The following discussion and analysis of financial condition and results of
operations relates to the operations and financial condition reported in our
consolidated financial statements, 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 July 3, 2018, the Company changed its name to Heyu Biological Technology
Corporation and applied for a new ticker symbol HYBT.
On January 17, 2019, Jiashierle (Xiamen) Healthcare Technology Co., Ltd.
("JSEL"), a limited liability company organized 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.
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 process of
cancer by converting selenium into nickel inside cells.
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The core research and development team consists of researchers who have
extensive experience in medicine and physics. The lead scientist of the team,
Mr. Xu, served as the deputy chief engineer of the New Energy Base of the
National Defense-Science and Technology Commission in 1995, the director of
Shanghai Hengbian New Energy Research Institute from 2003 to 2008, and the
chairman and chief scientist of Shanghai Guangzhui New Energy Technology Co.,
Ltd. from 2011 to 2019. In 2012, Mr. Xu was awarded the "Harmony Person of the
Year in China" at the "2011 Harmony China Annual Summit" in Beijing. He was also
jointly 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 Small and Medium Enterprise Development awarded Mr. Xu "2013
China Economic Outstanding Contribution Award."
Pursuant to the terms of the Share Transfer Agreement, 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 2019. 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 RMB5.5 million as the total pre-order
payment. RMB1.5 million and RMB1.5 million were delivered to JSEL on September 7
and September 27, 2019, respectively. The parties are currently working on the
timing for payment of the remaining RMB2.5 million 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 Saikun's 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 that will agree to act as partners to
co-host the clinical trial and patients who will voluntarily 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 with 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 its 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 mass production of the Chambers, Kangzi is conducting clinical
experiments to make further improvements on the Chamber and adjusting features
of the mass-production mold for the Chambers. As its long-term business
strategy, Kangzi focuses on researching, developing, and manufacturing
high-technology medical equipment while targeting both individual and
institutional customers. It plans to mass-produce the Chambers in small and
medium sizes, establish operation centers to sell the Chambers in various cities
across China, and initiate advertising and marketing campaigns on different
media platforms. Kangzi will also monetize on services provided to customers who
use the Chambers and other medical products. As of the date of this Report, we
are still in the clinical experiment phase and Kangzi is still in the process of
obtaining official governmental permits from relevant government authorities to
produce and sell the Chambers on a national scale. There is no assurance that we
will obtain the official governmental permits.
In addition to business activities related to the Chamber, the Company is also
conducting research, development, manufacturing, and sale of healthcare
equipment and plant-based disinfectant spray for treating skin infections and
disinfecting wounds. 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 the parties agreed to jointly improve a plant-based disinfectant spray for
treating skin infections and disinfecting wounds. The term of such agreement is
three years, and the agreement 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
Cross-strait Tsinghua Research Institute. The Cross-strait Tsinghua Research
Institute will receive 2% of the gross proceeds from sales of such improved
product. In the near future, the Company aims to standardize the production and
sale of healthcare equipment and plant-based disinfectant spray, while
increasing its brand awareness in the healthcare markets.
Since the first quarter of 2020, there has been a worldwide impact from the
COVID-19 pandemic. Government regulations and shifting social behaviors have
limited or closed non-essential transportation, government functions, business
activities and person-to-person interactions. In some cases, the relaxation of
such trends has been followed by actual or contemplated returns to stringent
restrictions on gatherings or commerce, including in parts of the U.S., and the
rest of the world. Global trade conditions and consumer trends that originated
during the pandemic continue to persist and may also have long-lasting adverse
impact on us and our industries independently of the progress of the pandemic.
We cannot predict the duration or direction of current global trends or their
sustained impact. Ultimately, we continue to monitor macroeconomic conditions to
remain flexible and to optimize and evolve our business as appropriate, and
attempt to accurately project demand and infrastructure requirements globally
and deploy our production, workforce and other resources accordingly.
