This discussion updates our business plan for the three-month periods ending October 31, 2020. It also analyzes our financial condition at October 31, 2020 and compares it to our financial condition at July 31, 2020. This discussion and analysis should be read in conjunction with our audited financial statements for the year ended July 31, 2020, including footnotes, contained in our Annual Report on Form 10-K, and with the unaudited financial statements for the interim period ended October 31, 2020, including footnotes, which are included in this quarterly report.





Overview of the Business

Hartford Great Health Corp. was originally incorporated in the State of Nevada on April 2, 2008 under the name PhotoAmigo, Inc. It changed its name to Hartford Great Health Corp. on August 22, 2018 and since then we have been engaged in activities to formulate and implement our business plan as set forth below.

Ability to continue as a "going concern".

The independent registered public accounting firms' reports on our financial statements as of July 31, 2020 and 2019, includes a "going concern" explanatory paragraph that describes substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to the factors prompting the explanatory paragraph are discussed in the financial statements, including footnotes thereto.





Plan of Operation

As of October 31, 2020, the company has issued a total of 99,108,000 shares of common stock. On December 11th, 2018, 96,090,000 shares of common stock were issued at the price of $0.02 per share to raise an additional $1,921,800 in capital.

On December 28, 2018, the Company acquired Hangzhou Hartford Comprehensive Health Management, Ltd ("HZHF"). On March 22, 2019, the Company acquired 60 percent of Hangzhou Longjing Qiao Fu Vacation Hotel Co., Ltd. ("HZLJ"). On March 20, 2019, the Company acquired Shanghai Hartford Comprehensive Health Management, Ltd. ("HFSH") with 90 percent of Shanghai Qiao Garden International Travel Agency ("Qiao Garden Int'l Travel"), and formed a joint venture entity, Hartford International Education Technology Co., Ltd ("HF Int'l Education").

The subsidiary of HFUS in Shanghai (HFSH) plans to borrow operating funds from two related party entities, SH Qiao Hong and SH Oversea Chinese Culture Media Ltd. The purpose of the loans is to invest in Hartford International Education Technology (Shanghai) Co., Ltd. (HF Int'l Education). Upon signing of supplemental agreement, HFUS currently holds 75.5% ownership of HF Int'l Education and maintains control over HF Int'l Education. On July 24, 2019, HF Int'l Education established a 100% owned subsidiary, Pudong Haojin Childhood Education Ltd. ("PDHJ"). On October 28, 2019, PDHJ had its childhood education center opened. On March 23, 2020, HF Int'l Education established Shanghai Hongkou HaiDeFuDe Childcare Co., Ltd.("HDFD") and was approved the business license to conduct childcare operations in Shanghai, China. On July 20, 2020, HF Int'l Education entered an agreement with two individuals to acquire the whole ownership of Shanghai Gelinke Childcare Education Center ("Gelinke").

HF Int'l Education has developed an enhanced model of childcare franchise management program and registered a new brand name, "HaiDeFuDe". HF Int'l Education has recruited a team of knowledgeable childcare teachers to develop series of independent textbooks designed to targeted age of young children and register for the copyrights for these textbooks in September of 2020. Recently, HF Int'l Education has begun marketing and promoting the enhanced model of franchise operation and management packaged program, under "HaiDeFuDe" brand, to an initial of 50 franchisees throughout different regions of China. To achieve that, HF Int'l Education has incorporate existing market resources throughout other major cities and provinces in China. The promotion of HF Int'l Education franchise operation and management model is expected to attract other childcare education centers to join the "HaiDeFuDe" brand, and HF Int'l Education expects to generate revenue from franchise and management fees. Due to the market uncertainties during the pandemic, we have reduced our revenue projection from our last disclosure. We expect to generate approximately RMB 600,000 in revenue by the end of 2020 and reach approximately RMB12 million in revenue from 20 franchisees by the end of 2021.





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Results of Operations - Three Months Ended October 31, 2020 Compared to Three Months Ended October 31, 2019.

Revenue and Cost of revenue: We recognized $79,387 and $64,516 revenue in the three months ended October 31, 2020 and 2019, respectively. Cost of revenue increased to $40,828 for the three months ended October 31, 2020, compared to $19,339 during the comparable period of 2019. The revenue was mainly generated from two industry segments, the hospitality housing in HZLJ and childhood education care services in HF Int'l Education. The other business lines with limited operations have not generated revenue yet.

Operating Expenses: Operating expenses increased to $696,765 for the three months ended October 31, 2020, compared to $439,163 during the comparable period of 2019. During the three months ended October 31, 2020, selling, general and administrative expenses increased by $248,013, and depreciation and amortization expenses increased by $9,589. The increase of operating expenses was mainly resulted from the expenses incurred in the new operating subsidiaries in China for childcare education business development, including lease cost.

Other Income (Expense): Other expense, net increased to $144 for the three months ended October 31, 2020, compared to $4,764 of income for the corresponding period of 2019. Other income for the three months ended October 31, 2019 was mainly resulted from interest income of loan receivables.

Net Loss Attributable to Noncontrolling Interest: For the three months ended October 31, 2020, we recorded a net loss attributable to noncontrolling interest of $134,393 compared to $83,519 for the corresponding period of 2019. The loss was allocated based on the ownership percentage of noncontrolling interest, which was mainly acquired through the acquisitions and Joint Ventures.

Net Loss Attributable to Hartford Great Health Corp: We recorded a net loss of $524,757 or $(0.01) per share for the three months ended October 31, 2020, compared to a net loss of $305,703 or $(0.00) per share for the three months ended October 31, 2019, an increase in loss of $219,054 due to the factors discussed above.

