This discussion updates our business plan for the three-month periods ending
October 31, 2022. It also analyzes our financial condition at October 31, 2022
and compares it to our financial condition at July 31, 2022. This discussion and
analysis should be read in conjunction with our audited financial statements for
the year ended July 31, 2022, including footnotes, contained in our Annual
Report on Form 10-K, and with the unaudited financial statements for the interim
period ended October 31, 2022, including footnotes, which are included in this
quarterly report.
Overview of the Business
Hartford Great Health Corp. was originally incorporated in the State of Nevada
on April 2, 2008, under the name PhotoAmigo, Inc. It changed its name to
Hartford Great Health Corp. on August 22, 2018, and since then we have been
engaged in activities to formulate and implement our business plan as set forth
below.
Ability to continue as a "going concern".
The independent registered public accounting firms' reports on our financial
statements as of July 31, 2022, includes a "going concern" explanatory paragraph
that describes substantial doubt about the Company's ability to continue as a
going concern. Management's plans in regard to the factors prompting the
explanatory paragraph are discussed in the financial statements, including
footnotes thereto.
Plan of Operation
As of July 31, 2022, the company has issued a total of 100,108,000 shares of
common stock. On December 11, 2018, 96,090,000 shares of common stock were
issued at the price of $0.02 per share to raise an additional $1,921,800 in
capital. On November 24, 2020, the Company issued additional 1,000,000 shares of
common stock to a significant shareholder of the Company at $0.02 per share.
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On December 28, 2018, the Company acquired Hangzhou Hartford Comprehensive
Health Management, Ltd ("HZHF"). On March 22, 2019, the Company acquired 60
percent of Hangzhou Longjing Qiao Fu Vacation Hotel Co., Ltd. ("HZLJ"). On March
20, 2019, the Company acquired Shanghai Hartford Comprehensive Health
Management, Ltd. ("HFSH") with 90 percent of Shanghai Qiao Garden International
Travel Agency ("Qiao Garden Int'l Travel"), which was disposed on December 31,
2020, and formed a joint venture entity, Hartford International Education
Technology Co., Ltd ("HF Int'l Education").
The subsidiary of HFUS in Shanghai (HFSH) advances operating funds from two
related party entities, SH Qiao Hong and SH Oversea Chinese Culture Media Ltd.
The main purpose of the funding is to invest in Hartford International Education
Technology (Shanghai) Co., Ltd. (HF Int'l Education). Upon signing of
supplemental agreement, HFUS currently holds 75.5% ownership of HF Int'l
Education and maintains control over HF Int'l Education. On July 24, 2019, HF
Int'l Education established a 100% owned subsidiary, Pudong Haojin Childhood
Education Ltd. ("PDHJ"). On October 28, 2019, PDHJ had its childhood education
center opened. On March 23, 2020, HF Int'l Education established Shanghai
Hongkou HaiDeFuDe Childcare Co., Ltd.("HDFD") and was approved the business
license to conduct childcare operations in Shanghai, China. On July 20, 2020, HF
Int'l Education entered an agreement with two individuals to acquire the whole
ownership of Shanghai Gelinke Childcare Education Center ("Gelinke"). During the
board meeting, SH Jingyu and another noncontrolling shareholders also sold a
total of 14.5% equity at zero value to HFSH. As a result, HFSH holds 90% of HF
Int'l Education and a total of 10% equity is held by two individual
noncontrolling shareholders.
HF Int'l Education has developed an enhanced model of childcare franchise
management program and registered a new brand name, "HaiDeFuDe". HF Int'l
Education has recruited a team of knowledgeable childcare teachers to develop
series of independent textbooks designed to targeted age of young children and
register for the copyrights for these textbooks in September of 2020. Since
then, HF Int'l Education has begun marketing and promoting the enhanced model of
franchise operation and management packaged program, under "HaiDeFuDe" brand, to
an initial of 50 franchisees throughout different regions of China. To achieve
that, HF Int'l Education has incorporated existing market resources throughout
other major cities and provinces in China. The promotion of HF Int'l Education
franchise operation and management model was expected to attract other childcare
education centers to join the "HaiDeFuDe" brand, and HF Int'l Education expected
to generate revenue from franchise and management fees.
Due to continued market uncertainties during the pandemic, the board of HFSH
adopted a new management approach to ease cash flow and reduce operation loss.
In March 2021, HF Int'l Education entered agreements with Hartford Health
Management (Shanghai), Co. Ltd. ("HFHM"). HFHM purchased seven education &
intellectual property copy rights and ten "HaiDeFuDe" registered trademarks from
HF Int'l Education for a total amount of RMB1.2M and RMB1.0M, respectively. In
June 2021, HF Int'l Education and its three subsidiaries entered license
agreements with HFHM for the rights to use the intellectual Properties (the
"IPs") HFHM owns. The IPs cover in the license agreements are four sets of
curriculum structure designed and fifteen trademarks including "HaiDeFuDe"
registered trademarks purchased from HF Int'l Education. As a return, on a
monthly basis, HF Int'l Education and its subsidiaries pays 20% of its tuition
revenue generated to HFHM as license usage fee.
However, due to China's continual of zero-Covid policy implementation this year
as well as Covid-19 lockdown for over two months in Greater Shanghai, childcare
and childhood education center were forced to halt operations; therefore, the
Company decides to divert its plan from childcare and childhood educational
development industry. In the near future, the company is looking into wholesale
trading and distribution of herbal supplement and other nutritional health
products in China.
