RAYONT INC. - Quarter Report: 2022 March (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2022

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to _________

SEC File No. 000-56020

RAYONT INC.

(Exact name of registrant as specified in its charter)

228 Hamilton Avenue, 3rd Floor, Palo Alto,

California, 94301

(Address of principal executive offices)

Issuer’s telephone number: 1 (855) 801-9792

(Former name, former address and telephone number, if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes ☐ No ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting 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.

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. ☐

Securities registered pursuant to Section 12(b) of the Act: None

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 16, 2022, there were 48,083,356 shares issued and outstanding of the registrant’s common stock.

TABLE OF CONTENTS

RAYONT INC. AND SUBSIDIARY

Unaudited Consolidated Financial Statements

For the NINE AND three months ended MARCH 31, 2022 and 2021

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

RAYONT INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

The accompanying notes are an integral part of these consolidated financial statements.

RAYONT INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME / (LOSS)

(Unaudited)

The accompanying notes are an integral part of these consolidated financial statements.

RAYONT INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

The accompanying notes are an integral part of these consolidated financial statements.

RAYONT INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

The accompanying notes are an integral part of these consolidated financial statements.

RAYONT INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 - ORGANIZATION AND BUSINESS DESCRIPTION

Rayont Inc. (the “Company” or “Rayont”) is a Nevada corporation formed on February 7, 2011. Rayont Inc. is a private equity company in areas of biotechnology and internet of things (IOT).

Given the acquisition of Rayont Australia Pty Ltd (formerly known as “THF Holdings Pty Ltd”) and Rayont International (Labuan) Inc as well as the cancer treatment assets that the Company has invested on, Rayont has been focusing on commercializing these investments. The commercialization of the current assets for cancer treatment requires medical board approval for almost all of the countries subject to the license. Rayont has conducted the initial study to identify the requirements for obtaining the approvals for using PDT to treat cancer across different jurisdictions in Sub-Saharan Africa (“SSA”). The same PDT technology has been licensed in China, Australia, Malaysia and New Zealand. It is currently undergoing medical trials in Australia and China. The recent announcements show positive results that the technology works. The Company believes that it will take time before it can start commercializing these assets and start to generate revenues and operating profits.

On August 26, 2020, the Company established Rayont Technologies Pty Ltd. (“Rayont Technologies”) through Rayont Australia. Rayont Technologies is an Australian corporation and IOT providing services such as end-to-end employee engagement and experience platform for businesses in Australia and globally. Rayont Technologies engages in providing customized digital learning based on real-life and practical situations and e-learning programs.

In order to cope with rapid growth Rayont Technologies Pty Ltd entered an agreement on October 15, 2020 with Ms. Kayla Ranee Smith to purchase the assets of Workstar Tech (Aust) Pty Ltd for USD215,017.19 (AUD302,876.22) payable over 90 days upon Ms. Smith transferring the assets to Rayont Technologies Pty Ltd. The Company has already paid the payable amount for this purchase. The assets that Rayont Technologies acquired under the agreement are:

1. Trademark

2. Website

3. Software

4. Office Assets

5. Customer Contracts

On December 23, 2020, Rayont Australia Pty Ltd, a wholly-owned subsidiary of Rayont Inc. , acquired all of the issued and outstanding capital stock of Prema Life Pty Ltd, an Australian company (“Prema Life”), from TheAlikasa (Australia) Pty Ltd, Prema Life’s sole shareholder. The acquisition of Prema Life was completed, and Prema Life became a subsidiary of the Company. Prema Life is a HACCP certified manufacturer and supplier of functional foods and supplements, and of practitioner only naturopathic and homeopathic medicines. Prema Life produces an extensive range of products including proteins, green blends, sports nutrition, weight management and maintenance, and health and wellness products.

On December 23, 2020, pursuant to an Acquisition Agreement, Rayont Australia Pty Ltd, a wholly-owned subsidiary of Rayont Inc., acquired all of the issued and outstanding capital stock of GGLG Properties Pty LTD, an Australian company (“GGLG”), from TheAlikasa (Australia) Pty Ltd, GGLG’s sole shareholder (the “Seller”). The Seller is an affiliate of the Company and therefore the acquisition is being treated as a related party transaction. The purchase price is $605,920, which is a 10% discount of the total amount of GGLG’s net tangible assets. The purchase price will be paid in six installments after a $265,300 down payment. In the event an installment payment is not paid timely, the Seller has agreed to accept shares of the Company valued at $0.87 per share. The price per share is based on a 20% discount of the average share price on the OTC Markets over the last 30 trading days.

On February 18, 2021 the Foreign Investment Review Board approved the capital stock transferring of GGLG Properties Pty Ltd to the Rayont Australia Pty Ltd. On March 9, 2021, the parties agreed to amend the acquisition agreements for the GGLG Properties Pty Ltd and as per Board Resolution, the Company issued 710,713 shares of its common stocks in leu of payment by Rayont Australia Pty Ltd of approximately $605,920 (AUD 800,000) to TheAlikasa Pty Ltd as full and final payment for the acquisition of 100% of the issued and outstanding common stock of GGLG.

GGLG Properties Pty Ltd is a special purpose company to hold the property asset of Rayont (Australia) Pty Ltd. Until the 28 June 2021, GGLG Properties Pty Ltd owned the property located at 11 Aldinga Street, Brendale, 4500 QLD, Australia which is the facility where Prema Life Pty Ltd operates. With the sale of property, GGLG Properties Pty Ltd has no real assets and operations hence, it has to reinvent itself and select a business activity to focus on.

On December 29, 2020, the Company incorporated Rayont Malaysia Sdn Bhd with a paid-up capital of $25 and on December 31, 2020 was incorporated Rayont Technologies (M) Sdn Bhd with a paid-up capital of $25 from Rayont Malaysia Sdn Bhd to carry out its business activities in Malaysia. On February 5, 2021 Rayont Technologies (M) Pty Ltd entered into an Asset Purchase Agreement with Sage Interactive Sdn Bhd to purchase its assets in consideration of the payment of USD 105,000.00. These assets include software for remote learning, customer contracts, digital content. These assets will operate in Malaysia under Workstar trademark and operation shall be integrated with Rayont Technologies Australia to drive efficiency and scale of digital assets operations.

