Quarterly Report (10-q)

Date : 08/12/2019 @ 6:30PM
Source : Edgar (US Regulatory)
Stock : Heyu Biological Technology Corporation (HYBT)
Quote : 0.02  -0.0025 (-11.11%) @ 9:16PM

Quarterly Report (10-q)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended June 30, 2019

or

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

 

For the transition period from ___________ to ___________

 

Commission file number 000-26731

 

HEYU BIOLOGICAL TECHNOLOGY CORPORATION

(Exact name of registrant as specified in its charter)

 

Nevada   87-0627910

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

4 th  Floor, No. 10 Building,

Xinglin Bay Business Operation Center,

Jimei District, Xiamen City,

Fujian Province, China 361022

(Address of principal executive offices, including zip code)

 

(86) 158 5924 0902

(Telephone number, including area code)

 

N/A

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

 

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

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
None   None   None

 

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

  

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 1,032,466,000  shares as of August 12, 2019.

 

 

 

 

 

 

TABLE OF CONTENTS

Index to Form 10-Q

 

    Page   
Part I
 
FINANCIAL INFORMATION
     
Item 1. Financial Statements 1
     
  Condensed Consolidated Balance Sheets (Unaudited) 1
     
  Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) 2
     
  Condensed Consolidated Statements of Stockholders’ Deficit (Unaudited) 3
     
  Condensed Consolidated Statement of Cash Flows (Unaudited) 4
     
  Notes to Condensed Consolidated Financial Statements (Unaudited) 5
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 11
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk 13
     
Item 4. Controls and Procedures 13
     
Part II
 
OTHER INFORMATION
     
Item 1. Legal Proceedings 14
     
Item 1A. Risk Factors 14
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 14
     
Item 3. Defaults Upon Senior Securities 14
     
Item 4. Mine Safety Disclosures 14
     
Item 5. Other Information 14
     
Item 6. Exhibits 14

 

i

 

 

FORWARD LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q, Financial Statements and Notes to Financial Statements contain forward-looking statements that discuss, among other things, future expectations and projections regarding future developments, operations and financial conditions. Forward-looking statements may appear throughout this report and other documents we file with the Securities and Exchange Commission (SEC), including without limitation, the following sections: Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q.

 

Forward-looking statements generally can be identified by words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “will be,” “will continue,” “may,” “could,” “will likely result,” and similar expressions. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially from those reflected in the forward-looking statements. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

 

ii

 

 

ITEM 1. FINANCIAL STATEMENTS

 

Heyu Biological Technology Corporation

(Formerly known as Pacific Webworks, Inc.)

Consolidated Balance Sheets

(Unaudited)

 

    June 30,     December 31,  
    2019     2018  
ASSETS            
             
Current Assets                
Cash and cash equivalents   $ 156,435     $ 37,555  
Other receivables     10,406       21,324  
Advances to suppliers     63,068          
Inventory     187,500       -  
Total current assets     417,409       58,879  
                 
                 
Total Assets   $ 417,409     $ 58,879  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY                
                 
Current Liabilities                
Accounts payable and accrued expenses   $ 54,743     $ 16,628  
Income tax and other taxes payable     23       23  
Related party payables     787,679       279,464  
Total current liabilities     842,445       296,115  
                 
Commitments and Contingent Liabilities                
                 
Stockholders’ Deficit                
                 
Common stock ($0.001 par value, 2,000,000,000 shares authorized, 1,032,466,000 and 1,141,472,861 shares issued and outstanding respectively as of March 31, 2019 and December 31, 2018, respectively)     1,032,466       1,141,473  
Shares to be cancelled     -       (109,007 )
Additional paid-in capital     17,149,050       17,149,050  
Accumulated other comprehensive income     5,759       2,567  
Accumulated deficit     (18,593,843 )     (18,421,319 )
Stockholders’ equity - HYBT and Subsidiaries     (406,568 )     (237,236 )
Noncontrolling interests in subsidiaries     (18,468 )     -  
Total stockholders’ deficit     (425,036 )     (237,236 )
                 
Total Liabilities and Stockholders’ Deficit   $ 417,409     $ 58,879  

 

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

 

1

 

 

Heyu Biological Technology Corporation

(Formerly known as Pacific Webworks, Inc.)

