UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended December 31, 2023

☐ 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: 000-51060

CHINA HEALTH INDUSTRIES HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware		86-0827216
(State or other jurisdiction of		(IRS Employer
incorporation or organization)		Identification No.)

3199-1 Longxiang Road, Songbei District Harbin City, Heilongjiang Province People’s Republic of China		150028
(Address of principal executive offices)		(Zip Code)

86-451-88100688

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act: None.

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Not Applicable		Not Applicable		Not Applicable

Indicate by check mark whether the issuer (1) 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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 1, 2024, there were 65,539,737 shares of common stock, $0.0001 par value per share, issued and outstanding.

TABLE OF CONTENTS

		Page

PART I	FINANCIAL INFORMATION	1

Item 1.	Financial Statements (Unaudited)	1

	Condensed Consolidated Balance Sheets As of December 31, 2023 (Unaudited) and June 30, 2023 (Audited)	1

	Condensed Consolidated Statements of Operations and Comprehensive (Loss)/Income For the Three and Six Months Ended December 31, 2023 and 2022 (Unaudited)	2

	Condensed Consolidated Statements of Stockholders’ Equity For the Three and Six Months Ended December 31, 2023 and 2022 (Unaudited)	3-4

	Condensed Consolidated Statements of Cash Flows For the Six Months Ended December 31, 2023 and 2022 (Unaudited)	5

	Notes to Condensed Consolidated Financial Statements As of December 31, 2023 (Unaudited)	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29

Item 4.	Controls and Procedures	29

PART II	OTHER INFORMATION	30

Item 6.	Exhibits	30

Exhibits/Certifications		30

Signatures		31

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

CHINA HEALTH INDUSTRIES HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

IN US DOLLARS

	December 31, 2023 (Unaudited)			June 30, 2023 (Audited)
ASSETS

Current assets
Cash and cash equivalents	$	15,343		$	47,246
Accounts receivable, net		-			-
Inventory		2,392			40,608
Other receivables, net		5,617			1,921
Advances to suppliers		217,488			198,157
Prepayments		8,606			-
Prepaid investment funds		-			40,682,360
Total current assets	$	249,446		$	40,970,292

Property, plants and equipment, net		2,614,478			2,727,170
Intangible assets, net		972,294			964,775
Construction in progress		428,652			420,092
Total assets	$	4,264,870		$	45,082,329

LIABILITIES AND EQUITY

Current liabilities
Short term loans	$	35,179		$	-
Accounts payable and accrued expenses		292,990			286,902
Other payables		94,853			94,293
Advances from customers		248,469			208,966
Related party debts		5,616,682			5,154,024
Wages payable		114,756			90,990
Taxes payable		152,219			137,585
Total current liabilities	$	6,555,148		$	5,972,760

Equity
Common stock, ($0.0001 par value per share, 300,000,000 shares authorized, 65,539,737 and 65,539,737 shares issued and outstanding as of December 31, 2023 and June 30, 2023, respectively)		6,554			6,554
Additional paid-in capital		521,987			521,987
Accumulated other comprehensive income		(2,781,639	)		(2,745,558	)
Statutory reserves		38,679			38,679
Merger reserve		(40,735,855	)		-
Retained earnings		40,659,996			41,287,907
Total stockholders’ (deficit)/equity	$	(2,290,278	)	$	39,109,569

Total liabilities and equity	$	4,264,870		$	45,082,329

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

CHINA HEALTH INDUSTRIES HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS)/INCOME
IN US DOLLARS
(UNAUDITED)

	For the Three Months Ended						For the Six Months Ended
	December 31, 2023			December 31, 2022			December 31, 2023			December 31, 2022

REVENUE	$	46		$	32,650		$	38,346		$	32,650

COST OF GOODS SOLD		(46	)		(29,645	)		(38,346	)		(29,645	)

GROSS PROFIT		-			3,005			-			3,005

OPERATING EXPENSES
Selling, general and administrative expenses		362,613			223,473			452,056			558,319
Depreciation and amortization expenses		82,942			192,365			177,456			348,242
Total operating expenses		(445,555	)		(415,838	)		(629,512	)		(906,561	)

LOSS FROM OPERATIONS		(445,555	)		(412,833	)		(629,512	)		(903,556	)

OTHER INCOME/(EXPENSES)
Interest income		15			26,046			1,819			60,529
Interest expenses		(42	)		-			(43	)		-
Other income, net		490			1,316,254			490			1,316,254
Bank charges		(465	)		(164	)		(665	)		(369	)
Total other (expenses) /income, net		(2	)		1,342,136			1,601			1,376,414

(LOSS)/INCOME BEFORE INCOME TAXES		(445,557	)		929,303			(627,911	)		472,858

Provision for income taxes		-			-			-			-

NET (LOSS)/INCOME		(445,557	)		929,303			(627,911	)		472,858

Foreign currency translation adjustment		203,157			1,266,416			(36,081	)		(1,244,395	)

COMPREHENSIVE (LOSS)/INCOME	$	(242,400	)	$	2,195,719		$	(663,992	)	$	(771,537	)

Net (loss)/earnings per share:

Basic & diluted (loss)/earnings per share	$	(0.0068	)	$	0.0142		$	(0.0096	)	$	0.0072
Weighted average shares outstanding:
Basic & diluted weighted average shares outstanding		65,539,737			65,539,737			65,539,737			65,539,737

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

CHINA HEALTH INDUSTRIES HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED DECEMBER 31, 2023 AND 2022

IN US DOLLARS

(UNAUDITED)

	Common Shares				Additional Paid-in		Merger			Retained			Statutory		Accumulated Other Comprehensive			Total Stockholders’			Total
	Shares		Amount		Capital		Reserve			Earnings			Reserve		Income (loss)			Equity			Equity

Balance, June 30, 2022		65,539,737	$	6,554	$	521,987	$	-		$	41,696,679		$	38,679	$	538,820		$	42,802,719		$	42,802,719

Net loss		-		-		-		-			472,858			-		-			472,858			472,858
Other comprehensive loss - Translation adjustment		-		-		-		-			-			-		(1,244,395	)		(1,244,395	)		(1,244,395	)
Balance, December 31, 2022		65,539,737	$	6,554	$	521,987	$	-		$	42,169,537		$	38,679	$	(705,575	)	$	42,031,182		$	42,031,182

Balance, June 30, 2023		65,539,737	$	6,554	$	521,987	$	-		$	41,287,907		$	38,679	$	(2,745,558	)	$	39,109,569		$	39,109,569

Net loss		-		-		-		-			(627,911	)		-		-			(627,911	)		(627,911	)

Business Combinations under Common Control		-		-		-		(40,735,855	)		-			-		-			(40,735,855	)		(40,735,855	)
Other comprehensive loss - Translation adjustment		-		-		-		-			-			-		(36,081	)		(36,081	)		(36,081	)
Balance, December 31, 2023		65,539,737		6,554	$	521,987	$	(40,735,855	)	$	40,659,996		$	38,679	$	(2,781,639	)	$	(2,290,278	)	$	(2,290,278	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

CHINA HEALTH INDUSTRIES HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED DECEMBER 31, 2023 AND 2022

IN US DOLLARS

(UNAUDITED)

	Common Shares				Additional Paid-in		Merger			Retained			Statutory		Accumulated Other Comprehensive			Total Stockholders’			Total
	Shares		Amount		Capital		Reserve			Earnings			Reserve		Income (loss)			Equity			Equity

Balance, September 30, 2022		65,539,737	$	6,554	$	521,987	$	-		$	41,240,234		$	38,679	$	(1,971,991	)	$	39,835,463		$	39,835,463

Net loss		-		-		-		-			929,303			-		-			929,303			929,303
Other comprehensive loss - Translation adjustment		-		-		-		-			-			-		1,266,416			1,266,416			1,266,416
Balance, December 31, 2022		65,539,737	$	6,554	$	521,987	$	-		$	42,169,537		$	38,679	$	(705,575	)	$	42,031,182		$	42,031,182

Balance, September 30, 2023		65,539,737	$	6,554		521,987	$	-		$	41,105,553		$	38,679	$	(2,984,796	)	$	38,687,977		$	38,687,977

Net loss		-		-		-		-			(445,557	)		-		-			(445,557	)		(445,557	)

Business Combinations under Common Control		-		-		-		(40,735,855	)		-			-		-			(40,735,855	)		(40,735,855	)
Other comprehensive loss - Translation adjustment		-		-		-		-			-			-		203,157			203,157			203,157
Balance, December 31, 2023		65,539,737	$	6,554	$	521,987	$	(40,735,855	)	$	40,659,996		$	38,679	$	(2,781,639	)	$	(2,290,278	)	$	(2,290,278	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

CHINA HEALTH INDUSTRIES HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

IN US DOLLARS

(UNAUDITED)

	For the Six Months Ended
	December 31,			December 31,
	2023			2022
Cash Flows from Operating Activities
Net (loss)/income from operations	$	(627,911	)	$	472,858
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization expenses		177,456			348,242
Reversal of doubtful accounts		(21,278	)		-
Changes in operating assets and liabilities,
Accounts receivable		21,278			-
Other receivables		12,474			680
Inventory		38,346			85,730
Advances to suppliers and prepaid expenses		(22,090	)		(8,940	)
Accounts payables and accrued expenses		-			(2,271	)
Advances from customers and other payables		27,527			(231,152	)
Related party debts		327,549			(112,835	)
Wages payable		20,005			(43,001	)
Taxes payable		11,619			2,885
Net cash (used in)/provided by operating activities		(35,025	)		512,196

Cash Flows from Investing Activities
Acquisition of subsidiary		2,853			-
Net cash provided by investing activities		2,853			-

Cash Flows from Financing Activities
Net cash (used in)/provided by financing activities		-			-

Effect of exchange rate changes on cash and cash equivalents		269			(2,132,707	)

Net decrease in cash and cash equivalents		(31,903	)		(1,620,511	)

Cash and cash equivalents, beginning balance		47,246			44,789,999
Cash and cash equivalents, closing balance		15,343			43,169,488

Supplemental cash flow information
Cash paid for income taxes	$	-		$	-
Cash paid for interest expenses	$	42		$	-

Non-cash activities:
Purchase of property, plant and equipment	$	281		$	-

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

CHINA HEALTH INDUSTRIES HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - ORGANIZATION AND BUSINESS BACKGROUND

China Health Industries Holdings, Inc. (“China Health US”) was incorporated in the State of Arizona on July 11, 1996 and was the successor of the business known as Arizona Mist, Inc. which began in 1989. On May 9, 2005, it entered into a stock purchase agreement and Share Exchange (effecting a reverse merger) with Edmonds 6, Inc. (“Edmonds 6”), a Delaware corporation, and changed its name to Universal Fog, Inc. Pursuant to this agreement, Universal Fog, Inc. (which has been in continuous operation since 1996) became a wholly-owned subsidiary of Edmonds 6.

