gross profit (loss)

 

 

2,208,334

 

 

 

474,543

 

 

 

360,000

 

 

 

(765,321 )

 

 

106,191

 

 

 

2,383,747

 

Gross Margin

 

 

60 %

 

 

100 %

 

 

100 %

 

(24%)

 

 

 

10 %

 

 

27 %

 

Gross Margin by product for the nine-month ended April 30, 2019

 

 

 

Product Sales

 

 

Advertising

 

 

Royalty Fee

 

 

Management Fee

 

 

Yippi

 

 

TogaGo

 

 

Subscription

 

 

Total

 

Revenue

 

 

3,170,590

 

 

 

167,996

 

 

 

180,000

 

 

 

1,072,630

 

 

 

-

 

 

 

-

 

 

 

111,952

 

 

 

4,703,168

 

Cost of goods sold

 

 

1,640,370

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

243,830

 

 

 

1,124

 

 

 

-

 

 

 

1,885,324

 

Gross profit (loss)

 

 

1,530,220

 

 

 

167,996

 

 

 

180,000

 

 

 

1,072,630

 

 

 

(243,830 )

 

 

(1,124 )

 

 

111,952

 

 

 

2,817,844

 

Gross Margin

 

 

48 %

 

 

100 %

 

 

100 %

 

 

100 %

 

 

-

 

 

 

-

 

 

 

100 %

 

 

60 %

 

Revenue increased by $4.0 million, or 85%, in the nine months ended April 30, 2020, compared to the prior year period, driven by a $3.2 million increase in Yippi in-app purchases, a $1.0 million increase in TogaGo platform sales, and a $486,000 increase in direct marketing network revenue.

 

Gross profit decreased by $434,000, or 15%, in the nine months ended April 30, 2020, compared to the prior year period, due to the increase in cost of goods sold of $4.5 million as a result of the increase in revenue of $4.0 million. Gross margin percentage decreased to 27% in the nine months ended April 30, 2020 compared to 60% in the prior year period, primarily driven by the sales mix shift from the higher margin businesses of management and information technology to the lower margin business of Yippi in-app purchases. The Company has invested significantly on the development of a system and platform in support of the Yippi and TogaGo operations, which are in the early implementation stage, but management expects reductions in cost of sales and increases in gross margin gradually over time.

 

 

 

Nine months ended

 

 

 

 

 

 

 

 

April 30,

 

 

 

 

 

 

 

 

2020

 

 

2019

 

 

Change

 

 

%

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

$ 5,830,163

 

 

$ 1,725,779

 

 

$ 4,104,384

 

 

 

238 %

Salaries and wages

 

 

5,751,943

 

 

 

8,224,676

 

 

 

(2,472,733 )

 

(30

%)

Professional fees

 

 

1,617,526

 

 

 

846,465

 

 

 

771,061

 

 

 

91 %

Depreciation

 

 

323,731

 

 

 

41,974

 

 

 

281,757

 

 

 

671 %

Total operating expenses

 

 

13,523,363

 

 

 

10,838,894

 

 

 

2,684,469

 

 

 

25 %

Loss from Operations

 

 

11,139,616

 

 

 

8,021,050

 

 

 

3,118,566

 

 

 

39 %

Other Income

 

 

164,704

 

 

 

6,648

 

 

 

158,056

 

 

2377

%

Net Loss

 

$ 10,974,912

 

 

$ 8,014,402

 

 

$ 2,960,510

 

 

 

37 %

 

 
38

Table of Contents

  

Net loss increased by approximately $3.0 million, or 37%, in the nine months ended April 30, 2020, compared to the prior year period, due to the increase in operating expenses primarily attributed to the increases in selling, general and administration expenses and professional fees. Selling, general and administrative expenses increased primarily due to the increase in sales and marketing commissions of $2.2 million and advertising and promotion fees of $1.2 million, which were driven by increases in sales activities and advertising and marketing efforts. Professional fees increased during the nine months ended April 30, 2020 mainly attributed to the increase in legal fees of $440,000 related to due diligence, SEC filings, and corporate status matters and maintenance matters.

 

Segment Operating Performance

 

Our operating performance by segment are as follows for the nine months ended April 30, 2020 and 2019:

 

Nine months ended April 30, 2020:

 

 

 

USA

 

 

Malaysia

 

 

Taiwan

 

 

Vietnam

 

 

Indonesia

 

 

Total

 

Revenue

 

$ 360,000

 

 

$ 4,517,910

 

 

$ 743,777

 

 

$ -

 

 

$ 3,097,838

 

 

$ 8,719,525

 

Gross Profit (Loss)

 

$ 360,000

 

 

$ (172,875 )

 

$ 630,421

 

 

$ -

 

 

$ 1,566,201

 

 

$ 2,383,747

 

Gross Margin

 

 

100 %

 

(4

%) 

 

 

85

%

 

 

-

 

 

 

51

%

 

 

27

%

Net Loss

 

$

(4,654,331

)

 

$

(3,654,565 )

 

$ (363,802 )

 

$ (23,625 )

 

$ (2,278,589 )

 

$ (10,974,912 )

 

Nine months ended April 30, 2019:

 

 

 

USA

 

 

Malaysia

 

 

Taiwan

 

 

Indonesia

 

 

Total

 

Revenue

 

$ 180,000

 

 

$ 2,534,252

 

 

$ -

 

 

$ 1,988,916

 

 

$ 4,703,168

 

Gross Profit (Loss)

 

$ 180,000

 

 

$ 1,107,626

 

 

$ 1,069,233

 

 

$ 460,985

 

 

$ 2,817,844

 

Gross Margin

 

 

100 %

 

 

82 %

 

 

90 %

 

 

23 %

 

 

60 %

Net Loss

 

$ (7,465,555 )

 

$ (801,206 )

 

$ (91,427 )

 

$ 343,786

 

 

$ (8,014,402 )

 

Revenue increased by approximately $4.0 million in the nine months ended April 30, 2020 compared to the prior year period driven by the growth across each of our segments primarily, with respect to the increase in Yippi in-app purchases and TogaGo platform sales in Malaysia and the increase in direct marketing network revenue in Indonesia and Taiwan.

 

Net Loss increased by approximately $3.0 million in the nine months ended April 30, 2020 compared to the prior year period, due to the increase in operating expenses primarily attributed to the increase in payroll costs and legal fees for the Company and the increase in sales and marketing commissions and payroll costs and advertising and promotion fees in Malaysia and Indonesia in support of business operations..

 

Plan of Operation

 

The Company’s current business activities do not at this time provide positive cash flow, although the Company has commenced generating revenue for the third quarter ended April 30, 2018. During the next twelve months, we anticipate incurring costs related to:

 

 

i.

Marketing the Yippi app to users located throughout Asia;

 

ii.

Investigating, analyzing, and consummating potential acquisition or merger opportunities;

 

iii.

Other ongoing general and administrative type costs; and

 

iv.

The preparation and filing of the Company’s financial statements and Exchange Act reports.

 

 
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We believe that we are nearing the point where we will commence generating a net profit on a quarterly basis from advertising within the Yippi app, and through sales within the direct marketing network, although we cannot predict exactly when this will occur. We have begun generating gross revenues and believe our revenue will increase during the current fiscal year.

 

During the prior fiscal year, the Company temporarily adopted selling products to assist the Company to generate cash flow to support its operations while the Company continued to develop the Yippi app. The Company has decided that due to the success of adding this division to the Company, that investing further into the direct marketing network was in the Company’s best interest and has acquired the subsidiary named Eostre. See Note 9 for additional details.

 

We believe that in order to grow our business going forward, we will need to continue to invest in marketing and advertising of our Yippi app throughout Asia. Because of this, we expect going forward to continue to invest heavily in marketing and advertising. We believe we will be able to meet our operating costs and additional marketing and advertising in excess of our revenues, through additional amounts, as necessary, to be loaned to or invested in us by our stockholders and management, although no agreements have been entered into with anyone.

 

Liquidity and Capital Resources

 

 

 

April 30,

 

 

July 31,

 

 

 

 

 

 

 

 

2020

 

 

2019

 

 

Change

 

 

%

 

Cash and cash equivalents

 

$ 11,269,840

 

 

$ 14,916,556

 

 

$ (3,646,716 )

 

(24

%)

Total Assets

 

$ 18,660,826

 

 

$ 21,006,426

 

 

$ (2,345,600 )

 

(11

%)

Total Liabilities

 

$ 11,547,090

 

 

$ 6,090,089

 

 

$ 5,457,001

 

 

 

90 %

Working Capital

 

$ 2,639,648

 

 

$ 10,491,941

 

 

$ (7,852,293 )

 

(75

%)

 

As of April 30, 2020, our total assets were $18.7 million, and our total liabilities were $11.5 million. Liabilities were comprised primarily of our current liabilities of $11.5 million, of which included accounts payable and accrued liabilities of $5.7 million and deferred revenue of $5.6 million.

 

Our stockholders’ equity decreased from $15 million as of July 31, 2019 to $7.1 million as of April 30, 2020.

 

We had $11.3 million in cash as of April 30, 2020, and the Company had assets to meet ongoing expenses or debts that may accumulate. Accumulated deficit was $35.2 million as of April 30, 2020 compared to accumulated deficit of approximately $24.2 million as of July 31, 2019.

 

Our working capital decreased by $7.9 million from $10.5 million at July 31, 2019, to $2.6 million at April 30, 2020, due primarily to the increase in our current liabilities by $5.4 million, as explained by the increase in accounts payable and accrued liabilities of $1.5 million and deferred revenue of $3.8 million, and the decrease in current assets for the decrease in cash and cash equivalents of $3.6 million.

 

Cash Flow

 

 

 

Nine months ended

 

 

 

 

 

 

 

 

 

April 30,

 

 

Change

 

 

 

2020

 

 

2019

 

 

Amount

 

 

%

 

Cash Flows (used in) operating activities

 

$ (3,272,933 )

 

$ (101,161 )

 

$ (3,171,772 )

 

 

3,135 %

Cash Flows (used in) investing activities

 

 

(247,333 )

 

 

(198,017 )

 

 

49,316

 

 

 

25 %

Cash Flows provided by (used in) financing activities

 

 

(133,934 )

 

 

2,149,959

 

 

 

(2,283,893 )

 

(106%)

 

Effects on changes in foreign exchange rate

 

 

7,484

 

 

 

(98,153 )

 

 

105,637

 

 

(108%)

 

Net change in cash and cash equivalents during period

 

$ (3,646,716 )

 

$ 1,752,628

 

 

$ (5,399,344 )

 

(308%)

 

 

 
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Cash Flow from Operating Activities

 

We have not generated significant positive cash flow from operating activities. For the nine-month period ended April 30, 2020, net cash flows used in operating activities was $3.3 million compared to $101,000 used during the nine-month period ended April 30, 2019. Cash flows used in operating activities for the nine-months ended April 30, 2020, comprised of a net loss of $11 million, which was reduced by non-cash expenses of $324,000 for depreciation and $3.4 million for stock-based compensation and a net change in working capital of $4.0 million. Cash flows used in operating activities for the nine-months ended April 30, 2019, comprised of a net loss of $8.0 million, which was reduced by non-cash expenses of $42,000 for depreciation and $6.9 million for stock-based compensation and a net change in working capital of $1.1 million.

 

Cash Flows from Investing Activities

 

During the nine-month period ended April 30, 2020, we used $247,000 in investing activities for the purchase of property and equipment. During the nine-month period ended April 30, 2019, we used $198,000 for the purchase of property and equipment.

 

Cash Flows from Financing Activities

 

We have financed our operations primarily from either advances and loans from related and third parties or the issuance of equity instruments. For the nine-month period ended April 30, 2020, net cash used in financing activities was $134,000, consisting of the repayment for cancellation of stock options of $157,000 and the repayment to related parties of $86,000, offset by common stock subscribed of $3,000 and proceeds from related parties of $106,000. For the nine-month period ended April 30, 2019, net cash provided by financing activities was $2.2 million, consisting of proceeds from the sale of shares of our common stock of $2.1 million and proceeds from related parties of $127,000, offset by repayment to related parties of $75,000.

 

Application of Critical Accounting Policies

 

We have identified the policies below as critical to our business operations and the understanding of our results of operations. The impact on our business operations and any associated risks related to these policies are discussed throughout Management’s Discussion and Analysis of Financial Condition and Results of Operations when such policies affect our reported or expected financial results.

 

In the ordinary course of business, we have made a number of estimates and assumptions relating to the reporting of results of operations and financial condition in the preparation of our financial statements in conformity with U.S. GAAP. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. The results form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ significantly from those estimates under different assumptions and conditions. We believe that the following discussion addresses our most critical accounting policies, which are those that are most important to the portrayal of our financial condition and results of operations and require our most difficult, subjective, and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

 

The material estimates for our company are that of the stock-based compensation recorded for options. The fair values of options are determined using the Black-Scholes option pricing model. We have no historical data on the accuracy of these estimates. The estimated sensitivity to change is related to the various variables of the Black-Scholes option pricing model. The specific quantitative variables are included in the notes to the consolidated financial statements.

 

We prepare our financial statements in conformity with U.S. GAAP, which requires management to make certain estimates and apply judgments. We base our estimates and judgments on historical experience, current trends and other factors that management believes to be important at the time the financial statements are prepared. On a regular basis, we review our accounting policies and how they are applied and disclosed in our financial statements.

 

 
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While we believe that the historical experience, current trends and other factors considered support the preparation of our financial statements in conformity with GAAP, actual results could differ from our estimates and such differences could be material.

 

For our critical accounting policies and estimates for “Revenue Recognition” and “Leases” see Note 1, Summary of Significant Accounting Policies, to the unaudited Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report. Other than the policy changes disclosed in Note 1, Summary of Significant Accounting Policies, to the unaudited Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report, there have been no material changes to our critical accounting policies and estimates during the nine months ended April 30, 2020 from those disclosed in our Annual Report on Form 10-K for the year ended July 31, 2019.

 

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, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to an investor in our securities.

 

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

 

Evaluation of Disclosure Controls and Procedures

 

The Company’s management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

In accordance with Exchange Act Rules 13a-15 and 15d-15, an evaluation was completed under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this Quarterly Report. Based on that evaluation, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were not effective in providing reasonable assurance that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act was recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period ending April 30, 2020, or subsequent to the date the Company completed its evaluation, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

In response to the COVID-19 pandemic, our accounting employees began working remotely beginning in mid-March 2020. We are continually monitoring and assessing the impact of the COVID-19 pandemic on our internal controls to minimize the impact to their design and operating effectiveness while these employees work remotely.

 

 
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Table of Contents

 

PART II – OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

There are no legal proceedings, which are pending or have been threatened against us or any of our officers, directors, or control persons, of which management is aware.

 

ITEM 1A. RISK FACTORS

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

On February 10, 2020, the Company approved the issuance of 113 shares of the Company’s common stock to its independent Directors, Iain Bratt, Jim Lupkin, and Shemori BoShae Guinn, pursuant to the terms of their Independent Director Agreements. The shares had an aggregate value of $1,500, which equals the total number of shares multiplied by the average of the closing price of our common stock as reported on OTC Market for the 30 trading days preceding the end of the second fiscal quarter, or $13.35 per share. These issuances of shares of the Company’s common stock are qualified for the exemption from registration contained in Section 4(a)(2) of the Securities Act.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

None.

