Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed be 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, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section
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, 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.
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
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act,
indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to
previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements
that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant
recovery period pursuant to §240.10D-1(b). ☐
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 March 23, 2023, there were 1,032,466,000
shares of the registrant’s Common Stock outstanding.
PART I
Unless otherwise indicated, all share amounts
and per share amounts in this Report have been presented giving effect to a 1-for-464 reverse split that became effective on April 11,
2018, and a 100-for-1 forward stock split that became effective on September 11, 2018.
Unless the context requires otherwise, references
in this Annual Report on Form 10-K/A to the “Company” or “our Company” refer to Heyu Biological Technology Corporation,
a Nevada company; “we,” “us,” and “our” refer to Heyu Biological Technology Corporation and
its subsidiaries, unless the context otherwise indicates; and “Shanghai Subsidiary” refers to Shanghai Kangzi Medical Technology
Co., Ltd.
ITEM 1. BUSINESS
The Company is a holding company incorporated
in the State of Nevada and not a Chinese operating company. As a holding company with no material operations of our own, we conduct our
operations and operate our business in China through our subsidiaries. Holders of our stock hold equity interest in Heyu Biological Technology
Corporation, a Nevada holding company with business operations in China and therefore, may never hold equity interests directly in our
Chinese operating entities. The Company holds equity interests in its PRC subsidiaries through its subsidiaries incorporated in British
Virgin Islands and Hong Kong. As we have a direct equity ownership structure, we do not have any agreement or contract between our Company
and any of its subsidiaries that is typically seen in a variable interest entity structure.
There are significant legal and operational
risks associated with conducting a substantial portion of our operations in mainland China, including, the changes in the legal, political,
and economic policies of the Chinese government, may materially and adversely affect our business, financial condition, results of operations,
and the market price of our shares. Any such changes could significantly limit or completely hinder our ability to offer or continue
to offer our shares to investors and could cause the value of our shares to significantly decline or become worthless. The PRC laws and
regulations are sometimes vague and uncertain, and, as a result, these risks may result in material changes in the operations of our
PRC subsidiaries, significant depreciation of the value of our shares, or a complete hindrance of our ability to offer or continue to
offer our securities to investors. In addition, we are subject to risks and uncertainties of the interpretations and applications of
PRC laws and regulations, including, but not limited to, those imposing limitations on foreign ownership in our industry. We are also
subject to the risks and uncertainties about any future actions of the PRC government. If any future actions of the PRC government result
in a material change in our operations, the value of our shares may depreciate significantly or become worthless. See “Risk
Factors — Risks Related to Doing Business in China — The uncertainties in the Chinese legal system could
materially and adversely affect us.”
The Chinese government has exercised, and
may continue to exercise, substantial influence or control over virtually every sector of the Chinese economy through regulation and
state ownership. The central or local Chinese governments could impose new, stricter regulations or interpretations of existing regulations
that could require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations.
Recently, the PRC government initiated a series of regulatory actions and made a number of public statements on the regulation of business
operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision
over China-based companies listed overseas, adopting new measures to extend the scope of cybersecurity reviews, and expanding efforts
in anti-monopoly enforcement and data privacy protection. As of the date hereof, we do not believe that we are subject to (a) the cybersecurity
review with the Cyberspace Administration of China, or CAC, as we do not qualify as a critical information infrastructure operator or
possess a large amount of personal information in our business operations, and our business does not involve data possessing that affects
or may affect national security, implicates cybersecurity, or involves any type of restricted industry; or (b) merger control review
by China’s anti-monopoly enforcement agency due to the fact that we do not engage in monopolistic behaviors that are subject to
these statements or regulatory actions. However, since these statements and regulatory actions are new, it is highly uncertain how soon
legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations
and interpretations will be modified or promulgated, and, if any, the potential impact such modified or new laws and regulations will
have on our daily business operation, the ability to accept foreign investments, and listing of our securities. For more details, see
“Risk Factors — Risks Related to Doing Business in China — We may be required under PRC laws
to submit filings to CSRC, the CAC, or other PRC governmental authorities for our future offering.”
We are not currently required to obtain prior
approval or prior permission from the China Securities Regulatory Commission (“CSRC”) or any other Chinese regulatory authority
under the Chinese laws and regulations currently in effect to issue securities to foreign investors. On February 17, 2023, the CSRC
promulgated a new set of regulations that consists of the Trial Administrative Measures for Overseas Securities Offering and Listing
by Domestic Companies (the “Trial Measures”) and five supporting guidelines. Pursuant to the Trial Measures, we may be required
to submit filings to the CSRC following the submission of future overseas listings and the completion of future offerings of our equity
securities to foreign investors. For more details, see “Risk Factors — Risks Related to Doing Business in
China — We may be required under PRC laws to submit filings to CSRC, the CAC, or other PRC governmental authorities for our
future offerings.” As there are uncertainties with respect to the Chinese legal system and changes in laws, regulations,
and policies, including how those laws, regulations and policies will be interpreted or implemented, there can be no assurance that we
will not be subject to additional requirements, approvals, or permissions in the future.
In addition, The PRC government has recently
published new policies that significantly affected certain industries, and we cannot rule out the possibility that it will in the future
release regulations or policies regarding the industry where we operate, which could adversely affect our business, financial condition
and results of operations. Furthermore, the PRC government has recently indicated an intent to exert more oversight and control over
overseas securities offerings and other capital markets activities and foreign investment in China-based companies like us. These risks
could result in a material change in our operations and the value of our shares, or could significantly limit or completely hinder our
ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or become
worthless. See “Risk Factors — Risks Related to Doing Business in China — The PRC government
exerts substantial influence over the manner in which our PRC subsidiaries must conduct their business activities.”
Our shares may be prohibited from trading
under the Holding Foreign Companies Accountable Act if the Public Company Accounting Oversight Board (“PCAOB”) is unable
to inspect our auditor for two consecutive years. Our auditor, WWC, P.C. is headquartered in San Mateo, California and has been inspected
by the PCAOB on a regular basis, with the last inspection conducted in November 2021, and it is not subject to the determinations announced
by the PCAOB on December 16, 2021 or the Statement of Protocol with the China Securities Regulatory Commission and the Ministry of Finance
of the People’s Republic of China on August 26, 2022. If trading in our shares is prohibited under the Holding Foreign Companies
Accountable Act in the future because the PCAOB determines that it cannot inspect or fully investigate our auditor at such future time,
trading of our shares may be prohibited. On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable
Act (“HFCAA”), which, if passed by the U.S. House of Representatives and signed into law, would reduce the period of time
for foreign companies to comply with PCAOB audits to two consecutive years, instead of three, thus reducing the time period before our
securities may be prohibited from trading. On December 29, 2022, a legislation entitled “Consolidated Appropriations Act, 2023”
(the “Consolidated Appropriations Act”), was signed into law by President Biden. The Consolidated Appropriations Act contained,
among other things, an identical provision to HFCAA, which reduces the number of consecutive non-inspection years required for triggering
the prohibitions under the HFCAA from three years to two. On August 26, 2022, the CSRC, the Ministry of Finance of the PRC, and the PCAOB
signed a Statement of Protocol (the “Protocol”), governing inspections and investigations of audit firms based in China and
Hong Kong. Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion
to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. However,
uncertainties still exist as to whether and how this new Protocol will be implemented and whether the PCAOB can make a determination
that it is able to inspect and investigate completely in mainland China and Hong Kong. On December 15, 2022, the PCAOB determined that
the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland
China and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise
fail to facilitate the PCAOB’s access in the future, the PCAOB Board will consider the need to issue a new determination. Notwithstanding
the foregoing, because we have substantial operations within the PRC through the PRC operating entities, if the PCAOB is not able to
fully conduct inspections of our auditor’s work papers in China, you may be deprived of the benefits of such inspection which could
result in limitation or restriction to our access to the U.S. capital markets and trading of our securities may be prohibited under the
HFCAA.
We were 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 medium 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 (the “Liquidation”).
On March 12, 2018, the Board of Directors of
the Company (the “Board”), with the consent of the majority shareholder, approved a 1-for-464 reverse stock split. On April
11, 2018, the reverse split became effective.
On April 18, 2018, the Company entered into a
Share Purchase Agreement (the “SPA”) with Mr. Ban Siong Ang (the “Purchaser”) and Mr. Dan Masters (the “Seller”),
pursuant to which the Purchaser acquired 1,021,051,700 shares, representing 98.91% of the issued and outstanding shares of common stock
of the Company (“Common Stock”) from Seller for an aggregate purchase price of $335,000 (“Share Purchase”). As
a result of the SPA, 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. The Company currently has no business operations. 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.
On September 25, 2018, the Financial Industry
Regulatory Authority, Inc. (“FINRA”) approved the Forward Split with an Effective Date of September 25, 2018 and a Pay Date
of September 24, 2018. In connection with the Forward Split, no fractional shares are necessary to be issued, and stockholders do not
need to present certificates for exchange. The Forward Split will be payable directly to each stockholder by the issuance of shares representing
the split differential.
On February 28, 2021, Ms. Wendy Wei Li resigned
from her position with the Company as the Chief Financial Officer. To fill the vacancies created by Ms. Wendy Wei Li’s resignation,
Mr. Ang was appointed as the Chief Financial Officer. On November 30, 2021, Mr. Bo Lyu has been appointed as the Chief Financial Officer.
On February 17, 2023, the board of directors
of the Company appointed Mr. Zengqiang Lin as an independent director of the Company, effective February 17, 2023.
Non-Binding Letter of Intent with Fujian
Shanzhiling Biological Technology Co., Ltd.
On October 8, 2018, the Company entered into
a non-binding letter of intent with Fujian Shanzhiling Biological Technology Co., Ltd. (the “Acquirer”), 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”). The letter of intent has been terminated, and the Company is not pursuing
this proposed acquisition any further.
Non-Binding Memorandum of Cooperation and
Non-Binding Letter of Intent with Luoyang Ditiantai Agricultural Development Co., Ltd.
On October 18, 2018, the Company entered into
a non-binding memorandum of cooperation with Luoyang Ditiantai Agricultural Development Co., Ltd. (“Ditiantai”), a Chinese
industrial agricultural chain enterprise, and on October 19, 2018, the Company entered into a non-binding letter of intent with Ditiantai.
Pursuant to the two documents, the Company agreed to acquire 51% of the outstanding capital of Ditiantai subject to certain adjustment
provisions (the “Ditiantai Acquisition”). The letter of intent has been terminated, and the Company is not pursuing this
proposed acquisition any further.
Share Transfer Agreement with Mr. Yu Xu
On January 17, 2019, Jiashierle (Xiamen) Healthcare
Technology Co., Ltd. (“JSEL”), a limited liability company incorporated under the laws of the People’s Republic of
China (the “PRC”), and an indirect wholly owned subsidiary of the Company, entered into a Share Transfer Agreement (the “Share
Transfer Agreement”) with Mr. Yu Xu (“Mr. Xu”), an individual 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”). Pursuant to the
Share Transfer Agreement, Mr. Xu transferred 60% of the equity interests of Kangzi to JSEL on January 17, 2019 for the purpose of developing
a joint venture in the business of selling medical equipment. In return, JSEL would fund the operations of Kangzi in proportion to its
equity interest in Kangzi. Kangzi owned no assets and conducts no business operation of its own. As a result, as of January 17, 2019,
Kangzi became an indirect subsidiary of the Company.
Share Cancellation Agreement with Mr. Ban
Siong Ang
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.
Raspberry Purchase Agreement and Raspberry
Juice Processing Agreement with Ditiantai
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.
New Business Initiative – Submillimeter
Wave (Terahertz) Quantized Space Therapy Chamber Project
Since the beginning of 2019, Mr. Xu has led the
core research and development team of Kangzi to develop and manufacture a new medical product, the Submillimeter Wave (Terahertz) Quantized
Space Therapy Chamber (the “Chamber”). Utilizing submillimeter waves, the Chamber is a medical equipment designed to treat
cancer through cold nuclear fusion caused by cosmic ray muons in an enclosed chamber. Specifically, we believe that exposure to an appropriate
amount of submillimeter waves could accelerate the generation of a large number of cosmic ray muons inside the human body and that such
cosmic ray muons could further facilitate cold nuclear fusion, which could reverse the cancering process through which selenium is converted
into nickel inside cells.
