ACQUISITIONS AND DISPOSALS | NOTE 3. ACQUISITIONS AND DISPOSALS In January 2019, HFSH entered agreements to acquire 100 100 Impacted by the government regulation newly implemented in education industry and the restrictions posted by the Chinese government to control the pandemic in China since 2021, the Company’s business hasn’t been developed as planned and occurred significant loss from the early child education practice. To avoid further operation losses, subsequently on August 1, 2022, HFSH entered a contract with a related party, Shanghai Oversea Chinese Culture Media Ltd. (“SH Oversea”), to sell 90 900 5,850 100 1,000 6,500 SCHEDULE OF NET ASSETS (LIABILITIES) DISPOSED OF SUBSIDIARY Net assets (liabilities) disposed of: Cash and cash equivalents $ 4,938 Prepaid and Other current receivables 45,532 Related party receivable 428,519 Inventory 305,124 Property and equipment - Net 582,707 ROU assets-Operating lease 2,836,698 Other assets 296,218 Related party loan and payables (1,321,549 ) Contract liabilities (547,906 ) Lease liabilities, current and noncurrent (3,715,688 ) Other current payable (401,782 ) Other liabilities (357,796 ) Noncontrolling interest 1,307,586 Net assets (liabilities) of the subsidiaries, excluding noncontrolling interest (537,399 ) Consideration 1,831 Gain on disposal of the subsidiaries $ (539,230 ) The total assets and liabilities of Education and hospitality segments that were classified as held for sale on the Company’s consolidated balance sheet as of SCHEDULE OF DISCONTINUED OPERATIONS OF FINANCIAL STATEMENTS July 31, 2022 Assets Current Assets Cash and cash equivalents $ 4,938 Prepaid and Other current receivables 45,532 Related party receivable 428,519 Inventory 305,124 Property and equipment, net 582,707 ROU assets-operating lease 2,836,698 Other assets 296,218 Total Assets held for sale $ 4,499,736 Liabilities Current Liabilities Related party loan and payables $ 1,321,549 Contract liabilities 547,906 Lease liabilities, current and noncurrent 3,715,688 Other current payable 401,782 Other liabilities 357,796 Total Liabilities held for sale $ 6,344,721 The unaudited Pro Forma Condensed Consolidated Financial Statements for the three and nine months ended April 30, 2022 have been derived from the historical unaudited Condensed Consolidated Financial Statements included in the Quarterly Report on Form 10-Q for the quarterly period ended April 30, 2022 filed with the Securities and Exchange Commission (“SEC”) on July 7, 2022. The unaudited Pro Forma Condensed Consolidated Financial Statements for the years ended July 31, 2022 and 2021 have been derived from the historical audited Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended July 31, 2022 filed with the SEC on November 14, 2022. The unaudited Pro Forma Condensed Consolidated Statement of Operations for the three and nine months ended April 30, 2022 and the years ended July 31, 2022 and 2021 give effect to the dispositions as if they had occurred on August 1, 2020, the beginning of the earliest period presented. The unaudited Pro Forma Condensed Consolidated Balance Sheet as of July 31, 2022 gives effect to the dispositions as if they had occurred on July 31, 2022. The unaudited Pro Forma Condensed Consolidated Financial Statements were prepared for illustrative and informational purposes only and are not intended to represent what our results of operations or financial position would have been had the disposition occurred on the dates indicated. The unaudited Pro Forma Condensed Consolidated Financial Statements also should not be considered indicative of our future results of operations or financial position. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors. The unaudited Pro Forma Condensed Consolidated Financial Information does not reflect the realization of any expected cost savings, synergies, or dis-synergies as a result of the dispositions. The unaudited Pro Forma Condensed Consolidated Financial Statements and accompanying notes should be read in connection with the historical unaudited Condensed Consolidated Financial Statements and accompanying notes for the three and nine months ended April 30, 2022, which are included in the Quarterly Report on Form 10-Q for the quarterly period ended April 30, 2022, as well as the historical audited Consolidated Financial Statements and accompanying notes as of and for the years ended July 31, 2022 and 2021, which are included in the Annual Report on Form 10-K for the year ended July 31, 2022. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS SCHEDULE OF PRO FORMA INFORMATION Historical Less: Discontinued Operations (a) Pro Forma Continuing Operations Historical Less: Discontinued Operations (a) Pro Forma Continuing Operations Three months ended April 30, 2022 Nine months ended April 30, 2022 Historical Less: Discontinued Operations (a) Pro Forma Continuing Operations Historical Less: Discontinued Operations (a) Pro Forma Continuing Operations Tuition revenue $ 151,930 $ 151,930 $ - $ 476,842 $ 476,842 $ - Service revenue 5,840 5,840 - 37,691 37,691 - Total revenue 157,770 157,770 - 514,533 514,533 - Operating cost and expenses Cost of tuition revenue 264,084 264,084 - 866,178 866,178 - Cost of service revenue 3,884 3,884 - 18,390 18,390 - Cost of revenue 267,968 267,968 - 884,568 884,568 - Depreciation and amortization 27,958 27,958 - 90,968 90,968 - Selling, general and administrative 340,133 301,478 38,655 1,313,841 1,170,519 143,322 Goodwill impairment - Total operating cost and expenses 636,059 597,404 38,655 2,289,377 2,146,055 143,322 Operating Loss (478,289 ) (439,634 ) (38,655 ) (1,774,844 ) (1,631,522 ) (143,322 ) Other Income (Expense) Interest (expense), net (16,768 ) (13,689 ) (3,079 ) (49,629 ) (41,342 ) (8,287 ) Other income, net 52,501 52,501 - 150,560 150,420 140 Gain (loss) on disposal of subsidiary - Other income, net 35,733 38,812 (3,079 ) 100,931 109,078 (8,147 ) Income (loss) before income taxes (442,556 ) (400,822 ) (41,734 ) (1,673,913 ) (1,522,444 ) (151,469 ) Income Tax Expense 800 - 800 800 - 800 Net income (loss) (443,356 ) (400,822 ) (42,534 ) (1,674,713 ) (1,522,444 ) (152,269 ) Less: net loss attributable to noncontrolling Interest (48,090 ) (48,090 ) - (177,817 ) (177,817 ) - Net income (loss) attributable to Hartford Great Health Corp $ (395,266 ) $ (352,732 ) $ (42,534 ) $ (1,496,896 ) $ (1,344,627 ) $ (152,269 ) Net loss per common share: Basic and Diluted $ (0.00 ) $ (0.00 ) $ (0.01 ) $ (0.00 ) Weighted average shares outstanding: Basic and diluted 100,108,000 100,108,000 100,108,000 100,108,000 UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS Historical Operations Operations Historical Operations disposal Operations Year ended July 31, 2022 Year ended July 31, 2021 Recognition Less: Pro Forma Less: of loss from Pro Forma Discontinued Continuing Discontinued subsidiaries Continuing Historical Operations Operations Historical Operations disposal Operations Tuition revenue $ 509,920 509,920 $ - $ 435,149 435,149 - $ - Service revenue 51,342 51,342 - 118,310 118,310 - - Total revenue 561,262 561,262 - 553,459 553,459 - - Operating cost and expenses Cost of tuition revenue 653,784 653,784 - 684,409 684,409 - - Cost of service revenue 23,309 23,309 - 38,429 38,429 - Cost of revenue 677,093 677,093 - 722,838 722,838 - - Depreciation and amortization 122,065 122,065 - 85,103 85,103 - Selling, general and administrative 1,635,770 1,457,857 177,913 2,691,369 2,435,714 - 255,655 Goodwill impairment - - 70,514 70,514 - - Total operating cost and expenses 2,434,928 2,257,015 177,913 3,569,824 3,314,169 - 255,655 Operating Loss (1,873,666 ) (1,695,753 ) (177,913 ) (3,016,365 ) (2,760,710 ) - (255,655 ) Other Income (Expense) - - Interest (expense), net (66,587 ) (54,730 ) (11,857 ) (30,886 ) (45,692 ) 14,806 Gain (loss) on disposal of subsidiary - 104,317 (53,056 ) 51,261 Other income, net 168,471 168,331 140 101,395 45,791 55,604 Other income, net 101,884 113,601 (11,717 ) 174,826 99 (53,056 ) 121,671 Loss before income taxes (1,771,782 ) (1,582,152 ) (189,630 ) (2,841,539 ) (2,760,611 ) (53,056 ) (133,984 ) Income (loss) before income taxes (1,771,782 ) (1,582,152 ) (189,630 ) (2,841,539 ) (2,760,611 ) (53,056 ) (133,984 Income Tax Expense 800 800 800 - 800 Net Loss (1,772,582 ) (1,582,152 ) (190,430 ) (2,842,339 ) (2,760,611 ) (53,056 ) (134,784 ) Net Income (Loss) (1,772,582 ) (1,582,152 ) (190,430 ) (2,842,339 ) (2,760,611 ) (53,056 ) (134,784 Less: net loss attributable to noncontrolling Interest (193,481 ) (193,481 ) - (589,005 ) ( 589,005 ) - - Net Loss Attributable to Hartford Great Health Corp $ (1,579,101 ) (1,388,671 ) $ (190,430 ) $ (2,253,334 ) ( 2,171,606 ) (53,056 ) $ (134,784 ) Net income (loss) Attributable to Hartford Great Health Corp $ (1,579,101 ) (1,388,671 ) $ (190,430 ) $ (2,253,334 ) ( 2,171,606 ) (53,056 ) $ (134,784 Net loss per common share: Basic and Diluted $ (0.02 ) $ (0.00 ) $ (0.02 ) $ 0.00 Weighted average shares outstanding: Basic and diluted 100,108,000 100,108,000 99,790,192 99,790,192 UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET As of July 31, 2022 Less: Discontinued Pro Forma Continuing Historical Operations Operations ASSETS Current Assets Cash and cash equivalents $ 15,227 $ - $ 15,227 Prepaid and Other current receivables 1,154 - 1,154 Related party receivable 14,233 - 14,233 Current assets held for sale 4,499,736 4,499,736 - Total Current Assets 4,530,350 4,499,736 30,614 Non-current Assets Property and equipment, net 8,006 - 8,006 Total Non-current Assets 8,006 - 8,006 TOTAL ASSETS $ 4,538,356 $ 4,499,736 $ 38,620 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities Related party loan and payables $ 4,481,524 - 4,481,524 Other current payable 144,760 - 144,760 Current liabilities held for sale 6,344,721 6,344,721 - Total Current Liabilities 10,971,005 6,344,721 4,626,284 TOTAL LIABILITIES 10,971,005 6,344,721 4,626,284 Commitments and contingencies - Stockholders’ Equity (Deficit) Preferred stock - $ 0.001 5,000,000 no - - Common stock - $ 0.001 300,000,000 100,108,000 100,108 100,108 Additional paid-in capital 2,173,521 2,173,521 Accumulated deficit (7,400,620 ) (539,230 ) (6,861,390 ) Accumulated other comprehensive loss (16,742 ) (16,839 ) 97 Noncontrolling interest (1,288,916 ) (1,288,916 ) - Total Stockholders’ Deficit (6,432,649 ) (1,844,985 ) (4,587,664 ) TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT $ 4,538,356 $ 4,499,736 $ 38,620 |