Company Quick10K Filing
Rito Group
Price-0.00 EPS-0
Shares56 P/E0
MCap-0 P/FCF0
Net Debt-0 EBIT-1
TEV-0 TEV/EBIT0
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-15
10-Q 2019-12-31 Filed 2020-02-14
10-Q 2019-09-30 Filed 2019-11-12
10-K 2019-06-30 Filed 2019-09-17
10-Q 2019-03-31 Filed 2019-05-14
10-Q 2018-12-31 Filed 2019-02-13
10-Q 2018-09-30 Filed 2018-11-13
10-K 2018-06-30 Filed 2018-09-27
10-Q 2018-03-31 Filed 2018-05-14
10-Q 2017-12-31 Filed 2018-02-14
10-Q 2017-09-30 Filed 2017-11-13
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10-Q 2017-03-31 Filed 2017-05-12
10-Q 2016-12-31 Filed 2017-02-14
10-Q 2016-09-30 Filed 2016-11-10
10-K 2016-06-30 Filed 2016-09-27
10-Q 2016-03-31 Filed 2016-05-16
8-K 2019-06-28
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8-K 2018-01-03

RITO 10Q Quarterly Report

Part I &Mdash; Financial Information
Item 1. Financial Statements
Note 1 - Basis of Preparation
Note 2 - Organization and Business Background
Note 3 - Going Concern Uncertainties
Note 4 - Summary of Significant Accounting Policies
Note 5 - Shareholders' Equity
Note 6 - Property, Plant and Equipment
Note 7 - Long - Term Bank Loans
Note 8 - Accrued Expenses and Other Payables
Note 9 - Due To Related Party
Note 10 - Income Taxes
Note 11 - Related Party Transactions
Note 12 - Concentrations of Risks
Note 13 - Commitments and Contingencies
Note 14 - Operating Lease
Note 15 - Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3 Quantitative and Qualitative Disclosures About Market Risk
Item 4 Controls and Procedures
Part II &Mdash; Other Information
Item 1. Legal Proceedings
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information.
Item 6. Exhibits
EX-31.1 ex31-1.htm
EX-31.2 ex31-2.htm
EX-32.1 ex32-1.htm
EX-32.2 ex32-2.htm

Rito Group Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
1.40.90.50.0-0.4-0.92015201620182020
Assets, Equity
0.20.1-0.0-0.2-0.3-0.42015201620182020
Rev, G Profit, Net Income
0.90.60.30.0-0.3-0.62015201620182020
Ops, Inv, Fin

10-Q 1 form10-q.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For The Quarterly Period Ended March 31, 2020

 

or

 

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ____________ to ____________

 

Commission File Number 000-55796

 

Rito Group Corp.

(Exact name of registrant issuer as specified in its charter)

 

Nevada   47-3588502

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

Room 6C, 4/F, Block C, Hong Kong Industrial Centre,

489-491 Castle Peak Road, Lai Chi Kok, Hong Kong

(Address of principal executive offices, including zip code)

 

Registrant’s phone number, including area code (852) 2385-8598

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common Stock   RTTO   OTC Markets

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

YES [X] NO [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section232.405 of this chapter) during the preceding twelve months (or shorter period that the registrant was required to submit and post such files).

 

YES [  ] NO [X]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule12b-2 of the Exchange Act. (Check one):

 

Large Accelerated Filer [  ] Accelerated Filer [  ] Non-accelerated Filer [  ] Smaller reporting company [X]
Emerging growth company [X]      

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act). Yes [  ] No [X]

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of March 31, 2020.

 

Class   Outstanding at March 31, 2020
Common Stock, $.0001 par value   56,596,489

 

 

 

 
 

 

TABLE OF CONTENTS

 

    Page
PART I FINANCIAL INFORMATION  
     
ITEM 1. FINANCIAL STATEMENTS:  
  Condensed Consolidated Balance Sheets as of March 31, 2020 (unaudited) and June 30, 2019 (audited) F-1
  Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended March 31, 2020 and 2019 (unaudited) F-2
  Condensed Consolidated Statements of Change in Shareholders’ Equity for the Nine Months Ended March 31, 2020 (unaudited) F-3
  Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2020 and 2019 (unaudited) F-4
  Notes to the Condensed Consolidated Financial Statements F-5 – F-15
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 3-6
ITEM 3. QUANTITATIVE AND QUALITATIVED IS CLOSURES ABOUT MARKET RISK 6
ITEM 4. CONTROLS AND PROCEDURES 6
     
PART II OTHER INFORMATION  
     
ITEM 1 LEGAL PROCEEDINGS 7
ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 7
ITEM 3 DEFAULTS UPON SENIOR SECURITIES 7
ITEM 4 MINE SAFETY DISCLOSURES 7
ITEM 5 OTHER INFORMATION 7
ITEM 6 EXHIBITS 7
  SIGNATURES 8

 

2
 

 

PART I — FINANCIAL INFORMATION

 

Item 1. Financial statements

 

RITO GROUP CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2020 AND JUNE 30, 2019

(Currency expressed in United States Dollars (“US$”))

 

   As of 
   March 31, 2020   June 30, 2019 
   (Unaudited)   (Audited) 
ASSETS        
CURRENT ASSETS          
Account receivables   212,523    123,289 
Deposits paid, prepayments and other receivables   28,244    31,350 
Operating lease right-of use assets, net   24,685    - 
Cash and cash equivalents  $85,549   $349,080 
           
