This discussion updates our business plan for the three-month periods ending October 31, 2022. It also analyzes our financial condition at October 31, 2022 and compares it to our financial condition at July 31, 2022. This discussion and analysis should be read in conjunction with our audited financial statements for the year ended July 31, 2022, including footnotes, contained in our Annual Report on Form 10-K, and with the unaudited financial statements for the interim period ended October 31, 2022, including footnotes, which are included in this quarterly report.





Overview of the Business

Hartford Great Health Corp. was originally incorporated in the State of Nevada on April 2, 2008, under the name PhotoAmigo, Inc. It changed its name to Hartford Great Health Corp. on August 22, 2018, and since then we have been engaged in activities to formulate and implement our business plan as set forth below.

Ability to continue as a "going concern".

The independent registered public accounting firms' reports on our financial statements as of July 31, 2022, includes a "going concern" explanatory paragraph that describes substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to the factors prompting the explanatory paragraph are discussed in the financial statements, including footnotes thereto.





Plan of Operation

As of July 31, 2022, the company has issued a total of 100,108,000 shares of common stock. On December 11, 2018, 96,090,000 shares of common stock were issued at the price of $0.02 per share to raise an additional $1,921,800 in capital. On November 24, 2020, the Company issued additional 1,000,000 shares of common stock to a significant shareholder of the Company at $0.02 per share.





18

On December 28, 2018, the Company acquired Hangzhou Hartford Comprehensive Health Management, Ltd ("HZHF"). On March 22, 2019, the Company acquired 60 percent of Hangzhou Longjing Qiao Fu Vacation Hotel Co., Ltd. ("HZLJ"). On March 20, 2019, the Company acquired Shanghai Hartford Comprehensive Health Management, Ltd. ("HFSH") with 90 percent of Shanghai Qiao Garden International Travel Agency ("Qiao Garden Int'l Travel"), which was disposed on December 31, 2020, and formed a joint venture entity, Hartford International Education Technology Co., Ltd ("HF Int'l Education").

The subsidiary of HFUS in Shanghai (HFSH) advances operating funds from two related party entities, SH Qiao Hong and SH Oversea Chinese Culture Media Ltd. The main purpose of the funding is to invest in Hartford International Education Technology (Shanghai) Co., Ltd. (HF Int'l Education). Upon signing of supplemental agreement, HFUS currently holds 75.5% ownership of HF Int'l Education and maintains control over HF Int'l Education. On July 24, 2019, HF Int'l Education established a 100% owned subsidiary, Pudong Haojin Childhood Education Ltd. ("PDHJ"). On October 28, 2019, PDHJ had its childhood education center opened. On March 23, 2020, HF Int'l Education established Shanghai Hongkou HaiDeFuDe Childcare Co., Ltd.("HDFD") and was approved the business license to conduct childcare operations in Shanghai, China. On July 20, 2020, HF Int'l Education entered an agreement with two individuals to acquire the whole ownership of Shanghai Gelinke Childcare Education Center ("Gelinke"). During the board meeting, SH Jingyu and another noncontrolling shareholders also sold a total of 14.5% equity at zero value to HFSH. As a result, HFSH holds 90% of HF Int'l Education and a total of 10% equity is held by two individual noncontrolling shareholders.

HF Int'l Education has developed an enhanced model of childcare franchise management program and registered a new brand name, "HaiDeFuDe". HF Int'l Education has recruited a team of knowledgeable childcare teachers to develop series of independent textbooks designed to targeted age of young children and register for the copyrights for these textbooks in September of 2020. Since then, HF Int'l Education has begun marketing and promoting the enhanced model of franchise operation and management packaged program, under "HaiDeFuDe" brand, to an initial of 50 franchisees throughout different regions of China. To achieve that, HF Int'l Education has incorporated existing market resources throughout other major cities and provinces in China. The promotion of HF Int'l Education franchise operation and management model was expected to attract other childcare education centers to join the "HaiDeFuDe" brand, and HF Int'l Education expected to generate revenue from franchise and management fees.

Due to continued market uncertainties during the pandemic, the board of HFSH adopted a new management approach to ease cash flow and reduce operation loss. In March 2021, HF Int'l Education entered agreements with Hartford Health Management (Shanghai), Co. Ltd. ("HFHM"). HFHM purchased seven education & intellectual property copy rights and ten "HaiDeFuDe" registered trademarks from HF Int'l Education for a total amount of RMB1.2M and RMB1.0M, respectively. In June 2021, HF Int'l Education and its three subsidiaries entered license agreements with HFHM for the rights to use the intellectual Properties (the "IPs") HFHM owns. The IPs cover in the license agreements are four sets of curriculum structure designed and fifteen trademarks including "HaiDeFuDe" registered trademarks purchased from HF Int'l Education. As a return, on a monthly basis, HF Int'l Education and its subsidiaries pays 20% of its tuition revenue generated to HFHM as license usage fee.

However, due to China's continual of zero-Covid policy implementation this year as well as Covid-19 lockdown for over two months in Greater Shanghai, childcare and childhood education center were forced to halt operations; therefore, the Company decides to divert its plan from childcare and childhood educational development industry. In the near future, the company is looking into wholesale trading and distribution of herbal supplement and other nutritional health products in China.





19

Results of Operations - Three Months Ended October 31, 2022 Compared to Three Months Ended October 31, 2021.

