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Hong Yuan Holding Group – ‘10-Q’ for 9/30/22

On:  Monday, 11/14/22, at 5:01pm ET   ·   For:  9/30/22   ·   Accession #:  1493152-22-32213   ·   File #:  0-56252

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  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

11/14/22  Hong Yuan Holding Group           10-Q        9/30/22   33:1.6M                                   M2 Compliance LLC/FA

Quarterly Report   —   Form 10-Q

Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                    HTML    472K 
 2: EX-31.1     Certification -- §302 - SOA'02                      HTML     16K 
 3: EX-32.1     Certification -- §906 - SOA'02                      HTML     13K 
 9: R1          Cover                                               HTML     62K 
10: R2          Balance Sheets                                      HTML     66K 
11: R3          Balance Sheets (Parenthetical)                      HTML     29K 
12: R4          Statements of Operations (Unaudited)                HTML     49K 
13: R5          Statement of Stockholders' Equity (Unaudited)       HTML     39K 
14: R6          Statements of Cash Flows (Unaudited)                HTML     51K 
15: R7          Organization and basis of accounting                HTML     34K 
16: R8          Summary of significant accounting policies          HTML     25K 
17: R9          Going Concern                                       HTML     16K 
18: R10         Related party transaction                           HTML     17K 
19: R11         Common stock                                        HTML     27K 
20: R12         Preferred stock                                     HTML     15K 
21: R13         Income Taxes                                        HTML     19K 
22: R14         Subsequent Event                                    HTML     15K 
23: R15         Summary of significant accounting policies          HTML     39K 
                (Policies)                                                       
24: R16         Organization and basis of accounting (Details       HTML     54K 
                Narrative)                                                       
25: R17         Summary of significant accounting policies          HTML     14K 
                (Details Narrative)                                              
26: R18         Related party transaction (Details Narrative)       HTML     24K 
27: R19         Common stock (Details Narrative)                    HTML     53K 
28: R20         Preferred stock (Details Narrative)                 HTML     19K 
31: XML         IDEA XML File -- Filing Summary                      XML     50K 
29: XML         XBRL Instance -- form10-q_htm                        XML    262K 
30: EXCEL       IDEA Workbook of Financial Reports                  XLSX     43K 
 5: EX-101.CAL  Inline XBRL Taxonomy Extension Calculation           XML     52K 
                Linkbase Document -- hgyn-20220930_cal                           
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                Document -- hgyn-20220930_def                                    
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                Document -- hgyn-20220930_lab                                    
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                Linkbase Document -- hgyn-20220930_pre                           
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                hgyn-20220930                                                    
32: JSON        XBRL Instance as JSON Data -- MetaLinks              134±   183K 
33: ZIP         XBRL Zipped Folder -- 0001493152-22-032213-xbrl      Zip     81K 


‘10-Q’   —   Quarterly Report

Document Table of Contents

Page (sequential)   (alphabetic) Top
 
11st Page  –  Filing Submission
"Part I -- Financial Information
"Condensed Consolidated Financial Statements (Unaudited)
"Management's Discussion and Analysis of Financial Condition and Results of Operations
"Quantitative and Qualitative Disclosures About Market Risk
"Controls and Procedures
"Part Ii -- Other Information
"Legal Proceedings
"Risk Factors
"Unregistered Sales of Equity Securities and Use of Proceeds
"Defaults Upon Senior Securities
"Mine Safety Disclosures
"Exhibits

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM  i 10-Q

 

 

 

 i  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended  i September 30,  i 2022 / 

 

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

 

For the transition period from to

 

Commission File No.  i 000-56252

 

 i HONG YUAN HOLDING GROUP

(Exact name of registrant as specified in its charter)

 

 i Nevada    i 91-2154289
(State or other jurisdiction
of incorporation or organization)
 

(I.R.S. Employer

Identification No.)

     

 i Room 2707, Global Mansion,  i Zhengbian Road,  i Jinhui District,

 i Zhengzhou City, Henan Province

   i 450000,  i China
(Address of principal executive offices)    (Zip Code)

 

 i +861  i 8999250338

(Registrant’s telephone number, including area code)

 

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

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common Stock   HGYN   OTCMarkets (OTCQB)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  i Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically on its corporate Web site, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐  i 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.

 

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

 

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

 

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

 

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. The number of shares outstanding of the registrant’s common stock as of November 9, 2022 was  i 74,640,766.