Consolidated Statements of Operations and Comprehensive Income

(Unaudited)

 

    For the Three Months Ended
June 30,
    For the Six Months Ended
June 30,
 
    2019     2018     2019     2018  
                         
Revenue, net   $ 27,998     $ -     $ 49,930     $ -  
                                 
Cost of Revenue   $ 15,399     $ -     $ 28,272     $ -  
                                 
Gross Profit   $ 12,599     $ -     $ 21,658     $ -  
                                 
Operating expenses                                
Selling expenses     (8 )     -       1,385       -  
Administrative expenses     153,540       12,931       209,702       21,841  
Total operating expenses     153,532       12,931       211,087          
                                 
Loss on operations     (140,933 )     (12,931 )     (189,429 )     (21,841 )
                                 
Other Income(Expenses)     (1,341 )     -       (1,337 )        
                                 
Loss on operations before income taxes     (142,274 )     (12,931 )     (190,766 )     (21,841 )
                                 
Income tax expense     -       -       -       -  
                                 
Net Loss   $ (142,274 )   $ (12,931 )   $ (190,766 )   $ (21,841 )
Loss attributable to noncontrolling interests     (17,616 )     -       (18,242 )     -  
Net loss attributable to HYBT shareholders     (124,658 )     (12,931 )     (172,523 )     (21,841 )
                                 
Other Comprehensive Income                                
Foreign currency translation adjustment     2,491       -       3,418       -  
Total Comprehensive Loss   $ (122,167 )   $ (12,931 )   $ (169,105 )   $ (21,841 )
Total comprehensive income attributable to noncontrolling interests     (218 )     -       (226 )     -  
Total comprehensive loss attributable to HYBT shareholders     (122,385 )     (12,931 )     (169,331 )     (21,841 )
                                 
Net loss per share - basic and diluted   $ (0.00 )   $ (0.00 )   $ (0.00 )   $ (0.00 )
                                 
Weighted average shares - basic and diluted     1,019,289,346       8,603,474       1,080,043,580       4,485,942  

 

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

 

2

 

 

Heyu Biological Technology Corporation

(Formerly known as Pacific Webworks, Inc.)

Condensed Consolidated Statements of Stockholders’ Deficit

(Unaudited)

 

    Heyu Biological Shareholders’ Equity              
    Common Stock                                
    Number of shares     Par value     Shares to be cancelled     Additional Paid in Capital     Accumulated Other Comprehensive Income     Accumulated Deficit     Non - controlling Interest     Total  
Balance at January 1, 2018     150,642,240       150,642       -       17,968,787       -       (18,173,542 )     -       (54,113 )
                                                              -  
1 for 464 reverse split     (150,317,580 )     (150,318 )     -       150,318       -       -       -       -  
1 for 100 split     32,141,340       32,141       -       (32,141 )     -       -       -       -  
Common stock issued April 13, 2018     1,000,000,000       1,000,000               (990,000 )                             10,000  
Waiver of payable to ex-shareholder                             52,087                               52,087  
Loss for the period     -       -       -       -       -       (21,841 )     -       (21,841 )
                                                                 
Balance at June 30, 2018     1,032,466,000     $ 1,032,466     $ -     $ 17,149,050     $ -     $ (18,195,383 )   $ -     $ (13,867 )
                                                                 
      Common Stock                                          
      Number of shares       Par value       Shares to be cancelled       Additional Paid in Capital       Accumulated Other Comprehensive Income       Accumulated Deficit       Non - controlling Interest       Total  
Balance at January 1, 2019     1,141,472,861       1,141,473       (109,007 )     17,149,050       2,567       (18,421,319 )     -       (237,236 )
                                                                 
Shares cancelled March 20, 2019     (109,006,861 )     (109,007 )     109,007       -       -       -       -       -  
Foreign currency translation adjustment     -       -       -       -       3,192       -       (226 )     2,966  
Loss for the period     -       -       -       -       -       (172,523 )     (18,242 )     (190,766 )
                                                                 
Balance at June 30, 2019     1,032,466,000     $ 1,032,466     $ -     $ 17,149,050     $ 5,759     $ (18,593,842 )   $ (18,468 )   $ (425,036 )

 

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

 

3

 

 

Heyu Biological Technology Corporation

(Formerly known as Pacific Webworks, Inc.)

Consolidated Statements of Cash Flows

(Unaudited)

 

    For the Six Months Ended June 30,  
    2019     2018  
             
CASH FLOWS FROM OPERATING ACTIVITIES            
Net Loss   $ (190,766 )   $ (21,841 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Bad debt written off - other receivable     27,387          
Change in assets and liabilities                
Accounts receivable     -       -  
Other receivables     (16,469 )     -  
Advances to suppliers     (63,068 )        
Inventory     (187,500 )        
Accounts payable and accrued liabilities     38,115       (8,877 )
Income tax and other taxes payable     -       -  
Net cash used from operating activities     (392,301 )     (30,718 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES     -       -  
                 
CASH FLOWS FROM FINANCING ACTIVITIES                
Proceeds from related party lending     508,215       30,718  
Net cash used in financing activities     508,215       30,718  
                 
Effect of exchange rate changes on cash     2,966       -  
                 
NET INCREASE IN CASH AND CASH EQUIVALENTS     118,879       -  
                 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD     37,555       -  
                 
CASH AND CASH EQUIVALENTS AT END OF PERIOD   $ 156,434     $ -  
                 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION                
Cash paid for interest   $ -     $ -  
Cash paid for income tax   $ -     $ -  
                 
Non-cash activities                
Shares issued for repayment of debt           $ 10,000  
Related party forgiveness of debt           $ 52,087  

 

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

 

4

 

 

Heyu Biological Technology Corporation

(Formerly known as Pacific Webworks, Inc.)