Total current assets   351,001    503,719 
           
NON-CURRENT ASSETS          
         - 
Plant and equipment, net   129,630    189,650 
Total non-current assets   129,630    189650 
           
TOTAL ASSETS  $480,631   $693,369 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
CURRENT LIABILITIES          
Current portion of long-term bank loans   9,998    8,882 
Accrued expenses and other payables   191,166    111,621 
Due to directors   -    10,255 
Due to related party   12,902    - 
Operating lease liabilities, current portion   24,026    - 
           
Total current liabilities   238,092    130,758 
           
NON-CURRENT LIABILITIES          
Long-term bank loans   15,645    23,284 
           
TOTAL LIABILITIES   253,737    154,042 
           
STOCKHOLDERS’ EQUITY          
Preferred stock, $0.0001 par value, 200,000,000 shares authorized, None issued and outstanding   -    - 
Common stock, $0.0001 par value, 600,000,000 shares authorized, 56,596,489 and 56,446,489 shares issued and outstanding as of March 31, 2020 and June 30, 2019 respectively   5,660    5,645 
Additional paid-in capital   4,808,562    4,508,577 
Accumulated other comprehensive loss   (2,069)   (1,193)
Accumulated deficit   (4,585,259)   (3,973,702)
           
TOTAL STOCKHOLDERS’ EQUITY   226,894    539,327 
           
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY  $480,631   $693,369 

 

See accompanying notes to the condensed consolidated financial statements.

 

F-1
 

 

RITO GROUP CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2020 AND 2019

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

 

   Three months ended
March 31,
   Nine months ended
March 31,
 
   2020   2019   2020   2019 
REVENUE  $95,944   $113,948   $312,685   $319,136 
                     
COST OF REVENUE   (47,837)   (49,909)   (175,820)   (232,653)
                     
GROSS PROFIT   48,107    64,039    136,865    86,483 
                     
OTHER INCOME   722    2,078    770    5,542 
                     
OPERATING EXPENSES                    
General and administrative   (258,575)   (460,768)   (744,933)   (996,573)
                     
LOSS FROM OPERATIONS   (209,746)   (394,651)   (607,298)   (904,548)
                     
Interest expense   (2,135)   (1,275)   (4,259)   (4,136)
                     
LOSS BEFORE INCOME TAX   (211,881)   (395,926)   (611,557)   (908,684)
                     
Income tax expense   -    -    -    - 
                     
NET LOSS  $(211,881)  $(395,926)  $(611,557)  $(908,684)
                     
Other comprehensive loss:                    
Foreign currency translation (loss)/gain   (415)   (20)   (876)   13,211 
                     
COMPREHENSIVE LOSS   (212,296)   (395,946)   (612,433)   (895,473)
                     
Net loss per share - Basic and diluted   (0.01)   (0.01)   (0.01)   (0.02)
                     
Weighted average number of common shares outstanding – Basic and diluted   56,567,117    56,119,461    56,503,398    56,008,855 

 

See accompanying notes to the condensed consolidated financial statements.

 

F-2
 

 

RITO GROUP CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2020

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Audited)

 

For the three months ended March 31, 2020

 

   COMMON STOCK   ADDITIONAL   ACCUMULATED OTHER       TOTAL 
   Number of shares   Amount   PAID-IN
CAPITAL
   COMPREHENSIVE
LOSS
   ACCUMULATED
DEFICIT
   STOCKHOLDERS’
DEFICIT
 
                         
Balance as of December 31, 2019   56,496,489    5,650    4,608,572    (1,654)   (4,373,378)   239,190 
Private Placement $2 per share in January 2020   100,000    10    199,990    -    -    200,000 
Net Loss   -    -    -         (211,881)   (211,881)
Other comprehensive loss   -    -    -    (415)        (415)
Balance as of March 31, 2020   56,596,489    5,660    4,808,562    (2,069)   (4,585,259)   226,894 

 

For the nine months ended March 31, 2020

 

   COMMON STOCK   ADDITIONAL   ACCUMULATED OTHER       TOTAL 
   Number of shares   Amount   PAID-IN
CAPITAL
   COMPREHENSIVE
LOSS
   ACCUMULATED
DEFICIT
   STOCKHOLDERS’
DEFICIT
 
                         
Balance as of June 30, 2019 (audited)   56,446,489   $5,645   $4,508,577   $(1,193)  $(3,973,702)  $539,327 
Issuance of common stocks   150,000    15    299,985    -    -    300,000 
Net Loss   -    -    -    -    (611,557)   (611,557)
Other comprehensive loss   -    -    -    (876)   -    (876)
Balance as of March 31, 2020   56,596,489    5,660    4,808,562    (2,069)   (4,585,259)   226,894 

 

See accompanying notes to condensed consolidated financial statements

 

F-3
 

 

RITO GROUP CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED MARCH 30, 2020 AND 2019

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

 

   Nine Months Ended
March 31,
 
   2020   2019 
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net loss  $(611,557)  $(908,684)
Adjustments to reconcile net loss to net cash used in operating activities          
Depreciation   50,054    74,325 
Interest expenses   4,259    4,136 
Loss on disposal of property, plant and equipment   7,608    - 
Changes in operating assets and liabilities:          
Accounts receivable   (89,234)   (26,531)
Prepayments, deposits and other receivables   3,104    (73,982)
Operating lease ROU assets   (24,685)   - 
Other payables and accrued liabilities   79,545    (225,009)
Operating lease liablilities   24,026    - 
Net cash used in operating activities   (556,880)   (1,155,745)
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Sales of property, plant and equipment   1,921    - 
Purchase of plant and equipment   -    (52,473)
Net cash provided in/(used in) investing activities   1,921    (52,473)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds from issuance of shares   300,000    701,409 
Advances from related party   12,902    - 
Repayment of bank borrowings   (6,523)   (141,098)
Bank loan interest   (4,259)   (4,136)
Advances to directors   (10,255)   (5,406)
Net cash provided by financing activities   291,865    550,769 
           