China Health Industries Holdings Limited (“China Health HK”) was incorporated on July 20, 2007 in Hong Kong under the Companies Ordinance as a limited liability company. China Health HK was formed for the purpose of seeking and consummating a merger or acquisition with a business entity organized as a private corporation, partnership, or sole proprietorship as defined by FASB ACS Topic 915 (“Development Stage Entities”).

Harbin Humankind Biology Technology Co., Limited (“Humankind”) was incorporated in Harbin City, Heilongjiang Province, the People’s Republic of China (the “PRC”) on December 14, 2003, as a limited liability company under the Company Law of the PRC. Humankind is engaged in the manufacturing and sale of health products.

On August 20, 2007, the sole shareholder of China Health HK entered into a share purchase agreement (the “Share Purchase Agreement”) with the owners of Humankind. Pursuant to the Share Purchase Agreement, China Health HK purchased 100% of the ownership in Humankind for a cash consideration of $60,408 (the “Share Purchase”). Subsequent to the completion of the Share Purchase, Humankind became a wholly-owned subsidiary of China Health HK. The Share Purchase was accounted for as a “reverse merger” since the owner of Humankind owned a majority of the outstanding shares of China Health HK’s common stock immediately following the execution of the Share Purchase Agreement, it was deemed to be the accounting acquirer in the reverse merger. Consequently, the assets and liabilities and the historical operations that have been reflected in the financial statements for periods prior to the Share Purchase are those of Humankind and have been recorded at the historical cost basis. After completion of the Share Purchase, China Health HK’s consolidated financial statements include the assets and liabilities of both China Health HK and Humankind, the historical operations of Humankind, and the operations of China Health HK and its subsidiaries from the closing date of the Share Purchase.

On October 14, 2008, Humankind set up a 99% owned subsidiary, Harbin Huimeijia Medicine Company (“Huimeijia”), with its primary business being manufacturing and distributing medicine. Mr. Xin Sun, the Company’s majority owner, owns 1% of Huimeijia. Huimeijia is consolidated in the consolidated financial statements of China Health HK.

On December 31, 2008, China Health HK entered into a reverse merger with Universal Fog, Inc., a U.S. publicly traded shell company (the “Transaction”). China Health HK is the acquirer in the Transaction, and the Transaction has been treated as a recapitalization of China Health US. After the Transaction and a 20:1 reverse stock split, Mr. Xin Sun owned 61,203,088 shares of common stock, representing 98.3% of the 62,234,737 total outstanding shares of common stock of China Health US. On April 7, 2009, Mr. Sun transferred 28,200,000 shares of common stock to 296 individuals, leaving him with 33,003,088 shares of common stock of China Health US, or approximately 53.03% of the total outstanding shares of common stock. Universal Fog, Inc. changed its name to China Health Industries Holdings, Inc. on February 19, 2009.

On November 22, 2013, Humankind completed the acquisition of Heilongjiang Huimeijia Pharmaceutical Co., Ltd. (“HLJ Huimeijia”) for a total purchase price of $16,339,869 (RMB100,000,000). HLJ Huimeijia was founded on October 30, 2003, and is engaged in the manufacturing and distribution of tincture, ointments, rubber paste (including hormones), topical solution, suppositories, liniment (including traditional Chinese medicine extractions), enemas and oral liquids. HLJ Huimeijia’s predecessor is Heilongjiang Xue Du Pharmaceutical Co., Ltd., which has established its brand name in the market through its supply of high quality medical products. HLJ Huimeijia is categorized as a “high and new technology” enterprise by the Science Technology Department in Heilongjiang Province. HLJ Huimeijia has 21 products which have been approved by, and have received approval numbers issued by, National Medical Products Administration, or NPMA (formerly known as the China State Food and Drug Administration, or the CFDA). In addition, HLJ Huimeijia is the holder of one patent for utility models, five patents for external design and six trademarks in China, including the Chinese brand name of “Xue Du” which has an established reputation among customers in northeastern China.

On December 24, 2014, Humankind entered into a stock transfer agreement (the “Original Agreement”) with Xiuzheng Pharmaceutical Group Co., Ltd. a company incorporated under the laws of the PRC and located in Jilin province (“Xiuzheng Pharmacy” or the “Buyer”), Mr. Xin Sun, the CEO of the Company, and Huimeijia, 99% owned by Humankind and 1% owned by Mr. Xin Sun. Pursuant to the Original Agreement, Humankind and Mr. Xin Sun (the “Equity Holders”), would sell their respective equity interests in Huimeijia to Xiuzheng Pharmacy.

On February 9, 2015, the four parties entered into a supplementary agreement (the “Supplementary Agreement”) to modify the terms of the Original Agreement, pursuant to which the Equity Holders and Huimeijia (collectively the “Asset Transferors”) would sell only the 19 drug approval numbers (including the tablet, capsule, powder, mixture, oral liquid, syrup and oral solution under the 19 approval numbers; licenses including the original copies of Business License, Organization Code Certificate, Tax Registration Certificate, Drug Production Permit and GMP Certificate, and other documents and original copies related to the production and operation of the 19 drugs) (the “Assets”) to Xiuzheng Pharmacy. The Equity Holders would have retained their equity interests in Huimeijia, but would have pledged such equity interests to Xiuzheng Pharmacy until the Assets were transferred, at which time the cash consideration would have been paid by the Buyer. Total cash consideration would have been the same as under the Original Agreement, i.e., RMB8,000,000 (approximately $1,306,186) to the Asset Transferors. In the event that the Assets had failed to be transferred to the Buyer due to the fault of the Asset Transferors, the paid consideration would have been returned to the Buyer with interest accrued. If the failure of the transfer of the Assets were a result of changes in government policy or force majeure, the paid cash consideration would have been returned to the Buyer but without any interest.

On October 12, 2016, the four parties agreed to rescind the Supplementary Agreement and entered into a new supplementary agreement (the “New Supplementary Agreement”), pursuant to which the four parties agreed to execute the transfer of the equity interests based on the Original Agreement and the Equity Holders agreed to sell their respective equity interests in Huimeijia to Xiuzheng Pharmacy. The transfer of 100% of the equity interests of Huimeijia to the Buyer was for total cash consideration of RMB 8,000,000 (approximately $1,306,186) (the “Purchase Price”) to the Equity Holders. 40% of the Purchase Price was due within 10 business days after the signing of the New Supplementary Agreement; 40% of the Purchase Price was due within 10 business days after the completion of the changes in business registration described in the Original Agreement and Xiuzheng Pharmacy obtaining documents evidencing its ownership on Huimeijia; 15% of the Purchase Price is due within 10 business days after the transfer of all of the Assets is approved by Heilongjiang FDA; and 5% of the Purchase Price is due within 10 business days after all of the Assets have been transferred to Xiuzheng Pharmacy or its designee, and Humankind and Mr. Xin Sun have instructed Xiuzheng Pharmacy to complete six-batches production of all forms of the drugs included in the Assets. As of the date of this report, 80% of the Purchase Price has been paid, the Company has completed changes in its business registration, and Xiuzheng Pharmacy has obtained a business license issued by the local State Administration of Industry and Commerce in Harbin (“Harbin SAIC”) to Huimeijia, in which the ownership of Huimeijia has been recorded as held by Xiuzheng Pharmacy, with Harbin SAIC and the legal representative (a person that is authorized to take most of the corporate actions on behalf of a company under the corporate laws in China) of Huimeijia has been appointed by the Buyer.

On June 27, 2023 (the “Signing Date”), Harbin Humankind Biology Technology Co., Limited (“Humankind”), a wholly owned subsidiary of China Health Industries Holdings, Inc. (“China Health”), a corporation incorporated under the laws of the State of Delaware, entered into certain equity transfer agreements (collectively, the “Agreements”) with Mr. Xin Sun and Mr. Kai Sun (collectively, the “Sellers”). Pursuant to the Agreements, the Sellers agreed to transfer to Humankind 99% and 1% of the equity interests of Heilongjiang HempCan Pharmaceuticals Co., Ltd. (“HempCan”), for a consideration of RMB292,050,000 (approximately $41,096,180) and RMB2,950,000 (approximately $415,113) respectively, totaling RMB295 million (approximately $41,511,293) (collectively, the “Purchase Prices”). The Purchase Prices shall be fully paid to Sellers within 15 business days after the Signing Date, and the Sellers shall complete certain registration procedures, such as change of equity ownership and change of business registration within 15 business days after full Purchase Prices are received. If Humankind is late in paying the Purchase Prices, a 0.1% per day late penalty on the amount of Purchase Prices that is paid late shall be paid to the Sellers. Mr. Xin Sun is China Health’s Chairman, sole director and sole executive officer and Mr. Kai Sun is Mr. Xin Sun’s younger brother. On December 1, 2023, the Company closed the Acquisition. The transfer of the equity interests of HempCan from the Sellers to Humankind and the changes of business registration have been completed. As the consideration for the Acquisition, the Company paid the Sellers an aggregate cash consideration of RMB295 million (approximately $41,511,293) in exchange for 100% equity ownership of HempCan.