Notes to Condensed Consolidated Financial Statements  

(Unaudited)

 

NOTE 1 – THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES

 

Heyu Biological Technology Corporation (the “Company”) was incorporated in the state of Nevada on May 18, 1987, as Asphalt Associates, Inc. and changed its name to Pacific WebWorks in January 1999. From 1999 to 2016 the Company engaged in the development and distribution of web tools software, electronic business storefront hosting, and Internet payment systems for individuals and small to mid-sized businesses. On February 23, 2016, the Company filed a voluntary petition for bankruptcy in the U.S. Bankruptcy Court for the District of Utah, and soon afterwards ceased its business activities. On August 19, 2016 the Company proposed a Plan of Liquidation and on November 28, 2016, the Court entered an order confirming the Plan of Liquidation and establishing a Liquidating Trust. On December 28, 2016, all assets and liabilities of the Company were transferred to the Liquidating Trust.

 

On April 18, 2018, the Company entered into a Share Purchase Agreement with Mr. Ban Siong Ang and Mr. Dan Masters, pursuant to which Mr. Ang acquired 1,021,051,700 shares, representing 98.91% of the issued and outstanding shares of common stock of the Company (“Common Stock”) from Mr. Masters for an aggregate purchase price of $335,000 (the “Share Purchase”). As a result of the Share Purchase Agreement, the Company accepted the resignation of Dan Masters, as the Company’s President, Chief Executive Officer, Chief Financial Officer, Secretary and Chairman of the Board. This resignation was given in connection with the closing of the Share Purchase and was not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies, or practices. Additionally, all debt due to Mr. Masters from the Company was cancelled as of the closing of the Share Purchase and recognized as contributed capital.

 

On April 18, 2018, to fill the vacancies created by Mr. Masters’s resignations, Ban Siong Ang and Hung Seng Tan were elected as the directors of the Company. Mr. Ang was appointed as President, Chief Executive Officer, and Chairman of the Board. Mr. Tan was appointed as Executive Director of the Company. Ms. Wendy Wei Li was appointed as Chief Financial Officer.

 

On July 3, 2018, the Company changed its name to Heyu Biological Technology Corporation, with a new ticker symbol, HYBT.

 

During 2018, the Company established the following subsidiaries: (1) HP Technology Limited, a British Virgin Islands business company incorporated on September 20, 2018 and (2) Heyu Healthcare Technology Limited, a Hong Kong company incorporated on March 29, 2018. Further, on November 5, 2018, the Company acquired the following subsidiary: Jiashierle (Xiamen) Healthcare Technology Co., Ltd. (“JSEL”), a limited liability company incorporated under the laws of the People’s Republic of China (the “PRC”) on November 16, 2017.

 

On January 17, 2019, JSEL entered into a Share Transfer Agreement (the “Share Transfer Agreement”) with Mr. Yu Xu (“Mr. Xu”), an individual with an address at No. 68 Chengde South Road, Qingpu District, Huaian City, Jiangsu Province, the PRC, and who owned 90% of the equity interests of Shanghai Kangzi Medical Technology Co., Ltd., a limited liability company organized under the laws of the PRC (“Kangzi”). JSEL received 60% of the outstanding equity interest of Kangzi from Mr. Xu for the purpose of developing a joint venture in the business of selling medical equipment. It was the parties’ intention that JSEL would fund the operations of Kangzi in proportion to its equity interest in Kangzi. At the time of the share transfer, Kangzi owned no assets and conducted no business operation of its own.

 

In March 2019, the Company entered into a Raspberry Purchase Agreement and a Raspberry Juice Processing Agreement with Luoyang Ditiantai Agricultural Development Co., Ltd. (“Ditiantai”). Pursuant to these two agreements, the Company purchased six tons of raspberry from Ditiantai, which were processed by Ditiantai into raspberry juice and delivered to the Company. The Company then sold the raspberry juice to a corporate buyer and five individual buyers. The Company, however, does not plan to engage in the business of selling raspberry juice in the long term, and is still identifying and considering its operational direction.