Effect of exchange rate changes on cash and cash equivalents   (437)   13,211 
           
Net change in cash and cash equivalents   (263,531)   (644,238)
Cash and cash equivalents, beginning of period   349,080    1,066,636 
CASH AND CASH EQUIVALENTS, END OF PERIOD  $85,549   $422,398 
           
SUPPLEMENTAL CASH FLOWS INFORMATION          
Cash paid for income taxes  $-   $- 
Cash paid for interest paid  $(4,259)  $(2,861)

 

See accompanying notes to the condensed consolidated financial statements.

 

F-4
 

 

RITO GROUP CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2020

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

 

NOTE 1 - BASIS OF PREPARATION

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and the rules and regulations of the Securities and Exchange Commission that permit reduced disclosure for interim periods. Therefore, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted.

 

In the opinion of management, the consolidated balance sheet as of March 31, 2020 which has been derived from audited financial statements and these unaudited condensed consolidated financial statements reflect all normal and recurring adjustments considered necessary to state fairly the results for the periods presented. The results for the nine months ended March 31, 2020 are not necessarily indicative of the results to be expected for the entire fiscal year ending June 30, 2020 or for any future period.

 

These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Management’s Discussion and the audited financial statements and notes thereto included in the Annual Report on Form 10-K for the fiscal year ended June 30, 2019.

 

NOTE 2 - ORGANIZATION AND BUSINESS BACKGROUND

 

Rito Group Corp. (the “Company”) was incorporated on March 24, 2015 under the laws of the state of Nevada.

 

The Company, through its subsidiaries, mainly engages in trading of retail goods such as cookware, jewelry and watches, AgriGaia Farming Products, and numerous other products.

 

F-5
 

 

RITO GROUP CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2020

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

 

Details of the Company’s subsidiaries:

 

  Company name   Place/date of incorporation  

Particulars of

issued capital

 

Equity

ownership

  Principal activities
                   
1. Sino Union International Limited (“Sino Union”)  

Anguilla

January 3, 2014

  84,500 shares of ordinary share of US$1 each   100%   Investment holding
                   
2. Rito International Enterprise Company Limited (“Rito International”)  

Hong Kong

August 12, 2014

  630,001 shares of ordinary share of HK$1 each   100%   Trading of retail goods
                   
3. 深圳市汇图贸易有限公司  

Shenzhen, PRC

June 27, 2018

  500,000 shares of ordinary share of RMB 1 each   100%   Trading of retail goods, business and agriculture technology consulting

 

Rito Group Corp. and its subsidiaries are hereinafter referred to as the “Company”.

 

NOTE 3 - GOING CONCERN UNCERTAINTIES

 

The accompanying financial statements have been prepared using the going concern basis of accounting, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

 

As of March 31, 2020, the Company suffered an accumulated deficit of $4,585,259 and continuously incurred a net operating loss of $611,557 for the nine months ended March 31, 2020. The continuation of the Company as a going concern through June 30, 2020 is dependent upon improving the profitability and the continuing financial support from its stockholders. Management believes the existing shareholders or external financing will provide the additional cash to meet the Company’s obligations as they become due. Furthermore, management plans to import healthy food and drinks produced by Taiwanese AgriGaia Biomimicry Farming System into Hong Kong and arrange the food and drinks to be sold in various outlets by our sole agent in Hong Kong.

 

F-6
 

 

RITO GROUP CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2020

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

 

These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result in the Company not being able to continue as a going concern.

 

NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The accompanying unaudited condensed consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying consolidated financial statements and notes.

 

Basis of presentation

 

The accompanying condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).

 

Basis of consolidation

 

The condensed consolidated financial statements include the accounts of Rito Group Corp. and its subsidiaries. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.

 

Use of estimates

 

In preparing these condensed consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets and revenues and expenses during the periods reported. Actual results may differ from these estimates.

 

Cash and cash equivalents

 

The company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.

 

Plant and equipment

 

Plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational:

 

Categories   Estimated useful life   Residual value
Leasehold improvement   Over the shorter of estimated useful life or term of lease   -
Equipment   3-10 years   -
Motor Vehicle   3-10 years   -

 

Expenditures for maintenance and repairs are expensed as incurred. The gain or loss on the disposal of plant and equipment is the difference between the net sales proceeds and the carrying amount of the relevant assets and is recognized in the statement of operations.

 

Accounts receivable

 

Accounts receivable are recorded at the invoiced amount and do not bear interest. Management reviews the adequacy of the allowance for doubtful accounts on an ongoing basis, using historical collection trends and aging of receivables. Management also periodically evaluates individual customer’s financial condition, credit history, and the current economic conditions to make adjustments in the allowance when it is considered necessary. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

 

F-7
 

 

RITO GROUP CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2020

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

 

Revenue recognition

 

In accordance with the Accounting Standard Codification (“ASC”) Topic 605 “Revenue Recognition”, the Company recognizes revenue when the following four criteria are met: (1) delivery has occurred or services rendered; (2) persuasive evidence of an arrangement exists; (3) selling price is fixed or determinable; and (4) collectability is reasonably assured.

