Attached files
| file | filename |
|---|---|
| EX-32.` - EXHIBIT 32.1 - CHINA BIOTECH HOLDINGS Ltd (del) | ex32x1.htm |
| EX-31.1 - EXHIBIT 31.1 - CHINA BIOTECH HOLDINGS Ltd (del) | ex31x1.htm |
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2018
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 000-55631
China Biotech Holdings Limited
(Exact name of registrant as specified in its charter)
|
Delaware
|
81-2310905
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
Suite 2431, Sun Hung Kai Centre
30 Harbour Road, Wanchai, Hong Kong.
(Address of principal executive offices) (zip code)
+852 29198916
(Registrant's telephone number, including area code)
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.
Yes [X] No [_]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
|
Large accelerated filer
|
[_]
|
Accelerated filer
|
[_]
|
|
Non-accelerated filer
|
[_]
|
Smaller reporting company
|
[X]
|
|
(Do not check if a smaller reporting company)
Emerging Growth Company [X]
|
|
|
|
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. [X]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [X] No [_]
Indicate the number of shares outstanding of each of the issuer's classes of stock, as of the latest practicable date.
|
Class
|
|
Outstanding at
June 30, 2018
|
|
Common Stock, par value $0.0001
|
|
8,500,000
|
Documents incorporated by reference: None
EXPLANATORY NOTES
On August 21, 2018, China Biotech Holdings Limited, a Delaware corporation (the “Company”), completed a redomicile merger to reorganize itself as a Cayman Islands company. Pursuant to the agreement and plan of merger dated as of November 15, 2017 (the “Merger Agreement”), the Company has merged with and into Zhong Yuan Bio-Technology Holdings Limited, an exempted company incorporated under the laws of the Cayman Islands and a wholly owned subsidiary of the Company (“ZY Cayman”), with ZY Cayman as the surviving company. Each issued and outstanding share of the common stock of the Company was converted into one ordinary share of ZY Cayman. The redomicile merger was previously reported in a Form 8-K filed with the United States Securities and Exchange Commission on August 28, 2018.
The Company has been redomiciled to the Cayman Islands and is no longer a Delaware company. However, the Company was a domestic company on June 30, 2018, and did not technically become a Cayman Islands company until August 21, 2018. Therefore, the Company is filing this Form 10-Q to comply with the periodic reporting requirements under the Securities Exchange Act of 1934, as amended (“Exchange Act”). At this time the Company is a Cayman Islands company and qualifies as a “Foreign Private Issuer.” As a Foreign Private Issuer, the Company will file periodic reports in the future under cover of Form 6-K and its Annual Report will be filed on Form 20-F. This quarterly report has not been reviewed by the Company’s outside auditors, since the Company is now a “Foreign Private Issuer” and such review will not be required in the future.
2
FINANCIAL STATEMENTS
|
Consolidated Balance Sheets as of June 30, 2018 (unaudited) and December 31, 2017
|
|
4
|
|
|
|
|
|
Unaudited Condensed Statements of Operations for the three and six months ended June 30, 2018 and for the period from April 4, 2016 (date of inception) to June 30, 2018
|
|
5
|
|
|
|
|
|
Unaudited Condensed Statements of Cash Flows for the six months ended June 30, 2018 and for the period from April 4, 2016 (inception) to June 30, 2018
|
|
6
|
|
|
|
|
|
Notes to Unaudited Consolidated Financial Statements
|
|
7-11
|
3
CHINA BIOTECH HOLDINGS LIMITED
CONSOLIDATED BALANCE SHEETS
|
|
June 30,
2018
|
December 31,
2017
|
||||||
|
|
(Unaudited)
|
|||||||
|
ASSETS
|
||||||||
|
Current assets
|
||||||||
|
Cash
|
$
|
100
|
$
|
100
|
||||
|
Total assets
|
$
|
100
|
$
|
100
|
||||
|
|
||||||||
|
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