 

 
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Table of Contents

 

ITEM 6. EXHIBITS

 

Exhibits:

 

10.1*

Stock Purchase Agreement – Phase 1

 

10.2*

Stock Purchase Agreement – Phase 2

 

10.3*

Pledge and Security Agreement – Ahmad Hizar Bin Sainol Abdin

 

10.4*

Pledge and Security Agreement – Lim Jun Hao

 

10.5*

Pledge and Security Agreement – Toh Kok Soon

 

10.6*

Secured Promissory Note – Ahmad Hizar Bin Sainol Abdin

 

10.7*

Secured Promissory Note – Lim Jun Hao

 

10.8*

Secured Promissory Note – Toh Kok Soon

 

31.1*

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

 

31.2*

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

 

99.1*

AJL Direct Sales License

 

101.INS

XBRL Instance Document*

 

101.SCH

XBRL Taxonomy Extension Schema Document*

 

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document*

 

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document*

 

101.LAB

XBRL Taxonomy Extension Label Linkbase Document*

 

101.PRE

XBRL Taxonomy Presentation Linkbase Document*

___________

*filed herewith

 

 
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Table of Contents

 

SIGNATURES

 

In accordance with the requirements of the Securities Exchange Act of 1934, as amended,, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

TOGA LIMITED

 

DATED: June 15, 2020

By:

/s/ Toh Kok Soon

 

Toh Kok Soon

 

President, Chief Executive Officer and Member of the Board

 

 

DATED: June 15, 2020

By:

/s/ Alexander Henderson

 

Alexander Henderson

 

Chief Financial Officer, Secretary, Treasurer and Member of the Board

 

 

 
45

 

EXHIBIT 10.1

 

STOCK PURCHASE AGREEMENT

 

THIS STOCK PURCHASE AGREEMENT (the “Agreement”) is dated as of May 31, 2020 by and between Hamidah Bibi A/P Seraj Din (“Hamidah”), Ahmad Hizar Bin Sainol Abdin (“Ahmad”) and Eostre Sdn. Bhd. (f.k.a. Sinar Sehat Sdn. Bhd.) a Malaysia corporation (the “Corporation” and collectively with Ahmad and Hamidah, the “Sellers”) and Toga Limited, a Nevada corporation (“Toga”), Toh Kok Soon (“Toh”), Lim Jun Hao (“Lim”, and collectively with Toga, Toh, and Ahmad, the “Buyers”). For the avoidance of doubt, Ahmad is both a part of the group constituting the Sellers in this Agreement and the group constituting the Buyers in this Agreement, as set forth more fully herein.

 

RECITALS

 

WHEREAS, immediately prior to the date of this transaction, the Corporation has an authorized share capital of RM500,000 consisting of 500,000 ordinary shares of RM1.00 per share, and such shares are held by the Sellers as follows: Ahmad holds 400,000 ordinary shares and Hamidah holds 100,000 ordinary shares.

 

WHEREAS, as of the date of this transaction, Ahmad and Hamidah are directors of the Corporation (the “Current Directors”), and there are no other directors of the Corporation.

 

WHEREAS, the Corporation desires to issue 4,500,000 additional ordinary shares, RM1.00 per share, and, together with those 500,000 shares already issued, the Sellers desires to sell all 5,000,000 ordinary shares of the Corporation (the “Stock”), to Buyers and Buyers desire to purchase such Stock, in the following amounts.

 

Name

 

Stock Purchased

Ownership Post-Agreement

No. of shares

%

Toga Limited

1,000,000

1,000,000

20%

Toh Kok Soon

1,000,000

1,000,000

20%

Lim Jun Hao

1,250,000

1,250,000

25%

Ahmad Hizar Bin

Sainol Abdin

1,750,000

(this amount shall include the 400,000 shares

held by Ahmad prior to this Agreement, but

which shall be validly reissued to Ahmad and

fully paid for by Toga, pursuant to this

Agreement)

1,750,000

35%

TOTAL

5,000,000

5,000,000

100%

 

WHEREAS, upon the execution of this Agreement, all Stock of the Corporation shall be validly issued, fully paid and non-assessable.

 

WHEREAS, at closing, the Purchase Price (defined below) for the Stock shall be paid by Toga to the Sellers by transferring such funds directly into the bank account of the Corporation.

 

WHEREAS, neither Hamidah, Ahmad, Toh or Lim, nor any of their respective affiliates (collectively, the “Insiders”), shall be entitled to receive any profit in connection with their share ownership of the Corporation.

 

WHEREAS, the Insiders shall only be entitled to reimbursement from the Corporation for their out-of-pocket costs and expenses actually incurred in connection with set-up or maintenance of the Corporation’s business, less any amounts already received directly or indirectly from Toga or its affiliates, plus $1.00 US.

 

 
1

 

 

WHEREAS, this Agreement is being executed along with certain other agreements, as follows:

 

 

1.

Promissory notes in favor of Toga signed by each of Toh, Lim and Ahmad, secured by each of their shares of the Corporation, respectively.

 

 

 

 

2.

Pledge and security agreements in favor of Toga signed by each of Toh, Lim and Ahmad, pledging each of their shares of the Corporation, respectively, to Toga.

 

 

 

 

3.

Stock Powers in favor of Toga signed by each of Toh, Lim and Ahmad, covering each of their shares of the Corporation, respectively.

 

 

 

 

4.

Irrevocable proxies in favor of Toga signed by each of Toh, Lim and Ahmad, to vote each of their shares of the Corporation, respectively, as directed by Toga.

 

 

 

 

5.

A Stock Purchase Agreement, between Toh, Lim, Ahmad and Toga, where, after certain conditions precedent are satisfied, Toh, Lim and Ahmad shall sell all of their shares of the Corporation to Toga, in exchange for the full satisfaction and cancellation of each of their respective promissory notes executed in favor of Toga.

 

WHEREAS, the parties desire to enter into this Agreement to effectuate, among other things, the above intentions.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual promises, agreements, covenants and warranties hereinafter set forth, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows:

 

1. Incorporation of Recitals. The recitals set forth above shall be incorporated by this reference and made part of this Agreement.

 

2. Sale and Purchase of Stock. The Corporation hereby issues 4,500,000 additional ordinary shares, RM1.00 per share, and, together with the 500,000 ordinary shares already issued, Sellers hereby sell, transfer, assign and deliver all right, title and interest in and to 100% of the Stock to Buyers free and clear of all liens, encumbrances, security interests, pledges, options, claims and rights of others of any nature whatsoever, at a price equal to RM1.00 per share of Stock, or RM5,000,000 in the aggregate (the “Purchase Price”), in cash payable at Closing (as hereinafter defined).

 

3. Closing. The closing (“Closing”) of the purchase and sale of the Stock contemplated hereunder shall take place on the date hereof and at such place as the parties may agree. At the Closing:

 

(a) Toga shall deliver to Sellers the entire Purchase Price, which shall be deposited directly into the bank account of the Corporation;

 

 
2

 

 

(b) Sellers shall deliver to Buyers share certificates representing the Stock being sold hereunder duly executed on behalf of the Corporation and registered to the names and in the amounts set forth below:

 

(i) Toga Limited: 1,000,000 ordinary shares of Stock;

 

(ii) Toh Kok Soon: 1,000,000 ordinary shares of Stock;

 

(iii) Lim Jun Hao: 1,250,000 ordinary shares of Stock; and

 

(iv) Ahmad Hizar Bin Sainol Abdin: 1,750,000 ordinary shares of Stock.

 

(c) Sellers shall deliver to Buyers a copy of resolutions of the Corporation, signed by all of its Current Directors, authorizing and approving the transactions contemplated by this Agreement, and the appointment of a new directors designated by Toga, who shall be authorized to have sole control over the Corporation’s bank accounts (the “Sellers Resolutions”)

 

(d) Sellers shall deliver to Buyers a copy of the undated resignation letters of each of the Current Directors (the “Resignation Letters”).

 

(e) Sellers shall deliver to Buyers the books, records and all other files and effects of the Corporation, including all such records as required to be kept by law applicable to the Corporation.

 

(f) Toh shall deliver to Toga a promissory note in the amount of RM1,000,000 in favor of Toga signed by Toh (the “Toh Promissory Note”).

 

(g) Lim shall deliver to Toga a promissory note in the amount of RM1,250,000 in favor of Toga signed by Lim (the “Lim Promissory Note”).

 

(h) Ahmad shall deliver to Toga a promissory note in the amount of RM1,750,000 in favor of Toga signed by Ahmad (the “Ahmad Promissory Note”).

 

(i) Toh shall deliver to Toga a pledge and security agreement in favor of Toga signed by Toh, pledging his 1,000,000 shares of the Corporation purchased hereunder to Toga as security for the Toh Promissory Note (the “Toh Security Agreement”).

 

(j) Lim shall deliver to Toga a pledge and security agreement in favor of Toga signed by Lim, pledging his 1,250,000 shares of the Corporation purchased hereunder to Toga as security for the Lim Promissory Note (the “Lim Security Agreement”).

 

(k) Ahmad shall deliver to Toga a pledge and security agreement in favor of Toga signed by Ahmad, pledging his 1,750,000 shares of the Corporation, including those previously held and those purchased hereunder, to Toga as security for the Ahmad Promissory Note (the “Ahmad Security Agreement”).

 

(l) Toh shall deliver to Toga an undated stock power in favor of Toga signed by Toh covering his 1,000,000 shares of the Corporation (the “Toh Stock Power”).

 

(m) Lim shall deliver to Toga an undated stock power in favor of Toga signed by Lim covering his 1,250,000 shares of the Corporation (the “Lim Stock Power”).

 

(n) Ahmad shall deliver to Toga an undated stock power in favor of Toga signed by Ahmad covering his 1,750,000 shares of the Corporation (the “Ahmad Stock Power”).

 

(o) Toh shall deliver to Toga an irrevocable proxy in favor of Toga signed by Toh to vote his 1,000,000 shares of the Corporation as directed by Toga (the “Toh Irrevocable Proxy”).

 

(p) Lim shall deliver to Toga an irrevocable proxy in favor of Toga signed by Lim to vote his 1,250,000 shares of the Corporation as directed by Toga (the “Lim Irrevocable Proxy”).

 

 
3

 

 

(q) Ahmad shall deliver to Toga an irrevocable proxy in favor of Toga signed by Ahmad to vote his 1,750,000 shares of the Corporation as directed by Toga (the “Ahmad Irrevocable Proxy”).

 

(r) A fully-executed stock purchase agreement for a “Phase 2” of the acquisition of the Corporation by Toga, between Toh, Lim, Ahmad and Toga, where, after certain conditions precedent are satisfied, Toh, Lim and Ahmad shall sell all of their shares of the Corporation to Toga, in exchange for the full satisfaction and cancellation of the Toh Promissory Note, the Lim Promissory Note, and the Ahmad Promissory Note (the “Phase 2 Stock Purchase Agreement”).

 

4. Transaction Documents. This Agreement, along with the documents referenced in Section 3 (b)-(r), above, shall be collectively referred to hereafter as the “Transaction Documents.” Each of the Transaction Documents:

 

(a) shall be separately executed by the respective parties thereto at Closing and

 

(b) shall be attached hereto as exhibits as set forth on Schedule A to this Agreement.

 

5. Representations and Warranties of Sellers. Sellers represent and warrant to Buyers as follows:

 

(a) The Corporation (i) is a corporation duly organized, validly existing and in good standing under the laws of Malaysia; (ii) has the power and authority to own, lease and operate its properties and carry on its business as now conducted; (iii) is duly qualified, licensed to do business, and in good standing as a foreign corporation in each jurisdiction where the failure to be so qualified or licensed could reasonably be expected to have a Material Adverse Effect. For the purposes of this Agreement, “Material Adverse Effect” shall mean any effect on the business, operations, properties or financial condition of the Corporation that is material and adverse to the Corporation and affiliates, taken as a whole, and/or any condition, circumstance, or situation that would prohibit or otherwise materially interfere with the ability of the Corporation to enter into and perform any of its obligations under this Agreement. For the purpose of this Agreement, “business” shall include operating a business in the “direct sales” space, subject to the Malaysian Direct Sales and Anti-Pyramid Scheme Act 1993.

 

(b) All permits, licenses, franchises, approvals, registrations, certificates, variances, and similar rights obtained, or required to be obtained, from governmental authorities (collectively, “Permits”) that are required for the Corporation to conduct its business, have been obtained and are valid and in full force and effect. The AJL Direct Selling License attached hereto as Exhibit 21 (the “License”) was issued to the Corporation on November 22, 2019 and will expire on November 21, 2021. Such license will not lapse, terminate, or expire as a result of the performance of this Agreement, or the consummation of the transactions contemplated hereby. Neither the Corporation nor any of the Sellers is in material default under, or material violation of, the License. Regarding the License, under all applicable laws of Malaysia:

 

(i) The License is valid for a multi-level marketing company such as the Corporation.

 

(ii) The Corporation can renew the License each year.

 

(iii) The License can be amended, without material issues or costs, to sell all products previously sold by Toga in Malaysia under the “Eostre” brand.

 

(iv) The License can be amended, without material issues or costs, to sell products through a direct marketing network using the “Eostre” business model planned by Toh and Toga.

 

 
4

 

 

(v) All of the above in Section 5(b)(i)-(iv) shall be and remain true and correct in all material respects both before and after:

 

(1) the planned sale of the Stock in this Agreement, and

 

(2) the planned sale of the Corporation’s ordinary shares to become 100% foreign owned (by Toga) pursuant to the Phase 2 Stock Purchase Agreement.

 

(vi) The planned transfer of ownership and control in the Corporation, as contemplated in this Agreement and in the Phase 2 Stock Purchase Agreement, can be completed without material issues, costs, or other approvals not previously disclosed to Toga during due diligence.

 

(c) Sellers have all requisite power and authority to execute and deliver this Agreement, to carry out his obligations hereunder, and to consummate the transactions contemplated hereby. Sellers have obtained all necessary approvals for the execution and delivery of this Agreement, the performance of his obligations hereunder, and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by Sellers and (assuming due authorization, execution and delivery by Buyers) constitutes Sellers’ legal, valid and binding obligation, enforceable against Sellers in accordance with its terms.

 

(d) The Stock is owned of record and beneficially by the Sellers, free and clear of all liens, pledges, security interests, charges, claims, encumbrances, agreements, options, voting trusts, proxies and other arrangements or restrictions of any kind (“Encumbrances”). Upon consummation of the transactions contemplated by this Agreement, Buyers shall own the Stock, free and clear of all Encumbrances.

 

(e) The execution, delivery and performance by Sellers of this Agreement do not conflict with, violate or result in the breach of, or create any Encumbrance on the Stock pursuant to any agreement, instrument, order, judgment, decree, law or governmental regulation to which Sellers is a party or is subject or by which the Stock is bound.

 

(f) None of the Insiders are a party to any transaction with the Corporation, or relating to the Corporation, including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, providing for the borrowing of money from or lending of money to or otherwise requiring payments to or from any such Insiders.

 

(g) All Stock of the Corporation has been, or will be at Closing, duly authorized by all necessary corporate action, and, when paid for in accordance with the terms hereof, 100% of the Stock of the Corporation shall be validly issued and outstanding, fully paid and nonassessable, and the Buyers shall be entitled to all rights accorded to a holder of ordinary shares of the Corporation.

 

(h) The Stock, which is 5,000,000 ordinary shares as of the Closing, represents 100% of the issued and outstanding securities of the Corporation and there are no other securities of any kind or nature (whether they be shares, warrants, options, convertible securities, or otherwise) issued or outstanding as of the Closing.

 

(i) All due diligence documents and information provided to the Buyers in connection with the Corporation and this Agreement are true and correct in all material respects.

 

(j) All requisite governmental, administrative or other third-party consents or approvals required by or with respect to Sellers in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been obtained.

 

 
5

 

 

(k) There are no actions, suits, claims, investigations or other legal proceedings pending or, to the knowledge of Sellers, threatened against or by Sellers that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement.

 

(l) No broker, finder, investment banker, or other third-party is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Sellers.

 

(m) No taxes are due to any governmental authority in connection with the transactions contemplated by this Agreement. The Corporation has paid all taxes and fees applicable to it due to any governmental authority prior to the Closing.

 

(n) The Corporation has, or shall have as of the Closing, all right, title and interest in and to, and control over, that certain domain name “Eostre.biz” free and clear of all Encumbrances.

 

(o) No representation or warranty by the Sellers in this Agreement and no statement contained in any other document furnished or to be furnished to the Buyers pursuant to this Agreement contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading.

 

6. Representations and Warranties of Buyers. Buyers represent and warrant to Sellers as follows:

 

(a) Buyers have all requisite power and authority to execute and deliver this Agreement, to carry out their obligations hereunder, and to consummate the transactions contemplated hereby. Buyers have obtained all necessary approvals for the execution and delivery of this Agreement, the performance of their obligations hereunder, and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by Buyers and (assuming due authorization, execution and delivery by Sellers) constitutes Buyers’ legal, valid and binding obligation, enforceable against Buyers in accordance with its terms.

 

(b) No governmental, administrative or other third party consents or approvals are required by or with respect to Buyers in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.

 

(c) There are no actions, suits, claims, investigations or other legal proceedings pending or, to the knowledge of Buyers, threatened against or by Buyers that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement.

 

(d) No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Buyers.

 

(e) Buyers have not, directly or indirectly, paid or given any commission or other remuneration in connection with the purchase of the Stock. Buyers have not received any public media advertisements and have not been solicited by any form of mass mailing solicitation.