 

Revenue is measured at the fair value of the consideration received or receivable, net of discounts and taxes applicable to the revenue. Revenue from trading of retail goods is recognized when title and risk of loss are transferred and there are no continuing obligations to the customer. Title and the risks and rewards of ownership transferred to and accepted by the customer when the products are collected by the customer at the Company’s office. Revenue is recorded net of sales discounts, returns, allowances, and other adjustments that are based upon management’s best estimates and historical experience and are provided for in the same period as the related revenues are recorded. Based on limited operating history, management estimates that there were no sales return for the period reported.

 

The Company derives its revenue from sales of goods to individuals. Generally, the Company recognizes revenue when products are sold and accepted by the customers and there are no continuing obligations to the customer.

 

Cost of revenues

 

Cost of revenue includes the purchase cost of retail goods for re-sale to the customers.

 

Income taxes

 

The provision of income taxes is determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC Topic 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

ASC Topic 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC Topic 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

 

The Company did not have any unrecognized tax positions or benefits and there was no effect on the financial conditions or results of operations for the nine months ended March 31, 2020. The Company conducts major businesses in Hong Kong and is subject to tax in this jurisdiction. As a result of its business activities, the Company will file tax returns that are subject to examination by the foreign tax authority.

 

F-8
 

 

RITO GROUP CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2020

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

 

Net loss per share

 

The Company calculates net loss per share in accordance with ASC Topic 260 “Earnings per share”. Basic loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted loss per share is computed similar to basic loss 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 stock equivalents had been issued and if the additional common shares were dilutive.

 

Foreign currencies translation

 

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statements of operations.

 

The reporting currency of the Company and its subsidiary in Anguilla is United States Dollars (“US$”). The Company’s subsidiary in Hong Kong maintains its books and record in Hong Kong Dollars (“HK$”), which is functional currency as being the primary currency of the economic environment in which the entity operates.

 

In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiary are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.

 

Translation of amounts from the local currencies of the Company into US$ has been made at the following exchange rates for the respective periods:

 

   As of and for the
nine months ended
March 31,
 
   2020   2019 
Period-end / average HK$ : US$1 exchange rate   7.7880    7.7500 
Period-end / average CNY¥: US$1 exchange rate   7.0122    6.7400 

 

Related parties

 

Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence.

 

Lease

 

In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-02, Leases, which was subsequently amended in 2018 by ASU 2018-10, ASU 2018-11 and ASU 2018-20 (collectively, Topic 842). Topic 842 will require the recognition of a right-of-use asset and a corresponding lease liability, initially measured at the present value of the lease payments, for all leases with terms longer than 12 months. For operating leases, the asset and liability will be expensed over the lease term on a straight-line basis, with all cash flows included in the operating section of the statement of cash flows. For finance leases, interest on the lease liability will be recognized separately from the amortization of the right-of-use asset in the statement of comprehensive income and the repayment of the principal portion of the lease liability will be classified as a financing activity while the interest component will be included in the operating section of the statement of cash flows. Topic 842 is effective for annual and interim reporting periods beginning after December 15, 2018. Early adoption is permitted. Upon adoption, leases will be recognized and measured at the beginning of the earliest period presented using a modified retrospective approach. Topic 842 allows for a cumulative-effect adjustment in the period the new lease standard is adopted and will not require restatement of prior periods.

 

Prior to January 1, 2019, the Company accounted for leases under ASC 840, Accounting for Leases. Effective January 1, 2019, the Company adopted the guidance of ASC 842, Leases, which requires an entity to recognize a right-of-use asset and a lease liability for virtually all leases. The Company adopted ASC 842 using a modified retrospective approach. As a result, the comparative financial information has not been updated and the required disclosures prior to the date of adoption have not been updated and continue to be reported under the accounting standards in effect for those periods. The adoption of ASC 842 on January 1, 2019 resulted in the recognition of operating lease right-of-use assets of $24,685, lease liabilities for operating leases of $24,026, and $659 cumulative-effect adjustment to accumulated deficit. See Note 12 for further information regarding the impact of the adoption of ASC 842 on the Company’s financial statements.

 

F-9
 

 

RITO GROUP CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2020

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

 

Fair value of financial instruments

 

The carrying value of the Company’s financial instruments: cash and cash equivalents, accounts receivable, deposits and other receivables, accounts payable, other payables and accrued liabilities approximate at their fair values because of the short-term nature of these financial instruments.

 

The Company follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” (“ASC Topic 820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC Topic 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:

 

  Level 1 : Observable inputs such as quoted prices in active markets;
   
  Level 2 : Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
   
  Level 3 : Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions

 

Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

 

Recent accounting pronouncements

 

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.

 

NOTE 5 - SHAREHOLDERS’ EQUITY

 

During the nine months ended March 31, 2020, the Company issued an aggregated of 150,000 shares of its common stock at $2.00 per shares for aggregate gross proceeds of $300,000.

 

NOTE 6 - PROPERTY, PLANT AND EQUIPMENT

 

   As of 
   March 31, 2020   June 30, 2019 
   (unaudited)   (audited) 
Leasehold improvement  $236,630   $236,630 
Equipment   32,570    32,570 
Motor vehicle   -    18,065 
    269,200    287,265 
           
Accumulated depreciation   139,570    (97,615)
Total  $129,630   $189,650 

 

Depreciation expense, classified as operating expenses, was $50,054 and $74,325 for the nine months ended March 31, 2020 and 2019 respectively.