HempCan was incorporated on May 22, 2019 in accordance with PRC laws, has been engaging in Research Development, production and marketing of innovative drugs as well as medical devices and functional food. HempCan commits itself to providing an innovative treatment to patients by developing a treatment approach with combination of anticancer, immune improvement and pain relief. In addition, HempCan also cooperates with universities and individual advisors to develop new products and new technique. Currently, HempCan owns two anticancer drugs and holds the business permit to plant hemp, hemp seed growing, cannabidiol (CBD) extraction and deep processing for other hemp products.

China Health US, China Health HK, Humankind, HLJ Huimeijia and HempCan are collectively referred herein to as the “Company.”

As of December 31, 2023, the Company’s corporate structure was as follows:

Note 2 - SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

This summary of the Company’s significant accounting policies is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management (“Management”), which is responsible for the integrity and objectivity of the financial statements and notes. These accounting policies conform to generally accepted accounting principles in the United States (“US GAAP”) and have been consistently applied in the preparation of the unaudited condensed consolidated financial statements.

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company without audit pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted as allowed by such rules and regulations, and Management believes that the disclosures are sufficient so that the information presented is not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2023. These unaudited condensed consolidated financial statements include all adjustments which, in the opinion of Management, are necessary for a fair presentation of the financial position and the results of operations of the Company. All such adjustments are of a normal and recurring nature. The results of operations of the Company for the six months ended December 31, 2023 may not be indicative of results that may be expected for the year ended June 30, 2024.

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include China Health US and its four subsidiary companies, namely China Health HK, Humankind, HLJ Huimeijia and HempCan. All significant intercompany balances and transactions have been eliminated in consolidation and combination.

On November 22, 2013 and December 1, 2023, China Health US, through its wholly owned subsidiary Humankind, completed the acquisition of HLJ Huimeijia and HempCan, respectively. HLJ Huimeijia, Humankind and HempCan were and are under the common control of Mr. Xin Sun, the CEO of China Health US, before and after the date of transfer. Humankind’s accounting policy adopted the guidance in ASC 805-50-05-5 for the transfer of net assets between entities under common control to apply an accounting method similar to the pooling-of-interests method. Under this method, the financial statements of Humankind shall report results of operations for the period in which the transfer occurs as though the transfer of net assets had occurred at the beginning of the period. Results of operations for that period will thus comprise both those of the previously separate entities combined from the beginning of the period to the date the transfer is completed and those of the combined operations from that date to the end of the period. Similarly, Humankind shall present statements of financial position and other financial information as of the beginning of the period as though the assets and liabilities had been transferred at that date. Financial statements and financial information of Humankind presented for prior years shall also be retrospectively adjusted to furnish comparative information.

Segment Reporting

FASB ASC Topic 280, “Segment Reporting,” established standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Company’s business segments. The Company has four reportable operating segments: Humankind, HLJ Huimeijia, HempCan and Others. The segments are grouped based on the types of products provided.

Fair Value of Financial Instruments

The provisions of accounting guidance, FASB ASC Topic 820 that applies to the Company requires all entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet, for which it is practicable to estimate fair value, and defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties.

Fair Value Measurements

FASB ASC Topic 820, “Fair Value Measurements and Disclosures”, clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value, and requires additional disclosures about the use of fair value measurements.

Various inputs are considered when determining the fair value of the Company’s debt. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in these securities. These inputs are summarized in the six broad levels listed below:

Level 1 –

observable market inputs that are unadjusted quoted prices for identical assets or liabilities in active markets.

Level 2 –

other significant observable inputs, including quoted prices for similar securities, interest rates, credit risk, etc.

Level 3 –

significant unobservable inputs, including the Company’s own assumptions in determining the fair value of investments.

The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or a nonrecurring basis. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. The Company had no financial assets or liabilities carried and measured on a nonrecurring basis during the reporting periods. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. The Company had no financial assets or liabilities carried and measured on a recurring basis during the reporting periods.

The availability of inputs observable in the market varies from instrument to instrument and depends on a variety of factors, including the type of instrument, whether the instrument is actively traded, and other characteristics particular to the transaction. For many financial instruments, pricing inputs are readily observable in the market, the valuation methodology used is widely accepted by market participants, and the valuation does not require significant discretion of Management. For other financial instruments, pricing inputs are less observable in the market and may require judgment of Management.

Translation of Foreign Currencies

Humankind, HLJ Huimeijia and HempCan maintain their books and accounting records in PRC currency “Renminbi” (“RMB”), which has been determined as the functional currency. The functional currency of China Health HK is the Hong Kong Dollar (“HKD”).

Transactions denominated in currencies other than the functional currencies are recorded at the exchange rates prevailing on the date of the transactions, as quoted by the Federal Reserve Board. Foreign currency exchange gains and losses resulting from these transactions are included in operations.

Humankind, HLJ Huimeijia, HempCan and China Health Hong Kong’s financial statements are translated into the reporting currency, the United States Dollar (“USD”). Assets and liabilities of the above entities are translated at the prevailing exchange rate at each reporting period end date. Contributed capital accounts are translated using the historical rate of exchange when capital is injected. Income and expense accounts are translated at the average rate of exchange during the reporting period. Translation adjustments resulting from the translation of these financial statements are reflected as accumulated other comprehensive income in shareholders’ equity and non-controlling interests.

Statement of Cash Flows

In accordance with Statement FASB ASC Topic 230, “Statement of Cash Flows”, cash flow from the Company’s operations is calculated based upon the local currencies and translated to the reporting currency using an average foreign exchange rate for the reporting period. As a result, amounts related to assets and liabilities reported in the statement of cash flows will not necessarily be the same as the corresponding balances on the balance sheets.

Use of Estimates and Assumptions

The preparation of financial statements in conformity with US GAAP requires Management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities on the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates and judgments on historical experience and on various other assumptions and information that are believed to be reasonable under the circumstances. Estimates and assumptions of future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained, and as the Company’s operating environment changes. Significant estimates and assumptions by Management include, among others, useful life of long-lived assets and intangible assets, valuation of inventory, accounts receivable and notes receivable, impairment analysis of long-lived assets, construction in progress, intangible assets, and deferred taxes. While Management believes that the estimates and assumptions used in the preparation of the financial statements are appropriate, actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the financial statements in the period they are determined to be necessary.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits in banks with maturities of six months or less, and all highly liquid investments which are unrestricted as to withdrawal or use and which have original maturities of six months or less at the time of purchase.

As of December 31, 2023 and June 30, 2023, the Company’s uninsured bank balances were mainly maintained at financial institutions located in the PRC and Hong Kong. The uninsured bank balances were $15,343 and $47,246 as of December 31, 2023 and June 30, 2023, respectively. The Company had no insured bank balances as of December 31, 2023 and June 30, 2023.

Accounts Receivable

Accounts receivable is recorded at the invoiced amount and do not bear interest. The Company extends unsecured credit to its customers in the ordinary course of business, but mitigates the associated risks by performing credit checks and actively pursuing past due accounts. An allowance for doubtful accounts is established and determined based on Management’s assessment of known requirements, aging of receivables, payment and bad debt history, the customer’s current credit worthiness, changes in customer payment patterns and the economic environment. From November 1, 2013, the Company changed its credit policy by offering ninety (90) day payment terms for sales agents. As of December 31, 2023 and June 30, 2023, the balances of accounts receivable were $nil and $nil, respectively. The Company determines the allowance based on aging data, historical collection experience, customer specific facts, and economic conditions. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company evaluated the nature of all accounts receivable then provided allowance for doubtful accounts. The Company has determined that an allowance of $30,566 and $51,188 was appropriate as of December 31, 2023 and June 30, 2023, respectively.

Advances to Suppliers

The Company periodically makes advances to certain vendors for purchases of raw materials or to service providers for services relating to construction plans for its plants, equipment and production lines for GMP upgrading, and records these payments as advances to suppliers. As of December 31, 2023 and June 30, 2023, advances to suppliers amounted to $217,488 and $198,157 , respectively.

Inventory

Inventory consists of raw materials, work in progress, and finished goods or manufactured products.

Inventory is stated at the lower of either cost or market value and consists of materials, labor and overhead. HLJ Huimeijia uses the weighted average method for inventory valuation. The other subsidiaries of the Company use the first-in, first-out (“FIFO”) method for inventory valuation. Overhead costs included in finished goods include direct labor costs and other costs directly applicable to the manufacturing process. The Company evaluates inventory for excess, slow moving, and obsolete inventory, as well as inventory the value of which is in excess of its net realizable value. This evaluation includes analysis of sales levels by product and projections of future demand. If future demand or market conditions are less favorable than the Company’s projections, a write-down of inventory may be required, and would be reflected in cost of goods sold in the period the revision is made. The inventory allowance in the amounts of $nil and $nil were provided for as of December 31, 2023 and June 30, 2023, respectively.