||||||||
|
Current liabilities
|
||||||||
|
Accrued liabilities
|
$
|
7,300
|
$
|
14,041
|
||||
|
Due to a related party
|
37,318
|
12,600
|
||||||
|
Total liabilities
|
44,618
|
26,641
|
||||||
|
|
||||||||
|
Stockholders' Deficit
|
||||||||
|
Preferred stock, $0.0001 par value 20,000,000 shares authorized;
none issued and outstanding as of June 30, 2018 and December 31, 2017, respectively
|
-
|
-
|
||||||
|
Common Stock, $0.0001 par value, 100,000,000 shares authorized; 8,500,000 shares issued and outstanding as of June 30, 2018 and December 31, 2017, respectively
|
850
|
850
|
||||||
|
Discount on Common Stock
|
(850
|
)
|
(850
|
|||||
|
Additional paid-in capital
|
2,712
|
2,712
|
||||||
|
Accumulated deficit
|
(47,230
|
)
|
(29,253
|
|||||
|
|
||||||||
|
Total stockholders' deficit
|
(44,518
|
)
|
(26,541
|
|||||
|
|
||||||||
|
Total liabilities and stockholders' deficit
|
$
|
100
|
$
|
100
|
||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
4
\
China Biotech Holdings Limited
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
|
|
For the three
months ended
June 30, 2018
|
For the six
months ended
June 30, 2018
|
For the period
from April 4, 2016
(inception) to
June 30, 2016
|
|||||||||
|
|
||||||||||||
|
|
||||||||||||
|
Revenue
|
$
|
-
|
$
|
-
|
$
|
$ -
|
||||||
|
Cost of revenue
|
-
|
-
|
-
|
|||||||||
|
|
||||||||||||
|
Gross profit
|
-
|
-
|
-
|
|||||||||
|
Operating expenses
|
（6,116）
|
（18,361）
|
（47,614）
|
|||||||||
|
|
||||||||||||
|
Loss before income taxes
|
(6,116
|
)
|
(18,361
|
)
|
(47,614
|
)
|
||||||
|
Income tax expense
|
-
|
-
|
||||||||||
|
|
||||||||||||
|
Net loss
|
$
|
(6,116
|
)
|
$
|
(18,361
|
)
|
$
|
(47, 614
|
)
|
|||
|
|
||||||||||||
|
Loss per share - basic and diluted
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
|||
|
|
||||||||||||
|
Weighted average shares - basic and diluted
|
8,500,000
|
8,500,000
|
20,000,000
|
|||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
5
China Biotech Holdings Limited
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
|
|
For the six
months ended
June 30, 2018
|
For the period
from April 4, 2016
(inception) to
June 30, 2018
|
||||||
|
|
||||||||
|
|
||||||||
|
Net loss
|
$
|
(6,116
|
)
|
$
|
(35,369
|
)
|
||
|
|
||||||||
|
Non-cash adjustments to reconcile net loss to net cash:
|
2,712
|
|||||||
|
Expenses paid for by stockholder and contributed as capital
|
||||||||
|
|
||||||||
|
Changes in Operating Assets and Liabilities:
|
||||||||
|
Accrued liabilities
|
(5,111
|
)
|
8,930
|
|||||
|
|
||||||||
|
Net cash provided by (used in) operating activities
|
(11,227 | ) |
(23,727
|
)
|
||||
|
Net proceeds received from related party
|
11,227
|
24,727
|
||||||
|
Net change in cash
|
-
|
100
|
||||||
|
|
||||||||
|
Cash, beginning of period
|
100
|
0
|
||||||
|
|
||||||||
|
Cash, end of period
|
$
|
100
|
$
|
100
|
||||
|
|
||||||||
|
SUPPLEMENTAL DISCLOSURES:
|
||||||||
|
Cash paid during the period for:
|
||||||||
|
Income tax
|
$
|
-
|
$
|
-
|
||||
|
|
||||||||
|
Interest
|
$
|
-
|
$
|
-
|
||||
|
|
||||||||
|
Noncash Investing and Financing Activities
|
||||||||
|
Common stock issued to officers for no consideration
|
$ |
$
|
-
|
|||||
|
Redemption of common shares in connection with the change of control
|
$ |
$
|
-
|
|||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
6
China Biotech Holdings Limited
Notes to Unaudited Condensed Financial Statements
NOTE 1 - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
China Biotech Holdings Limited (formerly Agate Island Acquisition Corporation and China Biotech Company Corporation) ("China Biotech" or "the Company") was incorporated on April 4, 2016 under the laws of the state of Delaware to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. The Company has been in the developmental stage since inception and its operations to date have been limited to issuing shares to its original shareholders.