We suspended our business operation in early February 2020 due to government
mandates and most of our staff members were forced to work from home. We
partially resumed our business operations on February 17, 2020, and we fully
resumed our business operations on March 1, 2020. However, as of the date of
this Report, our management and scientists have been working remotely.
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Liquidity and Capital Resources
As of June 30, 2022, we had assets of $51,266, which consisted of current assets
of $2,110 in cash, $32,595 in other receivables, $3,226 as advances to
suppliers, and noncurrent asset of $13,335 as operating lease right-of-use
asset. We had liabilities of $1,939,180, which consisted of current liabilities
of $16,579 in accounts payable, $383,523 in accrued expenses and other payables,
$448,002 in advances from customers, $57 in taxes payable, $1,077,233 in related
party payables, and $13,786 in short-term operating lease liabilities. We had an
accumulated deficit of $19,766,427.
As of December 31, 2021, we had assets of $37,377, which mainly consisted of
$4,323 in cash and cash equivalents, $29,608 in other receivables, and $3,446 in
operating lease right-of-use. As of December 31, 2021, we had liabilities of
$1,903,401, which mainly consisted of $17,356 in accounts payable, $471,788 in
advances from customers, $17 in other taxes payables, $1,072,293 in related
party payables, and $58,073 in operating lease liabilities. We also had an
accumulated deficit of $19,621,121.
In light of the impacts of the COVID-19 outbreak, if we are required to operate
in a challenging economic environment in China, or incur unanticipated capital
expenditures, or decide to accelerate growth, we may need additional financing.
As of June 30, 2022, we had borrowed a total of $1,077,233 from our shareholders
for working capital purposes. The loan is unsecured, non-interest bearing and
payable on demand. We cannot guarantee, however, that additional financing, if
required, would be available on favorable terms, if at all. Such financing may
include the use of additional debt or the sale of the Company's equity
interests. Any financing which involves the sale of the Company's equity
interests or instruments that are convertible into the Company's equity
interests could result in immediate and possibly significant dilution to our
existing shareholders.
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Results of Operations
Comparison of the Six Months Ended June 30, 2022 and 2021
Our revenues during the six months ended June 30, 2022, were $29,522, and cost
of revenues was $9,807, as compared to revenues of $53,613 and cost of revenues
$16,742 for the same period in 2021, respectively. The decrease in our revenue
were mainly due to the worsened situation of COVID-19 outbreak.
We had incurred selling expenses of $178 and administrative expenses of $164,928
during the six months ended June 30, 2022, as compared to $686 and $136,584 for
the same period in 2021, respectively. The decrease in selling expenses was
mainly due to fewer advertising expenses for our products in the quarter ended
June 30, 2022 compared with the same period in 2021, selling expenses. The
increase in administrative expenses was mainly due to office rental expenses
during the period.
Going Concern
The accompanying financial statements are presented on a going concern basis.
The Company's financial condition raises substantial doubt about the Company's
ability to continue as a going concern. As of June 30, 2022, the Company had an
accumulated deficit of $19,766,427, and a net loss of $145,306 for the six
months ended June 30, 2022. It is relying on advances from its directors, Mr.
Hungseng Tan and Mr. Ban Siong Ang, to meet its limited operating expenses.
In light of the impacts of the COVID-19 outbreak, if the economic environment in
China worsens, or if we incur unanticipated capital expenditures or decide to
accelerate growth, we may need additional financing. As of June 30, 2022, we had
borrowed a loan from our stockholders for working capital purposes. The loan is
unsecured, non-interest bearing and payable on demand. We cannot guarantee,
however, that additional financing, if required, would be available on favorable
terms, if at all. Such financing may include the use of additional debt or the
sale of the Company's equity interests. Any financing which involves the sale of
the Company's equity interests or instruments that are convertible into the
Company's equity interests could result in immediate and possibly significant
dilution to our existing stockholders.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues, or expenses, results of operations, liquidity,
capital expenditures, or capital resources that is material to investors.
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