The team consists of researchers whom have extensive
experience in medicine and physics. The lead scientist of the team, Mr. Xu, had served as the deputy chief engineer of the New Energy
Base of the National Defense-Science and Technology Commission in 1995, as the chairman and chief scientist of Shanghai Guangcon New
Energy Technology Co., Ltd. from 2011 to 2019, and the director of Shanghai Hengbian New Energy Research Institute from 2003 to 2008.
In 2012, Mr. Xu was rewarded the “Harmony-Person of the Year in China” at the “2011 Harmony China Annual Summit”
in Beijing and recognized as “Leaping China: One of the Most Influential People of the Year in 2011” by China International
Economic and Technical Cooperation Promotion Association, China Elite Culture Promotion Association, and China Outstanding Chinese Merchants
Association. In 2013, the Organizing Committee of Boau Forum on Asian SME Development awarded Mr. Xu “2013 China Economic Outstanding
Contribution Award.”
Pursuant to the terms of the Share Transfer Agreement
entered into by JSEL and Kangzi on January 17, 2019, JSEL has the right to monitor and manage all aspects of operation of Kangzi, including
its research and development activities relating to the Chamber. As the development of the Chamber enters its final stage at Kangzi,
JSEL started accepting pre-orders for the Chamber in September. Subsequently, on October 15 2019, JSEL entered into a clinical cooperation
agreement (the “Clinical Cooperation Agreement”) with Shenzhen Saikun Biotechnology Co., Ltd. (“Saikun”). Pursuant
to the Clinical Cooperation Agreement, Saikun agreed to pay JSEL 5.5 million RMB as the total preordering payment. 1.5 million RMB and
1.5 million RMB were delivered to JSEL respectively on September 7 and September 27, 2019. The parties are working on the timing for
payment of the remaining 2.5 million RMB due under the Clinical Cooperation Agreement. In exchange, JSEL is obligated to purchase all
the components of a Chamber from Kangzi, fully assemble it, and conduct a clinical trial with Saikun, third-party hospital partners,
and patients using the Chamber. Specifically, after receiving the full amount of payment from Saikun, JSEL shall transport the Chamber
to its preferred location, properly install it, and conduct a clinical trial that lasts at least one month. During the clinical trial,
JSEL shall provide training sessions regarding the proper operation of the Chamber to Saikun’s employees. Both Saikun and JSEL
are obligated to find third-party hospitals whom will agree to act as partners to co-host the clinical trial and patients whom will be
voluntarily willing to undergo treatment provided by the Chamber. While Saikun is responsible for various expenses related to the clinical
trial, JSEL is responsible for communicating with patients receiving treatment and other patient-related administrative matters. When
JSEL determines that Saikun is capable of properly operating the Chamber and managing activities related to the Chamber, Saikun may request
JSEL to move the Chamber to a location designated by Saikun and reinstall it. Furthermore, upon the successful completion of the clinical
trial, JSEL shall provide Saikun governmental permits necessary for the operation of the Chamber, and Saikun shall operate the Chamber
and provide related services to patients under the supervision of JSEL. In addition, JSEL shall transfer the right of using the Chamber
and any beneficiary right affiliated to using the Chamber to Saikun upon receiving the full amount of payment from Saikun. JSEL, nevertheless,
owns all the intellectual property rights affiliated with the Chamber. If the two parties decide to terminate the Clinical Cooperation
Agreement prior to the expiration of the term, Saikun’s right of using the Chamber during the term is still effective as long as
its use of the Chamber does not infringe any of JSEL’s intellectual property rights affiliated with the Chamber. The two parties
agreed that the term of the Clinical Cooperation Agreement would not end until Kangzi successfully obtains permits issued by relevant
government entities supervising development and sale of medical equipment.
To prepare for the mass production of Chambers,
Kangzi had conducted clinical experiments to make further improvements on Chamber and adjusting features of the mass-production mold
for Chamber and planned to obtain official governmental permits from relevant government authorities to produce and sell Chambers on
a national scale. As its long-term business strategy, Kangzi had focused on researching, developing, and manufacturing high-technology
medical equipment while targeting both individual and institutional customers and planned to massively manufacture Chambers in small
and medium sizes, establish operation centers to sell Chambers in various cities across China, initiate advertising and marketing campaigns
on different media platforms, and monetize on services provided to customers who use Chambers and other medical products. Our research
and development (“R&D”) activities were primarily carried out by Kangzi. However, due to the impact of COVID-19 and a
lack of funds, Kangzi has suspended its operations, and there have been no R&D activities or R&D expenses incurred since 2020.
At present, we are still evaluating the possibility and timing of resuming R&D activities, but no definitive conclusion has been
reached yet.
Corporate Structure
Currently, the Company owns 100% of HP TECHNOLOGY
LIMITED, a British Virgin Islands business company incorporated on September 20, 2018 (the “BVI Sub”). HP TECHNOLOGY LIMITED
owns 100% of Heyu Healthcare Technology Limited, a Hong Kong company incorporated on March 29, 2018 (the “HK Sub”). Heyu
Healthcare Technology Limited owns 100% of JSEL, which, in turn, holds a 60% equity interest in Kangzi. Two Chinese citizens, Yu Xu and
Anbo Zhai, hold 30% and 10% equity interest in Kangzi, respectively, and neither of them is affiliated with us. The following diagram
sets forth the structure of the Company as of the date of this Current Report:
Heyu
Biological Technology Corp
(a Nevada corporation) |
↓
100% |
HP
TECHNOLOGY LIMITED
(a British Virgin Islands business company) |
↓
100% |
Heyu
Healthcare Technology Limited
和宇健康科技有限公司
(a Hong Kong company) |
↓
100% |
Jiashierle
(Xiamen) Healthcare Technology Co., Ltd.
珈施尔乐(厦门)健康科技有限公司
(a PRC limited liability company/“Wholly
Foreign-Owned Enterprise”) |
↓
60% |
Shanghai
Kangzi Medical Technology Co., Ltd.
(a PRC limited liability company) |
Cash Transfers and Distributions
As of the date hereof, except for a loan in
the total amount of Renminbi 3,628,000 provided by our PRC subsidiary, JESL, to another PRC subsidiary, Kangzi, for the purpose of purchasing
raw materials, no cash transfers have occurred among our subsidiaries and the Company. Both JSEL and Kangzi are PRC companies, and the
cash transfer between them is not subject to PRC foreign exchange regulations.
We are not aware of any restrictions on foreign
exchange or limitations on transferring cash among the Company, the BVI Sub, and the HK Sub. Transfers of funds among our PRC subsidiaries
are free of restrictions. The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain
cases, the remittance of currency out of China. Remittances of funds from our PRC subsidiaries to the Company, the BVI Sub, and/or the
HK Sub are subject to review and conversion of Renminbi to U.S. Dollars through the bank designated and authorized by China’s State
Administration of Foreign Exchange (“SAFE”) to monitor foreign exchange activities.
Under existing PRC foreign exchange regulations,
payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions,
can be made in foreign currencies without prior approval of SAFE by complying with certain procedural requirements. Specifically, under
the existing exchange restrictions, cash generated from the operations of our PRC subsidiary in China may be used to pay dividends to
our company without prior approval of SAFE. However, approval from or registration with appropriate government authorities is required
where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans
denominated in foreign currencies. As a result, we will need to obtain SAFE approval or complete certain mandatory registration
procedures to use cash generated from the operations of our PRC subsidiary to pay any debts they may incur in a currency other than Renminbi
owed to entities outside China, or to make other capital expenditure payments outside China in a currency other than Renminbi.
In addition, any transfer of funds by us to
our PRC subsidiaries, either as a shareholder loan or as an increase in registered capital, is subject to approval by or registration
or filing with relevant governmental authorities in China. Any foreign loans procured by our PRC subsidiaries will be required to be
registered with SAFE or its local branches or satisfy relevant requirements. These restrictions may adversely affect the operations of
our PRC subsidiaries. The remittance of dividends by a wholly foreign-owned company out of China is subject to examination by the banks
designated by SAFE. Our PRC subsidiaries may be restricted from paying dividends to us, and if we are unable to obtain dividends from
our PRC subsidiaries, if any, it may adversely impact our dividends distribution to investors (if any). See “Risk Factors —
Governmental control of currency conversion may limit our ability to utilize our income effectively and affect the value of your investment.”
Currently, we do not have cash management
policies that dictate cash transfers among our Company and its subsidiaries.
As of the date hereof, (1) no cash
transfers have occurred between our Company and its subsidiaries; (2) none of our subsidiaries have made any dividend payment or
distribution to our Company; and (3) neither the Company nor any of its subsidiaries have made any dividends or distributions to
U.S. investors. Our subsidiaries have no plans to make any distribution or dividend payment to the Company in the near future.
Neither the Company nor any of its subsidiaries have plans to make any distribution or dividend payment to the investors in the near
future.
Available Information
The Company expects to continue to file annual
reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, proxy statements and other information with the
SEC. Any materials filed by the Company with the SEC may be read and copied at the SEC’s Public Reference Room at 100 F Street,
NE, Washington, D.C. 20549. Information on the operation of the SEC’s Public Reference Room is available by calling the SEC at
1-800-SEC-0330. The SEC maintains a website that contains annual, quarterly and current reports, proxy statements and other information
that issuers (including the Company) file electronically with the SEC. The Internet address of the SEC’s website is http://www.sec.gov.
The address of our principal executive offices and corporate offices is Room 903&904, Huli Building, 619 Sishui Street, Huli District,
Xiamen City, Fujian Province, China, 361009. Our telephone number is (86) 158 5924 0902.
ITEM 1A. RISK FACTORS
Smaller reporting companies are not required
to provide the information required by this item.
Risks Related to Doing Business in China
The uncertainties
in the Chinese legal system could materially and adversely affect us.
In 1979, the Chinese
government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect
of legislation over the past four decades has significantly enhanced the protections afforded to various forms of foreign investments
in mainland China. However, mainland China has not developed a fully integrated legal system, and recently enacted laws and regulations
may not sufficiently cover all aspects of economic activities in mainland China. In particular, the Chinese legal system is based on
written statutes and prior court decisions have limited value as precedents. Since these laws and regulations are relatively new and
the Chinese legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules may not be uniform and
enforcement of these laws, regulations and rules involves uncertainties. These uncertainties may affect our judgment on the relevance
of legal requirements and our ability to enforce our contractual rights or tort claims. In addition, the regulatory uncertainties may
be exploited through unmerited or frivolous legal actions or threats in attempts to extract payments or benefits from us. Furthermore,
the Chinese legal system is based in part on government policies and internal rules, some of which are not published on a timely basis
or at all and may have a retroactive effect. As a result, we may not be aware of our violation of any of these policies and rules until
sometime after the violation. In addition, any administrative and court proceedings in mainland China may be protracted, resulting in
substantial costs and diversion of resources and management attention.
In July 2021, the
General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly issued a document
to enhance its enforcement against illegal activities in the securities markets and promote the high-quality development of capital markets,
which, among other things, requires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement and
judicial cooperation, to enhance supervision over Chinese companies listed overseas, and to establish and improve the system of extraterritorial
application of the Chinese securities laws. Since this document is relatively new, uncertainties exist in relation to how soon legislative
or administrative regulation-making bodies will respond and what existing or new laws or regulations or detailed implementations and
interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will have
on companies like us. It is especially difficult for us to accurately predict the potential impact on the Company of new legal requirements
in mainland China because the Chinese legal system is a civil law system based on written statutes. Unlike the common law system, prior
court decisions under the civil law system may be cited for reference but have limited precedential value.
The Chinese
government may intervene in or influence our operations at any time, which could result in a material change in our operations and significantly
and adversely impact the value of our shares, including potentially making those shares worthless.