 

5

 

 

Basis of Presentation

 

The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company transactions and balances have been eliminated in consolidation.

 

The condensed consolidated financial statements of the Company as of and for the three and six months ended June 30, 2019 and 2018 are unaudited. In the opinion of management, all adjustments (including normal recurring adjustments) that have been made are necessary to fairly present the financial position of the Company as of June 30, 2019, the results of its operations for the three and six months ended June 30, 2019 and 2018, and its cash flows for the six months ended June 30, 2019 and 2018. Operating results for the interim periods presented are not necessarily indicative of the results to be expected for a full fiscal year. The balance sheet as of December 31, 2018 has been derived from the Company’s audited financial statements included in the Form 10-K for the year ended December 31, 2018.

 

The statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with the financial statements and other information included in the Company’s Annual Report on Form 10-K as filed with the SEC for the fiscal year ended December 31, 2018. 

 

As of June 30, 2019, the details of the consolidating subsidiaries are as follows:

 

Name of Company   Place of
incorporation
  Attributable
equity
interest %
 
HP Technology Limited   British Virgin Islands     100 %
             
Heyu Healthcare Technology Limited   Hong Kong     100 %
             
JSEL   The PRC     100 %
             
Kangzi   The PRC     60 %

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Management believes that the estimates used in preparing the financial statements are reasonable and prudent; however, actual results could differ from these estimates. Significant estimates include the allowance for doubtful accounts, impairment assessments of goodwill, valuation of deferred tax assets, rebilling collections and certain accrued liabilities such as contingent liabilities.

 

Cash Equivalents

 

The Company considers all highly liquid debt instruments purchased with a maturity period of three months or less to be cash or cash equivalents. The carrying amounts reported in the accompanying unaudited condensed consolidated balance sheets for cash and cash equivalents approximate their fair value. All of the Company’s cash that is held in bank accounts in the PRC and Hong Kong is not protected by Federal Deposit Insurance Corporation (“FDIC”) insurance or any other similar insurance in the PRC, or Hong Kong.

 

6

 

 

Inventories

 

Inventories are stated at the lower of cost or market value. The Company applies the weighted average cost method to its inventory.

 

Foreign Currency

 

For fiscal year 2019, the Company’s principal country of operations is the PRC. The accompanying consolidated financial statements are presented in US$. The functional currency of the Company is US$, and the functional currency of the Company’s subsidiaries is RMB. The consolidated financial statements are translated into US$ from RMB at year-end exchange rates as to assets and liabilities and average exchange rates as to revenues and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred. The resulting translation adjustments are recorded as a component of shareholders’ equity included in other comprehensive income. Gains and losses from foreign currency transactions are included in profit or loss. There were no gains and losses from foreign currency transactions during the quarter ended June 30, 2019 and 2018.

 

    As of  
    June 30,
2019
    December 31, 2018  
RMB: US$ exchange rate     6.8656       6.8764  

 

    Six months ended
June 30,
 
    2019     2018  
RMB: US$ exchange rate     6.7839       6.3666  

 

The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US$ at the rates used in translation.

 

General and administrative costs

 

General and administrative expenses include personnel expenses for executive, finance, and internal support personnel. In addition, general and administrative expenses include fees for bad debt costs, professional legal and accounting services, insurance, office space, banking and merchant fees, and other overhead-related costs.

 

Income Taxes

 

The Company accounts for income taxes pursuant to ASC Topic 740, Income Taxes. Income taxes are provided on an asset and liability approach for financial accounting and reporting of income taxes. Any tax paid by subsidiaries during the year is recorded. Current tax is based on the profit or loss from ordinary activities adjusted for items that are non-assessable or disallowable for income tax purpose and is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date. ASC Topic 740 also requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and the tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and tax credit carry-forwards. ASC Topic 740 additionally requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. Realization of deferred tax assets, including those related to the U.S. net operating loss carry-forwards, are dependent upon future earnings, if any, of which the timing and amount are uncertain.

 

The Company adopted ASC Topic 740-10-05, Income Tax, which provides guidance for recognizing and measuring uncertain tax positions, it prescribes a threshold condition that a tax position must meet for any of the benefits of the uncertain tax position to be recognized in the financial statements. It also provides accounting guidance on derecognizing, classification and disclosure of these uncertain tax positions.

 

The Company’s policy on classification of all interest and penalties related to unrecognized income tax positions, if any, is to present them as a component of income tax expense.

 

7

 

 

Capital Structure

 

The Company had 2,000,000,000 shares of authorized common stock, par value $0.001 per share, with 1,032,466,000 shares issued and outstanding as of June 30, 2019, and 1,141,472,861 shares issued and outstanding as of December 31, 2018.

