AAGH 10-Q
America Great Health (AAGH)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File No.
(Exact name of registrant as specified in its charter)
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Securities registered pursuant to Section 12(b) of the Act:
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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.
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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.
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| 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 ☐
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. The number of shares outstanding of the registrant’s common stock as of March 31, 2022 was
AMERICA GREAT HEALTH AND SUBSIDIARIES
TABLE OF CONTENTS
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PART I – FINANCIAL INFORMATION |
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ITEM 1 |
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ITEM 2 |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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ITEM 3 |
24 |
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ITEM 4 |
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PART II – OTHER INFORMATION |
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ITEM 1 |
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ITEM 1A |
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ITEM 2 |
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ITEM 3 |
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ITEM 4 |
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ITEM 5 |
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ITEM 6 |
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PART I – FINANCIAL INFORMATION
This Quarterly Report includes forward-looking statements within the meaning of the Securities Exchange Act of 1934 (the “Exchange Act”). These statements are based on management’s beliefs and assumptions, and on information currently available to management. Forward-looking statements include the information concerning our possible or assumed future results of operations set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements also include statements in which words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “consider” or similar expressions are used.
Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties and assumptions. Our future results and shareholder values may differ materially from those expressed in these forward-looking statements. Readers are cautioned not to put undue reliance on any forward-looking statements.
Item 1. Financial Statements
America Great Health and Subsidiaries
Condensed Consolidated Balance Sheets
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March 31, |
June 30, |
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2022 |
2021 |
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ASSETS |
(Unaudited) |
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CURRENT ASSETS |
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Cash |
$ | $ | ||||||
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Inventory |
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Other receivable |
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Supplier advances |
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TOTAL CURRENT ASSETS |
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Right-of-use asset |
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Other asset – Deposits |
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Property and equipment, net |
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TOTAL ASSETS |
$ | $ | ||||||
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LIABILITIES AND SHAREHOLDERS' DEFICIT |
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CURRENT LIABILITIES |
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Accounts payable and accrued expense |
$ | $ | ||||||
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Income tax payable |
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Due to related party |
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Unearned income |
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Short term loan |
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Lease liability - current |
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TOTAL CURRENT LIABILITIES |
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Lease liability - non current |
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Accrued interest |
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Long term loan |
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TOTAL LIABILITIES |
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SHAREHOLDERS' DEFICIT |
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| Redeemable, convertible preferred stock, Series A voting preferred stock, |
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| Common stock, no par value, unlimited shares authorized; |
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Additional paid-in capital |
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Accumulated deficit |
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TOTAL AMERICA GREAT HEALTH SHAREHOLDERS' EQUITY(DEFICIT) |
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Non-controlling interest |
- | - | ||||||
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TOTAL SHAREHOLDERS' EQUITY(DEFICIT) |
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TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT |
$ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
America Great Health and Subsidiaries
Condensed Consolidated Statements of Operations
| Three Months Ended March 31, |
Nine Months Ended December 31, |
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2022 |
2021 |
2022 |
2021 |
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(Unaudited) |
(Unaudited) |
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Sales |
$ | $ | $ | $ | ||||||||||||
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Cost of goods sold |
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Gross profit |
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Selling, general and administrative expenses |
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Professional fee |
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Payroll expense |
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Office expense & supplies |
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Rent expense |
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Advertising and promotion |
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Other |
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Loss from operations |
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Other income (expenses) |
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Loss on equity investment |
- | - | - | - | ||||||||||||
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Interest expense |
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Other income |
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Loss before income taxes |
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Income tax provision |
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Loss from continuing operations |
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NET LOSS |
$ | ( |
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Net loss attributable to non-controlling interest |
- | - | - | - | ||||||||||||
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NET LOSS ATTRIBUTABLE TO AMERICA GREAT HEALTH |
$ | ( |
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BASIC AND DILUTED LOSS PER SHARE |
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WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING BASIC AND DILUTED |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
America Great Health and Subsidiaries
Consolidated Statement of Shareholders' Deficit
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Total |
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Additional |
Accumulated |
Shareholder’s |
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Shares |
Amount |
Paid-in Capital |
Deficit |
Equity |
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Balance, June 30, 2020 |
$ | - | $ | $ | ( |
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Imputed interest |
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Net loss |
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Balance, September 30, 2020(Unaudited) |
$ | - | $ | $ | ( |
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Imputed interest |
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Net loss |
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Balance, December 31, 2020(Unaudited) |
$ | - | $ | $ | ( |
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Issuance of common stock for compensation |
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Imputed interest |
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Net loss |
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Balance, March 31, 2021 (Unaudited) |