 

 

 

 C: 
 
 

 

HONG YUAN HOLDING GROUP

TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION 3
     
ITEM 1 Condensed Consolidated Financial Statements (Unaudited) 3
     
ITEM 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations 11
     
ITEM 3 Quantitative and Qualitative Disclosures About Market Risk 14
     
ITEM 4 Controls and Procedures 14
     
PART II – OTHER INFORMATION 15
     
ITEM 1 Legal Proceedings 15
     
ITEM 1A Risk Factors 15
     
ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds 15
     
ITEM 3 Defaults Upon Senior Securities 15
     
ITEM 4 Mine Safety Disclosures 15
     
ITEM 5 Other Information 15
     
ITEM 6 Exhibits 15

 

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PART I FINANCIAL INFORMATION

 

This Quarterly Report includes forward-looking statements within the meaning of the Securities Exchange Act of 1934 (the “Exchange Act”). These statements are based on management’s beliefs and assumptions, and on information currently available to management. Forward-looking statements include the information concerning our possible or assumed future results of operations set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements also include statements in which words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “consider” or similar expressions are used.

 

Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties and assumptions. Our future results and shareholder values may differ materially from those expressed in these forward-looking statements. Readers are cautioned not to put undue reliance on any forward-looking statements.

 

Item 1. Financial Statements

 

HONG YUAN HOLDING GROUP

BALANCE SHEETS

 

             
   September 30,   December 31, 
   2022   2021 
   Unaudited     
ASSETS            
TOTAL ASSETS  $ -   $  - 
             
LIABILITIES AND STOCKHOLDERS’ DEFICIT            
Current Liabilities            
Accounts payable and accrued liabilities  $  i 900   $ - 
Due to related parties     i 88,311      i 53,176 
Total Current Liabilities     i 89,211      i 53,176 
             
TOTAL LIABILITIES     i 89,211      i 53,176 
             
Stockholders’ Deficit            
Preferred Stock:  i  i 5,000,000 /  shares authorized; $ i  i 0.001 /  par value  i  i  i  i 5,000,000 /  /  /  issued and outstanding at September 30, 2022 and December 31, 2021     i 5,000      i 5,000 
Common stock:  i  i 250,000,000 /  shares authorized; $ i  i 0.001 /  par value  i  i  i  i 74,640,766 /  /  /  shares issued and outstanding at September 30, 2022 and December 31, 2021     i 74,641      i 74,641 
Additional Paid-in Capital     i 97,186,036      i 97,186,036 
Accumulated deficit during development stage    ( i 97,354,888)    ( i 97,318,853)
Total Stockholders’ Deficit    ( i 89,211)    ( i 53,176)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT  $ -   $ - 

 

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

 

 C: 
3
 

 

HONG YUAN HOLDING GROUP

STATEMENTS OF OPERATIONS

UNAUDITED

 

                     
   Three Months Ended   Nine Months Ended 
   September 30,   September 30, 
   2022   2021   2022   2021 
                 
Operating Expenses                    
General and administrative  $ i 30   $ i 1,755   $ i 5,109   $ i 5,255 
Professional fees    i 9,895     i 11,352     i 30,926     i 38,509 
Total Operating Expenses    i 9,925     i 13,107     i 36,035     i 43,764 
                     
Operating loss   ( i 9,925)   ( i 13,107)   ( i 36,035)   ( i 43,764)
                     
Other Income and Expense   -    -    -    - 
                     
Provision for income taxes   -    -    -    - 
                     
Net loss  $( i 9,925)  $( i 13,107)  $( i 36,035)  $( i 43,764)
                     
Basic and dilutive net loss per common share  $( i 0.00)  $( i 0.00)  $( i 0.00)  $( i 0.00)
                     
Weighted average number of common shares outstanding - basic and diluted    i 74,640,766     i 74,640,766     i 74,640,766     i 74,641,039 

 

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

 

 C: 
4
 

 

HONG YUAN HOLDING GROUP

STATEMENT OF STOCKHOLDERS’ EQUITY

UNAUDITED

 

                                    
   Common Stock:
Shares
   Common Stock:
Amount
   Preferred Stock: (A-1) Shares   Preferred Stock: Amount   Additional Paid-in Capital   Accumulated
Deficit
   Totals 
                             
