Forward Looking Statement Notice
Certain statements made in this Quarterly Report on Form 10-Q are
"forward-looking statements" (within the meaning of the Private Securities
Litigation Reform Act of 1995) regarding the plans and objectives of management
for future operations. Such statements involve known and unknown risks,
uncertainties and other factors that may cause actual results, performance or
achievements of Crown Marketing, ("we", "us", "our" or the "Company") to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. The forward-looking
statements included herein are based on current expectations that involve
numerous risks and uncertainties. The Company's plans and objectives are based,
in part, on assumptions involving the continued expansion of business.
Assumptions relating to the foregoing involve judgments with respect to, among
other things, future economic, competitive and market conditions and future
business decisions, all of which are difficult or impossible to predict
accurately and many of which are beyond the control of the Company. Although the
Company believes its assumptions underlying the forward-looking statements are
reasonable, any of the assumptions could prove inaccurate and, therefore, there
can be no assurance the forward-looking statements included in this Quarterly
Report will prove to be accurate. In light of the significant uncertainties
inherent in the forward-looking statements included herein, the inclusion of
such information should not be regarded as a representation by the Company or
any other person that the objectives and plans of the Company will be achieved.
History and Organization
America Great Health, formerly Crown Marketing, is a Wyoming corporation (the
"Company"). A change of control of the Company was completed on January 19, 2017
from Jay Hooper, the former officer and director of the Company and its former
majority shareholder. Control was obtained by the sale of 16,155,746,000 shares
of Company common stock from Mr. Hooper to an investor group led by Mike Q.
Wang. In connection with the change of control, the Company sold to its former
majority shareholder a subsidiary for $100 and another subsidiary in exchange
for the cancellation of all payables and accrued expenses. After December 31,
2016, the Company's operations are determined and structured by the new investor
group. As such, the Company accounted for all of its assets, liabilities and
results of operations up to January 1, 2017 as discontinued operations.
On March 1, 2017, the Company filed with the Secretary of State of the State of
Wyoming an Articles of Amendment to change the corporate name from Crown
Marketing to America Great Health.
On March 9, 2017, the Company formed a wholly owned subsidiary, America Great
Health, under the laws of the State of California.
On June 24, 2019, the Company registered a wholly owned subsidiary in China,
Meizhong Health Industry Development Co., Ltd. The subsidiary is mainly engaged
in merger and acquisition, investment and financing, and marketing of medical
equipment and health products in China.
On June 30, 2020, the Company and Purecell Group ("Purecell"), a leading
anti-aging medical institution in Australia, entered into a Cooperation
Agreement, in which the Company agreed to acquire 51% of the equity of Purecell,
as consideration, the Company shall issue 510,000,000 common shares to
Purecell's nominated trustee. Upon completion of the acquisition transaction,
Purecell shall remain autonomy in its day to day operation, including recruiting
and retaining management team members. On February 10, 2021, the Company
completed its financial and legal due diligence. This transaction was completed
in May 2021.
On December 7, 2020, America Great Health, a California Corporation ("AAGH
California"), a wholly owned subsidiary of the Company, entered into a
Cooperation Agreement (the "Agreement") with Brilliant Healthcare Limited.
("Brilliant") pursuant to which the parties will establish a joint venture in
China (the "JV Company") for the purpose of promoting and developing stem cell
related product's R&D, production, sales, row material procumbent, mergers and
acquisitions, and consulting services. As of the time of filing these financial
statements with the Company's quarterly report, the formation of the JV Company
has not been completed. After the formation of the JV company is completed, the
Company shall invest USD $4.2 million in the JV Company within the next 24
months for 60% equity ownership of the JV Company, Brilliant shall transfer its
patented technology to the JV Company as its capital contribution, to account
for 40% equity ownership. As a condition for AAGH to obtain 60% equity in the JV
company and a as the founder of Brilliant, Dr. Aihua Guo agrees to transfer its
patent to the JV company as its share of contribution, and AAGH also agrees to
pay Dr. Aihua Guo additional compensation, which includes: (i) AAGH transfers
300 million original shares of AAGH to Dr. Aihua Guo at no cost, valuing at $15
million; (ii) AAGH pays Dr. Aihua Guo a one-time cash compensation of $3 million
with the following payment schedule: AAGH agrees to pay $500,000 to Dr. Aihua
Guo six months from the date of signing of this Agreement, $1.5 million to Dr.