The Chinese government
has significant oversight and discretion over the conduct of our business and may intervene or influence our operations as the government
deems appropriate to further regulatory, political and societal goals. The Chinese government has recently published new policies that
significantly affected certain industries such as the education and internet industries, and we cannot rule out the possibility that
it will in the future release regulations or policies regarding our industry that could require us to seek permission from Chinese authorities
to continue to operate our business, which may adversely affect our business, financial condition, and results of operations. Furthermore,
recent statements made by the Chinese government have indicated an intent to increase the government’s oversight and control over
offerings of companies with significant operations in mainland China that are to be conducted in foreign markets, as well as foreign
investment in China-based issuers. Any such action, if taken by the Chinese government, could significantly limit or completely hinder
our ability to offer or continue to offer shares to our investors and could cause the value of our shares to significantly decline or
become worthless.
The PRC government
exerts substantial influence over the manner in which our PRC subsidiaries must conduct their business activities.
The PRC government
has exercised, and continues to exercise, substantial control over virtually every sector of the Chinese economy through regulation and
state ownership, including steel sector where our PRC subsidiaries have been doing their business. Any government decisions or actions
to change the way steel production is regulated, or any decisions the government might make to cut spending, could adversely impact our
PRC subsidiaries’ business and our results of operations. In addition, the ability of our PRC subsidiaries to operate in China
may be harmed by changes in PRC laws and regulations, including those relating to taxation, environmental conditions, land use rights,
property and other matters. The central or local governments of these jurisdictions may impose new, stricter regulations or interpretations
of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations
or interpretations. Accordingly, government actions in the future, including any decision not to continue to support recent economic
reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies,
could have a significant effect on economic conditions in China or particular regions thereof, and could require us to divest ourselves
of any interest we then hold in Chinese properties. The central or local governments of the jurisdictions in which our PRC subsidiaries
operate may impose new, stricter regulations or interpretations of existing regulations with little advance notice that would require
additional expenditures and efforts on their part to ensure our subsidiaries’ compliance with such regulations or interpretations.
Our PRC subsidiaries may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties
for any failure to comply. In the event that our PRC subsidiaries are not able to substantially comply with any existing or newly adopted
laws and regulations, our business operations may be materially adversely affected and the value of our stock may significantly decrease.
Furthermore, the
PRC government authorities may strengthen oversight and control over offerings that are conducted overseas and/or foreign investment
in China-based issuers like us. Such actions taken by the PRC government authorities may intervene or influence the operations of our
PRC subsidiaries at any time, which may be beyond our control. Therefore, any such action may adversely affect the operations of our
PRC subsidiaries and substantially limit or hinder our ability to offer or continue to offer securities to you and significantly reduce
the value of such securities or cause the value of such securities to be completely worthless.
We may be required
under PRC laws to submit filings to CSRC, the CAC, or other PRC governmental authorities for our future offerings. However, we believe
that we and our PRC subsidiaries are not currently required to obtain the approval and/or comply with other requirements of the CSRC,
the CAC, or other PRC governmental authorities under PRC rules, regulations or policies in connection with our continued listing. In
the event that any such approval is required or that there are other requirements we and/or our PRC subsidiaries are obligated to comply
with, we cannot predict whether or how soon we and/or our PRC subsidiaries will be able to obtain such approvals and/or comply with such
requirements.
We are not currently
required to obtain prior approval or prior permission from the CSRC or any other Chinese regulatory authority under the Chinese laws
and regulations currently in effect to issue securities to foreign investors. On February 17, 2023, the CSRC released the Trial Administrative
Measures for Administration of Overseas Securities Offerings and Listings by Domestic Companies (the “Trial Measures”) and
five supporting guidelines, which came into effect on March 31, 2023. Pursuant to the Trial Measures, PRC domestic companies that seek
to offer and list securities overseas, directly or indirectly, should fulfill the filing procedure and report relevant information to
the CSRC. The Trial Measures provides that subsequent securities offerings of an issuer in the same overseas market where it has previously
offered and listed securities shall be filed with the CSRC within three (3) working days after the offering is completed, which
may subject us to additional compliance requirements in the future, and we cannot assure that we will be able to get the clearance of
filing procedures under the Trial Measures on a timely basis, or at all. If a domestic company fails to complete the filing procedures
or conceals any material fact or falsifies any major content in its filing documents, such domestic company may be subject to administrative
penalties by the CSRC, such as order to rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly
in charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines.
Additionally, the Trial Measures and supporting
guidelines will implement a new regulatory framework requiring China-based companies to submit filings to the CSRC following the completion
of future issuances of equity securities to foreign investors. The Circular on Administrative Arrangements for Filing of Overseas Issuance
and Listing of Domestic Companies released by the CSRC provides that companies already listed on overseas exchanges will be grandfathered,
such that prior offerings will not need to be filed with the CSRC. However, we may be required to submit filings to the CSRC in connection
with future offerings, including follow-on offerings, secondary offerings, or other shelf offerings, within three working days following
the completion of any such offering(s).
On February 24, 2023, the CSRC and other PRC
governmental authorities jointly issued the revised Provisions on Strengthening Confidentiality and Archives Administration of Overseas
Securities Offering and Listing by Domestic Companies (the “Revised Confidentiality Provisions”), which came into effect
on March 31, 2023. According to the Revised Confidentiality Provisions, Chinese companies that directly or indirectly conduct overseas
offerings and listings, shall strictly abide by the laws and regulations on confidentiality when providing or publicly disclosing, either
directly or through their overseas listed entities, materials to securities services providers. In the event such materials contain state
secrets or working secrets of government agencies, the Chinese companies shall first obtain approval from authorities, and file with
the secrecy administrative department at the same level with the approving authority; in the event that such materials, if divulged,
will jeopardize national security or public interest, the Chinese companies shall comply with procedures stipulated by national regulations.
The Chinese companies shall also provide a written statement of the specific sensitive information provided when providing materials
to securities service providers, and such written statements shall be retained for inspection. As the Revised Confidentiality Provisions
were recently promulgated, their interpretation and implementation remain substantially uncertain.
The PRC Regulations on Mergers and Acquisitions
of Domestic Enterprises by Foreign Investors (the “M&A Rules”) appear to require that offshore special purpose vehicles,
controlled by Chinese companies or individuals formed for the purpose of seeking a public listing on an overseas stock exchange through
acquisitions of Chinese domestic companies or assets in exchange for the shares of the offshore special purpose vehicles, obtain CSRC
approval prior to publicly listing their securities on an overseas stock exchange. The interpretation and application of those regulations
remain unclear.
Furthermore, in July 2021, the General Office
of the Communist Party of China Central Committee and the General Office of the State Council jointly promulgated the Opinions on Strictly
Cracking Down on Illegal Securities Activities in Accordance with the Law, pursuant to which Chinese regulators are required to accelerate
rulemaking related to the overseas issuance and listing of securities, and update the existing laws and regulations related to data security,
cross-border data flow, and management of confidential information. Numerous regulations, guidelines and other measures have been or
are expected to be adopted under the umbrella of or in addition to the PRC Cyber Security Law and PRC Data Security Law. The Cybersecurity
Review Measures (Decree No. 8 of the Cybersecurity Administration of the PRC), or the revised Cybersecurity Review Measures, enacted
on December 28, 2021 and came into effect on February 15, 2022, require online platform operators holding over one million users’
personal information to apply for a cybersecurity review before any public offering on a foreign stock exchange. These statements
and regulations are recently issued, and there remain substantial uncertainties about their interpretation and implementation.
Certain internet platforms in China have reportedly
become subject to heightened regulatory scrutiny in relation to cybersecurity matters. As of the date of this Report, we have not been
included within the definition of “operator of critical information infrastructure” by a competent authority, nor have we
been informed by any PRC governmental authority of any requirement that we file for a cybersecurity review. However, if we are deemed
to be a critical information infrastructure operator or an online platform operator that is engaged in data processing and holds personal
information of more than one million users, we could be subject to PRC cybersecurity review in the future.
As there are still uncertainties regarding
the interpretation and implementation of such regulatory guidance, we cannot assure investors that we will be able to comply with new
regulatory requirements relating to our future overseas capital-raising activities, and we may become subject to more stringent requirements
with respect to matters including data privacy and cross-border investigation and enforcement of legal claims.
If our Chinese subsidiaries do not receive
or maintain approvals or inadvertently conclude that approvals needed for their business are not required or if there are changes in
applicable laws (including regulations) or interpretations of laws and our Chinese subsidiaries are required but unable to obtain approvals
in the future, then such changes or need for approvals (if not obtained) could adversely affect the operations of our Chinese subsidiaries,
including limiting or prohibiting the ability of our Chinese subsidiaries to operate, and the value of our shares could significantly
decline or become worthless.
To operate our general business activities
currently conducted in mainland China, each of our Chinese subsidiaries is required to obtain a business license from the local counterpart
of the State Administration for Market Regulation, or SAMR. Each of our Chinese subsidiaries has obtained a valid business license from
the local counterpart of the SAMR, and no application for any such license has been denied.
We have not yet received any inquiry, notice,
warning, or sanction regarding obtaining approval, completing filing, or other procedures in connection with our previous issuances of
securities to foreign investors from the CSRC, CAC, or any other Chinese regulatory authorities that have jurisdiction over our operations.
Based on our understanding of the Trial Measures and supporting guidelines, we will not be required to submit an application to the CSRC
for our previous issuances of securities to foreign investors, but we may be required to submit filings with the CSRC after the completion
of future securities offering in the same overseas markets. There remains uncertainty as to the interpretation and implementation of
regulatory requirements related to overseas securities offerings and other capital markets activities, and we cannot assure you that
the relevant Chinese regulatory authorities, including the CSRC, would reach the same conclusion as us. If, for any reason, we were to
fail to obtain any approvals or to complete any filings or other procedures subsequently required by the CSRC or other Chinese regulatory
authorities, future offerings of our equity securities to foreign investors may be delayed or prevented or we may face sanctions, fines,
and other penalties, limitations on our ability to pay dividends outside of mainland China, limitations on our operations in mainland
China, delays or restrictions on the repatriation of the proceeds from our public offerings into mainland China, or other actions that
could have a material adverse effect on our business, financial condition, results of operations, and prospects, as well as the trading
price of our shares. Any uncertainties and/or negative publicity regarding the aforementioned approvals, filings, or other procedures
or any further laws, regulations, or interpretations that may be released or enacted in the future could have a material adverse effect
on the trading price of our shares, including potentially making those shares worthless.
Governmental control of currency conversion
may limit our ability to utilize our income effectively and affect the value of your investment
The PRC government imposes controls on the
convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. We receive substantially
all of our income in Renminbi. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions,
interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval
of SAFE by complying with certain procedural requirements. Specifically, under the existing exchange restrictions, cash generated from
the operations of our PRC subsidiary in China may be used to pay dividends to our company without prior approval of SAFE. However, approval
from or registration with appropriate government authorities is required where Renminbi is to be converted into foreign currency and
remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. As a result, we will
need to obtain SAFE approval or complete certain mandatory registration procedures to use cash generated from the operations of our PRC
subsidiary to pay any debts they may incur in a currency other than Renminbi owed to entities outside China, or to make other capital
expenditure payments outside China in a currency other than Renminbi. In addition, if any of our shareholders who is subject to SAFE
regulations fails to satisfy the applicable overseas direct investment filing or approval requirement, the PRC government may restrict
our access to foreign currencies for current account transactions. If we are prevented from obtaining sufficient foreign currency to
satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
We leased our principal executive offices and
corporate offices which are located at Room 903&904, Huli Building, 619 Sishui Street, Huli District, Xiamen City, Fujian Province,
China, 361009, the total gross floor area is approximately 755 square meters, or 8,126.75 square feet.
ITEM 3. LEGAL PROCEEDINGS
From time to time, we may become involved in
various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties,
and an adverse result in these or other matters may arise from time to time that may harm our business. There are currently no legal
proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.
ITEM 4. MINE SAFETY DISCLOSURES
None.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON
EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
There is limited public trading market for our
Common Stock; our Common Stock is quoted on the OTC Pink Market under the symbol “HYBT.”
The market price of our Common Stock is subject
to significant fluctuations in response to variations in our quarterly operating results, general trends in the market, and other factors,
over many of which we have little or no control. In addition, broad market fluctuations, as well as general economic, business, and political
conditions, may adversely affect the market for our Common Stock, regardless of our actual or projected performance. Trading in stocks
quoted on the OTC Pink Market is often thin and is characterized by wide fluctuations in trading prices due to many factors that may
have little to do with a company’s operations or business prospects. We cannot assure you that there will be a market for our Common
Stock in the future.