The Company will attempt to locate and negotiate with a business entity for the combination of that target company with the Company. The combination will normally take the form of a merger, stock-for-stock exchange or stock-for-assets exchange. In most instances the target company will wish to structure the business combination to be within the definition of a tax-free reorganization under Section 351 or Section 368 of the Internal Revenue Code of 1986, as amended. No assurances can be given that the Company will be successful in locating or negotiating with any target company. The Company has been formed to provide a method for a foreign or domestic private company to become a reporting company with a class of securities registered under the Securities Exchange Act of 1934.
The Company acquired 100% of the equity of Zhong Yuan Bio-Technology Holdings Limited on 27 October 2017. Zhong Yuan Bio-Technology Holdings Limited has not commenced any business as at the date of these financial statements.
On August 21, 2018, China Biotech Holdings Limited, a Delaware corporation (the “Company”), completed a redomicile merger to reorganize itself as a Cayman Islands company. Pursuant to the agreement and plan of merger dated as of November 15, 2017 (the “Merger Agreement”), the Company has merged with and into Zhong Yuan Bio-Technology Holdings Limited. an exempted company incorporated under the laws of the Cayman Islands and a wholly owned subsidiary of the Company (“ZY Cayman”), with ZY Cayman as the surviving company. Each issued and outstanding share of the common stock of the Company was converted into one ordinary share of ZY Cayman.
BASIS OF PRESENTATION
Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). Our consolidated financial statements include the accounts of China Biotech Holdings Limited and our wholly owned subsidiaries. The company is consolidating its wholly owned subsidiary. All intercompany transactions and balances have been eliminated in consolidation. Our fiscal year ends on December 31.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America.
7
USE OF ESTIMATES
The preparation of unaudited condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand and on deposit at banking institutions as well as all highly liquid short-term investments with original maturities of 90 days or less.
CONCENTRATION OF RISK
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. The Company places its cash with high quality banking institutions. The Company did not have cash balances in excess of the Federal Deposit Insurance Corporation limit as of June 30, 2018 and December 31, 2017, respectively.
INCOME TAXES
Under ASC 740, "Income Taxes," deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances are established when it is more likely than not that some or all of the deferred tax assets will not be realized. As of June 30, 2018 and December 31, 2017, there were no deferred taxes due to the uncertainty of the realization of net operating loss or carry forward prior to expiration.
LOSS PER COMMON SHARE
Basic loss per common share excludes dilution and is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted loss per common share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the loss of the entity. As of June 30, 2018, and December 31, 2017, there were no outstanding dilutive securities.
8
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company follows guidance for accounting for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the unaudited condensed financial statements on a recurring basis. Additionally, the Company adopted guidance for fair value measurement related to nonfinancial items that are recognized and disclosed at fair value in the unaudited condensed financial statements on a nonrecurring basis. The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 inputs are unobservable inputs for the asset or liability.
The carrying amounts of financial assets such as cash approximate their fair values because of the short maturity of these instruments.
NOTE 2 - GOING CONCERN
The Company has not yet generated any revenue since inception to date and has accumulated deficit of $47,230 and $29,253 as of June 30, 2018 and December 31,2017. The Company had a working capital deficit of $44,518 and $26,541 as of June 30, 2018 and December 31, 2017. The Company's continuation as a going concern is dependent on its ability to generate sufficient cash flows from operations to meet its obligations and/or obtaining additional financing from its members or other sources, as may be required.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern; however, the above condition raises substantial doubt about the Company's ability to do so. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.
In order to maintain its current level of operations, the Company will require additional working capital from either cash flow from operations or from the sale of its equity. However, the Company currently has no commitments from any third parties for the purchase of its equity. If the Company is unable to acquire additional working capital, it will be required to significantly reduce its current level of operations.
9
NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS
In January 2017, the FASB issued ASU No. 2017-1, “Business Combinations (Topic 805): Clarifying the definition of a Business”. The amendments in this ASU clarity the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Basically, these amendments provide a screen to determine when a set is not a business. If the screen is not met, the amendments in this ASU first, require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and second, remove the evaluation of whether a market participant could replace missing elements. These amendments take effect for public businesses for fiscal years beginning after December 15, 2017 and interim periods within those periods, and all other entities should apply these amendments for fiscal years beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. The Company does not expect that the adoption of this guidance will have a material impact on its consolidated financial statements.