Aihua Guo 12 months from the date of signing of this Agreement, and $1 million
to Dr. Aihua Guo 24 months from the date of signing of this Agreement. In June
2021, the JV Company was established in Hainan, China, fully known as Sijinsai
(Hainan) Biological Tech Ltd. On July 9, 2021, the Company paid the first
investment of $50,000. In July 2021, the Company paid Dr. Aihua Guo $100,000 as
prepaid expense.
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On September 3, 2021, America Great Health (the "Company") entered into an
Assets Acquisition Agreement with Wang's Property Investment & Management LLC to
purchase 53 units in 19 real estate properties appraised at $7,626, 286 for a
purchase price of $7,000,000 (the "Agreement"). The purchase price shall be paid
as follows : (i) $1,000,000 on execution of the Agreement, (ii) $2,000,000
within 60 days thereof and (iii) the remainder by April 10, 2022. The Agreement
is subject to customary closing conditions, including, satisfactory due
diligence.
On September 9, 2021, America Great Health (the "Company") entered into an
Agreement with Wang's Property Investment & Management LLC ("Wang") to purchase
some real estate properties held by Wang for a purchase price of $7,000,000. The
Company and Wang have both agreed that they will not conduct due diligence in
order for the transaction to proceed (the "transaction", the "Agreement"). As of
the reporting date, the Company has not made any payment for the transaction and
the transaction has not completed.
The properties acquired are commercial and residential properties located in
Illinois for rental purposes. AAGH was purchased with a cash contribution of
$7,000,000 and paid before April 10, 2022. The company will set up a management
department or have professionals to manage and operate the property.
On November 4, 2021, the Company set up a 100% owned subsidiary Nutrature Health
LLC.
On November 11, 2021, America Great Health (the "Company") entered into an
Advisory Committee Member Consulting Agreement with Dr. Kevin Buckman MD
("Consultant"). Pursuant to the Agreement, Consultant is to provide advisory
services, as a member to the Advisory Committee to the Board of Directors of the
Company, including without limitation, assisting GOF Biotechnologies Inc. in its
new drug approval process for oral insulin and Amylase X. Consultant shall be
compensated with a warrant to purchase 500,000 shares of the Company at $0.01
per share within 24 months and a warrant at each of the following stages: IND
application, Phase I clinical trials, Phase II clinical trials, Phase III
clinical trials and the sale of GOF Biotechnologies Inc. the license of oral
insulin and Amylase X at Phase I or Phase II clinical trials stages. This
Agreement shall be for an initial one-year term and shall renew automatically
for successive one-year terms up to a maximum of three (3) years unless
terminated by either party pursuant to the Agreement.
On November 15, 2021, the Company set up a 100% owned subsidiary Gof
Biotechnologies Inc. GOF is 75% majority owned (60,000,000 shares of common
stock) by the Company and the remaining 25% of its issued and outstanding shares
(20,000,000 shares of common stock) are held by Men Hwei, Tsai. On December 31,
2021, the Company entered into a Supplementary Agreement with Zhigong Lin to
amend his prior employment agreement with the Company dated August 31, 2021. The
Supplement Agreements provides, inter alia, that Zhigong Lin will be appointed
Chief Executive Officer of GOF.
Overview of Business
Our mission is to invest in innovative technologies intergrated with business
development in the healthcare ecosystem.
We are focused on protein and peptide small molecular drugs research and
development, diagnostic and medical devices with AI cloud computing, cell
therapy and regenerational medicine and supplements manufacturing and sales.