The following table sets forth the quarterly
high and low sales price per share of our Common Stock for the periods indicated. The prices represent inter-dealer quotations, which
do not include retail mark-up, mark-down or commission and may not necessarily represent actual transactions.
FISCAL YEAR 2021 | |
HIGH | | |
LOW | |
First Quarter | |
$ | 0.0240 | | |
$ | 0.0057 | |
Second Quarter | |
| 0.0200 | | |
| 0.0100 | |
Third Quarter | |
| 0.0204 | | |
| 0.0030 | |
Fourth Quarter | |
| 0.0030 | | |
| 0.0001 | |
FISCAL YEAR 2022 | |
HIGH | | |
LOW | |
First Quarter | |
$ | 0.0003 | | |
$ | 0.0001 | |
Second Quarter | |
| 0.0500 | | |
| 0.0003 | |
Third Quarter | |
| 0.0098 | | |
| 0.0004 | |
Fourth Quarter | |
| 0.0014 | | |
| 0.0004 | |
As of March 22, 2023, the last sale price reported
on the OTC Pink Market for our Common Stock was approximately $0.079 per share.
Dividend Policy
We have not paid any dividends on our Common
Stock and do not intend to pay any dividends in the foreseeable future.
Stockholders of Record
As of March 23, 2023, we have 669 recorded holders
of our Common Stock. This number excludes any estimate by us of the number of beneficial owners of shares held in street name, the accuracy
of which cannot be guaranteed.
Effective August 11, 1993, the SEC adopted Rule
15g-9, which established the definition of a “penny stock,” for purposes relevant to the Company, as any equity security
that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions.
For any transaction involving a penny stock, unless exempt, the rules require: (i) that a broker or dealer approve a person’s account
for transactions in penny stocks; and (ii) that the broker or dealer receive from the investor a written agreement to the transaction,
setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person’s account for transactions
in penny stocks, the broker or dealer must (i) obtain financial information and investment experience and objectives of the person; and
(ii) make a reasonable determination that the transactions in penny stocks are suitable for that person and that person has sufficient
knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer
must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the Commission relating to the penny
stock market, which, in highlight form, (i) sets forth the basis on which the broker or dealer made the suitability determination; and
(ii) states that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Disclosure also
has to be made about the risks of investing in penny stock in both public offerings and in secondary trading, and about commissions payable
to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available
to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information
for the penny stock held in the account and information on the limited market in penny stocks.
Transfer Agent
The transfer agent for our capital stock is Standard
Registrar and Transfer Company, Inc., located at 440 East 400 South, Suite 200, Salt Lake City, UT 84111. Their telephone number is (801)
571-8844.
Equity Compensation Plan Information
Currently, there is no equity compensation plan
in place for the Company.
Recent Sales of Unregistered Securities
During the fiscal years ended December 31, 2022,
2021, and 2020, we did not have sales of unregistered securities other than those already disclosed in the quarterly reports on Form
10-Q in the fiscal years 2022, 2021, and 2020 and current affair reports on Form 8-K, and the following transaction.
ITEM 6. RESERVED
As a Smaller Reporting Company, as defined by
Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore
are not required to provide the information requested by this Item.
ITEM 7. MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of financial
condition and results of operations relates to the operations and financial condition reported in the consolidated financial statements
of the Company thereto, which appear elsewhere in this Report, and should be read in conjunction with such financial statements and related
notes included in this Report. Except for the historical information contained herein, the following discussion, as well as other information
in this Report, contain “forward-looking statements,” within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the “safe harbor” created
by those sections. Actual results and the timing of the events may differ materially from those contained in these forward-looking statements
due to many factors, including those discussed in the “Forward-Looking Statements” set forth elsewhere in this Report.
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 March 12, 2018, the Board, with the consent
of the majority shareholder, approved a 1-for-464 reverse stock split. On April 11, 2018, the reverse split became effective.
On April 18, 2018, the Company entered into a
Share Purchase Agreement (the “SPA”) with Mr. Ban Siong Ang (the “Purchaser”) and Mr. Dan Masters (the “Seller”),
pursuant to which the Purchaser acquired 1,021,051,700 shares, representing 98.91% of the issued and outstanding shares of common stock
of the Company (“Common Stock”) from Seller for an aggregate purchase price of $335,000 (“Share Purchase”). As
a result of the SPA, 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 of the Company. Mr. Tan was appointed as Executive Director of the Company.
Ms. Wendy Wei Li was appointed as Chief Financial Officer. On February 28, 2021, Ms. Wendy Wei Li resigned from her position with the
Company as the Chief Financial Officer. To fill the vacancies created by Ms. Wendy Wei Li’s resignation, Mr. Ang was appointed
as the Chief Financial Officer. On November 30, 2021, Mr. Bo Lyu has been appointed as the Chief Financial Officer. On February 17, 2023,
the board of directors of the Company appointed Mr. Zengqiang Lin as an independent director of the Company, effective 17, 2023
On July 3, 2018, the Company changed its name
to Heyu Biological Technology Corporation, with a new ticker symbol, HYBT. The Company currently has no business operations. 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.
On September 25, 2018, the Financial Industry
Regulatory Authority, Inc. (the “FINRA”) announced the Forward Split with an Effective Date of September 25, 2018 and a Pay
Date of September 24, 2018. In connection with the Forward Split, no fractional shares are necessary to be issued, and stockholders do
not need to present certificates for exchange. The Forward Split will be payable directly to each stockholder by the issuance of shares
representing the split differential.
On October 8, 2018, the Company entered into
a non-binding letter of intent with Fujian Shanzhiling Biological Technology Co., Ltd (the “Acquirer”), 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”). The closing of the Shanzhiling Acquisition is subject to customary
terms and conditions, including, but not limited to, completion of due diligence, negotiation and execution of definitive transaction
documents between the parties and the delivery of audited and unaudited financial statements of the Target as required under applicable
rules of the Securities and Exchange Commission. In addition, completion of the transaction is subject to approval by our Board.
On October 18, 2018, the Company entered into
a non-binding memorandum of cooperation with Luoyang Ditiantai Agricultural Development Co., Ltd. (“Ditiantai”), a Chinese
industrial agricultural chain enterprise, and on October 19, 2018, the Company entered into a non-binding letter of intent with Ditiantai.
Pursuant to the two documents, the Company agreed to acquire 51% of the outstanding capital of Ditiantai subject to certain adjustment
provisions (the “Ditiantai Acquisition”). The letter of intent has been terminated, and the Company is not pursuing
this proposed acquisition any further.
On January 17, 2019, Jiashierle (Xiamen) Healthcare
Technology Co., Ltd. (“JSEL”), a limited liability company incorporated under the laws of the People’s Republic of
China (the “PRC”), and an indirect wholly owned subsidiary of the Company, entered into a Share Transfer Agreement (the “Share
Transfer Agreement”) with Mr. Yu Xu (“Mr. Xu”), an individual 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”). Pursuant to the
Share Transfer Agreement, Mr. Xu transferred 60% of the equity interests of Kangzi to JSEL on January 17, 2019 for the purpose of developing
a joint venture in the business of selling medical equipment. In return, JSEL would fund the operations of Kangzi in proportion to its
equity interest in Kangzi. Kangzi owned no assets and conducts no business operation of its own. As a result, as of January 17, 2019,
Kangzi became an indirect subsidiary of the Company.
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.
Since the beginning of 2019, Mr. Xu has led the
core research and development team of Kangzi to develop and manufacture a new medical product, the Submillimeter Wave (Terahertz) Quantized
Space Therapy Chamber (the “Chamber”). Utilizing submillimeter waves, the Chamber is a medical equipment designed to treat
cancer through cold nuclear fusion caused by cosmic ray muons in an enclosed chamber. Specifically, we believe that exposure to an appropriate
amount of submillimeter waves could accelerate the generation of a large number of cosmic ray muons inside the human body and that such
cosmic ray muons could further facilitate cold nuclear fusion, which could reverse the cancering process through which selenium is converted
into nickel inside cells.
The team consists of researchers whom have extensive
experience in medicine and physics. The lead scientist of the team, Mr. Xu, had served as the deputy chief engineer of the New Energy
Base of the National Defense-Science and Technology Commission in 1995, as the chairman and chief scientist of Shanghai Guangcon New
Energy Technology Co., Ltd. from 2011 to 2019, and the director of Shanghai Hengbian New Energy Research Institute from 2003 to 2008.
In 2012, Mr. Xu was rewarded the “Harmony-Person of the Year in China” at the “2011 Harmony China Annual Summit”
in Beijing and recognized as “Leaping China: One of the Most Influential People of the Year in 2011” by China International
Economic and Technical Cooperation Promotion Association, China Elite Culture Promotion Association, and China Outstanding Chinese Merchants
Association. In 2013, the Organizing Committee of Boau Forum on Asian SME Development awarded Mr. Xu “2013 China Economic Outstanding
Contribution Award.”
Pursuant to the terms of the Share Transfer Agreement
entered into by JSEL and Kangzi on January 17, 2019, JSEL has the right to monitor and manage all aspects of operation of Kangzi, including
its research and development activities relating to the Chamber. As the development of the Chamber enters its final stage at Kangzi,
JSEL started accepting pre-orders for the Chamber in September. Subsequently, on October 15 2019, JSEL entered into a clinical cooperation
agreement (the “Clinical Cooperation Agreement”) with Shenzhen Saikun Biotechnology Co., Ltd. (“Saikun”). Pursuant
to the Clinical Cooperation Agreement, Saikun agreed to pay JSEL 5.5 million RMB as the total preordering payment. 1.5 million RMB and
1.5 million RMB were delivered to JSEL respectively on September 7 and September 27, 2019. The parties are working on the timing for
payment of the remaining 2.5 million RMB due under the Clinical Cooperation Agreement. In exchange, JSEL is obligated to purchase all
the components of a Chamber from Kangzi, fully assemble it, and conduct a clinical trial with Saikun, third-party hospital partners,
and patients using the Chamber. Specifically, after receiving the full amount of payment from Saikun, JSEL shall transport the Chamber
to its preferred location, properly install it, and conduct a clinical trial that lasts at least one month. During the clinical trial,
JSEL shall provide training sessions regarding the proper operation of the Chamber to Saikun’s employees. Both Saikun and JSEL
are obligated to find third-party hospitals whom will agree to act as partners to co-host the clinical trial and patients whom will be
voluntarily willing to undergo treatment provided by the Chamber. While Saikun is responsible for various expenses related to the clinical
trial, JSEL is responsible for communicating with patients receiving treatment and other patient-related administrative matters. When
JSEL determines that Saikun is capable of properly operating the Chamber and managing activities related to the Chamber, Saikun may request
JSEL to move the Chamber to a location designated by Saikun and reinstall it. Furthermore, upon the successful completion of the clinical
trial, JSEL shall provide Saikun governmental permits necessary for the operation of the Chamber, and Saikun shall operate the Chamber
and provide related services to patients under the supervision of JSEL. In addition, JSEL shall transfer the right of using the Chamber
and any beneficiary right affiliated to using the Chamber to Saikun upon receiving the full amount of payment from Saikun. JSEL, nevertheless,
owns all the intellectual property rights affiliated with the Chamber. If the two parties decide to terminate the Clinical Cooperation
Agreement prior to the expiration of the term, Saikun’s right of using the Chamber during the term is still effective as long as
its use of the Chamber does not infringe any of JSEL’s intellectual property rights affiliated with the Chamber. The two parties
agreed that the term of the Clinical Cooperation Agreement would not end until Kangzi successfully obtains permits issued by relevant
government entities supervising development and sale of medical equipment.