 

Earnings (loss) per share

 

Basic net income (loss) per share of common stock attributable to common stockholders is calculated by dividing net income (loss) attributable to common stockholders by the weighted-average shares of common stock outstanding for the period. Potentially dilutive shares, which are based on the weighted-average shares of common stock underlying outstanding stock-based awards, warrants, options, or convertible debt using the treasury stock method or the if-converted method, as applicable, are included when calculating diluted net income (loss) per share of common stock attributable to common stockholders when their effect is dilutive.

 

Potential dilutive securities are excluded from the calculation of diluted EPS in loss periods as their effect would be antidilutive.

 

As of June 30, 2019, and December 31, 2018, there were no potentially dilutive shares.

 

    For the Quarter Ended
June 30,
 
    2019     2018  
Statement of Operations Summary Information:            
Net loss   $ (190,767 )   $ (21,841 )
Weighted-average common shares outstanding - basic and diluted     1,080,043,580       4,485,942  
Net loss per share, basic and diluted   $ (0.00 )   $ (0.00 )

 

NOTE 2 – GOING CONCERN

 

During the quarter ended June 30, 2019, the Company had been unable to generate cash flows sufficient to support its operations and had been dependent on related party advances from the current controlling shareholder. In addition, the Company had experienced recurring net losses, and had an accumulated deficit of $18,593,843 and working capital  deficit of $425,036 as of June 30, 2019. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.

 

There can be no assurance that sufficient funds required during the next year or thereafter will be generated from any future operations or that funds will be available from external sources such as debt or equity financings or other potential sources. If the Company is unable to raise capital from external sources when required, there would be a material adverse effect on its business. Furthermore, there can be no assurance that any such required funds, if available, will be available on attractive terms or that they will not have a significant dilutive effect on the Company’s existing stockholders. Management is now seeking an operating company with which to merge or acquire. In the foreseeable future, the Company will rely on related parties such as its controlling shareholder, to provide advances to funds general corporate purposes and any potential acquisitions of profitable investments. There is no assurance, however, that the Company will achieve its objectives or goals.

 

NOTE 3 – CASH AND CASH EQUIVALENTS

 

Cash and cash equivalents consist of the following:

 

    As of
June 30,
2019
    As of December 31, 2018  
             
Bank Deposits-China & HK     156,435       37,555  
    $ 156,435     $ 37,555  

 

8

 

 

NOTE 4 – OTHER RECEIVABLE

 

Other receivable consists of the following:

 

    As of
June 30,
2019
    As of December 31, 2018  
             
Fujian Shanzhiling Biological Technology Co., Ltd.     -       21,324  
Others     10,406       -  
    $ 10,406     $ 21,324  

 

On October 8, 2018, the Company entered into a non-binding letter of intent with Fujian Shanzhiling Biological Technology Co., Ltd. (the “Acquiree”), a Chinese biotechnology product manufacturing corporation, whereby the Acquirer agreed to acquire 51% of the outstanding capital of the Company subject to certain adjustment provisions (the “Shanzhiling Acquisition”). As of the date of this report, the Company has terminated the agreements related to Shanzhiling Acquisition; therefore, the related balance in the amount of $24,499 has been written off during the quarter ended June 30, 2019.

 

NOTE 5 – ADVANCES TO SUPPLIERS

 

Advances to suppliers consists of the following:

 

    As of
June 30,
2019
    As of December 31, 2018  
             
Prepayment for purchase of raw materials     63,068           -  
    $ 63,068     $ -  

 

NOTE 6 – INVENTORY

 

Inventory consists of the following:

 

    As of
June 30,
2019
    As of December 31, 2018  
             
Raw materials     170,277           -  
Finished goods     17,223       -  
    $ 187,500     $ -  

 

No impairment was provided for the inventories as of June 30, 2019.

 

NOTE 7 – ACCRUED EXPENSES AND OTHER PAYABLES

 

Accrued expenses and other payables consist of the following:

 

    As of
June 30, 2019
    As of December 31, 2018  
             
Accrued payroll     50,678       7,589  
Other Payables     4,065       9,039  
    $ 54,743     $ 16,628  

 

Accrued payroll includes all company employee payroll liabilities as of June 30, 2019, and other payables contains employee reimbursements.

 

9

 

 

NOTE 8 – RELATED PARTY TRANSACTIONS

 

As of June 30, 2019, and December 31, 2018, the Company owed related parties $787,679 and $279,464, respectively. As the Company has just started business activities in March 2019, all expenses incurred during this reporting period are paid by a related party. Expenses mainly included auditing, consulting and legal advisory expenses, government registration expenses, and payrolls.

 

A director of the Company provides the property for the use by the Company without charge.

