Nature
and Continuance of Operations
(Note 1)
The
accompanying notes are an integral part of these consolidated interim financial statements.
HQDA
Elderly Life Network Corp.
(formerly
Hartford Retirement Network Corp.)
Consolidated
Interim Statements of Operations
(Expressed
in U.S. Dollars)
(Unaudited)
|
|
|
|
|
For the three
months ended
31 December 2018
|
|
|
For the three
months ended
31 December 2017
|
|
|
For the six
months ended
31 December 2018
|
|
|
For the six
months ended
31 December 2017
|
|
|
|
Note
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
180,682
|
|
|
|
-
|
|
|
|
222,464
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank charges and interest
|
|
|
|
|
|
|
225
|
|
|
|
139
|
|
|
|
338
|
|
|
|
244
|
|
Consulting fees
|
|
|
|
|
|
|
-
|
|
|
|
8,500
|
|
|
|
73,250
|
|
|
|
41,000
|
|
Depreciation
|
|
|
5
|
|
|
|
63,176
|
|
|
|
570
|
|
|
|
110,973
|
|
|
|
570
|
|
Filing and financing fees
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,665
|
|
Foreign exchange loss
|
|
|
|
|
|
|
28,244
|
|
|
|
-
|
|
|
|
310,726
|
|
|
|
-
|
|
Legal and accounting
|
|
|
|
|
|
|
65,600
|
|
|
|
13,676
|
|
|
|
101,212
|
|
|
|
38,085
|
|
Management fees
|
|
|
7
|
|
|
|
26,000
|
|
|
|
27,500
|
|
|
|
50,000
|
|
|
|
50,000
|
|
Office and miscellaneous
|
|
|
|
|
|
|
141,709
|
|
|
|
184
|
|
|
|
152,590
|
|
|
|
1,394
|
|
Regulatory fees
|
|
|
|
|
|
|
6,353
|
|
|
|
3,522
|
|
|
|
8,042
|
|
|
|
13,522
|
|
Rent
|
|
|
|
|
|
|
2,850
|
|
|
|
2,850
|
|
|
|
5,700
|
|
|
|
6,650
|
|
Transfer agent fees
|
|
|
|
|
|
|
3,175
|
|
|
|
-
|
|
|
|
3,175
|
|
|
|
4,150
|
|
Travel
|
|
|
|
|
|
|
22,000
|
|
|
|
3,108
|
|
|
|
31,024
|
|
|
|
3,380
|
|
Stock based compensation
|
|
|
6, 7
|
|
|
|
-
|
|
|
|
-
|
|
|
|
27,125,714
|
|
|
|
-
|
|
Website development
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
68,613
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before other item
|
|
|
|
|
|
|
178,650
|
|
|
|
60,049
|
|
|
|
27,818,893
|
|
|
|
160,660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other item
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
3
|
|
|
|
73,791
|
|
|
|
-
|
|
|
|
77,362
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period
|
|
|
|
|
|
|
104,859
|
|
|
|
60,049
|
|
|
|
27,741,531
|
|
|
|
160,660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per common share
|
|
|
|
|
|
|
(0.00
|
)
|
|
|
(0.00
|
)
|
|
|
(0.23
|
)
|
|
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding
|
|
|
|
|
|
|
137,110,565
|
|
|
|
42,283,261
|
|
|
|
121,225,344
|
|
|
|
33,863,478
|
|
The
accompanying notes are an integral part of these consolidated interim financial statements.
HQDA
Elderly Life Network Corp.
(formerly
Hartford Retirement Network Corp.)