On January 19, 2022, the Company incorporated three companies that are No More Knots Holdings Pty Ltd, No More Knots (Clayfield) Pty Ltd and Wonder Foods Retail Pty Ltd with a paid-up capital of $72 for each of them to carry out its business activities in Australia.

Rayont will focus on healthcare including the manufacturing of alternative medicine products and services across the entire value chain or across the full range of activities that companies within an industry bring a product to its end users. Longer term, we have also invested in a ground-breaking cancer treatment technology through an exclusive license arrangement for the sub-Saharan African territories. Headquartered in Australia, with expanding operations internationally, our purpose is “Making Natural Products to Improve People’s Health”. We do this by investing in early research and development, establishing high quality manufacturing assets for regional distribution, and operating across the alternative medicine value chain. Our underlying strategy is to grow organically, selectively acquire, scale profitable assets, and improve efficiency through digitalization via mobile applications, websites or modes of delivering products or services to end users.

There were two transactions worth noting that occurred before 30 June 2021, namely GGLG Properties Pty Ltd disposed of 11 Aldinga Street Brendale QLD 4500 for USD693,403 for the land, and assets were sold for USD201,649. Premalife Pty Ltd subsequently purchased a new, more suitable building located at 32 French Avenue, Brendale QLD 4500 for USD2,304,330 excluding GST. In addition, Rayont (Australia) Pty Ltd purchased a new property on 23 September 2021 located at 900 Sandgate Road, Clayfield QLD, 4011, Australia for USD1,159,040 excluding GST. The acquisitions of those real estate assets into the Company have further strengthened the Group.

On January 31, 2022, two subsidiaries are disposed. One subsidiary Rayont Technologies (M) Sdn Bhd is disposed for the amount of USD40,000 and the other subsidiary Rayont Technologies Pty Ltd is disposed for the amount of $660,000. Both subsidiaries are acquired from Quantum Capital Inc. The purchase price for both companies in the amount of USD700,000 is not done with cash but in the form of shares of byer. Quantum Capital Inc issued 3,494,176 shares to the Rayont (Australia) Pty Ltd for the 100% of the issued and outstanding common stock of Rayont Technologies Pty Ltd owned from Rayont (Australia) Pty Ltd and 100% of the issued and outstanding common stock of Rayont Technologies (M) Sdn Bhd owned from Rayont (Malaysia) Sdn Bhd.

The World Health Organization designated COVID-19 as a global pandemic. To date, the Company has experienced some adverse impacts; however, the impacts of COVID-19 on our operating results for the six months ended March 31, 2022 and the year ended June 30, 2021 was limited due to the nature of our business. The extent of the COVID-19 impact to the Company will depend on numerous factors and developments related to COVID-19. Consequently, any potential impacts of COVID-19 remain highly uncertain and cannot be predicted with confidence.

As of March 31, 2022, the company group structure consisted of the following companies:

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/T for the year ended June 30, 2021. 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/T for the year ended June 30, 2021, have been omitted.

Use of Estimates

The preparation of our consolidated financial statements and accompanying notes in conformity with GAAP requires us to make certain estimates and assumptions. Actual results could differ from those estimates.

Going Concern

The Company had a net loss of $534,540 for the nine months ended March 31, 2022. The accumulated deficit of the Company is $4,446,944 and having a working capital deficiency of $2,500,022 as of March 31, 2022. The Company demonstrates adverse conditions that raise substantial the Company’s ability to continue as a going concern. These adverse conditions are recurring operating losses, accumulated deficit, working capital deficiency and other adverse key financial ratios.

The Company plans to continue obtaining funding from public or private offering, 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 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.

There is no customer who accounted for 10% or more of the Company’s sales but there is one customer that accounted for more than 10% of accounts receivable for the nine months ended March 31, 2022 and 2021, respectively. For more information, please read note no.8.

There is no supplier who accounted for 10% or more of the Company’s cost of sales for the nine months ended March 31, 2022 and 2021, respectively.

 Fair Value of Financial Instruments

The Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities are carried at cost, which approximates their fair value, due to the relatively short maturity of these instruments. As of March 31, 2022 and June 30, 2021, the Company’s notes payable has stated borrowing rates that are consistent with those currently available to the Company and, accordingly, the Company believes the carrying value of these debt instruments approximates their fair value.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 established a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:

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 March 31, 2022 and June 30, 2021, the Company had cash in bank of $37,845 and $243,610, respectively.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable recorded by the Company are customer obligations due under normal trade terms. The Company reviews its accounts receivable regularly to determine if a bad debt allowance is necessary. Management reviews the composition of accounts receivable and analyses the age of receivables outstanding, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the necessity of making such allowance. Uncollectible account balances are written off when management determines the probability of collection is remote. The allowance for doubtful accounts was nil as of March 31, 2022 and June 30, 2021.

Inventories

Inventories consisting of products available for sell, are stated at the lower of cost or market value. Cost of inventory is determined using the weighted average method. Inventory reserve is recorded to write down the cost of inventory to the estimated market value due to slow-moving merchandise and damaged goods, which is dependent upon factors such as historical and forecasted consumer demand, and promotional environment. The Company takes ownership, risks and rewards of the products purchased. Write downs are recorded in cost of revenues in the Condensed Statements of Operations and Comprehensive Income.

Intangible assets

Intangible assets are recognized and measured at cost upon acquisition and consist of the Company’s exclusive license with various useful life.

As of March 31, 2022 and June 30, 2021, the Company had various useful life intangible assets of $1,499,998 and $2,245,231 respectively associated with Rayont International’s exclusive license for registering and commercializing Photosoft^TM technology for treatment of all cancers across Sub-Sahara African region. The technology has been licensed in Australia, New Zealand, China, Malaysia and Sub-Sahara Africa. The other intangible assets are associated with trademark, website, software that Rayont Technologies Pty Ltd entered into an agreement on October 15, 2020 to purchase the assets of Workstar Tech (Aust) Pty Ltd. This company was sold on January 31, 2022 and its intangible assets are not part of the balance sheets as of March 31, 2022.

In addition, on February 5, 2021 Rayont Technologies (M) Sdn Bhd entered into an Asset Purchase Agreement with Sage Interactive Sdn Bhd to purchase intangible assets include software for remote learning, customer contracts and digital content. As of June 30, 2021, the carrying amount of this asset is $100,625. This company was sold on January 31, 2022 and its intangible assets are not part of the balance sheets as of March 31, 2022.

For other intangible assets, company determined the useful life of the asset as 10 years and it’s amortized based on the useful life.