 

7. No Issuances Without Consent of Toga. Except for the Stock being issued and sold pursuant to this Agreement, the Corporation shall not issue or sell any securities of any kind or nature (whether they be shares, warrants, options and convertible securities, or otherwise) without the prior written consent of Toga (or its designee(s) on the Corporation’s board of directors).

 

 
6

 

 

8. Further Assurances. At any time and from time to time after the Closing date, at Buyers’ request and without further consideration, Sellers shall promptly execute and deliver all such further agreements, certificates, instruments and documents, or perform such further actions, as Buyers may request, in order to fully consummate the transactions contemplated hereby regarding the sale of the Stock and carry out the purposes and intent of this Agreement.

 

9. Entire Agreement. The Transaction Documents constitute the entire agreement between the parties with respect to the subject matter hereof and it may not be terminated, modified or amended except in a writing executed by each of the parties hereto. The Transaction Documents supersede all prior agreements and undertakings between the parties (whether oral or written) with respect to its subject matter. In the event of any inconsistency between the statements in the body of this Agreement and those in the other Transaction Documents and any exhibits, the statements in the body of this Agreement will control.

 

10. Parties in Interest. This Agreement is binding upon, inures to the benefit of, and is enforceable by the parties hereto, and their respective successors, agents and assigns. No party hereto may assign its rights or delegate its obligations hereunder, without the prior written consent of the other party, which consent shall not be unreasonably withheld or delayed. No assignment shall relieve the assigning party of any of its obligations hereunder.

 

11. Notices. All notices, claims, demands or other communications hereunder or in connection with the transaction contemplated hereby will be in writing and will be deemed to have been duly given if hand delivered, or mailed by registered or certified mail, postage prepaid, return receipt requested, or delivered by a nationally recognized overnight courier or delivery service, expenses prepaid, or sent by facsimile or e-mail to the addresses set forth below each parties signatures, or such other address, facsimile or e-mail as the person or entity to whom notice is to be given may have previously furnished to the other party in writing in the manner set forth above. All notices will be deemed received on the date of delivery, or if mailed, on the date appearing on the return receipt therefore.

 

12. Miscellaneous.

 

(a) This Agreement may be executed in two or more counterparts, including by facsimile or electronic transmission, each of which shall be deemed an original, and all of which together shall constitute one and the same document.

 

(b) The Section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 

(c) Any provision of this Agreement which is invalid, illegal or unenforceable in any jurisdiction shall be ineffective only to the extent of such invalidity, illegality or unenforceability without in any way affecting the remaining provisions hereof in such jurisdiction or rendering that or any other provision of this Agreement invalid, illegal or unenforceable in any other jurisdiction.

 

(d) This Agreement shall be governed by the substantive laws (without reference to choice of laws rules) of the State of California, and the parties irrevocably agree that the courts located in Los Angeles shall have exclusive jurisdiction in respect to any dispute, suit, action, arbitration or proceedings which may arise out of or in connection with this Agreement.

 

 
7

 

 

(e) No delay on the part of either party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any right, power or privilege hereunder, or any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder.

 

(f) The parties hereto affirm that each had an adequate opportunity to consult with independent legal counsel regarding this Agreement prior to its execution. To the extent either party hereto has not consulted with independent legal counsel, the parties hereby expressly and voluntarily waive the opportunity to consult with independent legal counsel before entering into this Agreement.

 

[Remainder of page intentionally blank]

 

 
8

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first above written.

 

 

SELLERS:

 

 

 

 

 

/s/ Ahmad Hizar Bin Zainol Abidin                

 

Ahmad Hizar Bin Zainol Abidin

 
 

 

 
 

Address for Notices:

 

 

 

 

 

 

Tel:

 

 

E-mail:  

 

 

ID #:

 

 

 

 

 

 

/s/ Hamidah Bibi A/P Seraj Din                                      

 

 

Hamidah Bibi A/P Seraj Din

 

 

 

 

 

 

Address for Notices:

 

 

 

 

 

 

Tel:

 

 

E-mail: 

 

 

ID #:

 

 

 

 

 

 

CORPORATION:

 

 

 

 

 

 

/s/ Ahmad Hizar Bin Zainol Abidin                

 

 

By: Ahmad Hizar Bin Zainol Abidin

 

 

Title: Director

 

 

Address for Notices:

 

 

 

 

 

 

 

 

Tel:

 

 

 

E-mail:

 

 

 

Company Registration No.:

 

 

 

 

 

BUYERS:

 

 

 

 

 

 

TOGA LIMITED:

 

 

 

 

 

 

/s/ Alexander D. Henderson                                             

 

 

By:

Alexander D. Henderson                                                       

 

 

Title:

Chief Financial Officer

 

 

[Signature page to Stock Purchase Agreement]

                                                

 

 

 

  Address for Notices:  

 

 

 

 

 

 

 

Tel:

 

 

 

E-mail:

 

 

  

 

    

 

 

/s/ Toh Kok Soon  
 

Toh Kok Soon

 
   

 

Address for Notices:

 

 

 

 

 

 

 

Tel:

 

 

E-mail:

 

 

ID #:

 

 

 

 

 

/s/ Lim Jun Hao

 

 

Lim Jun Hao

 

 

 

 

Address for Notices:

 

 

 

 

 

 

Tel:

 

 

 

E-mail:

 

 

ID #:

 

 

 

 

 

/s/ Ahmad Hizar Bin Zainol Abidin

 

 

Ahmad Hizar Bin Zainol Abidin

 

 

 

 

Address for Notices:

 

 

 

 

 

 

 

 

Tel:

 

 

 

E-mail:

 

 

 

ID #:

 

 

 
2

 

 

SCHEDULE A

 

Schedule of Exhibits that must be attached hereto at closing (and fully-executed by all relevant parties thereto):

 

Exhibit No.

Document Title

1

Certificate evidencing 1,000,000 shares of the Corporation in the name of Toga

2

Certificate evidencing 1,000,000 shares of the Corporation in the name of Toh

3

Certificate evidencing 1,250,000 shares of the Corporation in the name of Lim

4

Certificate evidencing 1,750,000 shares of the Corporation in the name of Ahmad

5

Sellers Resolutions

6

Resignation Letter of Ahmad

7

Resignation Letter of Hamidah

8

Toh Promissory Note

9

Lim Promissory Note

10

Ahmad Promissory Note

11

Toh Security Agreement

12

Lim Security Agreement

13

Ahmad Security Agreement

14

Toh Stock Power

15

Lim Stock Power

16

Ahmad Stock Power

17

Toh Irrevocable Proxy

18

Lim Irrevocable Proxy

19

Ahmad Irrevocable Proxy

20

Phase 2 Stock Purchase Agreement

21

AJL Direct Selling License

 

 

3

 

EXHIBIT 10.2

 

PHASE 2 STOCK PURCHASE AGREEMENT

 

THIS STOCK PURCHASE AGREEMENT (the “Agreement”) is dated as of May 31, 2020 by and between Ahmad Hizar Bin Sainol Abdin (“Ahmad”), Toh Kok Soon (“Toh”), and Lim Jun Hao (“Lim” and collectively with Ahmad and Toh, the “Sellers”) and Toga Limited, a Nevada corporation (the “Buyer”).

 

RECITALS

 

WHEREAS, pursuant to that certain Stock Purchase Agreement, of even date herewith, between Eostre Sdn. Bhd., a Malaysia corporation (the “Corporation”), Hamidah Bibi A/P Seraj Din, Ahmad, the Buyer, Toh and Lim (including all exhibits attached thereto, collectively, the “Stock Purchase Agreement”), ordinary shares of the Corporation were paid for by Buyer and issued to the Sellers in the following amounts:

  

Name

 

Stock Purchased in Stock Purchase

Agreement

Ownership

No. of shares

%

Toga Limited

1,000,000

1,000,000

20%

Toh Kok Soon

1,000,000

1,000,000

20%

Lim Jun Hao

1,250,000

1,250,000

25%

Ahmad Hizar Bin Sainol Abdin

1,750,000 

1,750,000

35%

TOTAL

5,000,000

5,000,000

100%

 

WHEREAS, pursuant to the Stock Purchase Agreement, Buyer acquired 1,000,000 ordinary shares, or 20%, of the issued and outstanding ordinary shares of the Corporation, and Sellers acquired, in aggregate, 4,000,000 ordinary shares, or 80%, of the issued and outstanding ordinary shares of the Corporation (the “Stock”).

 

WHEREAS, in connection with Buyer’s payment for the Stock in the Stock Purchase Agreement, the Buyer and the Seller executed:

 

 

1.

Promissory notes in favor of the Buyer signed by each of Toh, Lim and Ahmad, secured by each of their shares of the Corporation, respectively (the “Promissory Notes”).

 

 

 

 

2.

Pledge and security agreements in favor of the Buyer signed by each of Toh, Lim and Ahmad, pledging each of their shares of the Corporation, respectively, to the Buyer.

 

 

 

 

3.

Stock Powers in favor of the Buyer signed by each of Toh, Lim and Ahmad, covering each of their shares of the Corporation, respectively.

 

 

 

 

4.

Irrevocable proxies in favor of the Buyer signed by each of Toh, Lim and Ahmad, to vote each of their shares of the Corporation, respectively, as directed by the Buyer.

 

WHEREAS, the Sellers desire to sell all of the Stock to Buyer and Buyer desires to purchase such Stock so that it will own 100% of the issued and outstanding ordinary shares of the Corporation.

 

WHEREAS, neither Hamidah, Ahmad, Toh or Lim, nor any of their respective affiliates (collectively, the “Insiders”), shall be entitled to receive any profit in connection with their share ownership of the Corporation.

 

 
1

 

 

WHEREAS, the Insiders shall only be entitled to reimbursement from the Corporation for their out-of-pocket costs and expenses actually incurred in connection with set-up or maintenance of the Corporation’s business, less any amounts already received directly or indirectly from the Buyer or its affiliates, plus $1.00 US.

 

WHEREAS, the Buyer and Sellers have entered into this Agreement where, after certain conditions precedent are satisfied, Sellers shall sell all of their shares of the Corporation to Buyer, in exchange for the full satisfaction and cancellation of each of their respective Promissory Notes executed in favor of Buyer.

 

WHEREAS, the parties desire to enter into this Agreement to effectuate, among other things, the above intentions.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual promises, agreements, covenants and warranties hereinafter set forth, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows:

 

1. Incorporation of Recitals. The recitals set forth above shall be incorporated by this reference and made part of this Agreement.

 

2. Sale and Purchase of Stock. Sellers hereby sell, transfer, assign and deliver all right, title and interest in and to 100% of the Stock to Buyer free and clear of all liens, encumbrances, security interests, pledges, options, claims and rights of others of any nature whatsoever at Closing (as hereinafter defined), as full satisfaction for all principal and accrued interest under the Promissory Notes.

 

3. Closing. The closing (“Closing”) of the purchase and sale of the Stock contemplated hereunder shall take place on the date that all regulatory approvals necessary for the sale of the Stock from the Sellers to the Buyer have been obtained, to the sole satisfaction of Buyer, including, but not limited to, those regulatory approvals which would allow the 100% ownership by a non-Malaysian entity for a Malaysian corporation licensed to engage in the Corporation’s direct selling business. At the Closing:

 

(a) Sellers shall deliver to Buyer share certificates representing the Stock being sold hereunder, duly executed on behalf of the Corporation and registered to the name of Buyer.

 

(b) Buyer shall cancel the Promissory Notes as fully satisfied and of no further force or effect.

 

4. Representations and Warranties of Seller. Sellers represent and warrant to Buyer as follows:

 

(a) The Corporation (i) is a corporation duly organized, validly existing and in good standing under the laws of Malaysia; (ii) has the power and authority to own, lease and operate its properties and carry on its business as now conducted; (iii) is duly qualified, licensed to do business, and in good standing as a foreign corporation in each jurisdiction where the failure to be so qualified or licensed could reasonably be expected to have a Material Adverse Effect. For the purposes of this Agreement, “Material Adverse Effect” shall mean any effect on the business, operations, properties or financial condition of the Corporation that is material and adverse to the Corporation and affiliates, taken as a whole, and/or any condition, circumstance, or situation that would prohibit or otherwise materially interfere with the ability of the Corporation to enter into and perform any of its obligations under this Agreement. For the purpose of this Agreement, “business” shall include operating a business in the “direct sales” space, subject to the Malaysian Direct Sales and Anti-Pyramid Scheme Act 1993.

 

 
2

 

 

(b) All permits, licenses, franchises, approvals, registrations, certificates, variances, and similar rights obtained, or required to be obtained, from governmental authorities (collectively, "Permits") that are required for the Corporation to conduct its business, have been obtained and are valid and in full force and effect. The AJL Direct Selling License attached to the Stock Purchase Agreement as Exhibit 21 (the “License”) was issued to the Corporation on November 22, 2019 will expire on November 21, 2021. Such license will not lapse, terminate, or expire as a result of the performance of this Agreement, or the consummation of the transactions contemplated hereby. Neither the Corporation nor any of the Sellers is in material default under, or material violation of, the License. Regarding the License, under all applicable laws of Malaysia:

 

(i) The License is valid for a multi-level marketing company such as the Corporation.

 

(ii) The Corporation can renew the License each year.

 

(iii) The License can be amended, without material issues or costs, to sell all products previously sold by Toga in Malaysia under the “Eostre” brand.

 

(iv) The License can be amended, without material issues or costs, to sell products through a direct marketing network using the “Eostre” business model planned by Toh and Toga.

 

(v) All of the above in Section 5(b)(i)-(iv) shall be and remain true and correct in all material respects both before and after:

 

(1) the planned sale of the Stock in this Agreement, and

 

(2) the planned sale of the Corporation’s ordinary shares to become 100% foreign owned (by Toga) pursuant to the Phase 2 Stock Purchase Agreement.

 

(vi) The planned transfer of ownership and control in the Corporation, as contemplated in this Agreement and in the Phase 2 Stock Purchase Agreement, can be completed without material issues, costs, or other approvals not previously disclosed to Toga during due diligence.

 

(c) Sellers have all requisite power and authority to execute and deliver this Agreement, to carry out his obligations hereunder, and to consummate the transactions contemplated hereby. Sellers have obtained all necessary approvals for the execution and delivery of this Agreement, the performance of his obligations hereunder, and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by Sellers and (assuming due authorization, execution and delivery by Buyers) constitutes Sellers’ legal, valid and binding obligation, enforceable against Sellers in accordance with its terms.

 

(d) The Stock is owned of record and beneficially by the Sellers, free and clear of all liens, pledges, security interests, charges, claims, encumbrances, agreements, options, voting trusts, proxies and other arrangements or restrictions of any kind (“Encumbrances”). Upon consummation of the transactions contemplated by this Agreement, Buyers shall own the Stock, free and clear of all Encumbrances.

 

(e) The execution, delivery and performance by Sellers of this Agreement do not conflict with, violate or result in the breach of, or create any Encumbrance on the Stock pursuant to any agreement, instrument, order, judgment, decree, law or governmental regulation to which Sellers is a party or is subject or by which the Stock is bound.

 

 
3

 

 

(f) None of the Insiders are a party to any transaction with the Corporation, or relating to the Corporation, including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, providing for the borrowing of money from or lending of money to or otherwise requiring payments to or from any such Insiders.

 

(g) All Stock of the Corporation has been, or will be at Closing, duly authorized by all necessary corporate action, and, when paid for in accordance with the terms hereof, 100% of the Stock of the Corporation shall be validly issued and outstanding, fully paid and nonassessable, and the Buyers shall be entitled to all rights accorded to a holder of ordinary shares of the Corporation.

 

(h) The Stock, which is 5,000,000 ordinary shares as of the Closing, represents 100% of the issued and outstanding securities of the Corporation and there are no other securities of any kind or nature (whether they be shares, warrants, options, convertible securities, or otherwise) issued or outstanding as of the Closing.

 

(i) All due diligence documents and information provided to the Buyers in connection with the Corporation and this Agreement are true and correct in all material respects.

 

(j) All requisite governmental, administrative or other third-party consents or approvals required by or with respect to Sellers in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been obtained.

 

(k) There are no actions, suits, claims, investigations or other legal proceedings pending or, to the knowledge of Sellers, threatened against or by Sellers that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement.

 

(l) No broker, finder, investment banker, or other third-party is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Sellers.

 

(m) No taxes are due to any governmental authority in connection with the transactions contemplated by this Agreement. The Corporation has paid all taxes and fees applicable to it due to any governmental authority prior to the Closing.