Revenue: We recognized $- and $169,812 revenue in the three months ended October 31, 2022 and 2021, respectively. The revenue for the three months ended October 31, 2021 was mainly generated from two industry segments, the hospitality housing in HZLJ and childhood education care services in HF Int'l Education. These two business operations have been disposed on August 1, 2022. see Note 3 Acquisitions and Disposals.

Operating Cost and Expenses: We recognized $- and $335,004 cost of revenue in the three months ended October 31, 2022 and 2021, respectively. The cost of revenue was mainly due to the license fees paid to HFHM and rent cost of HDFD's operating facility during the three months ended October 31, 2021. Operating expenses decreased to $ 54,648 for the three months ended October 31, 2022, compared to $507,759 during the comparable period of 2021. The decrease of operating cost and expenses was resulted from the discontinued operations in hospitality housing and childhood education care services since August 1, 2022. see Note 3 Acquisitions and Disposals.

Other Income (Expense): Other income, net increased to $535,050 for the three months ended October 31, 2022, compared to $24,791 for the corresponding period of 2021. Other income for the three months ended October 31, 2022 was mainly resulted from the gain on disposal of subsidiaries offset by interest expenses. Other income for the three months ended October 31, 2021 was mainly resulted from sublease income offset by interest expenses.

Net Loss Attributable to Noncontrolling Interest: For the three months ended October 31, 2022, we recorded a net loss attributable to noncontrolling interest of $- compared to $66,628 for the corresponding period of 2021. The loss was allocated based on the ownership percentage of noncontrolling interest, which has been disposed on August 1, 2022. see Note 3 Acquisitions and Disposals.

Net Income (Loss) Attributable to Hartford Great Health Corp: We recorded a net income of $480,402 or $0.00 per share for the three months ended October 31, 2022, compared to a net loss of $581,532 or $(0.01) per share for the three months ended October 31, 2021, due to the factors discussed above.

Liquidity and Capital Resources

As of October 31, 2022, we had a working capital deficit of $4,324,792 comprised of current assets of $75,635 and current liabilities of $4,400,427. This represents a decrease of $3,327,400 in the working capital deficit from the July 31, 2022 amount of $7,652,192. The decrease was primarily because the disposal of operations in hospitality housing and childhood education care services on August 1, 2022. see Note 3 Acquisitions and Disposals.

We believe that our funding requirements for the next twelve months will be in excess of $230,000. We are currently seeking for further funding through related parties' loan and finance.

As of October 31, 2022, the company has issued a total of 100,108,000 shares of common stock. On December 11, 2018, 96,090,000 shares of common stock were issued at the price of $0.02 per share to raise an additional $1,921,800 in capital. On November 24, 2020, the Company issued additional 1,000,000 shares of common stock to a significant shareholder of the Company at $0.02 per share.

We will seek additional financing in the form of debt or equity. There is no assurance that we will be able to obtain any needed financing on favorable terms, or at all, or that we will find qualified purchasers for the sale of our stock. Any sales of our securities would dilute the ownership of our existing investors.





20

Cash Flows - Three months ended October 31, 2022 Compared to Three months ended October 31, 2021





Operating Activities

During the three months ended October 31, 2022, $26,718 used in operating activities as compared to $412,091 used in the operations during the three months ended October 31, 2021. During the three months ended October 31, 2022, we recorded net income of $480,402, other current payable increased by $16,518 and related party payables net with receivables increased by $15,449, offset by non-cash item gain on disposal of subsidiaries of $539,230.

During the three months ended October 31, 2021, we recorded loss including noncontrolling interests of $648,160 , incurred non-cash depreciation of $28,219 , prepaid and other current receivables decreased by $116,580, other assets decreased by $74,757, other current payable increased by $35,152 , contract liabilities increased by $55,881, related party payables net with receivables decreased by $123,017, and operating lease liabilities net with operating lease assets increased by $39,003 as a result from the adoption of new lease guidance ASU No. 2016-02.





Investing activities

Nil of investing activities occurred during the three months ended October 31, 2022.

Cash used in investing activities was $127,928 for the three months ended October 31, 2021, primarily due to the expenditure of leasehold improvements in HF Int'l Education.





Financing activities

Cash provided by financing activities was $30,000 for the three months ended October 31, 2022 as compared to $529,995 cash provided by financing activities for the three months ended October 31, 2021. The cash flows provided by financing activities for the three months ended October 31, 2022 was from the proceeds of notes payable. The notes payable was borrowed from one related party with 5% annual interest rate. See Note 4 Related Party Transactions.

The cash flows provided by financing activities for the three months ended October 31, 2021 was primarily attributable to $469,995 funding support from related parties, $60,000 proceeds of notes payable. The notes payable was borrowed from one related party with 5% annual interest rate. See Note 4 Related Party Transactions.





Future Capital Expenditures

As of October 31, 2022, we have no future capital expenditures plan.





21

Off-Balance Sheet Arrangements

As of and subsequent to October 31, 2022, we have no off-balance sheet arrangements.





Contractual Commitments

As of October 31, 2022, we don't have material contractual commitments.





Critical Accounting Policies

Our significant accounting policies are disclosed in Note 1 of the footnotes to our unaudited financial statements above. There have been no other changes in our critical accounting policies since our most recent audit dated July 31, 2022.

© Edgar Online, source Glimpses