 

NOTE 9 – EQUITY

 

The Company recorded the following equity transactions during the six months ended June 30, 2019:

 

On March 15, 2019, the Company, with the approval of the Board, entered into a Share Cancellation Agreement (the “Share Cancellation Agreement”) with Mr. Ban Siong Ang, the President, Chief Executive Officer, and Chairman of the Board of the Company. Pursuant to the Share Cancellation Agreement, the Company and Mr. Ang agreed to cancel 109,006,861 shares of Common Stock previously issued to Mr. Ang.

 

The Company recorded the following equity transactions during the year ended December 31, 2018:

 

On March 12, 2018, the Board of Directors, with the consent of the majority shareholder, voted for a 1-for-464 reverse stock split. On April 11, 2018 the reverse split became effective.

 

On April 13, 2018, 1,000,000,000 shares were issued to a prior related party as a repayment of debt.

 

On April 18, 2018, the Company entered into a Share Purchase Agreement with Mr. Ban Siong Ang and Mr. Dan Masters, pursuant to which Mr. Ang acquired 1,021,051,700 shares, representing 98.91% of the issued and outstanding shares of Common Stock from Mr. Masters for an aggregate purchase price of $335,000. As a result of the Share Purchase Agreement, the Company accepted the resignation of Mr. Masters, as the Company’s President, Chief Executive Officer, Chief Financial Officer, Secretary and Chairman of the Board. This resignation was given in connection with the closing of the Share Purchase and was not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies, or practices. Additionally, all debt due to Mr. Masters from the Company was cancelled as of the closing of the Share Purchase and recognized as contributed capital.

 

On July 30, 2018, the Company amended its Articles of Incorporation with the State of Nevada in order to increase its authorized shares of Common Stock from 150,000,000 to 2,000,000,000.

 

On September 11, 2018, the Nevada Secretary of State approved the Company’s certificate of amendment to amend its Articles of Incorporation to effectuate a 100-for-1 forward stock split. The total issued and outstanding shares of Common Stock has been increased from 10,324,660 to 1,032,466,000 shares, with the par value unchanged at $0.001.

 

In October 2018, the controlling stockholder of the Company, Mr. Ban Siong Ang, entered into a series of share transfer agreements (the “Share Transfer Agreements”) with certain buyers (the “Buyers”). Pursuant to the Share Transfer Agreements, an aggregate of 109,006,861 shares of Common Stock were issued to the Buyers, but the cancellation of the 109,006,861 shares of Common Stock held by Mr. Ang was still in process as of December 31, 2018. The cancellation of those shares held by Mr. Ang was subsequently completed on March 20, 2019, pursuant to a Share Cancellation Agreement dated March 15, 2019, by and between the Company and Mr. Ang.

 

Unless otherwise indicated, all common share amounts and per share amounts in the financial statements and disclosures have been presented giving effect to the 1-for-464 reverse split that became effective on April 11, 2018, and the 100-for-1 forward stock split that became effective on September 11, 2018.

 

NOTE 10 – INCOME TAXES

 

The Company is subject to U.S. Federal tax laws. The Company has not recognized an income tax benefit for its operating losses in the United States because the Company does not expect to commence active operations in the United States.

 

Heyu Healthcare Technology Limited was incorporated in Hong Kong and is subject to Hong Kong profits tax at a tax rate of 16.5%. Since Heyu Healthcare Technology Limited had no taxable income during the reporting period, it has not paid Hong Kong profits taxes. Heyu Healthcare Technology Limited has not recognized an income tax benefit for its operating losses in Hong Kong because the Company does not expect to commence active operations in Hong Kong.

 

The Company plans to conduct its major operations in the PRC through JSEL, and in accordance with the relevant tax laws and regulations. The corporate income tax rate in China is 25%. The Company has not paid PRC profits taxes, since it had no taxable income during the reporting period.

 

10

 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Forward-Looking Statements

 

Statements made in this Quarterly Report which are not purely historical are forward-looking statements with respect to the goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and our business, including, without limitation, (i) our ability to raise capital, and (ii) statements preceded by, followed by or that include the words “may,” “would,” “could,” “should,” “expects,” “projects,” “anticipates,” “believes,” “estimates,” “plans,” “intends,” “targets” or similar expressions.

 

Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following: general economic or industry conditions, nationally and/or in the communities in which we may conduct business, changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets, our ability to raise capital, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, regulatory and technical factors affecting our current or potential business and related matters.

 

Accordingly, results actually achieved may differ materially from expected results in these statements. Forward-looking statements speak only as of the date they are made. We do not undertake, and specifically disclaim, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.