To prepare for the mass production of Chambers,
Kangzi had conducted clinical experiments to make further improvements on Chamber and adjusting features of the mass-production mold
for Chamber and planned to obtain official governmental permits from relevant government authorities to produce and sell Chambers on
a national scale. As its long-term business strategy, Kangzi had focused on researching, developing, and manufacturing high-technology
medical equipment while targeting both individual and institutional customers and planned to massively manufacture Chambers in small
and medium sizes, establish operation centers to sell Chambers in various cities across China, initiate advertising and marketing campaigns
on different media platforms, and monetize on services provided to customers who use Chambers and other medical products. Our research
and development (“R&D”) activities were primarily carried out by Kangzi. However, due to the impact of COVID-19 and a
lack of funds, Kangzi has suspended its operations, and there have been no R&D activities or R&D expenses incurred since 2020.
At present, we are still evaluating the possibility and timing of resuming R&D activities, but no definitive conclusion has been
reached yet.
Liquidity and Capital Resources
The following chart provides a summary of our
balance sheets on for the fiscal years ended December 31, 2022 and 2021, and should be read in conjunction with the financial statements,
and notes thereto, included with this Report at Part II, Item 8, below.
Year ended December 31 | |
2022 | | |
2021 | |
Cash and cash equivalents | |
$ | 11,428 | | |
$ | 4,323 | |
Other receivables, net | |
$ | 17,845 | | |
$ | 29,608 | |
Advances to suppliers | |
$ | 3,131 | | |
$ | 3,446 | |
Total current assets | |
$ | 32,404 | | |
$ | 37,377 | |
Total assets | |
$ | 32,404 | | |
$ | 93,549 | |
Accounts payable | |
$ | 16,150 | | |
$ | 17,356 | |
Accrued expenses and other payable | |
$ | 285,081 | | |
$ | 283,874 | |
Advances from customers | |
$ | 434,890 | | |
$ | 471,788 | |
Related party payable | |
$ | 1,268,749 | | |
$ | 1,072,293 | |
Total current liabilities | |
$ | 2,005,010 | | |
$ | 1,903,401 | |
Total liabilities | |
$ | 2,005,010 | | |
$ | 1,903,401 | |
Accumulated deficit | |
$ | (19,886,700 | ) | |
$ | (19,621,121 | ) |
Total stockholders’ deficit | |
$ | (1,972,606 | ) | |
$ | (1,809,852 | ) |
As of December 31, 2021, we had assets of $93,549,
which mainly consisted of $29,608 in Other receivables, net and $56,172 in Operating lease right-of-use asset; we had liabilities of
$1,903,401, which mainly consisted of $1,072,293 in Related party payables, $471,788 in Advances from customers, $283,874 in Accrued
expenses and other payable and 58,073 in Operating lease liability - current portion; we had an accumulated deficit of $19,621,121.
As of December 31, 2022, we had assets of $32,404,
which mainly consisted of $17,845 in Other receivables, net; we had liabilities of $2,005,010, which mainly consisted of $1,268,749 in
Related party payables, $434,890 in Advances from customers, and $285,081 in Accrued expenses; we had an accumulated deficit of $19,886,700
.
Results of Operations
The following chart provides a summary of our
results of operations for the fiscal years ended December 31, 2022 and 2021 and should be read in conjunction with the financial statements,
and notes thereto, included with this Report at Part II, Item 8, below.
From the period of the Liquidation on December
28, 2016 to September 6, 2019, we had been a shell company without any significant assets or operations. Since September 7, 2019, we
are no longer a shell company due to the business operation of Kangzi and the first amount of preordering payment received from Saikun.
For a detailed description, please see “Overview” above.
| |
Fiscal Year ended
December 31, | |
| |
2022 | | |
2021 | |
Revenue – related parties, net | |
$ | 78,953 | | |
$ | 96,478 | |
Total operating expenses | |
| 317,347 | | |
| 228,999 | |
Loss from operations | |
| (265,779 | ) | |
| (162,836 | ) |
Total other income (expense) | |
| 200 | | |
| (184 | ) |
Income tax | |
| - | | |
| - | |
Net loss | |
$ | (265,579 | ) | |
$ | (163,020 | ) |
Basic net loss per share | |
$ | (0.00 | ) | |
$ | (0.00 | ) |
We had $78,953 in revenues in the fiscal year
ended December 31, 2022 and $96,478 in revenues in the fiscal year ended December 31, 2021. Our expenses during the fiscal year ended
December 31, 2022, were $317,347, as compared to $228,999 for the fiscal year ended December 31, 2021. The increase in the expenses was
mainly due to increase in agency expenses, consulting fees and other office expenditures. Our agency expenses incurred in the fiscal
year ended December 31, 2022 was $62,045, as compared to $11,550 in the fiscal year ended December 31, 2021. Our consulting fees incurred
in the fiscal year ended December 31, 2022 was $55,293, as compared to $2,575 in the fiscal year ended December 31, 2021. Our other office
expenditures incurred in the fiscal year ended December 31, 2022 was $5,845, as compared to $4,136 in the fiscal year ended December
31, 2021. We will depend upon our shareholders to make loans to the Company to meet any costs that may occur. All such advances will
be interest-free loans or equity contributions. We have received customer prepayments for our new medical product and services pursuant
to the Clinical Cooperation Agreement. When we start fulfilling our obligations under the Clinical Cooperation Agreement, we expect to
see significant increase in revenue.
We generally sign a purchase and sale agreement
with a customer upon receiving the customer’s order. The customer will make payment to Mr. Ban Siong Ang, which will then be transferred
by Mr. Ban Siong Ang to the Company. Upon receipt of the payment, we will purchase the goods to fulfill the order. We will deliver the
goods to the customer or make the goods available for pick-up at our principal executive offices within one to two weeks from the payment
date. As we only keep goods for sale for a very short period of time and our sale volume is limited, we might have limited or no inventory
at any given time. There was no inventory at the end of a fiscal year period.
Revenue recognition
Our Shanghai Subsidiary received a payment
deposit from a customer who intended to purchase our product, the “space capsule”. However, our “space capsule”
product is classified as a medical device pursuant to the applicable PRC laws and regulations. According to the Measures on the Supervision
and Administration of the Business Operations of Medical Devices, which was promulgated by CFDA on July 30, 2014 and amended on November
17, 2017 and March 10, 2022, and took effect on May 1, 2022 and the Regulations on Supervision and Administration of Medical Devices
promulgated by the State Council on January 4, 2000, amended on March 7, 2014, May 4, 2017 and February 9, 2021, in order to sell this
product, our Shanghai Subsidiary is required to obtain a “Medical Equipment Business License” from the PRC Market Supervision
Administration.
To date, our Shanghai Subsidiary has not obtained
such license and thus, we are unable to proceed with selling the product to the customer. The customer has not requested a refund of
the deposit, although the customer is entitled to do so. Consequently, we have classified the deposit received from the customer as “unearned
revenue”. Recognition of this sales revenue is contingent upon our Shanghai Subsidiary obtaining the necessary permit to sell the
product to the customer.
The timeline for obtaining the Medical Equipment
Business License is uncertain and depends on the approval process of the relevant PRC government authorities. As a result, we are currently
unable to determine when such revenue can be recognized.
Cost of Revenue
The following chart provides a summary of
our cost of revenue for the fiscal years ended December 31, 2022 and 2021 and should be read in conjunction with the financial statements,
and notes thereto, included with this Report at Part II, Item 8, below.
|
For the Year Ended December 31, | |
|
2022 | | |
2021 | |
|
USD | | |
% | | |
USD | | |
% | |
Cost of revenues: |
| | |
| | |
| | |
| |
Disinfectant sprays |
| 7,504 | | |
| 27.41 | % | |
| 8,175 | | |
| 26.97 | % |
Healthcare instruments |
| 18,659 | | |
| 68.14 | % | |
| 22,140 | | |
| 73.03 | % |
Others |
| 1,220 | | |
| 4.46 | % | |
| | | |
| | |
Total |
| 27,385 | | |
| 100.0 | % | |
| 30,315 | | |
| 100.0 | % |
Our cost of revenue consists of goods purchased
from third parties, including disinfectant sprays, healthcare instruments, and other items. Our cost of revenue for the years ended December
31, 2022 and 2021 was $27,385 and $30,315, respectively. The decrease in cost of revenue was due to decrease in revenues.
Research and Development Activities
Our research and development (“R&D”)
activities were primarily carried out by our Shanghai Subsidiary. However, due to the impact of COVID-19 and a lack of R&D funds,
the Shanghai Subsidiary suspended its operations, and there have been no R&D activities and no R&D expenses since 2020. At present,
we are still evaluating the possibility and timing of resuming R&D activities, but no definitive conclusion has been reached yet.
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. The Company had an accumulated deficit of $19,886,700 and a net loss of $265,580 for the fiscal year ended December
31, 2022.
Off-balance sheet arrangements
As of December 31, 2022 and 2021, we did not
have any off-balance sheet arrangements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
Pursuant to Item 305(e) of Regulation S-K (§
229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,”
as defined by Rule 229.10(f)(1).
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA
The consolidated financial statements and supplementary
data required with respect to this Item 8, and as identified in Item 15 of this Report, are included in this Report.
ITEM 9. CHANGES OF INDEPENDENT CERTIFYING
ACCOUNTANT
None.
ITEM 9A. 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. To remediate the material weakness, our Chief Financial Officer, as a member
of CPA Australia, hence a Certified Public Accountant in Australia, has attended professional trainings regarding applying GAAP on a
regular basis. In the near future, we also intend to hire more personnel with sufficient training and experience in GAAP.
Management’s Annual Report on Internal
Control over Financial Reporting
Our management is responsible for establishing
and maintaining adequate internal control over financial reporting, as such item is defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act, for the company. Internal control over financial reporting includes those policies and procedures that: (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations
of its management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of our assets that could have a material effect on the financial statements.
Under the supervision and with the participation
of our current chief executive officer we conducted an evaluation of the effectiveness of our internal control over financial reporting
as of December 31, 2022, based on the framework set forth in Internal Control-Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). Based on our evaluation under this framework, current management concluded
that our internal control over financial reporting was not effective as of the evaluation dates due to the same reasons illustrated in
“Evaluation of Disclosure Controls and Procedures” above.
Changes in Internal Control over Financial
Reporting
There was no change in our internal control over
financial reporting that occurred during the fiscal year ended December 31, 2022, 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.
ITEM 9B. OTHER INFORMATION
None.
Item
9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
PART
III
ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The
following table sets forth information regarding each of our current directors and executive officers:
Name |
|
Age |
|
Position |
Ban
Siong Ang |
|
49 |
|
Chairman
of the Board, Chief Executive Officer, and President |
Hung
Seng Tan |
|
62 |
|
Executive
Director |
Bo
Lyu |
|
44 |
|
Chief
Financial Officer |
Kwee
Huwa Tan |
|
59 |
|
Director |
Stephan
Truly Busch |
|
70 |
|
Director |
Senad
Busatlic |
|
44 |
|
Director |
Zengqiang
Lin |
|
27 |
|
Director |
Business
Experience
The
following is a brief account of the education and business experience of each director and executive officer of the Company: (1) such
person’s name; (2) the year in which such person was first elected a director of the Company; (3) all positions and offices with
the Company held by such person; (4) the business experience of such person during the past five years; (5) certain other directorships,
if any, held by such person; and briefly discusses the specific experience, qualifications, attributes or skills that led to the conclusion
that each such person should serve as a director for us.
Mr.
Ban Siong Ang has been our Chairman of the Board, Chief Executive Officer, and President since April 18, 2018. Mr. Ang was appointed
as the Group CEO and Managing Director of HEYU Leisure Holidays Corporation (“HEYU Leisure”) in 2014. He also served as interim
CFO of HEYU Leisure prior to the joining of new CFO. He graduated from the University of Southern Queensland, Australia, in 1998 and
completed his Doctor of Philosophy in International Finance (Honoris Causa) from Gideon Robert University in 2017. Upon his graduation
from the University of Southern Queensland, he started his career and worked as Senior Officer in Bursa Malaysia Depository Sdn Bhd (formerly
known as Kuala Lumpur Stock Exchange) between 1998 and 2004. From 2004 to 2009, he served as the Director and principal consultant for
Golden Design Renovation and Construction Sdn Bhd. Between 2010 and 2011, he served as General Manager and Directors for E-World Films
Production Limited, Big Mine (Hong Kong) Private Limited and Asia Morgan Foundation Financial Ltd. In 2012, he founded Heyu Group of
Companies in China, Hong Kong, and Malaysia. Heyu Group of Companies are engaged in Leisure and Hotels management, club membership,
Biotechnology, Finance and Investment, Food & Beverage, Brand Franchising, Advance Entertainment Technology, Event Management,
Property Development and Management, land & real estate property development, etc. He is responsible for the formulation and implementation
of the Heyu Group of Companies’ corporate strategies as well as in charge of the corporate finance and investment management aspects
of the Group due to his acute knowledge with rich experience, strong commitment, innovative and dynamic personality. He obtained a few
Professional Institution Fellowship recognitions from the United Kingdom and also as a member of “The Academic Council on the United
Nations System (ACUNS)” in Canada. In view of Mr. Ang humanitarian contributions, he was certified as ASRIA CSR-CAP in recognizing
his outstanding contributions to establish, promote and protect humanity, Peace, Culture Human resource development and Education for
the well-being of human society through volunteerism. He was also bestowed the Royal Orders from the State of Pahang in Malaysia.
