1.
Organization and principal activities
QHY
Group (the "Company", or "we"), formerly named Yakun International Investment and Holding Group ("Yakun
International"), was incorporated
under the laws of the State of Nevada on October 16, 2007. Prior to the acquisition
of PBG Water Solutions International Inc. ("PBG Water Solutions") on January 15, 2018, the Company was a development
stage company that had not generated any revenue from operations and maintained no essential assets since inception.
In
November 2017, Yakun International entered into a Share Exchange Agreement (the "PBG SEA") with PBG Water Solutions
International Inc. ("PBG Water Solutions") and its shareholders, pursuant to
which Yakun International acquired 100% of the outstanding shares of PBG Water Solutions in exchange for 46,839,439 shares of
common stock of the Company and 19,000 shares of Series A Convertible Preferred Stock (each Series A Convertible Preferred Stock
was converted into 1,000 shares of common stock) of the Company, which constituted approximately 83% of the Company's issued
and outstanding capital stock on a fully-diluted basis as of and immediately after the consummation of the acquisition. PBG Water
Solutions was incorporated under the law of the State of Delaware on August 4, 2016, and in October 2017, it merged into a company
with the same name incorporated under the law of the State of Nevada. On January 15, 2018, all parties to the SEA agreed to amend
the original agreement and consummate the transaction. Shareholders of PBG Water solutions took control of Yakun International
on the same date. As of the issuance of these financial statements. PBG Water Solutions has not generated revenue.
The
transaction was accounted for as a "reverse acquisition" since, immediately following completion of the transaction,
the shareholders of PBG Water Solutions effectively controlled the post-combination Company. For accounting purposes, PBG Water
Solutions was deemed to be the accounting acquirer in the transaction and, consequently, the transaction is treated as a recapitalization
of PBG Water Solutions (i.e., a capital transaction involving the issuance of shares by the Company for the shares of PBG Water
Solutions). Accordingly, the consolidated assets, liabilities and results of operations of PBG Water Solutions became the historical
financial statements of the Company, and assets, liabilities and results of operations of Yakun and its subsidiaries were consolidated
with PBG Water Solutions beginning on the acquisition date. No step-up in basis or intangible assets or goodwill were recorded
in this transaction.
On
December 21, 2017, Yakun International incorporated QHY Water Solutions International Corp
("QHY Water Solutions") under the law of State of Nevada as its wholly owned subsidiary.
On
July 31, 2018, the Company filed an amendment to its articles of incorporation changing its corporate name to QHY Group. The amendment
became effective August 31, 2018.
In
December 2018, the Company issued 1,515,000 shares of common stock to certain consultants for services rendered or to be rendered
(See Note 7).
In
December 2018, the Company entered into a series of securities purchase agreements with certain non-affiliate investors for the
sale of 6,655,750 shares of the Company's common stock for aggregate consideration of $2,196,500. Of the shares sold, 5,972,582
were issued to six investors for $1,851,500 and the remaining 683,168 shares were sold to a single investor for $345,000.
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