$ | - | $ | $ | ( |
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Issuance of common stock for compensation |
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Issuance of common stock for debt |
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Issuance of common stock for equity trust |
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Issuance of common stock for merger & acquisition |
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Imputed interest |
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Net loss |
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Balance, June 30, 2021 |
$ | - | $ | $ | ( |
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Imputed interest |
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Net loss |
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Balance, September 30, 2021 (Unaudited) |
$ | - | $ | $ | ( |
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Issuance of common stock for debt |
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Imputed interest |
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Net loss |
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Balance, December 31, 2021 (Unaudited) |
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Issuance of common stock for debt |
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Issuance of common stock |
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Imputed interest |
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Net loss |
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Balance, March 31, 2022( Unaudited) |
$ | - | $ | $ | ( |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
America Great Health and Subsidiaries
Condensed Consolidated Statements of Cash Flows
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Nine Months Ended March 31, |
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2022 |
2021 |
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Cash Flows from Operating Activities |
(Unaudited) |
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Net loss |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Stock compensation |
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Imputed interest |
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Changes in operating Assets and Liabilities: |
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Other receivable |
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Inventory |
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Accounts payable and accrued expense |
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Unearned revenues |
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Income tax payable |
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Net cash used in operating activities from continuing operations |
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Net cash used in operating activities from discontinued operations |
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Net cash used in operating activities |
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Cash Flows from Investing Activities |
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Purchase of property and equipment |
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Net cash provided by investing activities |
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Cash Flows from Financing Activities |
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Short term loan |
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Long term loan |
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Issuance of common stock |
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Advances from related party |
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Repayment to related party |
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Net cash provided by financing activities from discontinued operations |
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Net cash provided by financing activities |
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Net increase in cash |
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Cash beginning of period |
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Cash end of period |
$ | $ | ||||||
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Interest paid |
$ | $ | ||||||
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Taxes paid |
$ | $ | ||||||
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Non-cash transactions |
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Shares issued for equity investment |
$ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
AMERICA GREAT HEALTH AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 – BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of America Great Health, formerly Crown Marketing and Subsidiaries (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. Operating results for the nine months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending June 30, 2022.
Nature of the Business
America Great Health, formerly Crown Marketing, is a Wyoming corporation (the "Company"). A change of control of the Company was completed on January 19, 2017 from Jay Hooper, the former officer and director of the Company and its former majority shareholder. Control was obtained by the sale of
On March 1, 2017, the Company filed with the Secretary of State of the State of Wyoming an Articles of Amendment to change the corporate name from Crown Marketing to America Great Health.
On March 9, 2017, the Company formed a wholly-owned subsidiary, America Great Health, under the laws of the State of California.
On June 24, 2019, the Company registered a wholly-owned subsidiary in China, US-China Mega Beauty Health Industry Development Co., Ltd. The subsidiary is mainly engaged in mergers and acquisitions, investments and financings, and marketing of medical equipment and health products in China.
On June 30, 2020, the Company and Purecell Group (“Purecell”), a leading anti-aging medical institution in Australia, entered into a Cooperation Agreement, in which the Company agreed to acquire
On December 7, 2020, the Company’s wholly-owned Californian subsidiary, America Great Health, entered into a Cooperation Agreement with Brilliant Healthcare Limited (“Brilliant”) pursuant to which the parties will establish a joint venture in China (the “JV Company”) for the purpose of promoting and developing stem cell related product’s R&D, production, sales, raw material procurement, mergers and acquisitions, and consulting services. After the formation of the JV company is completed, the Company shall invest US$
On May 18, 2021, the Company and David Tsai (“Dr. Tsai”), a pioneer in anti-cancer peptide research and invention in the United States, entered into a Cooperation Agreement, in which Dr. Tsai shall provide to the Company theories, technologies, methods, sources of raw materials, processing and production techniques, quality standards, quality control methods and other information and details related to his anti-cancer protein peptides, oral insulin and activation technology. Dr. Tsai shall also be responsible for the whole process of technology and product production, application and implementation, as well as professional technical support, consultation and cooperation in the process of product verification, publicity, promotion and sales. Currently, several patents are in the application process, and several products are in the process of getting ready for production.
On September 3, 2021, the Company entered into an Assets Acquisition Agreement with Wang’s Property Investment & Management LLC to purchase
On November 4, 2021, the Company set up a
On November 11, 2021, America Great Health (the “Company”) entered into an Advisory Committee Member Consulting Agreement with Dr. Kevin Buckman MD (“Consultant”). Pursuant to the Agreement, Consultant is to provide advisory services, as a member to the Advisory Committee to the Board of Directors of the Company, including without limitation, assisting GOF Biotechnologies Inc. in its new drug approval process for oral insulin and Amylase X. Consultant shall be compensated with a warrant to purchase
On November 15, 2021, the Company set up a
On February 4, 2021, the Company set up a
Going Concern
The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying condensed consolidated financial statements, the Company has incurred recurring net losses. For the nine months ended March 31, 2022, the Company recorded a net loss of $2,739,121, used cash to fund operating activities of $
During the year ended June 30, 2017, the Company’s former majority shareholder sold his shares to an investor group. The new owners’ plans to continue as a going concern revolve around its ability to achieve profitable operations, as well as raise necessary capital to pay ongoing general and administrative expenses of the Company. The ability of the Company to continue as a going concern is dependent on securing additional sources of capital and the success of the Company’s plan. There is no assurance that the Company will be successful in raising the additional capital or in achieving profitable operations.
