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.(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”.
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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 Labuan 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 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”).This company was sold on September 1, 2022 .
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.
On August 26, 2020 , the Company established Rayont Technologies Pty Ltd.
(Rayont Technologies) through Rayont 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.This company was sold on January 31, 2022 .
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 PhotosoftTM 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 exclusive license for License for Sub-Sahara Africa
was sold on June 29, 2022 for the amount of USD 2,500,000 to the Nova Medical Group Pty Ltd.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 AUD 302,876.22 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.Rayont Technologies Pty Ltd was sold on January 31, 2022 .4
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.Prema Life Pty Ltd was sold on September 1, 2022 .
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.
This company was sold on September 1, 2022 .
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, digital content and three key employees.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.Rayont Technologies (M) Sdn Bhd was sold on January 31, 2022 .
On April 1, 2022 under the agreement Rayont Inc.
, through its wholly owned subsidiary No More Knots Holdings Pty Ltd , 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 AUD3,000,000 (approximately USD 2,247,865 ) cash, payable in two tranches.
The first trench of USD1,910,685 (AUD2,550,000) is paid on May 4, 2022 and the second tranche of USD337,180 (AUD450,000) is payable before or on January 31, 2023 if three conditions are met namely;
1.
Achievement of EBIDTA of USD500,000 (AUD700,000) by June 30, 2022 .
2.
Former owner remain and transition the business until December 31, 2022 .
3.Complete the opening of new branch by December 31,2022 .
As of June 30,2022 the business failed to meet the first condition so the amount of the USD110,000 (AUD150,000) has been deducted from the purchase price.
The remaining conditions have been met by the vendor and as of December 29,2022 is unconditional and it has been agreed to be paid on 31 January 2023 .
No More Knots is home to over 45 tertiary qualified therapists who specialise in Remedial Massage and Myotherapy
As of this filing date, the Company has not completed and file its Form 8K as required by the SEC rules and regulations.The Company is in the process of completing all necessary documentation for the Form 8K filling in due time.
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On May 14, 2022 Wonderfoods Retail Pty Ltd , a wholly owned subsidiary of Rayont (Australia) Pty Ltd , entered into an agreement with Jovestone Pty Ltd to purchase the business of Go Vita at Capalaba in consideration for USD6,918 (AUD10,000) and existing stock value at USD64,337 (AUD93,000) payable in three instalments.The total payment for the purchase of the business completed on August 17, 2022 .
On June 29, 2022 Rayont (Australia) Pty Ltd (“Asset Seller”), Rayont International (L) Limited (“License Seller”) and Nova Medical Group Pty Ltd (“Buyer”) signed the Asset Sale Agreement for sale of Next Generation Photo Dynamic Therapy (NGPDT) License for Sub- Sahara Africa
and its equipment for a consideration of USD3,500,000 where the consideration is split as follows: ? License for Sub- Sahara Africa
– USD 2,500,000 ? Equipment – USD 1,000,000
On July 1, 2022 , under the agreement Rayont Inc., through its wholly owned subsidiary No More Knots (Ipswich) Pty Ltd , acquired the business of the Ipswich Massage from buyer OneDose Pty Ltd , in exchange for AUD825,000 (approximately USD600,000 ).Rayont will pay the purchase price in four instalments.As of today, it is remaining the last instalment that is due on July 5, 2023 in the amount of AUD51,000 (USD).
The Company assesses this business acquisition and accounts for this transaction under ASC805 “Business Combination”.The fair value of the business acquired is considered provisional and subject to adjustment as additional information may obtain through the measurement period.
On August 22, 2022 , under the agreement Rayont Inc., through its wholly owned subsidiary Rayont Australia Pty Ltd , acquired 100% of the total outstanding shares and units of The SkinDNA Company Pty Ltd , in exchange for AUD750,000 (approximately USD500,000 ).
Rayont paid by issuing 1,524,044 of its shares to the shareholder of record of The Skin DNA Company Pty Ltd.The Corporation’s common stock was valued at USD0.34 per share on the OTC Markets on August 22, 2022 .
On November 25, 2022 , the Company received a termination request from the former shareholders of The SkinDNA Company Pty Ltd.Both parties are discussing ways how to resolve the concerns each party has through informal mediation.
On September 1, 2022 , Rayont Inc.
, through its wholly owned subsidiary Rayont Holdings Pty Ltd (formerly known as No More Knots Holdings Pty Ltd ) incorporated Biomimic Pty Ltd for the amount of $70 .
On September 1, 2022 , Rayont Inc., through its wholly owned subsidiary Rayont Holdings Pty Ltd (formerly known as No More Knots Holdings Pty Ltd ) incorporated Health Script Pty Ltd for the amount of $70 .