In November 2016, the FASB issued Accounting Standards Update No. 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash" ("ASU 2016-18"). The new guidance is intended to reduce diversity in practice by adding or clarifying guidance on classification and presentation of changes in restricted cash on the statement of cash flows. ASU 2016-18 is effective for annual and interim periods beginning after December 15, 2017. Early adoption is permitted. The amendments in this update should be applied retrospectively to all periods presented. Management believed that the impact of this ASU to the Company’s consolidated financial statements would be insignificant and would only impact the Company to the extent it has restricted cash in future.
In August 2016, the FASB issued ASU No. 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows". The amendments provide guidance on the following eight specific cash flow issues: (1) Debt Prepayment or Debt Extinguishment Costs; (2) Settlement of Zero-Coupon Debt Instruments or Other Debt Instruments with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate of the Borrowing; (3) Contingent Consideration Payments Made after a Business Combination; (4) Proceeds from the Settlement of Insurance Claims; (5) Proceeds from the Settlement of Corporate-Owned Life Insurance Policies, including Bank-Owned; (6) Life Insurance Policies; (7) Distributions Received from Equity Method Investees; (8) Beneficial Interests in Securitization Transactions; and Separately Identifiable Cash Flows and Application of the Predominance Principle. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The amendments should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. . Management believed that the impact of this ASU to the Company’s consolidated financial statements would be insignificant.
10
In August 2014, the FASB issued ASU No. 2014-15, "Presentation of Financial Statements Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern". This standard is intended to define management's responsibility to evaluate whether there is substantial doubt about an organization's ability to continue as a going concern and to provide related footnote disclosures. Under U.S. GAAP, financial statements are prepared under the presumption that the reporting organization will continue to operate as a going concern, except in limited circumstances. Financial reporting under this presumption is commonly referred to as the going concern basis of accounting. The going concern basis of accounting is critical to financial reporting because it establishes the fundamental basis for measuring and classifying assets and liabilities. Currently, U.S. GAAP lacks guidance about management's responsibility to evaluate whether there is substantial doubt about the organization's ability to continue as a going concern or to provide related footnote disclosures. This ASU provides guidance to an organization's management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes. The amendments are effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early application is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. Management believes that the impact of this ASU to the Company's financial statements would be insignificant.
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force) and the United States Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future financial statements.
NOTE 4 - INCOME TAX EXPENSE
No provision for income tax has been made as the company incurred tax loss for the six months ended June 30, 2018 and for the fiscal year ended December 31, 2017.
NOTE 5 - ACCRUED LIABILITIES
As of June 30, 2018 and December 31, 2017, the Company had accrued professional fees of $7,300 and $14,041, respectively.
NOTE 6 - DUE TO A RELATED PARTY
The amounts due to a related party were $37,318 and $12,600 as of June 30, 2018 and December 31, 2017, respectively, are unsecured, interest-free and have no fixed repayment terms
NOTE 7 - STOCKHOLDERS' DEFICIT
The Company is authorized to issue 100,000,000 shares of common stock and 20,000,000 shares of preferred stock.
On April 4, 2016, the Company issued 20,000,000 founders common stock to two directors and officers pro rata as founder shares valued at $0.0001 par value per share and for a total discount of $2,000.
On May 3, 2017, the Company effectuated a change in control and redeemed 19,500,000 shares of common stock.
On May 4, 2017, the company issued 8,000,000 shares of common stock to the new owner for no consideration as a result of the change in control
As of June 30, 2018 and December 31, 2017, 8,500,000 shares of common stock and no preferred stock were issued and outstanding.
NOTE 8 – SUBSEQUENT EVENTS
The Company has evaluated subsequent events from the balance sheet date through October 10, 2018, the date at which the financial statements were available to be issued, and has determined that there are no subsequent events that require disclosure in accordance with FASB ASC Topic 855, “Subsequent Events”.
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Company's financial statements, which are included elsewhere in this Form 10-Q and in conjunction with the Company’s Annual Report on Form 10-K that was filed with the SEC on April 17, 2018.
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) in regard to 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 the Company (referred to herein as "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 its ability to identify a target candidate, to negotiate the terms of the acquisition of the target candidate and then to consummate the acquisition. 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 Annual 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.
All forward-looking statements speak only as of the date on which they are made. The Company undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made, except as required by federal securities and any other applicable law.