Our cash needs for the nine months ended March 31, 2022 were primarily met by loans and advances from current majority shareholder. As of March 31, 2022, we had a cash balance of $
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying CFS were prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”).
Basis of Consolidation
The condensed consolidated financial statements include the accounts of the Company and its current wholly owned subsidiary, America Great Health in California. Intercompany transactions and accounts have been eliminated in consolidation.
Cash
The Company considers all highly liquid debt instruments purchased with maturity periods of six months or less to be cash equivalents. The carrying amounts reported in the accompanying balance sheet for cash and cash equivalents approximate their fair value. The Company’s bank account in the United States is protected by FDIC insurance.
The Company’s bank account in the United States is protected by FDIC insurance. As of March 31, 2022 and June 30, 2021, the Company’s bank account in the United States had $
Estimates
Revenues
Revenue from sale of goods under Topic 606, Revenue from Contracts with Customers, is recognized in a manner that reasonably reflects the delivery of the Company’s products and services to customers in return for expected consideration and includes the following elements:
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executed contract(s) with customers that the Company believes is legally enforceable; |
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identification of performance obligation in the respective contract; |
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determination of the transaction price for each performance obligation in the respective contract; |
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allocation of the transaction price to each performance obligation; and |
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recognition of revenue only when the Company satisfies each performance obligation. |
The Company sells health related products through wholesale and retailers. Substantially all of the Company’s revenue is derived from product sales. The Company considers purchase orders to be a contract with a customer. Contracts with customers are considered to be short-term when the time between order confirmation and satisfaction of the performance obligations is equal to or less than one year, and virtually all of the Company’s contracts are short-term. The Company recognizes revenue for the transfer of promised goods to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods. The Company typically satisfies its performance obligations in contracts with customers upon shipment of the goods. The Company does not have any contract assets since the Company has an unconditional right to consideration when the Company has satisfied its performance obligation and payment from customers is not contingent on a future event. Generally, payment is due from customers within 40 to 60 days of the invoice date, and the contracts do not have significant financing components nor variable consideration. Returns and allowances are not a significant aspect of the revenue recognition process as historically they have been immaterial. All of the Company’s contracts have a single performance obligation satisfied at a point in time and the transaction price is stated in the contract, usually as a price per unit. All estimates are based on the Company’s historical experience; complete satisfaction of the performance obligation, and the Company’s best judgment at the time the estimate is made. Historically, sales returns have not significantly impacted the Company’s revenue.
Product Revenue
A majority of the Company’s sales are for products sold at a point in time and shipped to customers, for which control is transferred to the customer as goods are delivered to the third-party carrier for shipment. The Company receives payment for the sale of products at the time customers place orders and payment is required prior to shipment. The Company does not recognize assets associated with costs to obtain or fulfill a contract with a customer.
Shipping and handling activities are performed upon delivery to the third-party carrier for shipment. The Company accounts for these activities as fulfillment costs. Therefore, the Company recognizes the costs of these activities when revenue for the goods is recognized. Shipping and handling costs are included in cost of sales for all periods presented.
Inventories
Inventories are stated at the lower of cost (first-in, first-out) or net realizable value. Adjustments to reduce the cost of inventory to its net realizable value are made, if required, for estimated excess, obsolescence, or impaired balances. For the nine months ended March 31, 2022 and 2021, the Company has not made provision for inventory in regards to slow moving or obsolete items.
Equity Method Investments
We apply the equity method of accounting to investments when we have significant influence, but not controlling interest in the investee. Judgment regarding the level of influence over each equity method investment includes considering key factors such as ownership interest, representation on the board of directors, participation in policy-making decisions and material intercompany transactions. The Company’s proportionate share of the net income (loss) resulting from these investments is reported under the line item captioned “equity investment” in our Consolidated Statements of Operations. The carrying value of our equity method investments is reported in equity investment in the Consolidated Balance Sheets. The Company’s equity method investments are reported at cost and adjusted each period for the Company’s share of the investee’s income or loss and dividend paid, if any. The Company’s share of the investee’s income or loss is recorded on a one quarter lag for all equity method investments. The Company classifies distributions received from equity method investments using the cumulative earnings approach on the Consolidated Statements of Cash Flows. The Company assesses investments for impairment whenever events or changes in circumstances indicate that the carrying value of an investment may not be recoverable. The Company recorded no other-than-temporary impairment charges related to its equity method investments during the nine months ended March 31, 2022.
Fair Value Measurements
Fair value measurements are determined using authoritative guidance issued by the FASB, with the exception of the application of the guidance to non-recurring, non-financial assets and liabilities as permitted. Fair value is defined in the authoritative guidance as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy was established, which prioritizes the inputs used in measuring fair value into three broad levels as follows:
Level 1—Quoted prices in active markets for identical assets or liabilities.
Level 2—Inputs, other than the quoted prices in active markets, are observable either directly or indirectly.
Level 3—Unobservable inputs based on the Company’s assumptions.