The Company tests for indefinite lived intangibles impairment in the fourth quarter of each year and whenever events or circumstances indicate that the carrying amount of the asset exceeds its fair value and may not be recoverable. In accordance with its policies, the Company performed a qualitative assessment of indefinite lived intangibles at June 30, 2021, and determined there was no impairment of indefinite lived intangibles.

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 4-12 years.

Revenue Recognition

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to be entitled to in exchange for those products and services. We enter into contracts that include products and services, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net of allowances for returns and any taxes collected from customers.

The Company’s contracts with customers may include multiple performance obligations. Revenue relating to agreements that provide more than one performance obligation is recognized based upon the relative fair value to the customer of each performance obligation as each obligation is earned. The Company derives its revenues the follows:

Digital Learning Solutions:

Revenue from digital learning solutions is recognized when control has transferred to the customer which typically occurs when the service is completed or the delivery of the license to the customer.

Maintenance Services:

The Company offers maintenance and function improvements services related to the mobile apps for customers. Maintenance service is considered distinct and is recognized ratably over the maintenance term.

Sale of Goods - Medicinal Supplements:

Revenue from these sales is recognized when the entity has delivered the products to locations specified by its customers and the customers have accepted the products in accordance with the sales contract.

Products are sold to certain customers with volume discount and these customers also have the right to return within a reasonable time frame. Revenue from these sales is recorded based on the contracted price less the estimated volume discount and returns at the time of sale.

Earnings / (Loss) 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 March 31, 2022 and March 31, 2021.

Translation of Foreign Currency

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations.

The functional currency of the Company is the United States Dollars (“US$”) and the accompanying financial statements have been expressed in US$. In addition, the Company’s Australian subsidiaries maintain their books and record in a local currency, Australian Dollars (“AUD”), which is functional currency as being the primary currency of the economic environment in which the entity operates. The Company’s Malaysian subsidiaries maintain their books and record in US$.

In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiary are recorded as a separate component of accumulated other comprehensive income.

Translation of amounts from the local currency of the Company into US$1 has been made at the following exchange rates for the respective years:

 SCHEDULE OF EXCHANGES RATE

Recent Accounting Pronouncements

Management believes none of the recently issued accounting pronouncements will have a material impact on the consolidated financial statements.

NOTE 3 – INVENTORIES

As of March 31, 2022 and June 30, 2021, inventories were composed of the following:

 SCHEDULE OF INVENTORIES

NOTE 4 – PROPERTY AND EQUIPMENT, NET

As of March 31, 2022 and June 30, 2021, property and equipment consisted of the following:

 SCHEDULE OF PROPERTY AND EQUIPMENT, NET

On June 30, 2018, the Company purchased computers in the amount of $7,378.

On January 22, 2019, the Company’s subsidiary, Rayont (Australia) Pty. Ltd, purchased the cancer treatment equipment for USD 1,239,008 (AUD1,736,966).

On June 26, 2020, the Company’s subsidiary, GGLG Properties Pty Ltd, purchased a property located at 11 Aldinga Street Brendale QLD 4500, Australia for USD472,135 (AUD686,814). GGLG Properties Pty Ltd disposed this property on June 29, 2021 for USD693,403.

On October 15, 2020, the Company entered into an agreement to purchase the assets of Workstar Tech (Aust) Pty Ltd, from an individual towards purchase of fair value of USD476,594.32 (AUD632,393) for purchase consideration of USD228,258.35 (AUD302,876). The company considered the gain on purchase of assets as an income in fiscal year ended June 30, 2021.

These assets include intangible assets like trademark, website, software in the amount of USD465,666.59 (AUD617,893) and tangible assets like office assets, computer contracts in the amount of USD10,927.73 (AUD14,500). This company was sold on January 31, 2022 and its assets are not part of the BS as of March 31, 2022.

On October 28, 2020, the Company’s subsidiary obtained a Finance Lease for vehicle in the amount of $34,167 (AUD 44,880) from Australian Alliance Automotive Finance Pty Limited to assist the Company to meet its operating activities.

On June 28, 2021, the Company’s subsidiary, Premalife Pty Ltd, purchased a property which consist of 2720m2 land and 1760m2 building located at 32 French Avenue, Brendale QLD 4500, Australia for a total amount of USD2,304,330 excluding GST. The land cost is $1,273,595 and the building cost is $1,030,735. The purchase price of this property is paid totally by mortgage loans.

On September 23, 2021, the Company’s subsidiary, Rayont (Australia) Pty Ltd, purchased a new property located at 900 Sandgate Road, Clayfield QLD, 4011, Australia for USD1,159,040 excluding GST. The purchase price of this property is paid by issuing shares of Rayont Inc. In addition, the Company has received a loan to cover some fit-out expense and its interest is capitalized in the cost of this property. The policy that the Company has used for the capitalization of the interest is ASC835. Interest is capitalized during the period under which the asset is being prepared for its intended use. The purpose of this is to obtain a more accurate representation of the full costs incurred in acquiring or constructing the asset. The interest capitalized should be added to the cost of the asset on the balance sheet and, when the asset is used internally, amortized over the life of the asset. The amount of the interest capitalized is USD107,296 (AUD147,790). In addition, it is capitalized even the stamp duty of the property in the amount of USD52,654 (AUD72,525).

For the nine months ended March 31, 2022 and 2021, the depreciation expenses were $102,967 and $99,136, respectively.

NOTE 5 – INTANGIBLE ASSETS

On October 15, 2020, the Company entered into an agreement to purchase the assets of Workstar Tech (Aust) Pty Ltd, from an individual towards purchase of fair value of USD476,594.32 (AUD632,393) for purchase consideration of USD228,258.35 (AUD302,876). The company considered the gain on purchase of assets as an income in fiscal year ended June 30, 2021.

These assets include intangible assets like trademark, website, software in the amount of USD465,666.59 (AUD617,893) and tangible assets like office assets, computer contracts in the amount of USD10,927.73 (AUD14,500). This company was sold on January 31, 2022 and its assets are not part of the balance sheets as of March 31, 2022

Amortization is computed using the straight-line method over the 10-year estimated useful lives of the assets.

On February 5, 2021 Rayont Technologies (M) Pty Ltd entered into an Asset Purchase Agreement with Sage Interactive Sdn Bhd to purchase its assets in consideration of the payment of USD 105,000.00. These assets include software for remote learning, customer contracts and digital content. This company was sold on January 31, 2022 and its assets are not part of the balance sheets as of March 31, 2022.