Liquidity and Capital Resources

As of October 31, 2020, we had a working capital deficit of $4,367,285 comprised of current assets of $1,341,869 and current liabilities of $5,709,154. This represents an increase of $1,007,662 in the working capital deficit from the July 31, 2020 amount of $3,359,623.

During the three months ended October 31, 2020, our working capital deficit increased primarily because the additional advances from related parties for business operating.

We believe that our funding requirements for the next twelve months will be in excess of $1,900,000. We are currently seeking for further funding through related parties' loan and finance.

On December 11, 2018, the Company sold 96,090,000 shares of its common stock (the "Shares") to 15 individuals. The selling price was $0.02 per share for an aggregate of $1,921,800. All 15 investors executed subscription agreements. As of April 30, 2019, all proceeds have collected. Twelve of the 15 investors are Chinese citizens and purchased the shares in China. Due to the strict monitoring of China's foreign exchange investment policy, funds are not able to be transferred directly to HFUS. As a result, amount of $657,000 were collected in RMB from the Chinese investors. The Shares were sold in a private placement pursuant to an exemption from registration in accordance with Section 4(2) and/or Regulation S under the Securities Act of 1933, as amended. The Shares are all restricted shares and accordingly all stock certificates evidencing the Shares have been affixed with the appropriate legend restricting sales and transfers.

On July 3, 2020, the Company signed a subscription agreement to one of the current investors, selling 1,000,000 shares of common stock (the "Shares") priced at $0.02 per share. The stock shares were issued on November 24, 2020.

We will seek additional financing in the form of debt or equity. There is no assurance that we will be able to obtain any needed financing on favorable terms, or at all, or that we will find qualified purchasers for the sale of our stock. Any sales of our securities would dilute the ownership of our existing investors.





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Cash Flows - Three months ended October 31, 2020 Compared to Three months ended October 31, 2019





Operating Activities

During the three months ended October 31, 2020, $716 provided by operating activities as compared to $63,297 used in the operations during the three months ended October 31, 2019. During the three months ended October 31, 2020, we recorded loss including noncontrolling interests of $659,150 , incurred non-cash depreciation of $19,141, prepaid and other current receivables increased by $21,729, inventory increased by $87,962, other assets decreased by $87,026, other current payable increased by $75,127, and related party payable increased by $518,895, operating lease liabilities net with operating lease assets increased by $62,101 as a result from the adoption of new lease guidance ASU No. 2016-02. The increase of related party payable was resulted from the operating advances from related parties. See Note 12 Related Party Transactions.

During the three months ended October 31, 2019, we recorded losses including noncontrolling interests of $389,222, incurred non-cash depreciation of $9,552, prepaid and other current receivables decreased by $13,367, other assets decreased by $29,985, other current payable increased by $25,792, related party payable increased by $256,517, and other liabilities decreased by $38,612, operating lease liabilities net with operating lease assets increased by $29,324 as a result from the adoption of new lease guidance ASU No. 2016-02. The increase of related party payable was resulted from the operating advances from related parties.





Investing activities

Cash provided by investing activities was $12,264 for the three months ended October 31, 2020 as compared to $74,283 used for the corresponding period in 2019. During the three months ended October 31, 2020, HF Int'l Education acquired a new entity, Gelinke with cash net inflow of $12,264, see Note 3 Acquisitions and Joint Ventures.

During the three months ended October 31, 2019, HF Int'l Education's subsidiary - PDHJ was grand opened to provide childcare education services. Property and equipment have been added to this new entity.





Financing activities

Cash provided by financing activities was $3,899 for the three months ended October 31, 2020 as compared to $12,690 cash used in financing activities for the three months ended October 31, 2019. The cash flows provided by financing activities for the three months ended October 31, 2020 was primarily attributable to $25,156 notes payable with interest offset by $21,257 finance lease principal payment. The notes payable was borrowed from one related party with 5% annual interest rate. See Note 12 Related Party Transactions.

Cash flows used in financing activities for the three months ended October 31, 2019 was primarily attributable to $19,739 finance lease principal payment offset by $7,049 contribution received from noncontrolling interest owners to the joint venture entity HF Int'l Education.





Future Capital Expenditures

On January and February 27, 2019, HFSH entered an agreement with Shanghai Qiao Garden Property Management Group to acquire 85 percent ownership of Shanghai Senior Health Consulting Ltd. ("SH Senior"). On January 28, 2019, HFUS entered an agreement to acquire 100 percent equity interest of Shanghai Luo Sheng International Trade Ltd. ("SH Luosheng"). On February 24, 2019, HFSH entered an agreement to acquire 55 percent ownership of Shanghai Pasadena Ltd. ("SH Pasadena"). As of October31, 2020, these acquisition agreements have not yet taken effective as no consideration has been paid toward those acquisitions. These agreements will be executed when the Company is financially ready to move forward, and the purchase price will be calculated based on the net assets of each entity on the execute date. There was no penalty levied or to be levied due to delayed execution or no-execution of those agreements.





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Off-Balance Sheet Arrangements

As of and subsequent to October 31, 2020, we have no off-balance sheet arrangements.





Contractual Commitments

As of October 31, 2020, we have no other material contractual commitments except the office building and property leases which are included Note 11 Leases.





Critical Accounting Policies

Our significant accounting policies are disclosed in Note 1 of the footnotes to our unaudited financial statements above. There have been no other changes in our critical accounting policies since our most recent audit dated July 31, 2020.

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