 

NOTE 7 - LONG-TERM BANK LOANS

 

   As of 
   March 31, 2020   June 30, 2019 
   (unaudited)   (audited) 
Bank loan from financial institution in Hong Kong:          
The Hongkong and Shanghai Banking Corporation Limited  $25,643   $32,166 
           
    25,643    32,166 
Less: Current portion   (9,998)   (8,882)
Long-term portion  $15,645   $23,284 

 

In July 2017, the Company obtained a loan in the principal amount of HKD349,000 (approximately $45,032) from The Hongkong and Shanghai Banking Corporation Limited, a financial institution in Hongkong which bears interest at the base lending rate less 0.7% flat rate per month with 60 monthly installments of HKD8,260 (approximately $1,066) each and will mature in July 2022.

 

F-10
 

 

RITO GROUP CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2020

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

 

NOTE 8 - ACCRUED EXPENSES AND OTHER PAYABLES

 

Accrued expenses and other payable consists of followings:    
   As of 
   March 31, 2020   June 30, 2019 
   (unaudited)   (audited) 
Accrual  $101,159   $111,621 
Loan from third party A   11,612    - 
Loan from third party B   77,182    - 
Loan interests payable   1,213    - 
Total:  $191,166   $111,621 

 

For the nine months ended 31 March, 2020 and year ended 30 June, 2019, third party A advanced $11,612 and $0 to the Company to pay the administrative expenses, which is unsecured, interest-free with no fixed payment term, for working capital purpose.

 

For the nine months ended 31 March, 2020 and year ended 30 June, 2019, third party B advanced $77,182 and $0 to the Company to pay the administrative expenses. In January 2020, the Company obtained a loan in principal amount of HK$600,000 (approximately $77,182) from third party B, which bears interest at the base lending rate 8% annual interest with 4 months, interests payable of HK$4,000 (approximately $515) monthly and will mature in May 2020.

 

NOTE 9 - DUE TO RELATED PARTY

 

   As of 
   March 31, 2020   June 30, 2019 
   (unaudited)   (audited) 
Amount due to related party A  $12,902   $- 
Total   12,902    - 

 

Related party A is Rito Group Holding Limited, which is a holding company of Rito Group Corp. For the nine months ended March 31, 2020 and the years ended June 30, 2019, related party A advanced $12,902 and $0 to the company to pay administrative expenses, which is unsecured, interest-free with no fixed payment term, for working capital purpose.

 

NOTE 10 - INCOME TAXES

 

For the nine months ended March 31, 2020 and 2019, the local (United States) and foreign components of loss before income taxes were comprised of the following:

 

   For the nine months ended
March 31,
 
   2020   2019 
Tax jurisdictions from:          
– Local  $(49,024)  $(37,500)
– Foreign, representing          
Anguilla   (5,254)   (2,055)
Hong Kong   (555,838)   (867,634)
PRC   (1,441)   (1,495)
           
Loss before income taxes   (611,557)   (908,684)

 

Provision for income taxes consisted of the following:

 

    For the nine months ended
March 31,
    2020    2019 
Current:          
– Local  $-   $- 
– Foreign (Hong Kong)   -    - 
– Foreign (PRC)   -    - 
           
Deferred:          
– Local   -    - 
– Foreign (Hong Kong)   -    - 
– Foreign (PRC)   -    - 
   $-   $- 

 

The effective tax rate in the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. The Company has subsidiaries that operate in various countries: United States, Anguilla, Hong Kong and People’s Republic of China that are subject to taxes in the jurisdictions in which they operate, as follows:

 

United States of America

 

The Company is registered in the State of Nevada and is subject to the tax laws of the United States of America. As of March 31, 2020, the operations in the United States of America incurred $372,098 of cumulative net operating losses which can be carried forward to offset future taxable income. The net operating loss carryforwards begin to expire in 2037, if unutilized. The Company has provided for a full valuation allowance of $78,140 against the deferred tax assets on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

 

F-11
 

 

RITO GROUP CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2020

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

 

Anguilla

 

Under the current laws of the Anguilla, Sino Union is registered as an international business company which is governed by the International Business Companies Act of Anguilla and there is no income tax charged in Anguilla.

 

Hong Kong

 

Rito International is subject to Hong Kong Profits Tax, which is charged at the statutory income tax rate of 16.5% on its assessable income. For the nine months ended March 31, 2020, no provision for income tax is required due to operating loss incurred. As of March 31, 2020, Rito International incurred $4,079,542 of cumulative net operating losses which can be carried forward to offset future taxable income at no expiration. The Company has provided for a full valuation allowance against the deferred tax assets of $673,125 on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

 

People’s Republic of China

 

深圳市汇图贸易有限公司 is operating in the People’s Republic of China (“PRC”) subject to the Corporate Income Tax governed by the Income Tax Law of the People’s Republic of China with a unified statutory income tax rate of 25%. For the nine months ended March 31, 2020, no provision for income tax is required due to operating loss incurred. As of March 31, 2020, 深圳市汇图贸易有限公司 incurred $4,483 of cumulative net operating losses which can be carried forward to offset future taxable income at no expiration. The Company has provided for a full valuation allowance against the deferred tax assets of $1,120 on the expected future tax benefits from the net operating loss carry forwards as the management believes it is more likely than not that these assets will not be realized in the future.