Amortization is computed using the straight-line method over the 10-year estimated useful lives of the assets.

The Company had evaluated the useful life of 10 years from 2018 for the intangible assets of $2,000,000, which is associated with Rayont International’s exclusive license for registering and commercializing Photosoft^TM technology for treatment of all cancers across Sub-Sahara African region. The technology has been licensed in Australia, New Zealand, China, Malaysia and Sub-Sahara Africa.

The license has only remaining life of 7 years and it is amortized for the six months ended March 31, 2022.

As of March 31, 2022 and June 30, 2021, intangible assets, consisted of the following:

SCHEDULE OF INTANGIBLE ASSETS

For the nine months ended March 31, 2022 and 2021, the amortization expenses were $246,954 and $22,717, respectively.

NOTE 6 – LOANS PAYABLE

As of March 31, 2022 and June 30, 2021, loans payable, consisted of the following:

 SCHEDULE OF LOAN PAYABLE

Mortgage loan

On June 26, 2020, the Company’s subsidiary obtained a mortgage loan of $453,713 (AUD 660,000) from two private lenders Oliver Fleming Pty Ltd as Trustee and Oliver John Fleming to assist the Company to buy the land of the business place. The term of the loan is one year from the commencement date, and the interest rate is 10% per annum. Monthly payments are compound just from interest in the amount of $ 4,108 (AUD 5,500). The loan is secured under the Company’s present and future property of any kind, including all personal property. The principal amount is paid in the end of the term, on June 26, 2021.

On June 28, 2021, the Company’s subsidiary purchased a property which consist of 2720m2 land and building 1760m2. Since the intention was to settle the property prior to June 30, 2021as per the Sale & Purchase Contract, the liability of the loan had to be recognized, even though the agreement date of the loans for this property is on August 6, 2021 and on September 1, 2021. This transaction is an adjusting event for the balance sheet at June 30, 2021. The Company’s subsidiary obtained on August 6, 2021 a mortgage loan of $ 1,746,920 (AUD 2,380,000) from private lender COE Property Group Pty Ltd to assist the Company to buy the property of the business place. This loan is divided in two tranches. The term of the loan is one year from the commencement date for the first tranche in the amount of $ 1,490,020 (AUD 2,030,000), the interest rate is 9% per annum and for the second tranche in the amount of $ 256,900 (AUD 350,000), the term of the loan is 4 months from the commencement date and the interest rate is 36% per annum. Monthly payments are compound just from interest in the amount of $ 11,175 (AUD 15,225) for first tranche and interest in the amount of $ 7,707 (AUD 10,500) for the second tranche. The loan is secured under the Company’s present and future property of any kind, including all personal property. The principal amount will be paid in the end of the term, December 6, 2021 for second tranche and August 5, 2022 for first tranche. Both tranches are paid on May 4, 2022.

The Company’s subsidiary obtained on September 1, 2021 a mortgage loan of $ 257,915 (AUD 350,000) from private lender RDS Superannuation Pty Ltd as Trustee for The Ron Bruce Motor Trimmers Pty Ltd to assist the Company to buy the property of the business place. The term of the loan is two months from the commencement date, and the interest rate is 18% per annum. Monthly payments are compound just from interest in the amount of $ 3,869 (AUD 5,250). The loan is secured under the Company’s present and future property of any kind, including all personal property. The principal amount is paid in the end of the term, October 15, 2021.

As of March 31, 2022 and June 30, 2021 the Company had outstanding balances of $1,840,026 and $2,046,477 related to the mortgage loan.

The Company’s subsidiary obtained on October 15, 2021 a loan of $266,976 (AUD 360,000) from private lender James Lee to assist the Company to pay another loan. The term of the loan was three months from the commencement date but it is extended with two more months, and the interest rate is 48% per annum or 96% per annum if the payment will be default as per loan agreement. The loan is secured under the Company’s present and future property of any kind, including all personal property. The principal amount and the interest should be paid both on March 15, 2022. The Company’s subsidiary obtained on November 12, 2021 a loan of $547,319 (AUD747,500) from private lender Aura Loan Management Pty Ltd to assist the Company to cover the fit-out expenses for the property purchased lately located at 900 Sandgate Road, Clayfield QLD, 4011 Australia in order to be ready for internal use of the subsidiary Rayont (Autsralia) Pty Ltd. The term of the loan is 12 months from the commencement date, and the interest rate is 9.25% per annum. Monthly payments are compound just from interest in the amount of $4,183 (AUD5,762). The loan is secured under the Company’s present and future property of any kind, including all personal property. This loan is paid on May 4, 2022.

COVID-19 loan

On June 29, 2020, the Company’s subsidiary obtained a COVID-19 loan of $ 171,729 (AUD 250,000) from Queensland Rural and Industry Development Authority (QRIDA) to assist the Company to meet its working capital expenses. The term of the loan is 10 years from the commencement date, and the interest rate is 0% for the first 12 months from the commencement date and then 2.5% from the remainder of the term. The Company’s subsidiary has an Interest Only Period beginning 12 months after the Commencement Date and ending 36 months from the Commencement Date. The loan is secured under the Company’s present and future property of any kind, including all personal property. As of December 31, 2021 and June 30, 2021, the Company had outstanding balances of $181,501 and $187,406, respectively related to the COVID-19 loan.

For the 9 months ended March 31, 2022 and 2021 the interest expenses were $302,494 and $37,047, respectively.

NOTE 7 – FINANCE LEASE PAYABLE

 SCHEDULE OF FINANCE LEASE

On October 28, 2020, the Company’s subsidiary obtained a Finance Lease for vehicle in the amount of $34,167 (AUD 44,880) from Australian Alliance Automotive Finance Pty Limited to assist the Company to meet its operating activities. The term of the loan is 4 years from the commencement date, and the interest rate is 5.03% for the term. As of March 31, 2022, the Company had outstanding balances of $21,809 related to the Finance Lease.

Finance lease activity is included in property and equipment, net.

NOTE 8 – CONCENTRATION

At March 31, 2022 and June 30, 2021, the major customer represented approximately 42% and 0% of total accounts receivable, respectively. The payment is received on April 4, 2022 from this customer for the due amount to the end of March 31, 2022 and the difference will be paid on May, 2022.