The Company is required to use observable market data if available without undue cost and effort.
The Company’s financial instruments include cash and accounts payable. Management has estimated that the carrying amounts approximate their fair value due to the short-term nature.
Loss per Share
Basic earnings (loss) per share are computed by dividing income available to common shareholders by the weighted-average number of common shares available. Diluted earnings (loss) per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. The Company’s diluted loss per share is the same as the basic loss per share for the nine months ended March 31, 2022 and 2021, as there are no potential shares outstanding that would have a dilutive effect.
Income Taxes
Income tax expense is based on pretax financial accounting income. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts. Valuation allowances are recorded to reduce deferred tax assets to the amount that will more likely than not be realized. The Company recorded a valuation allowance against its deferred tax assets as of March 31, 2022, and June 30, 2021.
The Company accounts for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. The Company classifies the liability for unrecognized tax benefits as current to the extent that the Company anticipates payment (or receipt) of cash within one year. Interest and penalties related to uncertain tax positions are recognized in the provision for income taxes.
Recent Accounting Pronouncements
In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes, as part of its initiative to reduce complexity in accounting standards. The amendments in the ASU are effective for fiscal years beginning after December 15, 2020, including interim periods therein. Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements have not yet been issued. The Company is currently evaluating the effect, if any, that the ASU will have on its consolidated financial statements.
In January 2020, the FASB issued ASU No. 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivative and Hedging (Topic 815), which clarifies the interaction of rules for equity securities, the equity method of accounting, and forward contracts and purchase options on certain types of securities. The guidance clarifies how to account for the transition into and out of the equity method of accounting when considering observable transactions under the measurement alternative. The ASU is effective for annual reporting periods beginning after December 15, 2020, including interim reporting periods within those annual periods, with early adoption permitted. The Company have adopted this ASU on the consolidated financial statements in the year ended June 30, 2021. The adoption had no material impact on the consolidated financial statements in the year ended June 30, 2021 and nine months ended March 31, 2022.
In August 2020, the FASB issued ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40)” (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The ASU is part of the FASB’s simplification initiative, which aims to reduce unnecessary complexity in U.S. GAAP. The ASU’s amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Company is currently evaluating the impact of ASU 2020-06 on its financial statements.
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or is not believed by management to have a material impact on the Company’s present or future consolidated financial statements.
NOTE 3 – OTHER RECEIVABLE
As of March 31, 2022 and June 30, 2021, other receivable amounted to $
|
March 31, 2022 |
June 30, 2021 |
|||||||
|
Rent deposit |
$ | $ | ||||||
|
Loan to a third party |
||||||||
|
Employee advance |
||||||||
|
Others |
||||||||
|
Total |
$ | $ | ||||||
Loan to a third party amounted $
NOTE 4 – RELATED PARTY TRANSACTIONS
During the nine months ended March 31, 2022, the Company's current majority shareholder advanced $
NOTE 5 – SHORT TERM LOAN
As of March 31, 2022, short term loan amounted to $
NOTE 6 – LONG TERM LOAN
As of March 31, 2022 and June 30, 2021, long term loan amounted to $
|
As of March 31, 2022, long term loan consisted of the following: |
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|
Principal |
Interest |
Balance |
||||||||||
| Received long term loan on |
$ | $ | $ | |||||||||
| Received long term loan on |
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| Received long term loan on |
||||||||||||
| Received long term loan on |
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| Received long term loan on |
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| Received long term loan on |
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| Received long term loan on |
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| Received long term loan on |
||||||||||||
| Received long term loan on |
||||||||||||
| Received long term loan on |
||||||||||||
| Received long term loan on |
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| Received long term loan on |
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| Received long term loan on |
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| Received long term loan on |
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| Received long term loan on |
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|
Total |
$ | $ | $ | |||||||||
On May 5, 2021, the Company issued
On June 18, 2021, the Company issued an aggregate of
On May 31, 2021, the Company signed a loan agreement of $
On June 18, 2021, the Company issued
In October 2021, the Company issued
On October 28, 2021, the Company issued
In November 2021, the Company issued
In November 2021, the Company signed 3 loan agreements of $
NOTE 7 – CONVERTIBLE, REDEEMABLE PREFERRED STOCK
During the year ended June 30, 2016, the Company’s Board of Directors authorized the creation of a series of preferred stock consisting of
The Series A is also subject to adjustments to the Conversion Rate. If the common stock issuable on conversion of the Series A is changed into the same or a different number of shares of any other class or classes of stock, whether by capital reorganization, reclassification, or otherwise (other than a subdivision or combination of shares provided for above), the holders of the Series A shall, upon its conversion, be entitled to receive, in lieu of the common stock which the holders would have become entitled to receive but for such change, a number of shares of such other class or classes of stock that would have been subject to receipt by the holders if they had exercised their rights of conversion of the Series A immediately before that change.
In August 2016, the Company filed an amendment to its Articles of Incorporation to increase the number of authorized shares of Series A Preferred Stock from 1,000,000 to
There were no preferred shares outstanding as of March 31, 2022 and June 30, 2021.
