NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1 - ORGANIZATION AND BUSINESS DESCRIPTION
Rayont,
Inc. (formerly Velt International Group Inc., or “Rayont” or the “Company”) is a Nevada corporation formed
on February 7, 2011. The Company’s common stock are currently traded on the Over the Counter Pink Sheet under the symbol
“RAYT”.
On
November 19, 2018, the Company’s former principal shareholder, Mr. Chin Kha Foo, entered into a stock purchase agreement
to transfer 60% of the Company’s issued and outstanding shares to Rural Asset Management Services, Inc., a Malaysian company
(“Rural”). On December 14, 2018, Rural became the principal shareholder of the Company and Mr.
Ali Kasa was appointed to be the Company’s President, CEO, CFO, and Secretary due to the change in control of the Company.
Rural is an equity investment company with portfolio of interest in biotechnology, healthcare, cancer treatment research
and technology, ICT and Crypto Currency. Rural has invested to companies located in Malaysia, Australia and the USA.
On
January 22, 2019, the Company entered into an acquisition agreement with THF Holdings Pty Ltd., an Australian corporation (“THF”)
and Rural, pursuant to which the Company acquired 100% of the issued and outstanding capital stock of THF in exchange for 4,000,000
shares of the Company’s common stock, valued on January 22, 2019 at $1,000,000. THF is an Australian Cancer treatment and
medical device company. Rural is the majority shareholder of THF. In March 2019, the acquisition of THF was completed and THF
became a subsidiary of the Company. In addition, the acquisition was accounted for business combination under common control of Rural.
On
January 24, 2019, the Company entered into an acquisition agreement with THF International (Hong Kong) Ltd., a Hong Kong company
(“THF Hong Kong”) and the shareholders of THF Hong Kong, pursuant to which the Company acquired 100% of the issued
and outstanding capital stock of THF Hong Kong in exchange for 8,000,000 shares of the Company’s common stock, valued at
$2,000,000 on January 24, 2019. On May 13, 2019, the Company executed an amendment to the acquisition agreement, wherein the Company
agreed to acquire only 85% of THF Hong Kong and reduce the purchase price to 6,800,000 shares from 8,000,000 shares. On August
4, 2019, the Company and the THF Hong Kong agreed to terminate the acquisition.
On
January 24, 2019, the Company entered into an acquisition agreement with Natural Health Farm (Labuan) Inc. (“NHF”)
and the shareholders of NHF, pursuant to which the Company acquired 100% of the issued and outstanding capital stock of NHF in
exchange for 40,000,000 shares of the Company’s common stock, valued at $10,000,000 on January 24, 2019. NHF is a Malaysian
company concentrating on clinical life sciences and holds an exclusive license for registering and commercializing Photosoft technology
for treatment of all cancers in the Sub-Sahara African region. The technology has been licensed in Australia, New Zealand, China,
Malaysia and Sub-Sahara Africa. The human clinical trial efforts have started in Australia and China conducted by Hudson Medical
Institute, Australia. On August 4, 2019, the Company and NHF agreed to terminate the acquisition.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America (“GAAP”) for interim financial information and the rules of the Securities and Exchange
Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s
most recent Annual Financial Statements filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting
of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the
interim period presented have been reflected herein. The results of operations for the interim period are not necessarily indicative
of the results to be expected for the full year. Notes to the unaudited interim financial statements which would substantially
duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the
Form 10-K, have been omitted.
Use
of Estimates
The
preparation of consolidated financial statements in conformity with GAAP requires management to make estimates, judgements and
assumptions that affect certain amounts reported in the financial statements and footnotes. Accordingly, actual results could
differ from those estimates.
Going
Concern
The
Company demonstrates adverse conditions that raise substantial doubt about the Company’s ability to continue as a going
concern. These adverse conditions are negative financial trends, specifically negative working capital, recurring operating losses,
accumulated deficit and other adverse key financial ratios.
The
Company did not generate revenues to cover its operating expense during the three months ended December 31, 2019. The Company
plans to continue obtaining funding from the majority shareholder and the President of the Company to support the Company’s
normal business operating. There is no assurance, however, that the Company will be successful in raising the needed capital and,
if funding is available, that it will be available on terms acceptable to the Company.
The
consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded
assets, or the amounts and classification of liabilities that might be necessary in the event that the Company cannot continue
as a going concern.
Concentration
of Credit Risk
The
Company maintains its cash in bank accounts which, at times, may exceed the federally insured limits. The Company has not experienced
any losses in such accounts and believes it is not exposed to any significant credit risk on cash in bank.
Cash
and Cash Equivalents
The
Company considers all highly-liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
As of December 31, 2019 and September 30, 2019, the Company had cash in bank of $4,222 and $836, respectively.