 

The following table sets forth the significant components of the aggregate deferred tax assets of the Company as of March 31, 2020 and June 30, 2019:

 

   As of 
   March 31, 2020   June 30, 2019 
   (unaudited)   (audited) 
Deferred tax assets:          
Net operating loss carryforwards          
– United States of America  $78,140   $67,845 
– Hong Kong   673,125    581,411 
– PRC   1,120    761 
           
Less: valuation allowance   752,385    650,017 
Deferred tax assets  $(752,385)  $(650,017)
    -    - 

 

Management believes that it is more likely than not that the deferred tax assets will not be fully realizable in the future. Accordingly, the Company provided for a full valuation allowance against its deferred tax assets of $752,385 as of March 31, 2020. During the nine months ended March 31, 2020, the valuation allowance increased by $102,368, primarily relating to net operating loss carryforwards from the various tax regime.

 

F-12
 

 

RITO GROUP CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2020

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

 

NOTE 11 - RELATED PARTY TRANSACTIONS

 

   For the nine months ended
March 31,
 
   2020   2019 
Professional fee paid to:          
- Related party A  $15,726   $11,562 
- Related party B   13,350    17,103 
- Related party C   2,982    287 
           
Website design and maintenance fee paid to:          
- Related party D   445    441 
           
Advance from holding company          
- Related party E   (12,902)   - 
           
   $19,601   $29,393 

 

Related party A, B, C and D are the fellow subsidiaries of a corporate shareholder of the Company, E is the holding company of the Company.

 

The related party transactions are generally transacted in an arm-length basis at the current market value in the normal course of business.

 

NOTE 12 - CONCENTRATIONS OF RISKS

 

(a) Major customers

 

For the three months ended March 31, 2020, the customers who accounted for 10% of the Company’s revenues and the accounts receivable balances at period-end are presented as follows:

 

   For the three months ended
March 31, 2020
   As of
March 31, 2020
 
   Revenues   Percentage of
revenues
   Accounts
receivable
 
Customer A   95,944    100%   186,011 
                
Total:  $95,944    100%  $186,011 

 

For the three months ended March 31, 2019, the customers who accounted for 10% of the Company’s revenues and the accounts receivable balances at period-end are presented as follows:

 

   For the three months ended
March 31, 2019
   As of
March 31, 2019
 
   Revenues   Percentage of
revenues
   Accounts
receivable
 
Customer A  $17,174    15%  $97,819 
Customer B   96,774    85%   - 
                
Total:  $113,948    100%  $97,819 

 

For the nine months ended March 31, 2020, the customers who accounted for 10% of the Company’s revenues and the accounts receivable balances at period-end are presented as follows:

 

   For the nine months ended
March 31, 2020
   As of
March 31, 2020
 
   Revenues   Percentage of
revenues
   Accounts
receivable
 
Customer A   312,685    100%   186,011 
Total:  $312,685    100%  $186,011 

 

For the nine months ended March 31, 2019, the customers who accounted for 10% of the Company’s revenues and the accounts receivable balances at period-end are presented as follows:

 

   For the nine months ended
March 31, 2019
   As of
March 31, 2019
 
   Revenues   Percentage of
revenues
   Accounts
receivable
 
Customer A  $99,330    30%  $97,819 
Customer B   221,806    70%   - 
                
Total:  $319,136    100%  $97,819 

 

F-13
 

 

RITO GROUP CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2020

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

 

(b) Major vendors

 

For the three months ended March 31, 2020, the vendors who accounted for 10% or more of the Company’s cost of revenues and its accounts payable balance at period-end are presented as follows:

 

   For the three months ended
March 31, 2020
    As of
March 31, 2020
 
    Purchases    Percentage of
purchases
    Accounts
payable
 
Vendor A  $-    -%  $- 
Total:  $-    -%  $- 

 

For the three months ended March 31, 2019, the vendors who accounted for 10% or more of the Company’s cost of revenues and its accounts payable balance at period-end are presented as follows:

 

   For the three months ended
March 31, 2019
   As of
March 31, 2019
 
   Purchases   Percentage of
purchases
   Accounts
payable
 
Vendor A  $13,305    27%  $- 
Vendor B   36,604    73%   - 
Total:  $49,909    100%  $- 

 

For the nine months ended March 31, 2020, the vendors who accounted for 10% or more of the Company’s cost of revenues and its accounts payable balance at period-end are presented as follows:

 

   For the nine months ended
March 31, 2020
   As of
March 31, 2020
 
   Purchases   Percentage of
purchases
   Accounts
payable
 
Vendor A  $18,711    11%  $- 
Total:  $18,711    11%  $           - 

 

For the nine months ended March 31, 2019, the vendors who accounted for 10% or more of the Company’s cost of revenues and its accounts payable balance at period-end are presented as follows:

 

    For the nine months ended
March 31, 2019
    As of
March 31, 2019
 
    Purchases     Percentage of
purchases
    Accounts
payable
 
Vendor A   $ 73,054       31 %   $ -  
Vendor B     145,196       62 %            -  
Total:   $ 218,250       93 %   $ -  

 

(c) Credit risk

 

Financial instruments that are potentially subject to credit risk consist principally of accounts receivable. The Company believes the concentration of credit risk in its accounts receivables is substantially mitigated by its ongoing credit evaluation process and relatively short collection terms. The Company does not generally require collateral from customers. The Company evaluates the need for an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information.

 

F-14
 

 

RITO GROUP CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2020

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

 

NOTE 13 - COMMITMENTS AND CONTINGENCIES

 

The Company leases an office premises and a farm premises in Hong Kong under a non-cancellable operating lease that expire on July 2020, with an aggregate fixed monthly rent of approximately $3,457 and $3,063, respectively; and a storage premises in Hong Kong under a non-cancellable operating lease that expire on July 2020, with an aggregate fixed monthly rent of approximately $82.