 

Overview

 

Heyu Biological Technology Corporation (the “Company” or “we”) was incorporated in the state of Nevada on May 18, 1987, as Asphalt Associates, Inc. and changed its name to Pacific WebWorks in January 1999. From 1999 to 2016 the Company engaged in the development and distribution of web tools software, electronic business storefront hosting, and Internet payment systems for individuals and small to mid-sized businesses. On February 23, 2016, the Company filed a voluntary petition for bankruptcy in the U.S. Bankruptcy Court for the District of Utah, and soon afterwards ceased its business activities. On August 19, 2016, the Company proposed a Plan of Liquidation and on November 28, 2016, the Court entered an order confirming the Plan of Liquidation and establishing a Liquidating Trust. On December 28, 2016, all assets and liabilities of the Company were transferred to the Liquidating Trust.

 

On April 18, 2018, the Company entered into a Share Purchase Agreement with Mr. Ban Siong Ang and Mr. Dan Masters, pursuant to which Mr. Ang acquired 1,021,051,700 shares, representing 98.91% of the issued and outstanding shares of Common Stock from Mr. Masters for an aggregate purchase price of $335,000. As a result of the Share Purchase Agreement, the Company accepted the resignation of Mr. Masters, as the Company’s President, Chief Executive Officer, Chief Financial Officer, Secretary and Chairman of the Board. This resignation was given in connection with the closing of the Share Purchase and was not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies, or practices. Additionally, all debt due to Mr. Masters from the Company was cancelled as of the closing of the Share Purchase and recognized as contributed capital.

 

On April 18, 2018, to fill the vacancies created by Mr. Masters’s resignations, Ban Siong Ang and Hung Seng Tan were elected as the directors of the Company. Mr. Ang was appointed as President, Chief Executive Officer, and Chairman of the Board of the Company. Mr. Tan was appointed as Executive Director of the Company. Ms. Wendy Li was appointed as Chief Financial Officer.

 

11

 

 

On July 3, 2018, the Company changed its name to Heyu Biological Technology Corporation, with a new ticker symbol, HYBT.

 

On January 17, 2019, JSEL, entered into the Share Transfer Agreement with Mr. Xu, whereby JSEL received 60% of the outstanding equity interest of Kangzi from Mr. Xu for the purpose of developing a joint venture in the business of selling medical equipment. It was the parties’ intention that JSEL would fund the operations of Kangzi in proportion to its equity interest in Kangzi. At the time of the share transfer, Kangzi owned no assets and conducted no business operation of its own.

 

On March 15, 2019, the Company, with the approval of the Board, entered into a Share Cancellation Agreement (the “Share Cancellation Agreement”) with Mr. Ban Siong Ang, the President, Chief Executive Officer, and Chairman of the Board of the Company. Pursuant to the Share Cancellation Agreement, the Company and Mr. Ang agreed to cancel 109,006,861 shares of Common Stock previously issued to Mr. Ang.

 

In March 2019, the Company entered into a Raspberry Purchase Agreement and a Raspberry Juice Processing Agreement with Ditiantai. Pursuant to these two agreements, the Company purchased six tons of raspberry from Ditiantai, which were processed by Ditiantai into raspberry juice and delivered to the Company. The Company then sold the raspberry juice to a corporate buyer and five individual buyers. The Company, however, does not plan to engage in the business of selling raspberry juice in the long term, and is still identifying and considering its operational direction.

 

Liquidity and Capital Resources

 

As of June 30, 2019, we had assets of $417,409, which consisted of $156,435 in cash, $10,406 in other receivables, $63,068 as advances to suppliers, and $187,500 as inventory; we had liabilities of $842,445, which consisted of $54,743 in accounts payable, $23 in taxes payable, and $787,679 in related party payables; we had an accumulated deficit of $18,593,843. As of December 31, 2018, we had assets of $58,879 and liabilities of $296,115 and our accumulated deficit totaled $18,421,319. Additionally, as the Company started its operation in mid-March 2019, related parties paid expenses totaling $787,679 to vendors for accounting, auditing, consulting, SEC filing services, and all other operating expenses.

 

Results of Operations

 

Following the Liquidation on December 28, 2016, we became a shell company without any significant assets or operations.

 

Comparison of the Three Months Ended June 30, 2019 and 2018

 

We started operations in mid-March 2019, and had no revenues or operations for the same period in 2018. Our revenues during the three months ended June 30, 2019, were $27,998, and the cost of revenue was $15,399, as compared to nil and nil for the same period in 2018, respectively. The increase in revenues and cost of revenue was due to our sale of raspberry juice during the period. We had incurred selling expenses of $0 and administrative expenses of $153,540 during the three months ended June 30, 2019, as compared to selling expenses of nil and administrative expenses of $12,931 for the same period in 2018, respectively. The increase in the expenditure was mainly due to employee wages and salary expenses, auditing, and other day-to-day operation related expenses. We will, in all likelihood, incur operating expenses without sufficient revenues, as we identify and determine the operational direction of the Company. We will depend upon our officers and directors to make loans to the Company to meet any costs that may occur. All such advances will be interest-free loans or equity contributions.