Mr.
Hung Seng Tan has been our Executive Director since April 18, 2018. Mr. Tan was appointed as an Executive Director of HEYU Leisure
from 2014 to March 2018. Between March 1980 and February 1984, he worked at Hotels and Restaurants
in the United States of America. In June 1984, he started his own business venture in Malaysia and served as the Managing Director of
Mesin Engineering Sdn Bhd in the field of quarry construction and trading business. Mr. Tan is a prominent hands-on specialist in town
with 30 years’ experience in the quarry business (river and marine sand exploratory) and the earthworks construction business in
Malaysia in which he has completed a few important infrastructure projects since 1984. He has been sitting on the Board of Directors
of Mesin Engineering Sdn Bhd and Hang Seng Constructions in Malaysia since 1996. Mr. Tan’s individual qualifications and skills
that led to the conclusion that he should serve as the Executive Director of our Company.
Mr.
Bo Lyu has been our Chief Financial Officer since November 30, 2021. Prior to joining the Company, Mr. Bo Lyu served as financial
controller of Building Dreamstar Technology Inc. from August 2020 to October 2021. From December 2017 to April 2019, Mr. Lyu served as
the board secretary of Dragon Victory International Limited (Nasdaq: LYL). From 2014 to August 2017, Mr. Lyu served as the board secretary
of Hailiang Education Group Inc. (Nasdaq: HLG). From 2009 to 2013, Mr. Lyu worked as an investment manager in Hailiang Group Co. Ltd.,
the then-parent company of Hailiang Education Group Inc., Zhejiang Hailiang Co. Ltd. (SSE Listed: 002203), and Hailiang International
Holding Co. Ltd. (HKSE listed: 02336). Mr. Lyu received his bachelor’s degree in international investment from Wuhan University
in 2001 and his master’s degree in Finance from the National Economics Department of Albert-Ludwigs-Universität Freiburg in
2008. He also holds the Certificate of Board Secretary from Shenzhen Stock Exchange and is a CFA II candidate.
Ms.
Kwee Huwa Tan has been our director since October 12, 2018. She is a sales & marketing expert with a strong entrepreneurial spirit.
She is the founder and Chief Executive Officer of Isbel Beauty Centre, a provider of primer skin care products, since its incorporation
in 2012. Ms. Tan has also served as the Chief Advisor to Heyu Biological Technology Corporation (Xiamen) since 2013, where she was
tasked with developing networking opportunities, analyzing profitability of products and market potentials, and cultivating prospective
clients. Ms. Tan has also served as a director of Heyu Leisure and a member of its Nominating and Compensation Committee since 2017.
Mr.
Stephan Truly Busch has been our director since July 1, 2019. He has served as a non-executive director of Heyu Leisure Holidays
Corporation since March 2014, a Professor of Education and Linguistics of Manipur International University since May 2019, an accreditation
officer of International Accreditation Organization since January 2014, an evaluation expert of California University Foreign Credentials
Evaluation since 2010, a visiting professor of Universidad Empresarial de Costa Rica since December 2010, and an external professor at
Ansted University since September 2011. Mr. Busch has been in the teaching profession for over 40 years at different schools in Germany,
and is fluent in English, German, Bosnian, Croatian, and Serbian. From June 1973 to July 2014, Mr. Busch worked as a high school teacher
at Lessing-Realschule, a school in Germany. Mr. Busch received his Ph.D. in Education in 2014 and his master’s degree in 2010 from
Eastern Institute for Integrated Learning in Management University.
Dr. Senad
Busatlic has been our director since July 1, 2019. Dr. Senad Busatlic is a sales and marketing expert with 10 years
of experience in jump-starting sales, creating jobs, and capturing local, regional and international market trends. Dr, Busatlic has
held leadership positions in the department of sales and marketing at several multinational companies, including being a Sales Manager
at Orbico, an agent of Procter and Gamble, and Kraft Foods International from December 2001 to April 2003, a Sales Director at Megamix,
an agent of Henkel, from April 2003 to April 2005, a Sales Director at Vispack from April 2005 to March 2007, a Marketing Manager at
Coca Cola Hellenic Bottling Company from March till October 2007, and an Executive Director of Europapier-Hercegtisak from October 2007
to September 2009. Besides his professional experience, Dr. Busatlic has 10 years of academic research experience in B2B development.
His master thesis and Ph.D. thesis were devoted to discussing strategic decision-making process in sales and marketing. Since 2008,
he has published one book, three book chapters, 26 academic papers and 13 conference papers as author or co-author. In addition,
since 2010, he has supervised 18 undergraduate thesis, 17 Master thesis, and three PhD dissertations. He is currently in the process
of publishing a book with IGI Global, a leading international academic publisher headquartered in Pennsylvania, in the field of
strategic management and another book in the field of operations management. Dr, Busatlic has had several positions at the International
University of Sarajevo: from April 2012 to June 2017, Dr. Busatlic served as the head of Department of Economic and Management; from
December 2014 to June 2016, Dr. Busatlic served as the coordinator of Leadership and Entrepreneurship Center; from January 2011 to April
2012, Dr. Busatlic served as the Vice Rector for Research and External Affairs; and from October 2010 to January 2011, Dr. Busatlic served
as the Vice Dean for Faculty of Business Administration. Dr. Busatlic received his Ph.D. in Economics from Braca Karic University Belgrade in
2010.
Mr.
Zengqiang Lin has been our independent director since February 17, 2023. Mr. Zengqiang Lin is the founder and has served as the chairman
of the board of directors of Fuqing Hongchang Food Co., Ltd, a biotechnology-led food trading company since 2017. Prior to his current
role, Mr. Lin served as the general manager of Fujian Yuweixiang Frozen Food Co., Ltd, a leading enterprise in the food operation and
processing industry, from June 2016 to December 2017. He also held the position of manager at Xizang Changhui Construction Engineering
Co., Ltd from July 2015 to May 2016. Mr. Lin has a wealth of experience in business operation, supply chain management, and market expansion.
Mr. Lin graduated from Fuzhou Foreign Trade College.
Family
Relationships
Our
Executive Director, Mr. Tan, is the brother in law of our Chairman of the Board, Chief Executive Officer, and President, Mr. Ang. None
of our other directors or executive officers has a family relationship as defined in Item 401 of Regulation S-K.
Involvement
in Certain Legal Proceedings
To
the best of our knowledge, none of our directors or executive officers has, during the past ten years:
|
● |
been
convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor
offenses); |
|
● |
had
any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business
association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years
prior to that time; |
|
● |
been
subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction
or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in
any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be
associated with persons engaged in any such activity; |
|
● |
been
found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated
a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; |
|
● |
been
the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently
reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged
violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions
or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution,
civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting
mail or wire fraud or fraud in connection with any business entity; or |
|
● |
been
the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization
(as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange
Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons
associated with a member. |
Director
Independence
After
review of all relevant transactions or relationships between each director, or any of his or her family members, our Board has determined
that Ms. Kwee Huwa Tan, Mr. Stephan Truly Busch, Mr. Senad Busatlic, and Mr. Zengqiang Lin are “independent directors” as
defined under the NASDAQ listing standards. Pursuant to the applicable NASDAQ listing standards, an “independent director”
refers to a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship
which, in the opinion of the company’s board of directors, would interfere with the director’s exercise of independent judgment
in carrying out the responsibilities of a director.
Board
Meetings
The
Board did not hold any meeting during the fiscal year ended December 31, 2022.
Committees
of the Board of the Company
We
do not have a standing nominating, compensation, or audit committee. Rather, our full Board performs the functions of these committees.
We do not believe it is necessary for our Board to appoint such committees because the volume of matters that come before our Board for
consideration permits the directors to give sufficient time and attention to such matters to be involved in all decision making. Additionally,
because our Common Stock is not listed for trading or quotation on a national securities exchange, we are not required to have such committees.
Code
of Ethics
We
have not adopted a formal Code of Ethics. The Board evaluated the business of the Company and the number of employees and determined
that since the business is operated by a small number of persons, general rules of fiduciary duty and federal and state criminal, business
conduct, and securities laws are adequate ethical guidelines. In the event that our operations, employees, and directors expand in the
future, we may take actions to adopt a formal Code of Ethics.
Compliance
with Section 16(a) of the Securities Exchange Act
Section
16(a) of the Exchange Act requires our directors, executive officers, and greater than 10% beneficial owners of our Common Stock to file
reports of ownership and changes in ownership with the SEC. Directors, executive officers, and greater than 10% stockholders are required
by the rules and regulations of the SEC to furnish us with copies of all Section 16(a) reports they file. Based solely on the Company’s
review of the copies of such forms it has received and written representations from certain reporting persons with respect to the period
from January 1, 2021 through December 31, 2022, the Company believes that all of its officers, directors and greater than 10% beneficial
owners, complied with all Section 16(a) filing requirements applicable to them during the Company’s most recently completed fiscal
year.
ITEM
11. EXECUTIVE COMPENSATION
The
following is a summary of the compensation we paid to our executive officers, for the fiscal years ended December 31, 2022 and 2021 for
the Company.
Name and Principal Position | |
Year | |
Salary ($) | |
Bonus ($) | |
Stock
Awards ($) | |
Option
Awards ($) | |
Non-Equity
Incentive Plan
Compensation ($) | |
Nonqualified
deferred
compensation
earnings ($) | |
All Other
Compensation ($) | |
Total ($) | |
Ban Siong Ang, | |
2022 | |
$ | 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
Chief Executive Officer and President(1) | |
2021 | |
$ | 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Wendy Wei Li, | |
2022 | |
$ | 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
$ | 0 | |
Chief Financial Officer(2) | |
2021 | |
$ | 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
$ | 0 | |
| |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Bo Lyu, | |
2022 | |
$ | 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
Chief Financial Officer(3) | |
2021 | |
$ | NA | |
| NA | |
| NA | |
| NA | |
| NA | |
| NA | |
| NA | |
| NA | |
(1) |
Mr.
Ang has served as the Chief Executive Officer and President of the Company since April 18, 2018. |
(2) |
Ms.
Li served as the Chief Financial Officer of the Company from April 18, 2018 to February 28, 2021. |
(3) |
Mr.
Lyu has served as the Chief Financial Officer of the Company since November 30, 2021 |
Aggregated
Option Exercises and Fiscal Year-End Option Value Table
There
were no stock options exercised since the date of our inception by the executive officers named in the Summary Compensation table above.
Long-Term
Incentive Plan (“LTIP”) Awards Table
There
were no awards made to any named executive officers in the last completed fiscal year under any LTIP.
Employment
Agreements
The
Company has entered into employment agreements with officers and other key employees.
Compensation
of Directors
The
following is a summary of the compensation we paid to our directors, for the fiscal years ended December 31, 2022 and 2021 for the Company.
Name | |
Year | |
Fees Earned or Paid in Cash ($) | |
Stock Awards ($) | |
Option Awards ($) | |
Non-Equity Incentive Plan Compensation ($) | |
Nonqualified deferred compensation earnings ($) | |
All Other Compensation ($) | |
Total ($) | |
Ban Siong Ang | |
2022 | |
$ | 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| |
2021 | |
$ | 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Kwee Huwa Tan | |
2022 | |
$ | 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| |
2021 | |
$ | 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Stephan Truly Busch | |
2022 | |
$ | 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| |
2021 | |
$ | 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Senad Busatlic | |
2022 | |
$ | 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| |
2021 | |
$ | 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
We
do not currently have an established policy to provide compensation to members of our Board for their services in that capacity.