 

The aggregate lease expense for the nine months ended March 31, 2020 and 2019 were $55,563 and $58,645, respectively.

 

As of March 31, 2020, the Company has the aggregate future minimum rental payments due under a non-cancellable operating lease in the next one years, as follows:

 

Period ending March 31:    
2020  $25,066 
2021   - 
   $25,066 

 

NOTE 14 - OPERATING LEASE

 

The Company has operating lease agreements for three office spaces with remaining lease terms of 0.5 month to 30 months. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company accounts for the lease and non-lease components of its leases as a single lease component. Lease expense is recognized on a straight-line basis over the lease term.

 

Operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives.

 

This standard did not have a significant impact on our liquidity or on our compliance with our financial covenants associated with our loans.

 

The components of lease expense and supplemental cash flow information related to leases for the period are as follows:

 

   For the nine months ended
March 31,2020
 
     
Lease cost     
Operating lease cost (included in general and administrative in company’s unaudited condensed statement of operations)  $55,563 
      
Other information     
Cash paid for amounts included in the measurement of lease liabilities for the nine months ended March 31, 2020  $56,639 
Weighted average remaining lease term-operating leases (in years)   0.33 
Average discount rate - operating leases   4%

 

The supplemental balance sheet information related to leases for the period is as follows:

 

   At
March 31, 2020
 
     
Operating leases     
Long -term right-of-use assets   24,685 
      
Short-term operating lease liabilities   24,026 
Long-term operating lease liabilites   - 
Total operating lease liabilities   24,026 
      
Maturities of the Company’s lease liabilities are as follows:     
      
Year ending March 31,     
2020   18,966 
2021   5,255 
Total lease payments   24,221 
Less: Imputed interest/present value discount   (195)
Present value of lease liabilities   24,026 

 

NOTE 15 - SUBSEQUENT EVENTS

 

In accordance with ASC Topic 855, “Subsequent Events”, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued, the Company has evaluated all events or transactions that occurred after March 31, 2020 up through the date the Company presented this condensed consolidated financial statements.

 

During the period, the Company did not have any material recognizable subsequent event.

 

F-15
 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The information contained in this Form 10-Q is intended to update the information contained in our Annual Report on Form 10-K for the year ended June 30, 2019 and presumes that readers have access to, and will have read, the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other information contained in such Form 10-K. The following discussion and analysis also should be read together with our financial statements and the notes to the financial statements included elsewhere in this Form 10-Q.

 

The following discussion contains certain statements that may be deemed “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements appear in a number of places in this Report, including, without limitation, “Management’s Discussion and Analysis of Financial Condition and Results of Operations. “These statements are not guarantees of future performance and involve risks, uncertainties and requirements that are difficult to predict or are beyond our control. Forward-looking statements speak only as of the date of this quarterly report. You should not put undue reliance on any forward-looking statements. We strongly encourage investors to carefully read the factors described in our Form S-1 Amendment No.6, dated April 18, 2016, in the section entitled “Risk Factors” for a description of certain risks that could, among other things, cause actual results to differ from these forward-looking statements. We assume no responsibility to update the forward-looking statements contained in this transition report on Form10-Q. The following should also be read in conjunction with the unaudited Condensed Consolidated Financial Statements and notes thereto that appear elsewhere in this report.

 

Company Overview

 

Rito Group Corp is a company that operates through its wholly owned subsidiary, Sino Union International Limited, a Company organized under the laws of the British Colony, Anguilla. It should be noted that our wholly owned subsidiary, Sino Union International Limited. owns 100% of Rito International Enterprise Company Limited, a Hong Kong Company, and Rito International Enterprise Company Limited owns 100% of 深圳市汇图贸易有限公司, a Company organized in Shenzhen, China.

 

At this time, we operate exclusively through our wholly owned subsidiary and share the same business plan of our subsidiary which is the sale of miscellaneous retail goods. Sino Union International Limited also shares the same business plan of Rito International Enterprise Company Limited and 深圳市汇图贸易有限公司.

 

We are a development stage Company. Thus far the Company has been actively searching for companies that may be interested in listing their own products for sale on our “Rito Online Mall”, which is now still at the designing stage and is believed to be launched once the development is finalized. The Rito Online Mall provides a platform for merchants and customers to facilitate transactions and take advantage of the growth opportunity we have identified in Hong Kong’s E-Commerce Industry.

 

Results of Operation

 

For the three months ended March 31, 2020 and 2019

 

Revenues

 

For the three months ended March 31, 2020 and 2019, the Company generated revenue in the amount of $95,944 and $113,948 respectively. Our gross profits/(loss) for the three months ended March 31, 2020 and 2019 was $48,107 and $64,039, respectively.

 

General and administrative expenses

 

For the three months ended March 31, 2020 and 2019, we have had general and administrative expenses in the amount of $258,575 and $460,768 respectively, an decrease of $202,193 or 44% due to the information technology development expenses and marketing expenses in year 2019 are higher than that in year 2020. These expenses are comprised of motor vehicle expenses of $7,942, marketing expenses of $8,644, payroll expenses of $98,348 and entertainment of $50,969 for the three months ended March 31, 2020.

 

3
 

 

Net loss

 

Our net loss for the three months ended March 31, 2020 and 2019 was $211,881 and $395,926 respectively. The net loss mainly derived from the general and administrative expenses incurred.

