NOTES
TO 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
consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United
States of America (“GAAP”). The consolidated financial statements include the financial statements of the Company
and its subsidiary. All significant inter-company balances and transactions have been eliminated on consolidation.
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 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 year ended September 30, 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 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.
The
Company had total revenue of $0 and $23,048 for the years ended September 30, 2019 and 2018, respectively. For the year ended
September 30, 2018, all revenue was to one customer.
Fair
Value of Financial Instruments
The
carrying amounts of the Company’s current financial assets and liabilities approximated their fair values due to the short maturities.
The fair value of noncurrent financial assets and liabilities are determined based on the value of the discounted cash flows.
The Company believes no material difference exists between the fair value and carry amounts of the noncurrent financial assets
and liabilities
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 September 30, 2019 and 2018, the Company had cash in bank of $836 and $127, respectively.
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.
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:
Mobile
Apps:
Revenue
from the mobile apps is recognized when control has transferred to the customer which typically occurs when the mobile apps either
upon delivery of the key code to the customer or upon the deployment of the mobile app to the App Store.
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.
During
the year ended September 30, 2019 and 2018, the Company recognized revenue from the mobile apps and maintenance services in the
amount of $0 and $23,048, 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 September 30, 2019 and 2018.
Translation
of Foreign Currency
The
Company’s functional currency is the U.S. dollar (USD), which is the Company’s reporting currency. The functional currency
of the Company’s subsidiary is Australian dollar (AUD). Assets and liabilities of its subsidiary are translated at the rate
of exchange prevailing on the balance sheet date. Equity is translated at the prevailing rate of exchange at the date of the equity
transaction. The results of its subsidiary are translated to U.S. dollars at the average exchange rates during the reporting period.
Translation adjustments are reflected in stockholders’ equity and are included as a component of other comprehensive income
(loss).
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 September 30, 2019.
As
of September 30, 2019, the Company had noncurrent loans 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.
Loans
from a shareholder
As
of September 30, 2019, the Company had loans from a shareholder of $87,136 to support its operation and the amount bears no interest
and due on demand.
The
Company borrowed from the Company’s former principal shareholder to support its operation and the amount bears no interest
and due on demand and the outstanding balance of the borrowings as of September 30, 2018 were $160,955. On May 24, 2018, the Company
issued a promissory note of $249,975, bearing interest rate at 6% and due in twelve months, to the Company’s former principal
shareholder in exchange for cash. In July 2018, the Company made a total repayment of $190,000. As of September 30, 2018, the
outstanding balance for the promissory note was $59,975. For the year ended September 30, 2018, the interest expense was $3,110.
NOTE
4 - PROPERTY AND EQUIPMENT, NET
As
of September 30, 2019 and 2018, property and equipment consisted of the following:
|
|
September 30,
|
|
|
|
2019
|
|
|
2018
|
|
Laser equipment
|
|
$
|
1,171,725
|
|
|
$
|
-
|
|
Computer equipment
|
|
|
7,378
|
|
|
|
7,378
|
|
Total
|
|
|
1,179,103
|
|
|
|
7,378
|
|
Less: accumulated depreciation
|
|
|
(279,961
|
)
|
|
|
(1,074
|
)
|
Total property and equipment, net
|
|
$
|
899,142
|
|
|
$
|
6,304
|
|
During
the year ended September 30, 2019 and 2018, the depreciation expenses were $104,985 and $1,074, 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.
NOTE
6 - STOCK-BASED COMPENSATION
The
Company accounts for stock issued for services using the fair value method in accordance with ASC 718, Stock-Based Compensation,
the measurement date of shares issued for services is the date at which the counterparty’s performance is complete.
On
January 14, 2019, under the Company’s 2019 Equity Incentive Plan, the Company issued an aggregate of 900,000 shares to a
consultant for services rendered to the Company at $0.25 per share.
On
January 30, 2019, the Company issued 200,000 shares of its common stock to two consultants for services rendered to the Company
at $0.25 per share.
On
January 31, 2019, the Company issued 150,000 shares of its common stock to other two consultants for services rendered to the
Company at $0.25 per share.
On
February 11, 2019, the Board of Directors authorized the issuance of 1,000,000 shares of the Company’s common stock to its
President for services rendered at $0.25 per share.
On
April 8, 2019, the Company issued 200,000 shares of its common stock to one consultant for services rendered to the Company at
$0.25 per share.
On
April 26, 2019, the Company issued 900,000 shares of its common stock to one consultant for services rendered to the Company at
$0.25 per share.
NOTE
7 - INCOME TAXES
The
Company provides for income taxes under the asset and liability approach in accounting for income taxes. Deferred tax assets and
liabilities are recorded based on the differences between the financial statement and tax basis of assets and liabilities and
the tax rates in effect when these differences are expected to reverse. It also requires the reduction of deferred tax assets
by a valuation allowance if based on the weight of available evidence, it is more likely than not that some or all of the deferred
tax assets will not be realized.
The
Company is subject to taxation in the United States. The Company has not recognized an income tax benefit for its operating losses
generated based on uncertainties concerning its ability to generate taxable income in future periods. The tax benefit for the
period presented is offset by a valuation allowance. For the year ended September 30, 2019 and 2018, the Company has incurred
a net loss of approximately $104 thousand and $187 thousand, respectively. The net operating losses generated in tax years prior
to December 31, 2017, can be carryforward for twenty years, whereas the net operating losses generated after December 31, 2017
can be carryforward indefinitely. Management determined that it was unlikely that the Company’s deferred tax assets would
be realized and have provided for a full valuation allowance associated with the net deferred tax assets.
|
|
For the year ended
September 30,
|
|
|
|
2018
|
|
|
2017
|
|
Deferred tax asset, generated from net operating loss at the statutory rate (21%)
|
|
$
|
307,707
|
|
|
$
|
206,551
|
|
Valuation allowance
|
|
|
(307,707
|
)
|
|
|
(206,551
|
)
|
Net deferred tax asset
|
|
$
|
-
|
|
|
$
|
-
|
|
NOTE
8 - COMMITMENTS AND CONTINGENCIES
The
Company has no commitment or contingency as of September 30, 2019.
NOTE
9 - 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.