Option
Plan
We
currently do not have a Stock Option Plan. However, we may to issue stock options pursuant to a Stock Option Plan in the future. Such
stock options may be awarded to management, employees, and members of the Board and consultants of the Company.
ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The
following table provides the names and addresses of each person known to us to own more than 5% of our outstanding shares of common stock
as of the date of this Report, and by the officers and directors, individually and as a group. Unless otherwise indicated herein, the
address for the beneficial owners listed below is Room 903&904, Huli Building, 619 Sishui Street, Huli District, Xiamen City, Fujian
Province, China, 361009.
Title of Class | |
Name and Address of Beneficial Owner(1) | |
Amount(2) | | |
Percent of Class(3) | |
| |
Directors and named Executive Officers | |
| | |
| |
Common Stock | |
Ban Siong Ang | |
| 912,044,839 | | |
| 88.337 | % |
| |
| |
| | | |
| | |
Common Stock | |
Hung Seng Tan | |
| 50,000,000 | | |
| 4.843 | % |
| |
| |
| | | |
| | |
Common Stock | |
Bo Lyu | |
| - | | |
| 0 | % |
| |
| |
| | | |
| | |
Common Stock | |
Kwee Huwa Tan EW15-5, Regency Condo, Jalan Pelangi, 41300 Klang, Selangor, Malaysia | |
| 8,000,000 | | |
| 0.775 | % |
| |
| |
| | | |
| | |
Common Stock | |
All Directors and executive officers as a group (four persons) | |
| 970,044,839 | | |
| 93.955 | % |
| |
| |
| | | |
| | |
| |
5% Security Holders | |
| | | |
| | |
| |
N/A | |
| | | |
| | |
(1) |
Except
as otherwise indicated, the persons named in this table have sole voting and investment power with respect to all shares of common
stock shown as beneficially owned by them, subject to community property laws where applicable and to the information contained in
the footnotes to this table. |
(2) |
The
number of shares of Common Stock reflect the 100-for-1 forward stock split effective on September 25, 2018. |
(3) |
Beneficial
ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Pursuant to Rules 13d-3 and 13d-5 of the Exchange Act, beneficial ownership includes any shares
as to which a stockholder has sole or shared voting power or investment power, and also any shares which the stockholder has the
right to acquire within 60 days, including upon exercise of common shares purchase options or warrants. |
ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Related
Person Transactions
Other
than compensation agreements and other arrangements described herein and our transactions described below, since our inception there
has not been, nor is there currently proposed, any transaction or series of similar transactions to which we were or will be a party:
|
● |
in
which the amount involved exceeded or will exceed $120,000; and |
|
● |
in
which any current director, executive officer, holder of 5% or more of our shares of Common Stock on an as-converted basis or any
member of their immediate family had or will have a direct or indirect material interest. |
We
had $96,478 revenues in the fiscal year ended December 31, 2021. A director of the Company extended a zero-interest loan for the Company
to cover all the operation expenses totalling $162,410 for the year ended December 31, 2021.
We
had $78,953 revenues in the fiscal year ended December 31, 2022. Two shareholders of the Company extended a zero-interest loan for the
Company to cover all the operation expenses totaling $196,457 for the year ended December 31, 2022.
ITEM
14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The
following table provides information about the fees billed to us for professional services rendered by external accounting firms and
auditing firms during fiscal years 2022 and 2021:
| |
2022 | | |
2021 | |
Audit Fees | |
$ | 18,500 | | |
$ | 17,000 | |
Audit-Related Fees | |
| - | | |
| - | |
Tax Fees | |
| - | | |
| - | |
All Other Fees | |
| - | | |
| | |
Total | |
$ | 18,500 | | |
$ | 17,000 | |
Audit
Fees. Audit fees consist of fees for the audit of our annual financial statements or services that are normally provided in connection
with statutory and regulatory annual and quarterly filings or engagements.
Audit-Related
Fees. Audit-related fees consist of fees for accounting, assurance and related services that are reasonably related to the performance
of the audit or review of our financial statements and are not reported as Audit Fees.
Tax
Fees. Tax fees consist of fees for tax compliance services, tax advice and tax planning. During the fiscal years of 2022 and 2021,
the services provided in this category included assistance and advice in relation to the preparation of corporate income tax returns.
All
Other Fees. Any other fees not included in Audit Fees, Audit-Related Fees, or Tax Fees.
Pre-Approval
Policies and Procedures.
Our
Board pre-approved all services to be provided by WWC, Professional Corporation.
Heyu
Biological Technology Corporation
Consolidated
Statements of Stockholders’ Deficit
| |
Heyu
Biological Shareholders’ Equity | | |
| | |
| |
| |
Common
Stock | | |
Additional | | |
Accumulated
Other | | |
| | |
Non- | | |
| |
| |
Number of
shares | | |
Par
value | | |
Paid
in Capital | | |
Comprehensive
Income | | |
Accumulated
Deficit | | |
controlling
Interest | | |
Total | |
Balance
at January 1, 2021 | |
| 1,032,466,000 | | |
| 1,032,466 | | |
| 17,149,050 | | |
| (119,033 | ) | |
| (19,458,101 | ) | |
| (228,783 | ) | |
| (1,624,401 | ) |
Foreign
currency translation adjustment | |
| - | | |
| - | | |
| - | | |
| (56,626 | ) | |
| - | | |
| 34,195 | | |
| (22,431 | ) |
Loss
for the period | |
| - | | |
| - | | |
| - | | |
| - | | |
| (163,020 | ) | |
| - | | |
| (163,020 | ) |
Balance
at December 31, 2021 | |
| 1,032,466,000 | | |
$ | 1,032,466 | | |
$ | 17,149,050 | | |
$ | (175,659 | ) | |
$ | (19,621,121 | ) | |
$ | (194,588 | ) | |
$ | (1,809,852 | ) |
| |
Common
Stock | | |
Additional | | |
Accumulated
Other | | |
| | |
Non- | | |
| |
| |
Number of
shares | | |
Par
value | | |
Paid
in Capital | | |
Comprehensive
Income (Loss) | | |
Accumulated
Deficit | | |
controlling
Interest | | |
Total | |
Balance
at January 1, 2022 | |
| 1,032,466,000 | | |
| 1,032,466 | | |
| 17,149,050 | | |
| (175,659 | ) | |
| (19,621,121 | ) | |
| (194,588 | ) | |
| (1,809,852 | ) |
Foreign
currency translation adjustment | |
| - | | |
| - | | |
| - | | |
| 123,361 | | |
| - | | |
| (20,536 | ) | |
| 102,825 | |
Loss
for the period | |
| - | | |
| - | | |
| - | | |
| - | | |
| (265,579 | ) | |
| - | | |
| (265,579 | ) |
Balance
at December 31, 2022 | |
| 1,032,466,000 | | |
$ | 1,032,466 | | |
$ | 17,149,050 | | |
$ | (52,298 | ) | |
$ | (19,886,700 | ) | |
$ | (215,124 | ) | |
$ | (1,972,606 | ) |
The
accompanying notes are an integral part of these consolidated financial statements.
Heyu
Biological Technology Corporation
Consolidated
Statements of Cash Flows
For
the year Ended December 31,
| |
2022 | | |
2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |
| | |
| |
Net loss | |
$ | (265,579 | ) | |
| (163,020 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: | |
| | | |
| | |
Change in assets and liabilities | |
| | | |
| | |
Accounts receivable | |
| - | | |
| 1,317 | |
Other receivables, net | |
| (5,115 | ) | |
| 20,205 | |
Advance to suppliers | |
| - | | |
| (101 | ) |
Operating lease right-of-use asset | |
| 56,172 | | |
| 78,143 | |
Accounts payable and accrued liabilities | |
| 15,986 | | |
| (515 | ) |
Accrued expenses and other payable | |
| 1,207 | | |
| (10,359 | ) |
Advances from customers | |
| (36,898 | ) | |
| 12,205 | |
Lease liability | |
| (58,073 | ) | |
| (79,019 | ) |
Net cash used in operating activities | |
| (292,300 | ) | |
| (141,144 | ) |
| |
| | | |
| | |
CASH FLOWS FROM INVESTING ACTIVITIES | |
| - | | |
| | |
| |
| | | |
| | |
CASH FLOWS FROM FINANCING ACTIVITIES | |
| | | |
| - | |
Proceeds from related party lending | |
| 330,598 | | |
| 162,410 | |
Repayment to related party | |
| (134,141 | ) | |
| | |
Net cash provided by financing activities | |
| 196,457 | | |
| 162,410 | |
| |
| | | |
| | |
Effect of exchange rate changes on cash | |
| 102,948 | | |
| (22,432 | ) |
| |
| | | |
| | |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | |
| 7,105 | | |
| (1,166 | ) |
| |
| | | |
| | |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | |
| 4,323 | | |
| 5,489 | |
| |
| | | |
| | |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | |
$ | 11,428 | | |
$ | 4,323 | |
| |
| | | |
| | |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | |
| | | |
| | |
Cash paid for interest | |
$ | - | | |
$ | - | |
Cash paid for income tax | |
$ | - | | |
$ | - | |
Heyu
Biological Technology Corporation
Notes
to Consolidated Financial Statements
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 (the “Share Purchase
Agreement”), 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, Dan Masters resigned from his positions as the President, Chief Executive Officer,
Chief Financial Officer, Secretary and Chairman of the Board of the Company. Such resignations took place 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’ resignation, 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 the Executive Director of the Company. Ms. Wendy Li was appointed as the Chief Financial Officer of the Company.
On February 28, 2021, Ms. Wendy Li resigned from her position with the Company as the Chief Financial Officer. To fill the vacancies
created by Ms. Wendy Wei Li’s resignation, Mr. Ang was appointed as the Chief Financial Officer. On November 30, 2021, Mr. Bo Lyu
has been appointed as the Chief Financial Officer.
On
July 3, 2018, the Company changed its name to Heyu Biological Technology Corporation and applied for 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. 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. Mr.
Xu 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 selling medical equipment. It was Mr. Xu and JSEL’s intention that JSEL would fund the operations
of Kangzi in proportion to JSEL’s equity interest in Kangzi. At the time of the share transfer, Kangzi owned no assets and conducted
no business operation.
Since
the beginning of 2019, Mr. Xu has led the core research and development team of Kangzi to develop and manufacture a new medical product,
the Submillimeter Wave (Terahertz) Quantized Space Therapy Chamber (the “Chamber”). Utilizing submillimeter waves, the Chamber
is a medical equipment designed to treat cancer through cold nuclear fusion caused by cosmic ray muons in an enclosed chamber. We believe
that exposure to an appropriate amount of submillimeter waves would accelerate the generation of a large number of cosmic ray muons inside
the human body and that such cosmic ray muons could further facilitate cold nuclear fusion, which could reverse the cancer by converting
selenium into nickel inside cells.
Our
team consists of researchers who have years of extensive experience in medicine and physics. The lead scientist of the team, Mr. Xu,
had extensive professional experience in the aforementioned fields and has served as the deputy chief engineer of the New Energy Base
of the National Defense-Science and Technology Commission in 1995, the chairman and chief scientist of Shanghai Guangzhui New Energy
Technology Co., Ltd. from 2011 to 2019, and the director of Shanghai Hengbian New Energy Research Institute from 2003 to 2008. In 2012,
Mr. Xu received the “Harmony-Person of the Year in China” award at the “2011 Harmony China Annual Summit” in
Beijing. He was recognized as “Leaping China: One of the Most Influential People of the Year in 2011” by China International
Economic and Technical Cooperation Promotion Association, China Elite Culture Promotion Association, and China Outstanding Chinese Merchants
Association. Mr. Xu also received the “2013 China Economic Outstanding Contribution Award” from the Organizing Committee
of Boau Forum on Asian SME Development.