Impairment of Long-Lived Assets

The Company’s long-lived assets and other assets are reviewed for impairment in accordance with the guidance of the FASB ASC Topic 360-10, “Property, Plant, and Equipment”, and FASB ASC Topic 205, “Presentation of Financial Statements”. The Company tests for impairment losses on long-lived assets used in operations whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying amount of the asset to the future undiscounted cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Impairment evaluations involve Management’s estimates on asset useful life and future cash flows. Actual useful life and cash flows could be different from those estimated by Management, which could have a material effect on the Company’s reporting results and financial position. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values, and third-party independent appraisals, as considered necessary. As of December 31, 2023 and June 30, 2023, the Company had not experienced impairment losses on its long-lived assets. However, there can be no assurances that demand for the Company’s products or services will continue, which could result in an impairment of long-lived assets in the future.

Property, Plants and Equipment

Property, plants and equipment are carried at the lower of either cost or fair value. Maintenance, repairs and minor renewals are expensed as incurred, and major renewals and improvements that extend the life or increases the capacity of plant assets are capitalized.

When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gains or losses are included in the results of operations in the reporting period of disposition.

Depreciation is calculated on a straight-line basis over the estimated useful life of the assets. The depreciable life applied are:

Buildings, Warehouses and Improvements		20 to 30 years
Office Equipment		3 to 7 years
Vehicles		5 to15 years
Machinery and Equipment		7 to 15 years

Intangible Assets

The Company evaluates intangible assets in accordance with FASB ASC Topic 350, “Intangibles — Goodwill and Other”. Intangible assets deemed to have indefinite life are not amortized, but are subject to annual impairment tests. If the assumptions and estimates used to allocate the purchase price are not correct, or if business conditions change, purchase price adjustments or future asset impairment charges could be required. The value of the Company’s intangible assets could be impacted by future adverse changes such as: (i) any future declines in the Company’s operating results, (ii) a decline in the valuation of technology, including the valuation of the Company’s common stock, (iii) a significant slowdown in the worldwide economy, or (iv) any failure to meet the performance projections included in the Company’s forecasts of future operating results. In accordance with FASB ASC Topic 350, the Company tests intangible assets for impairment on an annual basis or more frequently if the Company believes indicators of impairment exist. Impairment evaluations involve Management’s estimates of asset useful life and future cash flows. Significant judgment of Management is required in the forecasts of future operating results that are used in the evaluations. It is possible, however, that the plans and estimates used may be incorrect. If the Company’s actual results, or the plans and estimates used in future impairment analysis, are lower than the original estimates used to assess the recoverability of these assets, the Company could incur additional impairment charges in a future period. Based on such evaluations, there was no impairment recorded for intangible assets, for the six months ended December 31, 2023 and 2022, respectively.

Construction in Progress

Construction in progress represents the costs incurred in connection with the construction of buildings or new additions to the Company’s plant facilities. Costs classified as construction in progress include all costs of obtaining the asset and bringing it to the location and condition necessary for its intended use. No depreciation is provided for construction in progress until such time as the assets are completed and are placed into service.

The Company reviews the carrying value of construction in progress for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value of the assets, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of the assets. The factors considered by Management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition, and other economic factors. Based on this assessment, there was no impairments recorded for construction in progress, for the six months ended December 31, 2023 and 2022, respectively. However, there can be no assurances that demand for the Company’s products or services will continue, which could result in an impairment of long-lived assets in the future.

Revenue Recognition

The Company recognizes revenue at the amount to which it expects to be entitled when control of the products or services is identified in any contract and transferred to its customers. Control is generally transferred when the Company has a present right to payment and title and the significant risks and rewards of ownership of products or services are transferred to its customers while performance obligation are completed. For most of the Company’s products net sales, control transfers when products are shipped and transaction price are determined. The majority of the Company’s revenue relates to the sale of inventory to customers, and revenue is recognized when control of the products or services is transferred to its customers that reflects the performance obligations are properly allocated with transaction price and satisfied in the contract. Given the nature of the Company’s business and the applicable rules guiding revenue recognition, the Company’s revenue recognition practices do not contain estimates that materially affect the results of operations. The Company records revenue at the discounted selling price and allows its customers to return products for exchange or credit subject to certain limitations. A provision for such returns is recorded based upon historical experience. There has been no provision recorded for returns based upon historical experience for the six months ended December 31, 2023 and 2022, respectively.

Cost of Goods Sold

Cost of goods sold consists primarily of the costs of raw materials, freight charges, direct labor, depreciation of plants and machinery, warehousing and overhead costs associated with the manufacturing process, and commission expenses.

Income Taxes

The Company adopts FASB ASC Topic 740, “Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is established for deferred tax assets if it is more likely than not that these items will either expire before the Company is able to realize the benefits or that future deductibility is uncertain.

Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The evaluation of a tax position is a two-step process. The first step is to determine whether it is more-likely-than-not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigations based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer met. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the year incurred. GAAP also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures and transition.

As a result of the implementation of FIN 48 (ASC 740-10), the Company undertook a comprehensive review of its portfolio of tax positions in accordance with recognition standards established by FIN 48 (ASC 740-10). The Company recognized no material adjustments to liabilities or stockholders’ equity as a result of the implementation. The adoption of FIN 48 did not have a material impact on the Company’s financial statements.

The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty. Tax laws and regulations themselves are subject to change as a result of changes in fiscal policy, changes in legislation, the evolution of regulations and court rulings. Therefore, the actual liability may be materially different from the Company’s estimates, which could result in the need to record additional tax liabilities or potentially reverse previously recorded tax liabilities or deferred tax asset valuation allowance.

Enterprise Income Tax

Under the Provisional Regulations of the PRC Concerning Income Tax on Enterprises promulgated by the PRC (the “EIT Law”), income tax is payable by enterprises at a rate of 25% of their taxable income.

Value Added Tax

The Provisional Regulations of the PRC Concerning Value Added Tax promulgated by the State Council came into effect on January 1, 1994. Under these regulations and the Implementing Rules of the Provisional Regulations of the PRC Concerning Value Added Tax, value added tax (“VAT”) is imposed on goods sold in, or imported into, the PRC and on processing, repair and replacement services provided within the PRC.

VAT payable in the PRC is charged on an aggregated basis at a rate of 13% or 16% (depending on the type of goods involved) on the full price collected for the goods sold or, in the case of taxable services provided, at a rate of 16% on the charges for the taxable services provided, but excluding, in respect of both goods and services, any amount paid in respect of VAT included in the price or charges, and less any deductible VAT already paid by the taxpayer on purchases of goods and services in the same financial year. As of December 31, 2023 and June 30, 2023, VAT payables were $44,423 and $37,119, respectively.

Sales-Related Taxes

Pursuant to the tax law and regulations of the PRC, the Company is obligated to pay 7% and 5% of the annual aggregate VAT paid by the Company as taxes for the purposes of maintaining and building cities and educational facilities, which fees are included as sales-related taxes. Sales-related taxes are recorded when sales revenue is recognized. Sales-related taxes were $nil and $nil for the six months ended December 31, 2023 and 2022, respectively.

Concentrations of Business and Credit Risks

All of the Company’s manufacturing is located in the PRC. There can be no assurance that the Company will be able to successfully continue to manufacture its products and failure to do so would have a material adverse effect on the Company’s financial position, results of operations and cash flows. Moreover, the success of the Company’s operations is subject to numerous contingencies, some of which are beyond management’s control. These contingencies include general economic conditions, prices of raw materials, competition, governmental and political conditions, and changes in regulations. Since the Company is dependent on trade in the PRC, the Company is subject to various additional political, economic and other uncertainties. Among other risks, the Company’s operations will be subject to the risks of restrictions on transfer of funds, domestic customs, changing taxation policies, foreign exchange restrictions, and political and governmental regulations. The Company operates in China, which may give rise to significant foreign currency risks from fluctuations and the degree of volatility of foreign exchange rates between U.S. dollars and the Chinese currency RMB. The results of operations denominated in foreign currency are translated at the average rate of exchange during the reporting periods.

(Loss)/Earnings Per Share

Basic (loss)/earnings per common share are computed by dividing net (loss)/earnings applicable to common shareholders by the weighted-average number of common shares outstanding during the period. When applicable, (loss)/diluted earnings per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents, consisting of shares that might be issued upon exercise of common stock options and warrants. For the six months ended December 31, 2023 and 2022, the Company had no potential dilutive common stock equivalents outstanding.

Potential common shares issued are calculated using the treasury stock method, which recognizes the use of proceeds that could be obtained upon the exercise of options and warrants in computing diluted earnings per share. It assumes that any proceeds would be used to purchase common stock at the average market price of the common stock during the period.

FASB ASC Topic 260, “Earnings Per Share”, requires a reconciliation of the numerator and denominator of the basic and diluted earnings per share (EPS) computations.