NOTE 8 – SHAREHOLDERS’ DEFICIT
At March 31, 2022 and June 30, 2021, the Company had
1) Shares issued for equity investment
On April 6, 2021, the Company issued
Equity Investment in Purecell Group
On June 30, 2020, the Company and Purecell Group (“Purecell”), a leading anti-aging medical institution in Australia, entered into a Cooperation Agreement, in which the Company agreed to acquire
On May 11, 2021, Aussie Produce PTY LTD (“AP”) signed agreement with Purecell to invest $
On March 30, 2022, the Company issued
2) Shares issued for stock compensation
On January 22, 2021, the Company issued an aggregate of
The issuance of these shares was recorded at fair market value of $
On March 10, 2021, the Company issued an aggregate of
On April 6, 2021, the Company issued
On April 7, 2021, the Company issued an aggregate of
On May 5, 2021, the Company issued an aggregate of
On May 18, 2021, the Company issued an aggregate of
On May 18 , 2021, the Company and David Tsai (“Dr. Tsai”), a pioneer in anti-cancer peptide research and invention in the United States, entered into a Cooperation Agreement, in which Dr. Tsai shall provide to the Company of relevant theories, technologies, methods, sources of raw materials, processing and production techniques, quality standards, quality control methods and other information and details related to his anti-cancer protein peptides, oral insulin and activation technology; Dr. Tsai shall also be responsible for the whole process of technology and product production, application and implementation, as well as professional technical support, consultation and cooperation in the process of product verification, publicity, promotion and sales. As consideration, the Company agreed to grant
On May 26, 2021, the Company issued an aggregate of
On June 18, 2021, the Company issued an aggregate of
On February 2, 2022, the Company issued an aggregate of
3) Shares issued for loan as collateral
On May 5, 2021, the Company issued
On June 18, 2021, the Company issued an aggregate of
On June 18, 2021, the Company issued
On May 31, 2021, the Company signed a loan agreement of $
In October 2021, the Company issued
On October 28, 2021, the Company issued
In November 2021, the Company issued
On February 2, 2022, the Company issued
NOTE 9 – EQUITY INVESTMENT
On June 30, 2020, the Company and Purecell Group (“Purecell”), a leading anti-aging medical institution in Australia, entered into a Cooperation Agreement, in which the Company agreed to acquire
On May 11, 2021, Aussie Produce PTY LTD (“AP”) signed agreement with Purecell to invest $
The following table summarizes the income statement of Purecell.
|
From 07/01/2021 to |
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|
03/31/2022 |
||||
|
Sales |
$ | |||
|
Gross profit |
||||
|
Net loss |
( |
) | ||
| |
( |
) | ||
The following table provides the summary of equity investment in Purecell.
|
As of March |
||||
| 31, 2022 | ||||
|
Beginning balance of investment |
||||
|
Loss on equity investment |
( |
) | ||
|
Ending balance of investment |
||||
NOTE 10 – INCOME TAXES
As of March 31, 2021, the Company had federal and California income tax net operating loss carryforwards of approximately $
Uncertain Tax Positions
Interest associated with unrecognized tax benefits are classified as income tax, and penalties are classified in selling, general and administrative expenses in the statements of operations. For the nine months ended March 31, 2022 and 2021, the Company had no unrecognized tax benefits and related interest and penalties expenses. Currently, the Company is not subject to examination by major tax jurisdictions.
NOTE 11 – LEASE
The Company has entered into a operating leases agreement with GKT, Alhambra, LP. The lease term of the office space is from December 1, 2020 to November 30, 2023. The current monthly rent including monthly management fee is $
Operating lease right-of-use assets and liabilities commencing after December 1, 2020 are recognized at commencement date based on the present value of lease payments over the lease term. For the three months ended March 31, 2022, the Company recognized approximately $
Because the rate implicit in each lease is not readily determinable, the Company uses its incremental borrowing rate to determine the present value of the lease payments.
Information related to the Company’s operating ROU assets and related lease liabilities are as follows:
|
Nine months ended |
||||
|
March 31, 2022 |
||||
|
Cash paid for operating lease liabilities |
$ | |||
|
Weighted-average remaining lease term |
||||
|
Weighted-average discount rate |
% | |||
|
Minimum future lease payments |
$ | |||
The following table presents the amortization of the Company’s lease liabilities under ASC 842 for each of the following years ending March 31:
|
2022 |
$ | |||
|
2023 |
||||
|
2024 |
||||
|
2025 |
||||
|
2026 |
||||
|
Total minimum payments |
||||
|
Less: short-term lease liability |
( |
) | ||
|
Long-term lease liability |
$ |
NOTE 12 – SUBSEQUENT EVENTS
On April 12, 2022, the Company issued
On January 28, 2022, the Company signed a company stock & payment exchange agreement with a supplier. The Company offers to pay the supplier the $
On January 28, 2022, the Company signed a company stock & payment exchange agreement with a supplier. The Company offers to pay the supplier the $
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward Looking Statement Notice
Certain statements made in this Quarterly Report on Form 10-Q are “forward-looking statements” (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of Crown Marketing, (“we”, “us”, “our” or the “Company”) to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. The Company’s plans and objectives are based, in part, on assumptions involving the continued expansion of business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance the forward-looking statements included in this Quarterly Report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved.