Consolidated
Interim Statements of Cash Flows
(Expressed
in U.S. Dollars)
(Unaudited)
|
|
For the six
months ended
31 December 2018
|
|
|
For the six
months ended
31 December 2017
|
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(27,741,531
|
)
|
|
|
(160,660
|
)
|
Adjustments to reconcile loss to net cash used by operating activities
|
|
|
|
|
|
|
|
|
Accrued interest
|
|
|
(73,774
|
)
|
|
|
-
|
|
Depreciation
|
|
|
110,973
|
|
|
|
570
|
|
Foreign exchange
|
|
|
28,454
|
|
|
|
-
|
|
Stock based compensation
|
|
|
27,125,714
|
|
|
|
-
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
Decrease in amounts receivable
|
|
|
-
|
|
|
|
50,000
|
|
Increase in prepaid expenses
|
|
|
(44,642
|
)
|
|
|
(6,467
|
)
|
Increase (decrease) in accounts payable and accrued liabilities
|
|
|
53,975
|
|
|
|
(6,256
|
)
|
Increase in unearned revenues
|
|
|
9,822
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(531,009
|
)
|
|
|
(122,813
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
Purchase of properties and equipment
|
|
|
(6,793,311
|
)
|
|
|
(3,156
|
)
|
Loans receivable
|
|
|
(5,621,584
|
)
|
|
|
(362,879
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
(12,414,895
|
)
|
|
|
(366,035
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
Issuance of common shares for cash
|
|
|
4,141,203
|
|
|
|
635,791
|
|
Loan from related parties
|
|
|
-
|
|
|
|
18,482
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,141,203
|
|
|
|
654,273
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash
|
|
|
(8,714,701
|
)
|
|
|
165,425
|
|
|
|
|
|
|
|
|
|
|
Cash, beginning
|
|
|
9,701,075
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash, ending
|
|
|
986,374
|
|
|
|
165,425
|
|
Supplemental
Disclosures with Respect to Cash Flows
(Note 8)
The
accompanying notes are an integral part of these consolidated interim financial statements.
HQDA Elderly Life Network Corp.
(formerly
Hartford Retirement Network Corp.)
Consolidated
Interim Statements of Changes in Stockholders’ Equity
(Expressed
in U.S. Dollars)
|
|
|
|
|
Number
of
shares issued
|
|
|
Capital
stock
|
|
|
Additional
paid-in capital
|
|
|
Share
subscriptions
received in
advance /
receivable
|
|
|
Deficit
|
|
|
Total
stockholders’
equity
|
|
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at 30 June 2017
|
|
|
|
|
|
|
9,945,000
|
|
|
|
9,945
|
|
|
|
1,086,255
|
|
|
|
-
|
|
|
|
(1,061,987
|
)
|
|
|
34,213
|
|
Common
shares issued for cash
|
|
|
6
|
|
|
|
32,610,000
|
|
|
|
32,610
|
|
|
|
1,597,890
|
|
|
|
(994,709
|
)
|
|
|
-
|
|
|
|
635,791
|
|
Net
loss
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(160,660
|
)
|
|
|
(160,660
|
)
|
Balance
at 31 December 2017 (Unaudited)
|
|
|
|
|
|
|
42,555,000
|
|
|
|
42,555
|
|
|
|
2,684,145
|
|
|
|
(994,709
|
)
|
|
|
(1,222,647
|
)
|
|
|
509,344
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
shares issued for cash
|
|
|
6
|
|
|
|
37,370,000
|
|
|
|
37,370
|
|
|
|
6,580,239
|
|
|
|
994,709
|
|
|
|
-
|
|
|
|
7,612,318
|
|
Share subscriptions
received
|
|
|
6
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
18,189,623
|
|
|
|
-
|
|
|
|
18,189,623
|
|
Net
loss
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(306,822
|
)
|
|
|
(306,822
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 30 June
2018
|
|
|
|
|
|
|
79,925,000
|
|
|
|
79,925
|
|
|
|
9,264,384
|
|
|
|
18,189,623
|
|
|
|
(1,529,469
|
)
|
|
|
26,004,463
|
|
Common
shares issued – related party
|
|
|
6,
7
|
|
|
|
41,731,867
|
|
|
|
41,732
|
|
|
|
33,343,762
|
|
|
|
(6,259,780
|
)
|
|
|
-
|
|
|
|
27,125,714
|
|
Common shares issued
|
|
|
6
|
|
|
|
15,471,146
|
|
|
|
15,472
|
|
|
|
12,398,146
|
|
|
|
(11,929,843
|
)
|
|
|
-
|
|
|
|
483,775
|
|
Share subscriptions
received
|
|
|
6
|
|
|
|
4,665,042
|
|
|
|
4,665
|
|
|
|
3,652,763
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,657,428
|
|
Common shares cancelled
|
|
|
6
|
|
|
|
(2,478,639
|
)
|
|
|
(2,479
|
)
|
|
|
2,479
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net
loss
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(27,741,531
|
)
|
|
|
(27,741,531
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at 31 December 2018 (Unaudited)
|
|
|
|
|
|
|
139,314,416
|
|
|
|
139,315
|
|
|
|
58,661,534
|
|
|
|
-
|
|
|
|
(29,271,000
|
)
|
|
|
29,529,84
9
|
|
The
accompanying notes are an integral part of these consolidated interim financial statements.