On September 1, 2022 , under the agreement Rayont Inc., through its wholly owned subsidiary Health Script Pty Ltd , acquired the assets from Tugun Compounding Pty Ltd , in exchange for AUD665,000 (approximately USD450,870 ).The sum of USD265,520 (AUD390,000) is made as “the Cash Payment” and USD 185,350 (AUD275,000) is paid by issuing 545,147 shares at $0.34 per share of Rayont Inc to the shareholder of record of Tugun Compounding Pty Ltd.
The Company is in the midst of assessing this acquisition whether should be accounted for as an acquisition of business or a group of assets under ASC805 “Business Combination”.
On September 1, 2022 , under the agreement Rayont Inc., sold 100% of the total outstanding shares and units of Rayont (Australia) Pty Ltd , Prema Life Pty Ltd and Rayont Properties Pty Ltd ATF Rayont Property Trust , in exchange for AUD4,944,225 (approximately USD3,352,185 ) to the buyer Exit Properties Pty Ltd.
On September 3, 2022 , under the agreement Rayont Inc., through its wholly owned subsidiary Health Script Pty Ltd , acquired intangible and tangible assets from Prema Life Pty Ltd , in exchange for AUD1,050,000 (approximately USD718,725 ).
The Company is in the midst of assessing this acquisition whether should be accounted for as an acquisition of business or a group of assets under ASC805 “Business Combination”.
About Rayont Inc
Rayont Inc is a Nevada USA company.Rayont operates in the personalized natural healthcare sector in USA and Australia .
Rayont uses scientific tools such as DNA, microbiome, iridology and other tests to personalize diagnoses, prescription and treatments of natural complementary and alternative medicine products, services and treatments to our patients in the markets we operate.
Results of Operations
Comparison of the three months ended December 31, 2022 and 2021
Revenue
There were $1,419,425 and $674,364 revenue generated for the three months ended December 31, 2022 and 2021, respectively.
The increase was attributable to revenues generated from new subsidiaries that are acquired like No More Knots Pty Ltd , No More Knots (Taringa) Pty Ltd , No More Knots (Newmarket) Pty Ltd and some other subsidiaries that are incorporated like Wonder Foods Retail Pty Ltd , No More Knots (Ipswich) Pty Ltd and Health Script Pty Ltd , that were not part of the Company during the quarter ended on December 31, 2021 .The Company continues looking for other opportunities which could potentially increase the revenues and profits of the Company.
6 Cost of Goods Sold
There were $531,504 and $361,116 cost of goods sold for the three months ended December 31, 2022 and 2021, respectively.The increase was attributable to the increased of revenues significantly for the quarter ended December 31, 2022 .
Operating Expense
Our operating expenses consist of selling, general and administrative expenses, depreciation and amortization expense.
For the three months ended December 31, 2022 and 2021, there were a total of $1,158,328 and $559,901 operating expenses, respectively.The increase was primarily due to the increase in the revenues and increase of the staff for the Company.
Other Income
Other income was $nil for the three months ended December 31, 2022 and 2021, respectively.
Net Income / (Loss)
We had a net loss of $301,610 for the three months ended December 31, 2022 , and a net loss of $348,081 for the three months ended December 31, 2021 based on the factors discussed above.
Comparison of the six months ended December 31, 2022 and 2021
Revenue
There were $2,788,102 and $1,361,887 revenue generated for the six months ended December 31, 2022 and 2021, respectively.The increase was attributable to revenues generated from new subsidiaries that are acquired like No More Knots Pty Ltd , No More Knots (Taringa) Pty Ltd , No More Knots (Newmarket) Pty Ltd and some other subsidiaries that are incorporated like Wonder Foods Retail Pty Ltd , No More Knots (Ipswich) Pty Ltd and Health Script Pty Ltd , that were not part of the Company during the six months ended on December 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 $1,101,919 and $690,466 cost of goods sold for the six months ended December 31, 2022 and 2021, respectively.
The increase was attributable to the increased of revenues significantly for the six months ended December 31, 2022 .
Operating Expense
Our operating expenses consist of selling, general and administrative expenses, depreciation and amortization expense.
For the six months ended December 31, 2022 and 2021, there were a total of $2,190,774 and $1,137,892 operating expenses, respectively.
The increase was primarily due to the increase in the revenues and increase of the staff for the Company.