History and Organization
America Great Health, formerly Crown Marketing, is a Wyoming corporation (the “Company”). A change of control of the Company was completed on January 19, 2017 from Jay Hooper, the former officer and director of the Company and its former majority shareholder. Control was obtained by the sale of 16,155,746,000 shares of Company common stock from Mr. Hooper to an investor group led by Mike Q. Wang. In connection with the change of control, the Company sold to its former majority shareholder a subsidiary for $100 and another subsidiary in exchange for the cancellation of all payables and accrued expenses. After December 31, 2016, the Company’s operations are determined and structured by the new investor group. As such, the Company accounted for all of its assets, liabilities and results of operations up to January 1, 2017 as discontinued operations.
On March 1, 2017, the Company filed with the Secretary of State of the State of Wyoming an Articles of Amendment to change the corporate name from Crown Marketing to America Great Health.
On March 9, 2017, the Company formed a wholly owned subsidiary, America Great Health, under the laws of the State of California.
On June 24, 2019, the Company registered a wholly owned subsidiary in China, Meizhong Health Industry Development Co., Ltd. The subsidiary is mainly engaged in merger and acquisition, investment and financing, and marketing of medical equipment and health products in China.
On June 30, 2020, the Company and Purecell Group (“Purecell”), a leading anti-aging medical institution in Australia, entered into a Cooperation Agreement, in which the Company agreed to acquire 51% of the equity of Purecell, as consideration, the Company shall issue 510,000,000 common shares to Purecell’s nominated trustee. Upon completion of the acquisition transaction, Purecell shall remain autonomy in its day to day operation, including recruiting and retaining management team members. On February 10, 2021, the Company completed its financial and legal due diligence. This transaction was completed in May 2021.
On December 7, 2020, America Great Health, a California Corporation (“AAGH California”), a wholly owned subsidiary of the Company, entered into a Cooperation Agreement (the “Agreement”) with Brilliant Healthcare Limited. (“Brilliant”) pursuant to which the parties will establish a joint venture in China (the “JV Company”) for the purpose of promoting and developing stem cell related product’s R&D, production, sales, row material procumbent, mergers and acquisitions, and consulting services. As of the time of filing these financial statements with the Company’s quarterly report, the formation of the JV Company has not been completed. After the formation of the JV company is completed, the Company shall invest USD $4.2 million in the JV Company within the next 24 months for 60% equity ownership of the JV Company, Brilliant shall transfer its patented technology to the JV Company as its capital contribution, to account for 40% equity ownership. As a condition for AAGH to obtain 60% equity in the JV company and a as the founder of Brilliant, Dr. Aihua Guo agrees to transfer its patent to the JV company as its share of contribution, and AAGH also agrees to pay Dr. Aihua Guo additional compensation, which includes: (i) AAGH transfers 300 million original shares of AAGH to Dr. Aihua Guo at no cost, valuing at $15 million; (ii) AAGH pays Dr. Aihua Guo a one-time cash compensation of $3 million with the following payment schedule: AAGH agrees to pay $500,000 to Dr. Aihua Guo six months from the date of signing of this Agreement, $1.5 million to Dr. Aihua Guo 12 months from the date of signing of this Agreement, and $1 million to Dr. Aihua Guo 24 months from the date of signing of this Agreement. In June 2021, the JV Company was established in Hainan, China, fully known as Sijinsai (Hainan) Biological Tech Ltd. On July 9, 2021, the Company paid the first investment of $50,000. In July 2021, the Company paid Dr. Aihua Guo $100,000 as prepaid expense.
On September 3, 2021, America Great Health (the “Company”) entered into an Assets Acquisition Agreement with Wang’s Property Investment & Management LLC to purchase 53 units in 19 real estate properties appraised at $7,626, 286 for a purchase price of $7,000,000 (the “Agreement”). The purchase price shall be paid as follows : (i) $1,000,000 on execution of the Agreement, (ii) $2,000,000 within 60 days thereof and (iii) the remainder by April 10, 2022. The Agreement is subject to customary closing conditions, including, satisfactory due diligence.
On September 9, 2021, America Great Health (the “Company”) entered into an Agreement with Wang’s Property Investment & Management LLC (“Wang”) to purchase some real estate properties held by Wang for a purchase price of $7,000,000. The Company and Wang have both agreed that they will not conduct due diligence in order for the transaction to proceed (the “transaction”, the “Agreement”). As of the reporting date, the Company has not made any payment for the transaction and the transaction has not completed.
The properties acquired are commercial and residential properties located in Illinois for rental purposes. AAGH was purchased with a cash contribution of $7,000,000 and paid before April 10, 2022. The company will set up a management department or have professionals to manage and operate the property.