 

(n) The Corporation has, or shall have as of the Closing, all right, title and interest in and to, and control over, that certain domain name “Eostre.biz” free and clear of all Encumbrances.

 

(o) No representation or warranty by the Sellers in this Agreement and no statement contained in any other document furnished or to be furnished to the Buyer pursuant to this Agreement contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading.

 

5. Bring Down of Representations and Warranties. The Sellers hereby agrees that the representations and warranties of Sellers set forth above shall be true and correct as of Closing date and as of the transfer of the Stock from Sellers to Buyer as though then made and as though such date was substituted for the date of this Agreement throughout such representations and warranties.

 

 
4

 

 

6. Representations and Warranties of Buyer. Buyer represents and warrants to Seller as follows:

 

(a) Buyer has all requisite power and authority to execute and deliver this Agreement, to carry out his obligations hereunder, and to consummate the transactions contemplated hereby. Buyer has obtained all necessary approvals for the execution and delivery of this Agreement, the performance of his obligations hereunder, and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by Buyer and (assuming due authorization, execution and delivery by Sellers) constitutes Buyer’s legal, valid and binding obligation, enforceable against Buyer in accordance with its terms.

 

(b) No governmental, administrative or other third party consents or approvals are required by or with respect to Buyer in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.

 

(c) There are no actions, suits, claims, investigations or other legal proceedings pending or, to the knowledge of Buyer, threatened against or by Buyer that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement.

 

(d) No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Buyer.

 

(e) Buyer has not, directly or indirectly, paid or given any commission or other remuneration in connection with the purchase of the Stock. Buyer has not received any public media advertisements and has not been solicited by any form of mass mailing solicitation.

 

7. No Issuances Without Consent of Toga. Except for the Stock being issued and sold pursuant to this Agreement, the Corporation shall not issue or sell any securities of any kind or nature (whether they be shares, warrants, options and convertible securities, or otherwise) without the prior written consent of Toga (or its designee(s) on the Corporation’s board of directors).

 

8. Further Assurances. At any time and from time to time after the Closing date, at Buyer’s request and without further consideration, Seller shall promptly execute and deliver all such further agreements, certificates, instruments and documents, or perform such further actions, as Buyer may request, in order to fully consummate the transactions contemplated hereby regarding the sale of the Stock and carry out the purposes and intent of this Agreement.

 

9. Entire Agreement. The Transaction Documents (as such term is defined in the Stack Purchase Agreement) constitute the entire agreement between the parties with respect to the subject matter hereof and it may not be terminated, modified or amended except in a writing executed by each of the parties hereto. The Transaction Documents supersede all prior agreements and undertakings between the parties (whether oral or written) with respect to its subject matter.

 

10. Parties in Interest. This Agreement is binding upon, inures to the benefit of, and is enforceable by the parties hereto, and their respective successors, agents and assigns. No party hereto may assign its rights or delegate its obligations hereunder, without the prior written consent of the other party, which consent shall not be unreasonably withheld or delayed. No assignment shall relieve the assigning party of any of its obligations hereunder.

 

 
5

 

 

11. Notices. All notices, claims, demands or other communications hereunder or in connection with the transaction contemplated hereby will be in writing and will be deemed to have been duly given if hand delivered, or mailed by registered or certified mail, postage prepaid, return receipt requested, or delivered by a nationally recognized overnight courier or delivery service, expenses prepaid, or sent by facsimile or e-mail to the addresses set forth below each parties signatures, or such other address, facsimile or e-mail as the person or entity to whom notice is to be given may have previously furnished to the other party in writing in the manner set forth above. All notices will be deemed received on the date of delivery, or if mailed, on the date appearing on the return receipt therefore.

 

12. Miscellaneous.

 

(a) This Agreement may be executed in two or more counterparts, including by facsimile or electronic transmission, each of which shall be deemed an original, and all of which together shall constitute one and the same document.

 

(b) The Section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 

(c) Any provision of this Agreement which is invalid, illegal or unenforceable in any jurisdiction shall be ineffective only to the extent of such invalidity, illegality or unenforceability without in any way affecting the remaining provisions hereof in such jurisdiction or rendering that or any other provision of this Agreement invalid, illegal or unenforceable in any other jurisdiction.

 

(d) This Agreement shall be governed by the substantive laws (without reference to choice of laws rules) of the State of California, and the parties irrevocably agree that the courts located in Los Angeles shall have exclusive jurisdiction in respect to any dispute, suit, action, arbitration or proceedings which may arise out of or in connection with this Agreement.

 

(e) No delay on the part of either party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any right, power or privilege hereunder, or any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder.

 

(f) The parties hereto affirm that each had an adequate opportunity to consult with independent legal counsel regarding this Agreement prior to its execution. To the extent either party hereto has not consulted with independent legal counsel, the parties hereby expressly and voluntarily waive the opportunity to consult with independent legal counsel before entering into this Agreement.

 

[Remainder of page intentionally blank]

 

 
6

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first above written.

 

 

SELLER:

       

/s/ Ahmad Hizar Bin Zainol Abidin

 

 

Ahmad Hizar Bin Zainol Abidin

 
     
    Address for Notices:  

 

 

 

 

 

 

Tel: __________________________________

 

 

 

E-mail:

 

 

 

ID #:

 

 

 

 

 

 

 

/s/ Toh Kok Soon

 

 

 

Toh Kok Soon

 

 

 

 

 

 

 

Address for Notices:

 

 

 

 

 

 

 

Tel: ___________________________________

 

 

 

E-mail: _________________________________

 

 

 

ID #: __________________________________

 

 

 

 

 

 

 

/s/ Lim Jun Hao

 

 

 

Lim Jun Hao

 

 

 

 

 

 

 

Address for Notices:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tel: __________________________________

 

 

 

E-mail: ________________________________

 

 

 

ID #: _________________________________

 

 

 

 

 

 

 

BUYER:

 

 

 

 

 

 

 

TOGA LIMITED:

 

 

 

 

 

 

 

/s/ Alexander D. Henderson

 

 

 

By: Alexander D. Henderson                                    

 

 

 

Title: Chief Financial Officer                                      

 

 

 

 

 

 

 

Address for Notices:

 

 

 

 

 

 

 

 

 

 

 

Tel: __________________________________

 

 

 

E-mail: ________________________________

 

 

[Signature page to Stock Purchase Agreement]

 

 

 

EXHIBIT 10.3

 

PLEDGE AND SECURITY AGREEMENT

 

THIS PLEDGE AND SECURITY AGREEMENT (this “Security Agreement”) is made as of the 31st day of May, 2020, by Ahmad Hizar Bin Sainol Abdin (“Pledgor”), in favor Toga Limited (the “Secured Party”). Pledgor hereby agrees with the Secured Party as follows:

 

RECITALS

 

WHEREAS, pursuant to that certain Stock Purchase Agreement, of even date herewith, between Eostre Sdn. Bhd., a Malaysia corporation (“Eostre”), Hamidah Bibi A/P Seraj Din, Ahmad Hizar Bin Sainol Abdin, Toga Limited, Toh Kok Soon and Lim Jun Hao (including all exhibits attached thereto, collectively, the “Stock Purchase Agreement”), 1,750,000 ordinary shares of Eostre (the “Shares”) were issued and sold to Pledgor and paid for by Secured Party;

 

WHEREAS, in connection therewith: (i) Pledgor has agreed to issue to the Secured Party a secured promissory note (the “Note”) in the aggregate principal amount of RM1,750,000, and (ii) Pledgor and Secured Party have agreed to secure the Note with a pledge of the Shares, and deliver them to Secured Party’s custody until the Note is satisfied in full, pursuant to the terms of the Note.

 

NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements set forth herein, the receipt and sufficiency of all of which are hereby acknowledged by the parties hereto, the parties hereto agree as follows:

 

AGREEMENT

 

1. Pledge of Collateral and Delivery of Pledged Collateral.

 

1.1 Pledgor hereby pledges and assigns to the Secured Party and grants to the Secured Party a security interest in all of the Collateral described in Section 2 below, whether now owned or hereafter acquired, now or at any time hereafter in the possession, custody or control of the Secured Party or its agents, whether held for safekeeping, in a safe deposit box, or otherwise (the “Collateral”) to secure prompt payment and full performance of the obligations described in Section 3 below (all such obligations, collectively the “Obligations”). The pledge of the Collateral pursuant to this Security Agreement creates a valid and perfected first priority security interest in the Collateral securing the performance by the Pledgor of its obligations under the Note. This Security Agreement shall terminate upon the payment or satisfaction in full of the Obligations.

 

1.2 All certificates or instruments representing or evidencing the Collateral shall be delivered, on behalf of the Secured Party, to the Secured Party’s designated agent, Alexander Henderson (the “Agent”), on or prior to the execution and delivery of this Security Agreement in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignments in blank, all in form and substance satisfactory to the Secured Party.

 

2. Collateral. The Collateral consists of the following:

 

2.1 The Shares, now owned beneficially and of record by Pledgor, Pledgor’s fully-executed Stock Power in favor of Secured Party attached as an exhibit to the Stock Purchase Agreement, and all cash, dividends, other securities, instruments, rights (including voting rights, subject to the terms and conditions of this Security Agreement) and other property at any time and from time to time received or receivable in respect thereof or in exchange for all or any part thereof, and in the event Pledgor receives any of the foregoing, Pledgor acknowledges that the same shall be received IN TRUST for the Secured Party and agrees immediately to deliver the same to the Agent in original form of receipt, together with any stock or bond powers, assignments, endorsements or other documents or instruments as the Secured Party may reasonably request to establish, protect or perfect the Secured Party’s interest in respect of such Collateral; and

 

 
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2.2 All other property hereafter delivered to the Agent on behalf of the Secured Party by Pledgor in substitution for or in addition to any of the foregoing, all certificates and instruments representing or evidencing such other property and all cash, dividends, other securities, instruments, rights and other property at any time and from time to time received or receivable in respect thereof or in exchange for all or any part thereof, including without limitation, dividends, distributions, warrants, profits, rights to subscribe, conversion rights, liquidating dividends and other rights, and, in the event Pledgor receives any of the foregoing, Pledgor acknowledges that the same shall be received IN TRUST for the Secured Party and agrees immediately to deliver the same to the Agent in original form of receipt, together with any stock or bond powers, assignments, endorsements or other documents or instruments as the Secured Party may reasonably request to establish, protect or perfect the Secured Party’s interest in respect of such Collateral; and

 

2.3 All proceeds of all of the foregoing.

 

3. Obligations. The Obligations secured under this Security Agreement are the obligations of Pledgor under the Note and this Security Agreement, and all extensions, amendments, modifications and renewals of any of the foregoing.

 

4. Covenants of Pledgor. Until the Obligations are paid in full, Pledgor agrees to:

 

4.1 Not create, incur, assume or permit to exist any liens, encumbrances, security interests, levies, assessments or charges on or in any of the Collateral, except those approved in writing by the Secured Party;

 

4.2 Promptly pay and discharge before the same become delinquent all taxes, assessments and governmental charges or levies imposed on Pledgor or any of the Collateral;

 

4.3 Not sell, encumber, or otherwise dispose of or transfer any Collateral, or any right or interest therein;

 

4.4 Appear in and defend, at Pledgor’s own expense, any action or proceeding which may affect Pledgor’s title to the Secured Party’s interest in the Collateral;

 

4.5 Procure or execute and deliver, from time to time, in form and substance satisfactory to the Secured Party in its discretion reasonably exercised, any stock powers, bond powers, endorsements, assignments, financing statements, estoppel certificates or other writings reasonably deemed necessary or appropriate by the Secured Party to perfect, maintain or protect the Secured Party’s security interest in the Collateral and the priority thereof, and take such other action and deliver such other documents, instruments and agreements pertaining to the Collateral as the Secured Party may request to effectuate the intent of this Security Agreement; and

 

4.6 Provide the Secured Party with such other information pertaining to the Collateral as the Secured Party may reasonably request from time to time.

 

 
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5. Authorized Action by the Secured Party.

 

5.1 Pledgor hereby irrevocably appoints the Secured Party as its attorney-in-fact to do (but the Secured Party shall not be obligated to and shall not incur any liability to Pledgor or any third party for failure so to do), upon an Event of Default and while such Event of Default is continuing, any act which Pledgor is obligated by this Security Agreement to do, and to exercise such rights and powers as Pledgor might exercise with respect to the Collateral, including, without limitation, the right to:

 

5.1.1 collect by legal proceedings or otherwise and endorse, receive and receipt for all payments, proceeds and other sums and property now or hereafter payable on or in respect of proceeds and other sums and property now or hereafter payable on or in respect of the Collateral, including dividends, profits and interest payments;

 

5.1.2 enter into any extension, reorganization, deposit, merger or consolidation agreement or other agreement pertaining to the Collateral, and in connection therewith may deposit or surrender control of the Collateral thereunder, accept other property in exchange therefor, and do and perform such acts and things as it may deem proper, and any money or property secured in exchange therefor shall be applied to the Obligations or held by the Secured Party pursuant to the provisions of the Note;

 

5.1.3 protect and preserve the Collateral;

 

5.1.4 transfer the Collateral to its own or its nominee’s name; and

 

5.1.5 take such action, as shall be authorized in the Note.

 

5.2 All the foregoing powers authorized herein, being coupled with an interest, are irrevocable so long as any Obligations are outstanding.

 

6. Voting. Secured Party, or its respective nominee or nominees, shall have the sole and exclusive right to exercise all voting powers pertaining to the Shares constituting the Collateral, and shall exercise such powers in such manner as the Secured Party may elect, and Pledgor hereby grants the Secured Party an irrevocable proxy, coupled with an interest to vote such shares of stock; provided, however, that such proxy shall terminate upon termination of the Secured Party’s security interest in the Collateral.

 

7. Default and Remedies.

 

7.1 Event of Default. The occurrence of any Event of Default under and as defined in the Note shall constitute an Event of Default of this Security Agreement (herein “Event of Default”).

 

7.2 Remedies upon Default. Upon the occurrence of any Event of Default (giving effect to applicable cure periods) and while such Event of Default is continuing, the Secured Party may, at its option, without notice to or demand on Pledgor, declare all Obligations immediately due and payable, and the Secured Party shall have all the default rights and remedies of a secured party under applicable law. Such rights shall include, without limitation the following:

 

7.2.1 Without limiting the Secured Party’s obligations under the California Uniform Commercial Code or other applicable law, the right to have the Collateral, or any part thereof, transferred to the Secured Party’s own names or to the names of their nominees and to cause a certificate or certificates representing the Collateral consisting of Shares to be issued in the name of, and to be delivered to and held by or for the account of, the Secured Party, whereupon the Secured Party shall have all of the rights, privileges, powers and remedies appurtenant to and arising from the ownership of the Collateral; and

 

 
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7.2.2 The right to sell, transfer, assign or deliver as much of the Collateral as is reasonably necessary to repay the obligations of Pledgor under the Note, including those obligations which are accelerated by reason of the Event of Default (together with expenses attendant upon such sale and repayment), at public or private sale, as the Secured Party may elect, either for cash or on credit, without assumption of any credit risk (so long as the Secured Party reasonably believes at the time of such sale on credit that the purchaser is able to satisfy the obligations for which credit is granted) thereof and without demand or advertisement (unless otherwise required by law). The Secured Party may have resort to the Collateral or any portion thereof with no requirement on the part of the Secured Party to proceed first against any other person or property.

 

8. Cumulative Rights. The rights, powers and remedies of the Secured Party under this Security Agreement shall be in addition to all rights, powers and remedies given to the Secured Party under any statute or rule of law or any other agreement, all of which rights, powers and remedies shall be cumulative and may be exercised successively or concurrently.

 

9. Waiver. Any forbearance, failure or delay by the Secured Parties in exercising any right, power or remedy shall not preclude the further exercise thereof, and every right, power or remedy of the Secured Party shall continue in full force and effect until such right, power or remedy is specifically waived in a writing executed by the Secured Party. Pledgor waives any right to require Secured Party to proceed against any person or to exhaust any Collateral or to pursue any remedy in Secured Party’s power prior to pursuing Pledgor in respect of the Obligations.

 

10. Binding Upon Successors. All rights of the Secured Party under this Security Agreement shall inure to the benefit of their successors and assigns, and all obligations of Pledgor shall bind the representatives, executors, administrators, heirs, successors and assigns of the Pledgor. Pledgor may not assign this Security Agreement without the prior written consent of the Secured Party.