Other Income
Other income was $851,844 and $nil for the six months ended December 31, 2022 and 2021, respectively.This income for six months ended December 31, 2022 was mainly due to gain on disposal of the subsidiaries Rayont (Australia) Pty Ltd , Prema Life Pty Ltd and Rayont Properties Pty Ltd on September 1, 2022 in the amount of $474,026 ; the amount of $91,936 from debt waiver by payable in two subsidiaries of the Company; The amount of $285,882 that is generated as a result of the sale of three subsidiaries Rayont (Australia) Pty Ltd , Prema Life Pty Ltd and Rayont Properties Pty Ltd on September 1, 2022 in the consolidation of the financial statements of the group.
Net Income / (Loss)
We had a net income of $199,898 for the six months ended December 31, 2022 , and a net loss of $615,190 for the six months ended December 31, 2021 based on the factors discussed above.
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Liquidity and Capital Resources
As of December 31, 2022 and June 30, 2022 , the Company had working capital of $1,237,993 and working capital deficit of $83,884 , respectively.The deficit is attributable to loans due to a related party of $128,677 , accounts payable of $384,355 , accrued liabilities of $470,689 , loan payable of $2,481,440 , other payables of $278,800 and finance lease of $10,983 , operating lease liabilities of $112,333 at June 30, 2022 .
As of December 31, 2022 and June 30, 2022 , the Company had $4,245,765 and $3,783,393 in current assets, respectively.
As of December 31, 2022 and June 30, 2020 , we had a cash and equivalents balance of $10,652 and $185,782 , respectively.The Company’s operations are primarily funded by the revenue, other income, proceeds received from loan payable and financial support from major shareholders.
Cash Flows from Operating Activities
Net cash provided by operating activities was $226,616 for the six months ended December 31, 2022 compared with net cash used by operating activities of $324,554 for the six months ended December 31, 2021 .
During the six months ended December 31, 2022 , the net cash provided by operating activities was attributed to net income of $199,898 , offset by depreciation and amortization expense of $32,942 , gain on disposal of investments of $70,392 and Debt waiver by payable of $91,936 ; an increase in accounts receivable of $526,683 , an decrease in inventory of $82,987 , an increase in accounts payable of $97,116 , a increase in accrued liabilities of $530,272 , an decrease in prepaid expense of $8,384 , an increase in other assets of $2,384 , an increase in other payable of $36,814 and an increase in other receivables of $70,402 .
During the six months ended December 31, 2021 , the net cash used by operating activities was attributed to net loss of $615,190 , offset by depreciation and amortization expense of $229,898 , share issued for compensation for service of $26,250 ; an decrease in accounts receivable of $183,408 , an decrease in inventory of $37,764 , an increase in accounts payable of $195,845 , a decrease in accrued liabilities of $16,384 , a increase in prepaid expense of $49,283 , an increase in other assets of $26,675 an decrease in other receivables of $341,330 , an increase in other payable of $17,591 .
Cash Flows from Investing Activities
Net cash used in investing activities was $637,712 for the six months ended December 31, 2022 compared with net cash used in investing activities of $884,117 for the six months ended December 31, 2021 .
During the six months ended December 31, 2022 , the net cash used in investing activities was attributed to the purchases of property and equipment of $71,189 , payment in the amount of $340,294 for purchased of the intangible assets from Health Script Pty Ltd and payment in the amount of $226,229 for the acquisition of subsidiaries from No More Holdings Pty Ltd.
During the six months ended December 31, 2021 , the net cash used in investing activities was attributed to the purchases of property and equipment of $694,010 , payment in the amount of $190,107 for purchased of the intangible assets from Rayont Technologies Pty Ltd.
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Cash Flow from Financing Activities
Net cash used in financing activities during six months ended December 31, 2022 and 2021 of $238,190 and $331,276 , respectively; proceeds from loan payable in the amount of $76,610 and $651,465 , respectively; proceeds / repayment to related party in the amount of $161,580 and $428,405 , respectively; issuance of common stock in the amount of Nil$ and $108,216 , respectively.
Non-Cash Investing and Financing Activities
During the six months ended December 31, 2022 , issuance of common stock for business acquisitions in the amount of $518,175 and issuance of common stock for acquisition of equipment in the amount of $185,350 .
During the six months ended December 31, 2021 , the issuance of common stock for business acquisitions in the amount of $618,320 and issuance of common stock for acquisition of a property in the amount of $1,159,040 ; issuance of common stock in the amount of $26.250 for compensation of the services.
Equity and Capital Resources
We had a net income for the six months ended December 31, 2022 and had an accumulated deficit of $3,435,045 as of December 31, 2022 .As of December 31, 2022 , we had cash of $10,652 , compared to cash of $185,782 as of June 30, 2022 .
We had material commitments for capital expenditures as of December 31, 2022 which are the purchased of new assets and business for USD1,635,017 from Health Script Pty Ltd , No More Knots (Ipswich) 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.
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