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Results of Operations - Three Months Ended October 31, 2022 Compared to Three
Months Ended October 31, 2021.
Revenue: We recognized $- and $169,812 revenue in the three months ended October
31, 2022 and 2021, respectively. The revenue for the three months ended October
31, 2021 was mainly generated from two industry segments, the hospitality
housing in HZLJ and childhood education care services in HF Int'l Education.
These two business operations have been disposed on August 1, 2022. see Note 3
Acquisitions and Disposals.
Operating Cost and Expenses: We recognized $- and $335,004 cost of revenue in
the three months ended October 31, 2022 and 2021, respectively. The cost of
revenue was mainly due to the license fees paid to HFHM and rent cost of HDFD's
operating facility during the three months ended October 31, 2021. Operating
expenses decreased to $ 54,648 for the three months ended October 31, 2022,
compared to $507,759 during the comparable period of 2021. The decrease of
operating cost and expenses was resulted from the discontinued operations in
hospitality housing and childhood education care services since August 1, 2022.
see Note 3 Acquisitions and Disposals.
Other Income (Expense): Other income, net increased to $535,050 for the three
months ended October 31, 2022, compared to $24,791 for the corresponding period
of 2021. Other income for the three months ended October 31, 2022 was mainly
resulted from the gain on disposal of subsidiaries offset by interest expenses.
Other income for the three months ended October 31, 2021 was mainly resulted
from sublease income offset by interest expenses.
Net Loss Attributable to Noncontrolling Interest: For the three months ended
October 31, 2022, we recorded a net loss attributable to noncontrolling interest
of $- compared to $66,628 for the corresponding period of 2021. The loss was
allocated based on the ownership percentage of noncontrolling interest, which
has been disposed on August 1, 2022. see Note 3 Acquisitions and Disposals.
Net Income (Loss) Attributable to Hartford Great Health Corp: We recorded a net
income of $480,402 or $0.00 per share for the three months ended October 31,
2022, compared to a net loss of $581,532 or $(0.01) per share for the three
months ended October 31, 2021, due to the factors discussed above.
Liquidity and Capital Resources
As of October 31, 2022, we had a working capital deficit of $4,324,792 comprised
of current assets of $75,635 and current liabilities of $4,400,427. This
represents a decrease of $3,327,400 in the working capital deficit from the July
31, 2022 amount of $7,652,192. The decrease was primarily because the disposal
of operations in hospitality housing and childhood education care services on
August 1, 2022. see Note 3 Acquisitions and Disposals.
We believe that our funding requirements for the next twelve months will be in
excess of $230,000. We are currently seeking for further funding through
related parties' loan and finance.
As of October 31, 2022, the company has issued a total of 100,108,000 shares of
common stock. On December 11, 2018, 96,090,000 shares of common stock were
issued at the price of $0.02 per share to raise an additional $1,921,800 in
capital. On November 24, 2020, the Company issued additional 1,000,000 shares of
common stock to a significant shareholder of the Company at $0.02 per share.
We will seek additional financing in the form of debt or equity. There is no
assurance that we will be able to obtain any needed financing on favorable
terms, or at all, or that we will find qualified purchasers for the sale of our
stock. Any sales of our securities would dilute the ownership of our existing
investors.
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Cash Flows - Three months ended October 31, 2022 Compared to Three months ended
October 31, 2021
Operating Activities
During the three months ended October 31, 2022, $26,718 used in operating
activities as compared to $412,091 used in the operations during the three
months ended October 31, 2021. During the three months ended October 31, 2022,
we recorded net income of $480,402, other current payable increased by $16,518
and related party payables net with receivables increased by $15,449, offset by
non-cash item gain on disposal of subsidiaries of $539,230.
During the three months ended October 31, 2021, we recorded loss including
noncontrolling interests of $648,160 , incurred non-cash depreciation of $28,219
, prepaid and other current receivables decreased by $116,580, other assets
decreased by $74,757, other current payable increased by $35,152 , contract
liabilities increased by $55,881, related party payables net with receivables
decreased by $123,017, and operating lease liabilities net with operating lease
assets increased by $39,003 as a result from the adoption of new lease guidance
ASU No. 2016-02.
Investing activities
Nil of investing activities occurred during the three months ended October 31,
2022.
Cash used in investing activities was $127,928 for the three months ended
October 31, 2021, primarily due to the expenditure of leasehold improvements in
HF Int'l Education.
Financing activities
Cash provided by financing activities was $30,000 for the three months ended
October 31, 2022 as compared to $529,995 cash provided by financing activities
for the three months ended October 31, 2021. The cash flows provided by
financing activities for the three months ended October 31, 2022 was from the
proceeds of notes payable. The notes payable was borrowed from one related party
with 5% annual interest rate. See Note 4 Related Party Transactions.
The cash flows provided by financing activities for the three months ended
October 31, 2021 was primarily attributable to $469,995 funding support from
related parties, $60,000 proceeds of notes payable. The notes payable was
borrowed from one related party with 5% annual interest rate. See Note 4 Related
Party Transactions.
Future Capital Expenditures
As of October 31, 2022, we have no future capital expenditures plan.
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Off-Balance Sheet Arrangements
As of and subsequent to October 31, 2022, we have no off-balance sheet
arrangements.
Contractual Commitments
As of October 31, 2022, we don't have material contractual commitments.
Critical Accounting Policies
Our significant accounting policies are disclosed in Note 1 of the footnotes to
our unaudited financial statements above. There have been no other changes in
our critical accounting policies since our most recent audit dated July 31,
2022.
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