 

For the nine months ended March 31, 2020 and 2019

 

Revenues

 

For the nine months ended March 31, 2020 and 2019, the Company generated revenue in the amount of $312,685 and $319,136 respectively. Our gross profits for the nine months ended March 31, 2020 and 2019 was $136,865 and $86,483, with gross profit margins of 44% and 27% respectively, an increased of 17% due to the Company improve the efficiency of management and the cost of materials decreased bringing the gross profit up.

 

General and administrative expenses

 

For the nine months ended March 31, 2020 and 2019, we have had general and administrative expenses in the amount of $744,933 and $996,573 respectively, an decrease of $251,640 or 25% due to the consultant services fee for IT support and marketing expenses in year 2019 are higher than that in year 2020. These expenses are comprised of advertising and promotion expenses of $7,600, marketing expenses of $34,713, information technology development expenses of $17,580, payroll expenses $243,822, motor vehicle $11,258 and entertainment of $63,595 for the nine months ended March 31, 2020.

 

Net loss

 

Our net loss for the nine months ended March 31, 2020 and 2019 was $611,557 and $908,684 respectively. The net loss mainly derived from the general and administrative expenses incurred.

 

Liquidity and Capital Resources

 

Cash Used in Operating Activities

 

Net cash used in operating activities was $554,665 for the nine months ended March 31, 2020 as compared to net cash used in operating activities of $1,157,020 for the nine months ended March 31, 2019. The cash used in operating activities was a result of our net loss attributable to payroll expenses, marketing expenses and advertising and promotion.

 

Cash Provided in/(Used in) Investing Activities

 

Net cash provided in/(used in) investing activities was $1,921 and $52,473 for the nine months ended March 31, 2020 and 2019, respectively. The cash used in investing activities for the nine months ended March 31, 2020 was resulted from the disposal of plant and equipment.

 

Cash Provided by Financing Activities

 

Net cash provided by financing activities were $289,650 and $552,044 for the nine months ended March 31, 2020 and 2019 respectively. The cash provided by financing activities was contributed from the aggregate proceeds of $300,000 from the issuance of shares in private placement and advances from holding company of $12,902 during the nine months ended March 31, 2020, offset by the repayment of director, bank borrowings and interest of $13,683, $6,523 and $3,046 respectively.

 

4
 

 

In regards to all of the above transactions we claim an exemption from registration afforded by Section 4(a)(2) and/or Regulation S of the Securities Act of 1933, as amended (“Regulation S”) for the above sales of the stock since the sales of the stock were made to non-U.S. persons (as defined under Rule 902 section (k)(2)(i) of Regulation S), pursuant to offshore transactions, and no directed selling efforts were made in the United States by the issuer, a distributor, any of their respective affiliates, or any person acting on behalf of any of the foregoing.

 

Going Concern

 

As of March 31, 2020, the Company suffered an accumulated deficit of $4,585,259 and incurred a continuous net operating loss of $611,557 for the nine months ended March 31, 2020. These matters raise substantial doubt about our ability to continue as a going concern. Our unaudited condensed consolidated financial statements included elsewhere in this report have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate our continuation as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the condensed consolidated financial statements do not necessarily purport to represent realizable or settlement values. The condensed consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty.

 

Off-balance Sheet Arrangements

 

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders as of March 31, 2020.

 

Related party transactions

 

   For the nine months ended
March 31,
 
   2020   2019 
Professional fee paid to:          
- Related party A  $15,726   $11,562 
- Related party B   13,350    17,103 
- Related party C   2,982    287 
           
Website design and maintenance fee paid to:          
- Related party D   445    441 
           
Advance from holding company          
- Related party E   (12,902)   - 
           
   $19,601   $29,393 

 

Related party A, B, C and D are the fellow subsidiaries of a corporate shareholder of the Company, E is the holding company of the Company.

 

The related party transactions are generally transacted in an arm-length basis at the current market value in the normal course of business

 

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Contractual Obligations

 

As of March 31, 2020, the Company has no contractual obligations involved.

 

Item 3 Quantitative and Qualitative Disclosures About Market Risk

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.

 

Item 4 Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures:

 

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of March 31, 2020. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2020, our disclosure controls and procedures were not effective due to the presence of material weaknesses in internal control over financial reporting.

 

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has identified the following material weaknesses which have caused management to conclude that, as of March 31, 2020, our disclosure controls and procedures were not effective: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.

 

Changes in Internal Control Over Financial Reporting:

 

There were no changes in our internal control over financial reporting during the quarter ended March 31, 2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II — OTHER INFORMATION

 

Item 1. Legal Proceedings

 

We know of no materials, active or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceedings or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any beneficial shareholder are an adverse party or has a material interest adverse to us.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information.

 

None.

 

ITEM 6. Exhibits

 

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  RITO GROUP CORP.
  (Name of Registrant)
     
Date: May 15, 2020    
     
  By: /s/ Choi Tak Yin Addy
  Title: Chief Executive Officer, President, Director (Principal Executive Officer)
     
Date: May 15, 2020    
     
  By: /s/ Choy Wing Fai
  Title: Chief Financial Officer, Chief Accounting Officer, Treasurer and Director
    (Principal Financial Officer and Principal Accounting Officer)
     
Date: May 15, 2020    
     
  By: /s/ Or Ka Ming
  Title: Chief Operating Officer, Secretary, Director
     
Date: May 15, 2020    
     
  By: /s/ Kao Pun Yiu Philip
  Title: Chief Technical Officer, Director

 

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