On September 3, 2021, the Company entered into an Assets Acquisition Agreement
with Wang's Property Investment & Management LLC to purchase 53 units in 19 real
estate properties appraised at $7,626, 286.37 for a purchase price of
$7,000,000, The purchase price shall be paid as follows : (i) $1,000,000 on
execution of the Agreement, (ii) $2,000,000 within 60 days thereof and (iii) the
remainder by April 10, 2022. The Agreement is subject to customary closing
conditions, including, satisfactory due diligence. On September 9, 2021, the
Company entered into a Supplemental Assets Acquisition Agreement with Wang's
Property Investment & Management LLC to amend and clarify that (i) it was
purchasing 19 real estate properties which includes 53 units appraised at
$7,626,286.37 for a purchase price of $7,000,000 and (ii) that it will waive and
not conduct due diligence in order for the transaction to proceed. The
acquisition has not been consummated. With the asset acquisition from Wang's
Property Investment & Management LLC, the Company will diversify its business
into property investment and management.
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Results of Operations
Results of Operations for the three and nine months ended March 31, 2022
compared to the three and nine months ended March 31, 2021.
Sales amounted $2,744 and $195,535 for the three months ended March 31, 2022 and
2021, respectively. Sales amounted $158,424 and $195,671 for the nine months
ended March 31, 2022 and 2021, respectively.
Cost of goods sold amounted $360 and $143,905 for the three months ended March
31, 2022 and 2021, respectively. Cost of goods sold amounted $1,551,367 and
$144,049 for the nine months ended March 31, 2022 and 2021, respectively.
Gross profit amounted $2,384 and $51,630 for the three months ended March 31,
2022 and 2021, respectively. Gross loss amounted $1,392,943 and gross profit was
$51,622 for the nine months ended March 31, 2022 and 2021, respectively.
Operating expenses incurred for the three months ended March 31, 2022 and 2021
was $649,642 and $98,689, respectively. Operating expenses incurred for the nine
months ended March 31, 2022 and 2021 was $1,305,821 and $134,502, respectively.
Our net loss for the three months ended March 31, 2022 and 2021 was $606,791 and
$49,216, respectively. Our net loss for the nine months ended March 31, 2022 and
2021 was $2,739,121 and $88,151, respectively. The decrease in net loss was
mainly due to decrease in professional fees.
Liquidity and Capital Resources
Liquidity is the ability of a company to generate funds to support its current
and future operations, satisfy its obligations, and otherwise operate on an
ongoing basis. Significant factors in the management of liquidity are funds
generated by operations, levels of accounts receivable and accounts payable and
capital expenditures.
The accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the settlement
of liabilities and commitments in the normal course of business. As reflected in
the accompanying consolidated financial statements, the Company has incurred
recurring net losses. For the nine months ended March 31, 2022, the Company
recorded a net loss of $2,739,121, used cash to fund operating activities of
$1,068,932, cash used for investing activities of $16,852 and cash provided by
financing activities of $795,952. For the nine months ended March 31, 2021, the
Company recorded a net loss of $88,151, used cash to fund operating activities
of $97,025 and cash provided by financing activities of $122,112. These factors
create substantial doubt about the Company's ability to continue as a going
concern. The financial statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going concern.
The Company is raising the additional capital to achieve profitable operations.
Our cash needs for the nine months ended March 31, 2022 were primarily met by
loans and advances from current majority shareholder. As of March 31, 2022, we
had a cash balance of $106,304. Our new majority shareholders will need to
provide all of our working capitals going forward.
Primarily as a result of our recurring losses and our lack of liquidity, we
received a report from our independent registered public accounting firm for our
financial statements for the nine months ended March 31, 2022 that includes an
explanatory paragraph describing the uncertainty as to our ability to continue
as a going concern.
Financial Position
As of March 31, 2022, we had $106,304 in cash, negative working capital of
$1,068,929 and an accumulated deficit of $6,294,814.