 

11. Severability; Amendment. If any of the provisions of this Security Agreement shall be held invalid or unenforceable, this Security Agreement shall be construed as if not containing those provisions and the rights and obligations of the parties hereto shall be construed and enforced accordingly. This Security Agreement may not be modified, altered or amended except by a written agreement signed by the parties hereto.

 

12. Return; Acquittance. The Secured Party may at any time deliver any Collateral to Pledgor and the receipt thereof by Pledgor shall be a complete and full acquittance in respect of the Collateral so delivered, and the Secured Party shall thereafter be discharged from any liability or responsibility therefor.

 

13. References. The singular includes the plural. The captions or titles of the sections of this Security Agreement are for convenience of reference only and shall not define or limit the provisions hereof.

 

14. Notices. Any notice, request or other communication required or permitted hereunder shall be in writing and shall be deemed to have been duly given if personally delivered or mailed by registered or certified mail, postage prepaid, or by recognized overnight courier or personal delivery at the respective addresses of the parties set forth in the Stock Purchase Agreement. Any party hereto may by notice so given change its address for future notice hereunder.

 

 
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15. Governing Law. This Note and all actions arising out of or in connection with this Note shall be governed by and construed in accordance with the laws as set forth in the Stock Purchase Agreement.

 

16. Specific Performance. Each of the parties acknowledge and agree that other parties would be irreparably damaged if any of the provisions of this Security Agreement are not performed in accordance with their specific terms and that any breach of this Security Agreement could not be adequately compensated in all cases by monetary damages alone. Accordingly, in addition to any other right or remedy to which the parties may be entitled, at law or in equity, it shall be entitled to enforce any provision of this Security Agreement by a decree of specific performance and to temporary, preliminary and permanent injunctive relief, without posting any bond or other undertaking.

 

17. Counterparts. This Security Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided, however, that a facsimile or pdf (or other electronic reproduction) signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile or pdf (or other electronic reproduction) signature.

 

18. Construction. This Security Agreement is the result of negotiations among, and has been reviewed by, Pledgor and the Secured Party and their respective counsel. Accordingly, this Security Agreement shall be deemed to be the product of all parties hereto, and no ambiguity shall be construed in favor of or against Pledgor or the Secured Party.

 

[THIS SPACE LEFT INTENTIONALLY BLANK; SIGNATURE PAGES FOLLOW]

 

 
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IN WITNESS WHEREOF, the parties hereto have duly executed this Security Agreement as of the date first written above.

 

 

PLEDGOR:

       
By: /s/ Ahmad Hizar Bin Sainol Abdin

 

Name:

Ahmad Hizar Bin Sainol Abdin  

  

[Signature pages of Secured Party to follow]

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Security Agreement as of the date first written above.

 

 

SECURED PARTY:

 

 

 

 

Toga Limited

 

       
By: /s/ Alexander D. Henderson

 

Name:

Alexander D. Henderson  
  Title: Chief Financial Officer  

 

 

 

EXHIBIT 10.4

 

PLEDGE AND SECURITY AGREEMENT

 

THIS PLEDGE AND SECURITY AGREEMENT (this “Security Agreement”) is made as of the 31st day of May, 2020, by Lim Jun Hao (“Pledgor”), in favor Toga Limited (the “Secured Party”). Pledgor hereby agrees with the Secured Party as follows:

 

RECITALS

 

WHEREAS, pursuant to that certain Stock Purchase Agreement, of even date herewith, between Eostre Sdn. Bhd., a Malaysia corporation (“Eostre”), Hamidah Bibi A/P Seraj Din, Ahmad Hizar Bin Sainol Abdin, Toga Limited, Toh Kok Soon and Lim Jun Hao (including all exhibits attached thereto, collectively, the “Stock Purchase Agreement”), 1,250,000 ordinary shares of Eostre (the “Shares”) were issued and sold to Pledgor and paid for by Secured Party;

 

WHEREAS, in connection therewith: (i) Pledgor has agreed to issue to the Secured Party a secured promissory note (the “Note”) in the aggregate principal amount of RM1,250,000, and (ii) Pledgor and Secured Party have agreed to secure the Note with a pledge of the Shares, and deliver them to Secured Party’s custody until the Note is satisfied in full, pursuant to the terms of the Note.

 

NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements set forth herein, the receipt and sufficiency of all of which are hereby acknowledged by the parties hereto, the parties hereto agree as follows:

 

AGREEMENT

 

1. Pledge of Collateral and Delivery of Pledged Collateral.

 

1.1 Pledgor hereby pledges and assigns to the Secured Party and grants to the Secured Party a security interest in all of the Collateral described in Section 2 below, whether now owned or hereafter acquired, now or at any time hereafter in the possession, custody or control of the Secured Party or its agents, whether held for safekeeping, in a safe deposit box, or otherwise (the “Collateral”) to secure prompt payment and full performance of the obligations described in Section 3 below (all such obligations, collectively the “Obligations”). The pledge of the Collateral pursuant to this Security Agreement creates a valid and perfected first priority security interest in the Collateral securing the performance by the Pledgor of its obligations under the Note. This Security Agreement shall terminate upon the payment or satisfaction in full of the Obligations.

 

1.2 All certificates or instruments representing or evidencing the Collateral shall be delivered, on behalf of the Secured Party, to the Secured Party’s designated agent, Alexander Henderson (the “Agent”), on or prior to the execution and delivery of this Security Agreement in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignments in blank, all in form and substance satisfactory to the Secured Party.

 

2. Collateral. The Collateral consists of the following:

 

2.1 The Shares, now owned beneficially and of record by Pledgor, Pledgor’s fully-executed Stock Power in favor of Secured Party attached as an exhibit to the Stock Purchase Agreement, and all cash, dividends, other securities, instruments, rights (including voting rights, subject to the terms and conditions of this Security Agreement) and other property at any time and from time to time received or receivable in respect thereof or in exchange for all or any part thereof, and in the event Pledgor receives any of the foregoing, Pledgor acknowledges that the same shall be received IN TRUST for the Secured Party and agrees immediately to deliver the same to the Agent in original form of receipt, together with any stock or bond powers, assignments, endorsements or other documents or instruments as the Secured Party may reasonably request to establish, protect or perfect the Secured Party’s interest in respect of such Collateral; and

 

 
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2.2 All other property hereafter delivered to the Agent on behalf of the Secured Party by Pledgor in substitution for or in addition to any of the foregoing, all certificates and instruments representing or evidencing such other property and all cash, dividends, other securities, instruments, rights and other property at any time and from time to time received or receivable in respect thereof or in exchange for all or any part thereof, including without limitation, dividends, distributions, warrants, profits, rights to subscribe, conversion rights, liquidating dividends and other rights, and, in the event Pledgor receives any of the foregoing, Pledgor acknowledges that the same shall be received IN TRUST for the Secured Party and agrees immediately to deliver the same to the Agent in original form of receipt, together with any stock or bond powers, assignments, endorsements or other documents or instruments as the Secured Party may reasonably request to establish, protect or perfect the Secured Party’s interest in respect of such Collateral; and

 

2.3 All proceeds of all of the foregoing.

 

3. Obligations. The Obligations secured under this Security Agreement are the obligations of Pledgor under the Note and this Security Agreement, and all extensions, amendments, modifications and renewals of any of the foregoing.

 

4. Covenants of Pledgor. Until the Obligations are paid in full, Pledgor agrees to:

 

4.1 Not create, incur, assume or permit to exist any liens, encumbrances, security interests, levies, assessments or charges on or in any of the Collateral, except those approved in writing by the Secured Party;

 

4.2 Promptly pay and discharge before the same become delinquent all taxes, assessments and governmental charges or levies imposed on Pledgor or any of the Collateral;

 

4.3 Not sell, encumber, or otherwise dispose of or transfer any Collateral, or any right or interest therein;

 

4.4 Appear in and defend, at Pledgor’s own expense, any action or proceeding which may affect Pledgor’s title to the Secured Party’s interest in the Collateral;

 

4.5 Procure or execute and deliver, from time to time, in form and substance satisfactory to the Secured Party in its discretion reasonably exercised, any stock powers, bond powers, endorsements, assignments, financing statements, estoppel certificates or other writings reasonably deemed necessary or appropriate by the Secured Party to perfect, maintain or protect the Secured Party’s security interest in the Collateral and the priority thereof, and take such other action and deliver such other documents, instruments and agreements pertaining to the Collateral as the Secured Party may request to effectuate the intent of this Security Agreement; and

 

4.6 Provide the Secured Party with such other information pertaining to the Collateral as the Secured Party may reasonably request from time to time.

 

 
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5. Authorized Action by the Secured Party.

 

5.1 Pledgor hereby irrevocably appoints the Secured Party as its attorney-in-fact to do (but the Secured Party shall not be obligated to and shall not incur any liability to Pledgor or any third party for failure so to do), upon an Event of Default and while such Event of Default is continuing, any act which Pledgor is obligated by this Security Agreement to do, and to exercise such rights and powers as Pledgor might exercise with respect to the Collateral, including, without limitation, the right to:

 

5.1.1 collect by legal proceedings or otherwise and endorse, receive and receipt for all payments, proceeds and other sums and property now or hereafter payable on or in respect of proceeds and other sums and property now or hereafter payable on or in respect of the Collateral, including dividends, profits and interest payments;

 

5.1.2 enter into any extension, reorganization, deposit, merger or consolidation agreement or other agreement pertaining to the Collateral, and in connection therewith may deposit or surrender control of the Collateral thereunder, accept other property in exchange therefor, and do and perform such acts and things as it may deem proper, and any money or property secured in exchange therefor shall be applied to the Obligations or held by the Secured Party pursuant to the provisions of the Note;

 

5.1.3 protect and preserve the Collateral;

 

5.1.4 transfer the Collateral to its own or its nominee’s name; and

 

5.1.5 take such action, as shall be authorized in the Note.

 

5.2 All the foregoing powers authorized herein, being coupled with an interest, are irrevocable so long as any Obligations are outstanding.

 

6. Voting. Secured Party, or its respective nominee or nominees, shall have the sole and exclusive right to exercise all voting powers pertaining to the Shares constituting the Collateral, and shall exercise such powers in such manner as the Secured Party may elect, and Pledgor hereby grants the Secured Party an irrevocable proxy, coupled with an interest to vote such shares of stock; provided, however, that such proxy shall terminate upon termination of the Secured Party’s security interest in the Collateral.

 

7. Default and Remedies.

 

7.1 Event of Default. The occurrence of any Event of Default under and as defined in the Note shall constitute an Event of Default of this Security Agreement (herein “Event of Default”).

 

7.2 Remedies upon Default. Upon the occurrence of any Event of Default (giving effect to applicable cure periods) and while such Event of Default is continuing, the Secured Party may, at its option, without notice to or demand on Pledgor, declare all Obligations immediately due and payable, and the Secured Party shall have all the default rights and remedies of a secured party under applicable law. Such rights shall include, without limitation the following:

 

7.2.1 Without limiting the Secured Party’s obligations under the California Uniform Commercial Code or other applicable law, the right to have the Collateral, or any part thereof, transferred to the Secured Party’s own names or to the names of their nominees and to cause a certificate or certificates representing the Collateral consisting of Shares to be issued in the name of, and to be delivered to and held by or for the account of, the Secured Party, whereupon the Secured Party shall have all of the rights, privileges, powers and remedies appurtenant to and arising from the ownership of the Collateral; and

 

 
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7.2.2 The right to sell, transfer, assign or deliver as much of the Collateral as is reasonably necessary to repay the obligations of Pledgor under the Note, including those obligations which are accelerated by reason of the Event of Default (together with expenses attendant upon such sale and repayment), at public or private sale, as the Secured Party may elect, either for cash or on credit, without assumption of any credit risk (so long as the Secured Party reasonably believes at the time of such sale on credit that the purchaser is able to satisfy the obligations for which credit is granted) thereof and without demand or advertisement (unless otherwise required by law). The Secured Party may have resort to the Collateral or any portion thereof with no requirement on the part of the Secured Party to proceed first against any other person or property.

 

8. Cumulative Rights. The rights, powers and remedies of the Secured Party under this Security Agreement shall be in addition to all rights, powers and remedies given to the Secured Party under any statute or rule of law or any other agreement, all of which rights, powers and remedies shall be cumulative and may be exercised successively or concurrently.

 

9. Waiver. Any forbearance, failure or delay by the Secured Parties in exercising any right, power or remedy shall not preclude the further exercise thereof, and every right, power or remedy of the Secured Party shall continue in full force and effect until such right, power or remedy is specifically waived in a writing executed by the Secured Party. Pledgor waives any right to require Secured Party to proceed against any person or to exhaust any Collateral or to pursue any remedy in Secured Party’s power prior to pursuing Pledgor in respect of the Obligations.

 

10. Binding Upon Successors. All rights of the Secured Party under this Security Agreement shall inure to the benefit of their successors and assigns, and all obligations of Pledgor shall bind the representatives, executors, administrators, heirs, successors and assigns of the Pledgor. Pledgor may not assign this Security Agreement without the prior written consent of the Secured Party.

 

11. Severability; Amendment. If any of the provisions of this Security Agreement shall be held invalid or unenforceable, this Security Agreement shall be construed as if not containing those provisions and the rights and obligations of the parties hereto shall be construed and enforced accordingly. This Security Agreement may not be modified, altered or amended except by a written agreement signed by the parties hereto.

 

12. Return; Acquittance. The Secured Party may at any time deliver any Collateral to Pledgor and the receipt thereof by Pledgor shall be a complete and full acquittance in respect of the Collateral so delivered, and the Secured Party shall thereafter be discharged from any liability or responsibility therefor.

 

13. References. The singular includes the plural. The captions or titles of the sections of this Security Agreement are for convenience of reference only and shall not define or limit the provisions hereof.

 

14. Notices. Any notice, request or other communication required or permitted hereunder shall be in writing and shall be deemed to have been duly given if personally delivered or mailed by registered or certified mail, postage prepaid, or by recognized overnight courier or personal delivery at the respective addresses of the parties set forth in the Stock Purchase Agreement. Any party hereto may by notice so given change its address for future notice hereunder.

 

 
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15. Governing Law. This Note and all actions arising out of or in connection with this Note shall be governed by and construed in accordance with the laws as set forth in the Stock Purchase Agreement.

 

16. Specific Performance. Each of the parties acknowledge and agree that other parties would be irreparably damaged if any of the provisions of this Security Agreement are not performed in accordance with their specific terms and that any breach of this Security Agreement could not be adequately compensated in all cases by monetary damages alone. Accordingly, in addition to any other right or remedy to which the parties may be entitled, at law or in equity, it shall be entitled to enforce any provision of this Security Agreement by a decree of specific performance and to temporary, preliminary and permanent injunctive relief, without posting any bond or other undertaking.

 

17. Counterparts. This Security Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided, however, that a facsimile or pdf (or other electronic reproduction) signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile or pdf (or other electronic reproduction) signature.

 

18. Construction. This Security Agreement is the result of negotiations among, and has been reviewed by, Pledgor and the Secured Party and their respective counsel. Accordingly, this Security Agreement shall be deemed to be the product of all parties hereto, and no ambiguity shall be construed in favor of or against Pledgor or the Secured Party.

  

[THIS SPACE LEFT INTENTIONALLY BLANK; SIGNATURE PAGES FOLLOW]

 

 
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IN WITNESS WHEREOF, the parties hereto have duly executed this Security Agreement as of the date first written above.

 

 

PLEDGOR:

       
By: /s/ Lim Jun Hao

 

Name:

Lim Jun Hao

 

 

[Signature pages of Secured Party to follow]

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Security Agreement as of the date first written above.

 

 

SECURED PARTY:

 

 

 

 

 

Toga Limited

       
By:

/s/ Alexander D. Henderson

 

Name:

Alexander D. Henderson

 
  Title:

Chief Financial Officer

 

 

 

  

EXHIBIT 10.5

 

PLEDGE AND SECURITY AGREEMENT

 

THIS PLEDGE AND SECURITY AGREEMENT (this “Security Agreement”) is made as of the 31st day of May, 2020, by Toh Kok Soon (“Pledgor”), in favor Toga Limited (the “Secured Party”). Pledgor hereby agrees with the Secured Party as follows:

 

RECITALS

 

WHEREAS, pursuant to that certain Stock Purchase Agreement, of even date herewith, between Eostre Sdn. Bhd., a Malaysia corporation (“Eostre”), Hamidah Bibi A/P Seraj Din, Ahmad Hizar Bin Sainol Abdin, Toga Limited, Toh Kok Soon and Lim Jun Hao (including all exhibits attached thereto, collectively, the “Stock Purchase Agreement”), 1,000,000 ordinary shares of Eostre (the “Shares”) were issued and sold to Pledgor and paid for by Secured Party;

 

WHEREAS, in connection therewith: (i) Pledgor has agreed to issue to the Secured Party a secured promissory note (the “Note”) in the aggregate principal amount of RM1,000,000, and (ii) Pledgor and Secured Party have agreed to secure the Note with a pledge of the Shares, and deliver them to Secured Party’s custody until the Note is satisfied in full, pursuant to the terms of the Note.