NOTE 9 – STOCKHOLDERS’ EQUITY

Capital Stock Issued

On July 17, 2021, the Company issued 710,713 shares of common stock to the The AliKasa Pty Ltd for the purchase of the GGLG, the Corporation’s wholly owned subsidiary, totaling $618,320.

On September 23, 2021, the Company issued 515,771 shares of common stock to the AMH Corporate Pty Ltd for the purchase of a property and building located at 900 Sandgate Road, Clayfield QLD, 4011 Australia from Rayont (Australia) Pty Ltd, the Corporation’s wholly owned subsidiary, totaling $1,159,040.

On December 16, 2021, the Company issued 10,500 shares of common stock to the two board directors of the Company as a compensation fee for their services.

On March 31, 2022, the Company issued 13,889 shares of common stock to the two board directors of the Company as a compensation fee for their services.

During the period from July 2021 through December 2021, the Company sold and issued 49,114 shares of common stock to 2 independent investors pursuant to a private placement; 16,614 shares at $2.21; 32,500 shares at $2.20 for a total amount of $108,216. The Company relied upon Section 4(2) and Regulation S of the Securities Act of 1933, as amended, for the sale of these securities. No commissions were paid regarding the share issuance and the share certificates were issued with a Rule 144 restrictive legend.

Capital Stock Authorized

Common Stock

The Company is authorized to issue 500,000,000 shares of common stock with a par value of $0.001 per share. As of March 31, 2022 and June 30, 2021, the outstanding shares of common stock were 48,083,356 and 46,783,369, respectively.

Preferred Stock

The Company is authorized to issue 20,000,000 shares of Series A Preferred Stock with a par value of $0.001 per share. There are not preferred shares issued and outstanding as of March 31, 2022 and June 30, 2021, respectively.

NOTE 10 - RELATED PARTY TRANSACTIONS

The related parties of the Company with whom transactions are reported in the consolidated financial statements are as follows:

Amount due from related parties

SCHEDULE OF AMOUNT DUE TO (FROM) RELATED PARTIES

As of March 31, 2022 and June 30, 2021, Prema Life Pty Ltd had loans receivable of $36,884 and $nil from TheAliKasa Australia Pty Ltd. The loans receivable was non-interest bearing and due upon request.

As of March 31, 2022 and June 30, 2021, Rayont International (L) had loans receivable of $11,881 from Rural Asset Management Services. On June 30, 2020, the company agreed to grant a loan to the Rural for the amount of $91,823. The loan bears no interest rate and receivable on demands. Due to the short maturity of the loan, the Company had a current loans receivable of $91,823 as of September 30, 2020. The Company made a three-party agreement on December 31, 2020 between its subsidiary Rayont International (L), Rayont Inc and Rural in order to eliminate the loans from /to Rural and there is no need for money to move around. The remaining balance of $11,881 will be received on demands.

As of March 31, 2022 and June 30, 2021, Rayont International (L) Ltd had loans receivable of $4,000 from Blue Pacific Academy. The loans receivable was non-interest bearing and due upon request.

As of March 31, 2022 and June 30, 2021, Prema Life Pty Ltd had loans receivable of $2,925 and $nil from Abrar Investments Pty Ltd. The loans receivable was non-interest bearing and due upon request.

As of March 31, 2022 and June 30, 2021, Rayont International (L) Ltd had loans receivable of $31,092 and $nil from director of the company. The loans receivable was non-interest bearing. “Since inception of outstanding balance, the management and its directors have been brought attention to and agreed that there has been violation due to loans to directors and executive offices up to current quarter ended March 31, 2022. As of the date of this report, the management and its directors are still in the process of rectifying the system deficiencies and correcting the errors by end of June 30, 2022.”

Amounts due to related parties

On December 31, 2020, the former director of the Rayont International (L) Ltd, forgave the $16,364, owed to him by the Company and the resulting gain is recorded as additional paid-in capital. The difference of $323 was paid back to the director.

On August 1, 2021 the director has given a loan amount of $386,105 which is used to pay the property that is bought from Prema Life Pty Ltd. This loan has 3% interest per annum and it is fully settled as of December 31, 2021.

The other amounts due to related parties were non-interest bearing and payable on demand. The amounts were used to support its operation, to acquire the property.

NOTE 11 - COMMITMENTS AND CONTINGENCIES

The Company has no commitment or contingency as of March 31, 2022.

NOTE 12 – OTHER INCOME

Other income was $514,320 and $782,545 for the nine months ended March 31, 2022 and 2021, respectively. This income for nine months ended March 31, 2022 was mainly due to gain on disposal of the subsidiaries Rayont Technologies Pty Ltd and Rayont Technologies (M) Sdn Bhd on January 31, 2022 and debt forgiven. This income for nine months ended March 31, 2021 was mainly due to tax incentive/grant obtained in relation to approved research and development activities carried out, due to ATO COVID19 Job Seeker, Cash Flow Boost incentives from Australian Government and gain on purchase of assets from Workstar Tech (Aust) Pty Ltd. On October 15, 2020, the Company entered into an agreement to purchase the assets of Workstar Tech (Aust) Pty Ltd, from an individual towards purchase of fair value of USD476,594.32 (AUD632,393) for purchase consideration of USD228,258.35 (AUD302,876).

NOTE 13 – OTHER ASSETS

On January 31, 2022, two subsidiaries are disposed. One subsidiary Rayont Technologies (M) Sdn Bhd is disposed for the amount of USD40,000 and the other subsidiary Rayont Technologies Pty Ltd is disposed for the amount of $660,000. The purchase price for both companies in the amount of USD700,000 is not done with cash but in the form of shares issued of buyer. Quantum Capital Inc (the buyer) issued 3,494,176 shares to the Rayont (Australia) Pty Ltd for the 100% of the issued and outstanding common stock of Rayont Technologies Pty Ltd owned from Rayont (Australia) Pty Ltd and 100% of the issued and outstanding common stock of Rayont Technologies (M) Sdn Bhd owned from Rayont (Malaysia) Sdn Bhd.

In addition, Quantum Capital Inc issued 314,995 more shares to the Rayont (Australia) Pty Ltd as a repayment for the loan that Rayont Technologies (M) Sdn Bhd has received from Rayont International (L) Labuan (one subsidiary of the Rayont Inc) and Rayont (Malaysia) Sdn Bhd. This loan balance as per date of this agreement is USD63,104.

