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. ("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 January 22, 2019, the Company entered into an acquisition agreement with
Rayont Australia Pty Ltd (formerly known as "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").
On August 26, 2020, the Company established Rayont Technologies Pty Ltd. (Rayont
Technologies) through Rayout 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.
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.
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
USD215,017.19 (AUD302,876.22) 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 and customer contracts.
3
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.
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.
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 and digital content. 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.
On January 19, 2022, the Company incorporated three companies that are No More
Knots Holdings Pty Ltd, No More Knots (Clayfield) Pty Ltd and Wonder Foods
Retail Pty Ltd with a paid-up capital of $72 for each of them to carry out its
business activities in Australia.
On January 31, 2022, two subsidiaries are disposed. One subsidiary Rayont
Technologies (M) Sdn Bhd is disposed for the amount of USD40,000 and the other
subsidiary Rayont Technologies Pty Ltd is disposed for the amount of $660,000.
Both subsidiaries are acquired from Quantum Capital Inc.
Rayont Inc., through its wholly owned subsidiary No More Knots Holdings Pty Ltd,
completed the acquisition of the No More Knots Group of companies, the largest
provider of Remedial Massage and Myotherapy services in Australia. It has
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 USD2,200,000 (AUD 3,000,000) cash, payable in two tranches. The
first tranche of USD 1.8M was payable before or on 1 April, 2022 and the second
tranche of USD400,000 is payable before or on July 15, 2022 The payment is done
on May 4, 2022.
The World Health Organization designated COVID-19 as a global pandemic. To date,
the Company has experienced some adverse impacts; however, the impacts of
COVID-19 on our operating results for the nine months ended March 31, 2022 and
the March 31, 2021 was limited due to the nature of our business. The extent of
the COVID-19 impact to the Company will depend on numerous factors and
developments related to COVID-19. Consequently, any potential impacts of
COVID-19 remain highly uncertain and cannot be predicted with confidence.
Results of Operations
Comparison of the three months ended March 31, 2022 and 2021
Revenue
There were $464,698 and $951,464 revenue generated for the three months ended
March 31, 2022 and 2021, respectively. The decrease was attributable to revenues
generated from Rayont Technologies Pty Ltd that were lower this period compare
with the three months ended on March 31, 2021. The Company continues looking for
other opportunities which could potentially increase the revenues and profits of
the Company.
4
Cost of Goods Sold
There were $309,440 and $340,325 cost of goods sold for the three months ended
March 31, 2022 and 2021, respectively. The decrease was attributable to the
decreased of revenues for the quarter ended March 31, 2022.
Operating Expense
Our operating expenses consist of selling, general and administrative expenses,
depreciation and amortization expense.
For the three months ended March 31, 2022 and 2021, there were a total of
$435,153 and $575,784 operating expenses, respectively. The decrease was
primarily due to the decrease in the selling, general and administrative
expenses as the revenues for the same period is decreased.
Other Income
Other income was $514,320 and $125,401 for the three months ended March 31, 2022
and 2021, respectively. This income for three months ended March 31, 2022 was
mainly due to gain on disposal of the subsidiaries Rayont Technologies Pty Ltd
and Rayont Technologies (M) Sdn Bhd on January 31, 2022 and debt forgiven. This
income for three months ended March 31, 2021 was mainly due to tax
incentive/grant obtained in relation to approved research and development
activities carried out, due to ATO COVID19 Job Seeker and Cash Flow Boost
incentives from Australian Government.
Net (Loss) / Income
We had a net income of $80,650 for the three months ended March 31, 2022, and a
net income of $147,643 for the three months ended March 31, 2021 based on the
factors discussed above.
Comparison of the nine months ended March 31, 2022 and 2021
Revenue
There were $1,826,585 and $2,147,704 revenue generated for the nine months ended
March 31, 2022 and 2021, respectively. The decrease was attributable to revenues
generated from Rayont Technologies Pty Ltd that were lower this period compare
with the nine months ended on March 31, 2021. The Company continues looking for
other opportunities which could potentially increase the revenues and profits of
the Company.
5
Cost of Goods Sold
There were $999,906 and $865,115 cost of goods sold for the nine months ended
March 31, 2022 and 2021, respectively. The increase was attributable to the
increased cost of goods sold from Prema Life Pty Ltd from 53 % to 60%.
Operating Expense
Our operating expenses consist of selling, general and administrative expenses,
depreciation and amortization expense.
For the nine months ended March 31, 2022 and 2021, there were a total of
$1,573,045 and $1,424,106 operating expenses, respectively. The increase was
primarily due to the salary expenses incurred for the operating subsidiary, the
operating expenses generated from Prema Life, as well as the increase in the
depreciation and amortization expense due to the new intangible and tangible
assets acquired.