Balance – December 31. 2021    i 74,640,766   $ i 74,641     i 5,000,000   $ i 5,000   $ i 97,186,036   $( i 97,318,853)  $( i 53,176)
                                    
Net loss   -    -    -    -    -    ( i 26,110)   ( i 26,110)
                                    
Balance – June 30, 2022    i 74,640,766   $ i 74,641     i 5,000,000   $ i 5,000   $ i 97,186,036   $( i 97,344,963)  $( i 79,286)
                                    
Net loss   -    -    -    -    -    ( i 9,925)   ( i 9,925)
                                    
Balance – September 30, 2022    i 74,640,766   $ i 74,641     i 5,000,000   $ i 5,000   $ i 97,186,036   $( i 97,354,888)  $( i 89,211)

 

   Common Stock:
Shares
   Common Stock:
Amount
   Preferred Stock: (A-1) Shares   Preferred Stock: Amount   Additional Paid-in Capital   Accumulated
Deficit
    Totals 
                              
Balance – December 31. 2020    i 74,641,276   $ i 74,641     i 5,000,000   $ i 5,000   $ i 97,186,036   $( i 97,272,577)   $( i 6,900)
                                     
Cancellation of common stock   ( i 510)   -    -    -    -    -     - 
Net loss   -    -    -    -    -    ( i 30,657)    ( i 30,657)
                                     
Balance – June 30, 2021    i 74,640,766   $ i 74,641     i 5,000,000   $ i 5,000   $ i 97,186,036   $( i 97,303,234)   $( i 37,557)
Beginning balance    i 74,640,766   $ i 74,641     i 5,000,000   $ i 5,000   $ i 97,186,036   $( i 97,303,234)   $( i 37,557)
                                     
Net loss   -    -    -    -    -    ( i 13,107)    ( i 13,107)
                                     
Balance – September 30, 2021    i 74,640,766   $ i 74,641     i 5,000,000   $ i 5,000   $ i 97,186,036   $( i 97,316,341)   $( i 50,664)
Ending balance    i 74,640,766   $ i 74,641     i 5,000,000   $ i 5,000   $ i 97,186,036   $( i 97,316,341)   $( i 50,664)

 

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

 

 C: 
5
 

 

HONG YUAN HOLDING GROUP

STATEMENTS OF CASH FLOWS

UNAUDITED

 

           
   Nine Months Ended 
   September 30, 
   2022   2021 
CASH FLOWS FROM OPERATING ACTIVITIES          
Net loss  $( i 36,035)  $( i 43,764)
Adjustments to reconcile net loss to net cash used in operating activities:   -    - 
Changes in operating assets and liabilities:          
Accounts payable and accrued liabilities    i 900     i 2,550 
Loan payable - related party    i 35,135     i 41,214 
Net Cash Used in Operating Activities   -    - 
           
CASH FLOWS FROM INVESTING ACTIVITIES   -    - 
           
CASH FLOWS FROM FINANCING ACTIVITIES   -    - 
           
Net change in cash and cash equivalents for the year   -    - 
Cash and cash equivalents at beginning of the year   -    - 
Cash and cash equivalents at end of the year  $-   $- 
           
SUPPLEMENTAL CASH FLOW INFORMATION:          
Cash paid for income taxes  $-   $- 
Cash paid for interest  $-   $- 

 

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

 

 C: 
6
 

 

HONG YUAN HOLDING GROUP

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2022

 

 i 

Note 1 – Organization and basis of accounting

 

Basis of Presentation and Organization

 

This summary of significant accounting policies of Hong Yuan Holding Group. (a development stage company) (the Company) is presented to assist in understanding the Company’s financial statements. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the accompanying financial statements. The Company has realized minimal revenues from its planned principal business purpose and, accordingly, is considered to be in its development stage in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic No. 915 (SFAS No. 7). The Company has elected a fiscal year end of December 31.

 

Business Description

 

We were incorporated on September 29, 2001 in the State of Nevada under the name of Biocorp North America Inc. On March 18, 2005, we filed an amendment to our certificate of incorporation to change our name to Cereplast, Inc.