NOTE 14 - SUBSEQUENT EVENTS

Rayont Inc., through its wholly owned subsidiary No More Knots Holdings Pty Ltd, completed the acquisition of the No More Knots Group of companies, the largest provider of Remedial Massage and Myotherapy services in Australia. It has acquired 100% of the total outstanding shares and units of No More Knots Pty Ltd, No More Knots (Taringa) Pty Ltd and No More Knots (Newmarket) Pty Ltd in exchange for USD2,200,000 (AUD 3,000,000) cash, payable in two tranches. The first tranche of USD 1.8M was payable before or on 1 April, 2022 and the second tranche of USD400,000 is payable before or on July 15, 2022 The payment is done on May 4, 2022.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes, and other financial information included in this Form 10-Q.

Our Management’s Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking. Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national, and local general economic and market conditions; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; change in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; the risk of foreign currency exchange rate; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission.

Although the forward-looking statements in this Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.

Overview

Rayont Inc. (“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 January 22, 2019, the Company entered into an acquisition agreement with Rayont Australia Pty Ltd (formerly known as “THF Holdings Pty Ltd”), an Australian corporation and Rural, pursuant to which the Company acquired 100% of the issued and outstanding capital stock of THF Holdings Pty Ltd. in exchange for 4,000,000 shares of the Company’s common stock, valued on January 22, 2019 at $1,000,000. THF Holdings Pty Ltd. is an Australian Cancer treatment and medical device company. Rural is the majority shareholder of THF Holdings Pty Ltd. In March 2019, the acquisition of THF Holdings Pty Ltd. was completed and THF Holdings Pty Ltd. became a subsidiary of the Company. In addition, the acquisition was accounted for business combination under common control of Rural. On August 25, 2020, the name THF Holdings Pty Ltd. was changed to Rayont (Australia) Pty Ltd. (“Rayont Australia”).

On August 26, 2020, the Company established Rayont Technologies Pty Ltd. (Rayont Technologies) through Rayout Australia. Rayont Technologies is an Australian corporation and is engaged primarily in digital learning solutions to support the development of people skills that drive business growth.

On September 30, 2020, the Company acquired all of the issued and outstanding capital stock of Rayont International (L) Limited (Rayont International), a Malaysian company. The purchase price paid by the Company was 25,714,286 shares of its common stock valued at $1,800,000 or $0.07 per share, which was the closing price of the Company’s common stock on the OTC Markets on September 29, 2020. Rayont International is a clinical-stage life sciences company that holds the exclusive license for registering and commercializing Photosoft^TM technology for treatment of all cancers across Sub-Sahara African region. The technology has been licensed in Australia, New Zealand, China, Malaysia and Sub-Sahara Africa.

On October 15, 2020, Rayont Technologies Pty Ltd entered into an agreement with Ms. Kayla Ranee Smith to purchase the assets of Workstar Tech (Aust) Pty Ltd for USD215,017.19 (AUD302,876.22) payable over 90 days upon Ms Smith transfers the assets to Rayont Technologies Pty Ltd. The assets that Rayont Technologies acquired under the agreement includes trademark, website, software, office assets and customer contracts.

On December 23, 2020, Rayont Australia Pty Ltd, a wholly-owned subsidiary of Rayont Inc. (the “Company”), acquired all of the issued and outstanding capital stock of Prema Life Pty Ltd, an Australian company (“Prema Life”), from TheAlikasa (Australia) Pty Ltd, Prema Life’s sole shareholder. The acquisition of Prema Life was completed, and Prema Life became a subsidiary of the Company. Prema Life is a HACCP certified manufacturer and supplier of functional foods and supplements, and of practitioner only naturopathic and homeopathic medicines. Prema Life produces an extensive range of products including proteins, green blends, sports nutrition, weight management and maintenance, and health and wellness products. In addition, the acquisition was accounted for business combination under common control. The method of accounting for such transfers, as well as the acquisition of businesses, was similar to the pooling of interest’s method of accounting. Under this method, the carrying amount of net assets recognized in the balance sheets of each combining entity are carried forward to the balance sheet of the combined entity. The amount by which the proceeds paid by the Company differs from Prema Life’s historical carrying value of the acquired business is accounted for as a return of capital or contribution of capital. In addition, transfers of net assets between entities under common control were accounted for as if the transfer occurred from the date that the Company and the acquired business were both under the common control and had begun operations.

On December 23, 2020, pursuant to an Acquisition Agreement, Rayont Australia Pty Ltd, a wholly-owned subsidiary of Rayont Inc. (the “Company”), acquired all of the issued and outstanding capital stock of GGLG Properties Pty LTD, an Australian company (“GGLG”), from TheAlikasa (Australia) Pty Ltd, GGLG’s sole shareholder (the “Seller”). The Seller is an affiliate of the Company and therefore the acquisition is being treated as a related party transaction. In addition, the acquisition was accounted for business combination under common control. The method of accounting for such transfers, as well as the acquisition of businesses, was similar to the pooling of interest’s method of accounting. Under this method, the carrying amount of net assets recognized in the balance sheets of each combining entity are carried forward to the balance sheet of the combined entity. The amount by which the proceeds paid by the Company differs from GGLG ‘s historical carrying value of the acquired business is accounted for as a return of capital or contribution of capital. In addition, transfers of net assets between entities under common control were accounted for as if the transfer occurred from the date that the Company and the acquired business were both under the common control and had begun operations.

The purchase price is $605,920, which is a 10% discount of the total amount of GGLG’s net tangible assets. The purchase price will be paid in six installments after a $265,300 down payment. In the event an installment payment is not paid timely, the Seller has agreed to accept shares of the Company valued at $0.87 per share. The price per share is based on a 20% discount of the average share price on the OTC Markets over the last 30 trading days.

On February 18, 2021 the Foreign Investment Review Board approved the capital stock transferring of GGLG Properties Pty Ltd to the Rayont Australia Pty Ltd. On March 9, 2021, the parties agreed to amend the acquisition agreements for the GGLG Properties Pty Ltd and as per Board Resolution, the Company issued 710,713 shares of its common stocks in leu of payment by Rayont Australia Pty Ltd of approximately $605,920 (AUD 800,000) to TheAlikasa Pty Ltd as full and final payment for the acquisition of 100% of the issued and outstanding common stock of GGLG.