Pursuant
to the terms of the share transfer agreement entered into by JSEL and Kangzi on January 17, 2019, JSEL has the right to monitor and manage
all aspects of operation of Kangzi, including its research and development activities relating to the Chamber. As the development of
the Chamber enters its final stage, JSEL started accepting pre-orders for the Chamber in September 2019.
The
outbreak of the novel coronavirus, commonly referred to as “COVID-19”, first found in mainland China, then in Asia and eventually
throughout the world, has significantly affected business and manufacturing activities within China, including travel restrictions, widespread
mandatory quarantines, and suspension of business activities within China. These measures have caused substantial disruptions to our
business operations. We suspended our business operation in early February 2020 due to government mandates. We partially recovered our
business operation on February 17, 2020, and on March 1, 2020, most of our staff members returned to the office and we fully resumed
our business operations on the same day. Accordingly, our business, results of operations and financial condition were adversely affected.
As of the date of this Report, Chinese industries have gradually resumed businesses as government officials started to ease the restrictive
measures since April 2020. However, as most of our top management team is an overseas team, due to the international travel ban, we still
operate under remote-working conditions, so the business of the Company is still recovering. Our management believes that our revenues
will gradually improve as the epidemic and the travel ban are lifted.
On
March 17, 2020, we entered into a business service cooperation agreement with Xiamen Qingda Intelligent Technology Co., Ltd., a wholly-owned
subsidiary of Cross-strait Tsinghua Research Institute, pursuant to which we agreed to jointly improve the plant based disinfectant spray for treating
skin infections and disinfecting wounds. The term of such agreement is three years, and can be renewed upon mutual agreement of both
parties. The original plant based disinfectant spray was developed and owned by the Company, while the improved product shall be owned
by both the Company and the Cross-strait Tsinghua Research Institute. The Cross-strait Tsinghua Research Institute will receive 2% of
gross proceeds from the sales of such improved product.
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.
As
of December 31, 2022, the details of the consolidating subsidiaries are as follows:
Name of Company | |
Jurisdiction of Formation | | |
Attributable equity interest % | |
HP Technology Limited | |
British Virgin Islands | | |
| 100 | % |
| |
| | |
| | |
Heyu Healthcare Technology Limited | |
Hong Kong | | |
| 100 | % |
| |
| | |
| | |
JSEL | |
PRC | | |
| 100 | % |
| |
| | |
| | |
Kangzi | |
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. As of December 31, 2022, the Company considered the economic implications
of the COVID-19 pandemic on its significant judgments and estimates. Given the impact and other unforeseen effects on the global economy
from the COVID-19 pandemic, these estimates required increased judgment, and actual results could differ from these estimates.
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 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.
Accounts
receivable and allowance for doubtful accounts
Accounts
receivable are stated at the historical carrying amount net of allowance for doubtful accounts. The Company maintains an allowance for
doubtful accounts which reflects its best estimate of amounts that potentially will not be collected. The Company determines the allowance
for doubtful accounts taking into consideration various factors, including but not limited to historical collection experience and credit-worthiness
of the debtors, as well as the age of the individual receivables balance. Additionally, the Company makes specific bad debt provisions
based on any specific knowledge the Company has acquired that might indicate that an account is uncollectible. The facts and circumstances
of each account may require the Company to use substantial judgment in assessing its collectability.
Inventories
Inventories
consist of finished goods, work in process, and raw materials. Inventories are stated at the lower of cost or market value. The Company
applies the weighted average cost method to its inventory.
Advances
from Customers
Advances
from customers are payments received from customers for goods or services that have not yet been delivered. Once the corresponding goods
or services are delivered, the amount in this account is transferred to a revenue account. The advance from customer account is generally
classified as a short-term liability since the amounts held in it are typically settled within 12 months. If the settlement extends beyond
12 months, they are classified as long-term liabilities instead.
Leases
The
Company adopted Accounting Standards Update No. 2016-02, Leases (Topic 842) (ASU 2016-02), as amended, which supersedes the
lease accounting guidance under Topic 840, and generally requires lessees to recognize operating and financing lease liabilities and
corresponding right-of-use (ROU) assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty
of cash flows arising from leasing arrangements.
Operating
leases are included in operating lease right-of-use (“ROU”) assets and short-term and long-term lease liabilities in our
consolidated balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities
in our consolidated balance sheets.
ROU
assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s
obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date
based on the present value of lease payments over the lease term. As most of the leases do not provide an implicit rate, we use the industry
incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.
We use the implicit rate when readily determinable. The operating lease ROU asset also includes any lease payments made and excludes
lease incentives. The lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise
that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
Adoption
of the standard resulted in the initial recognition of $215,298 of ROU assets and $215,298 of lease liabilities on our consolidated balance
sheet related to office space lease commitment on September 1, 2019.
Foreign
Currency
For
fiscal year 2021, the Company’s principal country of operations is the PRC. The accompanying consolidated financial statements
are presented in US$. 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.
| |
As of | |
| |
December 31, 2022 | | |
December 31, 2021 | |
RMB: US$ exchange rate | |
| 6.8983 | | |
| 6.3588 | |
| |
For the year ended December 31, | |
| |
2022 | | |
2021 | |
RMB: US$ exchange rate | |
| 6.7279 | | |
| 6.4499 | |
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.
Revenue
Recognition
Revenue
is recognized when control of the promised goods or services is transferred to the customers in an amount that reflects the consideration
the Company expects to be entitled to receive in exchange for those goods or services. Revenue is recognized when the following 5-step
revenue recognition criteria are met:
| 1) | Identify
the contract with a customer |
| 2) | Identify
the performance obligations in the contract |
| 3) | Determine
the transaction price |
| 4) | Allocate
the transaction price |
| 5) | Recognize
revenue when or as the entity satisfies a performance obligation |
Revenue
from product sales is recognized at the point in time control of the products is transferred, generally upon customer receipt based upon
the standard contract terms. Shipping and handling activities are considered to be fulfillment activities rather than promised services
and are not, therefore, considered to be separate performance obligations. The Company’s sales terms provide no right of return
outside of a standard quality policy and returns are generally not significant.
Cost
of Revenue
The
cost of revenue primarily consists of goods purchased from third parties, including disinfectant sprays, healthcare instruments, and
other items. The cost of revenue for the years ended December 31, 2022 and 2021 was $27,385 and $30,315, respectively.
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.
Capital
Structure
The
Company had 2,000,000,000 shares of common stock authorized, par value $0.001 per share, with 1,032,466,000 shares issued and outstanding
as of December 31, 2022, and December 31, 2021.
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.
For
the year ended December 31, 2022 and 2021, there were no potentially dilutive shares.
| |
For the year ended December 31, | |
| |
2022 | | |
2021 | |
Statement of Operations Summary Information: | |
| | |
| |
Net loss | |
$ | (265,579 | ) | |
$ | (163,020 | ) |
Weighted-average common shares outstanding - basic and diluted | |
| 1,032,466,000 | | |
| 1,032,466,000 | |
Net loss per share, basic and diluted | |
$ | (0.00 | ) | |
$ | (0.00 | ) |
NOTE
2 – GOING CONCERN
During
the year ended December 31, 2022, the Company was unable to generate cash flows sufficient to support its operations and was 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 $19,886,700 and working capital deficit of $1,972,606 as of December 31, 2022. These factors raise 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 will 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 December 31, 2022 | | |
As of December 31, 2021 | |
Bank Deposits-China & HK | |
| 11,428 | | |
| 4,323 | |
| |
$ | 11,428 | | |
$ | 4,323 | |
NOTE
4 – OTHER RECEIVABLE
Other
receivable consists of the following:
| |
As of December 31, 2022 | | |
As of December 31, 2021 | |
Rental and POS machine deposits | |
| 13,954 | | |
| 15,603 | |
Others | |
| 3,891 | | |
| 14,005 | |
Less: Allowance for doubtful accounts | |
| - | | |
| - | |
| |
$ | 17,845 | | |
$ | 29,608 | |
Management
periodically reviews account balance. If any indication occurs, the allowance for doubtful debts would be recognized. No such allowance
has been recognized during the year ended December 31, 2022.
NOTE
5 – ADVANCES TO SUPPLIERS
Advances
to suppliers consists of the following:
| |
As of December 31, 2022 | | |
As of December 31, 2021 | |
Purchases of scientific research equipment | |
| 3,131 | | |
| 3,446 | |
| |
$ | 3,131 | | |
$ | 3,446 | |
NOTE
6 – OPERATING LEASE RIGHT-OF-USE ASSET AND LIABILITIES
On
September 1, 2019, the Company entered in a lease agreement for office space, the right-of-use asset is recognized as following:
| |
As of December 31, 2022 | | |
As of December 31, 2021 | |
Operating lease right-of-use asset | |
| - | | |
| 56,172 | |
| |
$ | - | | |
$ | 56,172 | |
Operating
lease liability consist both current and noncurrent component as the following:
| |
As of December 31, 2022 | | |
As of December 31, 2021 | |
Operating lease liability - current portion | |
| - | | |
| 58,073 | |
Operating lease liability | |
| - | | |
| - | |
| |
$ | - | | |
$ | 58,073 | |
ASU
2016-02 requires that public companies use a secured incremental browning rate for the present value of lease payments when the rate
implicit in the contract is not readily determinable. We determine a secured rate on a quarterly basis and update the weighted average
discount rate accordingly. Lease terms and discount rate follow.
| |
December 31, 2022 | |
Weighted Average Remaining Lease Term (Year) | |
| - | |
Weighted Average Discount Rate | |
| 4.75 | % |
NOTE
7 – ADVANCES FROM CUSTOMERS
| |
As of December 31, 2022 | | |
As of December 31, 2021 | |
Advances from customers(1) | |
| 434,890 | | |
| 471,788 | |
| |
$ | 434,890 | | |
$ | 471,788 | |
(1) | On October 15, 2019, JSEL entered into a clinical cooperation agreement (the “Clinical Cooperation Agreement”) with Shenzhen Saikun Biotechnology Co., Ltd. (“Saikun”). Pursuant to the Clinical Cooperation Agreement, Saikun agreed to pay JSEL 5.5 million RMB as the total preordering payment. 1.5 million RMB and 1.5 million RMB were delivered to JSEL respectively on September 7 and September 27, 2019. The parties are working on the timing for payment of the remaining 2.5 million RMB due under the Clinical Cooperation Agreement. In exchange, JSEL is obligated to purchase all the components of the Chamber from Kangzi, fully assemble it, and conduct a clinical trial with Saikun, third-party hospital partners, and patients using the Chamber. Specifically, after receiving the full amount of payment from Saikun, JSEL shall transport the Chamber to its preferred location, properly install it, and conduct a clinical trial that lasts at least one month. |
NOTE
8 – ACCRUED EXPENSES AND OTHER PAYABLES
Accrued
expenses and other payables consist of the following:
| |
As of December 31, 2022 | | |
As of December 31, 2021 | |
Accrued payroll | |
| 155,078 | | |
| 166,337 | |
Other Payables | |
| 130,003 | | |
| 117,537 | |
| |
$ | 285,081 | | |
$ | 283,874 | |
Accrued
payroll includes all company employee payroll liabilities as of December 31, 2022, and other payables contains employee reimbursements.
NOTE
9 – RELATED PARTY TRANSACTIONS
As
of December 31, 2022 and 2021, the Company owed related parties $1,268,749 and $1,072,293, respectively. As the Company has just started
business activities in March 2019, all expenses incurred during this reporting period are paid by two of our shareholder, Mr. Hungseng
Tan and Mr. Ban Siong Ang, who are also directors of the Company. Expenses mainly included auditing, consulting and legal advisory expenses,
government registration expenses, and payrolls.
All
of our products are sold to our Chief Executive Officer and director of the Company, Mr. Mr. Ban Siong Ang. For the years ended December
31, 2022 and 2021, the Company earned revenues from Mr. Ban Siong Ang, in the amount of $78,593 and $96,478, respectively.
NOTE
10 – EQUITY
The
Company had not recorded any equity transactions during the year ended December 31, 2022.
The
Company had not recorded any equity transactions during the year ended December 31, 2021.
NOTE
11 – 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 has been conducting and plans to continue to conduct its major operations in the PRC through JSEL 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.
Heyu Biological Technology Corp
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