1.
|
Nature
and Continuance of Operations
|
HQDA
Elderly Life Network Corp. (formerly Hartford Retirement Network Corp.) (the “Company”) was incorporated under the
laws of the State of Nevada on 21 January 2004.
Effective
26 June 2017, the Company changed its name to Hartford Retirement Network Corp. and increased its authorized shares of common
stock, par value $0.001 per share from 75,000,000 to 200,000,000 and authorized 10,000,000 preferred stock, par value $0.001 per
share, with such rights, preferences and limitations as may be set from time to time by resolution of the Board of Directors (Note
6). Effective April 23, 2018, the Company changed its name to HQDA Elderly Life Network Corp.
These
consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted
in the United States of America (“GAAP”). The Company was in the business of acquiring and exploring mineral properties.
In May 2017, the Company shifted its focus to senior housing and retirement services and products. The Company is devoting all
of its present efforts in establishing a new business.
These
consolidated interim financial statements do not include all information and footnotes required by GAAP for complete financial
statements. Except as disclosed herein, there have been no material changes in the information disclosed in the notes to the financial
statements for the year ended 30 June 2018 included in the Company’s Annual Report on Form 10-K, filed with the SEC. The
interim unaudited financial statements should be read in conjunction with those financial statements for the year ended 30 June
2018 included in the Company’s Annual Report on Form 10-K. In the opinion of management, all adjustments considered necessary
for fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the six months
ended 31 December 2018, are not necessarily indicative of the results that may be expected for the year ending 30 June 2019.
The
Company’s consolidated interim financial statements as at 31 December 2018 and for the six months then ended 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. The Company reported a net loss of $27,741,531 for the six months ended 31 December 2018 and has a
working deficit of $7,049,052 at 31 December 2018.
Management
cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive, or raise
additional debt and/or equity capital. Management believes that the Company’s capital resources will not be adequate to
continue operating and maintaining its business strategy for the next 12 months. If the Company is unable to raise additional
capital in the near future, management expects that the Company will need to curtail operations, seek additional capital on less
favorable terms and/or pursue other remedial measures. These financial statements do not include any adjustments related to the
recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the
Company be unable to continue as a going concern.
At
31 December 2018, the Company had an accumulated deficit of $29,271,000 and cash of $986,374. Although management is currently
attempting to implement its new business plan, and is seeking additional sources of equity or debt financing, there is no assurance
these activities will be successful. These factors raise substantial doubt about the ability of the Company to continue as a going
concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Principles
of Consolidation
The
Company’s consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Shanghai
Hartford Health Management Ltd., a company incorporated in the People’s Republic of China from 9 November 2017. All inter-company
balances have been eliminated upon consolidation.
2.
|
Recent
Accounting Pronouncement
|
In
February 2016, the FASB issued ASU No. 2016-02 (Topic 842) “Leases.” Topic 842 supersedes the lease recognition requirements
in Accounting Standards Codification (“ASC”) Topic 840 “Leases.” Under Topic 842, lessees are required
to recognize assets and liabilities on the balance sheet for most leases and provide enhanced disclosures. Leases will continue
to be classified as either finance or operating. Topic 842 is effective for annual reporting periods and interim periods within
those years beginning after 15 December 2018. Early adoption by public entities is permitted. Entities are required to use a modified
retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the
financial statements, and there are certain optional practical expedients that an entity may elect to apply. Full retrospective
application is prohibited. The Company does not anticipate this amendment to have a significant impact on the financial statements.