 

On February 10, 2014, the Company, filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Indiana (the “Bankruptcy Court “). On February 14, 2014, the Company filed a motion in the Bankruptcy Court seeking to convert the Company’s Chapter 11 Case to a Chapter 7 bankruptcy case. On March 27, 2014, the court granted the Company’s motion and on that date the Company’s Chapter 11 Case was converted to a Chapter 7 case. As a result, the Company adopted liquidation basis of accounting on the discontinued operations according to ASC 205-30 “Presentation of Financial Statements – Liquidation Basis of Accounting”, accordingly the accumulated deficit generated prior to bankruptcy proceedings remained unadjusted.

 

On January 31, 2014, the Board of Directors of Cereplast, Inc. (the “Company”) approved a  i 1-for-50 reverse split (the “Reverse Split) which was previously approved by the shareholders on April 5, 2013 and previously disclosed on Current Report Form 8-K filed on April 5, 2013.

 

On February 3, 2014, Cereplast, Inc. (the “Company”) filed a Certificate of Amendment to its Articles of Incorporation to effect the reverse split (the “Reverse Split”), effective as of February 21, 2014.

 

On March 22, 2019, the eight judicial District Court of Nevada appointed Custodian Ventures, LLC as custodian for Cereplast, Inc., proper notice having been given to the officers and directors of Cereplast, Inc. There was no opposition.

 

On June 04, 2019, the Company filed a certificate of revival with the state of Nevada, appointing David Lazar as, President, Secretary, Treasurer and Director.

 

On October 4, 2019, the Company issued  i 50,000,000 shares of common stock to Custodian Ventures, LLC at par for shares valued at $ i 50,000 in exchange for settlement of a portion of a related party loan for amounts advanced to the Company in the amount of $ i 20,100, and a note receivable due to the Company in the amount of $ i 29,900. The note bears an interest of  i 3% and matures in  i 180 days following written demand by the holder.

 

On April 14, 2020, Custodian Ventures elected to convert the total amount of the  i 510 shares of Series A preferred stock into  i 510 shares of common stock.

 

On April 15, 2020, the Board of directors of the Company approved the withdrawal of the certificate of designation of  i 5,000,000 shares of Series A Preferred stock filed with the Nevada Secretary of State on August 24, 2012, as amended by the Amendment to Certificate of Designation after issuance of Class or Series filed with the Nevada Secretary of State on April 13, 2020.

 

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7
 

 

On May 1, 2020, the Company created  i 5,000,000 shares of series A-1 preferred stock with par value $ i 0.001. On May 4, 2020, the Company issued  i 5,000,00 shares of the Series A-1 Preferred stock valued at $ i 5,000 to Custodian Ventures LLC as repayment funds loaned to the Company.

 

A change of control of the Company was completed on November 3, 2020, control was obtained by the sale of  i 50,000,000 common shares and $ i 5,000,000 Series A-1 Preferred Shares from Custodian Ventures, LLC to Xudong Li. After November 3, 2020, the Company’s operations are determined and structured by the new major shareholder.

 

On November 18, 2020, the Company filed an amendment to its certificate of incorporation to change its name to Hong Yuan Holding Group.

 

The accompanying financial statements are prepared on the basis of accounting principles generally accepted in the United States of America (“GAAP”). The Company is a development stage enterprise devoting substantial efforts to establishing a new business, financial planning, raising capital, and research into products which may become part of the Company’s product portfolio. The Company has not realized significant sales since inception. A development stage company is defined as one in which all efforts are devoted substantially to establishing a new business and, even if planned principal operations have commenced, revenues are insignificant.

 

The Company is planning potential acquisitions. The management has approached several companies in China and met the management of potential acquisition targets. The Company feels strongly that despite the challenges of cross border business, it might be able to acquire some good growth companies and bring good values to our stockholders. Although the Company is making some progress in the Merger and Acquisition efforts, any potential results, if any, are still not certain.

 

The accompanying financial statements have been prepared assuming the continuation of the Company as a going concern. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and is dependent on debt and equity financing to fund its operations. Management of the Company is making efforts to raise additional funding until a registration statement relating to an equity funding facility is in effect. While management of the Company believes that it will be successful in its capital formation and planned operating activities, there can be no assurance that the Company will be able to raise additional equity capital, or be successful in the development and commercialization of the products it develops or initiates collaboration agreements thereon. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

 

 / 
 i 

Note 2 – Summary of significant accounting policies

 

 i 

Unaudited Interim Financial Information

 

These unaudited interim financial statements have been prepared in accordance with GAAP for interim financial reporting and the rules and regulations of the Securities and Exchange Commission that permit reduced disclosure for interim periods. Therefore, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. In the opinion of management, all adjustments of a normal recurring nature necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented have been made. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the year ending December 31, 2022.