 

NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements set forth herein, the receipt and sufficiency of all of which are hereby acknowledged by the parties hereto, the parties hereto agree as follows:

 

AGREEMENT

 

1. Pledge of Collateral and Delivery of Pledged Collateral.

 

1.1 Pledgor hereby pledges and assigns to the Secured Party and grants to the Secured Party a security interest in all of the Collateral described in Section 2 below, whether now owned or hereafter acquired, now or at any time hereafter in the possession, custody or control of the Secured Party or its agents, whether held for safekeeping, in a safe deposit box, or otherwise (the “Collateral”) to secure prompt payment and full performance of the obligations described in Section 3 below (all such obligations, collectively the “Obligations”). The pledge of the Collateral pursuant to this Security Agreement creates a valid and perfected first priority security interest in the Collateral securing the performance by the Pledgor of its obligations under the Note. This Security Agreement shall terminate upon the payment or satisfaction in full of the Obligations.

 

1.2 All certificates or instruments representing or evidencing the Collateral shall be delivered, on behalf of the Secured Party, to the Secured Party’s designated agent, Alexander Henderson (the “Agent”), on or prior to the execution and delivery of this Security Agreement in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignments in blank, all in form and substance satisfactory to the Secured Party.

 

2. Collateral. The Collateral consists of the following:

 

2.1 The Shares, now owned beneficially and of record by Pledgor, Pledgor’s fully-executed Stock Power in favor of Secured Party attached as an exhibit to the Stock Purchase Agreement, and all cash, dividends, other securities, instruments, rights (including voting rights, subject to the terms and conditions of this Security Agreement) and other property at any time and from time to time received or receivable in respect thereof or in exchange for all or any part thereof, and in the event Pledgor receives any of the foregoing, Pledgor acknowledges that the same shall be received IN TRUST for the Secured Party and agrees immediately to deliver the same to the Agent in original form of receipt, together with any stock or bond powers, assignments, endorsements or other documents or instruments as the Secured Party may reasonably request to establish, protect or perfect the Secured Party’s interest in respect of such Collateral; and

 

 
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2.2 All other property hereafter delivered to the Agent on behalf of the Secured Party by Pledgor in substitution for or in addition to any of the foregoing, all certificates and instruments representing or evidencing such other property and all cash, dividends, other securities, instruments, rights and other property at any time and from time to time received or receivable in respect thereof or in exchange for all or any part thereof, including without limitation, dividends, distributions, warrants, profits, rights to subscribe, conversion rights, liquidating dividends and other rights, and, in the event Pledgor receives any of the foregoing, Pledgor acknowledges that the same shall be received IN TRUST for the Secured Party and agrees immediately to deliver the same to the Agent in original form of receipt, together with any stock or bond powers, assignments, endorsements or other documents or instruments as the Secured Party may reasonably request to establish, protect or perfect the Secured Party’s interest in respect of such Collateral; and

 

2.3 All proceeds of all of the foregoing.

 

3. Obligations. The Obligations secured under this Security Agreement are the obligations of Pledgor under the Note and this Security Agreement, and all extensions, amendments, modifications and renewals of any of the foregoing.

 

4. Covenants of Pledgor. Until the Obligations are paid in full, Pledgor agrees to:

 

4.1 Not create, incur, assume or permit to exist any liens, encumbrances, security interests, levies, assessments or charges on or in any of the Collateral, except those approved in writing by the Secured Party;

 

4.2 Promptly pay and discharge before the same become delinquent all taxes, assessments and governmental charges or levies imposed on Pledgor or any of the Collateral;

 

4.3 Not sell, encumber, or otherwise dispose of or transfer any Collateral, or any right or interest therein;

 

4.4 Appear in and defend, at Pledgor’s own expense, any action or proceeding which may affect Pledgor’s title to the Secured Party’s interest in the Collateral;

 

4.5 Procure or execute and deliver, from time to time, in form and substance satisfactory to the Secured Party in its discretion reasonably exercised, any stock powers, bond powers, endorsements, assignments, financing statements, estoppel certificates or other writings reasonably deemed necessary or appropriate by the Secured Party to perfect, maintain or protect the Secured Party’s security interest in the Collateral and the priority thereof, and take such other action and deliver such other documents, instruments and agreements pertaining to the Collateral as the Secured Party may request to effectuate the intent of this Security Agreement; and

 

4.6 Provide the Secured Party with such other information pertaining to the Collateral as the Secured Party may reasonably request from time to time.

 

 
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5. Authorized Action by the Secured Party.

 

5.1 Pledgor hereby irrevocably appoints the Secured Party as its attorney-in-fact to do (but the Secured Party shall not be obligated to and shall not incur any liability to Pledgor or any third party for failure so to do), upon an Event of Default and while such Event of Default is continuing, any act which Pledgor is obligated by this Security Agreement to do, and to exercise such rights and powers as Pledgor might exercise with respect to the Collateral, including, without limitation, the right to:

 

5.1.1 collect by legal proceedings or otherwise and endorse, receive and receipt for all payments, proceeds and other sums and property now or hereafter payable on or in respect of proceeds and other sums and property now or hereafter payable on or in respect of the Collateral, including dividends, profits and interest payments;

 

5.1.2 enter into any extension, reorganization, deposit, merger or consolidation agreement or other agreement pertaining to the Collateral, and in connection therewith may deposit or surrender control of the Collateral thereunder, accept other property in exchange therefor, and do and perform such acts and things as it may deem proper, and any money or property secured in exchange therefor shall be applied to the Obligations or held by the Secured Party pursuant to the provisions of the Note;

 

5.1.3 protect and preserve the Collateral;

 

5.1.4 transfer the Collateral to its own or its nominee’s name; and

 

5.1.5 take such action, as shall be authorized in the Note.

 

5.2 All the foregoing powers authorized herein, being coupled with an interest, are irrevocable so long as any Obligations are outstanding.

 

6. Voting. Secured Party, or its respective nominee or nominees, shall have the sole and exclusive right to exercise all voting powers pertaining to the Shares constituting the Collateral, and shall exercise such powers in such manner as the Secured Party may elect, and Pledgor hereby grants the Secured Party an irrevocable proxy, coupled with an interest to vote such shares of stock; provided, however, that such proxy shall terminate upon termination of the Secured Party’s security interest in the Collateral.

 

7. Default and Remedies.

 

7.1 Event of Default. The occurrence of any Event of Default under and as defined in the Note shall constitute an Event of Default of this Security Agreement (herein “Event of Default”).

 

7.2 Remedies upon Default. Upon the occurrence of any Event of Default (giving effect to applicable cure periods) and while such Event of Default is continuing, the Secured Party may, at its option, without notice to or demand on Pledgor, declare all Obligations immediately due and payable, and the Secured Party shall have all the default rights and remedies of a secured party under applicable law. Such rights shall include, without limitation the following:

 

7.2.1 Without limiting the Secured Party’s obligations under the California Uniform Commercial Code or other applicable law, the right to have the Collateral, or any part thereof, transferred to the Secured Party’s own names or to the names of their nominees and to cause a certificate or certificates representing the Collateral consisting of Shares to be issued in the name of, and to be delivered to and held by or for the account of, the Secured Party, whereupon the Secured Party shall have all of the rights, privileges, powers and remedies appurtenant to and arising from the ownership of the Collateral; and

 

 
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7.2.2 The right to sell, transfer, assign or deliver as much of the Collateral as is reasonably necessary to repay the obligations of Pledgor under the Note, including those obligations which are accelerated by reason of the Event of Default (together with expenses attendant upon such sale and repayment), at public or private sale, as the Secured Party may elect, either for cash or on credit, without assumption of any credit risk (so long as the Secured Party reasonably believes at the time of such sale on credit that the purchaser is able to satisfy the obligations for which credit is granted) thereof and without demand or advertisement (unless otherwise required by law). The Secured Party may have resort to the Collateral or any portion thereof with no requirement on the part of the Secured Party to proceed first against any other person or property.

 

8. Cumulative Rights. The rights, powers and remedies of the Secured Party under this Security Agreement shall be in addition to all rights, powers and remedies given to the Secured Party under any statute or rule of law or any other agreement, all of which rights, powers and remedies shall be cumulative and may be exercised successively or concurrently.

 

9. Waiver. Any forbearance, failure or delay by the Secured Parties in exercising any right, power or remedy shall not preclude the further exercise thereof, and every right, power or remedy of the Secured Party shall continue in full force and effect until such right, power or remedy is specifically waived in a writing executed by the Secured Party. Pledgor waives any right to require Secured Party to proceed against any person or to exhaust any Collateral or to pursue any remedy in Secured Party’s power prior to pursuing Pledgor in respect of the Obligations.

 

10. Binding Upon Successors. All rights of the Secured Party under this Security Agreement shall inure to the benefit of their successors and assigns, and all obligations of Pledgor shall bind the representatives, executors, administrators, heirs, successors and assigns of the Pledgor. Pledgor may not assign this Security Agreement without the prior written consent of the Secured Party.

 

11. Severability; Amendment. If any of the provisions of this Security Agreement shall be held invalid or unenforceable, this Security Agreement shall be construed as if not containing those provisions and the rights and obligations of the parties hereto shall be construed and enforced accordingly. This Security Agreement may not be modified, altered or amended except by a written agreement signed by the parties hereto.

 

12. Return; Acquittance. The Secured Party may at any time deliver any Collateral to Pledgor and the receipt thereof by Pledgor shall be a complete and full acquittance in respect of the Collateral so delivered, and the Secured Party shall thereafter be discharged from any liability or responsibility therefor.

 

13. References. The singular includes the plural. The captions or titles of the sections of this Security Agreement are for convenience of reference only and shall not define or limit the provisions hereof.

 

14. Notices. Any notice, request or other communication required or permitted hereunder shall be in writing and shall be deemed to have been duly given if personally delivered or mailed by registered or certified mail, postage prepaid, or by recognized overnight courier or personal delivery at the respective addresses of the parties set forth in the Stock Purchase Agreement. Any party hereto may by notice so given change its address for future notice hereunder.

 

 
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15. Governing Law. This Note and all actions arising out of or in connection with this Note shall be governed by and construed in accordance with the laws as set forth in the Stock Purchase Agreement.

 

16. Specific Performance. Each of the parties acknowledge and agree that other parties would be irreparably damaged if any of the provisions of this Security Agreement are not performed in accordance with their specific terms and that any breach of this Security Agreement could not be adequately compensated in all cases by monetary damages alone. Accordingly, in addition to any other right or remedy to which the parties may be entitled, at law or in equity, it shall be entitled to enforce any provision of this Security Agreement by a decree of specific performance and to temporary, preliminary and permanent injunctive relief, without posting any bond or other undertaking.

 

17. Counterparts. This Security Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided, however, that a facsimile or pdf (or other electronic reproduction) signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile or pdf (or other electronic reproduction) signature.

 

18. Construction. This Security Agreement is the result of negotiations among, and has been reviewed by, Pledgor and the Secured Party and their respective counsel. Accordingly, this Security Agreement shall be deemed to be the product of all parties hereto, and no ambiguity shall be construed in favor of or against Pledgor or the Secured Party.

 

[THIS SPACE LEFT INTENTIONALLY BLANK; SIGNATURE PAGES FOLLOW]

 

 
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IN WITNESS WHEREOF, the parties hereto have duly executed this Security Agreement as of the date first written above.

 

 

PLEDGOR:

       
By: /s/ Toh Kok Soon

 

Name:

Toh Kok Soon  

 

[Signature pages of Secured Party to follow]

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Security Agreement as of the date first written above.

 

 

SECURED PARTY:

 

 

 

 

Toga Limited

 

       
By: /s/ Alexander D. Henderson

 

Name:

Alexander D. Henderson  
  Title: Chief Financial Officer  

 

 

 

EXHIBIT 10.6

 

SECURED PROMISSORY NOTE

 

Date: May 31, 2020

 

RM1,750,000

 

FOR VALUE RECEIVED, Ahmad Hizar Bin Sainol Abdin (the “Maker”) promises to pay to the order of Toga Limited, a Nevada corporation (the “Payee”), or its registered assigns, the principal sum of RM1,750,000, or such lesser amount as shall equal the outstanding principal amount hereof, together with accrued but unpaid interest, pursuant to this Secured Promissory Note (the “Note”).

 

THE OBLIGATIONS DUE UNDER THIS NOTE ARE SECURED BY A PLEDGE AND SECURITY AGREEMENT DATED AS OF THE DATE HEREOF (THE “SECURITY AGREEMENT”) AND EXECUTED BY MAKER IN FAVOR OF PAYEE. ADDITIONAL OBLIGATIONS OF MAKER AND RIGHTS OF PAYEE ARE SET FORTH IN THE SECURITY AGREEMENT.

 

This Note is being issued in connection with that certain Stock Purchase Agreement, of even date herewith, between the Eostre Sdn. Bhd., a Malaysia corporation (“Eostre”), Hamidah Bibi A/P Seraj Din, Ahmad Hizar Bin Sainol Abdin, Toga Limited, Toh Kok Soon and Lim Jun Hao (including all exhibits attached thereto, collectively, the “Stock Purchase Agreement”).

 

Pursuant to the terms and conditions of the Stock Purchase Agreement, Maker is executing this Note in favor of Payee.

 

The following is a statement of the rights of Payee and the conditions to which this Note is subject, and to which Payee, by the acceptance of this Note, agrees:

 

1. Definitions. As used in this Note the following capitalized terms have the following meanings:

 

a. “Maker” shall mean the Person specified in the introductory paragraph of this Note and any Person(s) which shall succeed to or assume the obligations of such Person under this Note.

 

b. “Payee” shall mean the Person specified in the introductory paragraph of this Note, or any Person who shall at the time be the successor to Payee as the holder of this Note.

 

c. “Lien” shall mean, with respect to any property, any security interest, mortgage, pledge, lien, claim, charge or other encumbrance in, of, or on such property or the income therefrom, including, without limitation, the interest of a vendor or lessor under a conditional sale agreement, capital lease or other title retention agreement, or any agreement to provide any of the foregoing, and the filing of any financing statement or similar instrument under the Uniform Commercial Code or comparable law of any jurisdiction.

 

d. “Obligations” shall mean and include all loans, advances, debts, liabilities and obligations existing or hereafter arising under or pursuant to the terms of this Note and the Security Agreement, including all principal, interest fees, charges, expenses, attorneys’ fees and costs chargeable to and payable by Maker hereunder and thereunder.

 

 

 

 

e. “Person” shall mean and include an individual, a partnership, a corporation (including a business trust), a stock company, a limited liability company, an unincorporated association, a joint venture or other entity or a governmental authority.

 

f. “Note Documents” shall mean this Note together with the Security Agreement.

 

2. Payments. Upon demand by Payee, the entire unpaid principal balance, together with interest accrued and unpaid thereon at the applicable rate specified in this Note, shall be immediately due and payable. Any and all payments made pursuant to this Note shall be applied, at the option of Payee, to accrued and unpaid interest, unpaid principal and other sums due hereunder, in such order as Payee, in its sole discretion, elects.

 

3. Interest. This note shall bear interest at 4% per annum, computed on the basis of the actual number of days elapsed and a year of 365 days. Such interest shall be accrued but unpaid unless and until a demand by Payee as set forth in Section 2, above.

 

4. Satisfaction of Note. This Note shall remain outstanding, and accrue interest, until the date of the “Closing” as such term is defined in that certain Phase 2 Stock Purchase Agreement, of even date herewith, between Toga Limited, Toh Kok Soon, Lim Jun Hao and Ahmad Hizar Bin Sainol Abdin (the “Phase 2 Stock Purchase Agreement”), and the transfer of all right, title and interest in and to the Shares (as defined therein) from the Maker to Payee as full satisfaction for all principal and interest accrued under this Note, as contemplated in the Phase 2 Stock Purchase Agreement.