Description of Business
The Company intends to investigate and, if such investigation warrants, acquire a target company or business seeking the perceived advantages of being a publicly held corporation. Our principal business objective for the next twelve months and beyond such time will be to achieve long-term growth potential through a combination with a business rather than immediate, short-term earnings. Management is considering acquiring or entering into an agreement with a company affiliated with the Company's President and controlling shareholder that has been formed to primarily focus on the health benefits associated with the Acer Truncatum tree that is native to China. A final decision as to whether to acquire that company has not been made at this time. If we do not acquire the company associated with our President and controlling shareholder, we intend to seek a potential target company in the biotech or biopharma industry in China.
12
The Company currently does not engage in any business activities that provide cash flow, and it has no operations. During the next twelve months we anticipate incurring costs related to:
|
(i)
|
filing Exchange Act reports, and
|
|
|
|
(ii)
|
investigating, analysing and consummating an acquisition.
|
|
|
We believe we will be able to meet these costs through loans or investments by our stockholders, management or other investors. There are no assurances that the Company will be able to secure any additional funding as needed. Currently, our ability to continue as a going concern is dependent upon our ability to generate future profitable operations and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Our ability to continue as a going concern is also dependent on our ability to find a suitable target company and enter into a possible reverse merger with such company. Management's plan includes obtaining additional funds by equity financing through a reverse merger transaction and/or related party advances; however, there is no assurance of additional funding being available.
The Company may consider acquiring a business which has recently commenced operations, is a developing company in need of additional funds for expansion into new products or markets, is seeking to develop a new product or service or is an established business which may be experiencing financial or operating difficulties and is in need of additional capital. In the alternative, a business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital, but which desires to establish a public trading market for its shares while avoiding, among other things, the time delays, significant expense and loss of voting control which may occur in a public offering.
Any target business that is selected may be a financially unstable company or an entity in its early stages of development or growth, including entities without established records of sales or earnings. In that event, we will be subject to numerous risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies. In addition, we may effect a business combination with an entity in an industry characterized by a high level of risk, and, although our management will endeavor to evaluate the risks inherent in a particular target business, there can be no assurance that we will properly ascertain or assess all significant risks. Our management anticipates that it will likely be able to effect only one business combination, due primarily to our limited financing and the dilution of interest for present and prospective stockholders which is likely to occur as a result of our management's plan to offer a controlling interest to a target business in order to achieve a tax-free reorganization. This lack of diversification should be considered a substantial risk in investing in us because it will not permit us to offset potential losses from one venture against gains from another.
The Company anticipates that the selection of a business combination will be complex and extremely risky. Through information obtained from industry publications and professionals, our management believes that there are numerous firms seeking the perceived benefits of becoming a publicly traded corporation. Such perceived benefits of becoming a publicly traded corporation include, among other things, facilitating or improving the terms on which additional equity financing may be obtained, providing liquidity for the principals of and investors in a business, creating a means for providing incentive stock options or similar benefits to key employees and offering greater flexibility in structuring acquisitions, joint ventures and the like through the issuance of stock. Potentially available business combinations may occur in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. We do not currently intend to retain any entity to act as a "finder" to identify and analyse the merits of potential target businesses.
13
Change in control
On May 3, 2017, the Company effected a change of its control. The Company cancelled an aggregate of 19,500,000 shares of the then 20,000,000 shares of outstanding stock valued at par. James M. Cassidy resigned as the Company's president, secretary and director and James McKillop resigned as the Company's vice president and director. TingTing Chang was then named sole director of the Company and was named President, Secretary and Chief Financial Officer of the Company.
On May 4, 2017, the Company issued 8,000,000 shares of its common stock to TingTing Chang at par and a discount of $800 as a result of the change in control.
Results of Operations
We have not generated any revenue to date and have incurred recurring losses since inception. It is unlikely the Company will have any revenues unless it is able to effect an acquisition or merger with an operating company, of which there can be no assurance. Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation. We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities. It is management's assertion that these circumstances may hinder the Company's ability to continue as a going concern. The Company's plan of operation for the balance of this fiscal year shall be to complete the change of domicile from Delaware to the Cayman Islands and to continue its efforts to locate a suitable acquisition candidate.
For the three months ended June 30, 2018 and 2017
Revenues
The Company did not generate any revenues during the three-month period ended June 30, 2018 and for the three-month period ended June 30, 2017.