 

Comparison of the Six Months Ended June 30, 2019 and 2018

 

We started operations in mid-March 2019, and had no revenues or operations for the same period in 2018. Our revenues during the six months ended June 30, 2019, were $49,930, and the cost of revenue was $28,272, as compared to nil and nil for the same period in 2018, respectively. The increase in revenues and cost of revenue was due to our sale of raspberry juice during the period. We had incurred selling expenses of $1,385 and administrative expenses of $209,702 during the six months ended June 30, 2019, as compared to selling expenses of nil and administrative expenses of $21,841for the same period in 2018, respectively. The increase in the expenditure was mainly due to employee wages and salary expenses, auditing, and other day-to-day operation related expenses. We will, in all likelihood, incur operating expenses without sufficient revenues, as we identify and determine the operational direction of the Company. We will depend upon our officers and directors to make loans to the Company to meet any costs that may occur. All such advances will be interest-free loans or equity contributions.

 

12

 

 

Going Concern

 

The accompanying financial statements are presented on a going concern basis. The Company’s financial condition raises substantial doubt about the Company’s ability to continue as a going concern. As of June 30, 2019, the Company had an accumulated deficit of $18,593,843, and a net loss of $142,274 and $190,766 for the three and six months ended June 30, 2019. It is relying on advances from its officer and director to meet its limited operating expenses.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues, or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.

 

ITEM 3 QUANTITATIVE AND QUALITATIVE ABOUT MATERIAL RISKS

 

Smaller reporting companies are not required to provide the information required by this item.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

Management has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures were not effective as a result of a material weakness primarily related to a lack of a sufficient number of personnel with appropriate training and experience in accounting principles generally accepted in the United States of America, or GAAP. We are currently in the process of evaluating the steps necessary to remediate this material weakness.

 

Changes in Internal Control Over Financial Reporting

 

There was no change in our internal control over financial reporting that occurred during the quarterly period ended June 30, 2019, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within any company have been detected.

 

13

 

 

PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS  

 

From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm business. We are currently not aware of any such legal proceedings or claims that will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.  

 

ITEM 1A. RISK FACTORS  

 

Smaller reporting companies are not required to provide the information required by this item.  

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS  

 

There were no unregistered sales of equity securities during the period covered by this report on Form 10-Q.  

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES  

 

None.  

 

ITEM 4. MINE SAFETY DISCLOSURES  

 

Not applicable.  

 

ITEM 5. OTHER INFORMATION  

 

None.  

 

ITEM 6. – EXHIBITS  

 

Exhibit   Exhibit Description
3.1 (1)   Articles of Incorporation
3.2  (2)   Certificate of Amendment
3.3  (3)   Certificate of Amendment
3.4 (4)   Certificate of Amendment
3.5 (5)   By-Laws
3.6 (6)   First Amendment to the By-Laws
31.1*   Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*   Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**   Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**   Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS   XBRL Instance Document*
101.SCH   XBRL Taxonomy Extension Schema Document*
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB   XBRL Taxonomy Extension Labels Linkbase Document*
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document*

 

(1) Filed as an exhibit to the Company’s Registration Statement on Form 10-12G, as filed with the SEC on July 16, 1999, and incorporated herein by this reference.
(2) Filed as an exhibit to the Company’s Form 8-K, as filed with the SEC on July 6, 2018, and incorporated herein by reference.
(3) Filed as an exhibit to the Company’s Form 8-K, as filed with the SEC on August 3, 2018, and incorporated herein by reference.
(4) Filed as an exhibit to the Company’s Form 8-K, as filed with the SEC on September 14, 2018, and incorporated herein by reference.
(5) Filed as an exhibit to the Company’s Registration Statement on Form 10-12G, as filed with the SEC on July 16, 1999, and incorporated herein by this reference.
(6) Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q, as filed with the SEC on November 13, 2018, and incorporated herein by this reference.

  

* Filed herewith.
** In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibits 32.1 and 32.2 herewith are deemed to accompany this Form 10-Q and will not be deemed filed for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act or the Exchange Act.

 

14

 

 

SIGNATURES

 

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

 

  Heyu Biological Technology Corporation
     
  By: /s/ Ban Siong Ang
  Name: Ban Siong Ang
Dated: August 12, 2019  Title: Chief Executive Officer
     
  By: /s/ Wendy Wei Li
  Name:  Wendy Wei Li
Dated: August 12, 2019  Title: Chief Financial Officer

 

 

15

 

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