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments (ASU 2016-13). The main objective of the standard is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. In issuing this standard, the FASB is responding to criticism that today’s guidance delays recognition of credit losses. The standard will replace today’s “incurred loss” approach with an “expected loss” model. The new model, referred to as the current expected credit loss (“CECL”) model, will apply to: (1) financial assets subject to credit losses and measured at amortized cost, and (2) certain off-balance sheet credit exposures. The standard is applicable to loans, accounts receivable, trade receivables, and other financial assets measured at amortized cost, loan commitments and certain other off-balance sheet credit exposures, debt securities (including those held-to-maturity) and other financial assets measured at fair value through other comprehensive income, and beneficial interests in securitized financial assets. The CECL model does not apply to available-for-sale debt securities. For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to what they do today, except that the credit losses will be recognized as allowances rather than reductions in the amortized cost of the securities. Accordingly, the new methodology will be utilized when assessing the Company’s financial instruments for impairment. As a result, entities will recognize improvements to estimated credit losses immediately in earnings rather than as interest income over time, as they do today. The ASU also simplifies the accounting model for purchased credit-impaired debt securities and loans. ASU 2016-13 also expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for loan and lease losses. ASU 2016-13 is effective for years beginning after December 15, 2019, including interim periods within those fiscal years under a modified retrospective approach. Early adoption is permitted for the periods beginning after December 15, 2018. The Company adopted the guidance from July 1, 2020. The Company finalized its analysis and the adoption of this guidance has no material impact on the Company’s consolidated financial statements and its internal controls over financial reporting.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (ASU 2018-13), which modifies the disclosure requirements on fair value measurements, including removing the requirement to disclose (1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, (2) the policy for timing of transfers between levels and (3) the valuation processes for Level 3 fair value measurements. ASU 2018-13 also added new disclosures including the requirement to disclose (a) the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and (b) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. ASU 2018-13 is effective for fiscal years (and interim reporting periods within those years) beginning after December 15, 2019 and early adoption is permitted. This standard will only impact the disclosures pertaining to fair value measurements. The Company adopted the guidance from July 1, 2020. The Company finalized its analysis and the adoption of this guidance has no material impact on the Company’s consolidated financial statements and its internal controls over financial reporting.

NOTE 3 - ACCOUNTS RECEIVABLE

The Company’s accounts receivable was $nil and $nil, net of allowances for doubtful accounts amounting to $30,566 and $51,188, as of December 31, 2023 and June 30, 2023, respectively.

Allowance for doubtful accounts movement is as follows:

	December 31,			June 30,
	2023			2023
Beginning balance	$	51,188		$	48,769
Provision		1,044			7,404
Reversal		(21,666	)		(4,985	)
Ending balance	$	30,566		$	51,188

NOTE 4 - INVENTORY

Inventory consisted of following:

	December 31,		June 30,
	2023		2023
Raw Materials	$	1,593	$	1,769
Finished Goods		799		575
Self-made semi finished goods		-		38,264
Total	$	2,392	$	40,608

The inventory allowance in the amounts of $nil and $nil was provided for as of December 31, 2023 and June 30, 2023, respectively.

NOTE 5 - Prepaid investment funds

Prepaid investment funds of the Company consisted of the following:

	December 31,		June 30,
	2023		2023
Prepaid investment funds	$	-	$	40,682,360
Total	$	-	$	40,682,360

The Company’s Prepaid investment funds in the amounts of $40,682,360 was paid to the Sellers. Mr. Xin Sun and Kai Sun as of June 30, 2023.

The Company have engaged a third-party valuation company to assist us with valuation of the HempCan’s assets and liabilities. The detailed valuation necessary to estimate the fair value of the assets acquired and liabilities assumed accordingly, according to the investigation by the assessors, it is believed that the unit market situation, industry conditions, customer network, business development strategy, and other data of HempCan are clear. The value of this aspect is difficult to manifest in the asset-based approach and market approach. Therefore, in conjunction with the purpose of this assessment and the characteristics of the assessed entity, the total equity value of the evaluated unit company’s shareholders included in the assessment scope is assessed using the income approach, accordingly, the assessed value of the total equity of shareholders of HempCan is RMB320,007,500 (approximately $44,172,476).

Through amiable negotiation, the Purchase Price, as provided in the Agreements, provides for the Sellers RMB295 million (approximately $40,682,360) in cash consideration.

Cash- Xin Sun	$	40,275,537
Cash-Kai Sun		406,824
Total consideration	$	40,682,360

NOTE 6 - CONSTRUCTION IN PROGRESS

Construction in progress from the continuing operations of the Company consisted of the following:

	December 31,		June 30,
	2023		2023
Plant - HLJ Huimeijia	$	428,652	$	420,092
Total	$	428,652	$	420,092

On April 6, 2012, HLJ Huimeijia entered into an agreement with a contractor for construction of the HLJ Huimeijia plant. The estimated total cost of construction was approximately $1.86 million (RMB12,800,000). As of December 31, 2023, 71.36% of construction has been completed, $1,285,273 (RMB 9,133,796) has been recorded as costs of construction in progress and construction in progress at an amount of $739,169 (RMB5,252,904) has been completed and converted into property, plant and equipment. The Company will do an assessment for impairment at year end then.

NOTE 7 - PROPERTY, PLANTS AND EQUIPMENT

Property, plants and equipment consisted of the following:

	December 31,			June 30,
	2023			2023
Building, Warehouses and Improvements	$	3,845,082		$	3,768,300
Machinery and Equipment		1,716,353			1,693,740
Office Equipment		65,067			72,382
Vehicles		60,865			75,117
Others		907,344			889,225
Less: Accumulated Depreciation		(3,980,233	)		(3,771,594	)
Total	$	2,614,478		$	2,727,170

Depreciation expenses was $165,534 and $117,841 for the six months ended December 31, 2023 and 2022, respectively. Depreciation expenses charged to operations was $165,534 and $117,841 for the six months ended December 31, 2023 and 2022, respectively. Depreciation expenses charged to cost of goods sold was $nil and $nil for the six months ended December 31, 2023 and 2022, respectively.

NOTE 8 - INTANGIBLE ASSETS

The following is a summary of intangible assets from the continuing operations of the Company:

	December 31, 2023			June 30, 2023
Land Use Rights – Humankind	$	891,857		$	874,048
Health Supplement Product Patents – Humankind		4,221,487			4,137,188
Pharmaceutical Patents - HLJ Huimeijia		367,857			360,511
Land Use Rights - HLJ Huimeijia		610,017			597,836
Less: Accumulated Amortization		(5,118,924	)		(5,004,808	)
Total	$	972,294		$	964,775

All land in the PRC belongs to the government of the PRC. Enterprises and individuals can pay the PRC government a fee to obtain the right to use a piece of land for commercial purposes or residential purposes for an initial period of 50 years or 70 years. These land use rights can be sold, purchased, and exchanged in the market. The successive owner of the land use right will have the right to use the land for the time remaining on the initial period. The patent has amortized life of 10 years.

Amortization expenses was $11,923 and $230,401 for the six months ended December 31, 2023 and 2022, respectively.

NOTE 9 - RELATED PARTY DEBTS

Related party debts, which represent temporary short-term loans from Mr. Xin Sun and Mr. Kai Sun, consisted of the following:

	December 31, 2023		June 30, 2023
Mr. Xin Sun	$	5,583,777	$	5,121,776
Mr. Kai Sun		32,905		32,248
Total	$	5,616,682	$	5,154,024

These loans are unsecured, non-interest bearing, and have no fixed terms of repayment; therefore, they are deemed payable on demand. Mr. Kai Sun is a PRC citizen and a family member of Mr. Xin Sun, the CEO of the Company.

NOTE 10 - INCOME TAXES

(a) Corporate income taxes

United States

China Health US was organized in the United States. China Health US had no taxable income for US income tax purposes for the six months ended December 31, 2023 and 2022. As of December 31, 2023, China Health US had a net operating loss carry forward for United States income tax purposes. Net operating loss carry forwards are available to reduce future years’ taxable income. Management believes that the realization of the benefits from these losses appears uncertain due to the Company’s operating history and the continued losses of its US entity. Accordingly, the Company has provided a 100% valuation allowance on the deferred tax asset to reduce the asset to zero. There were no changes in the valuation allowance for the six months ended December 31, 2023 and 2022. Management reviews this valuation allowance periodically and makes adjustments accordingly.

Hong Kong

China Health HK was incorporated in Hong Kong and is subject to Hong Kong taxation on its activities conducted in Hong Kong and income arising in or derived from Hong Kong. No provision for income taxes have been made because China Health HK had no taxable income in Hong Kong.

People’s Republic of China

Under the EIT Law, the standard EIT rate is 25%. The PRC subsidiaries of the Company are subject to PRC income taxes on an entity basis on income arising in or derived from the tax jurisdiction in which they operate.

The provision for income taxes of the Company consisted of the following for the three and six months ended December 31, 2023 and 2022:

	For the Three Months Ended				For the Six Months Ended
	December 31,				December 31,
	2023		2022		2023		2022
Current provision:		-		-		-		-
USA	$	-	$	-	$	-	$	-
PRC		-		-		-		-
Total current provision		-		-		-		-
Deferred provision:		-		-		-		-
USA		-		-		-		-
PRC		-		-		-		-
Total deferred provision		-		-		-		-
Total provision for income taxes	$	-	$	-	$	-	$	-

Significant components of deferred tax assets of the Company were as follows:

	December 31,			June 30,
	2023			2023
Deferred tax assets
Net operating loss carry forward	$	862,615		$	1,007,658
Allowances for doubtful accounts		(7,642	)		(12,797	)
Valuation allowance		(854,973	)		(994,861	)
Total	$	-		$	-

The tax payable consisted of the following:

	December 31,		June 30,
	2023		2023

VAT payable	$	44,423	$	37,119
Income tax payable		22,469		22,020
Other tax payable		85,327		78,446
Total	$	152,219	$	137,585

(b) Uncertain tax positions

There were no unrecognized tax benefits as of December 31, 2023 and June 30, 2023. Management does not anticipate any potential future adjustments in the next twelve months which would result in a material change to its tax positions. For the six months ended December 31, 2023 and 2022, the Company did not incur any interest or penalties arising from its tax payments.