 

The balance sheets and certain comparative information as of December 31, 2021 are derived from the audited financial statements and related notes for the year ended December 31, 2021, included in the Company’s Form 10K. These unaudited interim financial statements should be read in conjunction with the annual consolidated financial statements and the accompanying notes contained in our Form 10K.

 

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 i 

Covid – 19

 

On March 11, 2020, the World Health Organization announced that infections caused by the corona virus disease of 2019 (“COVID-19”) had become pandemic. The Government of China has adopted various regulations and orders, including mandatory quarantines, limits on the number of people that may gather in one location, closing non-essential businesses and travel bans to limit the spread of the disease. Many of these measures have been relaxed due to the decrease in the prevalence of Covid-19 in China. The Company’s efforts to establishing a new business, financial planning, raising capital, and research into products for the Company’s product portfolio has somewhat impacted by COVID-19.

 

 i 

Cash and Cash Equivalents

 

For purposes of reporting within the statements of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents.

 

 i 

Employee Stock-Based Compensation

 

The Company accounts for stock-based compensation in accordance with ASC 718 Compensation - Stock Compensation (“ASC 718”). ASC 718 addresses all forms of share-based payment (“SBP”) awards including shares issued under employee stock purchase plans and stock incentive shares. Under ASC 718 awards result in a cost that is measured at fair value on the awards’ grant date, based on the estimated number of awards that are expected to vest and will result in a charge to operations.

 

 i 

Loss per Share

 

Basic earnings (loss) per share are computed by dividing income available to common shareholders by the weighted-average number of common shares available. Diluted earnings (loss) per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. The Company’s diluted loss per share is the same as the basic loss per share for the nine months ended September 30, 2022 and 2021, as there are no potential shares outstanding that would have a dilutive effect.

 

 i 

Income Taxes

 

Income tax expense is based on pretax financial accounting income. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts. Valuation allowances are recorded to reduce deferred tax assets to the amount that will more likely than not be realized. The Company recorded a valuation allowance against its deferred tax assets as of September 30, 2022 and December 31, 2021.

 

The Company accounts for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any.  i The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. The Company classifies the liability for unrecognized tax benefits as current to the extent that the Company anticipates payment (or receipt) of cash within one year. Interest and penalties related to uncertain tax positions are recognized in the provision for income taxes.

 / 

 

 / 
 i 

Note 3- Going Concern

 

The accompanying financial statements have been prepared assuming the continuation of the Company as a going concern. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and is dependent on debt and equity financing to fund its operations. Management of the Company is making efforts to raise additional funding until a registration statement relating to an equity funding facility is in effect. While management of the Company believes that it will be successful in its capital formation and planned operating activities, there can be no assurance that the Company will be able to raise additional equity capital or be successful in the development and commercialization of the products it develops or initiates collaboration agreements thereon. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

 

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 i 

Note 4 – Related party transaction

 

During the nine months ended September 30, 2022, the Company’s current majority shareholder advanced $ i 35,135 to the Company as working capital. As of September 30, 2022 and December 31, 2021, the Company owed its current majority shareholders of $ i 88,311 and $ i 53,176, respectively. The advances are non-interest bearing and are due on demand.

 

 / 
 i 

Note 5 – Common stock

 

On October 4, 2019, the Company issued  i 50,000,000 shares of common stock to Custodian Ventures, LLC, the former major shareholder, at par for shares valued at $ i 50,000 in exchange for settlement of a portion of a related party loan for amounts advanced to the Company in the amount of $ i 20,100, and a note receivable due to the Company in the amount of $ i 29,900. The note bears an interest of  i 3% and matures in  i 180 days following written demand by the holder. At December 31, 2020, the note receivable with a balance of $ i 31,383 was written off because the collectability of the note is unlikely after the change of control.

 

On April 14, 2020, Custodian Ventures elected to convert the total amount of the  i 510 shares of Series A preferred stock into  i 510 shares of common stock.

 

On May 27, 2021, the  i 510 shares of common stock issued to Custodian Ventures were cancelled.

 

At September 30, 2022, the Company is authorized to issue  i 250,000,000 shares of $ i 0.001 par value common stock.