In
June 2016, the FASB issued ASU No. 2016-13 “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses
on Financial Instruments” which requires the measurement and recognition of expected credit losses for financial assets
held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which
will result in more timely recognition of credit losses. ASU 2016-13 is effective for annual reporting periods, and interim periods
within those years beginning after 15 December 2019. The Company does not anticipate this amendment to have a significant impact
on the consolidated financial statements.
On
20 June 2018, the FASB issued ASU No. 2018-07, which simplifies the accounting for share-based payments granted to nonemployees
for goods and services. Under the ASU, most of the guidance on such payments to nonemployees would be aligned with the requirements
for share-based payments granted to employees. Currently, share-based payment arrangements with employees are accounted for under
ASC 718, while nonemployee share-based payments issued for goods and services are accounted for under ASC 505-50. ASC 505-50,
before the ASU’s amendments, differs significantly from ASC 718. Differences include (but are not limited to) the guidance
on (1) the determination of the measurement date (which generally is the date on which the measurement of equity-classified share-based
payments becomes fixed), (2) the accounting for performance conditions, (3) the ability of a non-public entity to use certain
practical expedients for measurement, and (4) the accounting for (including measurement and classification) share-based payments
after vesting. The ASU eliminates most of the differences. ASU 2018-07 is effective for fiscal years beginning after December
15, 2018. The Company does not anticipate this amendment to have a significant impact on the consolidated financial statements.
On
28 August 2018, the FASB issued ASU No. 2018-13 to improve the effectiveness of disclosures about fair value measurements required
under ASC 820 as part of its disclosure framework project, which has an objective and primary focus to improve the effectiveness
of disclosures in the notes to financial statements. The ASU amends the disclosure requirements for recurring and nonrecurring
fair value measurements by removing, modifying, and adding certain disclosures. The new ASU is effective for fiscal years, and
interim periods within those fiscal years, beginning after 15 December 2019. The Company does not anticipate this amendment to
have a significant impact on the consolidated financial statements.
Revenue
consist primarily of hotel rental income. We apply the five-step model outlined in Accounting Standards Codification Topic 606,
Revenue from Contracts from Customers (ASC 606). Revenue is recognized when control of the promised products or services is transferred
to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange
for those products or services (the transaction price). We Adopted ASC 606 effective July 1, 2018. As a result, we have changed
our accounting for revenue recognition. We applied ASC 606 using the modified retrospective method and there was no material impact
to our consolidated financial statements related to the adoption of ASC 606.
During
the year ended 30 June 2018, the Company loaned $1,576,921 (RMB 10,437,800) to Shanghai Qiao Garden Group (“Shanghai Qiao
Garden”). The loan was unsecured, bears interest at 8% per annum and due on demand. During the year ended 30 June 2018,
the Company received $1,524,044 (RMB 10,087,800).
During
the year ended 30 June 2018, the Company waived $51,299, the full amount of accrued interest as the Company demanded the payment
prematurely (2017 - $Nil).
During
the six-month period ended 31 December 2018, the Company loaned $4,360,971(RMB 30,000,000) to Zhonghuaai Wufu (Shanghai) Hotel
Management Ltd, which is under common control with the Company. The loan was unsecured, bears interest at 4.35% per annum and
due in one year (Note 7). During the six months ended 31 December 2018, the Company accrued interest income of $73,774 (RMB 506,030).
On
November 2018, HQDA Guangzhou Company, an entity under common control, borrowed $1,260,613 from the Company for their business
operation. The loan receivable was unsecured, bear no interest and due on demand. Subsequently the loan was paid back at its entirety
on January 29, 2019.
4.
|
Asset
Purchase Agreement
|
On
2 April 2018, the Company entered into an Asset Purchase Agreement (the “APA”) whereby the Company will purchase land,
buildings, and right to use, construction use rights and other property rights located in Shanghai from Shanghai Qiao Garden.