NOTE 11 - (LOSS)/EARNINGS PER SHARE

Basic (loss)/earnings per common share is computed by dividing net (loss)/earnings applicable to common shareholders by the weighted-average number of common shares outstanding during the period. When applicable, diluted (loss)/earnings per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents, consisting of shares that might be issued upon exercise of common stock options and warrants.

Potential common shares issued are calculated using the treasury stock method, which recognizes the use of proceeds that could be obtained upon the exercise of options and warrants in computing dilutive earnings per share. It assumes that any proceeds would be used to purchase common stock at the average of the market price of the common stock during the period.

FASB ASC Topic 260, Earnings Per Share, requires a reconciliation of the numerator and denominator of the basic and diluted earnings per share (EPS) computations.

For the six months ended December 31, 2023 and 2022, the Company did not have potential dilutive shares. The following table sets forth the computation of basic and diluted net income per share:

	For the Three Months Ended					For the Six Months Ended
	December 31,					December 31,
	2023			2022		2023			2022

Net (loss)/income	$	(445,557	)	$	929,303	$	(627,911	)	$	472,858

Net (loss)/income per share:

Net (loss)/income share basic & diluted		(0.0068	)		0.0142		(0.0096	)		0.0072

Weighted average shares outstanding:
Basic & diluted		65,539,737			65,539,737		65,539,737			65,539,737

NOTE 12 - COMMITMENTS AND CONTINGENCIES

The Company’s assets are located in the PRC and revenues are derived from operations in the PRC.

In terms of industry regulations and policies, the economy of the PRC has been transitioning from a planned economy to market oriented economy. Although in recent years the Chinese government has implemented measures emphasizing the utilization of market forces for economic reforms, the reduction of state ownership of productive assets and the establishment of sound corporate governance in business enterprises, a substantial portion of productive assets in the PRC is still owned by the Chinese government. For example, all land is state owned and leased to business entities or individuals through the government’s granting of Land Use Rights. The granting process is typically based on government policies at the time of granting and can be lengthy and complex. This process may adversely affect the Company’s future manufacturing expansions. The Chinese government also exercises significant control over the PRC’s economic growth through the allocation of resources and providing preferential treatment to particular industries or companies. Uncertainties may arise with changing of governmental policies and measures.

The Company faces a number of risks and challenges not typically associated with companies in North America and Western Europe, since its assets exist solely in the PRC, and its revenues are derived from its operations therein. The PRC is a developing country with an early stage market economic system, overshadowed by the state. Its political and economic systems are very different from the more developed countries and are in a state of change. The PRC also faces many social, economic and political challenges that may produce major shocks, instabilities and even crises, in both its domestic arena and in its relationships with other countries, including the United States. Such shocks, instabilities and crises may in turn significantly and negatively affect the Company’s performance.

The Company had no rental commitment as of December 31, 2023.

NOTE 13 - MAJOR SUPPLIERS AND CUSTOMERS

For the six months ended December 31, 2023, the Company had no suppliers primarily due to the Company merely sold its previous inventory Hemp Oil and there is no need for new procurement. For the six months ended December 31, 2022, the Company had only one supplier that in the aggregate accounted for 100%.

For the six months ended December 31, 2023, the Company had one customer that in aggregate accounted for 100% of the Company’s total sales. For the six months ended December 31, 2022, the Company had only one customer that in the aggregate accounted for 100% of the Company’s total sales.

NOTE 14 - SEGMENT REPORTING

The Company is organized into the following four main business segments based on the types of products being provided to customers: HLJ Huimeijia, Humankind, HempCan and “Others”. Each of the four aforementioned operating segments has separate and distinct general ledgers. The chief operating decision maker (“CODM”) receives financial information, including information regarding revenue, gross margin, operating income, and net income, from the various general ledger systems to make decisions about allocating resources and assessing performance; however, the principal measure of segment profitability or loss used by the CODM is net income (loss) by segment. The Company do not report geographical information due to only has one office address.

The following table presents summary information by segment for the three and six months ended December 31, 2023 and 2022, respectively:

	For the Three Months Ended December 31, 2023															For the Three Months Ended December 31, 2022
	HLJ															HLJ
	Huimeijia			Humankind			HempCan			Others			Consolidated			Huimeijia		Humankind			Others			Consolidated
Revenues	$	-		$	46		$	-		$	-		$	46		$	-	$	32,650		$	-		$	32,650
Cost of revenues		-			46			-			-			46			-		29,645			-			29,645
Gross profit		-			-			-			-			-			-		3,005			-			3,005
Interest income		5			4			2			4			15			57		25,982			7			26,046
Interest expense		(42	)		-			-			-			(42	)		-		-			-			-
Depreciation and amortization		43,986			38,956			-			-			82,942			44,391		147,974			-			192,365
Income tax					-			-			-			-			-		-			-			-
Net (loss)/income		(88,948	)		(75,312	)		(35,940	)		(245,357	)		(445,557	)		1,132,949		(26,406	)		(177,240	)		929,303
Total capital expenditures		-			-			-			-			-			-		-			-			-
Total assets	$	2,147,962		$	2,108,361		$	5,864		$	2,683		$	4,264,870		$	2,686,549	$	45,819,182		$	28,370		$	48,534,101

	For the Six Months Ended December 31, 2023															For the Six Months Ended December 31, 2022
	HLJ															HLJ
	Huimeijia			Humankind			HempCan			Others			Consolidated			Huimeijia		Humankind			Others			Consolidated
Revenues	$	-		$	38,346		$	-		$	-		$	38,346		$	-	$	32,650		$	-		$	32,650
Cost of revenues		-			38,346			-			-			38,346			-		29,645			-			29,645
Gross profit		-			-			-			-			-			-		3,005			-			3,005
Interest income		9			1,797			2			11			1,819			361		60,155			13			60,529
Interest expense		(43	)		-			-			-			(43	)		-		-			-			-
Depreciation and amortization		91,041			86,415			-			-			177,456			111,110		237,132			-			348,242
Income tax					-			-			-			-			-		-			-			-
Net (loss)/income		(165,445	)		(173,493	)		(35,940	)		(253,033	)		(627,911	)		964,813		(294,335	)		(197,620	)		472,858
Total capital expenditures		-			-			-			-			-			-		-			-			-
Total assets	$	2,147,962		$	2,108,361		$	5,864		$	2,683		$	4,264,870		$	2,686,549	$	45,819,182		$	28,370		$	48,534,101

NOTE 15 - SUBSEQUENT EVENTS

The Company has evaluated subsequent events from the balance sheet date through the date the financial statements were issued and determined that there are no additional items to disclose.

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

FORWARD LOOKING STATEMENTS

We make certain forward-looking statements in this report. Statements concerning our future operations, prospects, strategies, financial condition, future economic performance (including growth and earnings), demand for our services, and other statements of our plans, beliefs, or expectations, including the statements contained under this caption as well as under captions elsewhere in this document, are forward-looking statements. In some cases, these statements are identifiable through the use of words such as “anticipate”, “believe”, “estimate”, “expect”, “intend”, “plan”, “project”, “target”, “can”, “could”, “may”, “should”, “will”, “would”, and similar expressions. The forward-looking statements we make are not guarantees of future performance and are subject to various assumptions, risks, and other factors that could cause actual results to differ materially from those suggested by these forward-looking statements. These risks and uncertainties, together with the other risks described from time to time in reports and documents that we file with the SEC should be considered in evaluating forward-looking statements. Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. Indeed, it is likely that some of our assumptions will prove to be incorrect. Our actual results and financial position will vary from those projected or implied in the forward-looking statements and the variances may be material. You are cautioned not to place undue reliance on such forward-looking statements, which reflect our view only as of the date of this report.

Important factors that could cause actual results to differ from those in the forward-looking statements include, without limitation, the following:

	●	the effect of political conditions, economic conditions, market conditions, and geopolitical events;

	●	legislative and regulatory changes that affect our business;

	●	the availability of funds and working capital; and

	●	the actions and initiatives of current and potential competitors.

Except as required by applicable laws, regulations, or rules, we do not undertake any responsibility to publicly release any revisions to these forward-looking statements to take into account events or circumstances that occur after the date of this report. Additionally, we do not undertake any responsibility to update you on the occurrence of any unanticipated events which may cause actual results to differ from those expressed or implied by any forward-looking statements.

The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes thereto as filed with the SEC and other financial information contained elsewhere in this report.

Except as otherwise indicated by the context, references in this report to “we”, “us”, “our”, “the Registrant”, “our Company”, or “the Company” are to China Health Industries Holdings, Inc., a Delaware corporation, China Health Industries Holdings Limited, a limited liability company incorporated under the laws of Hong Kong, its wholly owned subsidiary in China, Harbin Humankind Biology Technology Co. Limited (“Humankind”), and indirect wholly owned subsidiary, Heilongjiang Huimeijia Pharmaceutical Co., Ltd. (“HLJ Huimeijia”) and indirect wholly owned subsidiary, Heilongjiang HempCan Pharmaceuticals Co., Ltd. (“HempCan”). Unless the context otherwise requires, all references to (i) the “PRC” and “China” are to the People’s Republic of China; (ii) “U.S. dollar,” “$” and “US$” are to United States dollars; (iii) “RMB” are to Renminbi Yuan of China; (iv) “Securities Act” are to the Securities Act of 1933, as amended; and (v) “Exchange Act” are to the Securities Exchange Act of 1934, as amended.

Business Overview

Our principal business operations are conducted through our wholly-owned subsidiaries, Humankind, HLJ Huimeijia and HempCan.