 

5. Prepayment. This Note may not be prepaid, in whole or in part, from time to time.

 

6. Certain Covenants. Maker shall furnish to Payee promptly upon the occurrence thereof, written notice of the occurrence of any Event of Default hereunder.

 

7. Events of Default. The occurrence of any of the following shall constitute an “Event of Default” under this Note and the other Note Document:

 

a. Failure to Pay. (i) Maker shall fail to pay when due any payment on the due dates pursuant to the Note Documents, and such payment shall not have been made within five (5) days of Maker’s receipt of Payees’ notice of such failure to pay, or (ii) any other payment required under the terms of any other Note Document on the date due and such payment shall not have been made within ten (10) days of Maker’s receipt of Payees’ notice to Maker of such failure to pay.

 

b. Breaches of Covenants. Maker shall fail to observe or perform any other material covenant, representation, or warranty, obligation, condition or agreement contained in this Note, the other Note Document, or the Stock Purchase Agreement (other than those specified in Section 7(a) above) and such failure shall continue for ten (10) days after notice to Maker of such failure.

 

 

 

 

c. Voluntary Bankruptcy or Insolvency Proceedings. Maker shall (i) apply for or consent to the appointment of a receiver, trustee, liquidator or custodian of itself or of all or a substantial part of its property, (ii) be unable, or admit in writing its inability, to pay its debts generally as they mature, (iii) make a general assignment for the benefit of its or any of its creditors, (iv) be dissolved or liquidated, (v) become insolvent (as such term may be defined or interpreted under any applicable statute), (vi) commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or consent to any such relief or to the appointment of or taking possession of its property by any official in an involuntary case or other proceeding commenced against it, (vii) take any action for the purpose of effecting any of the foregoing.

 

d. Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the appointment of a receiver, trustee, liquidator or custodian of Maker of all or a substantial part of the property thereof, or an involuntary case or other proceedings seeking liquidation, reorganization or other relief with respect to Maker or the debts thereof under any bankruptcy, insolvency or other similar law now or hereafter in effect shall be commenced and an order for relief entered or such proceeding shall not be dismissed or discharged within thirty (30) days of commencement.

 

e. Note Documents. Any Note Document or any material term thereof shall cease to be, or be asserted by Maker not to be, a legal, valid and binding obligation of Maker enforceable in accordance with its terms or if the Liens of Payee in the Collateral (as defined in the Security Agreement) shall cease to be or shall not be valid, first priority perfected Liens or Maker shall assert that such Liens are not valid, first priority and perfected Liens.

 

8. Rights of Payee upon Default. Upon the occurrence or existence of any Event of Default (other than an Event of Default, referred to in Sections 7(c), 7(d) and 7(e) and giving effect to any applicable cure periods) and at any time thereafter during the continuance of such Event of Default, Payee may, by notice to Maker, declare all outstanding Obligations payable by Maker hereunder to be immediately due and payable without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, anything contained herein or in the other Note Document to the contrary notwithstanding. Upon the occurrence or existence of any Event of Default described in Sections 7(c), 7(d), of 7(e) immediately and without notice, all outstanding Obligations payable by Maker hereunder shall automatically become immediately due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, anything contained herein or in the other Note Document to the contrary notwithstanding. In addition to the foregoing remedies, upon the occurrence or existence of any Event of Default, Payee may exercise any other right, power or remedy granted to it by the Note Documents or otherwise permitted to it by law, either by suit in equity or by action at law, or both.

 

9. Assignment; Successors and Assigns. Neither this Note nor any of the rights, interests or obligations hereunder may be assigned, by operation of law or otherwise, in whole or in part, by Maker without the prior written consent of Payee. Subject to the restrictions on transfer in this Section 8, the rights and obligations of Maker and Payee of this Note shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties.

 

 

 

 

10. Waiver and Amendment. This Note may be amended, waived or modified only upon the written consent of Maker and Payee. Maker hereby agrees that Payee may extend the time for payment, accept partial payment or take, exchange or release security, if any, without discharging or releasing Maker. In addition, Maker agrees (a) that the failure of Payee to exercise any rights or remedies granted hereunder shall not constitute a waiver of such rights or remedies or any other rights or remedies or preclude the exercise of such rights or remedies or any other rights or remedies at any time; and (b) that the failure of Payee to exercise any rights or remedies granted hereunder in the event of an Event of Default, default or breach hereof, including without limitation, any failure by the Maker to make any payment hereunder, shall not be deemed a waiver of such Event of Default, default or breach.

 

11. Notices. Any notice, request or other communication required or permitted hereunder shall be in writing and shall be deemed to have been duly given if personally delivered or mailed by registered or certified mail, postage prepaid, or by recognized overnight courier or personal delivery at the respective addresses of the parties set forth in the Stock Purchase Agreement. Any party hereto may by notice so given change its address for future notice hereunder.

 

12. Governing Law. This Note and all actions arising out of or in connection with this Note shall be governed by and construed in accordance with the laws as set forth in the Stock Purchase Agreement.

 

13. Usury Limitations. It is the intention of Maker and Payee to conform strictly to applicable usury laws. Accordingly, notwithstanding anything to the contrary in this Note, the Security Agreement, or the Stock Purchase Agreement, amounts deemed to constitute interest under applicable law and contracted for, chargeable or receivable hereunder shall under no circumstances, together with any other interest, late charges or other amounts which may be interpreted to be interest contracted for, chargeable or receivable hereunder or thereunder, exceed the maximum amount of interest permitted by law, and in the event any amounts were to exceed the maximum amount of interest permitted by law, such excess amounts shall be deemed a mistake and shall either be reduced immediately and automatically to the maximum amount permitted by law or, if required to comply with applicable law, be canceled automatically and, if theretofore paid, at the sole option of Payee, be refunded to Maker or credited on the principal amount of this Note then outstanding.

 

14. Severability. If any one or more of the provisions of this Note are determined to be unenforceable, in whole or in part, for any reason, the remaining provisions shall remain fully operative and enforceable to the greatest extent permitted by law.

 

15. Headings. Headings included herein are for convenience only, and shall not be used to construe this Agreement.

 

16. Expenses; Waivers. If action is instituted to collect this Note, Maker promises to pay all costs and expenses, including, without limitation, reasonable attorneys’ fees and costs, incurred in connection with such action. Maker hereby waives notice of default, presentment or demand for payment, protest or notice of nonpayment or dishonor and all other notices or demands relative to this instrument.

 

 

 

 

17. Representation by Counsel and Interpretation. Maker and Payee each had the opportunity to be represented by counsel in connection with this Note and the matters contemplated by this Note. Accordingly, any rule of law or decision that would require interpretation of any claimed ambiguities in this Note against the Maker has no application and. The provisions of this Note shall be interpreted in a reasonable manner to affect the intent of the Maker and Payee.

 

18. Electronic Signature. This Note may be delivered in electronic format (including Docusign and pdf) which shall be deemed an original and the Payee will be entitled to rely upon such signature as conclusive evidence that this Note has been duly executed by the Maker.

 

[Signature Page Follows]

 

 

 

 

IN WITNESS WHEREOF, Maker has caused this Note to be executed as of the date first written above.

 

 

MAKER:

       
By:

/s/ Ahmad Hizar Bin Sainol Abdin

 

Name:

Ahmad Hizar Bin Sainol Abdin

 
        

ACCEPTED AND AGREED TO BY PAYEE:

 

 

 

 

 

Toga Limited, a Nevada corporation

 

 

 

 

 

 

By:

/s/ Alexander D. Henderson

 

 

Name:

Alexander D. Henderson

 

 

Title:

Chief Financial Officer

 

  

 

 

 

EXHIBIT 10.7

 

SECURED PROMISSORY NOTE

 

Date: May 31, 2020

 

RM1,250,000

 

FOR VALUE RECEIVED, Lim Jun Hao (the “Maker”) promises to pay to the order of Toga Limited, a Nevada corporation (the “Payee”), or its registered assigns, the principal sum of RM1,250,000, or such lesser amount as shall equal the outstanding principal amount hereof, together with accrued but unpaid interest, pursuant to this Secured Promissory Note (the “Note”).

 

THE OBLIGATIONS DUE UNDER THIS NOTE ARE SECURED BY A PLEDGE AND SECURITY AGREEMENT DATED AS OF THE DATE HEREOF (THE “SECURITY AGREEMENT”) AND EXECUTED BY MAKER IN FAVOR OF PAYEE. ADDITIONAL OBLIGATIONS OF MAKER AND RIGHTS OF PAYEE ARE SET FORTH IN THE SECURITY AGREEMENT.

 

This Note is being issued in connection with that certain Stock Purchase Agreement, of even date herewith, between the Eostre Sdn. Bhd., a Malaysia corporation (“Eostre”), Hamidah Bibi A/P Seraj Din, Ahmad Hizar Bin Sainol Abdin, Toga Limited, Toh Kok Soon and Lim Jun Hao (including all exhibits attached thereto, collectively, the “Stock Purchase Agreement”).

 

Pursuant to the terms and conditions of the Stock Purchase Agreement, Maker is executing this Note in favor of Payee.

 

The following is a statement of the rights of Payee and the conditions to which this Note is subject, and to which Payee, by the acceptance of this Note, agrees:

 

1. Definitions. As used in this Note the following capitalized terms have the following meanings:

 

a. “Maker” shall mean the Person specified in the introductory paragraph of this Note and any Person(s) which shall succeed to or assume the obligations of such Person under this Note.

 

b. “Payee” shall mean the Person specified in the introductory paragraph of this Note, or any Person who shall at the time be the successor to Payee as the holder of this Note.

 

c. “Lien” shall mean, with respect to any property, any security interest, mortgage, pledge, lien, claim, charge or other encumbrance in, of, or on such property or the income therefrom, including, without limitation, the interest of a vendor or lessor under a conditional sale agreement, capital lease or other title retention agreement, or any agreement to provide any of the foregoing, and the filing of any financing statement or similar instrument under the Uniform Commercial Code or comparable law of any jurisdiction.

 

d. “Obligations” shall mean and include all loans, advances, debts, liabilities and obligations existing or hereafter arising under or pursuant to the terms of this Note and the Security Agreement, including all principal, interest fees, charges, expenses, attorneys’ fees and costs chargeable to and payable by Maker hereunder and thereunder.

 

 

 

 

e. “Person” shall mean and include an individual, a partnership, a corporation (including a business trust), a stock company, a limited liability company, an unincorporated association, a joint venture or other entity or a governmental authority.

 

f. “Note Documents” shall mean this Note together with the Security Agreement.

 

2. Payments. Upon demand by Payee, the entire unpaid principal balance, together with interest accrued and unpaid thereon at the applicable rate specified in this Note, shall be immediately due and payable. Any and all payments made pursuant to this Note shall be applied, at the option of Payee, to accrued and unpaid interest, unpaid principal and other sums due hereunder, in such order as Payee, in its sole discretion, elects.

 

3. Interest. This note shall bear interest at 4% per annum, computed on the basis of the actual number of days elapsed and a year of 365 days. Such interest shall be accrued but unpaid unless and until a demand by Payee as set forth in Section 2, above.

 

4. Satisfaction of Note. This Note shall remain outstanding, and accrue interest, until the date of the “Closing” as such term is defined in that certain Phase 2 Stock Purchase Agreement, of even date herewith, between Toga Limited, Toh Kok Soon, Lim Jun Hao and Ahmad Hizar Bin Sainol Abdin (the “Phase 2 Stock Purchase Agreement”), and the transfer of all right, title and interest in and to the Shares (as defined therein) from the Maker to Payee as full satisfaction for all principal and interest accrued under this Note, as contemplated in the Phase 2 Stock Purchase Agreement.

 

5. Prepayment. This Note may not be prepaid, in whole or in part, from time to time.

 

6. Certain Covenants. Maker shall furnish to Payee promptly upon the occurrence thereof, written notice of the occurrence of any Event of Default hereunder.

 

7. Events of Default. The occurrence of any of the following shall constitute an “Event of Default” under this Note and the other Note Document:

 

a. Failure to Pay. (i) Maker shall fail to pay when due any payment on the due dates pursuant to the Note Documents, and such payment shall not have been made within five (5) days of Maker’s receipt of Payees’ notice of such failure to pay, or (ii) any other payment required under the terms of any other Note Document on the date due and such payment shall not have been made within ten (10) days of Maker’s receipt of Payees’ notice to Maker of such failure to pay.

 

b. Breaches of Covenants. Maker shall fail to observe or perform any other material covenant, representation, or warranty, obligation, condition or agreement contained in this Note, the other Note Document, or the Stock Purchase Agreement (other than those specified in Section 7(a) above) and such failure shall continue for ten (10) days after notice to Maker of such failure.

 

 

 

 

c. Voluntary Bankruptcy or Insolvency Proceedings. Maker shall (i) apply for or consent to the appointment of a receiver, trustee, liquidator or custodian of itself or of all or a substantial part of its property, (ii) be unable, or admit in writing its inability, to pay its debts generally as they mature, (iii) make a general assignment for the benefit of its or any of its creditors, (iv) be dissolved or liquidated, (v) become insolvent (as such term may be defined or interpreted under any applicable statute), (vi) commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or consent to any such relief or to the appointment of or taking possession of its property by any official in an involuntary case or other proceeding commenced against it, (vii) take any action for the purpose of effecting any of the foregoing.

 

d. Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the appointment of a receiver, trustee, liquidator or custodian of Maker of all or a substantial part of the property thereof, or an involuntary case or other proceedings seeking liquidation, reorganization or other relief with respect to Maker or the debts thereof under any bankruptcy, insolvency or other similar law now or hereafter in effect shall be commenced and an order for relief entered or such proceeding shall not be dismissed or discharged within thirty (30) days of commencement.

 

e. Note Documents. Any Note Document or any material term thereof shall cease to be, or be asserted by Maker not to be, a legal, valid and binding obligation of Maker enforceable in accordance with its terms or if the Liens of Payee in the Collateral (as defined in the Security Agreement) shall cease to be or shall not be valid, first priority perfected Liens or Maker shall assert that such Liens are not valid, first priority and perfected Liens.

 

8. Rights of Payee upon Default. Upon the occurrence or existence of any Event of Default (other than an Event of Default, referred to in Sections 7(c), 7(d) and 7(e) and giving effect to any applicable cure periods) and at any time thereafter during the continuance of such Event of Default, Payee may, by notice to Maker, declare all outstanding Obligations payable by Maker hereunder to be immediately due and payable without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, anything contained herein or in the other Note Document to the contrary notwithstanding. Upon the occurrence or existence of any Event of Default described in Sections 7(c), 7(d), of 7(e) immediately and without notice, all outstanding Obligations payable by Maker hereunder shall automatically become immediately due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, anything contained herein or in the other Note Document to the contrary notwithstanding. In addition to the foregoing remedies, upon the occurrence or existence of any Event of Default, Payee may exercise any other right, power or remedy granted to it by the Note Documents or otherwise permitted to it by law, either by suit in equity or by action at law, or both.

 

9. Assignment; Successors and Assigns. Neither this Note nor any of the rights, interests or obligations hereunder may be assigned, by operation of law or otherwise, in whole or in part, by Maker without the prior written consent of Payee. Subject to the restrictions on transfer in this Section 8, the rights and obligations of Maker and Payee of this Note shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties.

 

 

 

 

10. Waiver and Amendment. This Note may be amended, waived or modified only upon the written consent of Maker and Payee. Maker hereby agrees that Payee may extend the time for payment, accept partial payment or take, exchange or release security, if any, without discharging or releasing Maker. In addition, Maker agrees (a) that the failure of Payee to exercise any rights or remedies granted hereunder shall not constitute a waiver of such rights or remedies or any other rights or remedies or preclude the exercise of such rights or remedies or any other rights or remedies at any time; and (b) that the failure of Payee to exercise any rights or remedies granted hereunder in the event of an Event of Default, default or breach hereof, including without limitation, any failure by the Maker to make any payment hereunder, shall not be deemed a waiver of such Event of Default, default or breach.

 

11. Notices. Any notice, request or other communication required or permitted hereunder shall be in writing and shall be deemed to have been duly given if personally delivered or mailed by registered or certified mail, postage prepaid, or by recognized overnight courier or personal delivery at the respective addresses of the parties set forth in the Stock Purchase Agreement. Any party hereto may by notice so given change its address for future notice hereunder.