Properties are split into two groups:
|
●
|
Property
A: land use rights and adhesive substance use rights, right to own, and right to operate of the land located in Shanghai Pudong
New Area Zhangjiang Ziwei Rd No. 372 and No. 376. Assets are owned by Shanghai Qiao Garden Real Estate Group, a subsidiary
100% owned by Shanghai Qiao Garden;
|
|
|
|
|
●
|
Property
B: land use right, adhesive substance under construction use rights, right to own, and right to operate of the land located
in Shanghai Chongming District San Shuang Gong Lu No. 4797. Assets are owned by Shanghai Qiao Garden Information Technology,
Ltd. (“Transferor”), a subsidiary 100% owned by Shanghai Qiao Garden.
|
The
Company has agreed to pay the purchase price totalling of $36,991,173 (RMB 233,000,000) in instalments over the next 20 months
as follows:
|
a.
|
RMB
7,000,000 before 9 April 2018 (paid);
|
|
b.
|
RMB
43,000,000 before 10 April 2018 (paid);
|
|
c.
|
RMB
20,000,000 before 10 May 2018 (paid);
|
|
d.
|
RMB
20,000,000 before 31 July 2018 (paid);
|
|
e.
|
RMB
35,000,000 before 30 October 2018 (paid);
|
|
f.
|
RMB
35,000,000 before 30 December 2018 (paid);
|
|
g.
|
RMB
30,000,000 before 30 April 2019 (RMB 635,140 paid);
|
|
h.
|
RMB
22,000,000 before 31 August 2019; and
|
|
i.
|
RMB
21,000,000 before 31 December 2019.
|
As
at 30 June 2018, the Company had paid $18,233,403 (RMB 115,682,000) as deposits. During the six months ended 31 December 2018,
the Company paid a further $6,564,692 (RMB 44,953,140).
On
1 September 2018, the Company has obtained the full management and operation rights of the hotel property and all other assets
of Property A. The cost of $34,625,790 including the remaining balance of the purchase prices has been transferred to properties
and equipment.
On
8 August 2018, the Company has entered into a share purchase agreement to acquire Property B by acquiring 100% outstanding shares
of the Transferor for $731,968 (RMB 5,000,000). The total payments have been included in the deposits paid by the Company and
shares will be transferred to the Company when all current and potential liabilities are settled by the Transferor.
5.
|
Properties
and Equipment, net
|
|
|
Property A
|
|
|
Furniture and
Office Equipment
|
|
|
Total
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
COSTS
|
|
|
|
|
|
|
|
|
|
|
|
|
30 June 2017
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Additions
|
|
|
-
|
|
|
|
3,157
|
|
|
|
3,157
|
|
30 June 2018
|
|
|
-
|
|
|
|
3,157
|
|
|
|
3,157
|
|
Additions
|
|
|
34,700,579
|
|
|
|
-
|
|
|
|
34,700,579
|
|
31 December 2018
|
|
|
34,700,579
|
|
|
|
3,157
|
|
|
|
34,703,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACCUMULATED DEPRECIATION
|
|
|
|
|
|
|
|
|
|
|
|
|
30 June 2017
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Additions
|
|
|
-
|
|
|
|
1,245
|
|
|
|
1,245
|
|
30 June 2018
|
|
|
-
|
|
|
|
1,245
|
|
|
|
1,245
|
|
Additions
|
|
|
110,293
|
|
|
|
680
|
|
|
|
110,973
|
|
31 December 2018
|
|
|
110,293
|
|
|
|
1,925
|
|
|
|
112,218
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET BOOK VALUE
|
|
|
|
|
|
|
|
|
|
|
|
|
30 June 2017
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
30 June 2018
|
|
|
-
|
|
|
|
1,912
|
|
|
|
1,912
|
|
31 December 2018
|
|
|
34,590,286
|
|
|
|
1,232
|
|
|
|
34,591,518
|
|
Authorized
The
total authorized capital is 200,000,000 common shares with a par value of $0.001 and 10,000,000 preferred shares with a par value
of $0.001. As of 31 December 2018, and 30 June 2018, no preferred shares are issued and outstanding.
On
26 June 2017, the Company increased the authorized shares of common stock of the Company from 75,000,000 shares to 200,000,000
shares and authorized the issuance of up to 10,000,000 shares of preferred stock, with such rights, preferences and limitations
as may be set from time to time by resolution of the Board of Directors (Note 1).