The Company owns a GMP-certified plant and production facilities and has the capacity to produce 21 different NMPA-approved medicines, 14 NMPA-approved health supplement products and 10 hemp derivative products in soft capsule, hard capsule, tablet, granule, oral liquid forms. These products address the needs of some key sectors in China, including the feminine, geriatric, and children’s markets.

HLJ Huimeijia was founded on October 30, 2003 and its latest GMP certificate is effective until April 24, 2023. On December 1, 2019, NMPA announced that it will no longer issue GMP certificate for any pharmaceutical companies. However, NMPA will carry out conformity inspection to do compliance testing, as well as flight check (unannounced inspection) for all pharmaceutical companies. HLJ Huimeijia engages in the manufacture and distribution of tincture, ointments, rubber paste, including hormones, topical solution, suppositories, enemas, oral liquids, and liniment, including traditional Chinese medicine extractions. HLJ Huimeijia’s predecessor was Heilongjiang Xue Du Pharmaceutical Co., Ltd., which established brand recognition in the market through its supply of high-quality drug products. HLJ Huimeijia is a “high and new technology” enterprise that provides the most comprehensive types of topical medical products in Heilongjiang Province, a northeastern province of China.

There is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the economy of China, U.S. and the rest of the world and, as such, the extent of the business disruption and the related financial impact cannot be reasonably estimated at this time.

We have developed the following products that are derived from hemp and obtained business license to manufacture and sell these products. We are selling these products since May 2018. Hemp Seed Beer, Hemp Oil, Hemp Protein Powder, Hemp Polypeptide and Collagen Peptide are sold through Humankind and HempCan. Other products are sold through HLJ Huimeijia.The revenue of the Hemp Oil accounted for 100% and the Hemp Seed Beer accounted for 100.00% of the total revenues for the six-month periods ended December 31, 2023 and 2022, respectively.

Serial No.		Name
1		Hemp Oil
2		Hemp Protein Powder
3		Hemp Polypeptide
4		Collagen Peptide
5		Natural Hemp Essence Repair Lotion
6		Natural Hemp Revitalizing Essence
7		Natural Hemp Anit-aging Brightening Eye Cream
8		Natural Hemp Frozen Age Nourishing Cream
9		Hemp Seed Beer
10		Hemp Seed

We sell most of our products to sales agents, who are our customers. The sales agents sell the products to the end users.

Results of Operations

Three months ended December 31, 2023 compared to the three months ended December 31, 2022

The following table summarizes the top lines of the results of our operations for the three months ended December 31, 2023 and 2022, respectively:

	December 31,		December 31,
	2023		2022		Variance			%
Revenues	$	46	$	32,650	$	(32,604	)		(99.86	)%
Humankind		46		32,650		(32,604	)		(99.86	)%
HLJ Huimeijia		-		-		-			-
Cost of Goods Sold	$	46	$	29,645	$	(29,599	)		(99.84	)%
Humankind		46		29,645		(29,599	)		(99.84	)%
HLJ Huimeijia		-		-		-			-
Gross Profit	$	-	$	3,005	$	(3,005	)		(100.00	)%
Humankind		-		3,005		(3,005	)		(100.00	)%
HLJ Huimeijia		-		-		-			-

Revenue

Total revenues decreased by $32,604 or 99.86% for the three months ended December 31, 2023, as compared to the same period in 2022. The decrease in revenues was primarily due to an decrease of $32,604 or 99.86% in Humankind’s revenues for the three months ended December 31, 2023 as compared to the three months ended December 31, 2022. The decrease in Humankind’s sales revenues was primarily due to Humankind’s enterprise transformation, sales were not smooth because of factory shut down.

Our total cost of goods sold decreased by $29,599 or 99.84% for the three months ended December 31, 2023 as compared to the same period in 2022. The decrease in the overall cost of sales was attributable to an decrease of $29,599 or 99.84% in Humankind’s cost of sales for the three months ended December 31, 2023 as compared to the three months ended December 31, 2022. This decrease was mainly due to Humankind’s enterprise Transformation, sales were not smooth because of factory shut down.

Our gross margin decreased by $3,005 or 100.00%for the three months ended December 31,2023 as compared to the same period in 2022. This change was consistent with the change of sales and costs in Humankind. The decrease in gross profit was primarily due to the enterprise transformation and Humankind was temporarily out of production.

Sales by Product Line

The following table summarizes a breakdown of our sales by major product lines for the three months ended December 31, 2023 and 2022 respectively:

	December 31, 2023							December 31, 2022
	Quantity				% of			Quantity				% of
	(Unit)		Sales US$		Sales			(Unit)		Sales US$		Sales
Humankind
Hemp Oil		-	$	-		-	%		-	$	-		-	%
Collagen Peptide		-		-		-	%		-		-		-	%
Hemp Polypeptide		-		-		-	%		-		-		-	%
Hemp Protein Powder		-		-		-	%		-		-		-	%
Hemp Seed Beer		-		-		-	%		6,456		32,650		100.00	%
HLJ Huimeijia
Muskiness Bone Strengthener Paste		-		-		-	%		-		-		-	%
Dampness dispelling pain ointment		-		-		-	%		-		-		-	%
Refining Cream dogskin		-		-		-	%		-		-		-	%
Indometacin and Furazolidone Suppositories		-		-		-	%		-		-		-	%
ShangBiTongDing		-		-		-	%		-		-		-	%
Enema Glycerini		-		-		-	%		-		-		-	%
Essence repair liquid		-		-		-	%		-		-		-	%
Total		-	$	-		-	%		6,456	$	32,650		100.00	%

Operating Expenses

The following table summarizes our operating expenses for the three months ended December 31, 2023 and 2022, respectively:

	December 31, 2023		December 31, 2022		Variance			%
Operating Expenses
Selling, general and administrative	$	362,613	$	223,473	$	139,140			62.26	%
Depreciation and amortization		82,942		192,365		(109,423	)		(56.88	)%
Total Operating Expenses	$	445,555	$	415,838	$	29,717			7.15	%

Total operating expenses for the three months ended December 31, 2023 were $29,717 or 7.15% lower than those in the corresponding period in 2022. The decrease in operating expenses was primarily attributable to decrease of $139,140 or 62.26% in selling general and administrative expenses, which is mainly due to the increase of accountant fees and legal and professional fee due to the fact that company paid related costs of approximately $200,823 in December 2023. Also, the depreciation and amortization decreased by $109,423, which was primarily due to the full amortization of Humankind’s Health Supplement Product Patents in March 2023.

Interest Income and Interest Expense

Interest income was $15 for the three months ended December 31, 2023, as compared to $26,046 for the three months ended December 31, 2022. This decrease of $26,031, or 99.94% was mainly due to the decreased average balance of bank deposits compared with the same period of 2023 with 2022.

Interest expense was $42 for the three months ended December 31, 2023, as compared to $nil for the three months ended December 31, 2022.

Income Taxes

Income taxes was $nil for the three months ended December 31, 2023, as compared to $nil for the three months ended December 31, 2022.

Net (Loss)/Income and Net (Loss)/Income Per Share

Net loss was $445,557 for the three months ended December 31, 2023, as compared to $929,303 net income for the three months ended December 31, 2022. This increase of $1,374,860 in net loss was primarily attributable to the decrease of other income, net of $1,315,764.

Net loss per share was $0.0068 for the three months ended December 31, 2023 and $0.0142 net income per share for the three months ended December 31, 2022, respectively. This decrease was primarily a result of the aforementioned decrease in net loss.

Six months ended December 31, 2023 compared to the six months ended December 31, 2022

The following table summarizes the top lines of the results of our operations for the six months ended December 31, 2023 and 2022, respectively:

	December 31,		December 31,
	2023		2022		Variance			%
Revenues	$	38,346	$	32,650	$	5,696			17.45	%
Humankind		38,346		32,650		5,696			17.45	%
HLJ Huimeijia		-		-		-			-
Cost of Goods Sold	$	38,346	$	29,645	$	8,701			29.35	%
Humankind		38,346		29,645		8,701			29.35	%
HLJ Huimeijia		-		-		-			-
Gross Profit	$	-	$	3,005	$	(3,005	)		(100.00	)%
Humankind		-		3,005		(3,005	)		(100.00	)%
HLJ Huimeijia		-		-		-			-

Revenue

Total revenues increased by $5,696 or 17.45% for the six months ended December 31, 2023, as compared to the same period in 2022. The increase in revenues was primarily due to an increase of $5,696 or 17.45% in Humankind’s revenues for the six months ended December 31, 2023 as compared to the six months ended December 31, 2022. The increase in Humankind’s sales revenues was derived from selling Hemp oil.

Our total cost of goods sold increased by $8,701 or 29.35% for the six months ended December 31, 2023 as compared to the same period in 2022.The increase in the overall cost of sales was attributable to an increase of $8,701 or 29.35% in Humankind’s cost of sales for the six months ended December 31, 2023 as compared to the six months ended December 31, 2022. The increase in Humankind’s cost of sales was derived from selling Hemp oil.

Our gross profit was Nil for the six months ended December 31, 2023 as compared to the same period in 2022, primarily due to Humankind selling expiring Hemp oil at cost.