On November 4, 2021, the Company set up a 100% owned subsidiary Nutrature Health LLC.
On November 11, 2021, America Great Health (the “Company”) entered into an Advisory Committee Member Consulting Agreement with Dr. Kevin Buckman MD (“Consultant”). Pursuant to the Agreement, Consultant is to provide advisory services, as a member to the Advisory Committee to the Board of Directors of the Company, including without limitation, assisting GOF Biotechnologies Inc. in its new drug approval process for oral insulin and Amylase X. Consultant shall be compensated with a warrant to purchase 500,000 shares of the Company at $0.01 per share within 24 months and a warrant at each of the following stages: IND application, Phase I clinical trials, Phase II clinical trials, Phase III clinical trials and the sale of GOF Biotechnologies Inc. the license of oral insulin and Amylase X at Phase I or Phase II clinical trials stages. This Agreement shall be for an initial one-year term and shall renew automatically for successive one-year terms up to a maximum of three (3) years unless terminated by either party pursuant to the Agreement.
On November 15, 2021, the Company set up a 100% owned subsidiary Gof Biotechnologies Inc. GOF is 75% majority owned (60,000,000 shares of common stock) by the Company and the remaining 25% of its issued and outstanding shares (20,000,000 shares of common stock) are held by Men Hwei, Tsai. On December 31, 2021, the Company entered into a Supplementary Agreement with Zhigong Lin to amend his prior employment agreement with the Company dated August 31, 2021. The Supplement Agreements provides, inter alia, that Zhigong Lin will be appointed Chief Executive Officer of GOF.
Overview of Business
Our mission is to invest in innovative technologies intergrated with business development in the healthcare ecosystem.
We are focused on protein and peptide small molecular drugs research and development, diagnostic and medical devices with AI cloud computing, cell therapy and regenerational medicine and supplements manufacturing and sales.
On September 3, 2021, the Company entered into an Assets Acquisition Agreement with Wang’s Property Investment & Management LLC to purchase 53 units in 19 real estate properties appraised at $7,626, 286.37 for a purchase price of $7,000,000, The purchase price shall be paid as follows : (i) $1,000,000 on execution of the Agreement, (ii) $2,000,000 within 60 days thereof and (iii) the remainder by April 10, 2022. The Agreement is subject to customary closing conditions, including, satisfactory due diligence. On September 9, 2021, the Company entered into a Supplemental Assets Acquisition Agreement with Wang’s Property Investment & Management LLC to amend and clarify that (i) it was purchasing 19 real estate properties which includes 53 units appraised at $7,626,286.37 for a purchase price of $7,000,000 and (ii) that it will waive and not conduct due diligence in order for the transaction to proceed. The acquisition has not been consummated. With the asset acquisition from Wang’s Property Investment & Management LLC, the Company will diversify its business into property investment and management.
Results of Operations
Results of Operations for the three and nine months ended March 31, 2022 compared to the three and nine months ended March 31, 2021.
Sales amounted $2,744 and $195,535 for the three months ended March 31, 2022 and 2021, respectively. Sales amounted $158,424 and $195,671 for the nine months ended March 31, 2022 and 2021, respectively.
Cost of goods sold amounted $360 and $143,905 for the three months ended March 31, 2022 and 2021, respectively. Cost of goods sold amounted $1,551,367 and $144,049 for the nine months ended March 31, 2022 and 2021, respectively.
Gross profit amounted $2,384 and $51,630 for the three months ended March 31, 2022 and 2021, respectively. Gross loss amounted $1,392,943 and gross profit was $51,622 for the nine months ended March 31, 2022 and 2021, respectively.
Operating expenses incurred for the three months ended March 31, 2022 and 2021 was $649,642 and $98,689, respectively. Operating expenses incurred for the nine months ended March 31, 2022 and 2021 was $1,305,821 and $134,502, respectively.
Our net loss for the three months ended March 31, 2022 and 2021 was $606,791 and $49,216, respectively. Our net loss for the nine months ended March 31, 2022 and 2021 was $2,739,121 and $88,151, respectively. The decrease in net loss was mainly due to decrease in professional fees.
Liquidity and Capital Resources
Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures.
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying consolidated financial statements, the Company has incurred recurring net losses. For the nine months ended March 31, 2022, the Company recorded a net loss of $2,739,121, used cash to fund operating activities of $1,068,932, cash used for investing activities of $16,852 and cash provided by financing activities of $795,952. For the nine months ended March 31, 2021, the Company recorded a net loss of $88,151, used cash to fund operating activities of $97,025 and cash provided by financing activities of $122,112. These factors create substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
The Company is raising the additional capital to achieve profitable operations.
Our cash needs for the nine months ended March 31, 2022 were primarily met by loans and advances from current majority shareholder. As of March 31, 2022, we had a cash balance of $106,304. Our new majority shareholders will need to provide all of our working capitals going forward.