On December 29, 2020, the Company incorporated Rayont Malaysia Sdn Bhd with a paid-up capital of $25 and Rayont Malaysia Sdn Bhd incorporated on December 31, 2020 Rayont Technologies (M) Sdn Bhd with a paid-up capital of $25 respectively to carry out its business activities in Malaysia. On February 5, 2021 Rayont Technologies (M) Pty Ltd entered into an Asset Purchase Agreement with Sage Interactive Sdn Bhd to purchase its assets in consideration of the payment of USD 105,000.00. These assets include software for remote learning, customer contracts and digital content. These assets will operate in Malaysia under Workstar trademark and operation shall be integrated with Rayont Technologies Australia to drive efficiency and scale of digital assets operations. 

On January 19, 2022, the Company incorporated three companies that are No More Knots Holdings Pty Ltd, No More Knots (Clayfield) Pty Ltd and Wonder Foods Retail Pty Ltd with a paid-up capital of $72 for each of them to carry out its business activities in Australia.

On January 31, 2022, two subsidiaries are disposed. One subsidiary Rayont Technologies (M) Sdn Bhd is disposed for the amount of USD40,000 and the other subsidiary Rayont Technologies Pty Ltd is disposed for the amount of $660,000. Both subsidiaries are acquired from Quantum Capital Inc.

Rayont Inc., through its wholly owned subsidiary No More Knots Holdings Pty Ltd, completed the acquisition of the No More Knots Group of companies, the largest provider of Remedial Massage and Myotherapy services in Australia. It has acquired 100% of the total outstanding shares and units of No More Knots Pty Ltd, No More Knots (Taringa) Pty Ltd and No More Knots (Newmarket) Pty Ltd in exchange for USD2,200,000 (AUD 3,000,000) cash, payable in two tranches. The first tranche of USD 1.8M was payable before or on 1 April, 2022 and the second tranche of USD400,000 is payable before or on July 15, 2022 The payment is done on May 4, 2022.

The World Health Organization designated COVID-19 as a global pandemic. To date, the Company has experienced some adverse impacts; however, the impacts of COVID-19 on our operating results for the nine months ended March 31, 2022 and the March 31, 2021 was limited due to the nature of our business. The extent of the COVID-19 impact to the Company will depend on numerous factors and developments related to COVID-19. Consequently, any potential impacts of COVID-19 remain highly uncertain and cannot be predicted with confidence.

Results of Operations

Comparison of the three months ended March 31, 2022 and 2021

Revenue

There were $464,698 and $951,464 revenue generated for the three months ended March 31, 2022 and 2021, respectively. The decrease was attributable to revenues generated from Rayont Technologies Pty Ltd that were lower this period compare with the three months ended on March 31, 2021. The Company continues looking for other opportunities which could potentially increase the revenues and profits of the Company.

Cost of Goods Sold

There were $309,440 and $340,325 cost of goods sold for the three months ended March 31, 2022 and 2021, respectively. The decrease was attributable to the decreased of revenues for the quarter ended March 31, 2022.

Operating Expense

Our operating expenses consist of selling, general and administrative expenses, depreciation and amortization expense.

For the three months ended March 31, 2022 and 2021, there were a total of $435,153 and $575,784 operating expenses, respectively. The decrease was primarily due to the decrease in the selling, general and administrative expenses as the revenues for the same period is decreased.

Other Income

Other income was $514,320 and $125,401 for the three months ended March 31, 2022 and 2021, respectively. This income for three months ended March 31, 2022 was mainly due to gain on disposal of the subsidiaries Rayont Technologies Pty Ltd and Rayont Technologies (M) Sdn Bhd on January 31, 2022 and debt forgiven. This income for three months ended March 31, 2021 was mainly due to tax incentive/grant obtained in relation to approved research and development activities carried out, due to ATO COVID19 Job Seeker and Cash Flow Boost incentives from Australian Government.

Net (Loss) / Income

We had a net income of $80,650 for the three months ended March 31, 2022, and a net income of $147,643 for the three months ended March 31, 2021 based on the factors discussed above.

Comparison of the nine months ended March 31, 2022 and 2021

Revenue

There were $1,826,585 and $2,147,704 revenue generated for the nine months ended March 31, 2022 and 2021, respectively. The decrease was attributable to revenues generated from Rayont Technologies Pty Ltd that were lower this period compare with the nine months ended on March 31, 2021. The Company continues looking for other opportunities which could potentially increase the revenues and profits of the Company.

Cost of Goods Sold

There were $999,906 and $865,115 cost of goods sold for the nine months ended March 31, 2022 and 2021, respectively. The increase was attributable to the increased cost of goods sold from Prema Life Pty Ltd from 53 % to 60%.

Operating Expense

Our operating expenses consist of selling, general and administrative expenses, depreciation and amortization expense.

For the nine months ended March 31, 2022 and 2021, there were a total of $1,573,045 and $1,424,106 operating expenses, respectively. The increase was primarily due to the salary expenses incurred for the operating subsidiary, the operating expenses generated from Prema Life, as well as the increase in the depreciation and amortization expense due to the new intangible and tangible assets acquired.

Other Income

Other income was $514,320 and $782,545 for the nine months ended March 31, 2022 and 2021, respectively. This income for nine months ended March 31, 2022 was mainly due to gain on disposal of the subsidiaries Rayont Technologies Pty Ltd and Rayont Technologies (M) Sdn Bhd on January 31, 2022 and debt forgiven. This income for nine months ended March 31, 2021 was mainly due to tax incentive/grant obtained in relation to approved research and development activities carried out, due to ATO COVID19 Job Seeker, Cash Flow Boost incentives from Australian Government and gain on purchase of assets from Workstar Tech (Aust) Pty Ltd. On October 15, 2020, the Company entered into an agreement to purchase the assets of Workstar Tech (Aust) Pty Ltd, from an individual towards purchase of fair value of USD476,594.32 (AUD632,393) for purchase consideration of USD228,258.35 (AUD302,876).

Net (Loss) / Income

We had a net loss of $534,540 for the nine months ended March 31, 2022, and a net income of $609,528 for the nine months ended March 31, 2021 based on the factors discussed above.

Liquidity and Capital Resources

As of March 31, 2022 and June 30, 2021, the Company had working capital deficit of $2,500,022 and $1,456,964, respectively. The deficit is attributable to loans due to a related party of $28,599 and $387,238, respectively; accounts payable of $294,976 and $99,615, respectively; accrued liabilities of $299,689 and $472,021, respectively; loan payable of $2,840,360 and $2,051,554, respectively; other payables of $22,740 and $209,712, respectively. As of March 31, 2022 and June 30, 2021, the Company had $994,708 and $1,771,364 in current assets, respectively.