Earnings
Per Share
Basic
earnings per share is computed by dividing net income (loss) attribute to stockholders of common stock by the weighted-average
number of common shares outstanding for the period. Diluted net earnings per share is computed by dividing net income (loss) by
the weighted average number of common shares outstanding plus equivalent shares.
Diluted
earnings per share reflects the potential dilution that could occur from common shares issuable through convertible notes and
preferred stock when the effect would be dilutive. The Company only issued common stock and does not have any potentially dilutive
instrument as of December 31, 2019 and 2018.
Property
and equipment
Property
and equipment are carried at cost and, less accumulated depreciation. The cost of repairs and maintenance is expensed as incurred;
major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation
are removed from the accounts, and any resulting gains or losses are included in income in the year of disposal. The Company examines
the possibility of decreases in the value of property and equipment when events or changes in circumstances reflect the fact that
their recorded value may not be recoverable.
The
Company’s property and equipment mainly consists of computer and laser equipment. Depreciation
is computed using the straight-line method over the estimated useful lives of the assets, which range from 5-12 years.
Recent
Accounting Pronouncements
Management
believes none of the recently issued accounting pronouncements will have a material impact on the consolidated financial statements.
NOTE
3 - RELATED PARTY TRANSACTIONS
Loans
receivable owed by related parties
On
August 20, 2019, the Company agreed to grant a loan to Anvia Holdings Corporation (“Anvia”) for the amount of $93,000.
The Company’s President and CEO, CFO is also the President and CEO of Anvia.
The loan bears an interest rate at 8% and matures on February 19, 2020. Due to the short maturity of the loan, the Company had
a current loans receivable of $93,000 as of December 31, 2019 and September 30, 2019, respectively.
As
of September 30, 2019, the Company had noncurrent loan receivable of $191,360 from the Company’s affiliate company, HCC
Century City. The amount owed by HCC Century City bears no interest and unsecured. The Company was not able to collect the amount,
and the total amount of the loan receivable were written off as of December 31, 2019.
Loans
from a shareholder
As
of December 31, 2019 and September 30, 2019, the Company had loans from a shareholder of $87,270 and 87,136, respectively, to
support its operation and the amount bears no interest and due on demand.
NOTE
4 – PROPERTY AND EQUIPMENT, NET
As
of December 31, 2019 and September 30, 2019, property and equipment consisted of the following:
|
|
December 31,
|
|
|
September 30,
|
|
|
|
2019
|
|
|
2019
|
|
Laser equipment
|
|
$
|
1,218,333
|
|
|
$
|
1,171,725
|
|
Computer equipment
|
|
|
7,378
|
|
|
|
7,378
|
|
Total
|
|
|
1,225,711
|
|
|
|
1,179,103
|
|
Less: accumulated depreciation
|
|
|
(317,192
|
)
|
|
|
(279,961
|
)
|
Total property and equipment, net
|
|
$
|
908,519
|
|
|
$
|
899,142
|
|
For
the three months ended December 31, 2019 and 2018, the depreciation expenses were $25,553 and $369, respectively.
NOTE
5 – NOTE PAYABLE
On
August 12, 2019, the Company executed a securities purchase agreement with Power Up Lending Group Ltd. (the “Holder”).
Pursuant to the agreement, the Holder purchased a convertible note (the “Note”) from the Company in the aggregate
principal amount of $103,000. The Note bears interest at the rate of 8% per annum and the maturity date is February 12, 2021.
The amount under the Note may be converted into common stock , $0.001 par value per share, by the Holder at any time during the
period beginning on the date which is 180 days following the date of this Note and ending on the later on the later of the maturity
date and the date of payment of the default amount.
For
the three months ended December 31, 2019 and 2018, the interest expense related to the note payable were $3,206 and nil, respectively.
NOTE
6 - INCOME TAXES
The
Company recorded no income tax expense or benefit during the three months ended December 31, 2019 and 2018 since the Company incurred
net operating losses and recorded a full valuation allowance against net deferred tax assets for all periods presented. As of
December 31, 2019 and September 30, 2019, the aggregate balances of our gross unrecognized tax benefits were $311 thousand and
$307 thousand, respectively, of which a valuation allowance recognized against the unrecognized tax benefits.
NOTE
7 - COMMITMENTS AND CONTINGENCIES
The
Company has no commitment or contingency as of December 31, 2019.
NOTE
8 – SUBSEQUENT EVENTS
The
Company has evaluated subsequent events through the date these consolidated financial statements were issued and determined that
there were no subsequent events or transactions that require recognition or disclosures in the consolidated financial statements.