Issued
and outstanding
At
31 December 2018, the total issued and outstanding capital stocks is 139,314,416 common shares with a par value of $0.001 per
common share (30 June 2018 – 79,925,000).
During
the six months ended 31 December 2018, the Company cancelled 2,478,639 of its common stock due to no payments were received from
subscribers.
On
9 November 2018, the Company completed a private placement of 3,441,237 common shares for total proceeds of $2,652,493 (RMB18,417,446).
On
12 December 2018, the Company completed a private placement of 1,223,805 common shares for total proceeds of $1,004,935 (RMB6,977,714).
On
4 September 2018, the Company completed a private placement of 41,731,867 common shares for total proceeds of $6,259,780. A stock-based
compensation of $27,125,714 has been recognized during the issuance of shares (Note 6), being the difference between the proceeds
received and the fair value of the shares issued. The fair value of the shares issued was determined to be $0.80 per share based
on the issue price of shares issued to third parties in recent private placements.
On
11 July 2018, the Company completed a private placement of 15,471,146 common shares for total proceeds of $12,413,618.
On
7 April 2018, the Company completed a private placement of 47,500,000 common shares for total proceeds of $7,124,109.
On
2 March 2018, the Company completed a private placement of 2,920,000 common shares for total proceeds of $146,000.
On
5 October 2017, the Company completed a private placement of 5,000,000 common shares for total proceeds of $250,000.
On
8 September 2017, the Company completed a private placement of 1,950,000 common shares for total proceeds of $97,500.
On
8 August 2017, the Company completed a private placement of 19,910,000 common shares for total proceeds of $995,500
On
4 August 2017, the Company completed a private placement of 5,750,000 common shares for total proceeds of $287,500.
During
the year ended 30 June 2018, the Company cancelled 13,050,000 common shares for total proceeds of $652,500 which was not received.
As
at 31 December 2018, the Company received $1,982,911 in subscription funds that will be returned to investors due to overpayments
in subscription.
7.
|
Related
Party Transactions
|
During
the six months ended 31 December 2018, the Company paid management fee of $50,000 to the Company’s Chief Financial Officer
(2017 - $50,000).
During
the six months ended 31 December 2018, the Company issued 41,731,867 shares with total proceeds of $6,259,780. A stock-based compensation
of $27,125,714 has been recognized during the issuance of shares (Note 6).
Included
in accounts payable and accrued liabilities was $14,115 (30 June 2018 - $3,160) due to the Company’s Chief Financial Officer.
The amount is non-interest bearing, unsecured and due on demand.
During
the six-month period ended 31 December 2018, the Company loaned $4,360,971 (RMB 30,000,000) to Zhonghuaai Wufu (Shanghai) Hotel
Management Ltd., which is under common control with the Company. The loan was unsecured, bears interest at 4.35% per annum, unsecured
and due in one year (Note 3). During the six months ended 31 December 2018, the Company accrued interest income of $73,774 (RMB
506,030).
On
November 2018, HQDA Guangzhou Company, an entity under common control, borrowed $1,260,613 from the Company for their business
operation. The loan receivable was unsecured, bear no interest and due on demand. Subsequently the loan was paid back at its entirety
on January 29, 2019.
8.
|
Supplemental
Disclosures with Respect to Cash Flows
|
|
|
|
For the six
months ended
31 December 2018
$
|
|
|
|
For the six
months ended
31 December 2017
$
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the period for interest
|
|
|
-
|
|
|
|
-
|
|
Cash paid during the period for income taxes
|
|
|
-
|
|
|
|
-
|
|
The
Company entered into the APA to purchase two properties in Shanghai totaling RMB 233,000,000. Payments of $24,798,095 (RMB 160,635,140)
has been made and remainder of $10,518,515 (RMB 72,364,860) are due in 18 months (Note 4).
On
15 June 2018, the Company entered into a conference consultancy service agreement whereas the consultant will provide consulting
service and assistance to the Company to hold 30 conferences in China within a two-year period for a total purchase price of $794,000
(RMB 5,250,000).