Primarily as a result of our recurring losses and our lack of liquidity, we received a report from our independent registered public accounting firm for our financial statements for the nine months ended March 31, 2022 that includes an explanatory paragraph describing the uncertainty as to our ability to continue as a going concern.
Financial Position
As of March 31, 2022, we had $106,304 in cash, negative working capital of $1,068,929 and an accumulated deficit of $6,294,814.
Critical Accounting Policies and Estimates
Estimates
The preparation of these consolidated financial statements (“CFS”) in accordance with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of net sales and expenses during the reported periods. Actual results may differ from those estimates and such differences may be material to the financial statements. The more significant estimates and assumptions by management include among others, the fair value of shares of common stock issued for services. The current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions.
Revenues
Revenue from sale of goods under Topic 606, Revenue from Contracts with Customers, is recognized in a manner that reasonably reflects the delivery of the Company’s products and services to customers in return for expected consideration and includes the following elements:
|
● |
executed contract(s) with customers that the Company believes is legally enforceable; |
|
● |
identification of performance obligation in the respective contract; |
|
● |
determination of the transaction price for each performance obligation in the respective contract; |
|
● |
allocation of the transaction price to each performance obligation; and |
|
● |
recognition of revenue only when the Company satisfies each performance obligation. |
Inventories
Inventories are stated at the lower of cost (first-in, first-out) or net realizable value. Adjustments to reduce the cost of inventory to its net realizable value are made, if required, for estimated excess, obsolescence, or impaired balances.
Fair Value Measurements
Fair value measurements are determined using authoritative guidance issued by the FASB, with the exception of the application of the guidance to non-recurring, non-financial assets and liabilities as permitted. Fair value is defined in the authoritative guidance as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy was established, which prioritizes the inputs used in measuring fair value into three broad levels as follows:
Level 1—Quoted prices in active markets for identical assets or liabilities.
Level 2—Inputs, other than the quoted prices in active markets, are observable either directly or indirectly.
Level 3—Unobservable inputs based on the Company’s assumptions.
The Company is required to use observable market data if available without undue cost and effort.
The Company’s financial instruments include cash and accounts payable. Management has estimated that the carrying amounts approximate their fair value due to the short-term nature.
Loss per Share
Basic earnings (loss) per share are computed by dividing income available to common shareholders by the weighted-average number of common shares available. Diluted earnings (loss) per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. The Company’s diluted loss per share is the same as the basic loss per share for the nine months ended March 31, 2022 and 2021, as there are no potential shares outstanding that would have a dilutive effect.
Income Taxes
Income tax expense is based on pretax financial accounting income. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts. Valuation allowances are recorded to reduce deferred tax assets to the amount that will more likely than not be realized. The Company recorded a valuation allowance against its deferred tax assets as of March 31, 2022 and June 30, 2021.
The Company accounts for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. The Company classifies the liability for unrecognized tax benefits as current to the extent that the Company anticipates payment (or receipt) of cash within one year. Interest and penalties related to uncertain tax positions are recognized in the provision for income taxes.
Recent Accounting Pronouncements
See Footnote 2 of the financial statements for a discussion of recently issued accounting standards.
Contractual Obligations and Off-Balance Sheet Arrangements
We do not have any contractual obligations or off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Based upon an evaluation of the effectiveness of our disclosure controls and procedures performed by our Chief Executive Officer as of the end of the period covered by this report, our Chief Executive Officer concluded that our disclosure controls and procedures were not effective as a result of a weakness in the design of internal control over financial reporting identified below.
As used herein, “disclosure controls and procedures” mean controls and other procedures of our company that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Controls
There have been no changes in our internal controls over financial reporting during the period ended March 31, 2022 that have materially affected or are reasonably likely to materially affect our internal controls.
PART II — OTHER INFORMATION
Item 1. Legal Proceedings.
We are not a party to or otherwise involved in any legal proceedings.
In the ordinary course of business, we are from time to time involved in various pending or threatened legal actions. The litigation process is inherently uncertain and it is possible that the resolution of such matters might have a material adverse effect upon our financial condition and/or results of operations. However, in the opinion of our management, other than as set forth herein, matters currently pending or threatened against us are not expected to have a material adverse effect on our financial position or results of operations.
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 information required by this Item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Not applicable.
Item 3. Defaults Upon Senior Securities.
There have been no events which are required to be reported under this Item.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
Item 6. Exhibits and Financial Statement Schedules
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31.1 |
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32.1 |
Certification pursuant to 18 U.S.C. Section 1350 of CEO and CFO. Filed herewith. |
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101.INS* |
Inline XBRL Instance Document |
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101.SCH* |
Inline XBRL Taxonomy Extension Schema Document |
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101.CAL* |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
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101.DEF* |
Inline XBRL Taxonomy Extension Definition Linkbase Definition |
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101.PRE* |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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101.LAB* |
Inline XBRL Taxonomy Extension Label Linkbase Document |
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|
104 |
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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AMERICA GREAT HEALTH |
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Dated: May 20, 2022 |
By: /s/ Quinn Chen |
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Quinn Chen |
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Chief Financial Officer |
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