 

As of September 30, 2022, a total of  i 74,640,766 shares of common stock with par value $ i 0.001 remain outstanding.

 

 / 
 i 

Note 6 – Preferred stock

 

As of September 30, 2022, a total of  i 5,000,000 shares of Series A-1 preferred stock with par value $ i 0.001 is authorized and remain outstanding.

 

 / 
 i 

Note 7 – Income Taxes

 

Deferred taxes represent the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes. Temporary differences result primarily from the recording of tax benefits of net operating loss carry forwards.

 

As of September 30, 2022, the Company has an insufficient history to support the likelihood of ultimate realization of the benefit associated with the deferred tax asset. Accordingly, a valuation allowance has been established for the full amount of the net deferred tax asset.

 

Uncertain Tax Positions

 

Interest associated with unrecognized tax benefits are classified as income tax, and penalties are classified in selling, general and administrative expenses in the statements of operations. For the nine months ended September 30, 2022 and 2021, the Company had no unrecognized tax benefits and related interest and penalties expenses. Currently, the Company is not subject to examination by major tax jurisdictions.

 

 i 

Note 8 – Subsequent Event

 

In accordance with SFAS 165 (ASC 855-10) management has performed an evaluation of subsequent events through the date that the financial statements were available to be issued, and has determined that it does not have any material subsequent events to disclose in these financial statements.

 

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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.

 

Forward Looking Statement Notice

 

Certain statements made in this Quarterly Report on Form 10-Q are “forward-looking statements” (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of Crown Marketing, (“we”, “us”, “our” or the “Company”) to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. The Company’s plans and objectives are based, in part, on assumptions involving the continued expansion of business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance the forward-looking statements included in this Quarterly Report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved.

 

Overview

 

The Company was incorporated in the state of Nevada on September 14, 2001 under the name Biocorp North America, Inc. On July 19, 2004 the Company changed its name to Nat-UR, Inc. and on March 18, 2005 it changed its name again to Cereplast, Inc. In the summer of 2014, the Company ceased all operations.

 

On March 22, 2019, the eight judicial District Court of Nevada appointed Custodian Ventures, LLC as custodian for Cereplast, Inc., proper notice having been given to the officers and directors of Cereplast, Inc. There was no opposition.

 

On June 04, 2019, the Company filed a certificate of revival with the state of Nevada, appointing David Lazar as, President, Secretary, Treasurer and Director.

 

A change of control of the Company was completed on November 3, 2020, control was obtained by the sale of 50,000,000 common shares and $5,000,000 Series A-1 Preferred Shares from Custodian Ventures, LLC to Xudong Li. After November 3, 2020, the Company’s operations are determined and structured by the new major shareholder.

 

On November 18, 2020, the Company filed an amendment to its certificate of incorporation to change its name to Hong Yuan Holding Group.

 

We have not yet generated sustained profits from our prior operations. Our independent accountants have expressed a “going concern” opinion. As of September 30, 2022, we had an accumulated deficit of $97,354,888 and a net working capital deficit of $89,211.

 

While our current burn rate is nominal, it is expected that our costs of operations will continue to exceed revenues, primarily due to the costs associated with being a public reporting company. Based upon our current business plan, we may continue to incur losses in the foreseeable future and there can be no assurances that we will ever establish profitable operations. These and other factors raise substantial doubt about our ability to continue as a going concern.

 

The Company is planning potential acquisitions. The management has approached several companies in China and met the management of potential acquisition targets. The Company feels strongly that despite the challenges of cross border business, it might be able to acquire some good growth companies and bring good values to our stockholders. Although the Company is making some progress in the Merger and Acquisition efforts, any potential results, if any, are still not certain.

 

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Critical Accounting Policies, Judgments and Estimates

 

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). The preparation of these consolidated financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

 

An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimate that are reasonably likely to occur, could materially impact the consolidated financial statements. We believe that the following critical accounting policies reflect the more significant estimates and assumptions used in the preparation of the consolidated financial statements.

 

Revenue Recognition

 

ASU No. 2014-09, Revenue from Contracts with Customers (“Topic 606”), became effective for the Company on January 1, 2018 and were adopted using the modified retrospective method. The adoption of the new revenue standards as of January 1, 2018 did not change the Company’s revenue recognition as there were no revenues during the period.