Sales by Product Line

The following table summarizes a breakdown of our sales by major product lines for the six months ended December 31, 2023 and 2022 respectively:

	December 31, 2023							December 31, 2022
	Quantity				% of			Quantity				% of
	(Unit)		Sales US$		Sales			(Unit)		Sales US$		Sales
Humankind
Hemp Oil		3,375	$	38,346		100	%		-	$	-		-	%
Collagen Peptide		-		-		-	%		-		-		-	%
Hemp Polypeptide		-		-		-	%		-		-		-	%
Hemp Protein Powder		-		-		-	%		-		-		-	%
Hemp Seed Beer		-		-		-	%		6,456		32,650		100.00	%
HLJ Huimeijia
Muskiness Bone Strengthener Paste		-		-		-	%		-		-		-	%
Dampness dispelling pain ointment		-		-		-	%		-		-		-	%
Refining Cream dogskin		-		-		-	%		-		-		-	%
Indometacin and Furazolidone Suppositories		-		-		-	%		-		-		-	%
ShangBiTongDing		-		-		-	%		-		-		-	%
Enema Glycerini		-		-		-	%		-		-		-	%
Essence repair liquid		-		-		-	%		-		-		-	%
Total		3,375	$	38,346		100	%		6,456	$	32,650		100.00	%

Operating Expenses

The following table summarizes our operating expenses for the six months ended December 31, 2023 and 2022, respectively:

	December 31, 2023		December 31, 2022		Variance			%
Operating Expenses
Selling, general and administrative	$	452,056	$	558,319	$	(106,263	)		(19.03	)%
Depreciation and amortization		177,456		348,242		(170,786	)		(49.04	)%
Total Operating Expenses	$	629,512	$	906,561	$	(277,049	)		(30.56	)%

Total operating expenses for the six months ended December 31, 2023 were $277,049 or 30.56% lower than those in the corresponding period in 2022. The decrease in operating expenses was primarily attributable to decrease of $106,263 or 19.03% in selling general and administrative expenses, which is mainly due to the decrease in expired destruction of inventory and non-production expense. Also, the depreciation and amortization decreased by $170,786, which was primarily due to the full amortization of Humankind’s Health Supplement Product Patents in March 2023.

Interest Income and Interest Expense

Interest income was $1,819 for the six months ended December 31, 2023, as compared to $60,529 for the six months ended December 31, 2022. This decrease of $58,710, or 96.99% was mainly due to the decreased average balance of bank deposits compared with the same period of 2023 with 2022.

Interest expense was $43 for the six months ended December 31, 2023, as compared to $nil for the six months ended December 31, 2022.

Income Taxes

Income taxes was $nil for the six months ended December 31, 2023, as compared to $nil for the six months ended December 31, 2022.

Net (Loss)/Income and Net (Loss)/Income Per Share

Net loss was $627,911 for the six months ended December 31, 2023, as compared to $472,858 net income for the six months ended December 31, 2022. This increase of $1,100,769 in net loss was primarily attributable to the decrease of other income, net of $1,315,764 and operating expenses of $277,049.

Net loss per share was $0.0096 for the six months ended December 31, 2023 and $0.0072 net income per share for the six months ended December 31, 2022, respectively. This decrease was primarily a result of the aforementioned decrease in net loss.

Liquidity and Capital Resources

We believe our current working capital position, together with our expected future cash flows from operations and loans from our major shareholder, will be adequate to fund our operations in the ordinary course of business, anticipated capital expenditures, debt payment requirements, and other contractual obligations for at least the next twelve months. However, this belief is based upon many assumptions and is subject to numerous risks, and there can be no assurance that we will not require additional funding in the future.

The following table summarizes our cash and cash equivalents positions, our working capital, and our cash flow activities as of December 31, 2023 and June 30, 2023 and for the six months ended December 31, 2023 and 2022:

	December 31, 2023			June 30, 2023
Cash and cash equivalents	$	15,343		$	47,246
Working capital	$	(6,305,702	)	$	34,997,532
Inventories	$	2,392		$	40,608

	For the Six Months ended December 31,
	2023			2022
Cash (used in)/provided by :
Operating activities	$	(35,025	)	$	512,196
Investing activities	$	2,853		$	-
Financing activities	$	-		$	-

For the six months ended December 31, 2023, our net decrease in cash and cash equivalents totaled $31,903, which total was comprised of net cash used in operating activities in the amount of $35,025 and the effect of prevailing exchange rates on our cash position of $269.

For the six months ended December 31, 2022, our net decrease in cash and cash equivalents totaled $1,620,511, which total was comprised of net cash provided by operating activities in the amount of $512,196 and the negative effect of prevailing exchange rates on our cash position of $2,132,707.

Our working capital at December 31, 2023 was $(6,305,702), compared to working capital of $34,997,532 at June 30, 2023. This decrease of $41,303,234 or 118.02% was primarily attributable to the decrease of prepaid investment funds of $40,682,360 due to Offsetting the consideration paid for the acquisition of HempCan.

Net cash used in operating activities was $35,025 for the six months ended December 31, 2023, primarily attributable to net loss in the amount of $627,911 with adjustments of $177,475 of depreciation and amortization expenses, an increase of amounts due to related parties in the amount of $440,385 and an increase of advance from customers in the amount of $315,722. The positive effect of exchange rate changes on cash and cash equivalents in the amount of $269 for the six months ended December 31, 2023 was mainly a result of the effect of the valuation of the RMB against the USD on the significant amount of cash and cash equivalents held by the Company in RMB. The exchange rates from USD to RMB were 7.2513 to 1 and 7.1065 to 1 as of June 30, 2023 and December 31, 2023, respectively, and the average exchange rate from USD to RMB was 7.2358 for the six months ended December 31, 2023.

Net cash provided by operating activities was $512,196 for the six months ended December 31, 2022, primarily attributable to net income in the amount of $472,858. The negative effect of exchange rate changes on cash and cash equivalents in the amount of $2,132,707 for the six months ended December 31, 2022 was mainly a result of the effect of the valuation of the RMB against the USD on the significant amount of cash and cash equivalents held by the Company in RMB. The exchange rates from USD to RMB were 6.6981 to 1 and 6.8972 to 1 as of June 30, 2022 and December 31, 2022, respectively, and the average exchange rate from USD to RMB was 6.9789 for the six months ended December 31, 2022.

Net cash used in investing activities was $2,853 for the six months ended December 31, 2023, primarily attributable to the acquisition of the subsidiary formed HempCan.

Other than as described in this report, we have no present agreements or commitments with respect to any material acquisitions of businesses, products, product rights, technologies, or any other material capital expenditures. However, we will continue to evaluate acquisitions of, and/or investments in, products, technologies, capital equipment or improvements, or companies that complement our business and may make such acquisitions and/or investments in the future. Accordingly, we may need to obtain additional sources of capital in the future to finance any such acquisitions and/or investments. We may not be able to obtain such financing on commercially reasonable terms, if at all. Even if we are able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in the case of equity financing.

Related Party Debts

We had related party debts in the amount of $5,616,682 as of December 31, 2023, as compared to $5,154,024 as of June 30, 2023, an increase of $462,658 or 8.98%. Our related party debts mainly consist of a loan from Mr. Xin Sun, the CEO of the Company. The loan is unsecured, non-interest bearing, and has no fixed terms of repayment. There was no written agreement for the loan. See Note 9.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that are currently material or reasonably likely to be material to its financial position or results of operations.

Critical Accounting Policies and Estimates

We prepare the unaudited condensed consolidated financial statements in accordance with US GAAP. These accounting principles require us to make judgments, estimates and assumptions on the reported amounts of assets and liabilities at the end of each fiscal period, and the reported amounts of revenues and expenses during each fiscal period. We continually evaluate these judgments and estimates based on our own historical experience, knowledge and assessment of current business and other conditions, our expectations regarding the future based on available information, and assumptions that we believe to be reasonable.

There have been no material changes during the six months ended December 31, 2023 in the Company’s significant accounting policies to those previously disclosed in the annual report on Form 10-K for the fiscal year ended June 30, 2023.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in our reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that this information is accumulated and communicated to Management, including the Company’s chief executive and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

At the conclusion of the period ended December 31, 2023, the Company carried out an evaluation, under the supervision and with the participation of Management, including the Company’s principal executive and principal financial officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based upon that evaluation, the Company’s principal executive and principal financial officer concluded that, due to the material weakness in the Company’s internal controls over financial reporting as discussed in the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2023, as of the end of the period covered by this Quarterly Report on Form 10-Q, the Company’s disclosure controls and procedures were not effective to satisfy the objectives for which they are intended.

Despite the material weakness referenced above, Management believes that the Company’s unaudited condensed consolidated financial statements included in this report fairly present in all material respects the Company’s financial condition, results of operations and cash flows for the periods presented because the Company has retained a consultant who has U.S. GAAP experience to assist the Company in the preparation of its unaudited condensed consolidated financial statements.

Changes in Internal Controls over Financial Reporting

No changes in the Company’s internal controls over financial reporting have come to Management’s attention during the quarter ended December 31, 2023 that have materially affected, or are likely to materially affect, the Company’s internal control over financial reporting.

Limitations on Controls

Management does not expect that the Company’s disclosure controls and procedures or the Company’s internal control over financial reporting will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.

PART II - OTHER INFORMATION

Item 6. Exhibits.

The exhibits required by this item are set forth in the Exhibit Index attached hereto.

EXHIBIT INDEX

Exhibit No.		Description

31.1		Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of the Principal Executive Officer and the Principal Financial Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*		Inline XBRL Instance Document

101.SCH*		Inline XBRL Taxonomy Extension Schema Document

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104*		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

	CHINA HEALTH INDUSTRIES HOLDINGS, INC.

	/s/ Xin Sun
	By:	Xin Sun
	Title:	Chief Executive Officer and
		Chief Financial Officer
		(Principal Executive Officer,
		Principal Financial Officer and
		Principal Accounting Officer)

	Date:	April 1, 2024

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China Health Industries Holdings, Inc. 10-Q