This discussion updates our business plan for the six-month periods ending
January 31, 2023. It also analyzes our financial condition at January 31, 2023
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 January 31, 2023, 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 January 31, 2023, 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 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.
Impacted by Covid-19 pandemic and the government regulation implemented in
education industry and the restrictions posted by the Chinese government to
control the pandemic in China since 2021, to avoid further operation losses, on
August 1, 2022, HFSH entered a contract with a related party, Shanghai Oversea
Chinese Culture Media Ltd. ("SH Oversea"), to sell 90 percent ownership of HF
Int'l Education and its subsidiaries for $900 (RMB 5,850). On August 1, 2022,
HFUS entered a contract with SH Oversea and another individual, to sell 100
percent ownership of HZHF and its subsidiaries for $1,000 (RMB 6,500).
The company's sole subsidiary, HFSH is currently working with herbal
manufacturers to develop new herbal health supplement products for wholesale
distribution in China. The expected marketing and product launch date is in July
of this year.
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Results of Operations - Three months ended January 31, 2023 Compared to Three
months ended January 31, 2022.
Operating Expenses: Operating expenses decreased to $21,362 for the three months
ended January 31, 2023, compared to $49,157 during the comparable period of
2022. The decrease of operating expenses was due to the reduction of payroll and
professional expenses occurred in US as a result of the downsize of business
operation.
Other Income (Expense): Other expense, net increased to $4,089 for the three
months ended January 31, 2023, compared to other income, net of $2,747 for the
corresponding period of 2022. Other expense for the three months ended January
31, 2023 was mainly resulted from interest expenses. Other income for the three
months ended January 31, 2022 was mainly resulted from sublease income offset by
interest expenses.
Net Loss from continuing operations: Net loss from continuing operations
decreased to $25,451 for the three months ended January 31, 2023, compared to
net loss from continuing operations of $51,094 for the corresponding period of
2022 as result of above.
Net Loss from discontinued operations, net of tax: We realized $531,293 net
operation loss, including $186,951 revenue, $281,596 cost of revenue and
$436,648 operating expenses and others in the three months ended January 31,
2022 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.
Net Loss Attributable to Noncontrolling Interest: For the three months ended
January 31, 2023, we recorded a net loss attributable to noncontrolling interest
of $- compared to $63,099 for the corresponding period of 2022. 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
loss of $25,451 or $0.00 per share for the three months ended January 31, 2023,
compared to a net loss of $520,098 or $(0.00) per share for the three months
ended January 31, 2022, due to the factors discussed above.
Results of Operations - Six Months Ended January 31, 2023 Compared to Six Months
Ended January 31, 2022
Operating Expenses: Operating expenses decreased to $76,010 for the six months
ended January 31, 2023, compared to $104,667 during the comparable period of
2022. The decrease of operating expenses was due to the reduction of payroll and
professional expenses occurred in US as a result of the downsize of business
operation.
Other Income (Expense): Other income, net increased to $530,961 for the six
months ended January 31, 2023, compared to $(5,068) net loss for the
corresponding period of 2022. Other income for the six months ended January 31,
2023 was mainly resulted from the gain on disposal of subsidiaries offset by
interest expenses. Other income for the six months ended January 31, 2022 was
mainly resulted from sublease income offset by interest expenses.
Net Loss from continuing operations: Net income from continuing operations
decreased to $454,951 for the six months ended January 31, 2023, compared to net
loss from continuing operations of $109,735 for the corresponding period of 2022
as result of above.
Net Loss from discontinued operations, net of tax: We realized $1,121,622 net
operation loss, including $356,763 revenue, $616,600 cost of revenue and
$861,785 operating expenses and others in the six months ended January 31, 2022
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.
Net Loss Attributable to Noncontrolling Interest: For the six months ended
January 31, 2023, we recorded a net loss attributable to noncontrolling interest
of $- compared to $129,727 for the corresponding period of 2022. 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 $454,951 or $0.00 per share for the six months ended January 31, 2023,
compared to a net loss of $1,101,630 or $(0.01) per share for the six months
ended January 31, 2022, due to the factors discussed above.
Liquidity and Capital Resources
As of January 31, 2023, we had a working capital deficit of $4,673,487 comprised
of current assets of $73,040 and current liabilities of $4,746,527. This
represents a decrease of $2,978,705 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 $175,000. We are currently seeking for further funding through related
parties' loan and finance.
As of January 31, 2023, 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 - Six months ended January 31, 2023 Compared to Six months ended
January 31, 2022
Operating Activities
During the six months ended January 31, 2023, $63,128 used in operating
activities as compared to $653,284 used in the operations during the six months
ended January 31, 2022. During the six months ended January 31, 2023, we
recorded net income of $454,951, adjusted by subsidiary disposal gain of
$539,230, related party payables net with receivables increased by $26,955 and
offset by other current payable decreased by $6,631.
During the six months ended January 31, 2022, we recorded loss from continuing
operation of $109,735, incurred other current payable increased by $4,209,
related party payables net with receivables increased by $117,978, and offset by
$665,736 net cash used in operating activities from discontinued operations.
Investing activities
Nil of investing activities occurred during the six months ended January 31,
2023.
Cash used in investing activities was $174,317 for the six months ended January
31, 2022. The cash used in investing activities was primarily due to the
expenditure of leasehold improvements in HF Int'l Education, one of the
discontinued operations.
Financing activities
Cash provided by financing activities was $60,000 for the six months ended
January 31, 2023 as compared to $784,576 cash provided by financing activities
for the six months ended January 31, 2022. The cash flows provided by financing
activities for the six months ended January 31, 2023 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 six months ended January
31, 2022 was primarily attributable to $704,576 funding support from related
parties, $80,000 proceeds of notes payable. The notes payable was borrowed from
one related party with 5% annual interest rate.
Future Capital Expenditures
As of January 31, 2023, we have no future capital expenditures plan.
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Off-Balance Sheet Arrangements
As of and subsequent to January 31, 2023, we have no off-balance sheet
arrangements.
Contractual Commitments
As of January 31, 2023, 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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HARTFORD GREAT HEALTH CORP. 