 

Under the new revenue standards, the Company recognizes revenues when its customer obtains control of promised goods or services, in an amount that reflects the consideration which it expects to receive in exchange for those goods. The Company recognizes revenues following the five step model prescribed under ASU No. 2014-09: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) we satisfy the performance obligation.

 

Accounts receivable

 

The Company reviews accounts receivable periodically for collectability and establishes an allowance for doubtful accounts and records bad debt expense when deemed necessary. Our allowance for doubtful accounts is maintained to provide for losses arising from customers’ inability to make required payments. If there is deterioration of our customers’ credit worthiness and/or there is an increase in the length of time that the receivables are past due greater than the historical assumptions used, additional allowances may be required. The Company has no accounts receivables and therefore as of September 30, 2022 and 2021, no allowance for doubtful accounts is necessary.

 

Income Taxes

 

The Company follows the asset and liability method of accounting for future income taxes. Under this method, future income tax assets and liabilities are recorded based on temporary differences between the carrying amount of assets and liabilities and their corresponding tax basis. In addition, the future benefits of income tax assets including unused tax losses, are recognized, subject to a valuation allowance to the extent that it is more likely than not that such future benefits will ultimately be realized. Future income tax assets and liabilities are measured using enacted tax rates and laws expected to apply when the tax liabilities or assets are to be either settled or realized. The Company’s effective tax rate approximates the Federal statutory rates.

 

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Results of Operations for the Three and Nine Months Ended September 30, 2022 compared to the Three and Nine Months Ended September 30, 2021

 

In the summer of 2014, the Company decided to discontinue all operations. After the change of control on November 3, 2020, the Company’s operations are determined and structured by the new major shareholder.

 

During the three and nine months ended September 30, 2022 and 2021, we generated no revenues.

 

Operating expenses, during the three months ended September 30, 2022, was $9,925 compared to $13,107 during the three months ended September 30, 2021, a decrease of $3,182 or 24%. Operating expenses during the nine months ended September 30, 2022, was $36,035 compared to $43,764 during the nine months ended September 30, 2021, a decrease of $7,729 or 18%. The decrease was mainly due to the lower professional fees.

 

During the three months ended September 30, 2022, the Company incurred a net loss of $9,925, compared to a net loss of $13,107 during the three months ended September 30, 2021, a decrease of 3,182. During the nine months ended September 30, 2022, the Company incurred a net loss of $36,035, compared to a net loss of $43,764 during the nine months ended September 30, 2021, a decrease of $7,729. The decrease in net loss in the three and nine months ended September 30, 2022 was primarily due to the decrease in operating expenses.

 

Liquidity and Capital Resources

 

As of September 30, 2022 and 2021, we had a cash balance of $0. Due to the lack of revenue, the company’s operations are primarily funded by the Company’s CEO and major shareholder.

 

To the extent that the Company’s capital resources are insufficient to meet current or planned operating requirements, the Company will seek additional funds through equity or debt financing, collaborative or other arrangements with corporate partners, licensees or others, and from other sources, which may have the effect of diluting the holdings of existing shareholders. The Company has no current arrangements with respect to, or sources of, such additional financing and the Company does not anticipate that existing shareholders will provide any portion of the Company’s future financing requirements. Ms. Xudong, the CEO and principal shareholder of the Company, would favorably entertain funding, through loans, corporate expenses for approximately 24 months. Any loans by Ms. Xudong would be on an interest-free basis, documented by a promissory note and payable only upon consummation of a business combination transaction. Upon consummation of a business combination, we or the target may reimburse Ms. Xudong for any such loans from funds furnished by the target. We have no written agreement with Ms. Xudong to advance any further funds for future operating expense, therefore there is no assurance that such funds from Ms. Xudong will be forth coming, if required.

 

No assurance can be given that additional financing will be available when needed or that such financing will be available on terms acceptable to the Company. If adequate funds are not available, the Company may be required to delay or terminate expenditures for certain of its programs that it would otherwise seek to develop and commercialize. This would have a material adverse effect on the Company. These factors raise substantial doubt about the ability of the Company to continue as a going concern.

 

Operating Activities

 

Net cash used in operating activities was $0 during the nine months ended September 30, 2022 and 2021.

 

Investing Activities

 

We neither generated nor used cash in investing activities during the nine months ended September 30, 2022 and 2021.