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Critical Accounting Policies and Estimates
Estimates
The preparation of these consolidated financial statements ("CFS") in accordance
with accounting principles generally accepted in the United States of America
("GAAP") requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of contingent assets
and liabilities at the dates of the consolidated financial statements and the
reported amounts of net sales and expenses during the reported periods. Actual
results may differ from those estimates and such differences may be material to
the financial statements. The more significant estimates and assumptions by
management include among others, the fair value of shares of common stock issued
for services. The current economic environment has increased the degree of
uncertainty inherent in these estimates and assumptions.
Revenues
Revenue from sale of goods under Topic 606, Revenue from Contracts with
Customers, is recognized in a manner that reasonably reflects the delivery of
the Company's products and services to customers in return for expected
consideration and includes the following elements:
? executed contract(s) with customers that the Company believes is legally
enforceable;
? identification of performance obligation in the respective contract;
? determination of the transaction price for each performance obligation in the
respective contract;
? allocation of the transaction price to each performance obligation; and
? recognition of revenue only when the Company satisfies each performance
obligation.
Inventories
Inventories are stated at the lower of cost (first-in, first-out) or net
realizable value. Adjustments to reduce the cost of inventory to its net
realizable value are made, if required, for estimated excess, obsolescence, or
impaired balances.
Fair Value Measurements
Fair value measurements are determined using authoritative guidance issued by
the FASB, with the exception of the application of the guidance to
non-recurring, non-financial assets and liabilities as permitted. Fair value is
defined in the authoritative guidance as the price that would be received to
sell an asset or paid to transfer a liability in the principal or most
advantageous market for the asset or liability in an orderly transaction between
market participants at the measurement date. A fair value hierarchy was
established, which prioritizes the inputs used in measuring fair value into
three broad levels as follows:
Level 1-Quoted prices in active markets for identical assets or liabilities.
Level 2-Inputs, other than the quoted prices in active markets, are observable
either directly or indirectly.
Level 3-Unobservable inputs based on the Company's assumptions.
The Company is required to use observable market data if available without undue
cost and effort.
The Company's financial instruments include cash and accounts payable.
Management has estimated that the carrying amounts approximate their fair value
due to the short-term nature.
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Loss per Share
Basic earnings (loss) per share are computed by dividing income available to
common shareholders by the weighted-average number of common shares available.
Diluted earnings (loss) per share is computed similar to basic earnings per
share except that the denominator is increased to include the number of
additional common shares that would have been outstanding if the potential
common shares had been issued and if the additional common shares were dilutive.
The Company's diluted loss per share is the same as the basic loss per share for
the nine months ended March 31, 2022 and 2021, as there are no potential shares
outstanding that would have a dilutive effect.
Income Taxes
Income tax expense is based on pretax financial accounting income. Deferred tax
assets and liabilities are recognized for the expected tax consequences of
temporary differences between the tax bases of assets and liabilities and their
reported amounts. Valuation allowances are recorded to reduce deferred tax
assets to the amount that will more likely than not be realized. The Company
recorded a valuation allowance against its deferred tax assets as of March 31,
2022 and June 30, 2021.
The Company accounts for uncertainty in income taxes using a two-step approach
to recognizing and measuring uncertain tax positions. The first step is to
evaluate the tax position for recognition by determining if the weight of
available evidence indicates that it is more likely than not that the position
will be sustained on audit, including resolution of related appeals or
litigation processes, if any. The second step is to measure the tax benefit as
the largest amount that is more than 50% likely of being realized upon
settlement. The Company classifies the liability for unrecognized tax benefits
as current to the extent that the Company anticipates payment (or receipt) of
cash within one year. Interest and penalties related to uncertain tax positions
are recognized in the provision for income taxes.
Recent Accounting Pronouncements
See Footnote 2 of the financial statements for a discussion of recently issued
accounting standards.
Contractual Obligations and Off-Balance Sheet Arrangements
We do not have any contractual obligations or off-balance sheet arrangements.
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