As of March 31, 2022 and June 30, 2021, we had a cash and equivalents balance of $37,845 and $243,610, respectively. The Company’s operations are primarily funded by the revenue, other income, proceeds received from the sale of common stock in private placements and financial support from major shareholders.

Cash Flows from Operating Activities

Net cash provided by operating activities was $272,736 for the nine months ended March 31, 2022 compared with net cash used by operating activities of $103,470 for the nine months ended March 31, 2021. During the nine months ended March 31, 2022, the net cash provided by operating activities was attributed to net loss of $534,540, offset by depreciation and amortization expense of $349,921, shares issued as a compassion for services of $52,500, gain on disposal of investments of $312,143 and payable forgiven of $118,450; an decrease in accounts receivable of $266,761, an decrease in inventory of $75,409, an increase in accounts payable of $189,939, a decrease in accrued liabilities of $165,884, an increase in prepaid expense of $28,640, an increase in other assets of $41,148, an increase in other payable of $200,478 and a decrease in other receivables of $338,533.

During the nine months ended March 31, 2021, the net cash used by operating activities was attributed to net income of $609,528, offset by depreciation and amortization expense of $121,853, gain on purchase of assets of $242,934, an increase in accounts receivable of $552,881, an increase in inventory of $195,803, a increase in accounts payable of $80,374, a increase in accrued liabilities of $1,673 5, an increase in prepaid expense of $26,001,a decrease in advance to officer of $2,206, a decrease in other assets of $47 a decrease in other receivables of $76,141, an increase in other payable of $22,327.

Cash Flows from Investing Activities

Net cash used in investing activities was $874,770 for the nine months ended March 31, 2022 compared with net cash used in investing activities of $172,697 for the nine months ended March 31, 2021.

During the nine months ended March 31, 2022, the net cash used in investing activities was attributed to the remaining payment in the amount of $189,511 for the intangible assets purchased from Workstar Tech (Aust) Pty Ltd on October 15, 2020 and the payment in the amount of $685,259 done for the 32 French Avenue property Fit Out.

During the nine months ended March 31, 2021, the net cash used in investing activities was attributed to the purchases of property and equipment of $68,779, payment in the amount of $105,000 for purchased of the intangible assets from Rayont Technologies (M) Sdn Bhd and cash from acquisition of company Rayont International (L) Ltd on September 30, 2020 in the amount of $1,082.

Cash Flow from Financing Activities

Net cash used in financing activities during the nine months ended March 31, 2022 and 2021 of $454,881 and $89,286, respectively; proceeds from loan payable in the amount of $765,362 and $29,334, respectively; repayment to related party in the amount of $418,697 and $494,961, respectively; issuance of common stock in the amount of $108,216 and $579,363, respectively; adjustment in additional paid in capital in the amount of $0 and $24,450 respectively.

Non-Cash Investing and Financing Activities

During the nine months ended March 31, 2022, issuance of common stock for business acquisitions in the amount of $618,320 and the issuance of common stock for acquisition of a property in the amount of $1,159,040.

During the nine months ended March 31, 2021, the issuance of common stock for business acquisitions in the amount of $74,384 and forgiveness of debt in the amount of $2,016,363.

Equity and Capital Resources

We had a net loss for the nine months ended March 31, 2022 and had an accumulated deficit of $4,446,944 as of March 31, 2022. As of March 31, 2022, we had cash of $37,845, compared to cash of $243,610 as of June 30, 2021.

We had material commitments for capital expenditures as of March 31, 2022 which is the purchased a new property on 23 September 2021 located at 900 Sandgate Road, Clayfield QLD, 4011, Australia for USD1,159,040, excluding GST, from Rayont (Australia) Pty Ltd. We expect our expenses will continue to increase during the foreseeable future as a result of increased operational expenses and the development of potential business opportunities. However, we do not anticipate that the Company will generate revenue sufficient to cover its planned operating expenses in the foreseeable future, and we are dependent on the proceeds from future debt or equity investments to sustain our operations and implement our business plan. If we are unable to raise sufficient capital, we will be required to delay or forego some portion of our business plan, which would have a material adversely effect on our anticipated results from operations and financial condition. There is no assurance that we will be able to obtain necessary amounts of additional capital or that our estimates of our capital requirements will prove to be accurate. As of the date of this Report, we did not have any commitments from any source to provide such additional capital. Even if we are able to secure outside financing, it may not be available in the amounts or the times when we require. Furthermore, such financing would likely take the form of bank loans, private placement of debt or equity securities or some combination of these. The issuance of additional equity securities would dilute the stock ownership of current investors while incurring loans, leases or debt would increase our capital requirements and possible loss of valuable assets if such obligations were not repaid in accordance with their terms.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that we are required to disclose pursuant to these regulations.

Item 3. Quantitative and Qualitative Disclosure about Market Risk

Not applicable.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The Company has established disclosure controls and procedures to ensure that information required to be disclosed in this quarterly report on Form 10-Q was properly recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. The Company’s controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officer to allow timely decisions regarding required disclosure.

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) at September 30, 2021 based on the evaluation of these controls and procedures required by paragraph (b) of Rule 13a-15 or Rule 15d-15 under the Exchange Act. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer/Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer/Chief Financial Officer concluded that, at March 31, 2022, our disclosure controls and procedures were not effective.

Changes in Internal Control over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting that occurred during the Company’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors

Not applicable to smaller reporting companies.

Item 2. Unregistered Sales of Equity Securities and Use of Proceed.

During the period from July 2021 through March 2022, the Company sold and issued 49,114 shares of common stock to 2 independent investors pursuant to a private placement; 16,614 shares at $2.21; 32,500 shares at $2.20 for a total amount of $108,216. The Company relied upon Section 4(2) and Regulation S of the Securities Act of 1933, as amended, for the sale of these securities. No commissions were paid regarding the share issuance and the share certificates were issued with a Rule 144 restrictive legend.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosure.

Not applicable.

Item 5. Other Information.

Not Applicable.

Item 6. Exhibits.

(a) Exhibits.

SIGNATURES

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

In accordance with the requirements of the Securities and Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities indicated and, on the dates, stated.