 

Financing Activities

 

We neither generated nor used cash in financing activities during the nine months ended September 30, 2022 and 2021.

 

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Going Concern

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, we have incurred net losses of $36,035 and $43,764 for the nine months ended September 30, 2022 and 2021, respectively, and have a working capital deficit of $89,211 as of September 30, 2022, in addition to a stockholders’ deficit of $89,211, which raise substantial doubt about the Company’s ability to continue as a going concern.

 

Management believes the Company will continue to incur losses and negative cash flows from operating activities for the foreseeable future and will need additional equity or debt financing to sustain its operations until it can achieve profitability and positive cash flows, if ever. Management plans to seek additional debt and/or equity financing for the Company but cannot assure that such financing will be available on acceptable terms.

 

The Company’s continuation as a going concern is dependent upon its ability to ultimately attain profitable operations, generate sufficient cash flow to meet its obligations, and obtain additional financing as may be required. Our auditors have included a “going concern” qualification in their Report of Independent Certified Public Accountants accompanying our audited financial statements appearing elsewhere herein which cites substantial doubt about our ability to continue as a going concern. Such a “going concern” qualification may make it more difficult for us to raise funds when needed. The outcome of this uncertainty cannot be assured.

 

The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. There can be no assurance that management will be successful in implementing its business plan or that the successful implementation of such business plan will actually improve our operating results.

 

Off Balance Sheet Arrangements

 

We have not entered into 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 and would be considered material to investors

 

Inflation

 

We do not believe that inflation has had in the past or will have in the future any significant negative impact on our operations.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Based upon an evaluation of the effectiveness of our disclosure controls and procedures performed by our Chief Executive Officer as of the end of the period covered by this report, our Chief Executive Officer concluded that our disclosure controls and procedures were not effective as a result of a weakness in the design of internal control over financial reporting identified below.

 

As used herein, “disclosure controls and procedures” mean controls and other procedures of our company that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

Changes in Internal Controls

 

There have been no changes in our internal controls over financial reporting during the period ended September 30, 2022 that have materially affected or are reasonably likely to materially affect our internal controls.

 

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PART IIOTHER INFORMATION

 

Item 1. Legal Proceedings.

 

We are not a party to or otherwise involved in any legal proceedings.

 

In the ordinary course of business, we are from time to time involved in various pending or threatened legal actions. The litigation process is inherently uncertain and it is possible that the resolution of such matters might have a material adverse effect upon our financial condition and/or results of operations. However, in the opinion of our management, other than as set forth herein, matters currently pending or threatened against us are not expected to have a material adverse effect on our financial position or results of operations.

 

Item 1A. Risk Factors.

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

Not applicable.

 

Item 3. Defaults Upon Senior Securities.

 

There have been no events which are required to be reported under this Item.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

None.

 

Item 6. Exhibits and Financial Statement Schedules

 

31.1   Certification of CEO and CFO. Filed herewith.
32.1   Certification pursuant to 18 U.S.C. Section 1350 of CEO and CFO. Filed herewith.
101.INS*   XBRL Instance Document
101.SCH*   XBRL Taxonomy Extension Schema Document
101.CAL*   XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*   XBRL Taxonomy Extension Definition Linkbase Definition
101.PRE*   XBRL Taxonomy Extension Presentation Linkbase Document
101.LAB*   XBRL Taxonomy Extension Label Linkbase Document
104*   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

*XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are furnished and not filed.

 

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SIGNATURES

 

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

 

  HONG YUAN HOLDING GROUP
   
Dated: November 14, 2022 By: /s/ Li Xudong
    Li Xudong
   

CEO and Chief Financial Officer

(chief financial and accounting officer and duly authorized officer)

 

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 C: 

Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘10-Q’ Filing    Date    Other Filings
12/31/22
Filed on:11/14/22
11/9/22
For Period end:9/30/22
6/30/2210-Q
12/31/2110-K
9/30/2110-Q
6/30/2110-Q
5/27/21
12/31/20
11/18/20
11/3/20
5/4/20
5/1/20
4/15/20
4/14/20
4/13/20
3/11/20
10/4/19
6/4/19
3/22/19
1/1/18
3/27/14
2/21/14
2/14/148-K
2/10/148-K
2/3/148-K
1/31/14
4/5/138-K,  DEF 14A,  PRE 14A
8/24/128-K
3/18/05
7/19/04
9/29/01
9/14/01
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