Other Income
Other income was $514,320 and $782,545 for the nine months ended March 31, 2022
and 2021, respectively. This income for nine months ended March 31, 2022 was
mainly due to gain on disposal of the subsidiaries Rayont Technologies Pty Ltd
and Rayont Technologies (M) Sdn Bhd on January 31, 2022 and debt forgiven. This
income for nine months ended March 31, 2021 was mainly due to tax
incentive/grant obtained in relation to approved research and development
activities carried out, due to ATO COVID19 Job Seeker, Cash Flow Boost
incentives from Australian Government and gain on purchase of assets from
Workstar Tech (Aust) Pty Ltd. On October 15, 2020, the Company entered into an
agreement to purchase the assets of Workstar Tech (Aust) Pty Ltd, from an
individual towards purchase of fair value of USD476,594.32 (AUD632,393) for
purchase consideration of USD228,258.35 (AUD302,876).
Net (Loss) / Income
We had a net loss of $534,540 for the nine months ended March 31, 2022, and a
net income of $609,528 for the nine months ended March 31, 2021 based on the
factors discussed above.
6
Liquidity and Capital Resources
As of March 31, 2022 and June 30, 2021, the Company had working capital deficit
of $2,500,022 and $1,456,964, respectively. The deficit is attributable to loans
due to a related party of $28,599 and $387,238, respectively; accounts payable
of $294,976 and $99,615, respectively; accrued liabilities of $299,689 and
$472,021, respectively; loan payable of $2,840,360 and $2,051,554, respectively;
other payables of $22,740 and $209,712, respectively. As of March 31, 2022 and
June 30, 2021, the Company had $994,708 and $1,771,364 in current assets,
respectively.
As of March 31, 2022 and June 30, 2021, we had a cash and equivalents balance of
$37,845 and $243,610, respectively. The Company's operations are primarily
funded by the revenue, other income, proceeds received from the sale of common
stock in private placements and financial support from major shareholders.
Cash Flows from Operating Activities
Net cash provided by operating activities was $272,736 for the nine months ended
March 31, 2022 compared with net cash used by operating activities of $103,470
for the nine months ended March 31, 2021. During the nine months ended March 31,
2022, the net cash provided by operating activities was attributed to net loss
of $534,540, offset by depreciation and amortization expense of $349,921, shares
issued as a compassion for services of $52,500, gain on disposal of investments
of $312,143 and payable forgiven of $118,450; an decrease in accounts receivable
of $266,761, an decrease in inventory of $75,409, an increase in accounts
payable of $189,939, a decrease in accrued liabilities of $165,884, an increase
in prepaid expense of $28,640, an increase in other assets of $41,148, an
increase in other payable of $200,478 and a decrease in other receivables of
$338,533.
During the nine months ended March 31, 2021, the net cash used by operating
activities was attributed to net income of $609,528, offset by depreciation and
amortization expense of $121,853, gain on purchase of assets of $242,934, an
increase in accounts receivable of $552,881, an increase in inventory of
$195,803, a increase in accounts payable of $80,374, a increase in accrued
liabilities of $1,673 5, an increase in prepaid expense of $26,001,a decrease in
advance to officer of $2,206, a decrease in other assets of $47 a decrease in
other receivables of $76,141, an increase in other payable of $22,327.
Cash Flows from Investing Activities
Net cash used in investing activities was $874,770 for the nine months ended
March 31, 2022 compared with net cash used in investing activities of $172,697
for the nine months ended March 31, 2021.
During the nine months ended March 31, 2022, the net cash used in investing
activities was attributed to the remaining payment in the amount of $189,511 for
the intangible assets purchased from Workstar Tech (Aust) Pty Ltd on October 15,
2020 and the payment in the amount of $685,259 done for the 32 French Avenue
property Fit Out.
During the nine months ended March 31, 2021, the net cash used in investing
activities was attributed to the purchases of property and equipment of $68,779,
payment in the amount of $105,000 for purchased of the intangible assets from
Rayont Technologies (M) Sdn Bhd and cash from acquisition of company Rayont
International (L) Ltd on September 30, 2020 in the amount of $1,082.
Cash Flow from Financing Activities
Net cash used in financing activities during the nine months ended March 31,
2022 and 2021 of $454,881 and $89,286, respectively; proceeds from loan payable
in the amount of $765,362 and $29,334, respectively; repayment to related party
in the amount of $418,697 and $494,961, respectively; issuance of common stock
in the amount of $108,216 and $579,363, respectively; adjustment in additional
paid in capital in the amount of $0 and $24,450 respectively.
Non-Cash Investing and Financing Activities
During the nine months ended March 31, 2022, issuance of common stock for
business acquisitions in the amount of $618,320 and the issuance of common stock
for acquisition of a property in the amount of $1,159,040.
During the nine months ended March 31, 2021, the issuance of common stock for
business acquisitions in the amount of $74,384 and forgiveness of debt in the
amount of $2,016,363.
Equity and Capital Resources
We had a net loss for the nine months ended March 31, 2022 and had an
accumulated deficit of $4,446,944 as of March 31, 2022. As of March 31, 2022, we
had cash of $37,845, compared to cash of $243,610 as of June 30, 2021.
We had material commitments for capital expenditures as of March 31, 2022 which
is the purchased a new property on 23 September 2021 located at 900 Sandgate
Road, Clayfield QLD, 4011, Australia for USD1,159,040, excluding GST, from
Rayont (Australia) 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.
7
© Edgar Online, source Glimpses
RAYONT INC. 