 

12. Governing Law. This Note and all actions arising out of or in connection with this Note shall be governed by and construed in accordance with the laws as set forth in the Stock Purchase Agreement.

 

13. Usury Limitations. It is the intention of Maker and Payee to conform strictly to applicable usury laws. Accordingly, notwithstanding anything to the contrary in this Note, the Security Agreement, or the Stock Purchase Agreement, amounts deemed to constitute interest under applicable law and contracted for, chargeable or receivable hereunder shall under no circumstances, together with any other interest, late charges or other amounts which may be interpreted to be interest contracted for, chargeable or receivable hereunder or thereunder, exceed the maximum amount of interest permitted by law, and in the event any amounts were to exceed the maximum amount of interest permitted by law, such excess amounts shall be deemed a mistake and shall either be reduced immediately and automatically to the maximum amount permitted by law or, if required to comply with applicable law, be canceled automatically and, if theretofore paid, at the sole option of Payee, be refunded to Maker or credited on the principal amount of this Note then outstanding.

 

14. Severability. If any one or more of the provisions of this Note are determined to be unenforceable, in whole or in part, for any reason, the remaining provisions shall remain fully operative and enforceable to the greatest extent permitted by law.

 

15. Headings. Headings included herein are for convenience only, and shall not be used to construe this Agreement.

 

16. Expenses; Waivers. If action is instituted to collect this Note, Maker promises to pay all costs and expenses, including, without limitation, reasonable attorneys’ fees and costs, incurred in connection with such action. Maker hereby waives notice of default, presentment or demand for payment, protest or notice of nonpayment or dishonor and all other notices or demands relative to this instrument.

 

 

 

 

17. Representation by Counsel and Interpretation. Maker and Payee each had the opportunity to be represented by counsel in connection with this Note and the matters contemplated by this Note. Accordingly, any rule of law or decision that would require interpretation of any claimed ambiguities in this Note against the Maker has no application and. The provisions of this Note shall be interpreted in a reasonable manner to affect the intent of the Maker and Payee.

 

18. Electronic Signature. This Note may be delivered in electronic format (including Docusign and pdf) which shall be deemed an original and the Payee will be entitled to rely upon such signature as conclusive evidence that this Note has been duly executed by the Maker.

 

[Signature Page Follows]

 

 

 

 

IN WITNESS WHEREOF, Maker has caused this Note to be executed as of the date first written above.

 

  MAKER:
       
By: /s/ Lim Jun Hao

 

Name:

Lim Jun Hao  
     
ACCEPTED AND AGREED TO BY PAYEE:      

 

 

 

 

 

Toga Limited, a Nevada corporation

 

 

 

 

 

 

By:

/s/ Alexander D. Henderson

 

 

Name:

Alexander D. Henderson

 

 

Title:

Chief Financial Officer

 

 

 

EXHIBIT 10.8

 

SECURED PROMISSORY NOTE

 

Date: May 31, 2020

 

RM1,000,000

 

FOR VALUE RECEIVED, Toh Kok Soon(the “Maker”) promises to pay to the order of Toga Limited, a Nevada corporation (the “Payee”), or its registered assigns, the principal sum of RM1,000,000, or such lesser amount as shall equal the outstanding principal amount hereof, together with accrued but unpaid interest, pursuant to this Secured Promissory Note (the “Note”).

 

THE OBLIGATIONS DUE UNDER THIS NOTE ARE SECURED BY A PLEDGE AND SECURITY AGREEMENT DATED AS OF THE DATE HEREOF (THE “SECURITY AGREEMENT”) AND EXECUTED BY MAKER IN FAVOR OF PAYEE. ADDITIONAL OBLIGATIONS OF MAKER AND RIGHTS OF PAYEE ARE SET FORTH IN THE SECURITY AGREEMENT.

 

This Note is being issued in connection with that certain Stock Purchase Agreement, of even date herewith, between the Eostre Sdn. Bhd., a Malaysia corporation (“Eostre”), Hamidah Bibi A/P Seraj Din, Ahmad Hizar Bin Sainol Abdin, Toga Limited, Toh Kok Soon and Lim Jun Hao (including all exhibits attached thereto, collectively, the “Stock Purchase Agreement”).

 

Pursuant to the terms and conditions of the Stock Purchase Agreement, Maker is executing this Note in favor of Payee.

 

The following is a statement of the rights of Payee and the conditions to which this Note is subject, and to which Payee, by the acceptance of this Note, agrees:

 

1. Definitions. As used in this Note the following capitalized terms have the following meanings:

 

a. “Maker” shall mean the Person specified in the introductory paragraph of this Note and any Person(s) which shall succeed to or assume the obligations of such Person under this Note.

 

b. “Payee” shall mean the Person specified in the introductory paragraph of this Note, or any Person who shall at the time be the successor to Payee as the holder of this Note.

 

c. “Lien” shall mean, with respect to any property, any security interest, mortgage, pledge, lien, claim, charge or other encumbrance in, of, or on such property or the income therefrom, including, without limitation, the interest of a vendor or lessor under a conditional sale agreement, capital lease or other title retention agreement, or any agreement to provide any of the foregoing, and the filing of any financing statement or similar instrument under the Uniform Commercial Code or comparable law of any jurisdiction.

 

d. “Obligations” shall mean and include all loans, advances, debts, liabilities and obligations existing or hereafter arising under or pursuant to the terms of this Note and the Security Agreement, including all principal, interest fees, charges, expenses, attorneys’ fees and costs chargeable to and payable by Maker hereunder and thereunder.

 

 

 

 

e. “Person” shall mean and include an individual, a partnership, a corporation (including a business trust), a stock company, a limited liability company, an unincorporated association, a joint venture or other entity or a governmental authority.

 

f. “Note Documents” shall mean this Note together with the Security Agreement.

 

2. Payments. Upon demand by Payee, the entire unpaid principal balance, together with interest accrued and unpaid thereon at the applicable rate specified in this Note, shall be immediately due and payable. Any and all payments made pursuant to this Note shall be applied, at the option of Payee, to accrued and unpaid interest, unpaid principal and other sums due hereunder, in such order as Payee, in its sole discretion, elects.

 

3. Interest. This note shall bear interest at 4% per annum, computed on the basis of the actual number of days elapsed and a year of 365 days. Such interest shall be accrued but unpaid unless and until a demand by Payee as set forth in Section 2, above.

 

4. Satisfaction of Note. This Note shall remain outstanding, and accrue interest, until the date of the “Closing” as such term is defined in that certain Phase 2 Stock Purchase Agreement, of even date herewith, between Toga Limited, Toh Kok Soon, Lim Jun Hao and Ahmad Hizar Bin Sainol Abdin (the “Phase 2 Stock Purchase Agreement”), and the transfer of all right, title and interest in and to the Shares (as defined therein) from the Maker to Payee as full satisfaction for all principal and interest accrued under this Note, as contemplated in the Phase 2 Stock Purchase Agreement.

 

5. Prepayment. This Note may not be prepaid, in whole or in part, from time to time.

 

6. Certain Covenants. Maker shall furnish to Payee promptly upon the occurrence thereof, written notice of the occurrence of any Event of Default hereunder.

 

7. Events of Default. The occurrence of any of the following shall constitute an “Event of Default” under this Note and the other Note Document:

 

a. Failure to Pay. (i) Maker shall fail to pay when due any payment on the due dates pursuant to the Note Documents, and such payment shall not have been made within five (5) days of Maker’s receipt of Payees’ notice of such failure to pay, or (ii) any other payment required under the terms of any other Note Document on the date due and such payment shall not have been made within ten (10) days of Maker’s receipt of Payees’ notice to Maker of such failure to pay.

 

b. Breaches of Covenants. Maker shall fail to observe or perform any other material covenant, representation, or warranty, obligation, condition or agreement contained in this Note, the other Note Document, or the Stock Purchase Agreement (other than those specified in Section 7(a) above) and such failure shall continue for ten (10) days after notice to Maker of such failure.

 

 

 

 

c. Voluntary Bankruptcy or Insolvency Proceedings. Maker shall (i) apply for or consent to the appointment of a receiver, trustee, liquidator or custodian of itself or of all or a substantial part of its property, (ii) be unable, or admit in writing its inability, to pay its debts generally as they mature, (iii) make a general assignment for the benefit of its or any of its creditors, (iv) be dissolved or liquidated, (v) become insolvent (as such term may be defined or interpreted under any applicable statute), (vi) commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or consent to any such relief or to the appointment of or taking possession of its property by any official in an involuntary case or other proceeding commenced against it, (vii) take any action for the purpose of effecting any of the foregoing.

 

d. Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the appointment of a receiver, trustee, liquidator or custodian of Maker of all or a substantial part of the property thereof, or an involuntary case or other proceedings seeking liquidation, reorganization or other relief with respect to Maker or the debts thereof under any bankruptcy, insolvency or other similar law now or hereafter in effect shall be commenced and an order for relief entered or such proceeding shall not be dismissed or discharged within thirty (30) days of commencement.

 

e. Note Documents. Any Note Document or any material term thereof shall cease to be, or be asserted by Maker not to be, a legal, valid and binding obligation of Maker enforceable in accordance with its terms or if the Liens of Payee in the Collateral (as defined in the Security Agreement) shall cease to be or shall not be valid, first priority perfected Liens or Maker shall assert that such Liens are not valid, first priority and perfected Liens.

 

8. Rights of Payee upon Default. Upon the occurrence or existence of any Event of Default (other than an Event of Default, referred to in Sections 7(c), 7(d) and 7(e) and giving effect to any applicable cure periods) and at any time thereafter during the continuance of such Event of Default, Payee may, by notice to Maker, declare all outstanding Obligations payable by Maker hereunder to be immediately due and payable without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, anything contained herein or in the other Note Document to the contrary notwithstanding. Upon the occurrence or existence of any Event of Default described in Sections 7(c), 7(d), of 7(e) immediately and without notice, all outstanding Obligations payable by Maker hereunder shall automatically become immediately due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, anything contained herein or in the other Note Document to the contrary notwithstanding. In addition to the foregoing remedies, upon the occurrence or existence of any Event of Default, Payee may exercise any other right, power or remedy granted to it by the Note Documents or otherwise permitted to it by law, either by suit in equity or by action at law, or both.

 

9. Assignment; Successors and Assigns. Neither this Note nor any of the rights, interests or obligations hereunder may be assigned, by operation of law or otherwise, in whole or in part, by Maker without the prior written consent of Payee. Subject to the restrictions on transfer in this Section 8, the rights and obligations of Maker and Payee of this Note shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties.

 

 

 

 

10. Waiver and Amendment. This Note may be amended, waived or modified only upon the written consent of Maker and Payee. Maker hereby agrees that Payee may extend the time for payment, accept partial payment or take, exchange or release security, if any, without discharging or releasing Maker. In addition, Maker agrees (a) that the failure of Payee to exercise any rights or remedies granted hereunder shall not constitute a waiver of such rights or remedies or any other rights or remedies or preclude the exercise of such rights or remedies or any other rights or remedies at any time; and (b) that the failure of Payee to exercise any rights or remedies granted hereunder in the event of an Event of Default, default or breach hereof, including without limitation, any failure by the Maker to make any payment hereunder, shall not be deemed a waiver of such Event of Default, default or breach.

 

11. Notices. Any notice, request or other communication required or permitted hereunder shall be in writing and shall be deemed to have been duly given if personally delivered or mailed by registered or certified mail, postage prepaid, or by recognized overnight courier or personal delivery at the respective addresses of the parties set forth in the Stock Purchase Agreement. Any party hereto may by notice so given change its address for future notice hereunder.

 

12. Governing Law. This Note and all actions arising out of or in connection with this Note shall be governed by and construed in accordance with the laws as set forth in the Stock Purchase Agreement.

 

13. Usury Limitations. It is the intention of Maker and Payee to conform strictly to applicable usury laws. Accordingly, notwithstanding anything to the contrary in this Note, the Security Agreement, or the Stock Purchase Agreement, amounts deemed to constitute interest under applicable law and contracted for, chargeable or receivable hereunder shall under no circumstances, together with any other interest, late charges or other amounts which may be interpreted to be interest contracted for, chargeable or receivable hereunder or thereunder, exceed the maximum amount of interest permitted by law, and in the event any amounts were to exceed the maximum amount of interest permitted by law, such excess amounts shall be deemed a mistake and shall either be reduced immediately and automatically to the maximum amount permitted by law or, if required to comply with applicable law, be canceled automatically and, if theretofore paid, at the sole option of Payee, be refunded to Maker or credited on the principal amount of this Note then outstanding.

 

14. Severability. If any one or more of the provisions of this Note are determined to be unenforceable, in whole or in part, for any reason, the remaining provisions shall remain fully operative and enforceable to the greatest extent permitted by law.

 

15. Headings. Headings included herein are for convenience only, and shall not be used to construe this Agreement.

 

16. Expenses; Waivers. If action is instituted to collect this Note, Maker promises to pay all costs and expenses, including, without limitation, reasonable attorneys’ fees and costs, incurred in connection with such action. Maker hereby waives notice of default, presentment or demand for payment, protest or notice of nonpayment or dishonor and all other notices or demands relative to this instrument.

 

 

 

 

17. Representation by Counsel and Interpretation. Maker and Payee each had the opportunity to be represented by counsel in connection with this Note and the matters contemplated by this Note. Accordingly, any rule of law or decision that would require interpretation of any claimed ambiguities in this Note against the Maker has no application and. The provisions of this Note shall be interpreted in a reasonable manner to affect the intent of the Maker and Payee.

 

18. Electronic Signature. This Note may be delivered in electronic format (including Docusign and pdf) which shall be deemed an original and the Payee will be entitled to rely upon such signature as conclusive evidence that this Note has been duly executed by the Maker.

 

[Signature Page Follows]

 

 

 

 

 

IN WITNESS WHEREOF, Maker has caused this Note to be executed as of the date first written above.

 

 

MAKER:

       
By: /s/ Toh Kok Soon

 

Name:

Toh Kok Soon  

 

 

 

 

ACCEPTED AND AGREED TO BY PAYEE:

 

 

 

 

 

 

 

 

Toga Limited, a Nevada corporation

 

 

 

 

 

 

By:

/s/ Alexander D. Henderson

 

 

Name:

Alexander D. Henderson

 

 

Title:

Chief Financial Officer

 

 

 

 

 

EXHIBIT 31.1

 

CERTIFICATION PURSUANT TO RULE 13a-14(a) OR RULE 15d-14(a)

OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

 

I, Toh Kok Soon, Chief Executive Officer of TOGA LIMITED, certify that:

 

1.

I have reviewed this Quarterly Report on Form 10-Q of Toga Limited;

 

 

2.

Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

 

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

  

 

a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

 

 

 

b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

 

 

c)

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

 

 

 

d)

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

  

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

  

 

a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process summarize and report financial information; and

 

 

 

 

b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

  

Date: June 15, 2020

 

By: /s/ Toh Kok Soon                                       

Name: Toh Kok Soon

Title: Chief Executive Officer

 

EXHIBIT 31.2

 

CERTIFICATION PURSUANT TO RULE 13a-14(a) OR RULE 15d-14(a)

OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

 

I, Alexander D. Henderson, Chief Financial Officer of TOGA LIMITED certify that:

  

1.

I have reviewed this Quarterly Report on Form 10-Q of Toga Limited;

 

 

2.

Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

 

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

   

 

a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

 

 

 

b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

 

 

c)

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

 

 

 

d)

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

  

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

   

 

a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process summarize and report financial information; and

 

 

 

 

b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

  

Date: June 15, 2020

 

By: /s/ Alexander D. Henderson                                                            

Name: Alexander D. Henderson

Title: Chief Financial Officer (Principal Financial Officer)

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Toga Limited (the “Company”) on Form 10-Q for the period ended April 30, 2020 as filed with the Securities and Exchange Commission on or about the date hereof (the “Report”), the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

 

 

1.

The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

 

 

 

 

2.

The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

  

Date: June 15, 2020

 

By: /s/ Toh Kok Soon                                

Name: Toh Kok Soon

Title: Chief Executive Officer

 

 

EXHIBIT 32.2

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Toga Limited (the “Company”) on Form 10-Q for the period ended April 30, 2020 as filed with the Securities and Exchange Commission on or about the date hereof (the “Report”), the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

 

 

1.

The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

 

 

 

 

2.

The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

  

Date: June 15, 2020

 

By: /s/ Alexander D. Henderson                                    

Name: Alexander D. Henderson

Title: Chief Financial Officer

EXHIBIT 99.1