Total operating expenses
During the three months ended June 30, 2018, we incurred operating expenses of $6,116 compared to $2,000 incurred during the three months ended March 31, 2017. Operating expenses incurred during the three months ended June 30, 2018 were generally related to financial and administrative contracted services, such as legal and accounting, costs to prepare the Company's electronic filings with the SEC, and developmental costs. The increase in operating expenses was primarily due to legal expenses associated with preparing and filing our periodic reports with the SEC, the redomiciling of the Company from Delaware to the Cayman Islands and accounting and review costs associated with our financial statements.
Net loss
For the three months ended June 30, 2018, the Company had a net loss of $6,116, as compared to a net loss of $2,000 for the three months ended June 30, 2017.
14
Liquidity and Capital Resources
As of June 30, 2018, and December 31, 2017, the Company had total assets of $100. The Company's liabilities as of June 30, 2018 were $44,618, which was comprised of accrued expenses $7,300 and a related party payable of $37,318. This compares with total liabilities of $26,641, as of December 31, 2017, which was comprised of accrued expenses of $14,041 and a related party payable of $12,600. The Company can provide no assurance that it can continue to satisfy its cash requirements for at least the next twelve months.
The following is a summary of the Company's cash flows provided by (used in) operating, and financing activities for the six months ended June 30, 2018, and 2017.
|
|
Six months ended June 30, 2018
|
Six Months ended June 30, 2017
|
||||||
|
Net Cash (Used in) Operating Activities
|
$
|
(11,227
|
)
|
$
|
-
|
|||
|
Net Cash Provided by Financing Activities
|
$
|
11,227
|
$
|
-
|
||||
The Company has generated no revenues since inception. The Company is also dependent upon the receipt of capital investment or other financing to fund its ongoing operations and to execute its business plan of seeking a combination with a private operating company. In addition, the Company is dependent upon certain related parties to provide continued funding and capital resources. If continued funding and capital resources are unavailable on reasonable terms, the Company may not be able to implement its plan of operations.
Going Concern Consideration
The Company had no revenues and incurred a net loss of $6,116 for the three months year ended June 30, 2018. In addition, the Company had a working capital deficit of $44,518 and an accumulated deficit of $47,230 as of June 30, 2018. There is substantial doubt about our ability to continue as a going concern unless we are able to effect our business plan and raise funds necessary to continue operations. The financial statements have been prepared “assuming that we will continue as a going concern,” which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business. There can be no assurance that we will be able to continue as a going concern, and the financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Contractual Obligations
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.
Critical Accounting Policies and Estimates
We prepare our financial statements in conformity with GAAP, which requires management to make certain estimates and apply judgments. We base our estimates and judgments on historical experience, current trends and other factors that management believes to be important at the time the condensed financial statements are prepared. On a regular basis, we review our accounting policies and how they are applied and disclosed in our condensed financial statements.
While we believe that the historical experience, current trends and other factors considered support the preparation of our condensed financial statements in conformity with GAAP, actual results could differ from our estimates and such differences could be material.
15
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.
Information not required to be filed by Smaller reporting companies.
ITEM 4. Controls and Procedures.
Disclosures and Procedures
Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended (“Exchange Act”), is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our principal executive officer (who is also the principal financial and accounting officer) carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures under the Exchange Act. Based upon that evaluation, she concluded that our disclosure controls and procedures were not effective as of June 30, 2018, due to the material weaknesses resulting from a lack of personnel, the fact that the Board of Directors consists of one person and does not currently having any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K, and controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Mr. Edward Sin, who was acting as the Company’s Chief Financial Officer resigned effective May 3, 2018, and Ms. CHAN has assumed his duties.
Changes in Internal Controls
There was no change in the Company's internal control over financial reporting that was identified in connection with such evaluation that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
16
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no legal proceedings against the Company and the Company is unaware of such proceedings contemplated against it.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
(a) Not applicable.
(b) Item 407(c)(3) of Regulation S-K:
During the quarter covered by this Report, there have not been any material changes to the procedures by which security holders may recommend nominees to the Board of Directors.
ITEM 6. EXHIBITS
(a) Exhibits
17
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.
CHINA BIOTECH HOLDINGS LIMITED
By: /s/ CHANG TingTing ____________________________
CHANG TingTing, President and Chief Financial Officer
Dated: October 24, 2018
18